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  • service less beneficial than before the Act If a person with officer status in a public body cannot be removed from office without the consent of an outside authority such as a Minister that condition while undoubtedly in the public interest must necessarily also be a substantial benefit to the officer If therefore the Oireachtas had intended to remove the requirement of the Minister s sanction it would have been necessary expressly to say so in the Act Counsel for the respondent Mr Gerard Hogan SC attempts to get around this difficulty in the following manner He says that for the purposes of section 39 at least a distinction is drawn between conditions of service and conditions in regard to tenure of office The latter expression is referred to in subsection 3 Mr Hogan then goes on to argue that if it were the case that the expression conditions of service in subsection 1 included conditions of tenure subsection 3 would be unnecessary He then submits that the necessary inference to be drawn is that the expression conditions of service in subsection 1 was never intended to include conditions of tenure I reject this argument for two quite different reasons First of all even if it were the case that subsection 3 in so far as it related to a person transferred to the new company and who immediately before the relevant vesting date held office under the Local Authorities Officers and Employees Acts 1926 to 1983 was unnecessary it would be wrong to give an artificial restrictive interpretation to subsection 1 when to do so would have the effect of adversely affecting the terms on which a harbour master of perhaps many years standing as in this particular case would be employed thenceforth in the company In my view the vested statutory right of the appellant in this case not to be removed without the sanction of the Minister for the Marine should not be considered as abolished by implication The abolition of that right would require express wording in the 1996 Act and no such express provision is contained in it The second reason for which I reject Mr Hogan s argument is that I do not agree that if conditions of service under subsection 1 include conditions of tenure subsection 3 is unnecessary The statutory regime under the Local Authorities Officers and Employees Acts 1926 to 1983 contain other provisions which are to the benefit of an employee affected by those Acts There is power for the Minister to suspend while an inquiry is conducted into an alleged failure of misconduct or unfitness and as to what the disciplinary action if any would be appropriate After the passing of the 1996 Act therefore I am satisfied that the appellant still enjoyed the same conditions of service or at least conditions of service that were not less beneficial and that these conditions of service included conditions of tenure and that therefore he could not have been dismissed without the sanction of the Minister I feel supported in the view which I have taken by the decision of the former Supreme Court in Cox v Electricity Supply Board 1943 I R 94 In that case the plaintiff was a whole time permanent officer in the service of Dublin Corporation The ESB had acquired the electrical undertaking of the Corporation by virtue of the Electricity Supply Act 1927 the plaintiff was transferred to and became a servant of the ESB upon the same terms including increment pension and superannuation rights as he was on when employed by the Corporation While employed in the Corporation the plaintiff could not be dismissed without the approval of the Minister for Local Government and Public Health The ESB purported to dismiss him without obtaining such approval The High Court and on appeal from that court the Supreme Court held that the dismissal was invalid because of the absence of the consent of the Minister In the Supreme Court counsel for Dublin Corporation argued that the expression the same terms did not include a restriction on the right of dismissal Sullivan C J who delivered the main judgment of the court had this to say at p 112 This contention is based on the proposition that the tenure by which an office is held is not a term upon which the office is held I do not doubt that the word terms has a technical meaning when used in contrast with the word tenure and that the meaning of the word may vary according to the context in which it occurs But there is nothing in the Act to indicate that the word terms in the subsection in question is used in a technical sense and in its wider meaning it would in my opinion include any provision regulating the duration of employment or prescribing the manner in which the employment may be terminated whether such provision has been agreed to by the parties or has been imposed by the legislature In my opinion we should give the word terms in section 39 subsection 9 that wider meaning and it follows that the respondent cannot be dismissed from the employment of the appellant s without the concurrence of the Minister I consider that this case strongly supports the appellant If subsection 1 of section 39 of the 1996 Act stood alone without there being included subsection 3 there could not be the slightest doubt in my opinion and particularly having regard to the Cox case that the ministerial consent would be required before dismissal For the reasons which I have already indicated I do not believe that the Oireachtas intended subsection 3 to have the effect of restricting the meaning of subsection 1 and effectively giving an artificial definition to conditions of service This brings me back to section 1 of the Harbours Amendment Act 2000 to which I referred at the beginning of this judgment Subsection 4 a of section 43 of the Harbours Act 1996 newly inserted into that Act by the said section 1 of the Act of 2000 provides as follows As respects a member of the staff of a transferor company transferred into the employment of a transferee company by an order under this section the provisions of sections 39 40 and 41 shall subject to paragraphs p and c and to the extent that they apply to that member before such transfer continue to apply to him or her after such transfer and while he or she remains in the employment of the transferee company and for this purpose references in the said provisions to a company shall be construed as references to the transferee company and the said provisions shall otherwise be construed so as to have effect in relation to the said person while he or she remains in such employment Paragraph b of the same subsection then reads as follows In the application of sections 39 40 and 41 by virtue of this subsection references however expressed to a person transferred to a company under section 38 shall be construed as including such a person who is subsequently transferred to a new company I have already cited paragraph c at the beginning of the judgment Having regard to the view which I have taken on the interpretation of section 39 of the 1996 Act it necessarily follows that notwithstanding that the appellant ceased to be a harbour master he continued to have officer status and continued to be in a position from which he could not be dismissed without the sanction of the Minister for the Marine It seems clear therefore that he has never been validly removed and is still in office I could end the judgment at that point and not deal with any of the other issues that arose but I consider that that might be unhelpful to both parties in the aftermath of this case I therefore think it helpful if I express the view that in whatever position the appellant may be retained now in the company he has no right to insist that he must report to the chief executive That particular reporting relationship was so bound up with the position of harbour master that I think that the Oireachtas must have intended that the reporting relationship would not be regarded as being included in the subsisting terms and conditions of employment At any rate the requirement that the appellant should not be put on less beneficial conditions of service must refer to conditions of service which on an objective basis were for the benefit of the employee whether they be also for the benefit of the employer or not Although a particular reporting relationship may give rise to satisfying feelings of status on the part of an employee it would seem to me that it is essentially a term of the employment which viewed objectively is exclusively for the benefit of the employer It is a management requirement It would not make sense for the Oireachtas to have intended that somebody who ceased to be a harbour master was nevertheless in whatever role he took up to report only to the chief executive I do not believe that that is a correct construction of the statutory provisions On that matter therefore I consider that the respondent s view was the correct one In all the discussions and communications between the parties after the appellant ceased to be a harbour master neither side appears to have acted reasonably or sensibly The appellant was wholly unreasonable in taking the view that he would not take on any position unless it involved reporting to the chief executive officer On the other hand the employer never properly clarified what the duties of the appellant were to be in the future and what were the precise terms and conditions on which he was in office I have very little doubt from the nature of the communications between the parties that both sides were hoping for some kind of settlement package which would have involved the resignation of the appellant from the company But what the appellant in particular did not seem to realise is that such a package would have to be agreed and could not be forced The statutory scheme only gave the appellant the right to remain in the employment It did not give him the right to receive any money from the employer in return for his leaving the employment Once it appeared that an agreement of that kind could not be reached the employer should have clarified properly what the terms and conditions of the appellant s employment were going to be and what work to be assigned to him This of course would not necessarily mean that he could not be assigned to different work in the future It would have to be work reasonably compatible with his officer status in the company and his experience as a former harbour master I do not think it would necessarily have to be a named post I do not intend to review the correspondence and discussions It was more or less conceded at the hearing of the appeal that the nearest the company came to setting out the work for which the appellant would be required to do was in correspondence which ensued in August 2001 That correspondence commenced with a letter of the 1st August 2001 from the chief executive of the company Colin Hetherington to the appellant It read as follows Dear Senan I am following up on our meeting in the Pery Square Office on 5th July and like you would wish to draw matters between us to some urgent and satisfactory conclusion Clearly the current situation with you remaining at home whilst on full pay is not sustainable and I am writing to advise that with effect from Wednesday 8th August 2001 I will require your daily attendance in the office to progress project works in the harbour master s department Alan Coghlan and myself have been working on a number of specific projects and consider that your input would be useful and appropriate in moving these forward You will report to Alan Coghlan on a day to day basis but I will of course retain an interest in the progress of these projects Please confirm by return that you will attend the office as requested I look forward to hearing you Yours sincerely Alan Coghlan was the name of the harbour master That letter was replied to as follows in a letter of the 4th August 2001 Dear Mr Hetherington I have your letter of the 1st August 2001 In your letter you referred to our meeting on the 5th July 2001 At that meeting you said you were anxious to repossess my house You agreed that you would put any proposal concerning my house in writing No other subject was raised or discussed at that meeting You said in your letter that you would wish to draw matters to some urgent and satisfactory conclusion I also would so wish because I have been living in a professional limbo since Shannon Foynes Port Company came into being on the 18th September 2000 In all this time the only proposal for my future made by Shannon Foynes Port Company is that in the letter of the company s solicitors suggesting severance discussion My own solicitors have responded positively to that proposal In the circumstances which now pertain I respectively sic request that all proposals concerning my future be made through the solicitors who both you and I have respectively retained for that purpose I am passing your letter to my solicitor so that any issues that may arise can be dealt with professionally on both sides Mr Hetherington replied to that letter by letter of the 8th August 2001 which read as follows Dear Senan I refer to my letter to you of the 1st August 2001 requiring your daily attendance in the office to progress project works in the harbour master s department effective from Wednesday the 8th August 2001 I received your response to my letter on the 7th August 2001 You have advised that all proposals regarding your future be made through your solicitors Whilst it is regrettable that you adopt that attitude in relation to a legitimate request by your employer to return to work I instructed our solicitors to contact your solicitors regarding your return I am advised by our solicitors that when they contacted Michael Houlihan and Partners they were advised that they knew nothing of the correspondence between us nor indeed the request for you to return to work Notwithstanding your request that your solicitors deal with this issue I intend to continue dealing directly with you in relation to your return to work This is a proper approach from your employer and I expect you to comply I made enquiries this morning and have been informed that you have not attended for work as requested Please be advised that if you do not attend for work tomorrow the 9th August 2001 I will have no alternative but to issue you with a formal warning regarding your failure to attend This will result in the company reassessing whether it will continue paying your salary whilst you continue to refuse to return to work If you continue to refuse to return to work further disciplinary action will be taken against you There was further subsequent correspondence more or less in the same vein which culminated in the purported dismissal Having regard to the view I have taken on the requirement to obtain ministerial consent it is not necessary to give a definitive view as to whether the procedures leading up to dismissal were fair or as to whether the appellant s conduct constituted a repudiation of his employment For the same reason I do not find it necessary to express any view on the applicability to the facts of this case of Woodar Investment Development Limited v Wimpy Construction UK Limited 1980 1 W L R 277 or as to whether it represents the law in this jurisdiction As the issue does not now arise as far as I am concerned at least I do not find it necessary to express any views on the applicability of the European Communities Safeguarding of Employees Rights on Transfer of Undertakings Regulations 1980 S I No 306 of 1980 implementing Council Directive 77 187 except to say that if the question had arisen for determination it would have had to be referred to the European Court of Justice There is one other matter which I should mention By a somewhat circuitous argument counsel for the appellant Dr Michael Forde S C also submitted that the office of harbour master was an office to which the Local Authorities Officers and Employees Acts applied The argument was somewhat undermined by the provisions of section 39 2 of the Harbours Act 1946 which expressly provided that the office of general manager of a harbour should be an office to which those Acts applied There was no equivalent provision for a harbour master If the argument was to be sustainable at all the court would have had to be brought through all the relevant provisions of the Local Authorities Officers and Employees Acts and that was not done In the event it becomes irrelevant having regard to the view which I have taken and I do not find it necessary to make any decision on it It is of some interest however that the appellant was appointed in the ordinary way as harbour master in answer to an advertisement and not by way of any local appointments commissioners This would not of course be definitive but having regard to the terms of the Local Authorities Officers and Employees Act 1926 in particular I would have doubts that the argument would be sustainable I would allow the appeal in the sense that I would set aside the order of the High Court and substitute for it a declaration that the appellant has not been validly removed from office in the employment of the respondent I would not grant any other relief Histon v Shannon Foynes Port Company 7 THE SUPREME COURT Appeal Nos 4 8 04 Geoghegan J Fennelly J Kearns J BETWEEN SENAN HISTON Plaintiff Appellant and SHANNON FOYNES PORT COMPANY Defendant Respondent JUDGMENT of Mr Justice Geoghegan delivered the 17th day of December 2004 Pursuant to the Harbours Amendment Act 2000 the former harbours of Foynes Port Company and Shannon Estuary Port Company respectively were amalgamated The new amalgamated harbour became vested in the defendant respondent company Each of the former harbour companies before amalgamation had a harbour master The appellant was the harbour master under the Foynes Port Company Without going into unnecessary factual detail about what happened on the interim changeover the end result was that the post of harbour master within the new structure was advertised and both of the former harbour masters were applicants for the post The harbour master under the Shannon Estuary Port Company was the successful applicant for the office This necessarily meant that the appellant was no longer a harbour master Section 1 of the Harbours Amendment Act 2000 was the section which provided for the transfer of functions from one company to another company but it took the form of a newly inserted section 43 into the Harbours Act 1996 Subsection 4 c of the newly inserted section 43 provided as follows Where the chief executive or the harbour master of a transferor company transfers into the employment of the transferee company then nothing in paragraph a or in the provisions applied by that section shall be construed as requiring their appointment as chief executive or harbour master respectively of the transferee company but this paragraph shall not otherwise be construed as affecting the scales of pay conditions of service and terms of office of the persons concerned It is this provision which has sowed the seeds of dissension The new employer primarily through its chief executive clearly took the view that provided the appellant received the same pay and holidays etc the statutory provision was complied with The appellant on the other hand took quite a different view From a great deal of evidence emerging both from correspondence produced and from oral evidence given in the High Court which I do not find it necessary to review it can be fairly stated that the primary concern of the appellant was what might be described as a status concern in as much as he insisted that whatever duties he had to perform henceforth for the new company were to be on the basis that he would be reporting directly to the chief executive and not to the harbour master After willingly giving advice in the early days to the harbour master of the amalgamated harbour who had always been a friend of his he effectively stopped reporting for work while still drawing his salary and claiming that he had not been offered a post suitable to his station and reporting to the chief executive The matter was somewhat further complicated in that the post of harbour master under the old company had entailed the provision of a dwelling house and the requirement that the harbour master live in it The appellant moved out of that house subsequently but did not deliver up possession and there was an allegation that he left it in some neglect All of this resulted in both correspondence and discussions with the chief executive which eventually culminated in a letter of 1st August 2001 requiring the appellant to report for duty by a particular date and to take on assignments including special projects It was clear however that the appellant would not be reporting to the chief executive The appellant failed to comply with that letter and he was then dismissed The appellant instituted this litigation in the High Court by Plenary Summons The action was dismissed by the High Court Smyth J and the appeal from that judgment is now before this court Essentially the issue on the appeal is whether he was properly dismissed or not That was also substantially the issue before the High Court I mention this because that view of the case is not really reflected in the pleadings In the general endorsement of claim on the Plenary Summons the appellant sought the following three substantial reliefs 1 A declaration that the statutory provision contained in paragraph c of subsection 4 of section 1 of the Harbours Amendment Act 2000 upon its true construction gave the defendant the option of appointing the plaintiff to the office of harbour master of the Harbour of Shannon Foynes Port Company or of compensating him for his loss of office as harbour master of the former Harbour of Foynes Harbour Trustees and Foynes Port Company by either a paying monetary compensation for or equivalent to the tenure of his office or b agreeing with him new terms of office 2 An injunction restraining the defendant from imposing on the plaintiff without his agreement conditions of service and terms of office other than those of harbour master 3 An injunction restraining the defendant from threatening or taking disciplinary action against the plaintiff for refusing to accept conditions of service and terms of office other than those of harbour master These reliefs do not seem to me to reflect the real issues between the parties Approached on its face value it is quite clear that the appellant could not possibly be entitled to the first relief There is nothing in any of the relevant statutes which provides for compensation for loss of office I appreciate that counsel for the appellant argues that the appellant has a property right and that the removal of that property right gave rise to a constitutional right to compensation In my opinion that argument is unsustainable in view of the express conditions in the Acts of 1996 and 2000 carrying over the same scales of pay conditions of service and terms of office Nor in my view would the second relief sought be sustainable since the Act quite clearly envisages that a harbour master who is no longer a harbour master under the new company will still be entitled to remain in employment under the same terms and conditions of office This must obviously mean that the employer is entitled to assign him to any suitable duties on reasonable terms and conditions that are not less beneficial The statutory provision would be unworkable if there had to be agreement on the job specification of the new works The third relief seems inappropriate in view of the fact that three days before the issue of the Plenary Summons the respondent had already purported to dismiss the appellant However having regard to the way the case was argued both in the High Court and in this court I have come to the conclusion that the real issue is whether the appellant is still in office in the company or not It is that issue which I intend to address One of the arguments put forward on behalf of the appellant was that pursuant to the relevant statutory provisions he could not be removed from office without the consent of the Minister for the Marine and indeed there was an argument that the consent of another Minister might be required also It is common case that no such consent was sought or obtained Accordingly if such consent is required the removal from office or dismissal from employment was clearly unlawful and invalid This is therefore the first question which ought to be considered In doing so I will refer to each of the relevant statutory provisions The first in time is subsection 1 of section 38 of the Harbours Act 1946 That subsection reads as follows 1 Subject to the provisions of this Act there shall from time to time be appointed to or employed in the service of a harbour authority by such authority such and so many officers including in the case of a harbour authority mentioned in Part II of the First Schedule to this Act a secretary and in every case a harbour master and a collector of rates and servants as may be necessary for the due administration management operation and maintenance of the harbour of the harbour authority It is quite clear from the wording of that subsection that a harbour master was to be regarded as an officer as distinct from a servant though I am well aware that counsel for the appellant relied also on subsection 4 of the same section which applied the Local Authorities Officers and Employees Acts 1926 and 1940 to harbour authorities I do not find it necessary to refer to that subsection at this stage I will come back to it later on in the judgment I turn now to section 44 of the 1946 Act Subsection 1 of that section reads as follows A harbour authority may suspend or with the sanction of the Minister remove any officer in their service If the appellant had been a harbour master at the time that his employer purported to dismiss him and if that subsection had been still extant there is no doubt that his removal would have been ineffective without the sanction of the Minister It is necessary now to move to the Harbours Act 1996 That Act brought major changes in the administration of harbours Most importantly it allowed the Minister establish ordinary private companies to manage a particular harbour Under section 5 of the Act the Harbours Acts 1946 to 1976 were to stand repealed in relation to a harbour in respect of which a company became established pursuant to section 7 of the 1996 Act on the relevant vesting day Section 39 of the 1996 Act contained provisions dealing with the problem of existing officers and servants of a harbour authority and provided for their transfer into the employment of the relevant new company As both sides in the appeal are placing heavy reliance on the wording of this section I think it important to set out in full the first three subsections of section 39 For the purposes of the appeal the other two subsections are not really material These three subsections read as follows 1 Save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned or an agreement negotiated with the person concerned a person transferred to a company under section 38 shall not while in the service of the company be brought to less beneficial conditions of service or of remuneration than the conditions of service or of remuneration to which he or she was subject immediately before the relevant vesting day 2 Until such time as the scales of pay and conditions of service of persons transferred to a company under section 38 are varied by the company following consultation with any recognised trade union or staff association concerned or one or more of the said persons the scales of pay to which the said persons were entitled and the conditions of service restrictions requirements and obligations to which they were subject immediately before their transfer shall continue to apply to them and may be applied or imposed by the company while they are in its service 3 The conditions in regard to tenure of office which are granted by the company in relation to a person transferred to it under section 38 and who immediately before the relevant vesting day held office under the Local Authorities Officers and Employees Acts 1926 to 1983 or was a member of the staff of the Department of the Marine shall not while he or she is in the service of the company be less favourable to him or her than those applicable for the time being to persons holding office under the said Acts or in case he or she was a member of the staff of the Department of the Marine persons who are civil servants any alteration in the conditions in regard to tenure of office of the said person shall not be less favourable to him or her than the conditions applicable at the time of such alteration to persons holding office under the aforesaid Acts or as appropriate persons who are civil servants save in accordance with a collective agreement negotiated with any recognised trade union or staff association concerned or an agreement negotiated with the said person If a dispute arises between the company and any such person as to what conditions are applicable for the time being to persons holding office under the aforesaid Acts or who are civil servants the matter shall be determined by the Minister for Finance after consultation with the Minister Between 1975 and 1996 the appellant was an officer of the harbour authority which employed him and one of the conditions of service of that employment was that he could not be removed from office without the sanction of the Minister If subsection 1 stood alone it would be difficult to argue that if the Minister s sanction was no longer required the appellant did not have conditions of service less beneficial than before the Act If a person with officer status in a public body cannot be removed from office without the consent of an outside authority such as a Minister that condition while undoubtedly in the public interest must necessarily also be a substantial benefit to the officer If therefore the Oireachtas had intended to remove the requirement of the Minister s sanction it would have been necessary expressly to say so in the Act Counsel for the respondent Mr Gerard Hogan SC attempts to get around this difficulty in the following manner He says that for the purposes of section 39 at least a distinction is drawn between conditions of service and conditions in regard to tenure of office The latter expression is referred to in subsection 3 Mr Hogan then goes on to argue that if it were the case that the expression conditions of service in subsection 1 included conditions of tenure subsection 3 would be unnecessary He then submits that the necessary inference to be drawn is that the expression conditions of service in subsection 1 was never intended to include conditions of tenure I reject this argument for two quite different reasons First of all even if it were the case that subsection 3 in so far as it related to a person transferred to the new company and who immediately before the relevant vesting date held office under the Local Authorities Officers and Employees Acts 1926 to 1983 was unnecessary it would be wrong to give an artificial restrictive interpretation to subsection 1 when to do so would have the effect of adversely affecting the terms on which a harbour master of perhaps many years standing as in this particular case would be employed thenceforth in the company In my view the vested statutory right of the appellant in this case not to be removed without the sanction of the Minister for the Marine should not be considered as abolished by implication The abolition of that right would require express wording in the 1996 Act and no such express provision is contained in it The second reason for which I reject Mr Hogan s argument is that I do not agree that if conditions of service under subsection 1 include conditions of tenure subsection 3 is unnecessary The statutory regime under the Local Authorities Officers and Employees Acts 1926 to 1983 contain other provisions which are to the benefit of an employee affected by those Acts There is power for the Minister to suspend while an inquiry is conducted into an alleged failure of misconduct or unfitness and as to what the disciplinary action if any would be appropriate After the passing of the 1996 Act therefore I am satisfied that the appellant still enjoyed the same conditions of service or at least conditions of service that were not less beneficial and that these conditions of service included conditions of tenure and that therefore he could not have been dismissed without the sanction of the Minister I feel supported in the view which I have taken by the decision of the former Supreme Court in Cox v Electricity Supply Board 1943 I R 94 In that case the plaintiff was a whole time permanent officer in the service of Dublin Corporation The ESB had acquired the electrical undertaking of the Corporation by virtue of the Electricity Supply Act 1927 the plaintiff was transferred to and became a servant of the ESB upon the same terms including increment pension and superannuation rights as he was on when employed by the Corporation While employed in the Corporation the plaintiff could not be dismissed without the approval of the Minister for Local Government and Public Health The ESB purported to dismiss him without obtaining such approval The High Court and on appeal from that court the Supreme Court held that the dismissal was invalid because of the absence of the consent of the Minister In the Supreme Court counsel for Dublin Corporation argued that the expression the same terms did not include a restriction on the right of dismissal Sullivan C J who delivered the main judgment of the court had this to say at p 112 This contention is based on the proposition that the tenure by which an office is held is not a term upon which the office is held I do not doubt that the word terms has a technical meaning when used in contrast with the word tenure and that the meaning of the word may vary according to the context in which it occurs But there

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  • Harbottle 1843 2 Hare 461 The principle rooted in Foss v Harbottle that where a wrong has been done to a company the correct plaintiff is the company applies to both public and private companies including private companies established for a joint venture Thus I would dismiss this aspect of the appeal of the appellant Secondly the applicant submitted that in certain situations an individual could take a personal action and that he fell within this category He referred to Johnson v Gore Wood Co 2001 2 W L R 72 There is no doubt but that in certain circumstances where a company has suffered loss and damage and a shareholder suffers a separate distinct personal loss from that suffered by the company he may sue personally In Johnson v Gore Wood Lord Bingham reviewed relevant authorities and held that these authorities support the following proposition 1 Where a company suffers loss caused by breach of duty owed to it only the company may sue in respect of that loss No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder s shareholding where that merely reflects the loss suffered by the company A claim will not lie by a shareholder to make good a loss which would be made good if the company s assets were replenished through action against the party responsible for the loss even if the company acting through its constitutional organs has declined or failed to make good that loss So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd no 2 1982 Ch 204 particularly at pages 222 3 Heron International particularly at pages 261 2 George Fischer particularly at pages 266 and 270 271 Gerber and Stein v Blake particularly at pages 726 729 2 Where a company suffers loss but has no cause of action to sue to recover that loss the shareholder in the company may sue in respect of it if the shareholder has a cause of action to do so even though the loss is a diminution in the value of the shareholding This is supported by Lee v Sheard 1956 1 QB 192 at pages 195 6 George Fischer and Gerber 3 Where a company suffers loss caused by a breach of duty to it and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owned to the shareholder each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other I take this to be the effect of Lee v Sheard at pages 195 6 Heron International particularly at page 262 R P Howard particularly at page 123 Gerber and Stein v Blake particularly at pages 726 I do not think the observations of Leggatt L J in Barings at p 435B and of the Court of Appeal of New Zealand in Christensen v Scott at page 280 lines 25 35 can be reconciled with this statement of principle These principles do not resolve the crucial decision which a court must make on a strike out application whether on the facts pleaded a shareholder s claim is sustainable in principle nor the decision which the trial court must make whether on the facts proved the shareholder s claim should be upheld On the one hand the court must respect the principle of company autonomy ensure that the company s creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered On the other the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation The problem can be resolved only by close scrutiny of the pleadings at the strike out stage and all the proven facts at the trial stage the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company has enforced its full rights against the party responsible and whether to use the language of Prudential Assurance Co Ltd v Newman Industries Ltd no 2 1982 Ch 204 at page 223 the loss claimed is merely a reflection of the loss suffered by the company In some cases the answer will be clear as where the shareholder claims the loss of dividend or a diminution in the value of a shareholding attributable solely to depletion of the company s assets or a loss unrelated to the business of the company In other cases inevitably a finer judgment will be called for At the strike out stage any reasonable doubt must be resolved in favour of the claimant I would adopt and apply this analysis of the law Thus it is necessary to make a close scrutiny of the pleadings which in this case is the statement of claim Such a scrutiny is necessary to see whether the claim would be made good if the company had enforced its full rights and whether the loss suffered by the appellant is merely a reflection of the loss suffered by the company Considering the statement of claim it is clear that the action taken by the appellant is a reflection of the loss suffered by the company This is seen starkly in paragraph 9 of the statement of claim where the appellant pleaded that by reason of the aforesaid paragraphs the plaintiff as a substantial shareholder in and creditor of the company has suffered loss and damage It is thus a reflective claim and as such the appellant is not entitled to sue it is for the company to sue Consequently I would dismiss this aspect of the appeal also Thirdly the appellant submitted that he had been deceived by fraud and deception by the bank First this was not pleaded in the statement of claim so prima facie it is not a ground for this appeal However even taking a general rather than a technical approach the deception and fraud submitted by the applicant is not a ground apparent on the papers despite his lengthy submissions I find no basis for this aspect of the appeal At the core of this appeal is the fact that the High Court quite correctly proceeded on the basis that the facts as pleaded by the appellant are correct even though they were and are disputed by the bank Insofar as there is any doubt this must be and was determined in favour of the appellant Taking that approach it is clear on the pleadings that the action pleaded by the appellant is a reflective action a matter more properly brought by the company Thus I am satisfied the High Court acted correctly in striking out the appellant s proceedings and I would dismiss the appeal on this ground also The appellant made submissions as to the validity of the charge and the compliance with rules However this line of argument does not affect the fundamental principle as to whether the plaintiff has a reasonable cause of action whether his action is reflective of a company action In the circumstances it is clear that he has not such a reasonable cause of action I would dismiss the appeal sought on this ground also Throughout the proceedings the appellant made sweeping allegations of deception and fraud by the bank solicitors and barristers While I listened carefully to these submissions they did not appear to have any substance and do not address the issue of a reasonable cause of action in the circumstances where the appropriate litigator is the company Thus I would dismiss those submissions completely The plaintiff made submissions that the statement of claim was not correct and indeed made allegations against his then solicitor The statement of claim considered by the High Court and by this Court on appeal is the statement of claim delivered by his solicitor and set out in this judgment The appellant cannot succeed in this case by allegations against his then solicitor This case is grounded on the statement of claim delivered and filed However even if one took a wider approach as the appellant is a lay litigant these pleadings do not raise such issues or indeed even infer to such issues as were submitted by the appellant I would dismiss the appellant s claim on this aspect of the appeal also As the appellant is a lay litigant the Court gave him lee way and did not enforce rules of procedure and pleadings I listened to the submissions carefully to ensure that this lay litigant did not obfuscate a good point One matter for example was that at one stage of the submissions he said he did not have a legal adviser at a critical time when the loan was being transacted However even a cursory consideration of the documents indicates that legal advice was available to him All in all having carefully considered the papers and the oral submissions I would dismiss the appeal of the appellant 4 THE SUPREME COURT RECORD NO 322 of 2003 DENHAM J McCRACKEN J KEARNS J BETWEEN LIAM MADDEN PLAINTIFF APPELLANT AND ANGLO IRISH BANK CORPORATION PLC AND WILLIAM LACEY DEFENDANTS RESPONDENTS Judgment delivered on the 17th day of December 2004 by Denham J 1 Liam Madden the plaintiff appellant hereinafter referred to as the appellant has brought an appeal to this Court from the judgment of the High Court Ó Caoimh J delivered on the 23rd day of July 2003 2 Anglo Irish Corporation PLC and William Lacy are the named defendants respondents The first named defendant respondent is referred to hereinafter as the bank 3 On 23rd July 2003 the High Court held Mr Madden has instituted a claim against Anglo Irish Bank Plc The Bank seeks an Order from this Court dismissing the claim on the basis that it is one that is bound to fail and that it is one that the plaintiff simply cannot succeed on The Court approaches this matter with the guidance of a number of authorities that have been opened to the Court by Counsel on behalf of the Bank by looking at the Statement of Claim itself and the evidence put before this Court in relation to the history of the matter both by reference to the affidavit of Mr Spillane and the affidavit of Mr Madden himself The nature of the claim brought by Mr Madden is that set forth in the Statement of Claim Mr Madden seemed to express some surprise in relation to the terms of it but the existence of the Statement of Claim as having been served I think is clearly denoted by the terms of the affidavit of Mr Spillane who makes specific reference to it In it it can be seen that the Plaintiff Mr Madden has advanced this claim as against the Bank in his capacity as a shareholder and creditor of the Company His complaint as pleaded in the Statement of Claim is one in which he contends that the Company acted ultra vires and in breach of Section 60 of the Companies Act in entering into an agreement on or about the10th September 1992 which is the subject matter of the action The Court has had the benefit of the evidence put before the Court of Mr Spillane in relation to the history of this case and the history of the various applications to this Court and on appeal therefrom to the Supreme Court indicating the limits to which the Court permitted the matters to be advanced It is quite clear on the basis of the history and the number of Orders that have been made to date by the Supreme Court that the only issue really that survives is whether Mr Madden is entitled to maintain his claim for damages as against the Bank The submissions that have been advanced by Counsel have been made on the basis of an assumption that the plaintiff can prove the matters pleaded by him in the Statement of Claim served on the Bank and that if there is any dispute raised on the affidavit put before the Court by Mr Spillane that I should prefer the version of events put forward before the Court by Mr Madden in his replying affidavit This is the precise basis upon which I assess this matter The essential issue that comes before the Court is whether the claim is maintainable Mr Madden suggests that the Statement of Claim might be amended in some fashion but he has failed to indicate in any clear fashion how it could be amended to sustain a claim that is made on the Pleadings Reference has been made to fraud today but even in that regard it is quite clear that any fraud alleged by Mr Madden would itself be wrongdoing alleged to have occurred well in excess of six years the relevant statutory period and could not be maintained by him but as indicated by Mr Madden he was not precise in any manner in relation to these matters and it is quite clear that he has failed to indicate any precise amendment that might be made to the claim such as to overcome the submissions that have been made on behalf of the Bank by Counsel The Court has been assisted by reference to a number of authorities which indicate that on an application such as this the Court may consider what amendments could be made to a Statement of Claim to overcome a submission that a claim is unsustainable in one form or another but this is something that the plaintiff clearly is unable to do to show in any substantive manner how this Statement of Claim could be amended to overcome the essential submissions that have been advanced by Counsel on behalf of the Bank The essential situation that is faced by Mr Madden is that he seeks to advance in his capacity as a shareholder and creditor of the Company a claim which in fact can only be maintained by the Company itself or someone acting in its shoes such as the Liquidator of the Company and I fully accept the submissions of Counsel in this regard He has advanced to this Court a number of authorities including authorities of Courts in England which have been followed in this jurisdiction I think the most notable authority advanced was the Prudential Assurance v Newman Industries case and this indicates the essential difficulty faced by Mr Madden and the fact that as a creditor and shareholder of the Company he cannot maintain the claim in question which he seeks to maintain As has been indicated by Counsel on behalf of the Bank this authority has been approved in this jurisdiction by the Supreme Court in the case of O Neill v Ryan 1993 11 L R Y 557 In light of these matters I am quite satisfied that the Bank is entitled to succeed on its motion I accept fully the submissions that have been made by Counsel on behalf of the Bank Mr Madden is left in a situation where he simply cannot succeed in resisting the claim assuming that he could establish as a matter of fact everything set forth in the Statement of Claim He would find himself in a situation where as a matter of law he would not and cannot succeed in any claim for damages and it is in those circumstances that I will make an Order granting to the Bank the relief which it seeks at this stage and I will dismiss this claim I should say that were this matter allowed to proceed it could only result in a huge increase in costs with no better prospect ultimately to Mr Madden of succeeding because it could only give rise to a situation of proving facts which have been assumed to be capable of proof on the basis of a claim which has been noted and which is addressed by the Court as a claim which in relation to he facts in one that could be proved but which as a matter of law could never succeed 4 The High Court ordered pursuant to Order 122 Rule 11 of the Rules of the Superior Courts that the appellant s claim be dismissed for want of prosecution on the ground that there had been no proceedings for a period in excess of two years from the last proceedings and it was ordered pursuant to Order 19 Rule 28 of the Rules of the Superior Courts that the appellant s claim for damages be struck out on the ground that it disclosed no reasonable cause of action and was frivolous and vexatious 5 The applicant has appealed against the judgment of the High Court The applicant filed seventeen grounds of appeal as follows 1 The Honourable High Court Judge was wrong in Law 2 The said Order is a bad Order 3 The granting of this Order is a Tort in Law 4 The Honourable High Court Judge failed to exercise the discretion available to him in the pursuit of Justice 5 The Honourable High Court Judge failed to strike out these proceedings which were intentionally and positively grounded on the premeditated fraudulent misstatement and misrepresentation of the facts in Anglo s pleadings in order to pervert the course of justice 6 The Honourable High Court Judge failed to give weight to the fact that Anglo Irish Bank CORP as a matter of form intentionally grounded it s pleadings on the premeditated fraudulent misstatement and misrepresentation of the facts at issue 7 The Honourable High Court Judge failed to ensure my Right to Fair Procedures 8

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  • to some extent It is common case that the chances of successful treatment were at best problematical There is no dispute as to the trial judge s view that medical academic opinion was divided on the benefits of hormone therapy The defendants argued that this type of lost opportunity was not valuable in the sense that it should not attract compensation unless it could be proved that the postulated treatment would probably have been successful Mr Patrick Keane Senior Counsel for the defendants went so far as to submit that a forty nine percent chance of successful treatment would not confer an entitlement to damages though a fifty one percent chance would Asked how this was reconcilable with the universal practice of allowing for percentage risks below fifty of the future development of conditions such as arthritis or epilepsy he sought to distinguish these examples as being on the debit side only These were negative possibilities for an injured person whereas in the present case the plaintiff seeks compensation for the loss of a beneficial opportunity Before considering the authorities cited by Dr John White Senior Counsel for the plaintiff I should say that it seems to me to be contrary to instinct and logic that a plaintiff should not be entitled to be compensated for the fact that due to the negligent diagnosis of his medical condition he has been deprived of appropriate medical advice and the consequent opportunity to avail of treatment which might improve his condition I can identify no contrary principle of law or justice It is commonplace that allowance is made in awards and in settlements for the risk that an injured plaintiff may in the future develop arthritis in an injured joint The risk may be high or low a fifteen percent risk is often mentioned but damages are paid I cannot agree that this is any different from what is sought in the present case It does not matter that the damage suffered by the plaintiff consists of the loss of an opportunity to avail of treatment It might with equal logic be described as an increased risk of shorter life expectancy It seems to me as illogical to award damages for a probable future injury as if it were a certainty as to withhold them where the risk is low on the basis that it will not happen at all This precise matter was dealt with by this Court in Dunlop v Kenny Unreported 29th July 1969 O Dálaigh C J delivered the unanimous judgment It was held that the jury had been misdirected to the effect that the plaintiff would suffer from epilepsy when the evidence was that there was a risk of major epilepsy O Dálaigh C J held that the trial judge had overstated the risk He did not however state that there should be no award under this heading The following passage very clearly indicates the correct approach In cases such as this where there is an issue of possibility or probability of some disability or illness arising or developing in the future the damages to be awarded should be commensurate with and proportionate to the degree of that possibility or probability as the case may be If the degree of probability is so high as to satisfy a jury that it remains only barely possible that the condition will not occur a jury would justified in acting upon the assumption that it will occur and should measure the damages accordingly On the other hand if the probability that no such event will occur is so great that it is only barely possible that it would occur damages should nevertheless be awarded but should be proportionate the degree of risk small though it might be This statement applies of course only to the assessment of damages for future uncertain events In respect of past events whether related to liability or to the causation of damage or loss the normal rule of proof on the balance of probability applies These issues were considered by the House of Lords in Davies v Taylor 1974 A C 207 That was a claim for damages under the Fatal Accidents 1846 The plaintiff brought the claim arising from the death of her husband At the time or the death she was estranged from him and he had instructed solicitors to commence proceedings for divorce In support of her claim for loss of future dependency she said that reconciliation would have taken place The House of Lords were unanimously of the view that the trial judge had mistakenly held that no sum was recoverable Certain passages from the speeches of the Law Lords provide solid support for the approach I have outlined for this case Lord Reid spoke at page 213 as follows When the question is whether a certain thing is or is not true whether a certain event did or did not happen the court must decide one way or the other There is no question of chance or probability Either it did or did not happen But the standard of civil proof is a balance of probabilities If the evidence shows a balance in favour of it having happened then it is proved that it did in fact happen But here we are not and could not be seeking a decision either that the wife would or that she would not have returned to her husband You can prove that a past event happened but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can All that you can do is to evaluate the chance Sometimes it is virtually 100 per cent sometimes virtually nil But often it is somewhere in between And if it is somewhere in between I do not see much difference between a probability of 51 per cent and a probability of 49 per cent Injury in the Fatal Accident Acts does not and could not mean loss of a certainty It must and can only mean loss of a chance The chance may be a probability of over 99 per cent but it is still only a chance So I can see no merit in adopting here the test used for proving whether a fact did or did not happen There it must be all or nothing If the balance of probability were the proper test what is to happen in the two cases which I have supposed of a 60 per cent and a 40 per cent probability The 40 per cent case will get nothing but what about the 60 per cent case Is it to get a full award on the basis that it has been proved that the wife would have returned to her husband That would be the logical result I can see no ground at all for saying that the 40 per cent case fails altogether but the 60 per cent case gets 100 per cent But it would be almost absurd to say that the 40 per cent case gets nothing while the 60 per cent case award is scaled down to that proportion of what the award would have been if the spouses had been living together That would be applying two different rules to the two cases So I reject the balance of probability test in this case Lord Simon at page 220 of Glaisdale spoke to similar effect But this is one of those cases where a balance of probabilities is not the correct test If the appellant showed any substantial i e not merely fanciful possibility of a resumption of cohabitation she was entitled to compensation for being deprived of that possibility The damages would of course be scaled down from those payable to a dependant spouse of a stable union according as the possibility became progressively more remote But she would still e entitled to some down to the point where the possibility was so fanciful and remote as to be de minimis The assessment of future losses is on occasion a matter of mathematical calculation In certain cases the courts are accustomed to resorting to the evidence of actuaries who are expert in calculating the present capitalised value of a combination of future events of greater or lesser likelihood They can build in allowance for the occurrence of a variety of possibilities including likely age of death or retirement Nobody suggests that their calculations must be posited on the probable as distinct from the possible happening of each event Their reports would be deeply flawed if they were In my view the plaintiff should receive an award for the loss of the opportunity to be advised correctly and treated accordingly Taking this element together with the element of aggravation of damage by the judgment of McCracken J I believe the sum of 100 000 represents to correct level of the award I would therefore dismiss the appeal and allow the cross appeal substituting the sum of 100 000 for the sum of 45 000 awarded in the High Court that increased sum to include both compensation for the loss of life expectancy and the aggravation of damage dealt with in the judgment of McCracken J 14 THE SUPREME COURT 134 04 144 04 Murray C J Fennelly J McCracken J BETWEEN David Philp Plaintiff Respondent and Peter Ryan Bon Secours Hospital and Bon Secours Health System Defendants Appellants JUDGMENT delivered on the 17th day of December 2004 by FENNELLY J The Court has already pronounced its decision on this appeal It has increased the damages awarded to the Plaintiff Respondent by Peart J in the High Court from the sum of 45 000 to 100 000 The action was one for professional negligence against both defendants arising from the first named defendant s failure to diagnose that the plaintiff was suffering from prostate cancer and not prostatitis as he found Liability was in issue in the High Court but the appeal by the defendants was limited to the question of damages The plaintiff lodged a cross appeal claiming that the damages awarded were inadequate Two points were made in the cross appeal That no damages were awarded for possible loss of life expectancy That aggravated damages should have been awarded as a result of the conduct of the defence to the claim On the 26th June 2001 plaintiff was admitted to the Bon Secours Hospital in Cork having been referred to that hospital by his general practitioner He complained that he had been unable to pass urine since the previous day and of abdominal pain Pathology reports in respect of urine samples indicated that there was no bacterial growth and a seriously elevated PSA level of 168 The first named defendant diagnosed acute prostatitis The expert evidence for the plaintiff at the trial was to the effect that based on his clinical symptoms the pathology reports and other factors this could not have been a case of acute prostatitis In fact the test results suggested that the plaintiff almost certainly had cancer which had spread metastased outside the prostate into other parts of the body This view of the matter was not seriously disputed by the defendants experts At this stage of course there is no issue but that the plaintiff s condition was disastrously misdiagnosed due to the negligence of the defendants However it was also tragically clear that the plaintiff s cancer was in any event already at an advanced stage when he first presented to the first named defendant The real issue on this aspect of the appeal therefore was the extent to which the plaintiff was entitled to be compensated in damages for misdiagnosis where he was never going to recover fully Was the plaintiff entitled to recover damages for being deprived as a result of not being informed of it of the opportunity to consider possible treatment for his cancer It is material firstly to set out the principal findings of the learned trial judge on the negligence issue The learned trial judge held that the first named defendant was negligent in diagnosing prostatitis to the exclusion of any other possibility Consequently he did not tell the plaintiff that he was suffering from cancer or arrange any other necessary tests The negligence of the first named defendant resulted in the plaintiff not becoming aware that he had prostate cancer until eight months later than he should have Specifically he was deprived of an opportunity to have a discussion between July 2001 and March 2002 with the first named defendant or indeed any other medical person about his disease and the alternatives for treating him The arrival of the news in March 2002 that he was suffering from advanced prostate cancer was a great shock to the plaintiff as was the news that this diagnosis could have been made in July 2001 but had been missed by the first named defendant The learned trial judge found that the plaintiff had reasonable grounds for believing that his life expectancy was less than it would have been had the correct diagnosis been made in July 2001 and that this caused him great upset Turning to the question of damages the learned trial judge said I have no doubt that the plaintiff has suffered great anguish and distress on account of the knowledge that he could have been diagnosed sooner All the academic medical debate about the advantages and disadvantages of immediate versus deferred treatment are of little comfort to the plaintiff who in my view perfectly reasonably has reasonable grounds for fearing that his life has been shortened When he came to quantify damages he said As far as damages are concerned I propose to award a single sum to take account of the distress caused to the plaintiff as a result of the negligence of the first named defendant The plaintiff s evidence was that on receiving the letter on 10th March 2002 he panicked and later he was very angry and felt let down about the missed diagnosis and he was of the view that what he now faces was very different in terms of survival from it might have been Of course whether his life has been shortened is a matter perhaps we will never know Emphasis added The plaintiff did not therefore recover damages for loss of life expectancy It was contended on his behalf that if his cancer had been correctly diagnosed in the summer of 2001 he would have been advised of the various treatment options that would have been open to him The principal option would have been hormone treatment While this treatment was by no means assured of success and could be accompanied by undesirable side effects such as impotence there was a well established professional view that life could be prolonged to a significant degree The learned trial judge conducted a meticulously detailed analysis of the expert evidence given before him and of the professional literature on this question His conclusions were that there are two well respected schools of thought within the medical profession as to the pros and cons in general of immediate versus deferred hormone treatment in cases of prostate cancer and that it is not negligent to treat a patient in accordance with either however it is more likely than not that in relation to this particular plaintiff s disease as of July 2001 that had the correct diagnosis been made the plaintiff would have had a full discussion with his treating consultant when the advantages and disadvantages of each method of treatment would have been explained in a way which the plaintiff could understand and the plaintiff would have been able to participate in the decision making process regarding his treatment and future and that in the circumstances of this case he was deprived of that opportunity if the plaintiff had in consultation with his treating consultant opted for a deferral of hormone treatment until the disease had progressed the plaintiff would nevertheless have been monitored closely He would in other words have been kept under constant observation in order to see how the disease was progressing it was not reasonable on the evidence to assume that the delay of eight months in the correct diagnosis had had no adverse impact on the plaintiff s life expectancy and quality of life and it is not reasonable for the first named defendant to say that by not knowing that he had cancer he was better off in the sense that he could go about his life during that eight months free of the worry of knowing that he had a serious condition That would be to deny the plaintiff his basic right to be informed about a serious matter regarding his health and his right to plan his future in the light of that knowledge On the balance of probabilities the learned trial judge was of the view that having been deprived of an opportunity of considering having immediate or fairly immediate hormone treatment in the summer of 2001 a reasonable consequence of that was that the plaintiff had suffered distress by having a reasonable belief that his life had been shortened by anything from 8 months to two years and that on the evidence there was a reasonable basis for that belief Based on these considerations he decided to award a single sum to take account of the anger and distress suffered by the plaintiff However he did not award any damages for the fact that the plaintiff not having been informed of his condition in June 2001 was deprived of the opportunity of beneficial treatment In particular he did not award any damages for the loss of opportunity to be advised of treatment which might have had the effect of prolonging his life even by a short period This is not to say that the learned trial judge did not

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  • was only completing the record so that it reflected the true situation I believe on the balance of probabilities that on receipt of the solicitor s letter in December 2002 he looked at the clinical notes and in some sense of panic which must have impaired his judgment as to how to react or act he inserted a note which he felt would assist him in his defence of what was obviously going to be a claim against him This is an extremely serious finding against the first Defendant It is a finding that the first Defendant deliberately and knowingly altered a document which he must have known would be used in court proceedings with the intention of as the learned trial Judge said assisting his case which in fact means with the intention of deceiving the court and of attempting to deprive the Plaintiff of damages to which he has subsequently been found to be lawfully entitled That matter is of itself extremely disturbing because obviously the first Defendant had instructed his legal advisors that he had requested the Plaintiff to have a further PSA test in six weeks time His legal advisors quite properly at the time in effect represented to the Plaintiff and his advisors that this was a fact which would be proved by the first Defendant I will come to these matters later in the judgment In addition to misleading his legal advisors the Plaintiff also sought to and succeeded in misleading his own expert witness He prepared a case summary submitted to Mr Michael Murphy a consultant urologist who gave evidence on his behalf which was headed Case Summary In the course of that case summary he made the following statements I asked him to have a serum PSA measurement carried out after six weeks in the Middle East and to contact me with the result and Given that I felt that prostate cancer was only a remote possibility would see it as good medical practice to try and avoid what appeared to be unnecessary worry and anxiety for a patient over a period of six weeks while his next investigative assessment i e repeat serum PSA was awaited Had the follow up PSA test been carried out as instructed and in the event that the follow up PSA test was not showing signs of decreasing and indeed were it noted to be increasing I would have expressed appropriate concern and What transpired was that Mr Philp did not contact me with a PSA result as requested In my view this was a clear attempt to mislead a witness who the first Defendant knew was going to give evidence as an expert and therefore would be regarded by the Court in that light Through misleading Mr Murphy the first Defendant was again attempting to mislead the Court Fortunately the alteration was discovered before Mr Murphy gave his evidence and was indeed roundly condemned by him The allegation that the Plaintiff had been asked to have a further test done in six weeks time was not just contained in the clinical notes and the report to Mr Murphy It was also made in a number of ways to the Plaintiff s legal advisors albeit as I have said at a time when no doubt it was believed to be true by the Defendants legal advisors On 1st July 2003 the Plaintiff was served with a notice to admit facts and was asked to admit that he had been told by the first named Defendant to arrange to have a test carried out six weeks later On 7th July 2003 interrogatories were administered to the Plaintiff requiring the Plaintiff to admit on oath that the first named Defendant told him on 12th July 2001 to arrange to have a PSA test carried out six weeks later and that it was important to have the test carried out On 22nd May 2003 the first named Defendant swore an affidavit of discovery which disclosed his clinical notes and when production of these were sought it was the altered notes that were produced In fact despite its date that affidavit of discovery was not furnished to the Plaintiff until the 24th June 2003 On 1st July 2003 the Plaintiff s solicitors were asked admit the medical records held by the Defendants without formal proof On 19th July 2003 the Defendants solicitors replied to a notice for particulars stating that on the 12th July 2001 Dr Ryan instructed the plaintiff to have a serum PSA measurement carried out after six weeks in the Middle East and to contact him with the result There is no doubt that faced with these documents the defence against the Plaintiff s case must have appeared to the Plaintiff s advisors as being much stronger than it really was The main plank of the Plaintiff s case was that he was not told for some eight months after he became ill in July 2001 that he was suffering from prostate cancer If in fact he himself had failed to comply with the first Defendant s request to have a test carried out in six weeks time then of course much if not all of the blame for the delay would have been attributable to the Plaintiff himself He might well have been discouraged from proceeding with the action or have settled it at well below its value because of the apparent risk Furthermore had the alteration in the document not come to light somewhat fortuitously through the intervention of the learned trial Judge the Defendants expert Mr Murphy would have given evidence on the basis that the alleged instruction had been given to the Plaintiff and the first Defendant himself would not have been subjected to strenuous cross examination in relation to this instruction It is quite possible that the learned trial Judge in those circumstances would have found against the Plaintiff The truly appalling feature in this case is that it appears that the Defendants advisors were told of the alteration by the first Defendant between one and two weeks before the commencement of the action I find it almost incomprehensible that in those circumstances they did not inform the Plaintiff s solicitors of the true facts While a great deal of blame attaches to the first Defendant for having altered the document in the first place he did at least disclose the facts to his own legal advisors and in my view at least equal if not greater blame must be attributable to them It is instructive that they did not seek to use the clinical notes in cross examination of the Plaintiff or his advisors although they did suggest in such cross examination that he had been instructed to have a further test taken in six weeks time They did not seek to have their own client prove the notes until they were called for by the learned trial Judge although they knew they were being put on proof of the notes There must be at least a suspicion that there was a deliberate attempt to keep the true facts from the Court notwithstanding that the altered document had been furnished to the Plaintiff s solicitors as being genuine and that the facts stated in the alteration had formed part of the instructions to Mr Murphy In reviewing the law at the beginning of this judgment I pointed out that some doubt had been expressed as to whether aggravated damages should be awarded in negligence claims I have no doubt that this is a classic example of a case where such damages can and should be awarded The Plaintiff has not given evidence of the effect of the misinformation which he received had on him This is not something which the Defendants can complain about because his failure to discover the true facts before he had closed his case was due entirely to what I can only describe as the misconduct of the Defendants advisors in not disclosing the alteration In the absence of direct evidence in those circumstances in my view the Court is perfectly entitled to infer the probable effect that this false information had on the Plaintiff It must be remembered that he is a man who had for the last two years known that he was suffering from prostate cancer and does not have long to live He has undertaken proceedings based on the worry anxiety and loss of opportunity which arose due to the negligence of the Defendants One can only imagine the additional stress and anxiety which he must have suffered in the belief that there was at least in documents shown to him a strong defence to his action The loss for which he has already been compensated due to the negligence of the Defendants has in my view been greatly increased due to the grossly improper behaviour of both the first Defendant and his legal advisors This is clearly as case where already existing damages have been aggravated by such behaviour and I would award him a sum of 50 000 00 in addition to the compensatory damages awarded in relation to his basic claim as set out in the judgment of Fennelly J with which judgment I am in full agreement THE SUPREME COURT 134 04 144 04 Murray CJ Fennelly J McCracken J Between David Philp Plaintiff AND Peter Ryan Bons Secours Hospital Bon Secours Health System Defendants Judgment of Mr Justice McCracken delivered the 17th day of December 2004 In this judgment I propose to deal only with the question of whether the Plaintiff is entitled to aggravated damages by reason of the behaviour of the Defendants in the preparation and presentation of their case In Conway v Irish National Teachers Organisation 1991 2 IR 305 the circumstances in which aggravated or exemplary damages could be awarded was considered by this Court In the present case the Plaintiff does not claim exemplary damages such as were ultimately awarded in that case but does claim aggravated damages At page 317 Finlay CJ dealt with several types of damages which could be awarded and said 2 Aggravated damages being compensatory damages increased by reason of a The manner in which the wrong was committed involving such elements as oppressiveness arrogance or outrage or b the conduct of the wrongdoer after the commission of the wrong such as a refusal to apologise or to ameliorate the harm done or the making of threats to repeat the wrong or c conduct of the wrongdoer and or his representatives in the defence of the claim of the wronged plaintiff up to and including the trial of the action Such a list of the circumstances which may aggravate compensatory damages until they can properly be classified as aggravated damages is not intended to be in anyway finite or complete Furthermore the circumstances which may properly form an aggravating feature in the measurement of compensatory damages must in many instances be in part a recognition of the added hurt or insult to a plaintiff who is being wronged and in part also a recognition of the cavalier or outrageous conduct of the defendant In the present case the Plaintiff relies on the last of these factors as entitling him to aggravated damages In Swaime v Commissioners of Public Works 2003 1 IR 521 where the question of aggravated damages was considered in the light of a claim for negligence against the defendants in exposing the plaintiff to the risk of contracting mesothelioma Keane CJ said at page 525 after referring to the Conway case Although the then Chief Justice in the passage which I have quoted emphasises that the list of the circumstances in which aggravated damages may be awarded is not intended to be exhaustive those circumstances which he has identified do not typically arise in cases of negligence and if they do are not a ground for increasing the amount of compensatory damages He then went on to comment that in a claim for negligence one would not expect the circumstances giving rise to aggravated damages to arise because Most parties leave the subsequent conduct of the action entirely to their solicitors or their insurers However after referring to the English decision of Appleton v Garrett 1966 PIQR 1 and the Supreme Court decision in Cooper v O Connell unreported 5th June 1997 the Chief Justice continued at page 528 Those authorities were not cited in the present case either and in those circumstances it would not be appropriate for the court in my view to hold that there are no circumstances in which actions for negligence or nuisance aggravated damages may be awarded That question can be left for a case in which it is fully argued In the present case however I am satisfied that while the defendants were unquestionably guilty of what the trial Judge described as the grossest negligence that factor of itself is not sufficient to entitle the plaintiff to aggravated damages in the absence of circumstances such as those referred to in the judgment of Finlay CJ in Conway v Irish National Teachers Organisation 1991 2 IR 305 or factors of a similar nature It should be said that the authorities referred to by Keane CJ in that passage were not cited in this case either and the applicability of aggravated damages to actions in negligence was not argued at any length in this Court However it must be emphasised that the claim for aggravated damages in the present case is not based in any way on the degree of negligence of the Defendants but rather on their behaviour subsequent to the negligent acts The basis for the aggravated damages in the present case lies in the clinical notes of the first named Defendant in relation to the consultation with the Plaintiff on 12th July 2001 The relevant entry dated 12 7 01 reads ROC at OPD today for see DECO1 PSA 6 52 It is quite clear from looking at the notes that they purport to be a contemporaneous account of what occurred on the various dates set out in those notes The Plaintiff gave evidence that the first line was his shorthand for removal of catheter at outpatients department today that the word For was his abbreviation for what he planned to do and that he was to see the Plaintiff in December 2001 In the course of his evidence he conceded that the words PSA 6 52 which was intended to convey that the Plaintiff was to have a PSA test in six weeks was an addition which he made to the notes at a later date namely in December 2002 when he received a letter from the Plaintiff s solicitor threatening an action against him The Plaintiff s advisors clearly had doubts as to the authenticity of these clinical records and had refused to admit them in evidence unproved although the Plaintiff did admit the hospital records without formal proof The matter finally came to light on the sixth day of the hearing during the evidence in chief of the first Defendant He referred to his clinical notes in relation to a totally different matter and the learned trial Judge who appears to have assumed that the clinical notes had been admitted asked to see them Counsel for the Plaintiff said the notes had not been admitted in evidence and called for the originals to be produced This was done and at that stage the first Defendant disclosed that PSA 6 52 was an addition which I made to the notes at a later date He explained this by saying that in December 2002 when he received a letter from the Plaintiff s solicitor threatening an action against him he reviewed his notes and he also reviewed his correspondence with the Plaintiff s general practitioner In the course of this correspondence in July 2001 he had told the general practitioner that he was going to arrange to have a PSA repeated in about six weeks time He said that a letter to a general practitioner would normally be a more complete record and he assumed that he had omitted this from his clinical notes It should be noted that he did not say in his evidence in chief that he recollected having told the Plaintiff to have an additional test done in six weeks time Under cross examination the first Defendant conceded that I do not say with certainty that I did that or that I gave that instruction to Mr Philp I cannot remember the consultation So if I understand your question to be asking me am I sure that I gave that direction to Mr Philp can I say I asked him to have it done the answer is no I cannot say that Subsequently in the course of cross examination Counsel for the Plaintiff sought to ask him when was the first time that he had disclosed to anyone that he had altered the document Through his Counsel the first Defendant claimed privilege on the basis that he was being asked to disclose a communication between a client and his lawyer and this objection was upheld However in cross examination he did say that he had realised recently that there was a possibility that he did not advise the Plaintiff to have a test done as recorded in the notes and added And I then took the step of contacting my legal team and informing them of the situation in relation to the note Subsequently he said that the decision to disclose the fact that the document had been altered was made approximately one week before the hearing and later said I at all times up to recently by which I mean you know approximately two weeks ago was of the mind that I had asked for this PSA test to be done He repeated on several other occasions in the course of

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  • was wholly inappropriate and indeed totally wrong that any party should make contact of any nature with the arbitrator on the matters in issue He said that his award had been completed on 18th March but that the fax had arrived before its issue After brief reference to his terms of reference he stated that he would defer issuing his award until mid day on Friday 12th April a period in excess of the fourteen days which had been requested The letter concluded If you wish to make an application to the High Court in the matter you should do so before 12 April 02 In the alternative you can withdraw your faxed letter of 21 March The solicitors for the Appellant in a fax letter of 25th March stated Having taken my client s instructions he has indicated that we are prepared to take up the award on his behalf The letter indicated that the Appellant was reserving his rights but stated that there was no need to defer the issue of the award By letter of 28th March 2002 the arbitrator communicated his award to the parties Misconduct The Appellant has made the following complaints of alleged misconduct against the arbitrator arising from these events The two procedural complaints are set out above The substantive complaint relates to the approach to valuation adopted by the arbitrator and has concentrated on different aspects of the rulings The following represents the way in which these complaints were presented at the hearing of the appeal 1 The arbitrator wrongly decided that he was deemed not to know the identity of the vendor and the purchaser without hearing adequate submissions entitling him to reach that conclusion 2 The arbitrator wrongly ruled out consideration of the terms of the Court order exclusive of the Consent 3 The arbitrator ruled out evidence on the issue of quasi partnership or the appropriateness of a minority discount 4 The arbitrator failed to provide the Appellant with the original submissions of the Appellant as based on the PWC report 5 The arbitrator wrongly permitted the Respondent to introduce the rejoinder document of 8th February 2002 in particular by ruling on the matter before the letter was read at the hearing In addition to alleging misconduct the Appellant asks that the Court remit the award to the arbitrator pursuant to section 36 of the Arbitration Act 1954 All of these complaints were dismissed by Lavan J in a careful written judgment The learned judge summarised the submissions of the parties and concluded that there was no basis for interference with the award He held that the arbitrator had conducted himself correctly within the terms of his appointment Legal Principles The Appellant relies on the provisions of the Arbitration Act 1954 in seeking to have the arbitrator removed and his award set aside Section 36 1 provides as follows In all cases of reference to arbitration the Court may from time to time remit the matters referred or any of them to the reconsideration of the arbitrator or umpire Section 37 reads Where an arbitrator or umpire has misconducted himself or the proceedings the Court may remove him Section 38 1 provides Where a an arbitrator or umpire has misconducted himself or the proceedings or b an arbitration or award has been improperly procured the Court may set the award aside As counsel for the Appellant has submitted the notion of misconduct does not connote moral turpitude He says that his client had been procedurally disadvantaged by the rulings of the arbitrator and that this would suffice Atkin J in Williams v Wallis and Cox 1914 2 KB 478 at page 484 spoke of the meaning of the expression That expression does not necessarily involve personal turpitude on the part of the arbitrator and any such suggestion has been expressly disclaimed in this case The term does not really amount to much more than such a mishandling of the arbitration as is likely to amount to some substantial miscarriage of justice and one instance that may be given is where the arbitrator refuses to hear evidence upon a material issue Not surprisingly cases in which arbitral awards have been set aside for misconduct are few and far between We can leave aside obvious or extreme cases of financial misbehaviour or personal misconduct such as simple neglect by the arbitrator to perform his task Real cases of misconduct may arise in the conduct of the arbitration where the arbitrator acts unfairly either by clear acts of favouritism towards a party or adopts procedures which place one or other party perhaps even both at a clear disadvantage It seems to me that the standard or test of misconduct of such a nature would be something substantial something that smacks of injustice or unfairness One of the cited examples is of an arbitrator inspecting the farm he was to value in the presence of one party and in the absence of the other or of any representative of the other In the Matter of an Arbitration between Brien and Brien 1910 2 I R 84 This was considered by Wright J to be improper and inconsistent with the judicial character of an arbitrator There is a sharp distinction between acts committed in the course of the arbitration and its result Mere error is not misconduct Parties submit disputes including disputes as to the law to arbitration They expect the arbitrator to rule on all matters in dispute but they do not have any guarantee that the arbitrator will reach the correct result An arbitrator may err in his interpretation of the law or of the facts without being guilty of misconduct Though he was not dealing with an allegation of misconduct McCarthy J set the tone for the correct judicial approach to arbitral awards in Keenan v Shield Insurance Company 1988 I R 89 at page 96 Arbitration is a significant feature of modern commercial life there is an International Institute of Arbitration and the field of international arbitration is an ever expanding one It ill becomes the courts to show any readiness to interfere in such a process if policy considerations are appropriate as I believe they are in a matter of this kind then every such consideration points to the desirability of making an arbitration award final in every sense of the term Church and General Insurance Company v Connolly and McLoughlin Unreported High Court Costello J 7th May 1981 itself is an example of the type of fine combing exercise which courts should not perform when it is sought to review an arbitration award Insofar as the Appellant relies independently on section 36 of the 1954 Act to ask the Court to remit the award he cites the decision of Herbert J in the High Court in McCarrick v Gaiety Sligo Limited 2001 2 I R 266 In that case where the arbitration was to be based on written submissions alone the applicant failed through an oversight to furnish his submissions to the arbitrator and asked the court to remit the award pursuant to section 36 Herbert J said that he was dealing with a procedural mishap This had had the effect that the submissions of only one party were before the arbitrator Herbert J could not see any imperative of policy reason or justice which should cause this court to set any permanent inflexible and immutable limits to the exercise of the wide power conferred upon it by the Oireachtas in s 36 1 of the Act for the obvious purpose of ensuring justice and fairness between parties within the arbitration framework page 273 He cited another passage from the judgment of McCarthy J as follows Section 36 would appear to be the procedure appropriate for example to a case of patent mistake in monetary calculation in the giving or not giving of a particular credit in an award that is on its face ambiguous or uncertain in a case where the arbitrator himself seeks to rectify some error and perhaps where fresh evidence has become available subject to the standard rules of an appellate court in such cases In reaching his own decision on the interpretation of section 36 Herbert J followed the dictum of Donaldson M R interpreting the equivalent English provision in King v Thomas McKenna Ltd 1991 2 Q B 480 In my judgment the remission jurisdiction extends beyond the four traditional grounds to any cases where notwithstanding that the arbitrators have acted with complete propriety due to mishap or misunderstanding some aspect of the dispute which has been the subject of the reference has not been considered and adjudicated upon as fully or in a manner which the parties were entitled to expect and it would be inequitable to allow any award to take effect without some further consideration by the arbitrator In so expressing myself I am not seeking to define or limit the jurisdiction or the way in which it should be exercised in particular cases subject to the vital qualification that it is designed to remedy deviations from the route which the reference should have taken toward its destination the award and not to remedy a situation in which despite having followed an unimpeachable route the arbitrators have made errors of fact or law and as a result have reached a destination which was not that which the court would have reached This essential qualification is usually underlined by saying that the jurisdiction to remit is to be invoked if at all in relation to procedural mishaps or misunderstandings This is however too narrow a view since the traditional grounds do not necessarily involve procedural errors The qualification is however of fundamental importance Parties to arbitration like to parties to litigation are entitled to expect that the arbitration will be conducted without mishap or misunderstanding and that subject to the wide discretion enjoyed by the arbitrator the procedure adopted will be fair and appropriate What they are not entitled to expect of an arbitrator any more than of a judge is that he will necessarily and in all circumstances arrive the right answer as a matter of fact or law That is why there are rights of appeal in litigation and no doubt would be in arbitration were it not for the fact that in English law it is left to the parties if they so wish to build a system of appeal into their arbitration agreements and few wish to do so preferring finality to legality to adopt Lord Diplock s terminology The conclusion of Herbert J arrived at after very careful consideration goes some way to open up the possibilities of employing section 36 to cover more than the traditional four grounds error on the face of the award a mistake which the arbitrator wishes to have corrected new material evidence misconduct He considered that the Courts should exercise restraint in exercising the unlimited discretion conferred by the section It is true that section 36 does not in terms set any limits to the exercise of the discretion That does not mean that the discretion is unlimited The policy of the law is to uphold the certainty of arbitral awards once they have been made Furthermore the courts will not interfere without very good reason in the arbitration process I believe these propositions are consistent with the statement of McCarthy J cited above and with many others I would certainly be prepared to agree that the power to remit is not necessarily limited to the four well established circumstances These have on the other hand been developed by the courts after careful consideration over many years Normally the arbitrator should be allowed subject to the overriding obligation of fairness to be master of procedure It would be inimical to the autonomy and certainty of the arbitral process if the notion of procedural mishap were to become an additional ground of potential complaint Donaldson M R emphasised in particular that it would have to be inequitable to allow the award to take effect He also described as a vital qualification and one of fundamental importance that the power was designed to remedy deviations from the route which the reference should have taken toward its destination Donaldson M R also recalled his own earlier decision in The Mountan 1985 1 All ER 520 at 525 to the effect that the power provides the ultimate safety net whereby injustice can be prevented but it is subject to the consideration that it cannot be used merely to enable the arbitrator to correct errors of judgment whether of fact or law or to have second thoughts even if they would be better thoughts Conclusion I can dispose immediately of the argument based on section 36 It suffices for present purposes to say without pronouncing definitively on the scope of the discretion identified by Herbert J that in my view none of the matters advanced by the Appellant come within the scope of section 36 even as so interpreted There is no suggestion in the present case of the sort of procedural mishap which occurred in that case The Appellant is aggrieved by the ruling of the arbitrator on the issue of basis of valuation This was the subject of argument at the arbitral hearing the Appellant s solicitors returned to it in their letter of 21st March 2002 they have been argued in the High Court and in this Court The arbitrator offered the Appellant a postponement of the issue of his award specifically to enable him to apply to the High Court presumably pursuant to section 36 in respect of this very issue The Appellant declined this offer He decided to accept the award I agree with the submissions of Mr Hugh O Neill Senior Counsel for the arbitrator that the Appellant should not in these circumstances be allowed to invoke the provisions of section 36 It would not be inequitable to allow the award to stand I will now consider each of the complaints against the yardstick of misconduct The first three grounds of alleged misconduct can be considered together The basic complaint is that the arbitrator determined that his task was to value the shares on the basis of a willing purchaser and willing vendor that there was no identified purchaser or vendor and on the basis that he was not concerned with the background leading up to the submission of the matter to his arbitration In reaching these conclusions the arbitrator had before him the terms of reference contained in the two identical letters of 25th and 26th October 2000 The key provision was It has been agreed between the parties that Mr McCarthy shall dispose of his shares in the above companies The purchase and sale of the shares is to be conducted on the basis of there being a willing purchaser and a willing seller In my view the arbitrator was perfectly entitled to conclude that this sentence dictated the basis of the valuation he was expected to carry out Indeed the words do not seem readily capable of any other meaning The arbitrator was not of course privy to the terms of the Order made by the Court the Consent or the side letter To the extent that they contain provisions relevant to the arrangements reached between the parties those are terms of agreement between them To the extent however that the Appellant seeks to rely on the provisions of any of these documents so as to affect the terms of reference of the arbitrator the Respondent is and was entitled to rely on them Most materially by express provision the arbitrator was not to be permitted to see the terms of the Consent which was referred to in the Court order Finally the terms of the side letter precluded the Appellant from relying on the fact that an order might have been made pursuant to section 205 of the Companies Act I am quite satisfied that the manner in which the arbitrator interpreted the terms of reference fell well within the scope of his authority He heard argument from both parties No accusation of unfairness can be made To be fair to the Appellant I do not think he accused the arbitrator of being unfair In no sense can he have been guilty of misconduct in the manner in which he dealt with these matters Nor can I find any merit in the suggestion that the arbitrator misconducted himself in declining to ensure that the Appellant was provided with the original submissions of the Respondent The Appellant was provided with a copy of the PWC report on which those submissions were based Once Deloitte and Touche were able to produce a proper auditor s report as provided in the settlement the Respondent no longer wished to rely on the PWC report The arbitrator ruled that all original submissions were withdrawn The only purpose of referring to earlier submissions no longer relied on would have been to try to demonstrate some unidentified inconsistencies I cannot see any basis for an accusation of unfairness here Finally there is the question of the letter of rejoinder Certainly the final procedural rulings of the arbitrator made no provision for any party to submit such a document The arbitrator was clearly conscious of this at the hearing Therefore he suggested that the Respondent s representatives would be allowed to read the letter as part of his submissions He rightly recognised that each party had the right to respond to the opposing party s submissions He invited comment on his proposed procedure and there was no objection The letter was read It might have been better to have circulated the letter at the beginning but the arbitrator said that he had copies and it was open to the Appellant s counsel to ask for copies Counsel obviously realised that this was not a matter of any great importance and the letter was read later Nobody was denied the right to respond to it In my view all of the complaints of misconduct fail I am satisfied that the arbitrator conducted the arbitration properly and that he made rulings within the scope of his discretion I would dismiss the appeal 18 THE SUPREME COURT No 317 2003 Murray C J Geoghegan J Fennelly J BETWEEN John McCarthy Plaintiff Applicant and Enda Keane Eireann International Finance Brokers Limited Warrantell Limited and Des Peelo Defendants Respondents JUDGMENT delivered on the 16th day of December 2004 by FENNELLY J The fourth named respondent hereinafter the arbitrator made an award determining the price of the Appellant s shareholding in the second named respondent hereinafter the company The Appellant alleges misconduct by the arbitrator and seeks to have the award set aside and to have the arbitrator removed pursuant to sections 37 and 38 of the Arbitration Act 1954 hereinafter the 1954 Act Alternatively he seeks to have the reward remitted to the arbitrator pursuant to section 36 of the Act His claim was dismissed by Lavan J in the High Court and he now appeals to this court The Facts The Appellant acquired a 39 shareholding in the company in about 1998 The first named respondent hereinafter the Respondent was already a shareholder At that time and up to the commencement of the section 205 proceedings to be described below the Respondent held 59 of the shares the remaining 2 were held by a person who is not a party to the proceedings The Appellant also held shares in a number of associated companies In the year 2000 the Appellant instituted proceedings in the High Court in which he alleged that the Respondent was conducting the affairs of the company in a manner oppressive of him and in disregard of his interests He also alleged that the company had been operated as a quasi partnership The proceedings were brought by way of Petition pursuant to section 205 of the Companies Act 1963 When those proceedings came on for hearing before McCracken J in the High Court the parties reached a settlement which is comprised in three documents Firstly the Court made an order reciting that the settlement had been reduced to writing in the form of a consent executed by the parties The order went on to provide that the consent be received and filed and that the proceedings be stayed except as might be necessary for enforcing the agreement It then stated that pursuant to Section 205 of the Companies Act 1963 Warrantell Limited shall purchase the shareholding of the Petitioner the Appellant in the company in the manner set forth in the said consent The consent began by stating that since the institution of the proceedings the Respondent had transferred his shareholding in the company to Warrantell Limited hereinafter Warrantell It was agreed that Warrantell would be joined as a party to the proceedings This device appears to have been adopted by reason of concern that there might be a breach of section 31 of the Companies Act 1990 but the Court has not been asked to enter into that aspect of the matter The key provision of the consent was that Warrantell was subject to an order of the Court made pursuant to Section 205 of the Companies Act 1963 to purchase the shareholding of the Appellant in the company and the associated companies The parties agreed to the appointment of the arbitrator by name though originally he was to be the Accountant The consent provided The Accountant shall value the Appellant s shareholding in the said companies on the basis of a willing seller and a willing purchaser and as so doing shall act as an expert and not as an arbitrator Account shall be taken of the sums due and owing by the Appellant and the Respondent by way of director s loans to the companies The valuation date shall be 21st July 2000 The parties later agreed that the fourth named respondent would act as an arbitrator with the powers conferred by the 1954 Act I have treated the consent as if that word were substituted for Accountant The consent provided that the parties should exchange and submit to the arbitrator written submissions in relation to all issues arising on the said valuation While the consent also fixed times for this and other matters it allowed that the arbitrator at his sole discretion should be at liberty to extend the time limits No issue is taken with the performance by the arbitrator of this function The consent also provided for the convening of a meeting or meetings for the purpose of hearing oral submissions The parties were to furnish to the arbitrator by return any information sought by him It provided also that without fourteen days of the date of the meeting convened for the purpose of hearing oral submissions the arbitrator should publish his determination as to the value of the Appellant s shareholding in the said companies It then provided The said determination shall be final and binding on the parties Following detailed consequential provisions for giving effect to the determination by means of the purchase by Warrantell of the Appellant s shareholding and the payment of the purchase price the consent went on to state This agreement is confidential to the parties and their advisors and its terms shall not be disclosed by the parties their servants or agents save as may be required by law or Court order In particular there shall be no disclosure of its terms to the arbitrator The third relevant document signed by the Appellant and the Respondent is a side agreement as follows I John McCarthy hereby agree that when making submissions to the arbitrator regarding the valuation of my shareholding no reliance will be placed by me on or my behalf upon the fact that the High Court may have made an order pursuant to Section 205 of the Companies Act 1963 I reserve the right however in so far as it may be relevant to point to the fact that the purchase of my shareholding in the said companies has been made in the context of Section 205 proceedings instituted by me The solicitors for the Appellant and the Respondent on 25th and 26th October 2000 wrote to the arbitrator in virtually identical terms The opening paragraph of the letters differs only in so far as necessary for the solicitors to identify their respective clients Notably neither letter mentions Warrantell which as stated above now owned the Respondent s former shareholding in the company In fact each letter inaccurately ascribes this shareholding to the Respondent These letters contain the terms of reference of the arbitrator since according to its terms he was not to see the consent The crucial paragraph read as follows It has been agreed between the parties that Mr McCarthy shall dispose of his shares in the above companies The purchase and sale of the shares is to be conducted on the basis of there being a willing purchaser and a willing seller It went on to deal with certain procedural matters based on the contents of the consent These included a specification of the valuation date as 21st July 2000 This aspect of the matter presented some practical difficulties which are indirectly related to one of the items in dispute The consent had provided that the respondents were to have the accounts audited up to the valuation date by one of a number of named firms of auditors The arbitrator accepted the assignment and proceeded immediately to propose a timetable for the exchange of submissions and meetings The original timetable turned out to be too ambitious Procedural disputes developed between the parties particularly about the Appellant s solicitors demands for extensive documents and information from the Respondent and the company and the response that the Appellant had been the Finance Director of the company and was privy to most of the information in any event Whatever the rights and wrongs of these disputes the arbitrator extended times and regulated procedures Matters dragged on throughout 2001 Only two of these procedural disputes are now relevant Firstly the Respondent s original written submissions to the arbitrator were accompanied by a report from Price Waterhouse Coopers hereinafter PWC A covering letter explained that neither PWC nor any other firm had been able to prepare a report on the Balance Sheet at the relevant date These submissions were not sent to the solicitors for the Appellant It had been envisaged that submissions would be exchanged The Appellant s solicitors insisted that there be audited accounts up to 21st July 2000 as provided in the consent and expressly included in the terms of reference of the arbitrator and refused to accept the PWC report as satisfying the requirements of an audit Deloitte and Touche prepared a report and accounts The Respondent s solicitors sent a copy to the arbitrator and stated that they intended to update the submissions already made They formally withdrew the earlier submissions and promised new submissions by a date which they did not meet but it was later extended On 4th December 2001 the arbitrator sent the parties a new note of procedures to be followed He stated that all existing submissions were to be disregarded and that new submissions were to be made by 14th December and that he would exchange these forthwith The Respondent s submissions though late were received by the arbitrator within a final extended period up to 18th January 2002 The Appellant s solicitors said that they expected that their own original submission prepared by BDO Simpson Xavier should be included More importantly they demanded and this has become one of their grounds of complaint that the original submissions of the opposing party would be included as there would be essential comparisons to make between it and their present submission This point has been repeatedly made in various forms The arbitrator declined this request responding that he was not concerned with earlier submissions if they are not part of the final submission However it should be noted that the Appellant was provided with a copy of the PWC report itself They were deprived only of the Respondent s original submissions which had been withdrawn Secondly the arbitrator ruled that the parties should make submissions which would be exchanged He made no provision for either party to submit a rejoinder which also became a bone of contention in due course The oral hearing took place on 21st February 2002 Both parties were represented by Senior Counsel Apart from the two procedural matters already mentioned the Appellant claims that the arbitrator misconducted himself by making certain rulings concerning the basis of the arbitration His task was to value the Appellant s 39 shareholding in the company A minority shareholding may attract a significantly lower than proportionate valuation Hence the precise terms of reference of the arbitrator may be crucial to the basis of valuation The arbitrator stated his understanding at the outset that the valuation was to be determined on the basis of a willing seller and willing purchaser He said that he had no role or function as to the circumstances that arose in the valuation being pursued This was to be described not necessarily accurately as an open market valuation Mr Michael Cush Senior Counsel who represented the Appellant at the arbitration expressed fundamental disagreement with this approach He proposed to call evidence to show that the company had been run as a quasi partnership Mr Shipsey Senior Counsel for the Respondent opposed the calling of such evidence He said that the terms of reference were clear and limited to valuing a 39 stake in a series of companies on the basis of a willing purchaser He also said that the valuation was to be on the basis of a willing vendor and a willing purchaser not a specific vendor and purchaser Mr Cush in response accepted that the arbitrator was not being asked to find oppression but argued that whether or not here was a quasi partnership was relevant in determining whether there should be a discount for a minority shareholding Having heard these arguments the arbitrator repeated his opening rulings and added that he was not prepared to get involved in any way in the background or circumstances that led up to the litigation in any shape or form He ruled that he was not concerned with the identity of either vendor or purchaser The other complaint concerning the arbitration was more procedural The Respondent s solicitors sent to the arbitrator but not to the Appellant s solicitors a document purporting to be a rejoinder to the Appellant s submission As already stated such a pleading was not provided for in the procedures adopted by the arbitrator At the opening of the hearing the arbitrator referred to a letter dated 8th February which he had received from the Respondent s solicitors stating that he would refer to it later He suggested two different ways of dealing with this letter One was by a short adjournment after the opening statements The other was to simply read it into the record as part of the oral submissions as it was a response to the submission that had been made by the other side He said that he had copies but he did not make them available at that stage Nor however was he asked to provide copies after he had asked for comments on the procedure In fact he adopted the second procedure Having concluded the oral hearing the arbitrator adjourned to prepare his award On 21st March 2002 the solicitors for the Appellant wrote by fax to the arbitrator In a lengthy letter they argued that the arbitrator had misinterpreted his terms of reference on the issue of the correct basis of valuation They said that this was a matter on which a full argument should be had before any decision was reached The letter suggested at several points that the arbitrator might find himself in contempt of the court order albeit unintentionally They suggested that the arbitrator reconvene the arbitration for the purpose of hearing argument as to the appropriate method of valuation The letter ended by asking the arbitrator to withhold reaching a final determination to give their client not less than fourteen days notice if you intend to deliver your decision so that they sic may take such proceedings as are necessary By a return fax letter of the same day the arbitrator objected that it was wholly inappropriate and indeed totally wrong that any party should make contact of any nature with the arbitrator on the matters in issue He said that his award had been completed on 18th March but that the fax had arrived before its issue After brief reference to his terms of reference he stated that he would defer issuing his award until mid day on Friday 12th April a period in excess of the fourteen days which had been requested The letter concluded If you wish to make an application to the High Court in the matter you should do so before 12 April 02 In the alternative you can withdraw your faxed letter of 21 March The solicitors for the Appellant in a fax letter of 25th March stated Having taken my client s instructions he has indicated that we are prepared to take up the award on his behalf The letter indicated that the Appellant was reserving his rights but stated that there was no need to defer the issue of the award By letter of 28th March 2002 the arbitrator communicated his award to the parties Misconduct The Appellant has made the following complaints of alleged misconduct against the arbitrator arising from these events The two procedural complaints are set out above The substantive complaint relates to the approach to valuation adopted by the arbitrator and has concentrated on different aspects of the rulings The following represents the way in which these complaints were presented at the hearing of the appeal 1 The arbitrator wrongly decided that he was deemed not to know the identity of the vendor and the purchaser without hearing adequate submissions entitling him to reach that conclusion 2 The arbitrator wrongly ruled out consideration of the terms of the Court order exclusive of the Consent 3 The arbitrator ruled out evidence on the issue of quasi partnership or the appropriateness of a minority discount 4 The arbitrator failed to provide the Appellant with the original submissions of the Appellant as based on the PWC report 5 The arbitrator wrongly permitted the Respondent to introduce the rejoinder document of 8th February 2002 in particular by ruling on the matter before the letter was read at the hearing In addition to alleging misconduct the Appellant asks that the Court remit the award to the arbitrator pursuant to section 36 of the Arbitration Act 1954 All of these complaints were dismissed by Lavan J in a careful written judgment The learned judge summarised the submissions of the parties and concluded that there was no basis for interference with the award He held that the arbitrator had conducted himself correctly within the terms of his appointment Legal Principles The Appellant relies on the provisions of the Arbitration Act 1954 in seeking to have the arbitrator removed and his award set aside Section 36 1 provides as follows In all cases of reference to arbitration the Court may from time to time remit the matters referred or any of them to the reconsideration of the arbitrator or umpire Section 37 reads Where an arbitrator or umpire has misconducted himself or the proceedings the Court may remove him Section 38 1 provides Where a an arbitrator or umpire has misconducted himself or the proceedings or b an arbitration or award has been improperly procured the Court may set the award

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  • no conviction or acquittal Double Jeopardy It has for a long time been a principle of the common law that a person cannot be prosecuted and punished for an offence of which he has already been acquitted or convicted This is commonly referred to as the rule against double jeopardy It is a rule which applies to the prosecution for criminal offences The rule or what also might be called the notion of double jeopardy is not normally relied upon in express terms in the sense that if a person is prosecuted for an offence arising out of the same breach of the law or the same essential ingredients for which he has previously been tried and either convicted or acquitted his defence to the second prosecution will be based on the pleas of autrefois acquit or autrefois convict If either plea is successful the prosecution may proceed no further I suppose if a prosecution was initiated against a person for an offence for which he had previously been prosecuted and was awaiting trial he or she might well invoke the rule of double jeopardy in a general sense but the fundamental basis for resisting the second prosecution would be grounded more on an abuse of process or that the court concerned with the second prosecution had no jurisdiction to deal with the matter when another Court was already seized with an existing prosecution for the same offence However one approaches it the fundamental point is that the rule of double jeopardy and associated protections against being prosecuted twice for the same offence is a rule which arises in relation to the prosecution of offences The only criminal process with which the company in this case is concerned with is that which arises out of the two summonses before the District Court There is and there was not at any time any other criminal process or criminal prosecution Since there was no other criminal process no charge no trial of guilt or innocence the question of double jeopardy in relation to the District Court prosecution could not arise In that sense the approach of the District Court Judge was misconceived That is the only prosecution which has been brought against the company at any stage If the company feel aggrieved that the administrative process by which they were required to pay late entry fees imposed a criminal penalty in denial of their constitutional rights then it has been open to them to challenge that statutory consequence But that is a different matter to be taken up in different proceedings A District Judge must proceed on the basis of the presumption of constitutionality of an act of the Oireachtas Accordingly there having been no prior criminal prosecution no charge no conviction or acquittal the second named respondent was incorrect in holding that the prosecution pending before him was affected by the question of double jeopardy Accordingly I conclude that he was wrong in law in striking out the summonses and in failing to hear and determine the proceedings brought on foot of them For the reasons stated I would allow the appeal and set aside the order of the District Judge striking out the summonses and make the necessary order requiring him to hear and determine the matters before him 10 THE SUPREME COURT Murray C J Hardiman J Geoghegan J 145 03 The Registrar of Companies Applicant Appellant v Judge David Anderson and System Partners Ltd Respondents Judgment of Murray C J delivered on the 16th day of December 2004 This is an appeal by the applicant appellant the Registrar of Companies from a refusal of the High Court to grant his application for an order of certiorari by way of judicial review of a decision of the first named respondent made on 25th June 2002 in the District Court when he struck out two summonses which had been issued by the appellant against the second named respondent company for breach of s 125 of the Companies Act 1963 by failing to file annual returns for the said company within the times specified in the Act for the calendar years 2000 and 2001 It is not in dispute that the second respondents hereafter the company failed to file their annual returns as required by s 125 of the Companies Act 1963 As a consequence the company was prosecuted for its failure to make the returns pursuant to that section Subsequent to the issuing of the summonses for the said prosecution and before the matter came for hearing before the District Court the company filed its annual return in respect of each of the years in question Because it was late in filing its returns the company had to pay to the Registrar a significantly higher fee with the return than would have been the case if it had filed the returns by the due date The fee payable by a company if it files its annual return on time is 30 00 However by virtue of the Companies Fees Order 2001 S I 477 2001 the company was required to pay a fee with the late filing of the annual returns higher than the normal 30 00 The company did not file its annual returns for the years 2000 and 2001 until June 2002 and therefore were subject to the late filing fees imposed by the aforesaid order Those fees amounted to 1 200 00 in respect of the year 2000 and 379 00 in respect of the year 2001 Subsequent to the late filing of the returns and the payment of the associated late filing fees the prosecution by the appellant of the company for failing to make their returns came before the District Court on June 25th 2002 At that hearing it was drawn to the attention of the first named respondent that the company had already filed the returns in question albeit late and paid the associated late filing fees which were far in excess of what

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  • the same case Kingsmill Moore J at p 24 had this to say There was some debate during the course of the argument as to the interpretation of the words criminal charge I take it as meaning no more than an accusation in proper legal form of having committed a criminal offence What is a crime The anomalies which still exist in the criminal law and the diversity of expression in statutes make a comprehensive definition almost impossible to frame The criminal quality of an act cannot be discerned by intuition nor can it be discovered by reference to any standard but one is the act prohibited with penal consequences said Lord Atkin in Propriety Articles Trade Association v Attorney General for Canada 1931 A C 301 at 324 A recent textbook Cross and Jones suggests as a definition a crime is a legal wrong the remedy for which is the punishment of the offender at the instance of the State Of course it is true that a statutory summary offence may not require mens rea and may be punishable merely by a fine But the formalities whereby the defendant is tried are obviously criminal in nature and there is a prison sentence in default of payment of the fine I cannot see that there is any analogy between that and a perfectly sensible provision that as a deterrent against late filing of returns in the Companies Registration Office the company in default must pay increased fees It is of course open to argument that the increased fees are excessive or work a hardship or unfairness but they are still not a criminal penalty and if a company such as the second named respondent has any conceivable remedy for such alleged unfairness it lies elsewhere than pleading double jeopardy in the criminal prosecution The criminal prosecution comprised as I have already mentioned two charges and the offences alleged were contrary to s 125 of the Companies Act 1963 as amended by s 15 of the Companies Amendment Act 1982 and s 244 of the Companies Act 1990 This was quite clearly by the terms of the statute a criminal prosecution Mary Shortall in her affidavit states that in April 2002 a number of the companies in default with filing were randomly selected for prosecution pursuant to section 125 of the Companies Act 1963 This policy of random selection may well aggravate the sense of grievance but it is not something which is relevant on this appeal As far as this appeal is concerned the only question is whether the appellant was subjected to double jeopardy when he was prosecuted For the reasons which I have indicated I am satisfied that he was not Accordingly I would allow the appeal set aside the order of the High Court and substitute for it an order of certiorari quashing the order of the District Court and remitting the prosecutions to the District Court for trial While it will obviously be a matter for the District Court it would seem to be in accordance with established jurisprudence that the payment of the substantially increased fees would be a legitimate matter to take into consideration by way of mitigation of penalty if there is a conviction Regr of Cos v DJ Anderson Ors 7 THE SUPREME COURT Murray C J Hardiman J Geoghegan J 145 03 BETWEEN THE REGISTRAR OF COMPANIES Applicant Appellant and DISTRICT JUDGE ANDERSON AND SYSTEM PARTNERS LIMITED Respondent Respondents JUDGMENT of Mr Justice Geoghegan delivered the 16th December 2004 It is provided in the companies legislation that fees may be charged for the registration of documents in the Companies Office and that different which in practice means increased fees may be charged where the registration of documents is not done within a specified statutory time The second named respondent was late in filing returns and had to pay substantially increased fees as a result also under the companies legislation it is provided that a company which does not make its annual return within the prescribed time is guilty of an offence and may be prosecuted by the Registrar of Companies In this case the second named respondent after paying the substantially increased fees was also prosecuted for late returns in two respective years under two separate charges before the District Court The first named respondent made an order striking out the two charges on the grounds that the second named respondent was being subjected to double jeopardy The Registrar sought and obtained leave to bring judicial review proceedings seeking to quash the order of the District Court The proceedings duly came before the High Court Quirke J for hearing He upheld the view of the District Court judge that it was a case of double jeopardy and refused the application for judicial review Before this court now is an appeal from that decision It is important that I should refer to the relevant legislation and then go on to define as best I can the principle of double jeopardy S 369 of the Companies Act 1963 provided for a table of fees for the registration or delivery of documents to the registrar of different kinds and in different amounts depending on the category of return These fees were set out in the Eighth Schedule to the Act S 395 of the Companies Act 1963 as amended empowers the relevant Minister to alter the fees by order Subsection 3 of the amended section reads as follows 3 To avoid doubt an alteration to the Eighth Schedule under subsection 2 a may provide for different fees to be charged for the registration of documents depending on whether they are delivered to the Registrar of Companies within a specified time or at various times after a specified time As a consequence of other permitted Statutory Instruments made by the Minister the annual return had to be completed within 77 days of the Annual General Meeting and filed forthwith with the Companies Registration Office Pursuant

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  • presumed intention of the parties but deriving from the nature of the contract itself and referred to Lord Wilberforce s description of the different categories as no more than shades on a continuous spectrum I take this to mean that the range of cases or the variety or kinds of cases in which a term will be implied is not confined in any way and that there is vested in the court a wide discretion as to when it shall regard it as reasonable to imply a term such as a reasonable notice term I say this because a feature of the present case and an unusual feature is that in spite of the very large volume of business transacted by Wyeth with Dakota and of the very substantial investments both in terms of money premises plant and machinery and personnel no long term or even medium term supply agreement was ever entered into between Dakota and Wyeth Such an agreement would be of more benefit to Dakota than to Wyeth but one cannot say that it would not have been of some benefit to Wyeth also since they had a dependence on Dakota which was recognised albeit in a somewhat negative way by Ms Todd at the backend of 2002 when she embarked upon an examination of the risk to Wyeth of this dependency page 32 He continued at page 32 The question now is whether the relationship which developed between Wyeth and Dakota during and after 1998 changed things in such a way as to bring that relationship which was an evolving one into that category of relations which the law has recognised as capable of having implied therein a term that it will not be terminated other than on the basis of reasonable notice being given The following step in the reasoning is crucial and merits full citation At page 32 33 Peart J said In 1997 1998 there was a development in the evolution of the relationship between Wyeth and Dakota New products were being launched by Wyeth and very substantial quantities were expected I am satisfied that Wyeth wanted Dakota to supply these anticipated increased volumes if it had the capacity This accounts for Mr Slater speaking to Dakota at the time about moving its operation to an upgraded and larger premises if it wanted to be a major player in the packaging industry There is no doubt also that Dakota was an ambitious company anxious to expand its business and it goes without saying that it would jump at the chance of supplying Wyeth with the sort of quantities which were being talked about Dakota had other customers which a new premises and upgraded facility would also benefit But I am satisfied that a very close relationship had developed between these two companies by this time and without going so far as to say that Dakota was induced by Wyeth to invest so heavily in new premises and equipment it was clear that if that was done the new business would come their way It was certainly a benefit to Dakota but it was also a benefit to Wyeth who now had a local supplier who could satisfy its requirements both as to reliability of supply and as to quality of product Both of these factors are of critical importance to Wyeth given the business it is in This is borne out by the evidence given by Wyeth As we now know the new levels of business did come Dakota s way and in fact the forecasts were exceeded But while I am not saying this close cooperation and encouragement by Wyeth to invest created of itself some sort of contractual relationship it was a very significant factor in the development of the overall relationship between the parties and a factor which I must take into account when considering the nature of the relationship between the parties I prefer to use the phrase nature of the relationship between the parties because the use of the word contract is confusing in this case because as Mr Murray was at pains to point out there never was any contract in existence except each individual order of specific goods from time to time and perhaps the commitment to purchase those goods specified in the firm window in the forecasts given by Wyeth But to confine myself to that contract is to ignore essential aspects of the overall relationship and would fail to recognise what Murphy J was referring to in Sweeney v Duggan when he stated that there are a variety of cases in which a contractual term will be implied on the basis not of the intention of the parties but deriving from the nature of the contract itself I refine this a little bit further for the purpose of this case by stating that it ought also to be derived from the nature of the relationship of the parties as in the present case I accept that for a term to be implied it must not just be reasonable but must also be necessary In addition I am satisfied that a term cannot be implied simply because one party considers that in all the circumstances it would be fair to them It must also be capable of formulation with reasonable precision That much is clear from the English authorities and from Sweeney v Duggan Later on the same page he continued But in relation to the development of the relationship from 1998 I have absolutely no doubt that both parties would have regarded the giving of reasonable notice as a desirable thing had it been discussed I do not have to state why Dakota would regard it as desirable because that is obvious But as far as Wyeth is concerned they were also putting themselves in a position of some dependency on Dakota This was not seen as risky at the time but there was risk That risk was appreciated by September 2002 as we know In fact I find it extraordinary that the matter was not brought up for discussion by Dakota either of their own motion as it were or on the prompting of their Bank or even their auditors However that was the situation Dakota either closed their minds to the possibility of peremptory termination or worked on the assumption that everybody would be decent about things when and if that situation arose While Wyeth have said that they would never agree to enter into any long term supply agreement with a supplier and do not in fact do so that is not the same as saying that they would never agree to reasonable notice of termination The fact that they do not have long term supply agreements with their suppliers does not prevent this court from finding that a term of reasonable notice is capable of being implied At a later stage he gave further consideration to the grounds on which a term may be implied He considered that would be fair to both parties and also reasonable He said that it was necessary to give business efficacy to the relationship after 1998 He also spoke of giving business efficacy to the arrangements between the parties I have quoted at such length because it is necessary to understand what exactly the learned trial judge decided It is perfectly clear in my opinion that the learned trial judge held that there was never at any time an agreement or a contract between the parties other than individual purchase and sale contracts Mr Gardiner in seeking to explain what was from his point of view a very stark finding that no long term or even medium term supply agreement was ever entered into between Dakota and Wyeth sought to argue that the judge was merely referring to the absence of a written agreement However that is not what he said and there is nothing in the immediate context of this statement to suggest that the judge was making such a qualified statement Other of the passages quoted above show the learned trial judge studiously even elaborately avoiding the use of the word contract or agreement I cannot agree with Mr Gardiner s submission that the learned trial judge held that there was a contract He preferred quite expressly to use the phrase nature of the relationship between the parties because as he said the use of the word contract is confusing in this case Even in the passage where he cited Murphy J on the question of implying terms into contracts he felt it necessary to refine that dictum by stating that it ought also be derived from the nature of the relationship of the parties Accordingly I am satisfied that the learned trial judge was very careful even deliberate in his use of language It was not as suggested by Mr Gardiner ambiguous He may have been mistaken in the legal conclusion he drew but that is a different matter Furthermore it was quite consistent with the evidence and with the comments made by the learned trial judge on it that he should come to this conclusion The case as originally pleaded and presented by Dakota was that the agreement was made in October 1993 at the outset of the dealings between the parties As we have seen the learned trial judge rejected that contention holding that each order constituted a contract for the delivery of stipulated goods Next at the hearing Dakota relied on a letter written by Wyeth in 1996 in a very particular context Dakota had been required to engage in a tendering process if they were to continue supplying Wyeth Initially Dakota lost out in this process in favour of other suppliers They were able however to persuade Wyeth to reverse this decision because the competing tenders had been submitted on an incorrect basis which had distorted the process The important point was that in the intervening period when Dakota were going to lose the business Wyeth wrote a letter to Dakota as follows We refer to your recent tender submission in regard to our folding carton business in Ireland and the UK Regretfully your tender has not been successful in this instance The Preferred Supplier status has been awarded to a limited number of companies for our carton business It is our intention to transfer business over a mutually agreed period of time This letter became a major plank in the evidence of Mr Tony Fox on behalf of Dakota He maintained that it demonstrated that Wyeth had agreed to adopt some form of mechanism of termination Again as already seen Peart J rejected this contention He could not see how the letter could constitute anything in the way of a binding commitment Dakota had to depend on the evidence of Mr Fox if it were to establish the existence of a binding agreement Mr Fox expressly agreed that Dakota did not have a long term supply agreement with Wyeth Curiously he maintained nonetheless that they had a long term contract He was pressed repeatedly on this point in cross examination A representative answer would be the following We did not have an agreement in written format In the spirit of the working relationship that existed form 1993 it was our firm belief that there was an agreement between Dakota Packaging and Wyeth and that then least that we would have expected as a result of that very close working relationship and the investment that we put in to support Wyeth in what was a very dramatic period for them was that they would respect that and in their decision to exit which we don t have a problem with and in effect what we are looking for is a managed exit programme that will not damage our business At another point asked whether Dakota had an agreement which required Wyeth to do business for a particular period he said The only agreement that we had in terms of volumes were basically the forecasts that we were given on an annual basis Mr Fox gave no evidence of anything in the nature of a negotiated agreement In reality Dakota asked the court to infer an agreement from the relationship between the parties the extensive business they were doing the investment that Dakota had made and the undoubted history of close cooperation between the parties on every aspect It is impossible not to be impressed with the commitment of Dakota to the business and the large volume of sales they built up It is a notable feature of the case that no complaint is made about the quality of Dakota s service to their customer Consequently it is not at all surprising that they were aggrieved at losing this very valuable customer so suddenly Nonetheless Peart J could find the existence of an agreement only if there was evidence to support it Such written communications as existed tended to negative the existence of any long term commitment by Wyeth For example in January 2000 Wyeth denied any responsibility for stock purchased outside the two month firm period For reasons already given I am satisfied that the learned judge came to a carefully considered view that there was no agreement or contract and that this conclusion was firmly based on the evidence Having regard to this conclusion it is not contested that the learned trial judge was not entitled to imply a term into the arrangements or the relationship between the parties In Sweeney v Duggan Murphy J noted that there were at least two situations where the courts will independent of statutory requirement imply a term which has not been expressly agreed by the parties to a contract my emphasis He considered citing The Moorcock 1889 14 P D 64 the case of terms inferred on the basis of the presumed intention of the parties He also referred to the variety of cases in which a contractual term has been implied on the basis not of the intention of the parties to the contract but deriving from the nature of the contract itself emphasis added Here he referred to Liverpool C C v Irwin 1977 A C 239 Later he stated Whether a term is implied pursuant to the presumed intention of the parties or as a legal incident of a definable category of contract it must be not merely reasonable but also necessary Clearly it cannot be implied if is inconsistent with the express wording of the contract and furthermore it may be difficult to infer a term which cannot be formulated with reasonable precision emphasis added Quite clearly therefore there must be a contract before a term can be implied Peart J having determined that there was no contract of the relevant type was not entitled to infer or imply any term His refinement of the dictum of Murphy J was not justified There must be a contract Since that is sufficient to determine the appeal it is not strictly necessary to comment further Nonetheless I think it desirable to state that the cases on the topic indeed the cases which were very properly cited by the learned trial judge do not warrant at least some of the language used in the judgment In particular the courts do not have a broad discretion to imply terms It is not enough that a term to be implied is fair and reasonable It is true that the learned judge went on to hold that the term must also be necessary but it is important to bear in mind that the courts will not lightly infer terms In this case the implication of a term that reasonable notice must be given seems assuming there to be a contract simple enough but Peart J himself saw difficulties in formulating the term when he considered the obligations of Wyeth during the notice period How much product did they have to buy At what price Clearly these were matters that would have been the subject of detailed negotiation if the matter had arisen That is an additional reason It would be difficult to measure up to the reasonable precision test postulated by Murphy J Other Defences Wyeth relied on two additional grounds of defence which they argued on the appeal Firstly they argued that reliance on the alleged agreement being one not to be performed within one year from its making would have been defeated by the requirement that it be evidenced by a note or memorandum in writing for the purpose of the Statute of Frauds Ireland 1695 There was an interesting discussion as to the status in Irish law of the doctrine of part performance in the cases of contracts of this type English case law before the requirement was abolished appeared to hold that the doctrine applied only to contracts for the sale of land see Britain v Rossiter 1879 11 QBD 123 Maddison v Alderson 1883 8 App Cas 467 Palles C B on one view declined to follow these cases in Crowley v O Sullivan 1900 2 I R 477 More recently however Barron J speaking for this Court and referring to Maddison v Alderson stated in Mackey v Wilde 1998 1 I L R M 449 that in all the earlier cases it was assumed that the acts of part performance must necessarily relate to and affect land The conclusion in the present appeal is that there was no contract so the question of the need for writing does not arise Accordingly it seems better to leave that as well as a point concerning the absence of writing to satisfy the Sale of Goods Act for debate on another day I would allow the appeal and substitute for the judgment of the High Court an order that there being no agreement the appellant was not required to give the Respondent reasonable notice of termination of the trading relationship between the parties That is the only matter before this court Mr Gardiner says that there are outstanding matters such as a claim based on alleged misrepresentation and that they will be pursued before the High Court That does not appear to require any order from this court but the parties should be heard following the delivery of this judgment 17 THE SUPREME COURT 68 110 04 Murray C J Hardiman J Fennelly J BETWEEN Dakota Packaging Ltd Plaintiff Respondent and AHP Manufacturing BV trading as Wyeth Medica Ireland Defendant Appellant JUDGMENT delivered on the 15th day of December 2004 by FENNELLY J In a judgment delivered on 10th October 2003 Peart J determined that the Appellant hereinafter Wyeth were bound to give reasonable notice to the Respondent hereinafter Dakota of the termination of a trading relationship whereby they had been major purchasers of packaging from the latter He also determined that the period of notice should be twelve months and that during the period of notice Wyeth were obliged to continue to purchase whatever goods of that type Wyeth required during that period Wyeth s main point is that the learned trial judge purported to imply the term with regard to reasonable notice while finding that there was no long term purchase agreement between the parties Dakota concedes that a term cannot be implied where there is no contract but maintains that the learned trial judge in effect and despite some ambiguous language found that there was such a contract While the parties both in the High Court and in this Court presented extensive submissions on the law regarding implied contract terms there was no fundamental disagreement as to the relevant principles or cases It was agreed that there can be no implied term without a contract Thus the principal issue to be determined is whether the learned trial judge found that there was a contract other than individual contracts for the sale of goods The Facts Dakota is one of Ireland s major print and packaging companies It was a public limited company until 1994 It trades from Airways Industrial Estate Dublin 17 At the commencement of these proceedings it employed some 160 persons Employment had peaked at over 200 about the year 2000 The Appellant is a company registered in the Netherlands but trades in Ireland as Wyeth Medica Ireland It is part of a major American multi national company which manufactures pharmaceutical products Its Irish manufacturing base is at Newbridge Co Kildare where it manufactures contraceptive products Both companies are sophisticated enterprises operating in a competitive business environment and are accustomed to the need for high standards After initial contacts in 1993 Wyeth commenced purchasing packaging from Dakota From small beginnings of some IR 100 000 in 1993 the business increased to IR 700 000 in 1995 The greatest increase was from 1999 onwards About that time Dakota invested some 10 million in its manufacturing facilities in order to assist the growth of its business with Wyeth The business increased to just short of 4 million in 1999 and reached a peak value of 8 6 million in 2000 falling slightly to 8 million in 2001 and to 6 2 million in 2002 At the time of the commencement of the proceedings the Wyeth business represented approximately 40 of the total turnover of Dakota In late 2002 and early 2003 Wyeth expressed concern about the financial stability of Dakota These concerns were the subject of much discussion and argument between the parties Whether these concerns were justified or not and it is only fair to say that Dakota maintains that they were not does not need to be decided and it was not decided in the High Court It appears that the real effect of these events was to cause Wyeth to take a closer look at the prices they were paying to Dakota and to conclude that the goods could be sourced more competitively elsewhere Again whether they were correct in this respect is not relevant Dakota s sole contention is that while Wyeth were entitled to terminate their trading relationship they were required to give reasonable notice or as it was put in evidence on behalf of Dakota to agree an exit strategy Thus Wyeth did not have to justify the termination or even give a reason provided they gave proper notice Unless there was some long term agreement between the parties for the sale and purchase of packaging there was no contract into which Peart J was entitled to imply a term that reasonable notice had to be given of its termination In one sense this issue can be disposed of simply by looking at the judgment of Peart J Dakota has not appealed his findings regarding the existence or otherwise of a contract If as Wyeth maintains Peart J found there was no such contract they are entitled to succeed on the appeal Therefore I will refer to the judgment of the learned trial judge as fully as is necessary to deal with this question I will also however refer to the evidence which according to Dakota established the existence of such a contract Principally this evidence was given by Mr Tony Fox who was at all material times the sales director of Dakota In saying this I would also remark that as was rightly stated by Mr Paul Gardiner Senior Counsel for Dakota the facts themselves were not in serious dispute The High Court Judgment The following appear to me to be the most material passages from the judgment of Peart J Firstly in summarising the facts he made the following statements A critical feature of this trading relationship as far as the present dispute is concerned is that at no time was there ever any supply agreement in writing concluded between the parties The relationship developed over time with orders for product being received from Wyeth and being supplied on an order by order basis by Dakota although Wyeth would from time to time give Dakota a forecast of anticipated orders so that presumably Dakota could have sufficient raw materials available when the orders were placed to fulfil the orders without delay In relation to orders Mr Tony Fox Dakota s Sales Director agreed when giving evidence that each order placed represented a separate contract for the supply of the goods so ordered The standard terms and conditions appearing on the back of each order form were in line with this but Mr Fox went on to say that if that was to be the sole basis on which business was to be done with Wyeth its orders could not have been fulfilled to meet their requirements and that was why annual forecasts of volumes were made so that the necessary quantities of raw materials i e board would be in stock at Dakota to meet the orders placed Those stocks of board had to be bought in from board manufacturers and the lead time for that was about 10 12 weeks He said that the business relationship with Wyeth could not have developed and matured in the way it did if Dakota were to operate only on the basis that Wyeth had no obligations over and above what was stated on the order form but he had to accept that on paper that was the extent of Wyeth s obligation in relation to goods ordered page 9 Mr Fox also confirmed in his evidence that in early 1997 Wyeth introduced what is described as a Blanket Order system of ordering in order to cut down on paperwork given the number of orders being placed from time to time A letter from Wyeth dated 29th January 1997 announcing the introduction of this new purchasing system stated that the normal purchasing terms and conditions would continue to apply and then stated that the Blanket Order should not be interpreted as a firm commitment by WMI to purchase the authorised quantity stated in the Blanket Order You may only produce and deliver the stated call off quantities pages 9 10 Mr Fox was also referred to a further development in purchasing arrangements which was introduced in January 2000 This is what has been referred to as the two month firm window In effect there would be a six month forecast given of anticipated orders going forward but there would be a two month firm window the latter being what Dakota could actually manufacture and that Wyeth guaranteed to take and pay for The forecast six month period was merely indicative and Wyeth had no obligation to purchase on foot of it In April 2000 a document was sent by Wyeth entitled Standardized procedures for vendors and this set out the new arrangements relating to Firm period and Forecast and other matters which would form the basis for the purchasing arrangements with all Wyeth suppliers and not just Dakota Under the paragraph headed Forecast it states The forecast period is for the following four months of the schedule Vendors should use the Schedule period to forecast for base material for periods outside of the Firm Period This period can be used by supplier to produce hold stock but WMI is not liable for any stock outside the firm period that does not have a purchase order While Mr Fox acknowledged that this document existed he again stated that from a practical point of view it was not possible to operate strictly in accordance with it because of the lead time needed to buy in raw material from board manufacturers The two month window would not give sufficient lead time page 10 More importantly when he came to what he described as his conclusions the learned judge said Nothing was ever written down and each order constituted a contract for the delivery of the stipulated goods Business gradually increased through 1995 to 1998 when just less than two million euro worth of business was transacted again just on an order by order basis page 29 In 1996 as we know Dakota had at first failed to win a tender for the Wyeth business at that time On the 14th February 1996 a letter was received from Mr Slater indicating that the business was to be transferred to a new supplier but he also indicated that the business would be transferred over a mutually agreed period of time and he then thanked Dakota for its support in the tendering process whatever that meant and also expressed appreciation for the long standing association between the two companies In my view taking a snapshot of the relationship between the two companies at that time there was no obligation upon Wyeth to give any notice to Dakota and anything contained in that letter was a voluntary gesture on the part of Wyeth Perhaps indeed it suited Wyeth to transfer the business gradually to its new suppliers rather than to have the changeover take place overnight In any event it was expressed in the way that appears in the letter but I cannot see how that letter can constitute anything in the way of a binding commitment that at any future time at which the relationship might be terminated the transfer of business to any new supplier would be undertaken in a timeframe to be mutually agreed between the parties It could not amount to that and I am satisfied that no form of estoppel can arise therefrom If there is to be a term of reasonable notice implied into the relations between the plaintiff and the defendant it cannot in my opinion arise by virtue of that letter pages 29 30 I am satisfied that the level of the relationship as of that time was of a character similar to many a business relationship of 5 years standing In any walk of life business comes and goes It can go for any number of reasons or for no reason other than someone s whim or a simple desire for change and no notice may be required to be given in these circumstances unless there is an express term to the contrary Nevertheless the law has recognised that in some circumstances reasonable notice of termination must be given even where there is no such term expressed in any written contract between the parties I have been referred to a number of such cases each of which is different in terms of the type of relationship existed between the parties and there is certainly no case to which I have been referred which is on all fours with the present case though there are some similarities in some of the cases But the fact that the court will imply terms in certain circumstances is well settled page 30 Having referred to the judgment of Murphy J in Sweeney v Duggan 1997 2 I R 531 he continued on page 29 Having referred to the said officious bystander he went on to say that in addition to the sort of case in which the parties would say Oh but of course there was a variety of cases in which a contractual term would be implied not on the basis of the presumed intention of the parties but deriving from the nature of the contract itself and referred to Lord Wilberforce s description of the different categories as no more than shades on a continuous spectrum I take this to mean that the range of cases or the variety or kinds of cases in which a term will be implied is not confined in any way and that there is vested in the court a wide discretion as to when it shall regard it as reasonable to imply a term such as a reasonable notice term I say this because a feature of the present case and an unusual feature is that in spite of the very large volume of business transacted by Wyeth with Dakota and of the very substantial investments both in terms of money premises plant and machinery and personnel no long term or even medium term supply agreement was ever entered into between Dakota and Wyeth Such an agreement would be of more benefit to Dakota than to Wyeth but one cannot say that it would not have been of some benefit to Wyeth also since they had a dependence on Dakota which was recognised albeit in a somewhat negative way by Ms Todd at the backend of 2002 when she embarked upon an examination of the risk to Wyeth of this dependency page 32 He continued at page 32 The question now is whether the relationship which developed between Wyeth and Dakota during and after 1998 changed things in such a way as to bring that relationship which was an evolving one into that category of relations which the law has recognised as capable of having implied therein a term that it will not be terminated other than on the basis of reasonable notice being given The following step in the reasoning is crucial and merits full citation At page 32 33 Peart J said In 1997 1998 there was a development in the evolution of the relationship between Wyeth and Dakota New products were being launched by Wyeth and very substantial quantities were expected I am satisfied that Wyeth wanted Dakota to supply these anticipated increased volumes if it had the capacity This accounts for Mr Slater speaking to Dakota at the time about moving its operation to an upgraded and larger premises if it wanted to be a major player in the packaging industry There is no doubt also that Dakota was an ambitious company anxious to expand its business and it goes without saying that it would jump at the chance of supplying Wyeth with the sort of quantities which were being talked about Dakota had other customers which a new premises and upgraded facility would also benefit But I am satisfied that a very close relationship had developed between these two companies by this time and without going so far as to say that Dakota was induced by Wyeth to invest so heavily in new premises and equipment it was clear that if that was done the new business would come their way It was certainly a benefit to Dakota but it was also a benefit to Wyeth who now had a local supplier who could satisfy its requirements both as to reliability of supply and as to quality of product Both of these factors are of critical importance to Wyeth given the business it is in This is borne out by the evidence given by Wyeth As we now know the new levels of business did come Dakota s way and in fact the forecasts were exceeded But while I am not saying this close cooperation and encouragement by Wyeth to invest created of itself some sort of contractual relationship it was a very significant factor in the development of the overall relationship between the parties and a factor which I must take into account when considering the nature of the relationship between the parties I prefer to use the phrase nature of the relationship between the parties because the use of the word contract is confusing in this case because as Mr Murray was at pains to point out there never was any contract in existence except each individual order of specific goods from time to time and perhaps the commitment to purchase those goods specified in the firm window in the forecasts given by Wyeth But to confine myself to that contract is to ignore essential aspects of the overall relationship and would fail to recognise what Murphy J was referring to in Sweeney v Duggan when he stated that there are a variety of cases in which a contractual term will be implied on the basis not of the intention of the parties but deriving from the nature of the contract itself I refine this a little bit further for the purpose of this case by stating

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