High Court of Ireland Decisions

1. The moving party in this set of Motions is Mr. Zakaria El Taher, the second named Defendant in the first proceedings and Zakaria El Taher and his son Nasser El Taher, the tenth and twelfth named Defendants in the second mentioned action. The interests of the moving parties is identical: to strike out the Notice of indemnity and the contribution dated the 26th January, 2001 by the first named Defendant in the first and by the companies (the MMP Group) in the second mentioned action. Given that identity of interest is, accordingly, convenient to refer to both of the moving parties as the El Tahers.

2. There are, in fact, four Motions before the Court: two originally returnable for the 1st March, 2001 and the others returnable the 13th March, 2001. The Motions returnable for the latter date are more comprehensive and form the basis for a composite application to the Court which was heard over four days from thursday the 8th to thursday the 15th November, 2001.

3. In the first (1989) proceedings the Court is asked to strike out the Notice of indemnity and contribution dated the 26th January, 2001 served on Zakaria El Taher by the first named Defendant, Mr. Goodman, at the commencement of the trial fixed to take place on the 15th May, 2001.

4. Directions are also sought. Similar reliefs were applied for to strike out the Notice of indemnity and contribution of the MMP companies.

5. An application was made by the Respondents, (Mr. Goodman and the MMP companies) to disallow this Affidavit. The Applicant, having duly served the Affidavit on the Respondents, requested its inclusion.

6. The Court considered that, in view of the submissions made by Counsel on his behalf and in view of the age and distant place of residence of Mr. Zakaria El Taher that the Affidavit should be considered, de bene esse , by the Court to ascertain its relevance to these proceedings and to the Motions before the Court.

7. The Affidavit deals comprehensively in over 60 pages with the involvement of Mr. Zakaria El Taher and, later, Mr. Nasser El Taher, in the MMP Group from the time of purchase of a 50% interest from Mr. Phelan on the 10th October, 1986, his involvement with Mr. Phelan from that date until the 15th April, 1987 when, as already determined by this Court in its ruling of 11th September last, in breach of contract he sold shares held by him through Master Meat Anstalt to interests controlled by Mr. Goodman. The Affidavit further deals with the period from that date to the 16th September, 1988 when Mr. Phelan, through the provision of a deadlock mechanism, sold to other interests controlled by Mr. Goodman.

8. In paragraph 17 of the Affidavit Mr. El Taher stated that he makes his Affidavit in relation to all proceedings, whether in England or Ireland, relating in whatsoever manner to the MMP Group and to the surrounding circumstances relating thereto. He further avers to the considerable effort to prepare and finalise the Affidavit as he wished it to be as comprehensive and as factual a record as possible, in case of his early decease. It was, indeed, for this reason that the Court considered it appropriate to read the entire Affidavit.

9. The Affidavit was not sworn in the proceedings before this Court and, indeed, was sworn, on the 9th September, 2000, over four months before the Notice of indemnity and contribution, dated the 26th January, 2001, was served. No reference is made to any matter germane to this application. Furthermore neither grounding Affidavits refer to this earlier Affidavit.

10. For those reasons the Court, while deeming that while it might be relevant to the proceedings, held that it was neither relevant to nor necessary for the present application.

11. It is significant that this Affidavit does not refer to the Affidavit of Mr. Zakaria El Taher sworn on the 9th September, 2000.

12. Mr. Bradshaw refers to the extensive amended defence and counterclaim of Mr. Goodman of the 29th September, 2000. This, he says will necessitate extensive and complex financial calculations and analyses which would require an amount of time estimated at more that half the length of the trial involving witnesses of fact and expert evidence concerning dividend payments, company property, taxation, intercompany transfers, accounts and enquiries. If the Notices were not struck out this would necessitate Mr. El Taher and his legal team being present for the lengthy counterclaim of Mr. Goodman against Mr. Phelan and being subject to cross examination in relation to financial issues which, it is deposed, do not concern him in relation to events of some 13 years distance.

13. Mr. Bradshaw asked the Court to determine, at the outset of the trial, that the Notices be struck out whether or not Mr. El Taher is needed as a witness of fact given that he is over 80 years of age and suffering from certain disabilities which are detailed (though not the subject of any exhibit) in the Affidavit.

14. The Statute of Limitation ground was not proceeded with. It was conceded that the Notice of contribution and indemnity was not statute barred.

15. The deponent refers to the facts and matters arising in the Judgment of this Court of the 11th September, and to the following six grounds namely:

16. The deponent describes his poor state of health; that he has been a diabetic for over thirty years; that he has been informed by his doctors that his life is in danger and is now nearing its end. He says that the circumstances surrounding the sale of the MMP Group to Mr. Goodman and to what he refers as Mr. Goodman’s subsequent unlawful actions have not only damaged his reputation and that of his family but have contributed to his ill health and have troubled his conscience for over 14 years. He says that in 1996, having visited Mecca, he thought it proper to rectify his previous wrong doings and to clear his conscience.

17. In relation to the Judgment of this Court of the 11th September, 2001 the deponent says that the Court found that the Agreement of the 15th April, 1987 (made between him and Mr. Goodman) was based on concealment, secrecy, deceit and trickery and that, accordingly, it must be dishonest and hence unlawful and/or fraudulent for each of those grounds.

18. Furthermore, because of the admitted inducement by Mr. Goodman he submits that any agreement based on such inducement is dishonest and hence unlawful and/or fraudulent.

19. The finding by the Court on the 11th September, 2001 that the agreement was in breach of the Joint Venture Agreement is a further ground.

20. The Court found that the Joint Venture Agreement automatically and absolutely ceased as of the 15th April, 1987. Accordingly, Mr. El Taher says, it must follow that the exercise of the deadlock provision by Mr. Goodman in September, 1988 is illegal and/or fraudulent and/or void.

21. Mr. El Taher believes that the “corporate veil” between Mr. Goodman and the companies has been lifted by virtue of the Judgment of this Court on the 11th September, 2001. He submits that from the 15th April, 1987, Mr. Goodman is controller and shadow director of the MMP Group. Mr. El Taher says that he does not have any beneficial rights in the Group and was acting simply on the instructions of Mr. Goodman. He says that he reluctantly and under duress and threat of losing the indemnities given to him by Mr. Goodman on the 15th April, 1987.

22. Ms. Anita Kerrigan, Solicitor in the firm of Noel Smith and Partners, acting for Mr. Goodman and the MMP companies swore an Affidavit on 6th November, 2001. She says that she is advised that many of the matters set out in Mr. El Taher’s Affidavit are scandalous in their references to Mr. Goodman and to persons and firms not before the Court. Furthermore, the Affidavit contains matters of argument and commentary which are inappropriate.

23. Ms. Kerrigan’s Affidavit is in response to Mr. El Tahers Affidavit of the 1st November, 2001 and not to the Affidavit of the 9th September, 2000 sworn in the English proceedings. In relation to that Affidavit, in respect of which she is advised is not relevant to the Motions before the Court, she makes no comment thereon other than to point out some differences in Mr. Taher’s versions of events.

24. Ms. Kerrigan refers to Mr. Goodman’s claim that Mr. El Taher breached a duty of care owed to him in relation to the management of the company through his failure to prevent the wrong doings alleged against Mr. Phelan. The indemnities which Mr. Goodman gave to Mr. Taher were given on the basis of warranties and representations made by Mr. El Taher in relation to the affairs and finances of the Master Meat companies as of the 15th April, 1987.

25. In relation to the second Motion against Mr. El Taher and his son, Nasser El Taher, she says that both Messrs. El Taher breached their contractual, fiduciary or other duties towards the companies of which they were directors by their failure to prevent Mr. Phelan’s wrongdoing in relation to the companies.

26. The deponent says that Mr. Zakaria El Taher served a Notice of indemnity on the 16th October, 1991 in the first action in which he claimed an indemnity from Mr. Goodman in relation to the action brought by Mr. Phelan on the basis of the indemnity between Mr. Goodman and Mr. El Taher of the 16th April, 1987.

27. The replying Affidavit states that the allegations of Mr. Goodman, which were denied, do not provide a legal basis for the strike out of the Notice of indemnity and contribution. In any event the truth of these allegations cannot properly be determined in advance of the trial of the action, when the Court will have available to it all relevant evidence, as to the events and the mental states of the participants.

28. The Affidavit considered of the Judgment of the 11th September, 2001 and of the grounds put forward by Mr. El Taher as referred to above.

29. The reference in Mr El Taher’s affidavit to indemnities are by Mr. Goodman to both Zakaria El Taher and to his son Nassar El Taher

30. It is submitted by Counsel for Mr. Goodman that this indemnity relates only to an action by Zakaria El Taher, on behalf of Mr. Goodman, against Mr. Phelan and must be strictly construed.

31. That deed of indemnity made between Mr. Goodman as principal and Nasser El Taher and Taher Meats (Ireland) Limited (not a party to these proceedings) as nominees provides as follows:-

32. The Applicants submit that it is Mr. Goodman who is suing Nasser, indirectly through his allegedly illegal control of the MMP Group in proceedings relating to which he has already indemnified Nasser in the above mentioned deed of indemnity. It is clearly necessary, in order to sustain such a submission, that the Court has to identify Mr. Goodman, who gave the indemnity, with the MMP Group of companies who served the Notice of indemnity and contribution on Mr. Nasser El Taher.

33. I do not have to either interpret the provisions of this indemnity except to say that each indemnity is limited in nature. Certainly it is arguable that they are not coterminous with the Notices of indemnity and contribution which it is sought to strike out.

34. In addition to the Civil Liability Act claim, the Respondents claim damages for breach of contract, damages for breach of fiduciary duty, damages for negligence, damages for misrepresentation and/or deceit, a declaration of invalidity that the indemnity was procured by misrepresentation and breach of contract and that therefore the indemnity agreements between the first named Defendant and the second named Defendant of the 15th April, 1987 are null and void.

35. The claim under the Civil Liability Act, 1961, commencing at Section 21, arises not because of any relationship or contract or legal duty between the Defendants. Such a claim seeks an apportionment of liability as between co-Defendants.

36. The second type of claim contained in the Notices for indemnity and contribution is that under Order 16 Rule 1. That is a claim that a Defendant:-

37. This claim does not arise either from contractual indemnity but from issues which are similar or connected to the issues that are already arising between the Plaintiff and each of the Defendants.

38. It is clear that in this case each of the types of contribution claims are made.

39. It would appear that the claims mentioned in respect of the notices in both cases differ substantially from the case law in respect of strike out of actions in limine .

40. That case related to an application for the dismissal of an action unsustainable in relation to the specific performance of an agreement for a sale of lands.

41. Before the statement of claim was delivered the Defendants brought a Motion seeking an Order dismissing the Plaintiff’s claim on the grounds that it was unsustainable and amounted to an abuse of process. The Motion was refused by the High Court (Macken J.).

42. The Defendants in the Supreme Court accepted that they would not be entitled to an Order under Order 19 Rule 28 of the Rules of the Superior Courts, 1986. Their appeal relied upon the inherent jurisdiction of the Court.

43. The Supreme Court (Denham, Hardiman and Geoghegan J.J.) in dismissing the appeal held:

44. Hardiman J. referred to the legal principles to be applied in construing the Motion which were summarised in Lac Minerals -v- Chevron Corporation [1995] 1 ILRM 161 as follows:

45. It is clear, as Hardiman J. stated in relation to that case, that the position poses a very difficult hurdle for the Defendants to clear.

46. Geoghegan J., at 284, referred to Jodifern Limited -v- Fitzgerald [2000] 3 IR 321 at 332 where Barron J. stated:-

47. Geoghegan J. held it important to bear the above dicta in mind when applying the legal principles to that case.

48. The principles had been clearly laid down in Jodifern Limited -v- Fitzgerald [2000] 3 IR 321 at 333 per Barron J. referred to in Supermac Ireland .

49. The test enunciated by Barron J. is as follows:-

50. There is clearly room for considering what evidence should be accepted or how it should be interpreted. Applying the Jodifern test whether the Plaintiff could succeed rather than whether he would. It seems to me that each of the Defendants has established an arguable case.

51. The Applicants have distinguished the position of Zakaria El Taher and Nasser El Taher. The Court has been urged, on the basis of the Affidavit of Zakaria El Taher sworn the 1st November, 2001, that Nasser El Taher should not be penalised for the involvement of his father. It is clear that the respective role of each differed significantly even on the basis of that Affidavit and, indeed, the comprehensive Affidavit of Zakaria El Taher sworn the 9th September, 2000 in the English proceedings. There is no Affidavit from Nasser El Taher. The Affidavit of William Bradshaw sworn the 8th March, 2001 made on behalf and with the authority of Zakaria and Nasser El Taher, does not seek to distinguish the position of one from the other in these Motions.

52. Mr. Bradshaw’s Affidavit, at paragraph 10 submits that one of the grounds for striking out the Motion is the fact that Nasser El Taher was not a party to the Joint Venture Agreements, nor the Master Anstalt Sale Agreement and that he had resigned as a director of the MMP Group since October, 1987.

53. The Court accepts, however, that there are significant differences. Notwithstanding, both were at material times directors of the MMP Group of companies. Mr. Nasser El Taher is a Defendant in the Master Trade action. Applying the test whether the MMP Plaintiffs could succeed, it seems to me that an arguable case is made such as to disentitle Nasser El Taher to the Order sought, notwithstanding that he was not a party to the Joint Venture Agreement.

54. Mr. Bradshaw further submits that the strike out of the Notice of indemnity and contribution will result in significant savings of both costs and the Courts time and will assist justice for all the parties involved. Given the fact that both of the Messrs. El Taher are Defendants in one or other of these actions it does not seem to me that the striking out of the Notices of indemnity and contribution will significantly reduce their involvement. It is unfortunate that the complexity of the case has involved 52 days of trial and will involve more time and terms of oral evidence. However, the determination of this Motion in favour of the Applicants will not affect the complexity of these proceedings.

55. In relation to Nasser El Taher, whom Zakaria El Taher submits is completely indemnified by Mr. Goodman as to all eventualities in the Deed of Indemnity (see paragraph 26(vi)(b)) the latter submits that Mr. Goodman, as an indemnifier, is now suing Nasser (indirectly through his illegal control of the MMP Group) in proceedings relating to which he has already indemnified Nasser. He submits that the Court has already lifted the corporate veil pursuant to paragraph 2(1) of the Judgment of the 11th September, 2001. I propose to deal with this matter under the general submission relating to the lifting of the corporate veil.

56. It is submitted that it must follow that Mr. Goodman was at all relevant times, since the 15th April, 1987 to date, the controller and shadow director of the MMP Group. This submission is, of course, based not on the Judgment but on a purported deduction from the admission by Mr. Goodman on 29th September, 2000. It does not purport to identify Mr. Goodman with the companies - controller/director does not imply identity - nor does it imply a joint or several liability. No claim can arise for personal liability as a shadow director under the 1990 Companies Act which, clearly, did not apply to actions before the date of coming into operation of the relevant section of that Act. Neither is there any claim in respect of insolvency making the controller/director personally liable. The claim is simply that Tarsos Anstalt is the alter ego of Mr. Goodman. However, even if this were so, the question arises as to whether the MMP Group can be considered the alter ego of Mr. Goodman.

57. In that case Murphy J. upheld the decision of Laffoy J. in the High Court as follows:-

58. The submission that the companies had no active trading for some considerable time was evidenced by the fact that the companies were, in fact, struck off and were only reinstated shortly before the onset of the trial. It is clear, Counsel submits, that the companies themselves had and have nothing but the most nominal existence and the only purpose to their continued existence is to maintain proceedings which can only be intended to benefit Mr. Goodman personally. There can be no question of the companies having any other purpose having regard to the disinterest shown to their continued survival or, indeed, compliance with the companies acts for some considerable period of time. If the Plaintiffs were successful in obtaining an Order against him, he submits that it would be invidious that Mr. Goodman, who, he further submits, is not merely a wrong doer, but a wrong doer who obtained the control of the companies by a sustained process of deception, should be permitted to benefit. In relation to the submissions with regard to the reinstatement of the companies, the Companies Act is clear. The companies, after reinstatement, are entitled to all the benefits and bear all the liabilities that they had at the time of their being struck off the registrar.

59. The Judgment of this Court to which reference has been made establishes, Mr. Dempsey submits, that there can be no question of Mr. El Taher giving any of the representations or warranties alleged in the contribution notices to Mr. Goodman personally. The agreement of the 15th April, 1987 between Zakaria El Taher and Tarsos Anstalt, that Mr. El Taher would sell and Tarsos would purchase 80% of the proprietary interest in Master Meat Anstalt with an option for the remaining 20% for consideration of US $9.75 million contained representations and warranties to Tarsos Anstalt and not to Mr. Goodman. These were, inter alia , that the consolidated balance sheets of the companies in draft form showed a true and fair view of the companies as of the 31st December, 1986 and that the net assets of the companies as at that date and as at the date of the agreement were not less than the net assets shown therein (or at most a variation of 10% less). There was a similar provision with regard to draft profit and loss accounts together with the representation that all trading from that date had been in the normal and usual course of business of the companies with no material adverse change. Moreover, it was represented that Mr. El Taher had disclosed to Tarsos all matters in relation to the companies that should or ought to be disclosed in good faith to a purchaser for full value of the shares which he is aware.

60. Counsel further submitted that Mr. El Taher held the shares for Mr. Goodman and was entitled to an indemnity .

61. Mr. Donal O’Donnell SC submitted that the application is legally flawed and factually misconceived. The inherent jurisdiction of the court to strike may only be exercised in circumstances of undisputed facts, or otherwise where the court is certain but that no matter what might arise or happen in the course of the proceedings, the claim will be resolved in a matter fatal to the claimant’s contentions. [ Barry .v. Buckley [1981] IR 306, 308, per Costello J.; Cavern Systems Dublin Ltd. .v. Clontarf Resident Association [1984] ILRM 24, 27 (per Costello J.) and Sun Fat Chan .v. Osseous Ltd . [1992] 1 IR 425, 428 (per McCarthy J.)]

62. Mr. O’Donnell SC referred to the emphasis put on the principles in the above cases by the Supreme Court in Jodifern .v. Fitzgerald [2000] 3 IR 321, 333 and 334, per Barron J. and Murray J. In Supermacs Ireland .v. Katesan Katesan (Naas) Limited [2000] 4 IR 273 the decision in Sun Fat Chan and Lac Minerals .v. Chevron Corporation [1995] ILRM 161 were endorsed.

63. In the Respondents’ submission there are not undisputed facts which would reach the threshold necessary to strike out the Respondent’s claim. Moreover, the Court is being asked to decide that the agreement of the 15th April 1987 was dishonest, illegal and fraudulent such as to preclude the making of claims contained in the notices. None of these matters have been determined nor can be determined in an application of this nature.

64. Given the comprehensive nature of the notices themselves, they cannot be said to be founded on the 1987 Agreement. They arise rather from the claim by Mr. Phelan for damages for deceit, inducement and breach of contract and conspiracy. It has already been held that the breach was a breach by Mr. El Taher himself. In relation to the second set of Notices of indemnity and contribution served by the companies, it cannot be said that they are in any way affected by the 1987 Agreements. Their claims are independent. They are not affected by disputes relating to the identity of their members.

65. In a similar way the admission by Mr. Goodman of having induced, in legal terms, the agreement does not, by that admission alone, render such inducement dishonest, unlawful and/or fraudulent.

66. Having found that there was a breach of the articles of association does not necessarily establish a voidness of any transaction. Moreover the breach of the agreement of the 15th April, 1987 was a breach by Mr. Zakaria El Taher, as found in the Judgment of the 11th September, 2001.

67. It may very well be that the deadlock provision of the Joint Venture Agreement did not survive the ceasing of the Joint Venture Agreement itself. It does not follow that the exercise by parties of the provisions is necessarily illegal or fraudulent or void.

68. Even allowing Mr. Dempsey’s submission in this regard and his submission that Mr. Goodman must rely on the very agreement of the 15th April, 1987 which the Court has held to have been breached by Mr. El Taher and which Mr. Dempsey submits is illegal, fraudulent and void, such is not incontrovertible evidence as to have the notice struck out. The continuing obligation requirement of paragraph 11 of that agreement would, in the event of it not been found illegal, impose an obligation on Mr. El Taher after the completion of the agreement.

69. The Court considers, as it held in the judgment of 11th September, 2001, that this issue is not available for consideration. It must await oral evidence. Mr. Zakaria El Taher avers that he acted reluctantly and under duress and threat of losing the indemnity given to him. Moreover, Mr. Zakaria El Taher refers to betrayal, crisis and manipulation which at best at this stage of the hearing are allegations and in respect of which no concluded facts have been found. There is no finding that the subsequent purchase of Mr. Phelan’s shares by Mr. Goodman in September, 1988 is tainted with illegality, dishonesty or fraud. These matters are not, at this time, ready for adjudication.

70. Mr. El Taher’s amended defence (paragraphs 34, 35 and 37) pleads that the agreement dated the 15th April, 1987 is void. The Court is asked to make an order for restitution and/or recision of the agreement of that date in exercise of a Courts inherent jurisdiction. If this order were made Mr. Goodman would have no standing.

71. However, this relief is not pleaded in the actions nor is it prayed for in the Notices of Motion before this Court. It is ultra petita and, accordingly, can not be considered.

72. The Court has made no finding with regards to illegal, deceitful or fraudulent agreements. It has held that there was a breach of the agreement by Mr. Zakaria El Taher and that, according to the terms of the Joint Venture Agreement in 1986, that agreement ceased. There is, accordingly, no adequate grounds to strike out the Notices for this reason.

73. There is an arguable case that each of the indemnities are limited in their scope. While the Court does not have to determine this discrete issue at this stage, once there is an arguable ground it is not appropriate to consider this ground as adequate to sustain a strike out of any pleadings.

74. Mr. El Taher submits that his son did not breach the confidentiality clause contained in the second part of the Deed of Indemnity and that it is not proper for Mr. Goodman to penalise his son by refusing to honour his (Mr. Goodmans) liabilities under the Deed of Indemnity for not participating in what Mr. Zakaria El Taher calls the “web of deceit of Mr. Goodman”.

75. I have already held that the finding of deceit depends of the proof of intention; that there is no such finding in the Judgment of the 11th September, 2001 and, indeed, that there is no finding of fraud in that Judgment. Any such consideration must await oral evidence.

76. He refers to his letter of the 8th September, 1988 when he wrote to his Solicitors, Matheson Ormsby and Prentice, stating that the deadlock provisions can only apply between Mr. Phelan and himself personally and that the counteroffer in the deadlock situation could only be made by him and no-one was entitled to make such a counteroffer without obtaining his prior written approval. In this regard Mr. El Taher says that he does not wish to be used as a scape goat in the trial. He says that Mr. Crowley misrepresented his involvement to Mr. Phelan and played a major part in the exercise of the deadlock provision. He referred, without exhibiting same, to memoranda and communications that Zakaria El Taher was still representing 50% shareholding in 1988. No point was taken by Mr. O’Donnell SC in respect of these references other than to emphasise the necessity of exhibiting relevant documents appropriately.

77. This submission relates to the involvement of parties other than those in this application. The Court would require findings of fact not presently available in relation to Mr. Goodman and to the MMP Group of companies and to the above named persons in this regard.

78. The Court cannot say, at this juncture, that the claims, made by way of Notice of indemnity and contribution, should be struck out. There is room for considering what existing evidence should be accepted and how it should be interpreted. More importantly further evidence is necessary to prove intention and to resolve conflicts.

79. The Affidavits, as analysed reflect an incomplete picture of complex claim of breach of contract, conspiracy and allegations of fraud. The documentary evidence by way of Affidavit has not been subject to cross or to re-examination.