Supreme Court allows appeal on preliminary issue of law despite High Court's order to wait for final trial determination.

THE SUPREME COURT

2012 NO.150

Fennelly J.

O’Donnell J.

McKechnie J.

Between:-

CIARA QUINN, COLETTE QUINN, BRENDA QUINN, AOIFE QUINN, SEAN QUINN JUNIOR and PATRICIA QUINN

PLAINTIFFS / RESPONDENTS

-and-

IRISH BANK RESOLUTION CORPORATION LIMITED

FIRST NAME DEFENDANT / APPELLANT

and

KIERAN WALLACE

SECOND NAMED DEFENDANT

-and-

SEAN QUINN, DARA O’REILLY and LIAM MCCAFFREY

THIRD PARTIES

Judgment of Mr Justice Fennelly delivered the 12th day of June 2013.

1. Charleton J, on 23rd February 2012, determined a preliminary point of law against the appellant in litigation pending before the High

Court in which the respondents are plaintiffs. The appellant has served notice of appeal against the order made on foot of that

judgment. The respondents object that the appellant is not entitled to proceed with its appeal until after the final determination of

the High Court action. This judgment is concerned with that preliminary objection. I will begin by setting out the procedural history

which has led to the hearing of this issue.

2. The first five plaintiffs are children of Mr Seán Quinn. The sixth-name plaintiff is his wife. Mr Seán Quinn, senior, as stated in the

statement of claim, “is a businessman who founded the Quinn group of companies…that was, by the middle of the first decade of this

century, a successful and profitable conglomerate.”

3. On 16th May 2011, the plaintiffs commenced proceedings in the High Court against the appellant and one Kieran Wallace, the

second-named defendant. The second-named defendant is sued as a share receiver appointed over shares in companies owned by

some or all of the plaintiffs.

4. The plaintiffs claim declarations that certain purported charges of shares of the different plaintiffs in a number of companies in the

Quinn group are invalid, unenforceable and of no legal effect and that purported deeds of appointment of the second-named

defendant made on foot of those charges should be set aside. They also claim that certain guarantees entered into by the different

plaintiffs are invalid, unenforceable and of no legal effect and, if necessary orders for rescission of the same. In addition, the plaintiffs

claim damages for the torts of negligence, breach of duty (including statutory duty) and intentional and/or negligent infliction of

economic damage.

5. A central, perhaps the central, claim of the plaintiffs is that they entered into the share pledges and guarantees which they seek

to impugn in connection with and as security for lending by the appellant under its former identity as Anglo Irish bank which was

tainted with illegality and made for an illegal purpose. That lending, it is alleged, was for the underlying purpose of market manipulation

within the meaning of directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and

market manipulation (market abuse). Furthermore, that lending, it was claimed, was made in breach of s. 60 of the Companies Act

1963.

6. It cannot be doubted that the allegations made in the High Court proceedings are extremely serious and that the impending

litigation will be lengthy, complex and costly. One party estimates that the hearing of the action will take three to six months.

7. The case has been admitted to the Commercial Court. Already, motions for security for costs and for discovery have been issued.

8. The appellant served a notice of motion for hearing in the Commercial Court on 30th November 2011 seeking orders and directions

for the determination in advance of any other issue in the proceedings of specified issues set out under seven headings in an

Appendix to the Notice of Motion. When the various sub-headings are taken into account, the total number of such proposed issues

probably exceeded twenty.

9. Having heard argument on 30th November and 16th December 2011, Kelly J made an order directing “the trial of the preliminary

issue identified at paragraph 1 of the Appendix to the said Motion.” As the order records, the court declined “to make an order in

respect of the other preliminary issues identified at paragraph number 2 onwards of the Appendix to the said Motion.”

10. The preliminary issue so ordered was heard by Charleton J, who, by his judgment of 23rd February 2012, determined that the

plaintiffs (the respondents to this appeal) should not be prevented from relying on the acts of illegality alleged against the appellant in

the proceedings. The order of the High Court on foot of that judgment is dated 8th March 2012.

11. The appellant served notice of appeal to this Court on 10th April 2012 against the decision of Charleton J. Essentially, the

appellant claims that the legislation implementing the Market Abuse Directive was intended to establish a self-contained and

comprehensive scheme of enforcement of market abuse rules with specified and exclusive legal remedies for their breach such that

the Oireachtas did not intend to afford a remedy in the form of a declaration of invalidity or unenforceability to parties to transactions

claimed to relate to the alleged abuse. Similar grounds of appeal are advanced in relation to the claimed breaches of s. 60 of the

Companies Act 1963.

12. The respondents object that the appellant is not entitled to pursue its appeal to this Court until after the final determination of

the action pending in the High Court. They make this argument under two headings.

13. Firstly, they refer to hearings in the High Court following the delivery of the judgment of Charleton J, in which the matter of the

possible pursuit of an appeal by the appellant against his ruling on the preliminary issue was discussed. Charleton J expressed the view

that there should not be an appeal at that stage, but said that the matter was one more appropriately to be decided by Kelly J, since

he was the judge who had made the order providing that the preliminary issue should be determined. The matter was adjourned for

consideration by Kelly J, before whom there was a hearing on 16th April 2012. Counsel for the respondents accepts that Kelly J did

not determine whether the appellant could appeal the order at that stage. Rather, he decided the issue as to whether the further

prosecution of the High Court proceedings should be postponed. He decided that it should not. The respondents maintain that it was

incumbent on the appellant to pursue before Kelly J their right to appeal to this Court in advance of the main proceedings in the High

Court.

14. The second point made by the respondents is that, in the affidavit grounding the motion, in written submissions and at the

hearing of the motion seeking an order for determination of preliminary issues before Kelly J on 30th November and 16th December

2011, the appellant and its counsel had effectively given an undertaking that, in the event that an order was made as sought, it

would not appeal any order determining any preliminary issue until after the final determination of the proceedings. It is said that the

respondents relied on these alleged undertakings and that the appellant is not permitted to pursue its appeal at this stage.

15. I now turn to consider whether the respondents are justified in their objection to the appellant proceeding with its appeal against

the judgment and order of Charleton J.

16. I am satisfied that the appellant is entitled to proceed with the appeal. The notice of motion served for hearing on 30th November

2011 was based, in the alternative, on Order 63A, rules 5, 6 and/or 14, Order 25 rule 1, Order 34 rule 2 and/or Order 36 rule 7 of the

Rules of the Superior Courts. The order of the High Court of 16th December 2011 did not specify the rule under which it was made.

17. I do not believe it is at all necessary to decide whether the appellant gave an undertaking not to appeal in the event that one or

more of its proposed preliminary issues was accepted by the Court. It undoubtedly made a proposal to that effect in the affidavit

grounding the motion and in submissions. That is not denied. The record thereafter is, however, confusing. The respondents did not,

initially at any rate, respond in kind. It wanted to keep its right to appeal open. But the exchange of counsel became inconsistent and

confusing. At the end of the day, none of this matters. It is absolutely clear that Kelly J made his order in clear and unqualified terms.

He set down the issue as a preliminary issue. Referring to the first issue specified in the Appendix to the notice of motion, he said:

“But the first issue as to standing is certainly capable of being dealt with in fairly short order. It does not involve any discovery, it is a

legal issue arising from the facts in the Statement of Claim which are accepted for the purposes of the determination of that issue

and I see no reason why that issue couldn’t proceed within a matter of weeks.”

18. Nothing in the stated reasons of Kelly J or in the order of the High Court contains any restriction on the right of either party to

appeal an order made on the preliminary issue or to any undertaking. Thus, nothing in the order or in the record leading up to it

prevents the appellant from exercising its right of appeal in the circumstances which have now arisen.

19. That being the case, I can find no basis for the respondents’ other argument, in fact the argument first advanced at the hearing,

to the effect that there was a need for a further determination by Kelly J, following the decision of Charleton J, on the question of the

right to appeal. There is simply no warrant for the notion that the High Court could, at that stage, have imposed any restriction on

the timing of the appeal. As I have already said, it made no such stipulation when making the order setting down the preliminary issue

on 16th December 2011.

20. Finally, I would like to make it clear that I pass no judgment on the question of the right to appeal against a determination made

in the course of a trial, whether or not one uses the term “modular.” That expression seems to me to need clearer definition. There is

a distinction between the determination of a preliminary issue in advance of a trial issue pursuant, for example, to Order 25, rule 4 and

the determination by a judge of distinct issues of fact or law in the course of the trial. While Kelly J used the term “modular,” it is

quite clear that what he did was to decide that a specified point should be determined as a preliminary issue of law in advance of the

trial. Whether it would have been open to him to place restrictions on the right to appeal need not be decided. He simply did not do

so. There is no need, in the present situation, to express any views on the circumstances in which an appeal may be taken from the

determination of particular issues in the course of the main trial.

21. In my view, the appellant is entitled to proceed with its appeal.