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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Allied Irish Banks Plc -v- Aqua Fresh Fish Ltd [2015] IEHC 184 (27 March 2015)
URL: http://www.bailii.org/ie/cases/IEHC/2015/H184.html
Cite as: [2015] IEHC 184
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Judgment
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Neutral Citation: [2015] IEHC 184 THE HIGH COURT [2012 No. 618 Sp] BETWEEN ALLIED IRISH BANKS plc PLAINTIFF AND
AQUA FRESH FISH LIMITED DEFENDANT JUDGMENT of Mr. Justice Keane delivered on the 27th March 2015 Introduction 2. The application arises in proceedings in which the plaintiff bank (“the bank”) seeks an order for possession and, if necessary, one for sale of certain lands mortgaged to the bank by the company (“the property”). Background 4. The special summons is grounded upon an affidavit of Robert Amerlynck, sworn on the 28th February 2013. Mr Amerlynck is an assistant manager employed at the insolvency and debt recovery unit of the bank. Mr Amerlynck exhibits a copy of the mortgage, which records on its face that it was given under the common seal of the company in the presence of Adrian Flynn and Patricia Flynn as directors. The mortgage recites that it incorporates the bank’s mortgage conditions (2009 Edition) (“the conditions”). The conditions are also exhibited to Mr Amerlynck’s affidavit. 5. The mortgage provides that the property is charged in favour of the bank as security for the payment and discharge of the “[t]otal [d]ebt.” The “[t]otal [d]ebt” is defined (at clause 2.1. of the conditions) to include all amounts payable in respect of any loans or credits made or granted by the bank to the company “now or at any time in the future.” 6. Mr Amerlynck exhibits a copy of the particular Land Registry Folio for County Louth in respect of the property, which records that the company was registered as owner on the 3rd September 2007 and that the bank’s mortgage was registered as a burden on the 11th March 2010. Mr Amerlynck further avers that the mortgage was duly registered in the Companies Office on the 25th February 2010 and he exhibits a company report containing a note to that effect. 7. Mr Amerlynck deposes that the company borrowed €155,615 from the bank for working capital on or about the 1st March 2011, which the company failed to repay in accordance with the terms of the said loan. Mr Amerlynck avers that, on the 15th June 2012, the company was indebted to the bank in the sum of €170,880.82, comprising €165,710.16 in respect of the said loan plus interest, together with €5,170.66 in respect of the company’s current account with the bank. Mr Amerlynck goes on to aver that a demand for repayment of that sum was made by letter dated the 17th July 2012 but that, despite that demand, the company failed to pay the monies due and, in consequence, the bank became entitled to exercise its powers under the mortgage. Mr Amerlynck further deposes that, while the bank demanded possession of the premises pursuant to the terms of the mortgage by letter dated the 24th July 2012, the company failed to deliver up possession of the property. The history of the proceedings 9. In the affidavit that he swore on the 26th April 2013 to ground that ex parte application, Mr Flynn identified himself as the managing director of the company. Mr Flynn went on to aver that he was seeking to act on the company’s behalf in the proceedings as an authorised agent of the company because of the company’s lack of funds to engage a solicitor or counsel. At paragraph 9 of his affidavit, Mr Flynn averred as follows: “I further say that we have a strong and valid defence to the plaintiff’s claim.” Mr Flynn did not disclose what that defence is. Accordingly, insofar as it was material, neither the strength nor the validity (nor, indeed, the existence) of the company’s proposed defence could have been assessed by the Court. 10. In a ruling delivered on the 14th May 2013, the High Court (in the person of Peart J.) refused Mr Flynn’s application on the basis of the evidence then before it and in reliance upon an established line of judicial authority to which I will return later in this judgment. 11. Mr Flynn appealed that decision to the Supreme Court. There is very little information before this Court concerning the circumstances in which that occurred. However, the Supreme Court made an Order on the 29th November 2013, reciting that Mr Flynn - as managing director, chairman, company secretary and majority shareholder of the company - had brought a motion ex parte for certain interlocutory orders in respect of his appeal, and ordering that Mr Flynn be allowed to enter an appearance on behalf of the company in the proceedings, before going on to order as follows:
13. On the same day that Mr Flynn entered the said “conditional appearance” on behalf of the company, the bank successfully applied to the Master ex parte for an Order, pursuant to the terms of Order 63, rule 1(15) of the Rules of the Superior Courts (“the RSC”) permitting it to correct a clerical error on the face of the special summons whereby reference was wrongly made to “an affidavit of Tom O’Reilly to be filed,” whereas the grounding affidavit subsequently sworn was actually that of Robert Amerlynck. Order 63, rule 4 of the RSC provides that such applications may be made ex parte. The Master gave the bank liberty to amend the special summons by the deletion of the name “Tom O’Reilly” and the insertion in its place of the name “Robert Amerlynck.” The present application 15. In the same notice of motion, Mr Flynn also seeks a number of other reliefs, principal among which is an Order setting aside the Order of the Master already described, permitting the bank to amend its special summons. In seeking that particular relief, Mr Flynn invokes the terms of Order 52, rule 3 of the RSC, although that rule does not appear to cover the case, and does so on two grounds: first, that the bank did not put the company on notice of the application (although Order 63, rule 4 of the RSC clearly states that such applications may be made ex parte); and second, that the bank was somehow precluded from making the application because the appearance entered on behalf of the company by Mr Flynn is only a “conditional appearance” (which, as already mentioned, Mr Flynn appears to believe acts as a stay on the proceedings). 16. In any event, it seems to me that I should not proceed to consider Mr Flynn’s application for that, or any other, relief on behalf of the company unless and until I am satisfied that he should be permitted to represent the company as an unqualified advocate. Accordingly, that is the issue that I must now consider. 17. Although Mr Flynn complains in the affidavit that he swore on the 23rd April 2014 to ground the present application that its contents may not be complete due to the shortness of time available to him for its preparation, I note that it runs to approximately 55 pages and comprises 175 numbered paragraphs of closely spaced type. No doubt, Mr Flynn would borrow a phrase from Blaise Pascal in submitting that he made his affidavit very long because he did not have the leisure to make it shorter. 18. A significant portion of Mr Flynn’s affidavit is devoted to setting out the background to the company’s formation and its ill-fated activities. Mr Flynn avers that he incorporated the company as a vehicle for a business that he proposed to establish to engage in the sale of land-based fish farming equipment and, it would seem, to engage directly in the aquaculture of the Australian Barramundi fish species at the company’s own premises in Ireland. Mr Flynn further avers that both he and his immediate and extended family invested heavily in the business, and that he and his wife borrowed extensively in order to do so. Mr Flynn blames various state agencies, regulators and planning authorities for the failure of his business and avers that he is preparing a complaint to the Ombudsman, which, he asserts, prevents him from going into detail in that regard. 19. Elsewhere in his affidavit, Mr Flynn repeats his earlier averments that the company no longer has sufficient funds to engage a solicitor or counsel and goes on to refer to, and exhibit, various e-mail requests for legal advice or assistance that he has made to certain university law faculties, two voluntary organisations and the Legal Aid Board without success. Mr Flynn also repeats his earlier averment that the company has “a strong and valid defence” to the bank’s claim, although, once again, he does not identify, much less explain, what that defence is. 20. The preponderance of Mr Flynn’s lengthy affidavit comprises, in effect, legal submissions in support of his application for permission to represent the company as an unqualified advocate for the purpose of the proceedings. 21. By Order made on the 24th June 2014, Gilligan J. gave directions for the hearing of the application, including directions governing the exchange of written submissions. 22. I heard the application on the 12th and 13th November 2014. For reasons that will become evident later in this judgment, in the course of the hearing I asked Mr Flynn if he was in a position to identify the “strong and valid” defence upon which the company intends to rely in answer to the bank’s claim for possession of the mortgaged lands. In response, Mr Flynn subsequently produced a written document that sets out 33 purported separate grounds of defence. It is noteworthy that nowhere in that document, or in either of the two affidavits Mr Flynn has sworn on the company’s behalf for the purpose of the present application, does the company deny that it borrowed the monies now in dispute from the bank, that it mortgaged the lands at issue to the bank as security for its borrowings, or that it has failed to repay those monies. Instead, in broad terms the defence comprises: first, a series of complaints alleging procedural unfairness and a want of form in the progress of the proceedings to date; second a series of technical objections to the validity of the mortgage deed upon which the bank relies; third, a series of technical objections to the validity of the loan agreement between the company and the bank; fourth, a series of technical objections to the validity of the demand for repayment of the loan made by the bank; fifth, a bare assertion that the bank’s solicitors acted for both the bank and the company in the relevant transactions, thereby creating a conflict of interest; sixth, a bare assertion that the company had a collateral agreement with the bank whereby it was only required to make repayments on its indebtedness for a period of one year; seventh, a bare assertion that the bank was negligent in lending to the company; eighth, a series of technical objections to the bank’s locus standi to bring or maintain the proceedings; and ninth, a bare assertion that “Land and Conveyancing Act 2009 unconstitutional.” Mr Flynn submitted that this was only an outline defence and sought to reserve the company’s right to enter a full and proper defence if he is granted permission to act as the company’s legal representative. 23. I propose to deal with Mr Flynn’s application in two stages. First, I must consider on what basis, if any, in principle a director of a company, who is neither a solicitor nor a barrister, may be permitted to represent that company in legal proceedings. Second, should I conclude that some basis exists upon which I may accede to such an application in principle, I must decide whether Mr. Flynn’s application for permission to represent the company as an unqualified legal advocate in this case should be granted or refused. Applicable principles
26. Mr Flynn did not cite the subsequent decision of the Supreme Court in Abbey Films v. The Attorney General [1981] I.R. 158, a case that involved a constitutional challenge to s. 15 of the Restrictive Practices Act 1972. In delivering judgment for the Court in that case, Kenny J. stated (at p. 172 of the report):
28. In answering the question posed, O’Neill J. had particular regard to the following passage from the judgment of Somers J. in the New Zealand Court of Appeal decision in G.J. Mannix Limited [1984] 1 N.Z.L.R. 309 (at 316):
[32] It is a well settled principle of our system of jurisprudence that what is not argued is not decided. In my view the judgment of the Supreme Court in Battle v. Irish Art Promotion Centre Ltd [1968] I.R. 252 is not to be seen as an authority which excludes an inherent jurisdiction in this court to manage and control it own proceedings and in rare and exceptional cases to permit an unqualified advocate to represent another litigant. [33] I am satisfied that this court does possess such an inherent jursidiction and that I should deal with the application of Mrs. Coffey accordingly.” 31. In giving judgment for the Court, Fennelly J. considered that the representation of companies may well present a particular aspect of the question of whether a lay person should be permitted to exercise a right of audience in respect of another person before the courts. Having considered the extract from the judgment of Ó Dálaigh C.J. in Battle already quoted above, Fennelly J stated:
34. This ruling proceeds from the fact that the incorporated company is, as a strict matter of law, a legal person separate from its members and from its directors and management. Nonetheless, in practice, the courts have to deal on a daily basis with difficult cases involving unrepresented companies, frequently because there are simply no funds to provide for legal representation. The company, being a purely legal or notional person, cannot speak except through a representative of some kind. If it has no legal representation, it will not be represented at all. Although that is far from ideal, it represents the present law.” 33. In a lengthy earlier passage in the judgment (at paragraphs 23 to 30), Fennelly J. had explained, and set out the rationale underpinning, the fundamental rule that the only persons who enjoy a right of audience before our courts are the parties themselves (when not legally represented), a solicitor duly and properly instructed by a party, and counsel duly instructed by a solicitor to appear for a party. Without reproducing that passage in its entirety, the pertinent propositions that I distill from it include the following:
(ii) The right of audience is regulated by law in respect of professional advocates. (iii) The right of a party to appear for him or herself and to plead his or her own case is a matter of necessity as well as of right. That it is sometimes unavoidable is not to say that it is desirable. The courts are better able to administer justice fairly and efficiently when parties are represented. (iv) Professional advocates are required to be familiar with the rules of procedure and practice which must be observed if the business of the courts is to be disposed of in as expeditious and economic a manner as is reconcilable with the requirements of justice. That is not necessarily the case with lay litigants. (v) Professional advocates are expected to approach cases with a degree of professional detachment which assists in their expeditious and economic disposition. The same cannot be expected of lay litigants. (vi) The conduct of litigation in terms of presenting the contentions of the parties in a concise and logical form, deploying and testing the evidence and examining the relevant law demands professional skills of a high order. The absence of such skills will inevitably extend the process of litigation, and in particular the duration of a trial, thereby adversely affecting other members of the public who seek access to justice in a world of finite judicial resources, adding to the cost of litigation, and - in a worst case scenario - increasing the risk that a court may reach the wrong decision. (vii) To grant unqualified persons the same rights of audience and representation as are granted to qualified professional advocates would be inimical to the integrity of the justice system, in which the public interest requires that judges should have absolute trust in the general standard of probity and high professional standards of the advocates appearing before them. (viii) Professional advocates undergo an extended and rigorous period of legal and professional training and are bound by extensive and detailed codes of professional conduct, subject to an active system of professional discipline. The grant of parallel rights of audience in the courts to unqualified persons would defeat the purpose of implementing these standards. 35. Of course, another pertinent authority is the decision already delivered by Peart J. on the 14th May 2013 in these proceedings on Mr Flynn’s prior ex parte application for permission to represent the company as an unqualified advocate. In that decision, Peart J considered the principle enunciated in Battle; the reaffirmation of that principle in Reynolds v. Malocco [1999] 2 IR 203 and in Friends of the Curragh Environment Ltd. v. An Bord Pleanála [2009] 4 I.R.; the decision of O’Neill J. in Coffey v. Tara Mines Ltd, supra, which Peart J. considered to be confined to its own facts; and the decision of the Supreme Court in Coffey, NO2GM Ltd & Ors, supra, before concluding that, subject to the limited exception identified in Coffey v. Tara Mines Ltd, the rule established in Battle still applies, which is to say that, in the absence of statutory exception, a limited company cannot be represented in court proceedings by its managing director or other officer or servant. 36. The most recent case that I have been invited to consider, is the concise though very thorough decision of Gilligan J. in McDonald v. McCaughey [2014] IEHC 455. In that case, Gilligan J. considered all of the key authorities I have already mentioned but, in addition, noted the decision of the High Court in Dublin City Council v. Marble & Granite Tiles Ltd [2009] IEHC 455, in which Laffoy J. held that a company director could not represent that company in those proceedings, observing:
The arguments 40. Doing the best I can, in the hope that I do not fundamentally misrepresent the essence of Mr. Flynn’s case, I understand him to be making two broad arguments in those submissions. The first is that the rule in Battle has not survived the entry into force of the Lisbon Treaty of the European Union on the 1st December 2009. The second argument is that, if the rule in Battle has survived the entry into force of the Lisbon Treaty, Mr Flynn’s application to represent the company falls within that category of rare and exceptional circumstances that mandates a departure from that rule in the exercise of the Court’s inherent jurisdiction, as recognised by O’Neill J in Coffey v. Tara Mines Ltd. I propose to address each of those arguments in turn. 41. In arguing that the coming into force of the Lisbon Treaty has altered the position in Irish law, Mr Flynn is evidently referring to the fact that it enshrines in European Union law the European Charter of Fundamental Rights (“the Charter”) proclaimed on the 7th December 2000. Article 52(3) of the Charter provides that, in so far as it contains rights which correspond to rights guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”), the meaning and scope of those rights shall be the same as those laid down by the Convention. 42. Accordingly, Mr Flynn points to, amongst others, the right to a fair trial under Article 47 of the Charter and Article 6 of the Convention; the right to property under Article 17 of the Charter and Article 1 of the Protocol to the Convention; privacy rights under Article 7 of the Charter and Article 8 of the Convention; the right to freedom from discrimination under Article 21 of the Charter and Article 14 of the Convention; the right to equality before the law under Article 20 of the Charter; and the right to an effective remedy for the violation of any Convention right under Article 47 of the Charter and Article 13 of the Convention. 43. As I understand the argument he makes, Mr Flynn appears to be saying that, in so far as the company is entitled to avail of the rights just described, those rights, whether considered individually or in combination, either prevent the application of the rule in Battle by this Court or, differently put, operate to confer an entitlement on Mr Flynn to represent the company as an unqualified advocate. There are two fundamental problems with that submission. 44. The first problem is that the Charter does not apply to the Member States of the European Union (EU) in all circumstances. Article 51 thereof provides in relevant part as follows:
45. In the case of C 206/13 Cruciano Siragusa v Regione Sicilia, a judgment delivered on the 6th March 2014, the Court of Justice of the European Union (CJEU) identified the following framework for determining whether any national law involves the implementation of EU law (at paragraph 25 of its judgment):
47. However, the CJEU found that the case did not come within the scope of application of the Charter. In this regard the court noted that EU law imposed no obligations to protect the landscape akin to those laid down by Italian law. The court further noted, at paras. 27-33, that the objectives pursued by the Italian law concerned were not the same as those pursued by the various provisions of EU environmental law. The court also stated, at paragraph 29 of its judgment, that the fact that a particular provision of national law “is capable of indirectly affecting the operation of a common organisation of the agricultural markets cannot in itself constitute a sufficient connection between that legislation and EU law” to bring a particular situation within the scope of the Charter. 48. The present proceedings are a mortgage suit for possession of lands brought by a bank against a company. No attempt has been made on behalf of the company to demonstrate that the legislation under which they have been brought, the Land and Conveyancing Law Reform Act 2009, is intended to implement a provision of EU law, or to demonstrate that there are specific rules of EU law on the relevant matters governed by that legislation or capable of affecting them. 49. In the circumstances, Mr Flynn has failed to satisfy me that the present case is capable of coming within the scope of the Charter and, in consequence, has failed to satisfy me that the company is entitled to invoke its provisions for the purpose of the present application. 50. Even if that were not so, it has frequently been observed that the Charter largely represents a re-affirmation of rights already protected both by EU law and by the domestic law of the Member States. In the case of J. McB. v. L.E. [2010] 4 IR 433, Mc Menamin J. stated as follows (at p. 476):
52. For the sake of completeness in this context, I should also say that I reject as unstateable the various other arguments put forward by Mr Flynn in support of his asserted entitlement to represent the company, to wit: that the company is a minor since it is less than eighteen years old and, therefore, has an entitlement to be represented by a next friend in accordance with the applicable statutory provisions, or that the company has a disability, on the basis that it cannot think or speak for itself and should for that reason be afforded the protection of Mr Flynn as its next friend. Suffice it to say that the statutory provisions enacted to provide special protection to the vulnerable categories of disabled and minor persons self-evidently have no application to artificial persons such as the defendant company. I reject, as similarly unstateable, Mr Flynn’s submission that he should be permitted to appear as legal representative of the company in its defence of the present mortgage suit by reference to a strained analogy with the right of a minority shareholder to seek leave to bring a derivative action on the company’s behalf. Conclusion 54. Mr Flynn has several times averred that the company lacks the funds to instruct solicitor or counsel. He has also asserted, more obviously in argument than in evidence, that neither the company’s directors nor its shareholders are in a position to put it in funds for that purpose. Mr Flynn produced various bank statements and company accounts at the hearing of the application that he sought to rely upon in support of those propositions, although they had not been put in evidence. Nevertheless, I am prepared to accept for the purpose of argument, that neither the company nor any of its directors or shareholders has the funds to retain legal representation on the company’s behalf. 55. However, corporate and personal impecuniosity has never been rare and, sadly, is at present very common. 56. Moreover, in accepting the impecuniosity of the company and of Mr Flynn, I must also take into account the implications for others of the privilege he seeks, that of mounting a defence on behalf of the company as a lay advocate. Since Mr Flynn is not himself a defendant to the action, he would have no potential exposure in costs, regardless of the manner in which the defence may be conducted. Similarly, Mr. Flynn would not be subject to professional oversight or discipline in relation to his conduct of the defence. The bank, on the other hand, faces every prospect of incurring irrecoverable costs in meeting any such defence, should it be successful in doing so. 57. As noted earlier in this judgment, Mr Flynn has several times averred that the company has “a strong and valid defence” to the bank’s claim, although that defence was not identified until, in the course of the hearing, he produced the “points for a defence” document already referred to, which purports to set out, non-exhaustively, 33 separate grounds of defence. Of course, the assertion by a corporate defendant that it has a good defence to a claim against it is, in itself, neither rare nor exceptional. As I understand it, Mr Flynn makes two points in that regard. First, he does not accept that the company should have to establish anything akin to a fair or reasonable probability of having a real or bona fide defence defence as part of the Court’s consideration of whether rare and exceptional circumstances have been made out. In the alternative, he contends that, by reference to the contents of the document concerned, the company has met that test. 58. I am satisfied that it is appropriate to consider whether the company has made out a fair or reasonable probability of having a real or bona fide defence as part of the broader consideration of whether rare and exceptional circumstances have been established. In that regard, I am in complete agreement with the views expressed by Gilligan J. in McDonald v. McCaughey, supra. To hold otherwise would be to disregard both the fair trial rights of other litigants and the requirements of the proper administration of justice. 59. I draw support for that conclusion from the judgment of CJEU in the case of DEB Deutsche Energiehandels- und Beratungsgesellschaft mbH, Case C-279/09, 22nd December 2010. In that case, the CJEU was concerned with a question arising from the refusal of the German courts to grant legal aid to a company that wished to sue that Member State for an alleged delay in the transposition of certain Directives establishing common rules for the internal market in natural gas as a result of which that company claimed it had suffered substantial losses and had been rendered impecunious. The CJEU was asked to consider whether EU law and, in particular, the principle of effectiveness precludes a national rule under which a person does not qualify for legal aid. In concluding that it was not impossible for legal persons to rely on the principle of effectiveness, which may cover the assistance of a lawyer, the CJEU pointed out that it was for the national court to ascertain whether the conditions for granting legal aid pass the test of proportionality in so far as they constitute a limitation on the right of access to the courts, and that, in making that assessment, the national court must take into consideration, inter alia, “whether the applicant has a reasonable chance of success.” 60. I cite the foregoing authority merely as an example of what I consider to be the well-established principle in both domestic and European Union law that, in considering matters such as civil legal aid or the lay representation of a corporate litigant in civil proceedings, it is perfectly appropriate, indeed necessary, that some regard should be had to the arguability of the case that the party concerned is seeking to make with the benefit of that assistance. 61. In whatever way the appropriate test is precisely formulated, the company in this case has failed to satisfy me that it has made out a fair or reasonable probability of having a real or bona fide defence, or that it has a valid bona fide arguable point on the known facts and the applicable law, or that it has raised any defence with a reasonable chance of success. Bearing in mind the established proposition that mere assertion on affidavit is insufficient to make out an arguable defence, I can find no evidence in the case to support those defences that rely on assertions of fact, such as the alleged existence of a collateral contract, the alleged negligence on the part of the bank, or the alleged conflict of interest on the part of the bank’s solicitors. Nor am I satisfied that any of the legal issues raised in the “points for a defence” document is sufficient to establish a fair or reasonable probability of the company having a real or bona fide defence. It seems to me that it would be entirely wrong to accept that a bald assertion, such as “Land and Conveyancing Act 2009 unconstitutional,” at least without some significant elaboration or explanation, could ever form the basis for a conclusion that a fair or reasonable probability of a real or bona fide defence has been made out. 62. To the finding I have just made I would add that I know of no reason why the undoubted industry and energy that Mr Flynn has brought to bear in arguing for the company’s right to be represented by him as lay advocate, could not have been applied instead, or in addition, to the task of putting on affidavit the evidence (as opposed to legal argument) necessary to support any defence the company would wish to make. Nor do I see any reason why that could not still be done. It would then be for the appropriate court to consider that evidence as part of the overall evidence in the proceedings in light of both the applicable law and the matters that it is necessary for the bank to prove in order to obtain the relief that it seeks against the company. 63. I therefore conclude that this case does not come within the category of rare and exceptional circumstances that would warrant a departure from the rule in Battle. Accordingly, the application must be refused. |