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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> IBB Internet Services Ltd & Ors -v- Motorola Ltd [2011] IEHC 504 (09 November 2011)
URL: http://www.bailii.org/ie/cases/IEHC/2011/H504.html
Cite as: [2011] IEHC 504
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Judgment Title: IBB Internet Services Ltd & Ors -v- Motorola Ltd Composition of Court: Judgment by: Clarke J. Status of Judgment: Approved |
Neutral Citation Number: [2011] IEHC 504 THE HIGH COURT COMMERCIAL 2010 11862 P BETWEEN IBB INTERNET SERVICES LIMITED, IRISH BROADBAND INTERNET SERVICES LIMITED (TRADING AS IMAGINE NETWORKS) AND IMAGINE COMMUNICATIONS GROUP LIMITED PLAINTIFFS AND
MOTOROLA LIMITED DEFENDANT JUDGMENT of Mr. Justice Clarke delivered the 9th November, 2011 1. Introduction 1.2 It needs to be noted that one of the consequences of that clear distinction is that, where the promoters of a corporate enterprise choose to run their business through a series of companies, each of those companies has a separate legal existence and personality separate not just from the ultimate beneficial owners but also one from the other. It is, of course, a matter of choice for the promoters as to what corporate structure they wish to put in place at the outset. However, where those promoters choose to form a group of connected companies, the relevant promoters concerned create a situation where there are a number of separate corporate entities each with its own separate legal existence and personality but where there may be some form of interlocking shareholding arrangements which give it its group structure. There may be many reasons why those behind a commercial enterprise choose not just to establish a company through which to carry on their enterprise, but choose to establish a number of interlocking companies within a group. One must assume that, at least in most cases, the division of the company’s assets and business into separate companies is considered to have an advantage. This may well be so, not least, perhaps, because each separate company has its own limited liability. It follows that, again ordinarily and subject to very limited exceptions, the debts of one company cannot be visited on another company within the group unless there are in place obligations, such as cross guarantees, whereby the liabilities of one company are guaranteed by others. 1.3 The fact that such a structure may be seen to be advantageous does not, of course, mean that it may not also give rise to problems in certain circumstances. While the promoters may look on each company as forming part of one large group, the fact that they have chosen to establish a series of interconnected companies, means that, for many purposes, each company must be looked on as a separate entity with its own assets and liabilities. That circumstance provides the backdrop to the difficulty which has arisen in these proceedings and to the application now brought by the defendants (“Motorola”) which seeks to have the current statement of claim struck out. In order to understand the precise issues which have arisen, it is necessary to say a little about the factual background to the issues which arise in these proceedings generally. 2. Factual Background 2.2 Leaving aside for the moment the separate identity of the various companies within the Imagine group, at a general level complaint is made that Motorola failed in its obligations under the contracts to which I have referred both as to the speed with which the relevant network was rolled out and as to the quality of the services provided. Motorola denies any failing on its part. Obviously a full trial will be required to determine the accuracy or otherwise of those allegations. The problem that has emerged, so far as the proceedings are concerned, is as to the precise company or companies within the Imagine group that can properly be said to have a legal claim to damages in the event that it is established, at trial, that Motorola is guilty of breach of contract. That difficulty has led to a significant complication in the pleading of this case which has already been the subject of a decision of Kelly J. (IBB Internet Services Limited & Ors v. Motorola Limited [2011] IEHC 253). Against that background I now turn to the procedural history relevant to the application which I have to decide. 3. Procedural History 3.2 For the reasons set out in that judgment Kelly J. made an order which, in relevant part, provides for the following:-
The court doth grant leave to the Plaintiffs for the delivery of a re-amended Statement of Claim And the Court doth direct that that document must set out the case which the Plaintiffs wish to make and the facts which they propose to rely upon And the court doth direct that the plaintiffs’ re-amended Statement of Claim must be pleaded in such a way as to make any request for further particulars unnecessary And the court doth direct that the plaintiffs’ re-amended Statement of Claim must contain full particulars of all factual matters which will be relied upon as part of the plaintiffs’ case”(sic.).
B. it is also said that the re-amended statement of claim contains amendments or changes which were not authorised by that order; and C. it is said that the re-amended statement of claim is, in any event, such as would tend to prejudice or delay the fair trial of the action (and thus is, in the slightly old fashioned term used in this context, embarrassing) and, therefore, liable to be struck out under O. 19, r. 27 of the Rules of the Superior Courts. 4. The Order of the 6th July 4.2 However, I am not satisfied that the permission given to the Imagine Companies to amend their statement of claim is as narrow as Motorola suggests. The order notes that the Imagine Companies are to be given “a final opportunity to make the case which they wish” and goes on to give leave for the delivery of a re-amended statement of claim. There is nothing in the form of the order which suggests that the leave to amend is being restricted within the parameters of the argument addressed by counsel at the hearing which led to that order. I am not, therefore, satisfied that the order of the 6th July imposed a limitation on the Imagine Companies which required them to confine any amendments to the statement of claim to issues which were addressed in the course of argument before Kelly J.. On the basis of that interpretation it seems to me that the argument put forward by Motorola under that heading must necessarily fail. 4.3 The second issue of contention between the parties as to the proper interpretation of the order of the 6th July stems from the detailed additional requirements contained in the order which specify that the re-amended statement of claim must set out the facts which the Imagine Companies propose to rely on, pleaded in such a way as to make any request for further particulars unnecessary, with such pleading to contain full particulars of all factual matters which are to be relied on as part of the Imagine Companies’ case. 4.4 Counsel for Motorola argues that those provisions of the order of the 6th July impose an additional obligation on the Imagine Companies to particularise their claim beyond the ordinary obligation which arises under the rules and which has been the subject of extensive case law. It is common place that even detailed statements of claim give rise to a notice for particulars whereby the defendant seeks greater detail as to aspects of the claim. The boundaries of what may legitimately be sought by way of further particulars are explored in cases such as McGee v O’Reilly [1996] 2 I.R. 229, BA Pension Trustees v McAlpine (Court of Appeal) 72 BLR 26 and Thema Institutional Fund PLC & Anor v HSBC Institutional Trust Services [Ireland] [2010] IEHC 19. In most cases, provided that the statement of claim contains sufficient information to give an appropriate outline of a plaintiff’s case, a court is most unlikely to regard the statement of claim which may lack full detail as being unsatisfactory to the point of warranting being struck out, but rather will require a defendant who feels that more detail is needed, to serve an appropriate notice for particulars. 4.5 However, it seems to me that counsel for Motorola must be correct when he argues that the specific provisions of the order of Kelly J. to which I have drawn attention must be taken to be meant to impose some additional obligation beyond what I might call the ordinary obligation to particularise a statement of claim. If the intention of Kelly J. was simply to allow a re-amended statement of claim which complied with the ordinary rules and practice as to its detail, then there would have been no need for the order to go beyond the provision which gave leave to the Imagine Companies for the delivery of a re-amended statement of claim. The following provisions of the order, and in particular the provision that required that the re-amended statement of claim “must be pleaded in such a way as to make any request for further particulars unnecessary”, would have been redundant and of no meaning if the intent was simply that the re-amended statement of claim was to comply with ordinary practice. It seems clear to me that, having regard to the unsatisfactory history of the pleading of the case as outlined by Kelly J. in his judgment, an additional burden is, by the order of the 6th July, placed on the Imagine Companies. To construe the order otherwise would be to assume that a series of provisions were included in the court’s order which had, in effect, no real meaning or effect. 4.6 There remains the question of the extent of that additional burden placed on the Imagine Companies. In the course of argument counsel for the Imagine Companies suggested (correctly so far as it goes) that there could hardly ever be a statement of claim in respect of which the defendant might not wish to seek some further details. However, it seems to me that the order of Kelly J. is carefully crafted so as to require the re-amended statement of claim to be pleaded in a way which makes any request for further particulars “unnecessary”. There may well be information which a defendant might find interesting and which, at some stage, that defendant might be entitled to have before the case comes on for hearing. However, it might not be “necessary” for the defendant to have that information to properly understand the plaintiff’s case. It seems to me that the test of compliance with the order of the 6th July must be to consider whether there are aspects of the re-amended statement of claim in respect of which particulars would be “necessary”. I propose applying that test to those aspects of the statement of claim in respect of which complaint is made. 5. Motorola’s Complaints 5.2 However, in addition to that case a plea is made in the re-amended statement of claim which asserts a collateral agreement on which Imagine claims to be entitled to succeed. In general terms, the plea made is that, as problems were encountered, it is said, with Motorola, assurances were given which amounted to a collateral warranty that the service would ultimately be provided to an appropriate standard and on time. The matter is pleaded at para. 22 of the re-amended statement of claim in which it is said that Imagine entered into a collateral contract with Motorola whereby, in consideration of Imagine not causing Internet Services and Broadband Services to withdraw from the relevant contracts and sue for damages, Motorola, it is alleged, agreed with Imagine that it would resolve the problems concerned. 5.3 Paragraph 22 in turn refers back to para. 21 which refers to various representations and warranties allegedly given by Motorola as having occurred “during October, November and December, 2009 and January and February, 2010”. It is as a result of those representations and warranties that Motorola is said to have entered into the collateral contract to which I have referred. 5.4 While one could, in ordinary circumstances, debate the extent to which it was “necessary” to get more detailed particulars of when and by whom the relevant representations were said to have been made, one particular feature of this case seems to me to put the issue beyond doubt. The principal contract in writing is a so called master services agreement (“MSA”) entered into on the 13th October, 2009, between Broadband Services and Motorola. For technical reasons which are said to be associated with equipment financing an agreement of the 10th December, 2009, (“the Novation Agreement”) was made between Motorola and Internet Services and Broadband Services as result of which, amongst other things, the MSA was novated to Internet Services. 5.5 What is striking is that both of these important contractual documents were executed at a time when it is now said that Imagine obtained the benefit of a collateral contract to which it was a party even though all parties chose to enter into written agreements, during the same period, to which Imagine was not a party. I should emphasise that nothing in this judgment should be taken as expressing any view on whether a claim of the type concerned is capable of being maintained. That is an issue for another day. However, what seems to me to be absolutely clear is that it is “necessary” for Motorola to know whether any of the representations or warranties sought to be relied on (and thus the collateral contract deriving from them) were made either before the MSA was executed, between the execution of the MSA and the Novation Agreement, or after the Novation Agreement. Those particulars are not simply matters of detail but matters of significant substance which have the potential to play a very significant role in the case. To put it neutrally there will at least be a question as to whether representations given before the Novation Agreement could be said to confer legal rights directly on Imagine in circumstances where the parties entered into that Novation Agreement and where for whatever reason Imagine was not to be a party to the MSA but Internet Services was. 5.6 It seems to me to follow from that analysis that the re-amended statement of claim is not one which, in the words of the order of the 6th July, makes “any request for further particulars unnecessary”. I am satisfied that the re-amended statement of claim fails to meet the standard imposed by that order in a significant and material way and not just in a minor or technical way which might legitimately be overlooked or be capable of being easily remedied. 6. Consequences 6.2 It is important to emphasise that Motorola did not, in this application, seek to have the proceedings themselves struck out. Rather it is the statement of claim which was sought to be struck out. 6.3 It follows that, immediately after the striking out of the statement of claim, there will remain an obligation on the Imagine Companies to file a statement of claim. I propose to give the Imagine Companies an opportunity to file a new statement of claim within such time as may be fixed following discussion with counsel. I further propose to give directions, not dissimilar to those included by Kelly J. in the order of the 6th July, as to the content of that new statement of claim. So as to minimise the risk of further difficulties it seems to me that I should record that at least some of the other complaints made by Motorola concerning the “new” elements of the statement of claim and the extent to which those new elements were not particularised were also well founded. While particulars are given as to the basis on which it is contended that a whole series of companies within the Imagine group (including but not limited to the plaintiffs in these proceedings) form a single economic entity, no particulars are given as to how it is said, separately, that Broadband Services and Internet Services together form a single economic entity. It is, in my view, legitimate for such a plea to be included in the alternative. However, it does not seem to me, given that it is an alternative plea, that the particulars set out for suggesting that a whole range of companies form a single economic entity can also be used to properly elucidate the separate claim to the effect that just those two companies are a single economic entity. In addition, I am not satisfied that the re-amended statement of claim sets out with any sufficient clarity the basis, ultimately articulated by counsel in argument, for suggesting that the damages that could be due to Internet Services and Broadband Services were exactly the same as the damages which would be due to Imagine under the wider single economic entity argument. 6.4 For the avoidance of doubt, I am satisfied that, if the matters which I have just addressed are remedied, the statement of claim will be sufficient to meet the requirements of the order which I intend to make. However, that does not mean that Motorola are disentitled to raise further particulars if they so wish. 6.5 For the further avoidance of doubt, it seems to me that some attempt should be made by the parties to extract, from the various particulars already sought and delivered in this case, the questions and replies which remain relevant to the case as it will now be pleaded and to include all of those particulars in a single document which can, in due course, form an easily referable part of the pleadings. 7. Conclusions 7.2 As indicated to counsel at the close of the hearing, I will also rule on the question as to what order as to the costs of these proceedings to date is just in all the circumstances of the case when counsel have had an opportunity to consider this judgment.
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