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Bula Ltd. v. Crowley [1997] IEHC 72 (29th April, 1997)

THE HIGH COURT

1986 No. 6624P

BETWEEN

BULA LIMITED (IN RECEIVERSHIP), BULA HOLDINGS, THOMAS C. ROCHE,

THOMAS J. ROCHE, RICHARD WOOD AND MICHAEL WYMES

PLAINTIFFS

AND

LAURENCE C. CROWLEY, NORTHERN BANK FINANCE CORPORATION LIMITED, ULSTER INVESTMENT BANK LIMITED, ALLIED IRISH INVESTMENT BANK LIMITED AND MACKAY AND SCHNELLMAN LIMITED

DEFENDANTS

Ruling made by Mr. Justice Barr on the 29th day of April, 1997

1. These proceedings comprise the second of two primary actions in a vast panoply of litigation which is unique in Irish legal history as to duration, complexity, range and multiplicity of issues. In essence it revolves around an intended lead and zinc mine near Navan, Co. Meath. The prime mover at the heart of this litigation is Mr. Michael Wymes, who at all material times was managing director of Bula Limited, owner of the proposed mine, (Bula) and also through a holding company a major shareholder therein. He orchestrated the affairs of Bula from its incorporation in 1971 and in that regard was instrumental in launching on its behalf and other interested parties the primary actions to which I have referred. The Bula mining lands adjoin property which comprises a lead and zinc mine operated by Tara Mines Limited (Tara). The first action (Bula I) was in essence against Tara and the State. The trial before Lynch J. continued for 277 court days. The principal witness for the plaintiffs was Mr. Wymes and he gave evidence for about 120 days. An enormous quantity of documents comprising upwards of a hundred box files were introduced in evidence. The learned trial judge delivered judgment (the judgment) on 6th February, 1997 in which he rejected the case made on behalf of the plaintiffs against both sets of defendants and he dismissed the action against all of them. In the introductory part of the judgment Lynch J. commented on the statement of claim in Bula I and set out the essence of the plaintiffs' claim and the defendants' response thereto in the following passage at p.p. 2 and 3:-

"The statement of claim contains such a multiplicity of allegations and claims many of which have been abandoned and withdrawn at various stages in the course of the trial, that I think it is desirable that I should state at the outset in broad terms what is the essence of the plaintiffs' claim. The plaintiffs allege against [Tara and its associates] that in spite of a provision in [Tara's] lease from the Minister that they should co-operate with the plaintiffs as owners of the neighbouring mine, those defendants nevertheless wrongfully conspired together and sought to inflict and did in fact inflict economic loss and damage to the plaintiffs to such an extent as to ruin the plaintiffs in order to enable [Tara] to acquire the plaintiffs' one sixth share approximately of the Navan zinc and lead ore body at an under value with a view to working the same for their own benefit along with their own five sixth share approximately of that ore body. The plaintiffs allege against the [State] that by virtue of agreements made with the plaintiffs and other agreements made with [Tara] the [State] had power and was under an obligation to the plaintiffs to prevent [Tara and its associates] from acting in the manner aforesaid but that the [State] not only failed to prevent [Tara and its associates] from so acting but on the contrary encouraged and assisted them in so acting.

All of these claims so made by the plaintiffs against the defendants are vehemently denied by all the defendants who allege on the contrary that the failure of the plaintiffs' enterprise was due to the plaintiffs own incompetence and unreasonable conduct leading to commercial errors of an irrational and disastrous nature".

2. An extensive notice of appeal has been served on behalf of the plaintiffs challenging the judgment and order of Lynch J.

3. The judgment contains inter alia a wide-ranging analysis of much of the history relating to the Bula saga as it unfolded over almost a quarter of a century from 1971 and it includes many findings of fact, some of which it is submitted on behalf of the first four defendants herein have significance in these proceedings i.e. the second action to which I have referred (Bula II) which has been brought by the same plaintiffs as in Bula I and is against Mr. Crowley (the receiver appointed over the assets of Bula in 1986) and the second, third and fourth defendants (the banks) which provided funds for Bula's activities. The remaining defendant is a consultant mining engineering company, but the case against it has no relevance to the issue with which I am presently concerned.

4. The banks have been intimately involved in the affairs of Bula from early in the history of its mining project at Navan and the receiver likewise from the time of his appointment by the banks in 1986. Briefly stated, the case made by Bula is that the banks were negligent, deceitful, in breach of contract and in breach of trust in and about their relationship with Bula. The claims against the receiver are broadly similar. It is alleged that in consequence of the foregoing the Bula mining project and the company were effectively destroyed and the plaintiffs and each of them have suffered catastrophic losses.

5. The plaintiffs instructed a new team of legal advisers in or about November 1996, none of whom had been previously involved in this action or any earlier proceedings relating to Bula or its associates. In January, 1997 the plaintiffs were given liberty to introduce new claims against the banks and the receiver on foot of the Statute of Limitations, 1957. The possibility of such claims had arisen after the plaintiffs' new team of advisers were instructed and the relevant time-bar relating to the status of the receiver and of debts due to the banks was alleged to have expired. In response, the banks contend that time has not run against any of them by reason of, inter alia, alleged acknowledgements and also a payment binding on Bula made on behalf of the plaintiffs by the State. It is submitted on behalf of the receiver by way of defence to the limitation issue that time has not run against him because, inter alia, he has been prevented from disposing of the assets of Bula and from carrying out his functions as receiver by the challenge to the legality of his appointment and of his powers which has been mounted by the plaintiffs against him in this action from its inception and that the plaintiffs are estopped from relying on the time-bar alleged. By way of alternative defence, the receiver also relies on acknowledgements of the debts owing to the banks and of title and payments which it is alleged are binding on Bula.

6. It is evident that the outcome of the Statute of Limitations issue could have far-reaching consequences in terms of the action proper. Accordingly, I directed that it should be tried by way of preliminary issue on affidavit with liberty to all parties to call oral evidence. I also directed that the opening statement by counsel for the plaintiffs should include not only matters relevant to the preliminary issue, but also all other issues in the action except damages and the case against the consultant mining engineers.

7. As to findings made by Lynch J. in the judgment; I have ruled that findings made by him which are relevant to any issue in the present action are not reviewable herein and the parties are not entitled to re-open such matters. I reached that conclusion on the ground that, although the parties are not the same in both actions, the facts relating to each are intimately intertwined; that some factual matters and findings may be common to issues in both actions; that many such matters entailed an assessment by Lynch J. of a huge volume of evidence adduced in course of a trial of monumental length and if re-opened would add greatly to the duration and expense of the present trial; and that, at least until the outcome of the appeal to the Supreme Court in Bula I is known, there was no acceptable reason in justice to revisit such findings and to permit the plaintiffs to challenge them. I am satisfied that for the foregoing reasons it is not in the interest of justice to re-open relevant findings made by Lynch J. in Bula I and that it would be an abuse of the process of the court to do so. Mr. Traynor, leading counsel for the plaintiffs, did not challenge that ruling or seek to argue against it.

8. After the opening of the plaintiffs' case, Mr. Wymes was called to give evidence viva voce and in course of it Mr. Traynor raised with him a payment by the State of interest due by Bula to Northern Bank Finance Corporation, (N.B.F.C.), one of the banks, and whether Bula had authorised the State so to do. If that payment (i.e. £56,760.90 made on 19th February, 1986 the fact of which is not in dispute) had the authority of Bula then the time-bar issue against N.B.F.C. fails. Mr. Nesbitt, counsel for the banks, challenged the right of the plaintiffs to re-open the question as to whether the payment was binding on Bula having regard to findings relating thereto made by Lynch J. in the judgment. It emerged in course of debate and an examination of the statement of claim in Bula I that the relationship between the State and Bula, including the payment of the interest in question, had been investigated by Lynch J. in course of the trial and that rulings relating thereto had been made by him in the judgment. I was informed that in Bula I evidence was led on behalf of the Plaintiffs to the effect, inter alia, that the payment of interest in question had been made without the knowledge or authority of Bula and amounted to an unlawful course of conduct which was part of the case in negligence and breach of contract which it made against the State. It was also submitted by Mr. Traynor that the relevant findings by Lynch J. are not immune from challenge in this action, notwithstanding my ruling, because they were not fundamental to the finding made by the trial judge on the relevant issue in that he could have held, without making a formal finding as to the payment in question, that even if it had not been authorised by Bula, the unlawful making of the payment did not sound in damages and the claim would have failed for that reason also. Accordingly, therefore, the circumstances and the effect of the payment made by the State could be re-opened in Bula II. In short, it was submitted that this court is not bound by facts found by Lynch J. in Bula I which were not essential to the determination of issues in that action by the learned trial judge. Although that argument was in part contrary to the ruling which I had made as to facts found by Lynch J., I did not inhibit Mr. Traynor from making a detailed legal submission in that regard.

9. I have considered the submissions and the authorities referred to by counsel and I have come to the following conclusions as to the principles of law which I should apply in deciding whether any particular matter of fact or law found by Lynch J. in the judgment should not be re-visited in Bula II and should be regarded as binding herein.

1. It is common case that issue estoppel does not arise per se in this case and that the status of the findings made by Lynch J. in the judgment relates to whether or not, in the context of Bula II, it would be unjust in all the circumstances and an abuse of the process of the court to allow such findings to be re-visited in this action. However, the principles of law relating to issue estoppel and abuse of process are closely related in their content and application.

2. The concept of abuse of the process of the court applies irrespective of privity. When an issue has been finally determined by a court of competent jurisdiction it is an abuse of the process of the court to seek to have it relitigated in new proceedings - see judgment of Blayney J. in Breathnach -v- Ireland (No.2) [1993] I.R. 448 and the judgment of the House of Lords in Hunter -v- Chief Constable of West Midlands [1982] AC 529.

3. The Supreme Court (see judgment of Keane J. in Belton -v- Carlow County Council, Prendergast & Another, Third Parties , unreported 25th February, 1997) has recently adopted with approval the law as to issue estoppel stated by Sir Owen Dixon in Blair -v- Curran [62 C.L.R. 464 (High Court of Australia) at p.p. 531/2] as follows:-

"A judicial determination directly involving an issue of fact or of law disposes once [and] for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be restrained or that rights be declared. The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the formal proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order".

10. In my view the foregoing dictum of Dixon J. applies also in circumstances such as that in the present action where the plaintiffs, but not the defendants, are the same as in Bula I.

4. I am satisfied that there are three questions which should be addressed by the court in determining an issue regarding the status of facts and/or law found by a court of competent jurisdiction in earlier proceedings. In terms of the instant case; first, are the plaintiffs seeking to re-open in Bula II an issue of fact or law which was decided against them in Bula I? Secondly, was the finding in question necessary to the determination by Lynch J. of the issue in Bula I to which it relates? Thirdly, is the finding in question relevant to an issue raised by the plaintiffs in Bula II? These questions comprise the yardstick against which the status of each finding of fact or law made by Lynch J. in Bula I must be assessed in determining whether or not it has binding effect in Bula II. My original general ruling in that regard is amplified accordingly.

11. The findings by Lynch J. which are in question arise out of issues addressed by him contained in paragraph 58 of the statement of claim in Bula I under the heading "PARTICULARS OF BREACH OF DUTIES BY THE MINISTER". It is pleaded as follows:-

"In addition to the matters herein before pleaded the Minister acted in breach of his obligation under the Agreement and in particular Articles 8.02 and 9.05 thereof and under the Representation and the contracts herein pleaded and in breach of his duties of good faith and fair dealing and of care to the plaintiffs and each of them, in the following respects:...

(m) the Minister entered into or caused to be entered into, unauthorised discussions, understandings and agreements with the other Defendants, and each of them, the Receiver, and others including the Banks and the Revenue Commissioners, in relation to the business affairs of the Plaintiffs and each of them.....the said discussions, understandings and agreements were contrary to the aforesaid obligations and duties owed by the Minister and others to the plaintiffs and each of them, and procured breaches of obligations and duties owed by the other Defendants and each of them, the Receiver, and others to the Plaintiffs and each of them, and were to the detriment of the Plaintiffs and each of them. Without prejudice to the generality of the foregoing, the Minister:....

(ii) secretly agreed with N.B.F.C. and U.I.B. in September 1982 to pay interest on the Bula account for the period 15th September, 1980 to 15th October, 1982; denied such fact at the time, and later refused to provide Bula with copies of the said contracts;

(iii) secretly agreed with N.B.F.C. to pay interest on the Bula account for the period 1st to 21st December, 1984 as referred to at paragraph 53, and failed to provide to Bula a copy of the said contracts;......."

12. Lynch J. addressed the particulars of alleged breaches of duty by the Minister pleaded at paragraph 58 in the statement of claim (insofar as they had continued in issue) in course of the judgment and dealt with the specific matters now under review at p.181 in the following terms:-

"...I also reject sub-paragraph (m) and its five internal sub-paragraphs. The internal sub-paragraphs (ii) and (iii) are quite extraordinary complaints at the Minister's paying bank interest to stave off the receivership when one recalls Mr. Wymes' wearisome wad of correspondence (to borrow Mr. Holloway's expression in another context...) demanding that the Minister contribute to interim finance and then when he does help out complaining about it."

13. Applying to these findings the foregoing yardstick as to their status in Bula II; in my opinion the following conclusions are inescapable:

(i) The plaintiffs are seeking to re-open in Bula II an issue of fact which was decided against them by Lynch J. in the judgment, i.e., the allegation that the Minister had entered into an unauthorised agreement or arrangement with N.B.F.C. and had secretly agreed with the latter to pay certain specified interest due by Bula to the bank and had failed to provide Bula with a copy of the said contract.

(ii) The findings in question (i.e. a rejection of the specific allegations pleaded by the plaintiffs and pursued by them in Bula I as to alleged secret unauthorised payment of interest by the State to N.B.F.C.) were necessary to a determination of the issues raised in paragraph 58(m),(ii) and (iii) and, indeed, were fundamental to that determination. The contention that Lynch J. might have avoided a determination on whether or not the interest payment had been authorised by Bula by holding that the action of the State, even if secret and unauthorised, did not sound in damages, is irrelevant. The fact is that the learned trial judge confronted the particular issue and determined it.

(iii) The finding by Lynch J. as to the payment of interest to N.B.F.C. by the State is fundamental to the preliminary issue on foot of the Statute of Limitations which has been raised by the plaintiffs in Bula II.

14. In the light of the foregoing conclusions I rule that the finding by Lynch J. regarding the payment of the interest in question by the State to N.B.F.C. amounted to a finding that it was not an unlawful payment or one which was secret or unauthorised by Bula and it is binding on the plaintiffs in this action.