High Court of Ireland Decisions

1. Order 19 Rule 28 of the Rules of the Superior Court or alternatively pursuant to the inherent jurisdiction of the Court to do so.

2. The Plaintiff's action is to set aside an Order of the High Court made on

3. In the Matter of Greendale Developments Limited (in liquidation) and

4. In the Matter of the Companies Acts, 1963-1990. The proceedings were heard over 3 days commencing 30th January, 1996 before the then President of the High Court, Mr. Justice Costello who delivered judgment on the 12th March, 1996. The matter was appealed to the Supreme Court and was argued over a number of days. The judgment of the Supreme Court was delivered by Keane J. on 20th February, 1997.

5. It is not disputed that the Court has jurisdiction to strike out or stay proceedings in an appropriate case either pursuant to Order 19 Rule 28 of the Rules of the Superior Court or pursuant to its inherent jurisdiction.

6. The Court's jurisdiction to strike out a Plaintiff's claim which is frivolous or vexatious or as an abuse of the process is usefully summarised in the judgment of Murphy J. in the case Bruno Tassan Din and Arbourfield Ltd. Plaintiffs -v- Banco Ambrosiano S.P.A. and Others 1991 1 I.R. page 569 at page 572. He said as follows:-

7. Later in the same judgment Murphy J. said as follows:-

8. In the same judgment at page 582 the learned judge went on:-

9. The Authorities therefore establish the following propositions:

10. A number of legal issues were argued before me for consideration in applying the principles set out above.

11. There were further grounds on which it was argued that judgment

12. Convention in Human Rights insofar as the trial was unfair because of the refusal to grant an

13. Court on the ultra vires point was per incurium. I declined to adjudicate on these points on

14. Supreme Court and were not, therefore, appropriate matters for my consideration.

15. It seems appropriate to see what part of the judgment obtained by the Liquidator is in dispute in these proceedings, and to examine those matters to ascertain whether the judgment obtained in respect of these sums was dependant on the evidence of Mr Burgess which is alleged to be perjured. If it appears that the evidence of Mr Burgess sought to be impugned could not reasonably be held to have had decisive bearing on, or could not reasonably have altered the judgment obtained, the motion of the Defendants should succeed regardless of the determination of the other legal issues. If, on the other hand, the challenged evidence of Mr Burgess, as set out in the statement of claim, could be held to give the Plaintiff a reasonable chance of success in having the judgment obtained set aside, the Plaintiff is entitled to continue his proceedings (subject to being able to surmount the other legal obstacles). Dr Forde argues that this is an incorrect approach, and that if any part of the judgment was or could be held to have been obtained by fraud the whole of the judgment must be set aside. He relies on a passage in Jonesco and Beard 1930 Appeal Cases at p. 298 whereat page 301 Lord Buckmeister said "Fraud is an insidious disease and if clearly proved to have been used so that it might deceive the court, it spreads to and infects the whole body of the judgment" . That case, however, concerned a dispute between two parties about a claim for a share of eight named horses. In addition the Plaintiff claimed that money was due to him for the sale of two other racehorses. The alleged fraud there would contaminate both parts of the judgment since it was inextricably tied up with the veracity of a party. The situation seems to me quite different however, where, (as in this case), some parts of the judgments are not, and cannot be, attributable to any of the evidence sought to be impugned. In my view, the findings of the High Court affirmed on appeal by the Supreme Court, and which are not in any way dependant on the matters alleged in the Plaintiff's claim, should be differentiated from matters allegedly dependant on the Plaintiff's claim. In that context the matters agreed to be at issue between the parties are as follows:

16. I propose to deal with these matters seriatim.

17. It is not in dispute that cheques to the value of £255,894 were identified by Mr. Fagan himself in his Statement of Affairs in the proceedings under Section 298 of the Companies Act as being cheque payments made to or on behalf of Stephen Fagan and Mai Malone. From this sum, prima facie due, the Plaintiff deducted a sum of £77,800 in respect of monies paid to Stephen Fagan from 1st June, 1989 to the 8th August, 1994 in respect of wages and a further sum of £32,737 in respect of payments made by Stephen Fagan trading as Classical Architectural Stone leaving a balance of £145,357. Mr. Fagan claimed that extra monies were due to him as wages. He had no documentation to support his claim and PAYE and PSRI was paid on the basis of a £1,200 salary. He said in his Affidavit and in evidence that an agreement was made that he be paid £2,000 per month, and that the Liquidator only gave him credit for the £1,200 a month which was actually paid and not the balance due to him. Mr Burgess in his evidence denied any such agreement and said that the £1,200 was the sum agreed. The President of the High Court at page 7 of his judgment said:

18. While it is reasonable to suggest that the rejection by the Liquidator of the claim for £2,000 a

19. On the basis of that decision the sum claimed for additional wages could not be recovered in

20. This is the position notwithstanding the fact that these matters were not dealt with in the "set

21. Certain portions of this are not in dispute. A figure of £1,135.67 in respect of the legal costs for the sale of Mr. Fagan's private house is not disputed. A sum of £1,933 in respect of the purchase of 12a Upper Churchtown Road is not disputed and a sum of £6,993 referable to an action taken against Mr. Fagan personally is not disputed. What is in dispute is a sum of £16,128 which arises as follows: in the case of Allied Irish Banks Plc. -v- Stephen Fagan, Mai Malone, Greendale development Limited and Others fees and outgoings payable to Fergus P. Taaffe & Co. amounted to £55,234. The Liquidator asserted that 29% of these fees should be apportioned to Mr. Fagan. The evidence of Mr. Burgess was only of marginal importance in regard to these fees. It is not disputed that the bank took proceedings against Mr. and Mrs. Fagan personally concerning certain property. The Company was later joined in those proceedings. The Defendant got some benefit because the proceedings against him were terminated. The Liquidator made certain calculations as to how the benefits obtained by the compromise of the Bank's action should be apportioned. He put the basis of his calculations before the Court and the Court accepted that it was reasonable that Mr. Fagan pay a portion of the fees as he had benefited from the legal action. Mr. Fagan produced documentation to show it was the understanding of his Solicitors that the fees would be discharged by the Company, but Mr. McQuaid contested this. In my view the decision of the Court would clearly have been the same regardless of what Mr. Burgess said in his Affidavit or under examination.

22. The finding that Mr. Fagan be personally liable for a portion of the costs which the Company paid to the Solicitor who acted for himself and the Company, was entirely reasonable and was not based on any direct evidence by Mr. Burgess. Furthermore, the decision to hold Mr. Fagan liable for a portion of costs was based, (inter alia), on the finding that even if Mr. Fagan was entitled to rescind the contract of sale of Bridgewater House, (a matter hotly contested between the parties) the circumstances of such rescission amounted "to a breach of his duty to the Company and malfeasance. Mr. Fagan should have been aware of the Bank's equitable interest in the contract for sale, which he had lodged with it as a security, and should have appreciated that it was highly probable that the Bank would institute proceedings should it learn of the recession and that, in all probability the proceedings would be successful." That finding does not depend on the acceptance of Mr Burgess's evidence. If he were disbelieved that finding would still stand: It is also noteworthy that no questions were asked of Mr Burgess concerning those fees.

23. The Liquidator, Mr. McQuaid, in his report analysed the Credit Card expenses

24. Mr. Fagan. The reason for the refusal of the Liquidator to disallow the expenses was that,

25. Burgess said that the company benefited, at least from some of the trips, and also said that

26. Mr. Fagan had used his mobile telephone to make business calls on behalf of the company.

27. In those circumstances it does not appear to me that his evidence could have been in any way

28. High Court at page 10 the matter is dealt with as follows:

29. It was clear from the above that the judgment would stand without the evidence of Mr

30. Burgess. Moreover, insofar as the sums claimed by Mr. Fagan were to be set off against

31. Supreme Court. Nonetheless Mr. Fagan is not precluded from recovering these monies if he

32. Stone, one for £7,000 and one for £3,275. Mr. Fagan was ordered to repay those sums on

33. It appears now that the judgment in respect of the sums of £7,000 and £3,250 obtained against Mr Fagan should properly have been not against Mr. Fagan but against Classical Architecture Limited . This appears on the basis of the exhibits contained in the Affidavit of Mr. Fagan sworn on the 18th day of February 1998. This error was due to the fact that Mr. Fagan denied in evidence that Classical Architecture Limited had ever traded, as indeed had Mr. Burgess in his Affidavit of 30th January, 1996. If the Court was misled by Mr. Burgess on that point it was also misled by Mr. Fagan. However, it appears to me that the judgment against Mr. Fagan is in part, at least, reliant on the evidence of Mr. Burgess contained in Paragraph 6 of the said Affidavit that there was no agreement between Greendale and Classical Architectural Stone that it would carry out the manufacture of reconstituted stone products for Greendale.

34. In respect of the judgments for the sums of £7,000 and £3,275 it is necessary, therefore, to consider whether it is necessary for the evidence impugning the judgment in those amounts to be newly discovered. In Halsbury's Law of England 4th Edition Volume 26 Paragraph 561 the following passage occurs:-

35. A further passage from the same edition of Halsbury dealing with estoppel in Volume 16 at Paragraph 1534 is also relevant:-

36. Both of those passages were cited in the Banco Ambrosiano case by Murphy J.

37. Furthermore, I was referred to an article in Volume 77 of the Law Quarterly Review by D.M. Gordon where the learned author says at page 376:-

38. And later at page 549 in the same article the author says:-

39. The position from these authorities appears to be that there must be some new material not discoverable by reasonable diligence at the time of the trial which would have an important bearing on the outcome of the proceedings. However, I have been referred to the judgment of Barrington J. in the case of Waite & Anor. -v- House of Spring Gardens Limited, Armourshield Limited and Michael Saccs , unreported, 26th June, 1985. At page 5 of the judgment he says as follows:-

40. It appears to me, however, that that is referring to setting aside of judgment of

41. In that case, it was argued, inter alia, that where a judgment was sought to be set aside on the ground of fraud, the fraud must have been discovered by the applicant since the date of the judgment. That was his fourth proposition.

42. Cowan L.J. said at page 579:-

43. Lord Cowan quoted Lindley L.J. in that case as follows:-

44. At page 416 in the same edition under the heading English Judgments

45. At a footnote to page 377, in the article in the last Laws Quarterly Review already referred to, it is stated that the need for newly discovered evidence had its source in Bacon L.C.'s rule (1619) which required review to be upon "some new matter which hath arisen in time after the decree, and not any new proof, which might have been used when the decree was made".

46. In my view, to set aside a judgment on the basis of fraud, it is necessary that the material be newly discovered, and not to have been in existence and available by exercise of reasonable diligence at the time of the trial. In relation to the payments of £7,000 and £3,275 in issue in the present case, the evidence relied on consists of receipts which are exhibited in the Affidavit of Mr. Fagan dated the 18th day of February 1998, and on the contents of the Affidavit of Mr. Smith who said he worked for Mr. Fagan's company. It is clear that the existence of the documentation on which he relies was or should have been well known to Mr. Fagan well prior to the hearing in the High Court. No explanation has been given by him for the failure to produce these receipts. Furthermore, in his Affidavit of 18th February 1988, Mr. Fagan does not make the case that the documentary evidence concerning Classical Architectural Stone Ltd was unavailable at the trial, or that he did not know about it. In my opinion, therefore, Mr. Fagan has no reasonable chance of succeeding in having this part of the judgment set aside on the basis of the alleged fraud of Mr. Burgess. I will refer again later to these sums of £7,000 and £3,275.

47. In the proceedings in the High Court the amount of the money in relation to

48. Springfield House was not challenged and the only issue was whether Mr. Fagan was obliged

49. As appears from the foregoing, the judgment against the Plaintiff in relation to

50. £100,000 is owing. Dr. Forde, however, argues that the penalty and interest amounting to

51. For the reasons I have outlined above, even if the entire contents of the

52. Statement of Claim were proven, I do not consider that there is any reasonable chance that the

53. I have decided most of the issues on the basis that even should the allegations made in the Statement of Claim be proven, there would be no reasonable chance of the judgment being set aside. In the case of the Classical Architectural Stone Ltd monies, the decision was on the basis that the evidence on which it is now sought to rely was or should have been available at the time of the trial, and no adequate explanation was given for the failure to produce it then. It is unnecessary, therefore, to consider the other legal submissions save as follows:

54. It is further argued by Dr. Forde that it would be somehow unconscionable for

55. A considerable part of the cross-examination of the Liquidador was directed towards showing that he was partial as between Mr. Fagan and Mr. Burgess. There was criticism of Mr. McQuaid for not trying harder to obtain Mr. Burgess' diaries. Questions were also directed as to his failure to pursue Mr. Burgess for his failure to keep proper records. Questions were also asked as to why it was Mr. Fagan rather than Mr. Burgess who was pursued by the Liquidator.

56. I am satisfied on the evidence before me that there has been no want of impartiality between the parties on the part of the Liquidator, and that he dealt even-handedly with Mr. Fagan and Mr. Burgess. The question of pursuing Mr. Burgess for inadequate record-keeping is under consideration. The decision not to resolve the conflict between Mr. Fagan and Mr. Burgess by having them cross-examined in the Master's Court was a policy decision taken by the Liquidator on good grounds. The decision to pursue Mr. Fagan rather than Mr. Burgess was justified on the basis that Mr. Fagan was the beneficiary of the monies. In circumstances where I find that there has been no unfairness or no partiality on behalf of the Liquidator, it is not necessary to consider in what circumstances, if any, the Liquidator might be precluded from standing over a judgment he obtained for want of impartiality.

57. That does not entirely dispose of the matter however. At paragraph 7 of his second supplemental affidavit dated 10th day of March 1998 Mr. McQuaid states:

58. The Liquidator got judgment against Mr. Fagan for monies paid to Classical Architectural Stone Limited a separate legal entity. Mr. McQuaid's qualified offer to allow Mr. Fagan credit is, in my view, an inadequate response. Likewise, in my view, it is likely that the £3,275 was also money that was recoverable (if at all) against the company and not Mr. Fagan - I will discuss with Counsel the form of order that should follow this finding.

59. Having carefully considered all the relevant matters, therefore, and applying the law as set down aforesaid, it seems to me that the action should be stayed (subject to a suitable order being made concerning the £7,000, and £3,275).