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Bula Ltd. v. Crowley [1997] IEHC 98 (18th June, 1997)

THE HIGH COURT

1986 No. 6624 P.

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 delivered by Mr. Justice Barr on the 18th day of June, 1997

1. When this action resumed on Tuesday last, 10th June, 1997, two important matters arose. First, Mr. Traynor, counsel for the plaintiffs, informed the court that his clients had composed their differences with the fifth defendants, the consultant mining engineers, MacKay and Schnellman Limited, and that the action against them may be struck out with no further order. Mr. Clarke, counsel for the latter, consented and I made the order requested.

2. Secondly, Mr. Traynor stated that since my reserved decision delivered on the 29th April, 1997 regarding, inter alia, the status in this action of findings of fact and law made by Lynch J. in his judgment in Bula I on matters pertinent to issues raised in this action (Bula II), a detailed examination of the judgment of Lynch J. had been carried out on behalf of the plaintiffs and the conclusion has been reached, which is accepted by the plaintiffs, that the claims made in Bula II (other than those introduced in January 1997 by leave of the court relating to the Statute of Limitations which are still outstanding) cannot succeed against the defendants or any of them (the banks and the receiver) while certain findings of fact made by Lynch J. in his judgment retain their present status and validity. In short, it was specifically conceded by Mr. Traynor on behalf of his clients that all claims made by the plaintiffs against the banks and the receiver (the primary claims), other than outstanding issues relating to the Statute of Limitations, must fail unless Bula is successful on its appeal to the Supreme Court in Bula I and relevant findings made by Lynch J. are set aside by that court. Accordingly, Mr. Traynor sought an order staying this action or, alternatively, adjourning it pending the outcome of the plaintiffs' appeal to the Supreme Court in Bula I. The banks and the receiver opposed the application.

3. Mr. Traynor referred the court to a voluminous notice of appeal which has been filed and served in Bula I. He informed the court that solicitors and counsel have been instructed on the appeal; that significant progress has been made in preparing the extensive documentation which the Supreme Court will require and that his clients are prepared to do all in their power to expedite the hearing of the appeal. However, taking an optimistic view, it is unlikely that the Supreme Court will deliver final judgment on the appeal in less than two years from now.

4. Mr. Traynor carried out a detailed analysis of the judgment of Lynch J. and established that there are many findings of fact and conclusions therein which have a crucial bearing on the primary issues raised in this action. It is evident from the notice of appeal that all are being challenged by Bula and it would appear that the conclusion now stated on behalf of the plaintiffs is well founded and that they cannot hope to succeed in this action on the primary claims made by them and that it would be a pointless exercise to pursue any such claims unless and until Bula is successful on its appeal to the Supreme Court in Bula I and the relevant findings of Lynch J. are set aside.

5. Having considered detailed submissions made over several days by counsel for the parties, I have come to the following conclusions:-

1. This application ought to have been made at the commencement of the trial. The judgment of Lynch J. was delivered on 6th February, 1997, i.e. about ten weeks before then. A perusal of it must have revealed that it contains findings which are of crucial importance in the context of primary issues raised in this action. I have no doubt that a conscious decision was made to proceed with the preliminary issues arising out of the Statute of Limitations in the hope that the plaintiffs might be successful thereon and to postpone the present application to await the outcome of the preliminary issues. A manipulation of litigation in that way is itself an abuse of the process of the court. In the event, my ruling on 29th April, 1997, though it did not deal with all of the limitation issues, did dispose of one of them and it also defined the status of the relevant findings in the judgment of Lynch J., in consequence of which the plaintiffs' strategy failed and they then had no alternative but to make the present application as the only possible way of avoiding defeat in this action on all of the primary claims made against the defendants.

2. The trial is now in its seventeenth day. If I were satisfied in the light of the concession belatedly made by the plaintiffs that they cannot succeed on any of the primary issues raised against the defendants that there had been a total waste of court time and resources, I would refuse the application and, in the premises, would dismiss all of the plaintiffs' claims save only those relating to the Statute of Limitations which remain outstanding. However, I am satisfied that the hearing up to now has been productive and that although the present application ought to have been made at the commencement of the trial, perhaps allied to a submission that the preliminary issues should be allowed to proceed, its postponement has not created the mischief to which I have referred.

3. The court has a discretion as to whether or not it should accede to the plaintiffs' application to stay or adjourn the trial pending the outcome of the appeal to the Supreme Court in Bula I. That discretion should be exercised justly having due regard to the interests of all parties to the action. The definitive question which I must address is where does justice lie in all the circumstances?

4. The plaintiffs concede that one of the options now open to the court is to dismiss all of their primary claims against the defendants and that that is the only logical course if their application for a stay or adjournment is refused. However, it is submitted by Mr. Traynor that that would create an impossible situation for the plaintiffs even if they were successful on appeal in Bula I and relevant findings in the judgment of Lynch J. are overturned by the Supreme Court. He argues that in such event he could not successfully challenge, on appeal to the Supreme Court in this action, the dismissal of the plaintiffs' primary claims herein because there is no error in law or fact on which he might rely in opposing dismissal of such claims having regard to the specific concession which the plaintiffs have been obliged to make on foot of the findings made by Lynch J. in his judgment in Bula I. In short, he submits that in the event of a dismissal of the plaintiffs' primary claims in this action in the light of the concession made on their behalf, the Supreme Court probably would not entertain a subsequent challenge to such dismissals in the event that the plaintiffs succeeded on their appeal in Bula I, because a judgment dismissing the plaintiffs' primary claims, if made in this action, would have been good in law having regard to the status of the judgment of Lynch J. in Bula I at the time of judgment in this action. Whether Mr. Traynor's submission in that regard is well founded is a question which the Supreme Court might have to address in due course and, strictly, is not one for me in this action. Suffice to comment that I have some doubt as to the validity of the argument on the ground that it does not take into account the possibility of an alternative challenge on behalf of the plaintiffs based on a submission that in such an event I would have been unjust in not exercising my discretion in favour of an adjournment of the trial without any findings on the primary issues raised therein, notwithstanding the concession made on behalf of the plaintiffs. I do recognise, however, that, in the event of having to address such an issue, the Supreme Court might decide the matter as envisaged by Mr. Traynor and that in the end of the day the plaintiffs could possibly find themselves in the situation of being successful on their appeal in Bula I but unable to upset an order, if made in this action, dismissing the primary claims made by the plaintiffs against each of the defendants - even though such an order was based on the validity of findings made by Lynch J. in his judgment in Bula I subsequently set aside by the Supreme Court.

5. Viewing the application from the perspective of the defendants, the following points emerged:-

(a) The primary claims made by the plaintiffs against the defendants are enormous and have been outstanding for in or about twelve years. This has created a particular hardship for the receiver. He is a chartered accountant in private practice of high repute who is widely regarded as having a distinguished international reputation in his field, including major receiverships. Serious allegations relating to his professional integrity and competence have been made against him by the plaintiffs and he is anxious not to postpone defence of his reputation for upwards of a further two years.

(b) In practical terms, the only hope the banks have of recovering debts amounting to millions of pounds reputedly owing to them by Bula is by sale of its ore body at Navan. It is contended by counsel for the defendants that this is impossible so long as Bula's primary claim remains in being that the receiver was not lawfully appointed and that he has no authority to sell the ore body. The price of lead and zinc fluctuates on the international market and the existing value of the ore body may decline if there is a long and indeterminate adjournment of this trial. Furthermore, it is submitted that Tara Mines Limited is the buyer most likely to pay the best price for the Bula ore body, but Tara may lose interest if when the Bula ore ultimately comes on the market they have either completed mining at Navan or have completed that part of their operation which is adjacent to the Bula ore body. However, no evidence was led in support of these submissions.

(c) It was urged on behalf of the defendants that if the court was disposed to grant an adjournment of the trial, it should be on terms, inter alia, that, subject to ultimate liability and, if relevant, assessment and award of consequential damages for loss which might be suffered by Bula, the plaintiffs shall specifically withdraw their opposition to the sale of the ore body by the receiver.

(d) The plaintiffs' application for adjournment of the trial has resulted in a potential major practical advantage for the defendants. If it had not been made, this action probably would have continued for at least six months of court time and would have involved a great deal of further effort and expense. In the event, it has been conceded by the plaintiffs that if their appeal in Bula I is unsuccessful and they fail to have the relevant findings of Lynch J. set aside by the Supreme Court, their primary claims in Bula II against all defendants must fail and in that event they are willing to consent to judgment, thus leaving only the remaining Statute of Limitations issues outstanding. On its appeal in Bula I the plaintiffs are faced with the task of upsetting findings of fact and conclusions thereon made by the trial judge and to succeed must satisfy the Supreme Court that there was no evidence which might reasonably support such findings. A perusal of the judgment indicates that, at best, this will be for them a difficult task.

6. Reviewing the remarkable and apparently unique situation which now exists in this case, it seems to me that, balancing the interests of the parties, justice requires that the trial shall be adjourned to await the outcome of the plaintiffs' appeal to the Supreme Court in Bula I on the following terms:-

(i) The plaintiffs (and each of them) undertake to perform diligently and expeditiously all acts necessary to prosecute their appeal in Bula and Others -v- Tara Mines and Others before the Supreme Court and they shall take all possible steps to expedite the determination of the said appeal.

(ii) In the event of the plaintiffs not prosecuting and/or expediting their said appeal, the defendants shall be at liberty to apply to this court for an order dismissing the primary claims made by the plaintiffs in this action but without prejudice to remaining issues under the Statute of Limitations.

(iii) The plaintiffs recognise and agree that in the event of the Supreme Court determining the said appeal in Bula -v- Tara & Others in favour of the respondents therein as against the appellants without overturning any material findings of fact made by the learned trial judge, the plaintiffs' primary claims in this action shall stand dismissed with costs (including reserved costs) to be awarded to the defendants, such costs to be taxed in default of agreement but without prejudice to the plaintiffs' said claims on foot of the Statute of Limitations.

(iv) The plaintiffs and each of them undertake that they will not mount further proceedings against the defendants (or any of them, their servants or agents) in respect of any alleged wrong-doing of which they are presently aware or in the opinion of the court ought now to be aware.

(v) Any such dismissal of claims in the said proceedings shall be without prejudice to any counterclaim that the second, third and/or fourth defendants may be permitted to advance and/or to the right of the said defendants to apply to the court to amend their pleadings to include a counterclaim in the terms of the counterclaim which is the subject-matter of the said defendants' outstanding application to amend. The said application for leave to amend the pleadings shall stand adjourned generally with liberty to re-enter and the right of the plaintiffs to oppose any such application is reserved.

(vi) The plaintiffs (and each of them) undertake to waive any claim to interest on any award made in their favour in this action between the date of their application for an adjournment and the re-commencement (if any) of the trial.

7. In my opinion it would be unjust to spancel the plaintiffs by requiring as the price of the adjournment sought that they withdraw opposition to the sale of the Bula ore body by the receiver - even if their rights as to damages are reserved in the event of ultimate success in challenging the status of the receiver and his right to sell the ore body. The heart of the Bula case is now, and always has been, that the receiver's appointment by the banks was unlawful and that he has no right to sell the ore body. The plaintiffs still retain the ambition that, with others, they will one day succeed in launching a Bula lead and zinc mine at Navan. Whether that is a pipe-dream or a reasonable possibility remains to be seen. Be that as it may, to deprive them of it as the price of the adjournment of the action and the possible preservation of their primary claims against the defendants would be an unfair and unreasonable sacrifice to impose on them. The advantage derived by the defendants in having all of the primary claims made against them by Bula, including the challenge to the receiver's right to sell the ore body, dependant in the first instance on the success of the plaintiffs' appeal to the Supreme Court in Bula I is an equitable quid pro quo for allowing the plaintiffs to preserve their challenge to the status of the receiver pending the outcome of that appeal.

8. The remaining issues relate to the Statute of Limitations. If the plaintiffs' appeal in Bula I fails, then such issues will become essentially points of law and the hearing in that regard should be concluded in a matter of days. On the other hand, if the plaintiffs' appeal is successful then matters of fact relating to such issues will have to be investigated in conjunction with disputed facts associated with primary issues raised in the action. They will require to be investigated in full if the relevant findings made by Lynch J. in Bula I are set aside by the Supreme Court. It follows, therefore, that the remaining Statute of Limitations issues should be adjourned also to await the outcome of the appeal in Bula I.

9. The order will provide that all parties shall have liberty to apply.