Supreme Court sends dispute over right to benefit from sale of incomplete development to trial

About this case:

• Judgment:
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Moylist Construction Limited was involved as the contractor in a building contract involving 18 holiday homes known as the Greens at Ballybunion in Co. Kerry. Much of the funding for the purchase of the lands on which the development was to take place and the construction of the holiday homes concerned came from Ulster Bank.

Following the collapse of the Celtic Tiger economy, the developer, Mr Tom O’Carroll, found himself in debt to both Moylist for building works which were carried out but which were not paid for, and Ulster Bank arising from borrowings to finance the project.

The principal asset from which funds might be available is the development, over which Ulster Bank has the benefit of a mortgage. Ulster Bank therefore appointed a receiver under its powers arising from the mortgage.

Moylist commenced proceedings, in which they claim that the Receiver and Ulster Bank have wrongly dispossessed Moylist of its entitlement to occupy the premises on foot of the building contract which was put in place between Mr O’Carroll and Moylist.

The respondents brought applications seeking to have the proceedings dismissed as being bound to fail, which were acceded to by the High Court. Moylist therefore appealed.

Mr Justice Clarke first considered the jurisdiction of courts to strike out proceedings as being bound to fail, as identified in Barry v. Buckley I.R. 306.

This was found to be separate from the entitlement of the court to strike out proceedings under O.19, r.28 of the Rules of the Superior Courts, which allow cases to be dismissed if they do not disclose a case of action.

Rather, “the underlying basis of the jurisdiction to dismiss as being bound to fail stems from the court’s inherent entitlement to prevent an abuse of process. Bringing a case which is bound to fail is an abuse of process.” (Keohane v. Hynes I.E.S.C. 66.)

Justice Clarke found that this power was to be used sparingly, and should involve significantly limited engagement with the facts, as the “default position in respect of any proceedings is that they should go to trial.”

He further found that a court should not entertain an application to dismiss where the legal issues or questions of construction arising are themselves complex and such as would require the type of careful analysis which can only be carried out safely at a full trial and in circumstances where the facts can be fully explored.

In the current case, it was therefore “necessary to consider whether a case where the issues have to be analysed on appeal, as they were in this case, for a full days hearing, can avoid the appropriate depiction of being too complex to be properly dealt with within the ambit of a motion to dismiss as being bound to fail”.

Before considering whether this was the case, Justice Clarke addressed an argument brought by Ulster Bank and the Receiver that the case made on appeal by Moylist had different from their case before the High Court.

He noted that it may be appropriate to allow for some limited evolution in a party’s case, citing Lough Swilly Shellfish Growers Co-operative Society Ltd. & anor v. Bradley & anor 1 I.R. 227.

In cases where the party was facing a dismissal of their case, he found that there should be greater latitude given to argue further grounds for appeal, citing Lopes v. Minister for Justice, Equality and Law Reform 2 I.R.301 and I.B.R.C. v. McCaughey 1 I.R. 749.

This should therefore be considered as an additional factor when weighing the balance between a party being excluded from making a new ground, and a party having to meet a different case on appeal. That factor will not be decisive, but it may tip the balance in an appropriate case.

Turning to the facts of the case, Justice Clarke found that the issue of who should be entitled to receive the funds from a sale of the development was an issue which would require a fine analysis of the technical legal position, citing Headstart Global Fund Ltd. v. Citco Bank Nederland NV and ors I.E.H.C. 334.

Giving a brief overview of some of the legal issues, Justice Clarke noted that these included whether Moylist had a continuing entitlement to possession in circumstances where all work had ceased, whether Ulster Bank was entitled to enter into possession and whether both had rights to possession requiring an examination of which entitlement should prevail.

Justice Clarke made clear that the list of questions debated before the Supreme Court had not been exhaustive, but had required a full day of hearing.

As he had concluded that this case is not appropriate for determination on a motion to dismiss, Justice Clarke refrain from expressing any view on the merits of the points raised, “for that might be taken to interfere with the proper role of the trial judge who will now have to hear this case”.

To the extent that some of the argument ranged over issues which, it was said, had not been raised by Moylist in the High Court, the Judge was prepared to take them into account.

It was noted that quite a number of the points said to be new were, to a significant extent, purely legal or documentary and, where documentary, were based on the same documents which were already before the Court.

He concluded that: “It follows that the proceedings should now follow their ordinary course in the High Court. However, having regard to the considerable delay which has been encountered by reason of this excursion into what I have held to be an inappropriate form of summary disposal, it seems to me that every effort should be made to afford this case the earliest possible trial date in the High Court.”