Charles Kelly Ltd v Ulster Bank Ireland Ltd [2019] IEHC 711 (09 August 2019)

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THE HIGH COURT

[2019] IEHC 711

[2015/6744 P/2015]

BETWEEN

CHARLES KELLY LIMITED

PLAINTIFF

AND

ULSTER BANK IRELAND LIMITED

DEFENDANT

JUDGMENT of Ms. Justice Reynolds delivered on the 9th day of August, 2019

Introduction

1. The applicant, William Kelly, a litigant in person, seeks to be joined as a notice party to

the within proceedings. Before engaging with the merits or otherwise of his application, it

is necessary to set out some of the history to the protracted litigation in this matter.

Background

2. These proceedings succeed s.205 proceedings commenced in 2008 between the then

directors and shareholders of the plaintiff company and entitled Edward Gerard Kelly,

petitioner and William Kelly and Charles Kelly Limited, respondents 2008 No. 402 COS.

Those proceedings were substantially determined by the High Court (Laffoy J.) in four

separate reserved judgments delivered between February 2010 and July 2012.

3. In the course of those judgments the court held, inter alia, as follows: -

“(a) that William Kelly had exercised his powers as a director of the company in a

manner oppressive to the petitioner within the meaning of s.205(1) of the

Companies Act 1963, and

(b) that there had been a total breakdown in the relationship of the petitioner, Edward

Gerard Kelly and the respondent, William Kelly, that they were deadlocked to the

extent that they were incapable of running the company properly together and that

the situation was irretrievable.”

4. Arising from ancillary orders made by the court, William Kelly is no longer a director or

shareholder of the company. Gerard Kelly (otherwise known as Edward Gerard Kelly) is

now the sole shareholder and remains a director of the company.

5. The decisions of the High Court remain under appeal and the company maintains that

William Kelly has been guilty of extraordinary delay in prosecuting his appeal.

6. In the within proceedings, the company seeks damages for negligence, breach of duty,

breach of statutory duty and/or breach of fiduciary duty arising from various complaints

made against the defendant (“the Bank”), which can be summarised as follows: -

(a) an allegation that the Bank honoured payments drawn on the accounts of the

plaintiff which were not validly submitted.

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(b) an allegation that the Bank wrongly permitted the company to exceed its overdraft

limit of €1.6m.

(c) an allegation that the Bank wrongfully refused to transfer the liabilities of the

company from its overdraft facility to one or more term loan facilities.

7. This Court has already dealt with an application by the Bank in the within proceedings for

security for costs which was acceded to by Order dated 13th February, 2019.

Application to be joined as a Notice Party

8. At the outset, it is notable that the Bank is adopting a neutral stance in relation to this

application.

9. As stated above, the crux of the plaintiff’s claim is that the Bank facilitated alleged

misappropriation of company funds and further facilitated reckless lending/borrowing by

the company.

10. The Bank has filed a full defence and has further raised two preliminary issues as follows:

-

(a) that the proceedings are statute barred, and/or

(b) that the company’s claim of negligent and/or reckless lending is not a cause of

action known to the law in this jurisdiction.

11. Mr. William Kelly was granted leave by Ms. Justice Pilkington to bring the within

application to be joined as a notice party in circumstances where he contended that he

had a material and vital interest in the outcome of them. He further contends that it will

save time and costs and define the issues between the parties. He maintains that the

proceedings are without foundation and indeed are statute barred.

12. In his grounding affidavit, he summarises the factual background between the parties and

clearly seeks to reopen and relitigate matters that have already been determined by Ms.

Justice Laffoy and are the subject matter of a pending appeal.

The company’s position

13. In his replying affidavit on behalf of the company, Mr. Gerard Kelly vehemently objects to

the within application. He posits that it is entirely misconceived, would undoubtedly lead

to increased costs and delay and further is an abuse of process. In circumstances where

Mr. William Kelly is neither a director nor a shareholder of the company, Mr. Gerard Kelly

maintains that he has no basis to interfere in the current proceedings.

14. Further, he contends that it has not been possible to comply with all of the previous

orders of the High Court in circumstances where Mr. William Kelly has failed to repay the

sum of €165,000 to the company as directed by the court (the sum used by Mr. William

Kelly to discharge legal fees in the earlier proceedings and the subject matter of an

allegation in the within proceedings that the Bank wrongfully honoured this payment out

of company accounts). In addition, a number of properties were directed to be

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distributed in specie to Mr. William Kelly. It has not been possible to complete the

transfers due to Mr. Kelly’s failure to pay the sum of €165,000 and due to his

unwillingness to cooperate in the transfer.

15. In summary, Mr. Gerard Kelly contends that the within application is being maintained

with a view to launching a collateral attack on the findings of Ms. Justice Laffoy and to

intermeddle in the within proceedings for Mr. William Kelly’s own self-interest.

The applicant’s reply

16. Mr. William Kelly by way of reply maintains that it is in fact Mr. Gerard Kelly who is

seeking to relitigate the s.205 proceedings. Further, he contends that he can be of

material assistance to the Bank in its defence of these proceedings and asserts that his

joinder to the proceedings would minimise costs, not increase them.

Law

Rules of the Superior Courts

17. Order 15 Rule 9 of the RSC states:

“Where there are numerous persons having the same interest in one cause or

matter, one or more of such persons may sue or be sued, or may be authorised by

the Court to defend, in such cause or matter, on behalf, or for the benefit, of all

persons so interested”.

18. Order 15, rule 13 provides that:

“…The Court may at any stage of the proceedings, either upon or without the

application of either party, and on such terms as may appear to the Court to be

just, order that the names of any parties improperly joined, whether as plaintiffs or

as defendants, be struck out and that the names of any parties, whether plaintiffs

or defendants, who ought to have been joined, or whose presence before the Court

may be necessary in order to enable the Court effectually and completely to

adjudicate upon and settle all the questions involved in the cause or matter, be

added.”

Caselaw

19. It is clear that there are a number of authorities which oppose allowing a party to be

joined as a party against the will of the plaintiff in civil proceedings.

20. In Barlow v Fanning & Ors [2002] 2 IR 593, the Supreme Court held that: -

“a person could be joined as a defendant against the wishes of the plaintiff only in

exceptional circumstances”.

In that case, Professor Fanning was head of the Department within the University in

respect of whom allegations were made. It was clear that in the course of the hearing, it

was possible that adverse findings could be made which would reflect on him and his

reputation. Notwithstanding that, the Supreme Court was not prepared to join Professor

Fanning in the proceedings where there were no “exceptional circumstances”.

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21. In YAP v. Children’s University Hospital Temple Street Limited [2006] IEHC 308, Clarke J.

in refusing an application to join a notice party referred to “the obligation on the courts to

keep private proceedings down to the parties whom the plaintiff chooses” and further

noted that the facts in the case could not be distinguished in any material way from the

facts in the Barlow case.

22. This position, however, appears to have been somewhat eroded by latter case law. In

Dowling & Ors v. Minister for Finance & Ors, [2013] IESC 58, the Supreme Court held as

follows: -

“Looking at the matter from the point of view of principle and, without reference to

the applicable Rules governing the joinder of parties, it is clear that the position is

significantly different depending on whether the proceedings are purely civil and

private or whether they concern issues of public law. In civil litigation, generally

speaking parties are allowed to choose whom they wish to sue. In matters of

public law persons other than the public authority may have a real and substantial

interest in the outcome…

Civil and public law proceedings are not, however, in completely watertight

compartments. There is an underlying principle that a person is entitled to

participate in proceedings which are capable of adversely and directly affecting his

or her substantial interests”.

23. In Dowling the Supreme Court relied on its previous decision in BUPA Ireland Ltd & BUPA

Insurance Ltd v Health Insurance Authority & Ors [2005] IESC 80. That case began as a

Judicial Review, to which V.H.I. were a notice party. The reason why V.H.I. was joined

and was able to remain being joined was in part because what BUPA was seeking to do

was to set aside the exercise of a statutory regime in respect of risk equalisation which

would, in practice, have the effect of significantly affecting the funding of V.H.I.

Therefore, V.H.I. was directly affected by any order that might be made by the court.

24. In analysing this decision in Dowling, Fennelly J. noted: -

“This Court, in BUPA, was primarily of the view that the judicial review rules

provided the framework for the decision and that the High Court judge in that case

had been mistaken in considering the matter in the light of Order 15, Rule 13 and

the decision in Barlow v Fanning, cited about. It concluded, nonetheless, that, even

if Order 15 were to be treated as applicable, V.H.I. should still be joined because

the Court was “strongly of the view that this case does involve exceptional

circumstances and that the continued presence of the notice party in the

proceedings is ‘necessary in order to enable the court effectually and completely to

adjudicate upon and settle all questions involved in the cause or matter’.” (Page

214 [of BUPA] )

25. Thus, it appears that in public law proceedings such as Judicial Review, applications of

this nature are to be considered under the provisions of Order 84 of the rules which

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provide that any person who has an interest in the proceedings may be joined to them.

Otherwise, Order 15 as cited above would seem to apply.

26. In determining the within application, this Court must therefore consider whether Mr.

William Kelly has an interest in the outcome of the proceedings and whether his joinder to

the proceedings is necessary in order to enable the court effectually and completely to

adjudicate upon and settle all the questions involved in the cause or matter.

Conclusions

27. It is evident that Mr. William Kelly is misguided in his view that the outcome of the within

proceedings will have some effect on his pending appeal. This is clearly not the case. He

has at all times accepted that he utilised company funds to discharge his legal fees in the

earlier proceedings, therefore, this issue is not in dispute either in these proceedings or

indeed in his appeal.

28. In relation to the other outstanding issues to be determined in these proceedings, again it

is of no interest to Mr. William Kelly whether the company succeeds or not as he is

neither a director nor shareholder of same. He has set out his position on affidavit and it

is now a matter for the Bank as to whether or not they choose to call him as a witness at

the hearing.

29. It is manifestly apparent that the issues that Mr. William Kelly seeks to have addressed in

these proceedings are precisely the same issues that have already been determined by

Ms. Justice Laffoy in excess of seven years ago and it is now a matter for him to

prosecute his appeal without further delay.

30. I am not satisfied that his joinder to the within proceedings is necessary to enable an

adequate and proper adjudication upon the matters at issue herein. Whilst it seems

somewhat inevitable that his actions and position within the company will be of no little

significance in the course of the hearing, nonetheless it seems to me that he has failed to

sufficiently demonstrate that his interests are capable of being adversely and/or directly

affected by the outcome of these proceedings. These are private civil proceedings as

between the company and the Bank and Mr. William Kelly has failed to establish how he

has an interest in the outcome of same to the satisfaction of this Court.

31. For all of these reasons I must refuse his application.

Result: Application refused

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