Court of Appeal in Northern Ireland Decisions

1. This is an appeal by leave from a decision of Girvan J given on 8 February 1999, whereby he affirmed an order made by Master Ellison on 23 June 1998 dismissing the action. That order was made on foot of a summons dated 1 May 1998 brought by the respondents for an order striking out the proceedings commenced by the appellants by writ of summons issued on 6 April 1998, on the ground that there was pending in the High Court of the Republic of Ireland an action between the appellant and the respondents involving the same causes of action and/or the same subject matter of dispute and that the action was frivolous, vexatious and an abuse of the process of the court. There is also before the court an application for the extension of time for service of the notice of appeal, which was served on 24 March 1999, the time limited by the judge having expired the previous day.

2. The arguments put before us ranged over a number of difficult issues, which were presented to us with notable skill and industry by counsel on each side. It is in no respect a reflection on the quality of their submissions if we decide the appeal on a relatively narrow ground and absolve ourselves from the necessity of investigating and ruling on several of the issues dealt with by counsel in the course of argument.

3. The facts were set out fully and clearly by the learned judge in his written judgment and we shall give only a summary version of them in this judgment. The appellant company was incorporated in Northern Ireland in April 1981, originally under the name of Ulster Natural Resources Ltd, and changed its name to Lough Neagh Exploration Ltd in 1991. It was formed to carry out petroleum exploration activities in Northern Ireland and the Republic of Ireland and elsewhere. The appellant company underwent a capital reconstruction in early 1999 in an attempt to raise funds, but the ordinary shareholding has at all material times been held in the same proportions: 10.28 per cent by Mr James F Kenny and the balance by a company in Northern Ireland bearing the appellant's former name of Ulster Natural Resources Ltd, the shares in which are held equally by Mr Kenny and the first-named respondent Ms Susan Morrice.

4. From about 1977 Mr Kenny was interested in prospecting for petroleum deposits in an area known as the North West Carboniferous Basin (NWCB), which extends over a substantial part of north west Ireland and is situate partly in the Republic of Ireland and partly in Northern Ireland. Until 1989 he did so on behalf of other companies, in particular North West Oil & Gas Ltd, of which he became managing director in 1980. Ms Morrice was also engaged in consultancy work for North West Oil & Gas Ltd and other companies between about 1982 and 1989. A company named Marathon Petroleum Corporation had held a prospecting licence from the Government of the Republic for the period 1960-80, and had carried out exploratory work, but had not been successful in finding deposits of commercial use. During the 1980s several companies engaged in exploratory drilling and the acquisition of seismic data, preparatory to obtaining petroleum licences from the two governments for the extraction of deposits. The results do not appear to have been encouraging, for these companies all eventually gave up their efforts and turned to other fields of activity.

5. In 1989 Mr Kenny acquired the appellant company, then still named Ulster Natural Resources Ltd, and in 1990 he transferred a 50 per cent interest in it to Ms Morrice. In consultation with Ms Morrice he bought from North West Exploration plc (the renamed North West Oil & Gas Ltd) its petroleum assets, which included a licence PL9/88 in respect of an area in Northern Ireland and a quantity of seismic and other exploration data. This material, much of which was stored in England in the care of the Hays Information Management Company, is of importance to a prospecting concern, which is saved much time and labour if it does not have to repeat the exploration work to which it relates. In December 1990 Mr Kenny transferred the data to the appellant for the sum of £20,000. When Ms Morrice became a 50 per cent shareholder in the appellant company she funded half of that consideration.

6. On 25 July 1991 Ms Morrice entered into an agreement with the appellant to act as consultant for a period of three years. Clause 3.1 of that agreement provided:

7. In 1995 Ms Morrice informed Mr Kenny that she was helping a Denver company, Priority Oil & Gas Ltd, to carry out an economic study of the NWCB oil and gas reserves, with a view to carrying out further work if the results proved encouraging. She wanted seismic data from the appellant, which Mr Kenny was unwilling to furnish without payment. Mr Kenny claims that Ms Morrice then engaged in discussions with the Department of Economic Development in Northern Ireland, and possibly the Department of Transport, Energy and Communications in the Republic, concerning the issue of prospecting licences in the NWCB area. He also alleges that she instructed Hays Information Management to release to her information relating to seismic data held by Hays on behalf of the appellant. In July 1996 an advertisement appeared in the press that the Minister of Transport, Energy and Communications in the Republic intended to grant a non-exclusive petroleum prospecting licence to the second respondent S Morrice & Associates and to Priority Oil & Gas Ltd over certain lands in the Republic lying within the NWCB. Mr Kenny claims that these acts by Ms Morrice were in breach of her consultancy contract and the duty of confidentiality which she owed to the appellant.

8. On 25 April 1997 the appellant issued a plenary summons in the High Court in the Republic, directed to the respondents in the present proceedings, together with Priority Oil & Gas Ltd and the Minister for Transport, Energy and Communications. It subsequently obtained leave to issue and serve the proceedings on the first three defendants out of the jurisdiction. The indorsement on the plenary summons, which is set out in an appendix to the learned judge's judgment, seeks several kinds of relief, which are based upon the following claims (a) that Ms Morrice had acted in breach of contract and her fiduciary duties to the appellant (b) that the information and scientific data are the property of the appellant (c) that any licence issued by the Minister was the property of the appellant (d) that the information rights in relation to the NWCB are the property of the appellant. The appellant accordingly sought to enforce these claims by means of a variety of injunctions and declarations, together with claims for damages.

9. The defendants to the summons entered unconditional appearances, so submitting to the jurisdiction of the Irish court in respect of all the claims contained in the summons. The appellant then brought an application for an interlocutory injunction, to which the Minister responded by applying for a mandatory injunction to require the appellant to deliver up to him all seismic field tapes in its possession. By a written judgment delivered on 8 August 1997 Laffoy J declined to accede to either application.

10. By notices of motion dated 30 June 1997 the first three defendants applied to the court for an order for security for costs and on 27 August 1997 Laffoy J made an order for security. In her written judgment she records a concession made by the appellant's counsel that there was reason to believe that the appellant would be unable to pay the costs of the defendants if they were successful in their defence of the action. By a subsequent application decided on 23 January 1998 the amount of the security was fixed at IR£128,000, to be lodged within six weeks. We were informed that it is the Irish practice to require security for only a proportion, in the region of one third, of the estimated future costs, unlike our current practice: see Deighan v Sunday Newspapers Ltd [1985] NI 9. The defendants then issued a notice of motion on 2 April 1998, seeking an order striking out the action for failure to deliver a statement of claim and failure to provide security for costs. On 12 June 1998 O'Sullivan J ordered that the action be struck out. The appellant appealed to the Supreme Court, which adjourned the appeal to allow the appellant to take steps to attempt to raise the money, but eventually dismissed the appeal on 17 May 1999.

11. The appellant's solicitors in Northern Ireland wrote a letter of claim to Ms Morrice on 5 March 1998, threatening to commence proceedings in the High Court in Northern Ireland. The respondents point to the fact that this letter was sent on the day before the expiry of the time limited for lodging the sum fixed for security for costs in the proceedings in the Republic. The writ of summons was issued on 6 April 1998 and the respondents issued the summons to strike out the action on 1 May 1998. Master Ellison made an order on 23 June 1998 striking out the action and the appellant appealed to the Chancery Judge by notice dated 29 June 1998. The appeal came on for hearing before Girvan J in December 1998 and January 1999, after the summons was amended by leave, and the judge gave his written judgment dismissing the appeal on 8 February 1999. On 26 February 1999 the appellant sought leave to appeal. On 8 March 1999 the judge ordered that the appellant give security for the costs of the appeal in the sum of £15,000, extended the time for service of the notice of appeal to 23 March and adjourned the application for leave to appeal. On 19 March 1999 the appellant lodged the sum required by way of security and on 22 March the judge gave leave to appeal. The appellant's solicitors did not serve the notice of appeal until 24 March, although they had it stamped by the Appeals and Lists Office on 23 March.

12. The respondents submitted before Girvan J and in this court that the action should be stayed on two main grounds (a) under the terms of the Convention on the Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, known as the Brussels Convention; (b) as being an abuse of the process of the court. The learned judge did not consider that Article 22 of the Convention was applicable in the events which had happened. He was not satisfied on the evidence that Article 21 applied, and left it unresolved whether the appellant could successfully rely upon Article 26. He concluded, however, that the institution of the present proceedings in Northern Ireland constituted an abuse of the process of the court and he affirmed the Master's order dismissing the action.. Mr Stephens QC on behalf of the respondents conceded that Article 22 did not apply, since there is no action now pending in the Republic, and we need not consider this provision further. Article 21, as amended by the 1978 Accession Convention, provides:

13. Since the action commenced in the Republic was finally struck out, it seems to us doubtful whether either paragraph of Article 21 can apply. In view of our conclusions on the issue of abuse of process we do not propose to consider that issue further or to analyse in detail the extent of the congruity between the causes of action contained in the respective proceedings. Similarly, we shall not express an opinion on the question whether it is possible for the respondents successfully to invoke Article 26.

14. The jurisdiction to strike out a pleading or dismiss an action on the ground that it is an abuse of the process of the court is contained both in the Rules of the Supreme Court and in the inherent jurisdiction of the court. Under RSC (NI) Order 18, rule 19(1) –

15. The inherent jurisdiction of the court to stay proceedings which are frivolous or vexatious or an abuse of its process exists independently of the power contained in the rules of court. The court's exercise of its power, whether under the rules of court or the inherent jurisdiction, is discretionary. Accordingly we as an appellate tribunal approach the judge's decision in accordance with the principles laid down by the House of Lords in Evans v Bartlam [1937] AC 473, confining ourselves essentially to reviewing the exercise of his discretion. We bear in mind the remarks of Lord Diplock in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at 220, where he said, in the context of an appeal against the refusal of an interlocutory injunction:

16. The boundaries of what may constitute an abuse of the process of the court are not fixed. As Stuart-Smith LJ said in Ashmore v British Coal Corporation [1990] 2 All ER 981 at 984, the categories are not closed and considerations of public policy and the interests of justice may be very material. He went on to quote a passage from Lord Diplock's speech in Hunter v Chief Constable of West Midlands [1982] AC 529 at 536 which underlines this point:

17. Relevant examples of the exercise of the power may be found in cases in which courts have dismissed actions (a) where the plaintiff had instituted an action in England when proceedings claiming the same relief were in being in another jurisdiction (b) where the case falls within the principle described as extended res judicata , in circumstances in which the plaintiff had brought a previous action but had failed to bring his whole claim forward in those proceedings (c) where a second action is commenced after the first has been dismissed for want of prosecution (d) where the action has been commenced, not with the genuine object of obtaining the relief specified, but for some collateral purpose. These categories may overlap, in that a particular case may fall within two or more. The present case may not fall precisely within any of the categories, but they afford examples which enable us to determine how we should apply the principle.

18. The first category may more properly be an application of the principle of estoppel, but it is not necessary to consider it in more detail, since the first action is no longer in being, although it was when the writ in the present case was issued. It shades into the second category, that of extended res judicata , which has been the subject of some judicial and academic consideration. This principle applies where the defence of estoppel proper is not available, and is based upon the inherent jurisdiction of the court to prevent an abuse of its process: see Brisbane City Council v Attorney General of Queensland [1979] AC 411 at 425, per Lord Wilberforce, approving a statement of Somervell LJ in Greenhalgh v Mallard [1947] 2 All ER 255 at 257. Some doubts have been expressed about the breadth of the principle. In Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 Lord Kilbrandon stated:

19. The High Court of Australia subsequently held in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 that Lord Kilbrandon's statement was rather too wide, and preferred to express the principle in the terms that –

20. Counsel devoted a good deal of their argument in the appeal before us to a comparison of the relief sought in the action in the Republic and that claimed in the writ of summons in the present case. Mr Stephens submitted that it was basically the same, and that where the claims in this action extended beyond that made in the action brought in the Republic these further claims were matters which could and should have been brought forward in the latter case. We do not find it necessary to express a firm view on the extent of the congruence of the subject-matter of the two claims or on the breadth of the principle of extended res judicata. We observe that in the Anshun case the court placed some emphasis on the possible inconsistency between earlier and later decisions. The same theme also appears clearly in Hunter v Chief Constable of West Midlands [1982] AC 529, where the action was commenced in order to mount a collateral attack on a final decision adverse to the plaintiff made by another court of competent jurisdiction in previous proceedings. This clearly could not arise where the first action is dismissed for failure to provide security for costs without a decision on the substantive issues in the case. We are not persuaded that it would necessarily be an abuse of the process of the court in all circumstances to commence a second action based on the same claims where the first one was dismissed on this ground. It would be possible to conceive of situations in which it would not be an abuse to commence further proceedings, and we think that much might depend on the facts and circumstances of the case and the motive of the plaintiff in initiating the second action. In the present case, however, the learned trial judge found that it was open to the appellant to pursue those matters which it then attempted to pursue in the litigation in Northern Ireland. He also found that it would have been likely to include by way of amendment in the proceedings in the Republic any additional claims which were contained in the writ issued in Northern Ireland. He did not consider that the procedural difficulties relied upon by the appellant as a reason for not including such additional claims in the action in the Republic were not insuperable and represented something of an afterthought on the part of the appellant. We agree with all of these conclusions, and are of opinion that the Anshun test was satisfied, that the matters which the appellant seeks to pursue in the present action were so relevant to the subject matter of the proceedings in the Republic that it would have been unreasonable not to include them in those proceedings.

21. There are some circumstances in which it may be regarded as an abuse of the process of the court to commence further proceedings even though the first action has not proceeded to a determination of the substantive matters in issue between the parties. In Janov v Morris [1981] 3 All ER 780 the first action had been dismissed for want of prosecution and the plaintiff then sought to commence a second action advancing the same claims. He had given no explanation of his failure to obey the peremptory order of the court in the first case to serve a summons for directions by a specified date, nor was there any indication that he was likely to comply with orders made in the second action. The Court of Appeal held that it was an abuse of the process of the court to commence the second action, Watkins LJ describing it as treating the court with "intolerable contumely". Another strand in the authorities is represented by cases in which the plaintiff is not bringing the proceedings for the bona fide purpose of litigating the issues but for some collateral purpose, which the court will regard as an abuse of its process: see, eg, Lonrho plc v Fayed [1994] 1 All ER 188 at 211, per Evans LJ.

22. The judge drew the following inference from the course of the proceedings:

23. He went on to examine the appellant's ability to pay the respondents' costs should the appellant lose this action and drew the inference that the appellant could not comply with any reasonable order for security. He continued at page 29 of his judgment:

24. The correctness of the judge's conclusion concerning the ability of the appellant to comply with an order for security is borne out by the averments in paragraphs 10 and 11 of the affidavit sworn by Mr Kenny on 8 April 1999 in connection with the appeal to the Supreme Court:

25. Mr Stephens suggested in argument that the object of the appellant in commencing the present proceedings was to gain some collateral advantage, to put pressure on the respondents to make some concession in order to avoid having to go to heavy and probably irrecoverable expense or be subjected to harm to their commercial interests. O'Sullivan J accepted at page 13 of the judgment which he gave when striking out the appellant's case in the Republic that the respondents would sustain significant commercial damage if they were delayed in raising money for their project of exploiting the licences. This was founded upon the averments to that effect made on behalf of the respondents in the proceedings in the Republic (see, eg, paragraphs 12 and 13 of the affidavit of Declan Black sworn on 20 March 1998), which do not appear to have been controverted.

26. The respondents will assuredly seek an order for security for costs if the action proceeds, and we regard it as obvious from the facts established that the appellant has no prospect of being able to comply with any order for security for costs that the court might make. Mr Morgan QC for the appellant suggested that neither the parties nor the court could know how much security would be required until an application was made and the amount was fixed. We do not think that it is necessary for the parties to go through such a procedure in order to determine the appellant's ability to comply with an order for security. It was completely unable to raise the sum of IR£128,000 required in the proceedings in the Republic. It was suggested that the issues in the present action may be more limited and the expected costs bill accordingly lower, but against that the court will on our practice require security for a larger proportion of the expected bill than is customary in the Republic. We cannot suppose that the order would order the provision of security in a materially lower sum, taking account of the complexity of the issues and the evidence which is likely to be required, and it might well be substantially higher. Even if the same or a lower sum were ordered, it seems to us clear from the evidence before us that the appellant could not raise any amount which a court would be likely to fix.

27. We accordingly are in entire agreement with the judge's conclusion that the appellant has no prospect of satisfying an order for security for costs. In our view it commenced the present action knowing that it would be unable to comply with the order made in the proceedings in the Republic and equally unable to comply with an order for security if made in this action. In our opinion that is vexations, oppresive and an abuse of the process of the court. We consider that it would be unfair to the respondents to allow the action to proceed when the inevitable conclusion will be that it will be stayed in due course, after the expenditure of further costs and the consumption of more time, with the probable consequence of damage to their commercial interests.

28. We therefore conclude that the appellant has not made out a sufficient case for us to interfere with the judge's exercise of his discretion. Further, we consider that his decision was correct and fully justified on the evidence which he had before him. We have taken account of the matters urged upon us by Mr Stephens in respect of the extension of time, but are of the view that it would be proper to grant the extension sought of one day until 24 March 1999. We accordingly extend the time for service of the notice of appeal, but dismiss the appeal.