Supreme Court dismisses appeals as unstatable, moot, or abuse of process regarding discrepancies between judgment and order.

THE SUPREME COURT

S.C. Appeal No. 185/02

S.C. Appeal No. 271/02

S.C. Appeal No. 272/02

S.C. Appeal No. 334/02

Denham J.

Murray J.

McGuinness J.

Appeal No. 185/02

In the Matter of The Companies Acts 1963 – 2001 and

In the Matter of Section 316 of The Companies Act 1963 and

In the Matter of Bula Limited (In Receivership) and

In the Matter of an Application by Laurence Crowley,

The Receiver of Bula Limited

And

Appeal No. 271/02

In the Matter of the Companies Acts, 1963-2001

In the Matter of Section 316 of The Companies Act, 1963 and

In the Matter of Bula Limited (In Receivership) and

In the Matter of An Application By Laurence Crowley,

Receiver of Bula Limited

And

Appeal No. 272/02

Between/

Bula Limited (In Receivership), Bula Holdings,

Richard Wood and Michael J. Wymes

Plaintiffs/Appellants

And

Laurence Crowley and Tara Mines Limited

Defendants/Respondents

And

Appeal No. 334/02

In the Matter of The Companies Acts, 1963-2001 and

In the Matter of Section 316 of The Companies Act, 1963 and

In the Matter of Bula Limited (In Receivership) and

In the Matter of An Application by Laurence Crowley, Receiver of Bula Limited

Judgment delivered on the 11th day of April, 2003 by Denham J.

1. Litigation

Four appeals are considered in this judgment, which appeals are part of a series of seven appeals by these parties which have been

before this Court this term. Three appeals of this series have been heard by the Court and judgment was delivered on the 13th day of

February, 2003. As pointed out in that judgment these appeals are part of a long line of litigation between the parties, stretching over

decades.

2. Parties

The parties in this litigation are as follows: (a) Bula Limited (In Receivership), hereinafter referred to as Bula; (b) Bula Holdings,

hereinafter referred to as Holdings; (c) Thomas C. Roche who died in 1999 is not a party but is still named in some proceedings; (d)

Thomas J. Roche is also named in some proceedings but is no longer a party in the litigation; (e) Richard Wood; (f) Michael Wymes;

(g) Laurence Crowley, hereinafter referred to as the Receiver, is the Receiver appointed by the Banks over the assets of Bula; (h) the

Northern Bank Finance Corporation Limited; (i) Ulster Investment Bank Limited; (j) Allied Irish Investment Bank Limited: these three

banks are referred to collectively as the Banks. Richard Wood and Michael Wymes are directors of Bula and Holdings. Michael Wymes

is the moving party in the overall litigation. Thomas C. Roche (now deceased) and Thomas J. Roche, who took no part in the

proceedings, were directors of Bula.

3. History

These appeals are part of a long history of litigation between the parties. It was the intention of Bula and its directors to engage in

major mining operations on its lands and to that end large sums of money were borrowed from the Banks and duly secured by a

number of mortgages and debentures which entitled the relevant banks holding security to appoint a receiver over the property of the

company in the event of default by Bula in its obligations to the bank in question. Major financial difficulties occurred in consequence

of which the Banks called in their loans by formal demands in 1982. On the 8th October, 1985 the Banks appointed Laurence Crowley

as the Receiver over Bula’s secured property and he then went into possession of the property.

4. Four Appeals

There are four appeals considered in this judgment. They are part of a series of seven appeals to this Court. The first three appeals

were determined in a judgment delivered on the 13th February, 2003. The matters before this Court now will be referred to as the

fourth, fifth, sixth and seventh appeal.

(a) The fourth appeal, appeal No. 185/02

The fourth appeal is an appeal by Bula, Holdings, Richard Wood and Michael Wymes against the judgment and order of the High Court

(Murphy J.) delivered on the 20th June, 2002 (now reported at [2002] 2 I.L.R.M. 513) in which the High Court, on the application of

the Receiver pursuant to s. 316 of the Companies Act, 1963, made an order approving the sale of the Bula orebody to Tara Mines

Limited, hereinafter referred to as Tara, on the terms set out in contract dated the 9th May, 2001, hereinafter referred to as the

Contract. The High Court order of the 20th June, 2002 is referred to hereinafter as the s. 316 order.

(b) The fifth appeal, appeal No. 271/02

The fifth appeal is an appeal by Bula, Holdings, Richard Wood and Michael Wymes against the judgment and order of the High Court

(Murphy J.) delivered on the 12th July, 2002 in which the High Court declined to grant a stay on the s. 316 order.

(c) The sixth appeal, appeal No. 272/02

The sixth appeal is an appeal in a separate set of proceedings, High Court Record No. 2002, No. 10141 Bula Limited (In Receivership),

Bula Holdings, Richard Wood and Michael Wymes v. Laurence Crowley, which proceedings were instituted on the 23rd July, 2002 and

brought by Bula, Holdings, Richard Wood and Michael Wymes against the order of the High Court (Murphy J.) made on the 1st August,

2002 in which the High Court refused to grant injunctions the effect of which would have been to restrain the vendor and purchaser

under the Contract (which contract had been completed pursuant to the s. 316 order) pending the determination of the fourth appeal

herein.

(d) The seventh appeal, appeal No. 334/02

The seventh appeal is an appeal by Bula, Holdings, Richard Wood and Michael Wymes against the order of the High Court (Murphy J.)

made on the 5th November, 2002 in which the court declined to amend the s. 316 order perfected on the 25th June, 2002 which

purported to embody the judgment made on the 20th June, 2002.

The four appeals are brought in each case by Bula, Holdings, Richard Wood and Michael Wymes. Bula, Holdings, Richard Wood and

Michael Wymes are hereinafter referred to collectively as the plaintiffs.

5. The fourth appeal, appeal No. 185/02

5.(i) Decision of the High Court

On the 20th June, 2002 the High Court made an order approving the sale of Bula orebody to Tara pursuant to s. 316 of the Companies

Act, 1963, on the terms set out in the Contract. The learned High Court judge reached the conclusion:

“The Court finds that the Receiver, in selling the asset of the Company which are secured under the various debentures, had

exercised all reasonable care necessary to obtain the best price. The price was, in the circumstances, the only price reasonably

obtainable for the property as at the time of sale.

There has been no breach by the Receiver of his duty under subsection 1 of Section 316A.

I will, accordingly, allow the Receiver’s Application and make an Order approving the sale of the said property to Tara Mines Limited on

the terms set forth in the contract dated the 9th May, 2001 and grant liberty to Bula Limited (in Receivership) to complete the said

contract.”

5.(ii) Appeal

On the 2nd July, 2002 the plaintiffs filed thirty-four grounds of appeal. The Court has been furnished with helpful written submissions

on the matter and heard oral submissions.

5.(iii) Submissions of Plaintiffs

In oral submissions for the plaintiffs, Mr. John Trainor S.C. stated that this, the fourth appeal, the appeal against the s. 316 order,

was the main appeal. The most important issues which counsel addressed were as follows. First, he submitted that the statutory test

had not been satisfied in that (a) there was no specialist valuer; (b) the sale was at a gross undervaluation; (c) there was a failure

to exploit the position of Tara; and (d) the Receiver went to the market at the wrong time. Counsel emphasised that these four

aspects of the matter were merely facets of the issue as to whether in all the circumstances the statutory requirements of s. 316

had been met. Counsel opened extensive case law on the test to be applied in a s. 316 application. Counsel submittted further that

there had been a lack of fair procedures. Comprehensive case law was opened to the court in oral and written submissions as to the

duty of good faith required of the Receiver. Counsel argued that the s. 316 application had the gravest consequences for the

plaintiffs and that consequently these were proceedings in which all the requirements of fair proceedings should be made available to

the plaintiffs. Counsel submitted that where a matter is of great consequence to parties the right to cross-examine is a fundamental

right; if the consequences are sufficiently grave it is a right of the party to test the evidence. In this case on the 23rd April, 2002,

when the hearing commenced, application on behalf of the plaintiffs was made to the Court to cross-examine the Receiver and Mr.

Wells on their affidavits. (Notice to Cross-examine had been served on the 22nd April, 2002.) The learned High Court judge declined

the application, he declined to allow an adjournment for cross-examination or for discovery. Counsel submitted that essentially the

learned trial judge’s reason was because it would cause unjustifiable delay. In the judgment of the High Court delivered on the 20th

June, 2002 the matter was referred to as follows:

“However, an application for cross-examination had been rejected by the Court at the commencement of this action as had an

application for adjournment for the purpose of discovery motions.”

Counsel stated that from that ruling two things followed: first, paragraphs 168 to 259 of Michael Wymes affidavit which dealt with the

involvement of Navan Mines with Bula was withdrawn as those references without discovery could not proceed. Thus those

paragraphs were not opened to the trial judge, they were withdrawn voluntarily by the plaintiffs. Secondly, an objection was taken to

paragraphs 146 to 167 of the affidavit of Michael Wymes as they contained hearsay and they were ruled out by the learned trial

judge. There was no appeal against that decision. Thus paragraphs 146 to 259 of the affidavit of Michael Wymes were not before the

trial court. Counsel submitted that the reason given by the learned trial judge for not allowing cross-examination was that it would

cause unjustifiable delay. Counsel submitted that to give delay as a reason was not valid. The Contract had been entered into on the

9th May, 2001 and was subject to court approval: see Special Condition 10. Closing was to be ten days thereafter. Closing could be

and was postponed. Counsel queried the rush in forcing on a hearing in April or May of 2002. The primary obligation to close in 2001

had gone. Counsel submitted that the affidavits were silent as to where the urgency lay. Counsel submitted that there was a bare

formulaic affidavit which required to be tested by cross-examination. Counsel opened extensive case law on the need for fair

procedures. Counsel also opened extensive case law on the test to be applied to a s. 316 application.

5.(iv) Submissions on behalf of the Receiver

In written and oral submissions counsel for the Receiver submitted that the trial judge was correct in finding that the Receiver had

complied with his statutory and legal duties in effecting a sale of the mine and was correct in authorising the completion of the sale.

5.(v) Submissions on behalf of Tara

Comprehensive written submissions were filed on behalf of Tara. In oral submissions counsel for Tara adopted the submissions of the

Receiver and submitted that the High Court order was not in error, that it was the only order open to the learned High Court judge.

Counsel pointed out that Tara had bought the Bula orebody pursuant to a contract approved by the High Court; an order of the High

Court which was in force at the time. Tara completed the contract which the court had said was to be completed. Counsel pointed

out that Tara had been in litigation brought by the plaintiffs since 1986. He submitted that in this appeal the court was being asked

whether the Receiver correctly exercised his jurisdiction. Counsel referred to the long history of litigation and ventured that if the

price had been different, if the Receiver was seeking to stand over a sale at half or double the price, the matter would still be

litigated by the plaintiffs. Counsel emphasised that the Receiver had a duty of good faith. He argued that there was not a scintilla of

evidence that the Receiver acted in any way other than in good faith. He submitted that the function of the Receiver was to take

charge of the assets and sell them, that he had a duty of good faith, and that the Receiver’s primary duty was to the Banks. Here, he

pointed out, the Receiver had come to court to get approval for a sale at a price which was greatly less than the liabilities to the

Banks; yet the sale was supported by the Banks. Further, that those who would in the first instance be liable to make up the

shortfall, the guarantors, that is the Roches, also supported the sale. He submitted that on the facts and law the Receiver had at all

times acted correctly. As to the issue of extracting a higher price from Tara, counsel queried how the Receiver could turn to Tara and

order it to pay a higher price; no one else was bidding. He referred to the process, including to those interested parties who came to

the data room yet none made an offer. He pointed out that it was only when the Receiver went back to those who had expressed an

interest that he had received a sealed bid from Tara. Counsel argued that the only reasonable explanation was that as a stand alone

mine Bula had no commercial value. He submitted that the evidence, the process, was sufficient for the Receiver. He submitted that

the obligation was to get the property to the market, that in s. 316 faith is put in the market. He submitted that in this case the

market value had been ascertained in the only conclusive way it could be, by an open and fair sale process. Counsel adopted the

arguments of the Receiver as to the cross-examination point. Counsel submitted that the appeal should be dismissed.

5.(vi) Submissions on behalf of the Banks

Extensive written submissions were filed by the Banks and I have considered them carefully. Counsel for the Banks adopted the

submissions of the Receiver and Tara. Counsel pointed out that the price obtained, IR£27,500,000, fell short of the debt of

approximately €95,000,000 and that therefore the Banks would suffer a loss. In addition to that loss there is also the cost of the

receivership and litigation over nearly two decades. He submitted that in that context, if there was any reality to the plaintiffs’ case

and if the Receiver had failed in his duty, the parties most disadvantaged would be the Banks; yet the Banks supported the sale. He

submitted that the Banks’ support for the position of the Receiver is a significant relevant factor. He pointed out that in relation to

the valuation issue argued by the plaintiffs, that the plaintiffs had advanced no evidence of market value, that the only evidence

brought by the plaintiffs was that of Mr. Evans and that it did not purport to be evidence of market value. Counsel submitted that at

the end of the day a valuation is only the opinion of one expert, that the only true test is the open market. Counsel concluded by

submitting that the Receiver had complied with s. 316 and that the appeal of the plaintiffs should be dismissed.

5.(vii) Notice of Motion

The application for a s. 316 order was brought by way of Notice of Motion dated the 20th March, 2002. In the motion the Receiver

sought the following relief:

“1. An Order pursuant to section 316 of the Companies Act 1963 for directions in connection with the contract entered into for

the sale of the property known as the Bula Mine, Navan County Meath (and more particularly described in the Schedule hereto)

by Bula Limited (In Receivership) to Tara Mines Limited on 9 May 2001, a copy of which contract appears as Exhibit LC2 to the

Affidavit of Laurence Crowley sworn herein on 4 March 2002.

2. Further or in the alternative, an Order approving the sale of the said property to Tara Mines Limited on the terms set forth in

the said contract and/or an Order granting directions and/or liberty to Bula Limited (In Receivership) to complete the said

contract.”

The motion also referred to further or other relief which the court might deem appropriate and to costs. The motion was grounded on

the affidavit of the Receiver sworn on the 4th March, 2002 and that of Andrew Wells affirmed on the 4th March, 2002. In his affidavit

sworn on the 4th March, 2002 the Receiver deposed:

“MY EFFORTS TO DISPOSE OF THE LANDS:

13. When the second of the above entitled sets of proceedings were instituted, an injunction was sought restraining me from

seeking to dispose of the mine. The application for the injunction was struck out, but I did undertake to the Plaintiffs in that

action that I would apply to the Court for the approval of any sale of the mine or other charged assets on notice to the

Plaintiffs. I have been advised by my counsel and believe that (at the latest) the basis upon which this undertaking had been

given lapsed upon the determination of the Supreme Court of 15 January 1999, (the effect of which was that all allegations

against the Defendants in the second action save for the then adjourned matters relating to the Statute of Limitations, stood

dismissed). Nonetheless, this application (which is prompted by the terms of the agreement between the Company and Tara

Mines Limited to which I shall refer further below) is on notice to the parties who were Plaintiffs in the second action.

14. Following the decision of the Supreme Court I immediately embarked upon the process of seeking to dispose of the mine. At

the outset I retained International Mining Consultants (“IMC”) formerly Mackay & Schnellmann Limited, to advise me and IMC

assisted me throughout the process. IMC is one of the leading firms of mining consultants with a very high level of expertise

throughout the industry. Advertisements were placed at the beginning of May 1999 in financial newspapers and mining journals

circulating in the UK, France, Germany, Australia, South Africa, Canada and the USA. I beg to refer to a copy of the

advertisement published upon which marked with the letters “LC4” I have signed my name prior to the swearing hereof. In

addition I wrote to approximately sixty major mining enterprises on 6 May 1999 inviting expressions of interest.

15. Replies were received from forty-five parties, expressing varying levels of interest. A data room was set up in the offices of

KPMG Dublin with the assistance of IMC which contained all of the technical and other relevant documentation relating to the

orebody. My solicitors prepared a Confidentiality Agreement to be signed by parties who wished to take the matter further and

this Confidentiality Agreement was signed by nineteen parties. In all twelve parties visited the data room and a further seven

were sent technical information. This due diligence process continued in the main throughout the Summer of 1999 and up until

October/November 1999.

16. In early 2000 I had discussions with a number of the parties and also had a number of meetings with the Banks to review

progress. There were also continuing developments in the various legal actions which had to be considered. I had discussions

with a number of parties, including Tara Mines Limited, following which Tara Mines Limited submitted an offer in a sealed

envelope on 2 October 2000 which offer was valid up until 31 March 2001.

17. Following receipt of the Tara Mines offer, on 11 October 2000 I wrote to the nineteen parties who had expressed an

interest in the mine and had signed the Confidentiality Agreement advising them that I had received an offer and requesting

them to indicate if they wished to pursue their interest. After the letter of 11 October 2000 was issued discussions took place

with four of those parties but none resulted in the receipt of a realistic offer for the mine.

18. A further meeting was held with representatives of Tara Mines Limited on 10 January 2001 at the conclusion of which an

offer of IR£27.5 million was secured from Tara Mines Limited for the mine. I discussed this offer fully with IMC who strongly

recommended that I should proceed.

19. In the course of that process, I caused my solicitors to advise the Solicitors who had represented and were then

representing the Company and certain of its directors, including Mr. Michael Wymes (who has been the person controlling on

behalf of the Plaintiffs the various sets of legal proceedings to which I have referred) of the fact and extent of the efforts being

undertaken to dispose of the mine. I have gathered together and marked with the letters “LC5” prior to the swearing hereof, a

booklet containing copies of the correspondence which has passed between the parties to that end. Insofar as that

correspondence presents objections to my engaging in that course of action, I believe that same are duly and properly

answered in the letters sent by my solicitors and, insofar as it is necessary so to do, I beg to refer to my position as articulated

and set forth in that correspondence.

20. The process of seeking to dispose of the mine has resulted in a conditional contract being negotiated with Tara Mines

Limited, the owner of the adjoining property, and a Defendant in the first set of legal proceedings to which I have referred

above. That company has entered into an agreement to purchase the mine for a sum of £27.5 million and that agreement in

turn is dependant upon the approval of this Court. It is in this connection that this application is brought to the Court. That

agreement was entered into on 9 May 2001, and is exhibited above.

21. As is apparent from the agreement dated 9 May 2001, the closing date of that contract is 10 working days from the date

upon which the approval of the Court has been obtained, and in any event not later than December 31 2001. Tara Mines Limited

by letter dated 25 January 2002 agreed to extend the closing date to 31 March 2002. I am now extremely anxious to conclude

this transaction.

22. Specifically, in circumstances where the Receivership of this company has had such a lengthy history, in which its principal

asset has not been exploited while proceedings outlined in this Affidavit were pending, in which the debts now owed to the

Banks far exceed the value of the asset itself, and in which Tara Mines Limited has executed a contract to purchase the mine, I

believe it just and appropriate that the Court grant the directions sought herein.

23. I believe that the consideration reflected in that contract represents the best available price for the mine in all of the

circumstances, and is by far the best offer which it has been possible to obtain following an extensive and exhaustive marketing

campaign. In these circumstances, I pray the Court to grant the relief claimed herein.”

In a supplemental affidavit sworn on the 18th April, 2002 the Receiver further deposed:

“2. This Affidavit is sworn by me in response to the Affidavit of Michael Wymes herein. On Tuesday evening 16 April my solicitors

received an unsworn electronic version of an Affidavit to be sworn by Michael Wymes. My solicitors were advised that this

would correspond to a version of the Affidavit to be sworn by Mr. Wymes. This was notwithstanding the express direction by

this Court that any affidavits in reply to my application should be delivered not later than Monday 15 April 2002. Subsequently,

at 6.15 p.m. on Wednesday 17 April my solicitors received the Affidavit of Mr. Wymes together with the exhibits thereto which

had been sworn that day.

3. From the perspective of the Receivership of Bula Limited, it is critical that the within application be heard and determined at

the soonest available opportunity. Having had an opportunity to consider the contents of Mr. Wymes’ Affidavit, I do not believe

it necessary that I respond to the many and lengthy averments in same. I adopt this position conscious of the fact that a

response from me will provoke a further lengthy reply from Mr. Wymes, and will jeopardise the rapid determination of this matter

and, I believe, waste further Court time. I adopt this course of action aware that it will provoke Mr. Wymes to assert that I am

therefore accepting the claims made by him, and that were the assertions made by him untrue, I would have denied them. I

must, accordingly, make it clear that I am not responding to this Affidavit for the reasons I have stated, and that my decision

not to respond to Mr. Wymes’ Affidavit is not an admission of any of the contents of same, either as to their relevance,

accuracy or truth I will respond to any particular aspect of that Affidavit if the Court, in exercise of its jurisdiction to grant

directions herein, believes it appropriate that I so do.

4. I am advised and I believe that the issue before the Court herein is whether I took reasonable care to obtain the best price

reasonably obtainable for the property in question. I believe for the reasons set forth in my first Affidavit that I took such care,

that I took all steps reasonably open to me to this end, and that the price obtained by me is in fact the best price reasonably

obtainable. In the course of determining to sell that property I have acted without regard to any considerations other than my

duty to obtain that price, and I have acted in this connection in accordance with the best professional advice available to me. I

personally do not have any conflict of interest real or apparent in connection with the discharge of this, nor any, of my duties

as Receiver, and I am advised and believe that the objections suggested by Mr. Wymes to that end are misplaced in law. In this

regard, I regret the fact that Mr. Wymes has chosen to present his objection to the sale of this asset in the manner apparent

from his Affidavit.

5. I should finally draw the attention of the Court to the fact that Thomas J. Roche and Thomas C. Roche have indicated their

support for the within application. I beg to refer to a letter from their solicitors so recording of 17 April, upon a copy of which

marked with the letters “LC1” I have signed my name prior to the swearing hereof.”

On behalf of the Receiver an affidavit was affirmed by Andrew P. Wells on the 4th March, 2002, which stated:

“I, ANDREW P. WELLS Metallurgist of 60 Worship Street, London EC2A 2HD, England, aged eighteen years and upwards Affirm

and say as follows:-

1. I am the Principal Metallurgist with International Mining Consultants (“IMC”) 60 Worship Street, London EC2A, 2HD, England

which, inter alia, incorporates Mackay & Schnellmann Limited. IMC and its predecessor company Mackay & Schnellmann Limited

have acted as specialist mining consultants to Mr. Laurence Crowley in his capacity as Receiver of Bula Limited throughout the

period of the receivership.

2. In January 1999 IMC was instructed by the Receiver to advise on a comprehensive marketing campaign to sell the orebody.

IMC was closely associated with this campaign through the process and in particular advised the Receiver on the format of the

advertisement for potential buyers, the newspapers and specialist journals in which the advertisement should be placed in order

to bring the campaign to the attention of a specialised market and the parties to whom the Receiver should write informing

them of the availability of the orebody for sale.

3. Subsequently we advised the Receiver on the documentation and information to be made available to parties expressing an

interest in the purchase of the orebody. IMC subsequently assembled a data room in the offices of KPMG Dublin containing all

available relevant technical information which a potential purchaser would reasonably wish to examine and review in considering

making an offer for the orebody. IMC assisted the Receiver and his staff throughout this process and responded to any queries

raised. The process described in the preceding paragraphs led to a number of parties expressing an interest in the orebody and

IMC advised the Receiver on the background to the parties concerned and the extent of their participation in the industry.

4. Ultimately, in January 2001, the marketing campaign culminated in the negotiation by the Receiver of an offer from Tara

Mines Limited to purchase the orebody for a consideration of IR£27.5 million. The Receiver advised me of this offer. I was in no

doubt, having regard to the world-wide marketing campaign, the then current zinc price and all other relevant factors, that this

was a reasonable price for disposal of the mine and I so informed the Receiver. In the period of thirteen months which has since

elapsed there have been no developments to alter that opinion and indeed during the period in question there has been a

significant deterioration in actual zinc prices and in the expectation for such prices.

5. I am informed and believe that the Receiver is applying to the High Court seeking approval of a contract for the sale of the

Bula orebody to Tara Mines Limited for a consideration of IR£27.5 million. I am of the opinion that this is a price which should be

accepted. Furthermore, in achieving this offer, I am satisfied that the Receiver has conducted a comprehensive and exhaustive

marketing campaign which has encompassed all parties in the industry in any way likely to have an interest in acquiring the

orebody.

6. I make this Affidavit from facts within my own knowledge save where otherwise appears and wheresoever otherwise

appearing I believe same to be true.”

5.(viii) Ruling of President as to s. 316 Order

The President of the High Court on consent gave directions as to the pleadings in the s. 316 application. On the 20th March, 2002 the

President fixed the 23rd April, 2002 as the date for hearing of the s. 316 application. The plaintiffs were given until the 15th April to

file replying affidavits. (In fact the affidavit of Mr. Wymes was sworn on the 17th April, 2003.)

5.(ix) Ruling by High Court on 24th April, 2002

On the 22nd April, 2002 the plaintiffs filed notice to cross-examine the Receiver and Andrew Wells on their affidavits. On the

application coming on for hearing on the 23rd April, 2002 Mr. Peart, on behalf of the plaintiffs, sought an adjournment to enable a

cross-examination of Mr. Wymes and Mr. Wells and for discovery. This was refused by the High Court. Ruling, on the 24th April, 2002,

Murphy J. stated:

“This [is] an application for an adjournment in a matter where the President, by consent of the parties, gave directions that the

matter be heard on the 23rd of April – that is yesterday. The application by the Receiver is an application under [s]316 and

indeed [s]316A of the 1963 Act as amended by Section 171 of the 1990 Companies Act. The Receiver was appointed on the 8th

of October, 1985 by Northern Bank Finance Corporation and some other banks, . . .

Section 316A, I simply refer to it obliquely here, refers to the duties of the Receiver in selling the property to get the best price

reasonably obtainable and this is the substance, of course, of the application that the President directed be heard yesterday.

The background position is that an offer has been made in the conditional contract and that provides for a payment of some 27.5

million [punts] in relation to the assets of the company over which the Receiver has charge. The analysis of that contract is not

necessary, save as to deal with one of the conditions which has been subject to the ground for adjournment, and that is condition

10, the Court approval and the closing date, and in particular 10 C, which states

‘Prior to the closing date the Receiver will establish to the satisfaction of the purchaser that the challenges made in the course

of litigation, both as to the validity of his appointment and continuance in office and to his authority to effect sale of the

assets, have failed and been disposed of and consequentially provide no impediment to the completion of the sale in accordance

with the terms of this contract.’

Now, Mr. Peart in applying for a short adjournment without prejudice to his indication that he will apply, and indeed was

applying for a longer adjournment pending the determination by the Supreme Court of the appeal of the judgment of Mr. Justice

Barr, relied on that conditional element of the contract which Tara were to, had agreed under certain conditions and with

certain time limits, had made an offer for the assets of Bula: It has been urged upon me by Mr. Finlay that the question of this

being an impediment to his application is misfounded on the basis that it is the purchaser who has to be satisfied. And indeed

Mr. Gallagher and Mr. Nesbitt supported that stance, and Mr. Feeney for the purchaser clearly stated that in opposing the

application for an adjournment, that it was a matter for his client and not a matter that would impede the process of this sale –

but that of course was to get drawn into the substance of the matter – but in terms of an application for an adjournment he

would resist that on that basis also.

It does seem to me in determining that question that I am going to the substance of the matter and I would then refrain from

making any definitive decision on that matter at present. However, it does seem to me that it would not be a ground for an

adjournment where it is, where it goes to the substance of the matter. For that reason I would reject that as a basis for a

short or more lengthy adjournment. It does seem to me that the condition speaks for itself and that it’s really a matter, again

without making a finding, is a matter of conveyance rather than a matter of substance and certainly not a matter that would

seem to me to hold up this matter before the Court.

Secondly, Mr. Peart says that the valuation evidence which he has given in the replying affidavit of Mr. Wymes, that he would

like an opportunity of putting that on affidavit. However, he did not think that the provisional valuation would differ substantially

from that offered. Mr. Finlay replied that he was happy to accept the provisional valuation without any necessity to have that

sworn, and dealt with the elements that constituted an application under [s.]316 and [s.] 316A to the court.

It does seem to me that there is no ground for an adjournment to put in a further affidavit and I am fortified in this regard by

the consent order that was made by the president with regard to the timing of the grounding affidavit and the replying affidavit.

The third ground put forward as a basis for the adjournment is the necessity of serving a notice, or if that notice has been

served, to cross-examine the deponent, the Receiver, that it was necessary to have time to prepare for that examination. It

does seem to me that this is a matter which came very late in the day and certainly was not a matter which was before the

President, with regard to the directions that by consent were ordered by the President.

The fourth ground relates to the need for discovery. Mr. Peart says that, given again the elements relating to valuation, that he

is entitled to discovery with regard to the underlying bases for valuation and for the offer made by Tara. It does seem to me

that this is a matter which properly should have been dealt with by the President. I cannot conceive, nor has it been urged

upon the Court, any grounds why or any reasons why this was not known at the time of the application for directions. Again, I

would say by way of aside, that where an application has been made for directions, that that is the time at which minds are

concentrated as to the steps, preliminary steps necessary for matters – for interlocutory matters to be dealt with.

The final ground relied upon is, to my mind, an important one; that is [that] no prejudice would be suffered by the Receiver for

a short adjournment – and I leave aside for the moment the question of a longer adjournment. And in fairness, the application

proceeded on the basis of a short adjournment, presumably this morning where, probably on the insistence of the Court, that

the application for the longer adjournment was also included with the intent that if that had – if the short adjournment had

succeeded, then the matter could be reserved with regard to a longer adjournment. Or alternatively, if a longer adjournment

was not granted, at least a short adjournment could find favour with the Court.

But the question of prejudice does, of course, come from both the history of this matter and also from the offer itself. The

closing date has been varied but 10 B, in dealing with the closing date, while it does envisage – envisage a date originally of the

31st of December 2001, also originally, or also in the version which is a subject of the application by the Receiver, also deals

with the 31st of December 2002, that is to say should the approval not be obtained by the 31st of December 2002, as also

otherwise agreed in writing, this contract will be deemed to be the an end and the purchaser would be entitled to a return of its

deposit with interest but without compensation for damages.

Now, it does seem to me that this is – the argument on prejudice – that it’s within that context that I have to deal with the

element of prejudice. Whatever agreements that were made or extended, the Court has to look at closing dates and also has to

be aware, and will be aware, of the substance of the action, of the way underlying economic considerations can affect offers.

And this is a matter that the Receiver will have to satisfy the Court, that at the present time, in terms of the application, that

pursuant to Section 316 A that the best price available has been obtained.

The history of this matter, again the brief references that were made by counsel on the perusal of the decision of Mr. Justice

Lynch and the references to the judgment of the Supreme Court and that of Mr. Justice Barr in the second action that was

referred to, it does seem to me that further prejudice will ensue from a delay from the middle 1980’s up to the final realisation of

the issue regarding the matters being at that time statute barred and the attempted finalisation of this matter, that severe

prejudice would be suffered by the applicant who is, of course, the – sorry – the applicant in the substantive action, with

regard to the finalisation of this matter.

For this, these reasons, it seems to me that I must refuse both the application for a longer adjournment to the determination of

the Supreme Court appeal and also an application for a shorter adjournment for the purpose of the cross-examination on

affidavit of the deponent’s [sic] on the grounding affidavit and also for the purposes of discovery.”

The s. 316 application then proceeded before the High Court.

5.(xi) High Court judgment delivered 20th June, 2002

The s. 316 application was at hearing for ten days before the High Court. Judgment was reserved and delivered on the 20th June,

2002. The learned High Court judge concluded:

“The Court finds that the Receiver, in selling the asset of the Company which are secured under the various debentures, had

exercised all reasonable care necessary to obtain the best price. That price was, in the circumstances, the only price

reasonably obtainable for the property as at the time of sale.

There has been no breach by the Receiver of his duty under subsection 1 of section 316 A.

I will, accordingly, allow the Receiver’s Application and make an Order approving the sale of the said property to Tara Mines

Limited on the terms set forth in the contract dated the 9th May, 2001 and grant liberty to Bula Limited (in Receivership) to

complete the said contract.”

It is against that decision that the plaintiffs have appealed.

5.(xii) Section 316 Application

At issue is the order made on an application pursuant to s. 316 of the Companies Act, 1963 as amended by s. 171 of the Companies

Act, 1990. Section 316 provides:

“Where a receiver of the property of a company is appointed under the powers contained in any instrument, any of the

following persons may apply to the court for directions in relation to any matter in connection with the performances or

otherwise by the receiver of his functions, that is to say –

(a)(i) The receiver . . .

and on any such application, the court may give such directions, or make such order declaring the rights of persons before the

court or otherwise, as the court thinks just.”

Section 316A(1) as inserted by s. 172 of the Companies Act, 1990 provides:

“A receiver, in selling property of a company, shall exercise all reasonable care to obtain the best price reasonably obtainable

for the property at the time of sale.”

6. Decision on the Fourth Appeal

Of receivers it is stated in Keane, Company Law (3rd Ed.) at para. 22.01:

“The remedy most usually availed of by debenture holders is the appointment of a receiver. As his title indicates, his main

function is to receive or get in all the assets of the company on behalf of the debenture holder and dispose of them in due

course in order to pay off the principal and interest due.”

The primary duty of the receiver is to the debenture holders, but he also has a duty to the company. He has a duty to take

reasonable care. This may be seen in s. 316A. Under s. 316A the receiver has a duty: (a) to exercise all reasonable care, (b) to

obtain the best price reasonably obtainable for the property, (c) at the time of sale.

Section 316A gives statutory force to common law. Of s. 316A Keane J. stated in In Re Edenfell Holdings Ltd. [1999] 1 I.R. 443 at p.

464:

“It is clear that, at common law, a receiver owed a duty of care in relation to the sale of the property, comprised in the charge

by virtue of which he was appointed, to any persons interested in the property. That common law duty was given statutory

force by s. 316A of the Act of 1963, which was inserted by s. 172 of the Companies (Amendment) Act, 1990, and which is as

follows:-

‘A receiver, in selling property of a company, shall exercise all reasonable care to obtain the best price reasonably

obtainable for the property at the time of the sale.’

Strictly speaking, the application by the receiver might have been dealt with on the basis that, since he was clearly entitled

prima facie to sell the property for what seemed to him the best price obtainable, he should be permitted so to do, without

prejudice to the rights of any person who might be interested in the property to institute proceedings, claiming either an

injunction restraining him from disposing of the property or damages for breach of his common law and statutory duty. Since,

however, there was also a motion before the court on behalf of Mr. Barrett seeking an order restraining the receiver from

completing the sale and all the parties who might have had an interest in the matter were before the court, it was obviously

sensible to decide the substantive issue, as the trial judge did, on the basis of the evidence on affidavit and submissions before

her.”

On the function of the Court Keane J. held, at p. 466:

“It is not the function of the court in a case such as this to decide, with the benefit of hindsight, whether it might have been

better for the creditors and anyone else interested in the property had the receiver rejected the Astra offer and continued to

deal with Anglo Éire or anyone else who might be interested. The court was dealing with the matter with the advantage of

hindsight: the receiver had to deal with the matter then and there and in the light of the expert advice available to him from a

valuer. Having tested the market again, without any response in the form of an unconditional offer, he was entitled, in all the

circumstances, to take the view he did, that accepting the Astra proposal was the more prudent course.”

Under s. 316 the function of the court is to consider whether the Receiver has taken all reasonable care to obtain the best price

reasonably obtainable for the property at the time of sale. Applying Edenfell the Receiver had to deal with the matter then and there

and in the light of the expert advice available to him. The appropriate date is the date of sale. The Receiver does not have a general

obligation to wait for the market to rise. This was described in Keane, Company Law (3rd Ed.) para. 22.20 as follows:

“. . . while every case should be judged on its own facts, there is no general obligation on a receiver to wait for the market to

rise. If he makes a reasonably prudent assessment of the market at the relevant time, he will not be held liable simply because

it appears subsequently that by waiting he might have got a better price.”

Thus, the Receiver has a duty to take all reasonable care to obtain the best price reasonably possible at the time of sale. However,

he is not obliged to postpone a sale to obtain a better price. I adopt the law as stated in Keane, Company Law (3rd Ed.) as cited

above and as stated in Gower, Principles of Modern Company Law (5th Ed.) (1992) p. 438:

“In the exercise of his powers a receiver is under a duty to the debtor company to take reasonable care to obtain the best

price reasonably possible at the time of sale; this duty is also owed to a guarantor of the company’s debts. However, as the

receiver in exercising his power of sale is in a position analogous to that of the mortgagee, he is not obliged to postpone sale in

order to obtain a better price or to adopt a piecemeal method of sale.”

The Process

The facts of each case are crucial and each s. 316 application depends on the circumstances of that case. At the core of the

analysis of the function of the Receiver in this s. 316 application is consideration of the process carried out by the Receiver in selling

the mineral orebody. The facts of the process have been found by the learned High Court judge on the evidence before him, as set

out previously in this judgment. Important steps in the process taken by the Receiver included the following:

1. In 1999 after the conclusion of the Tara litigation the Receiver commenced taking steps to sell the mine.

2. The Receiver engaged mining consultants, International Mining Consultants (IMC), formerly Mackay & Schnellman Limited, to

advise him on the sale.

3. Advertisements were placed in financial newspapers, mining journals and other publications in May, 1999 in the United

Kingdom, France, Germany, Australia, South Africa, Canada and the United States of America.

4. The Receiver wrote directly to sixty major mining companies inviting expressions of interest.

5. These steps were as advised by IMC and were stated to have encompassed all parties in the industry in any way likely to

have an interest in acquiring the orebody.

6. Replies were received from forty-five parties expressing interest.

7. The Receiver provided documentation and facilities including a data room in Dublin containing information about the mine,

subject to a confidentiality agreement, to enable interested parties further consider the matter.

8. Nineteen interested parties signed the confidentiality agreement.

9. Twelve interested parties visited the data room.

10. In October, 2000 Tara submitted a sealed bid valid until the 31st March, 2001.

11. Following receipt of this offer the Receiver advised all the nineteen parties who had expressed an interest in the mine that

an offer had been made and asked them whether they wished to pursue their interest.

12. Discussions took place with four of these interested parties but none lead to a realistic offer for the mine.

13. On the 11th January, 2001 Tara made an offer of IR£27,500,000.

14. The Receiver received advice from IMC that the price should be accepted. (See the affidavit of Mr. Wells).

15. The sale was supported by the Banks. The Banks are owed greatly in excess of IR£27,500,000. Consequently their support

of this sale is an important factor to be weighed in the situation.

16. The sale was supported by the Roches. As the debt is in excess of the sum obtainable on the sale and the Roches are

guarantors their support is also an important factor to balance in the situation.

After the process and the High Court order the sale took place. The Receiver sold the orebody to Tara, pursuant to the High Court

order. The plaintiffs appealed against the order and judgment of the High Court on many grounds. However, in relation to the s. 316

order counsel emphasised four facets. These were:

(a) that there was no specialist valuer;

(b) that the sale was at a gross undervaluation;

(c) that there was a failure to exploit the position of Tara, and

(d) that the Receiver went to the market at the wrong time.

I will consider each of these submissions separately. However, in such separate analysis it becomes clear that the fundamental facts

of the case, the process undertaken by the Receiver, repeatedly arise and govern the case.

The fundamental issue on this appeal is whether the statutory requirements of s. 316 were met. The four important matters raised by

counsel for the plaintiffs were four facets of that basic issue. In fact, the issue as to whether the requirements of s. 316 were met is

answered by considering the process carried out by the Receiver. In an analysis of that process is the answer to the fundamental

issue and also to the four facets raised by counsel.

I shall consider each of the four facets as submitted by counsel for the plaintiffs. However, I shall not deal with them in the same

order as raised by counsel. This is to facilitate analysis of the process of the Receiver as a whole.

(1) Submission that the Receiver went to the market at the wrong time

Counsel for the plaintiffs submitted that the Receiver went to the market at the wrong time. The answer to this submission is found in

the common law as quoted previously in Edenfell and in the process followed by the Receiver. Applying the analysis of Keane J., as

set out previously in this judgment, in Edenfell, to the facts of this case it is clear that the Receiver took reasonable care to obtain

the best price reasonably obtainable for the property at the time of sale.

The Receiver is entitled to choose the time at which he will sell the asset. He is not obliged to postpone a sale until the markets may

rise or other possible events. However, the receiver is obliged to fairly expose the asset to the market.

In this case the decision to commence the sale process after the conclusion of the Tara litigation was rational. To paraphrase

Edenfell, it is not the function of the Court, with the benefit of hindsight, to decide if it might have been better if the Receiver had

waited further. The Receiver had been appointed in 1986, and in light of the circumstances in 1999 he then decided to commence

taking steps toward the sale of the mine. He based his decision, inter alia, on the conclusion of the Tara litigation in the Supreme

Court.

The Receiver had an obligation to take all reasonable care to obtain the best price reasonably obtainable for the property at the time

of sale. Given the facts of this case, the decision of the Receiver to sell in 1999 was reasonable.

The plaintiffs submitted that the sale should not have proceeded because of the pending and threatened litigation. However, the

plaintiffs had already brought about litigation since 1986. In 1999, with the conclusion of the Tara appeal, albeit that there was other

litigation in the offing, it was reasonable for the Receiver to take steps toward sale of the mine. In a situation such as he found

himself, with the ongoing threat of litigation, it might have been considered that the litigation would not conclude in any reasonable

time and thus if threat of litigation was a bar to a sale no sale could take place in the foreseeable future. This could not be

reasonable. It would enable mischievous litigation to stop sales. Further, the particular situation was met in this case by the decision

of the Receiver that no purchaser would be required to buy into litigation. This decision was reflected in the Contract. And, as stated

previously, the Receiver did not have a general obligation to wait for the market to rise.

The primary duty of the Receiver was to the secured creditors, and this meant to realise the assets. Having decided not to sell prior

to the Tara litigation there was no good reason why that decision could not be revisited and revised at the conclusion of the Tara

case. A threat of further litigation could not be a reasonable reason to bar any process toward sale in all circumstances.

Thus there was evidence of reasonable care being taken by the Receiver as to the timing of the sale. However, the Receiver’s primary

responsibility was to the secured creditors. See Lightman & Moss, The Law of Receivers and Administrators of Companies (3rd Ed.) at

para. 7-032 and the additional authorities there cited, and in particular Bank of Cyprus (London) Ltd. v. Gill [1980] 2 Lloyds’ Rep. 51

and Routestone Limited v. Minories Finance Ltd. [1997] B.C.C. 180 in which at p. 187 Jacob J. stated that “[n]o duty of care is owed

by the mortgagee or receiver in relation to the actual decision to sell”. I would distinguish Re Charnley Davies Ltd. (No. 2) [1990]

B.C.L.C. 760 and accept that it applies to an administrator. I adopt the words of Millett J. at p. 775:

“A mortgagee is bound to have regard to the interests of the mortgagor, but he is entitled to give priority to his own interests,

and may insist on an immediate sale whether or not that is calculated to realise the best price; he must take reasonable care to

obtain the true value of the property at the moment he chooses to sell it: see Cuckmere Brick Co. Ltd. v. Mutual Finance Ltd.

[1971] 2 All ER 633, [1971] Ch. 949. An administrator, by contrast, like a liquidator, has no interest of his own to which he may

give priority, and must take reasonable care in choosing the time at which to sell the property.”

The Receiver is in the same position as a mortgagee. The first duty of the Receiver is to the secured creditors. Thus, in proceeding to

sale the Receiver may put the secured creditors’ interests first. The Receiver was not under a duty to wait for the market to rise. The

Receiver took a rational decision in all the circumstances to proceed to sell the asset. Indeed, also, on the evidence, it is clear that

he took reasonable care in the timing of the sale. Therefore, the submissions on behalf of the plaintiffs that the Receiver went to the

market at the wrong time must fail.

(2) Submission that there was no specialist valuer

Counsel submitted that the requirements of s. 316 had not been met because there was no specialist valuer. There is no doubt that

selling an asset requires reasonable care. The asset in this case is of a special type. Thus, at issue is the sale of a special type of

property, the orebody of a mine. Clearly such a sale requires specialist advice. In this case the Receiver sought, obtained and was

guided by the expertise of Mr. Wells and International Mining Consultants of London. No evidence was called to undermine that

expertise. I am satisfied that the Receiver was entitled to rely on that expertise, as was the High Court. It was an appropriate

expertise in the circumstances for the Receiver. The expertise of Mr. Wells was never really challenged by any expert called by the

plaintiffs. Nor was any expert called who challenged, in any significant manner, the expert opinion of Mr. Wells. That expertise,

coupled with the process followed by the Receiver, was utilised by the Receiver and ensured that the asset was on sale on the open

market.

The process in this case was as advised by the expert. It has been set out in detail previously in this judgment. It involved engaging

mining consultants International Mining Consultants (IMC), advertisements in financial newspapers, mining journals and other

publications in targeted countries and the Receiver writing directly to sixty mining companies. Each of these steps were advised by

IMC and were stated to encompass all parties in the industry likely to have an interest. There were 45 replies expressing an interest,

a data room was established containing information about the mine, nineteen interested parties took a step further and signed the

confidentiality agreement, twelve interested parties visited the data room, yet there was one sealed bid only, from Tara. However, on

receipt of the bid the Receiver wrote back to the nineteen parties who had expressed an interest and informed them of the offer, and

asked them if they wished to pursue the matter. Discussions did take place with four of the parties but did not proceed. Tara offered

IR£27,500.000. The Receiver was advised by IMC that the price should be accepted. This entire process was advised and assisted by

IMC. It was a professional process. The combination of the process and the expertise of the experts appointed by the Receiver

brought the sale of the mine to the open market, the specialist financial mining market and to the specific notice of sixty major mining

companies, and it was then followed up. The open market determined the price.

I am quite satisfied that there was no error on behalf of the learned trial judge on this aspect of the application. The Receiver was

entitled to rely on the expert he appointed. The court, in turn, had clear evidence upon which it was entitled to determine that in the

appointment and reliance on the expert (both as to the process and the advice as to price) the Receiver exercised all reasonable care

so as to obtain the best price reasonably obtainable for the property at the time of sale. Consequently, I would dismiss this ground of

appeal.

(3) Submission that the sale was at a gross undervaluation

Counsel for the plaintiffs submitted that they should succeed on the appeal because the sale was at a gross undervaluation.

However, I am satisfied that the appeal of the plaintiffs on this ground is not sound. The issue under s. 316 is price, not valuation.

The issue of valuation is governed by the facts of the case, in this case the process of sale. The essence of the Receiver’s duty of

care is that the asset, the mine, was fairly and properly exposed to the market. The process, the steps he took, have been set out

previously. It is clear from that process that no party was excluded from the process. It is evident that it was a fair process. Within

that process the steps were appropriate. The advertising was appropriate. The letters written to sixty parties was an exercise in

reasonable care. It was good practice for the Receiver to require a confidentiality letter. Further, the Receiver did not just rest on the

offer made. Rather, he then went back to the nineteen parties who had expressed an interest and requested them if they wanted to

pursue their interest. The process in this case brought the mine to the open market. It was a reasonable process. The market set the

price. The consequence was that the price was the best price reasonably obtainable for the property at that time.

The fact that the asset might have a special added value to one party does not negate the price as the open market price after a

reasonable process. In such a situation the price meets the requirements of s. 316.

On behalf of the plaintiffs Mr. Evans gave evidence on affidavit of valuation in excess of the price achieved. However, the question of

a valuation of the mine as an independent mine or as an adjunct mine is an exercise not relevant to the matter of the s. 316

application. Section 316 does not refer to or require a valuation. Section 316 requires the “best price”. Under s. 316 the objective is

the best price not the best valuation. Consequently, I am satisfied that the plaintiffs submissions on this ground must fail.

(4) Submission that there was a failure to exploit the position of Tara

The plaintiffs submitted that the Receiver had failed to exploit Bula’s bargaining power and Tara’s commercial viability. This claim must

be analysed in context. The context is the sale process set out previously. The argument that the Receiver could have forced Tara to

pay more brings an air of unreality to the matter of the sale. What type of force? Force is not relevant. The sale was conducted on

the open market. The process has been set out fully previously. The market set the price. It is the market price that is relevant, not

the value to Tara. The value to an individual purchaser is immaterial.

The case Trans-Tec Automotive (Campsie) Limited [2001] B.C.C. 403 was opened to the court but I am satisfied that it is

distinguishable. The Receiver was selling the orebody but had no leverage over Tara and was powerless to increase the price above

that obtainable on the open market. There was no evidence upon which this case could have had any applicability.

Considering the process from this aspect I am satisfied that there was no action which might be described as failure to exploit the

position of Tara, rather the Receiver exercised all reasonable care to obtain the best price reasonably obtainable for the mine at the

time of sale.

Thus, having considered and analysed the process carried out by the Receiver and the resulting price achieved for the orebody from

the point of view of these four facets submitted on behalf of the plaintiffs, I am satisfied that the statutory requirements of s. 316

were met. Further, on consideration of the sale process of the Receiver and on analysis of the s. 316 order as a whole, in light of the

relevant law and all the facts of the case, I am satisfied that there was no error by the learned High Court judge in making the order

which he did. Consequently this aspect of the plaintiffs’ case must fail.

Fair procedures – cross-examination of deponents

Counsel submitted that there had been a lack of fair procedures. Specifically, counsel submitted that the s. 316 application had grave

consequences for the plaintiffs and that consequently they had the right to cross-examine deponents to test their evidence. Counsel

submitted that the refusal of the trial judge to allow cross-examination on behalf of the plaintiffs was in breach of fundamental fair

procedures.

This ground of appeal requires analysis from several angles. First, the parties, by consent, sought and obtained directions for the s.

316 hearing from the President of the High Court on the 20th March, 2002. On that date orders were made as to the exchange of

affidavits and as to the date of hearing. It was at that time that issues such as the cross-examination of the witnesses should have

been addressed. The affidavit of the Receiver and Mr. Wells had been sworn on the 4th March, 2002.

Secondly, the application for cross-examination was filed on the 22nd April, 2002 in circumstances where the date for trial (23rd April,

2002) had been set on the 20th March, 2002 and the affidavits in issue sworn on the 4th March, 2002 and filed on the 20th March,

2002. In a case where there has been a history of litigation and delays the timing of this application was an appropriate factor for the

High Court to consider.

Thirdly, the application to cross-examine has to be considered in the context of the s. 316 application. In this case the Receiver had

chosen to go to court to seek directions as to the sale. It is understandable, in light of the long history of litigation, that the Receiver

chose to avail of this facility and make the application to court. Counsel for the Receiver submitted that in any application under s.

316 a competent Receiver must come before the court in the knowledge that the court might not approve the sale. Thus it was

essential that while the Receiver placed before the court material sufficient for directions he must not disclose material that could

prejudice a subsequent sale if the court did not approve the sale. He instanced, if the Receiver came to court and said that the

nineteen parties who signed the confidentiality agreement all told the Receiver that the mine was hopeless, and if that was disclosed

and the court did not approve the application for the sale, how would that leave the Receiver if he wished to sell? Counsel submitted

that careful judgment was necessary by the Receiver to determine if there was sufficient material for the court to exercise its

function. However, on the other hand, the Receiver should not disclose commercially sensitive information in case a subsequent sale

was necessary. The test for the court was to consider if it had sufficient information upon which to make a decision. The court could

either require further information or refuse (because of lack of sufficient information or otherwise) to direct the sale. I am satisfied

that this is the correct analysis of the nature of the application and the functions of the Receiver and the court and I apply them to

this case. If the court required further material it could have requested it, it could have requested commercially sensitive material in a

sealed envelope or it could have refused to order the sale. However, the court did not take any of these approaches.

In this case the court had to be satisfied that the Receiver had exercised all reasonable care necessary to obtain the best price, the

price reasonably obtainable for the property at the time of sale. The facts which the learned trial judge had before him included those

set out in the affidavits of the Receiver and Mr. Wells. These facts have been set out in this judgment, as has the process taken by

the Receiver toward the sale. There was no significant challenge as to the expertise of Mr. Wells. There was no significant challenge

as to the expert opinion of Mr. Wells. There was evidence of valuation put forward by Mr. Wymes and Mr. Evans. However, no expert

gave evidence such as to challenge the expertise of IMC. But the plaintiffs wished to cross-examine the Receiver’s deponents.

On the 22nd April, 2002 the solicitor for the plaintiffs sent by fax a notice to cross-examine the Receiver and Mr. Wells. Counsel for

the Receiver submitted that the notice for cross-examination was misconceived, that it was in the form of cross-examination

pursuant to O. 40, r. 31 of the Rules of the Superior Courts, 1986. It stated:

“Notice of Cross-Examination

TAKE NOTICE that the respondents, Bula Limited (in Receivership), Bula Holdings, Michael Wymes and Richard Wood intend at

the trial of this application to cross-examine the several deponents named and described in the schedule hereto on their

affidavits therein specified. AND ALSO TAKE NOTICE that you are required to produce the said deponents for such cross-

examination before the court aforesaid.”

Counsel submitted that this referred to trials on affidavit. He submitted that an entirely different provision deals with the discretion of

the court, in applications such as these under s. 316. He referred to O. 40, r. 1. That rule provides:

“1. Upon any petition, motion, or other application, evidence may be given by affidavit, but the Court may, on the application of

either party, order the attendance for cross-examination of the person making any such affidavit.”

On the other hand, following the heading III Trial on Affidavit O. 40, r.r. 28, 29, 30 provide:

“28. Within fourteen days after a consent for taking evidence by affidavit as between the parties has been given, or after an

order has been made for such purpose, or within such time as the parties may agree upon, or the Court may allow, the plaintiff

shall file his affidavits and deliver to the defendant or his solicitor a list thereof.

29. The defendant, within fourteen days after delivery of such list, or within such time as the parties may agree upon, or the

Court may allow, shall file his affidavits, and deliver to the plaintiff or his solicitor a list thereof.

30. Within seven days after the expiration of the last-mentioned fourteen days, or such other time as aforesaid, the plaintiff

shall file his affidavits in reply, which affidavits shall be confined to matters strictly in reply, and shall deliver to the defendant or

his solicitor a list thereof.”

Following the above rules r. 31 provides:

“When the evidence is taken by affidavit, any party desiring to cross-examine a deponent who has made an affidavit filed on

behalf of the opposite party may serve upon the party by whom such affidavit has been filed a notice in writing, requiring the

production of the deponent for cross-examination at the trial, such notice to be served at any time before the expiration of

fourteen days next after the end of the time allowed for filing affidavits in reply, or within such time as in any case the Court

may specially appoint; and unless such deponent is produced accordingly, his affidavit shall not be used as evidence unless by

the leave of the Court. The party producing such deponent for cross-examination shall not be entitled to demand the expenses

thereof in the first instance from the party requiring such production. The notice shall be in the Form No. 21 in Appendix C.”

It is clear that this latter rule relates to a trial which, as an exception to the oral tradition, is being heard on affidavit. In such a trial

the right to cross-examination of such evidence exists.

However, a s. 316 application is an entirely different matter to a trial on affidavit. There are opposing parties in an adversarial trial. In

contrast, this is a motion, the Receiver has applied to court to obtain the court’s consent, if appropriate, for a sale. Parties are put

on notice and may present evidence but it is not an adversarial trial by affidavit. Instead, the court, in exercising its judicial discretion

on the application, may also exercise a judicial discretion as to whether there may be cross-examination. In the exercise of that

judicial discretion it was quite appropriate for the court to have regard to the fact that there had been, by consent, a hearing before

the President of the High Court on the 20th March, 2002 for directions as to the application and there had been no application there

for cross-examination. Further, it was appropriate to have regard to the fact that although the plaintiffs had the affidavits of the

Receiver and Mr. Wells by that date, yet it was the 22nd April, 2002 before they filed Notice to Cross-examine. This delay was a

factor the High Court was entitled to take into consideration. Further, the High Court was entitled to have regard to the fact that

application on the 23rd April, 2002 before the High Court was for time to prepare for cross-examination.

I am satisfied that the issue of cross-examination in an application under s. 316 is a matter for the judicial discretion of the court in

an application or motion. It is not a right as is expressed for trials on affidavit. Consequently, the court was correct to consider that

it had a discretion and then to exercise judicial discretion. In such exercise of discretion the court did not err in considering the

matters which it did. In refusing the adjournment on the 24th April, 2002 the court acted within its discretion. It is clear from case

law that appellate courts are slow to intervene and overturn an order such as a refusal of an adjournment. The burden on the

plaintiffs is heavy.

I am satisfied that the plaintiffs have failed to meet any such burden of proof. I would not intervene in the High Court’s decision not

to adjourn the case. Further, I am satisfied that the plaintiffs’ submissions are grounded on a false understanding as to the alleged

right to cross-examination as an application under s. 316 is not a trial on affidavit. Consequently, I am satisfied that the plaintiffs’

appeal on this ground fails also.

As to the issue of the refusal of the High Court to enable discovery on the 23rd April, 2002: for the reasons given above I am satisfied

that the decision was within the discretion of the trial judge and I would not allow an appeal on this ground either.

7. The fifth appeal, appeal No. 271/02

7.(i) The fifth appeal is an appeal by the plaintiffs against the judgment and order of the High Court (Murphy J.) delivered on the 12th

July, 2002. In essence the High Court on the 12th July, 2002 refused a stay on the High Court order of the 20th June, 2002 and the

plaintiffs are now appealing against that refusal of the stay on 12th July, 2002.

I am satisfied that this appeal is a moot. The High Court ordered the sale on 12th July, 2002. The sale has proceeded. In the fourth

appeal herein I have upheld that judgment of the High Court. Consequently, the issue of a stay is moot.

7.(ii) Counsel for the plaintiffs opened the facts of the case to the court and pressed the court, even if it was of the view that the

matter was a moot, to consider the issue in light of the decision of the High Court. While making it plain that this was not to be

considered a precedent, the plaintiffs were allowed to express their views about the order of the High Court.

7.(iii) The facts in this appeal are that on the 20th June, 2002 the High Court made an order pursuant to s. 316 of the Companies

Act, 1963 approving the sale of the mine to Tara on the terms set forth in the Contract dated the 9th May, 2001 (which High Court

judgment was the subject of the fourth appeal considered previously in this judgment). On 2nd July, 2002 the plaintiffs served notice

of appeal against the order of the High Court of the 20th June, 2002. There was correspondence and communication between the

parties and it was indicated to the plaintiffs that it was intended that completion of the sale would take place on Thursday the 11th

July, 2002. The plaintiffs applied by notice of motion dated the 8th July, 2002 for a stay on the order of the 20th June, 2002. On the

12th July, 2002 counsel for the plaintiffs applied in court for the said stay. Counsel for the Receiver and the Banks submitted that the

High Court judge was functus officio and relied upon Hughes v. O’Rourke and Ors. [1986] I.L.R.M. 538, and GMcG v. DW (No. 2)

[2000] 4 I.R. 1. The High Court ordered on the 12th July, 2002 that the application for a stay be refused. Counsel’s note of the

judgment provides:

“Note of Ruling delivered on the 12th July 2002 by Murphy J.

The Learned Judge began by [saying that] a stay application was the substantive motion, that the Order had been perfected

on the 25th of June and that an Appeal was now pending before the Supreme Court. There was now a preliminary question

which needed to be addressed. What does a stay involve? Clearly it is a stay on execution of the Order. Under Rule 18, there is

no automatic stay, and an application for a stay must be made to the Court. What is the appropriate time for such an

application to be made? The stay clearly refers to the Order made, and it seemed to me that such an application should be

made before the Order is made up. Only in limited circumstances can the matters be revisited by the Court, such as on the

consent of the parties and the Court accedes to their request, and also under the slip rule. Although not before the Court

formally, there has been submissions made by Mr. Trainor, that there is a disjunction between the Judgment and Order. This

would be interesting to pursue if there is a disjunction and if so maybe injunctive relief should be sought under the contract.

The reason why no stay application was made, Mr. Trainor said, was that there was an understanding that nothing could

happen before the Appeal was determined. The applicants could seek relief by way of amendment and/or injunction. However,

while this may be of interest, it was not before the Court this morning. An application for a stay is. There is an ambiguity in

[Order 58], Rule 18. Usually where there is ambiguity . . . The High Court Order had been perfected and to that extent, I am

now functus officio, and the Supreme Court will have to deal with that. Therefore unless the Supreme Court rules otherwise

then the order remains.

Under [Order 58], Rule 19, an application may be made either to the High Court or Supreme Court, and in the first instance be

made to the High Court. It seems this allows an application for a stay to be made to both Courts; to the High Court when [it

has seisin of the matter and] to the Supreme Court when . . . when the Supreme Court has seisin on the Appeal. This seems to

be the interpretation which the Supreme Court has come to in Hughes v. O’Rourke. It is a fundamental principle that one (sic)

the final Order has been made and perfected, the High Court (sic) jurisdiction is exhausted. Mr. Trainor raises issues that it only

covers matters raised by the Court on matters determined by the Court. He suggests that because a stay was not applied for,

there is no Order. But it seems the substantive matter is different from procedural matters. Henchy J refers to substance. The

stay should be applied for at the time of delivery of the Judgment and certainly before the Order is perfected. The Supreme

Court appeared to agree with this in the case of GMcG v DW (No. 2) (quotation from the decision of Ms Justice Denham). It

appears that the approval of the sale to the purchaser under the contract is a final Order. Questions of stay are matters of

procedure.

(Quotation of Chief Justice Finlay in the [Belville case [1994] 1 I.L.R.M. 29])

It seems accordingly I must refuse the application

Costs were awarded against the applicants with a stay in the event of an Appeal.”

The Rules of the Superior Courts provide as follows: O. 58, R.18 states:

“An appeal to the Supreme Court shall not operate as a stay of execution or of proceedings under the decision appealed from,

except so far as the High Court or the Supreme Court may order; and no intermediate act or proceedings shall be thereby

invalidated, except so far as the High Court or the Supreme Court may direct.”

O. 58, r. 19 provides:

“Whenever under these Rules an application may be made either to the High Court or to the Supreme Court it shall be made in

the first instance to the High Court.”

It is clear that an application for a stay should be made in the first instance to the High Court. This is usually done in the High Court

at the time the High Court decision is made or as soon as possible thereafter. If the stay is refused by the High Court then an

application may be made to the Supreme Court appealing that refusal. While it is normal practice to apply for a stay at the time of the

decision of the High Court it may be made thereafter on notice to the High Court.

Counsel for the plaintiffs submitted that the following facts were significant. It was submitted that the plaintiffs had originally believed

no stay was necessary once their appeal had been filed as it was on the 2nd July, 2002. Counsel submitted that the plaintiffs were

surprised that an application for a stay was necessary. Owing to the elevation of their legal adviser to the High Court the plaintiffs

had to change solicitors. Counsel was retained on an emergency basis. Counsel applied to the High Court first thing on Monday

morning, the 12th July, 2002. After the refusal of the stay by the High Court, counsel was engaged elsewhere during that day. There

appears to have been a breakdown in communications. No application was made to the Supreme Court for a stay.

8. Decision on the fifth appeal

While counsel for the plaintiffs did not accept that this appeal was moot he did accept that there were some difficulties in the appeal

seeking a stay in the circumstances. Counsel for the Receiver, the Banks and Tara submitted that the appeal was moot.

This Court has to consider the appeal in the circumstances that now exist. The court is not a forum for academic discourse. The

circumstances are that this is an appeal from a refusal of a stay on a sale pending an appeal. However, that sale has been completed

and the appeal on the sale order heard. Consequently, the issue of a stay on the sale is now moot. There is well settled law that this

court will not consider a moot. The reality is that the appeal, for a stay of a sale ordered on the 20th June, 2002, pending an appeal,

in all the circumstances is moot. I would strike out the appeal of the plaintiffs.

However, I will express my opinion that the High Court has jurisdiction to grant a stay in a case even if the High Court order has been

made up and the matter is on appeal to the Supreme Court. If such an application for a stay to the High Court fails a party may apply

to the Supreme Court for a stay pending an appeal.

9. The sixth appeal, appeal No. 272/02

This appeal arose in proceedings in which the plaintiffs sought an interlocutory injunction restraining the Receiver and Tara from

exercising their respective rights as vendor and purchaser following the completion of the sale on the 12th July, 2002. On the 1st

August, the High Court refused this application.

The plaintiffs acknowledged that the Receiver had made his position clear in correspondence in the days prior to the 12th July, 2002

that he intended to complete the sale of Bula’s assets on the 12th July, 2002 unless the order of the High Court of the 20th June,

2002 was subject to a stay. As set out above the application for a stay was refused by the High Court and there was no appeal from

that order to the Supreme Court.

The plaintiffs accepted that on the afternoon of the 12th July, 2002 there was neither a stay nor an injunction in place restraining

the Receiver from completing the sale to Tara. On the 12th July, 2002 the Receiver proceeded to complete the sale of the mine in

accordance with the Contract pursuant to the order of the High Court made on the 20th June, 2002.

10. Decision on the sixth appeal

I am satisfied that this appeal is moot. However, in addition, it is clear that the application was in essence a second application for a

stay, which had already been refused by the High Court and from which there had been no appeal to the Supreme Court. It was an

attempt to set up the same case again. I am satisfied that it was in fact inappropriate to apply to the court for this order. The

dictum of Lord Halsbury L.C. in Reichel v. McGrath [1889] 14 A.C. 665 was referred to by counsel. That dictum was cited with

approval by Keane J. in Belton v. Carlow County Council [1997] 1 I.R., 172 (at p. 182) and by this court in McCauley v. McDermott

[1997] 2 I.L.R.M. 486 (at p. 497). The dictum was:

“I think it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the

litigant were to be permitted by changing the form of proceedings to set up the same case again.”

I adopt and apply this law. I am satisfied that the trial judge did not err in refusing the application. The sale had been specifically

authorised by the trial judge on the 20th June, 2002 and had been completed. His decision as to the sale was on appeal. I am

satisfied that the learned trial judge did not err in the exercise of his discretion in declining the plaintiffs injunctive relief on their

Notice of Motion filed on the 24th July, 2002.

While I acknowledge that there was a reference by the High Court judge in his judgment on the fifth appeal to injunctive proceedings,

and the human situation of the plaintiffs as to their stated difficulties in applying for a stay, I am satisfied that these proceedings

qualify as a technical abuse of process, the same questions having been disposed of previously. I would dismiss the appeal on these

grounds alone. However, it should be noted that in all the circumstances the appeal was in fact moot.

11. The seventh appeal, appeal No. 334/02

The seventh appeal is an appeal by the plaintiffs against the order of the High Court made on the 5th November, 2002 in which the

learned High Court judge declined to amend the s. 316 order of the High Court made on the 20th June, 2002 and perfected on the

25th June, 2002 which purported to embody his judgment made on the 20th June, 2002.

The plaintiffs applied to the High Court to have the order which had been perfected on the 25th June varied. The learned High Court

judge rejected the application of the plaintiffs for two reasons. First, he was of the view that the order appeared to embody the

effect of his judgment. Secondly, he considered that the sale had been completed, an application for a stay had been refused, as had

an application for an injunction.

The plaintiffs submitted that the appeal should be allowed on the grounds that they did not accept the decision of the learned trial

judge that the order of June 25th did not misrepresent the effect of his judgment delivered on the 20th June, 2002.

The note of the judgment given by Murphy J. on the 5th November, 2002 includes the following:

“The caselaw has been extensively opened to me by Counsel for the Applicants and it is clear that I do have the power to

amend my Order in the appropriate circumstances. I accept that the principles are correctly stated in the decision of Romer J as

he then was in Ainsworth v Wilding. There does seem to be a leitmotif running through the caselaw that an Order or Judgment

should be amended so that it accurately reflects the intention of the Court. The question, therefore, is whether the shortened

version of my ruling contained in the perfected Order correctly states what the Court intended.

...

Completion of the sale of the mine could only mean completion subject to the contract of the 9th of May. I find that there is no

discrepancy between the Judgment and the Order; the Order is merely shorter in form. This argument was extensively dealt

with by me at pages 124 to 132 of the Transcript. The Court has already dealt with this matter.

The amendment of the application is at the discretion of the Court and I am entitled to bear in mind the fact that the

application for a stay and for an injunction have been refused. It doesn’t seem that the difference between the Order and the

Judgment is a discrepancy; Counsel for the Applicants has conceded that there is not a difference in substance but merely a

difference in wording. I find there is no real difference between the Order and the Judgment. Having regard to all the

circumstances, I find that more injustice would be caused by my amending the Order than by my not amending the Order. I

therefore refuse to grant the first and second amendments to the Order sought by the Applicants.”

Counsel for the Receiver submitted that a judge may amend a perfected order if it does not accurately reflect the order which was

actually decided and intended by the court. Here the trial judge, on the application of the plaintiffs, reviewed the order and having

heard submissions from the parties, decided that the perfected order did accurately reflect what he had intended and (except in

relation to a typographical error) he refused to amend the order. Counsel on behalf of Tara submitted inter alia that it was

extraordinary that this court should be asked to review and reverse the learned trial judge’s view as to the effect of his own judgment

and whether that judgment was properly reflected in the order as perfected. It was submitted that in this case the purported

discrepancies between the judgment and the order were brought to his attention and he did not accept that there were any such

discrepancies.

12. Decision on the seventh appeal

To request this court to go behind a finding of the learned trial judge that the High Court order properly reflected his intention in his

judgment is an unstatable appeal and accordingly should be dismissed.

13. Access to court and case management

The right of access to court is an elementary right under the Constitution. It is a fundamental facet of a democracy encompassing

the rule of law. The right of access to court includes affording a plaintiff an adequate opportunity to substantiate the claim which he

has made: see Bula Ltd. v. Tara Mines Ltd. (No. 1) [1987] I.R. 85. However, that right does not exclude the necessity of case

management by the courts. The time when a court could take a laissez-faire attitude to the length of a case has passed together

with the 19th Century. The court has a duty to all litigants who wish to proceed before the court. Court time is not infinite. Court

resources are not unlimited. Thus the time allocated to a case should not be so disproportionate that it reflects unfairly on other

litigants. In addition, while the general rule is that costs follow the event the circumstances of a case may be relevant to the issue of

costs, and these circumstances may include the time allocated to a case. Thus an unreal attitude to the length a case should take,

or a situation where a case is determined to be an abuse of the process of the courts, or unstatable, may weigh heavily in any

application as to costs. I am concerned at the length of court time which was allocated to these cases in the High Court and hope

that in the future the court will be assisted in case management.

14. Conclusion

I have perhaps been too indulgent of the plaintiffs’ appeals in dealing with them at some length. Certainly in relation to the fifth, sixth

and seventh appeals, these appeals are quite simply moot. However, I have taken care to indicate that I have considered the issues

raised by the plaintiffs to insure that in spite of many bad points being raised on behalf of the plaintiffs that no injustice is done in the

midst of this tidal application. After very careful consideration I am satisfied that the plaintiffs have no ground upon which to succeed

on any of these appeals.

For the reasons stated I would dismiss the fourth appeal and affirm the order of the High Court. As to the fifth appeal, I am satisfied

that it is moot and should be struck out. I would dismiss the sixth appeal on the grounds that it was an abuse of the process of the

courts and affirm the order of the High Court. As to the seventh appeal, I regard it as unstatable and accordingly am satisfied that it

too should be dismissed.