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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Dully v Athlone Town Stadium Ltd & ors (Approved) [2019] IEHC 892 (06 December 2019)
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Cite as: [2019] IEHC 892

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Page 1 ⇓
THE HIGH COURT
[2019] IEHC 892
[2017 No. 252 S.P.]
BETWEEN
DAVID DULLY
PLAINTIFF
AND
ATHLONE TOWN STADIUM LIMITED, DECLAN MOLLOY, KEIRAN TEMPLE AND PADDY
MCCAUL
DEFENDANTS
AND
THE FOOTBALL ASSOCIATION OF IRELAND
NOTICE PARTY
(NO. 8)
JUDGMENT of Mr. Justice Richard Humphreys delivered on the 6th day of December,
2019
1.       This case was ostensibly settled on 23rd May, 2019. However, the first and second-
named defendants are now seeking to unravel the settlement. That attempt has involved
a number of unhappy features, perhaps too many to enumerate; but the more striking
ones are as follows:
(i). The undesirable spectacle of unfounded aspersions being cast against a wide range
of persons. The high point of that process was making a submission as to fraud by
two of the directors without having put that to the director who gave evidence.
Shortly after that allegation was launched, as soon as it was queried by the court it
was rapidly withdrawn.
(ii). Aspersions were cast against a wide range of professionals without any expert or
other evidence to support them.
(iii). The principal application with which we are now concerned was originally based on
two short grounds set out in a notice of motion, which set out two reasons as to
why the company was allegedly not bound by the settlement, but as it was put by
counsel for the fourth-named defendant, “day by day the case has grown”. We
have now reached an unendingly elaborate series of points being initiated, one
more meritless than the next. In a probably futile attempt to bring some
comprehensibility to the case, I will set out later in this judgment the 21 separate
headings under which one can classify the submissions that were made on behalf of
the first-named defendant.
(iv). Materials provided by the first-named defendant were in considerable disarray and
were subjected to a process of almost continuous revision. Perhaps the low point
was that, after counsel for that defendant finished his oral submission, and after
the second named defendant had made submissions, we had got to at about 4.40
pm on Day 4 of the hearing, at which point counsel for the first named defendant
said that he was in the process of putting in yet another slightly adjusted written
submission for which permission had not been sought let alone granted.
Page 2 ⇓
(v). More generally, the first-named defendant has engaged in a campaign of
procedural obfuscation, bringing evolving and mutating applications together with
virtually continuous applications for adjournments, sometimes several times a day.
Many of those applications were made on the tendentious basis of demanding
fairness”, a process that seems to be entirely one-way as far as the first-named
defendant is concerned. The impression generated at the time (an impression that
somehow persists in retrospect) seemed to be that 21 points of law were not
enough for the first-named defendant; and that, in addition, appeal points had to
be generated on an ongoing basis as a kind of insurance policy.
(vi). Finally, but importantly from a practical point of view, the first-named defendant
has conducted the case in a manner utterly oblivious to the other demands on the
court. The only time estimate given in advance on behalf of the first-named
defendant was that the application was unsuitable for a Monday. The application
was then listed for a full day. But, once it eventually got going, it has run for a full
week. Had I not afforded the parties the benefit of early starts, shortened lunch
adjournments and late sittings, the matter would have comfortably drifted into a
second week, and maybe the momentum thereby generated would have propelled
it even further.
2.       I have received assistance from the parties as follows:
(i). on behalf of the plaintiff from Mr. Kieran Collins B.L.; and without taking away from
other counsel in any way I would commend Mr. Collins on his admirably surgical
and focused cross-examinations and submissions;
(ii). on behalf of the first-named defendant and moving party in the motions by Mr.
Michael Forde S.C. (with Mr. Laurence Masterson B.L.);
(iii). by Mr. Molloy, the second-named defendant, in person; I am also grateful for Mr.
Molloy in his contribution to the present motion for being commendably succinct;
(iv). there was no appearance by the third-named defendant;
(v). on behalf of the fourth-named defendant by Mr. Cormac Ó Dúlacháin S.C.;
(vi). the notice party has not appeared at any stage.
First-named defendant’s medley of applications
3.       A profusion of applications emanated from the first-named defendant. This legal
cornucopia can be summarised as follows:
(i). Relief 1 in a motion of September, 2019: This sought an order vacating the order
purportedly requiring the first-named defendant to withdraw the appeals. That was
an error in the order because that outcome was not in fact ordered by the court, so
that has already been dealt with on 15th October, 2019 and that part of the order
has already been deleted. Nothing further arises under that heading.
Page 3 ⇓
(ii). Relief 2 in motion of September, 2019: This seeks a “declaration” that the first-
named defendant is not bound by the undertakings on the second page of the
agreed statement to the court. A declaration sought by a defendant is not normally
the procedurally correct approach in this context because the proceedings were
instituted by special summons. However, at the outset I decided to entertain the
application here because it seemed the only convenient way to address the real
issues in the proceedings. As noted below, I subsequently allowed Mr. Forde to
amend the relief to encompass the undertakings on the first page as well.
(iii). Relief 1, canvassed in an affidavit of October, 2019: That relates to an amendment
which has already been dealt with.
(iv). Relief 2 in affidavit of October, 2019: The second paragraph of Mr. McNelis’
affidavit seeks to direct the plaintiff’s solicitors to promptly repay the monies
previously lodged in court, or if they have been distributed, to lodge €50,000 to the
credit of the appeal. No point was made by Mr. Ó Dúlacháin about this relief being
sought in an affidavit rather than a formal notice of motion but in any event it was
not pursued as will be seen below.
(v). Motion of November, 2019: This sought relief for the plaintiff and/or fourth-named
defendant to provide a full explanation as to the payment out of the monies lodged.
That was not pursued either, as detailed further below.
(vi). Oral applications in the course of the hearing: During the hearing, Mr. Forde, in opening
the motion, asked for costs of the hearing of 4th November, 2019. Given the belated
nature of that application, that was left over until the finalisation of his other applications.
He also asked for permission to withdraw his legal submissions. I was reluctant to allow
that unless any replacement submission was being proffered in their stead, and also left
that over. Amended legal submissions were finally produced on Day 4 of the hearing, just
as Mr. Forde was concluding his submissions. As noted above, as a final afterthought he
said that he wanted to put in yet a further revised version but I saw no necessity for or
benefit in that. Mr. Forde also sought to have witnesses cross-examined in two separate
tranches, first on the issue of withdrawal of the monies and secondly, on the merits of the
dispute. I rejected that application as it would lead only to procedural complication and
yet further waste of time. As the hearing continued Mr. Forde made a number of other
applications, which I will refer to below as they arise.
Oral evidence
4.       Four witnesses were tendered for cross-examination. Firstly, the witnesses who had put
in affidavits for the first-named defendant, Mr. Neil McNelis, solicitor, and Mr. Declan
Molloy, who also swore an affidavit on his own behalf. There was then cross-examination
of the fourth-named defendant’s witnesses, Mr. Paddy McCaul and Mr. Colm MacGeehin.
For clarity, when addressing their evidence below I have set out the various points made
by the witnesses in roughly chronological order rather than in the order in which they
made those points in the course of their evidence.
Page 4 ⇓
Evidence of Neil McNelis
5.       Mr. McNelis was cross-examined by Mr. Collins, Mr. Molloy and Mr. Ó Dúlacháin. At the
end of cross-examination, Mr. Forde asked for an adjournment to consider
correspondence put to Mr. McNelis in that cross-examination. However, much of this was
documentation that was on Mr. McNelis’s file but that had not been exhibited by Mr.
McNelis. In the course of cross-examination Mr. McNelis had said that he presumed he
gave all his documents to counsel but Mr. Forde said that the material was news to him.
That rather striking contradiction was never explained. I held that the adjournment
application was totally without merit because Mr. McNelis had had much of the
documentation at all material times, and indeed had said in evidence that he had given
the papers to counsel. Even if, counterfactually, there was any merit to the application, I
was persuaded by Mr. Ó Dúlacháin’s submission that the first-named defendant had
imposed “incredible cost and expense” on his client, expense that should not be increased
further, especially where the application was being brought by an insolvent company.
Email of 15th May, 2019
6.       On 15th May, 2019, prior to the settlement, Mr. McNelis sent an email to Mr. MacGeehin
which assumed some importance in the course of the hearing. He said that he had been
given to understand that very little contact had taken place between Mr. MacGeehin’s
counsel, Mr. Ó Dúlacháin, and his counsel Mr. Forde. That was the background to the
email. Its purpose, he said, was to put on record his concerns. The email said that the
company consisted of the three directors and whatever the three agreed upon would
result in them giving their instructions from their own point of view and for the company,
so that unless there was something that impacted exclusively on him as solicitor for the
company, it was safe for Mr. MacGeehin to assume that instructions the directors give
concerning the case against them will apply with equal merit to the instructions relating to
the company. In evidence he said it was “perverse and ridiculous” to say that that means
that as long as his office is in the clear the directors can agree to what they like. He said
that he had not as yet received a copy of the instructions provided to Mr. MacGeehin by
the three directors concerning the proposed settlement meeting and what they were
looking for from that meeting. He said he would need to see those instructions, nor did
he get those instructions later. His interpretation of the email was that it was a warning
to Mr. MacGeehin to in turn warn the three individuals that they should get advice from
the company’s legal advisers, which did not happen. The email records that it was Mr.
Forde’s view that there was no need for the company to be separately represented since
the three directors would be providing their instructions and such instructions would apply
equally to the company. Mr. MacGeehin could simply relay whatever has been decided.
7.       Mr. McNelis said that was referencing back to discussions he had had with Mr. Forde. He
said that he himself appeared in court on one or two occasions as a courtesy in
circumstances where the plaintiff’s latest motion did not seek relief against the company.
He was informed by the court that there was no need to be present, he was superfluous
at that point. Mr. Forde’s view was he did not need to be present because there was
nothing concerning the company.
Page 5 ⇓
8.       He was asked if the company was not a party, why send the email at all. His reply was
that the letter was not an authorisation to Mr. MacGeehin. He claimed that that was clear
from the wording. He said it was not on his horizon that something like the settlement
would happen. Unfortunately, that answer is not convincing. The problem is that the
email clearly envisages that there was going to be some development that could bind the
company.
9.       When asked why not send a one-liner that the company would not be bound, he said that
his position was that the company would not be bound and was not in the frame. I
appreciate that Mr. McNelis is doing his best to recall the position but I reject his evidence
in this regard as a misrecollection. It is not consistent with the terms of the letter sent at
the time, which very much puts the company potentially in the frame. My conclusion is
that his recollections are unconsciously significantly coloured in retrospect by later
developments.
10.       The email refers to a settlement meeting on the following Friday and says “there is little
point in me being there on Friday”. That can only be construed as him being happy with
the settlement going ahead without his involvement.
Settlement of 23rd May, 2019
11.       While his affidavit stated that at the outset of the hearing on 21st May, 2019, Mr. McNelis
asked to be excused from attending the hearing, and was so excused, he now informs me
that that turns out to be a misunderstanding. His asking to be excused happened the
previous December and not on 21st May, 2019. He now says he did not appear or
address the court at the May hearing at all except by being at the back of the court
helping Mr. MacGeehin by providing papers. Again, I totally accept that that inaccuracy in
the affidavit can purely be put down to human error and was not in any way intended to
be unhelpful to the court.
12.       It was put to Mr. McNelis that Mr. McCaul said at para. 9 of his affidavit that no resolution
of the company at an EGM was previously sought to defend the plaintiff’s action or to
launch the appeal to the Court of Appeal. His response to that was that unless it impacts
on the company in a fairly fundamental way, the ordinary instructions were applicable. It
was put to him that Mr. McCaul had said that he was not advised that there needed to be
an EGM or that he needed Mr. McNelis’s agreement. His answer was that there was never
any doubt about the directors’ instructions to Mr. McNelis regarding appealing the
substantive matter and damages. It was put to him that there was a benefit for the
company in the settlement. His answer was that it was of no benefit to the company
because it was rendering itself completely insolvent. He said that the company had the
benefit of an asset - two appeals. I will deal with this further below, but the problem with
that view is the one expressed by Mr. McCaul in the witness box, which was basically that
the appeal was a risk. On the totality of the evidence, I conclude that the company was
insolvent at all material times so it cannot be said that the settlement “rendered” it
insolvent. Mr. McNelis’s view was that the settlement was so irresponsible and so
reckless that the directors could have exposed themselves to personal liability and legal
costs. In his view it was “ridiculous”.
Page 6 ⇓
13.       When asked was he aware that Mr. Molloy was the mastermind of the events of 23rd May,
2019 and had come up with the idea of using the €50,000 lodged in court as security for
costs to settle the matter, he said that he knew that Mr. Molloy had provided the €50,000
in the first place but did not know that using it to settle the case was Mr. Molloy’s idea. It
was put to him that he had said at para. 5 of his affidavit of 11th September, 2019 that
the company was an entire stranger as to what occurred on 23rd May, 2019 and never
consented to the order made. He said he was not consulted about the terms of
settlement and if he had been consulted he would have requested advice from counsel.
He first learned that the settlement had been concluded by means of a phone call from
Mr. MacGeehin. He was not asked prior to the settlement for his imprimatur. He said
that there was no communication between the directors’ legal team and the company’s
legal team between the previous letter and the settlement, and he did not seem to know
why.
14.       An order was perfected on foot of the settlement that contained errors. The reference to
an order that the appeals be discontinued was erroneous and the court later amended the
order to delete that. The gist of the settlement was that the claim personally against the
directors was withdrawn with no order. The company would discontinue the appeals
lodged with the Court of Appeal with no order, all costs orders would be vacated, and the
€50,000 lodged as security for costs would be paid to the plaintiff along with a further
€50,000. A new entity would be set up to hold Athlone Town Stadium “on trust for the
benefit of the club or any successor club”, the club to occupy the lands “pursuant to
licence to the use of the lands for the purposes of soccer and for the benefit of the
community at large”.
Letter of 28th May, 2019
15.       Mr. McNelis got a letter dated 28th May, 2019 from Mr. MacGeehin informing him of the
settlement. The letter states that Mr. Molloy wanted to fight on but the other two
directors did not. It says that Mr. MacGeehin presumed that the directors would have to
contact Mr. McNelis directly to release the funds in court. Asked whether he assisted in
the release of funds he said purely from a procedural point of view. If he had received
instructions to carry out the order from the company, the three directors, he would have
assisted but given that Mr. Molloy did not consent, the company was in conflict with itself
so the matter is not clear at all. He only took preparatory steps but did not want to be in
a situation where at the eleventh hour he would be expected to do something and be
outside the time. He wrote to the three members to inform them he had no hand, act or
part in the settlement and was completely perplexed. He did not feel it was for Mr.
MacGeehin to speak for the company, it was for him to ascertain from the company what
instructions they wished to provide. He wrote to the directors several times. First he
made clear his non-involvement in the settlement and secondly, to find out what they
wanted him to do. It was clear there was disagreement, and also he wanted to “cover
himself” regarding what had to be done, given that an order of the court had been made.
He seemed to be saying that he advised the directors they were bound by the court order,
although not necessarily by the settlement.
Page 7 ⇓
16.       He understood that the majority of the directors had agreed to the settlement but that
was not the position in the lead up to the court case. He was of the view that it had to be
unanimous. It was “completely wrong” to suggest that Mr. MacGeehin was entitled to act
for the company. He explicitly said to Mr. MacGeehin that he should not do anything
unless Mr. Molloy was in agreement. His evidence was that he said in his email to Mr.
MacGeehin that the directors could give instructions, provided that they all agree. I
should note at this juncture that his email does not specifically say that the agreement
has to be unanimous.
17.       Mr. McNelis said that a show of hands to vote for the extinction of the company would be
ridiculous. It was put to him that he never replied to Mr. MacGeehin’s letter in order to
indicate his astonishment. He explained that by saying that he had no instructions and
was largely in the dark, and he felt it was not his place to start raising issues.
Letter of 24th June, 2019 from Mr. McNelis to the directors, copied to Mr. MacGeehin
18.       On 24th June, 2019, Mr. McNelis wrote to the directors and Mr. MacGeehin discussing the
implementation of the order. It was put to him that that letter expressed no alarm or
concern about the settlement. He said he was urging the company to do what needed to
be done. It was put to him that both he and Mr. MacGeehin were proactive in
implementing the settlement. Mr. McNelis denied this and said that that was a
misinterpretation. He was alerting the directors to the order and ensuring he would not
be at fault or caught out by a deadline and be unable to meet it. The idea that Mr.
McNelis was not proactive in implementing the settlement is, in my view, not convincing
and not compatible with contemporaneous materials.
Meeting on 27th June, 2019
19.       An EGM of the company occurred on 27th June, 2019. Acceptance of the settlement was
proposed. Messrs. McCaul and Temple voted yes, Mr. Molloy voted no. While not
accepted by the shareholders, the settlement was accepted by a majority of the directors,
who Mr. McNelis says are instructing him. Mr. Temple then wrote to Mr. MacGeehin on
company letter-headed paper stating that a majority of directors agreed to comply with
the order and “we now request that this order is complied with”. That was forwarded to
Mr. MacGeehin on 2nd July, 2019. Mr. McNelis says he may have seen that but cannot be
certain about it.
Correspondence regarding release of funds, July, 2019
20.       On 3rd July, 2019, Mr. MacGeehin wrote to Mr. McNelis saying that he was engaging with
the Accountant General for the release of funds. Asked whether he replied, Mr. McNelis
said “in a manner of speaking”. He had a sequence of letters to the directors seeking
instructions and recalled a conversation with Mr. MacGeehin to the effect that the solicitor
for the company would have to take the steps necessary to deal with the company’s
affairs, although he could not put that into a time frame. I might note here that clearly
he did not write back protesting.
21.       Also on 3rd July, 2019, Mr. MacGeehin wrote to the Courts Service in his capacity as
solicitors for the directors of the company to consent to payment out of sums lodged
pursuant to the order of the Court of Appeal of 8th February, 2018. Mr. McNelis’s
Page 8 ⇓
evidence was that it was “totally inappropriate” for Mr. MacGeehin to describe himself
thus as that would give the impression that he was acting for the company. I do not
accept that criticism. Mr. MacGeehin’s description of himself was entirely accurate.
22.       Again on 3rd July, 2019, Mr. McNelis wrote to Mr. MacGeehin, enclosing the order of
Irvine J. with the schedule for lodgement, and my own order, and stated that the
registrar “may be prepared to issue a schedule directing payment out by the accountant’s
office to Richard Stapleton [solicitor for the plaintiff] of the €50,000”. He explained this
by saying he was giving Mr. MacGeehin information, but he understood that nothing could
happen without a payment schedule. He knew there was no payment schedule and he
thought the matter would have to come back to court. It was put to him that Mr.
MacGeehin asked for details to help draw down the money and that he provided that. He
said he was dealing with an officer of the court who would not do anything inappropriate.
He denied that this was cooperation. He said counsel was “putting a spin on this” and
that he was “simply giving information”. The directors were capable of giving Mr. McNelis
instructions themselves. He was not giving Mr. MacGeehin carte blanche and he was
convinced nothing could happen without the matter going back to court. On the totality
of the evidence, I find that Mr. McNelis was co-operating with the implementation of the
settlement and it can certainly be said in particular that there were no massive concerns
about the settlement expressed in his email relating to its implementation.
23.       It was put to him that he came to court making serious allegations against Mr. MacGeehin
without having exhibited documents that he himself possessed. He swore four affidavits
without exhibiting the most pertinent documents, which I note would have put his
allegations against Mr. MacGeehin in quite a different light. His explanation was that the
letter that he exhibited was one where he notified the Accountant’s office of a
conversation with an official in that office and as a follow up a letter was sent to copper-
fasten the position. That of course is not an explanation for why he did not exhibit the
other documentation.
24.       The position as it appeared following cross-examination contrasts starkly with the
averment of Mr. McNelis at para. 4 of his third affidavit where he said it was misleading to
suggest that the defendants had made arrangements to release the money and that “no
such arrangements were made by me … the release of that money took me entirely by
surprise”. It also contrasts with para. 5 of Mr. McNelis’s fourth affidavit that “I was never
notified of the application for the payment schedule … it would seem that some material
misrepresentation was made to enable that schedule to be issued or else an inexcusable
error was made on the part of this honourable court”. The reference to “inexcusable”
error seems strange. Mr. McNelis was unable to give any explanation, coherent or
otherwise, as to why an error on the part of the court would be inexcusable. It is an
unhappy situation that the incomplete picture presented in Mr. McNelis’s affidavits takes
on a very different complexion when all of the correspondence was put before the court.
I do not think there was any positive intention on the part of Mr. McNelis to mislead the
court, but it is a symptom of the polarisation that the case has generated that, in his own
Page 9 ⇓
mind, Mr. McNelis seems to have unconsciously retrospectively downgraded the
significance and importance of much of this correspondence.
25.       His overall complaint of surprise is hollow given that he had been in explicit
correspondence with Mr. MacGeehin about the issue of the payment schedule. In re-
examination he was asked what led him to think that a payment schedule could be issued
without a court order and he said in discussions with the registrar that he understood the
matter would have to go back to court. He said the registrar might have sought advice
and he may have been under the impression that if all parties were in agreement it might
be a simple formality of going to court and asking the court for an order. He said that he
did not want to read too much into his email; but the only rational explanation why he
said that was that the email contradicts the thrust of his recollections and his evidence.
26.       On 4th July, 2019, submissions in the appeals to the Court of Appeal were drafted by
counsel. When asked who gave instructions for those submissions he said that was done
“on the basis of long standing instructions”. He said the instructions came from the three
company directors and nobody ever gave him any instructions to the contrary. Things
became confused as a result of the settlement but he was working on the instructions he
had all along. When it was put to him that a majority of directors had supported the
settlement, he said that he had had very little contact with the company and had no
instructions withdrawing the previous instructions. He wanted to fulfil the deadline
imposed by Irvine J. and there was no contact apart from a phone call from Mr. McCaul a
few days after 23rd May, 2019. Mr. McNelis did not make inquiries with the directors.
His preference in more recent times had been to deal with matters by email. In the
context of his evidence on that point, I should record that much of what he said in the
witness box was not backed up by emails. That again reflects the extent to which his
evidence, I conclude, was unconsciously coloured by the way the matter had developed at
an earlier stage.
27.       On 10th July, 2019, Mr. MacGeehin wrote to Mr. McNelis indicating that funds had not
been released by the Accountant General’s office to the plaintiff’s solicitor. He was
advised it was with the company’s solicitors and directors to ensure the release of funds
and asked Mr. McNelis to telephone him to discuss. When asked why the letter of 10th
July, 2019 had not been disclosed by Mr. McNelis he said he was not sure why that was
but he did not think there was anything sinister in it. That is an unconvincing explanation
in a context where serious allegations had been made against Mr. MacGeehin. Mr.
McNelis had sworn an affidavit raising the prospect of the court office having been misled,
inferentially by Mr. MacGeehin being the only other person dealing with that office.
28.       Mr. McNelis said there was no reference in documentation to discussions between him and
Mr. MacGeehin after 10th July, 2019 but that such discussions had happened. He may
have phoned Mr. MacGeehin but he does not recall. As to why there was no
correspondence, he said he was absolutely satisfied that it was a matter for Mr.
MacGeehin to deal with the order he had negotiated and it was of no concern to the
company. On 22nd July, 2019, Mr. McNelis advised the Accountant’s office by phone of
Page 10 ⇓
an irregularity in the settlement agreement. He wanted to be notified and was assured
no payment could be made by the office without a payment schedule, which would
require an order of the court. He emailed a letter to the Accountant’s office on the same
date. The letter said he hadn’t any instructions to withdraw the appeal, that distribution
of the lodgement would jeopardise the appeal but the company had no involvement in the
settlement, that he was advised by counsel that it appears to involve a breach of
company law but the majority shareholders did not agree or were not given sufficient
information, and that if there was a request to pay out the €50,000 he would appreciate
advance notice. He said the purpose of the letter was to act as a warning not to pay out,
it was not based on positive instructions. The letter made the point that he had not
received instructions to withdraw the appeal.
29.       On 30th July, 2019, an EGM instructed Mr. McNelis to do what needed to be done to
secure the company’s case in the Court of Appeal. Mr. McNelis interpreted that as
superseding any decision on 27th June, 2019. Mr. Molloy emailed Mr. McNelis on 31st
July, 2019 to say in effect, we voted to instruct you to do whatever needs to be done to
set aside the settlement and secure the appeal to the Court of Appeal.
30.       It was put to him that Mr. McCaul says in para. 5 of his affidavit of 30th September, 2019
that there was no meeting of the board of directors instructing Mr. McNelis to proceed or
authorising him to swear an affidavit on behalf of the company, that his affidavit had not
been approved or verified by the company and that Mr. McCaul had not been contacted to
establish the truth or accuracy of any averment made by him. His reply was that he saw
no reason to disbelieve Mr. Molloy and he was getting his instructions from Mr. Molloy’s
email of 31st July, 2019.
31.       He said that the release of the money took him entirely by surprise. When put to him
that he had been previously written to by Mr. MacGeehin he did not resolve that
contradiction. It is clear from the contemporaneous materials that Mr. McNelis was aware
of the intention to seek the release of the money. He referred in evidence to the lack of a
meeting of shareholders and to the dissent of Mr. Molloy. He said it was not a huge
surprise to him that he was not getting proper instructions from the company and said “I
was aware of nothing”.
Meeting of 8th September, 2019
32.       Another EGM took place on 8th September, 2019 and passed a resolution instructing Mr.
McNelis to apply to seek to extend time to appeal the order of 23rd May, 2019. That
emerges in a so-called set of exhibits to Mr. Molloy’s affidavit of 15th October, 2019, but
which “exhibit” was never sworn to. It was initially presented to the court as if it had
been properly exhibited. Mr. McNelis has now sworn an affidavit of 2nd December, 2019
explaining that the original “exhibit” was not sworn to, but he does not seem to have fully
(or at all) understood the problem that the “exhibit” should not have been presented to
the court as an exhibit when it was never sworn to. That rather important point is just
not engaged with. Again, I absolve Mr. McNelis of any intention to mislead the court, but
it is strange when such a volume of procedural failings is being launched against Mr.
MacGeehin by Mr. McNelis’s side that Mr. McNelis himself has been involved in a very
Page 11 ⇓
unhappy situation where an unsworn “exhibit” was presented to the court as if it had
been sworn, where it took some days for the court to be in fact told that this “exhibit”
was never sworn to, and I might add where, when this was ultimately done, it was done
in a kind of “happy to clear that up” manner, without acknowledgement of the more
significant aspects of the problem.
Evidence of Mr. Molloy
33.       Mr. Molloy is in the peculiar position of having sworn an affidavit not only on behalf of the
company but also on his own behalf. That raises the interesting procedural question as to
how to deal with that for the purposes of cross-examination. It is not a situation that
happens particularly often, so in the absence of anybody having drawn my attention to
any specific jurisprudence in that regard, I decided to take the most generous possible
interpretation from Mr. Forde’s point of view, namely to have Mr. Forde tender Mr. Molloy
for cross-examination on the affidavit sworn for the first-named defendant, and also to
allow Mr. Forde to re-examine him on the affidavit sworn from Mr. Forde’s client and to
cross-examine him on the affidavit sworn on his own behalf. Mr. Forde, Mr. Collins and
Mr. Molloy himself agreed to that procedure and Mr. Ó Dúlacháin seemed to acquiesce,
subject to reserving his position regarding relevance. Mr. Molloy was then cross-
examined by Mr. Collins and Mr. Ó Dúlacháin.
34.       I should note at this point in the narrative that midway through the cross-examination of
Mr. Molloy by Mr. Ó Dúlacháin, Mr. Forde made a somewhat unusual (indeed Mr. Ó
Dúlacháin called it “utterly extraordinary”), application. Firstly, he applied to adjourn the
case to a plenary hearing and secondly, he also made his daily application for an
adjournment, this time to allow Mr. McNelis to reply on affidavit to the affidavit of Mr.
MacGeehin and also, he said, perhaps to allow the question of discovery to be considered
and the question of calling the registrar to give oral evidence to be considered. As
regards the plenary hearing, I previously decided not to adjourn the matter to a plenary
hearing when ordering cross-examination prior to the trial of the motions. There was no
reason to revisit that. No unfairness to anybody was demonstrated, given that cross-
examination of all relevant deponents was also ordered. Mr. Forde also submitted that
at a minimum” Mr. McNelis, and by way of jus tertii, Mr. Molloy, were entitled to time to
reply to Mr. MacGeehin’s affidavit exhibiting various documents. That was a spurious
objection because many of these documents, and certainly most of the important ones,
were in Mr. McNelis’ possession all along. As noted above, he gave sworn evidence that
he gave the documents on file to counsel, so clearly there was some disarray on the first-
named defendant’s side of the house. That impression was reinforced by a number of
factors, including the fairly consistent disorganisation in the first-named defendant’s
papers, pleadings, authorities and submissions. A situation where a party had papers but
failed to disclose them or to consider them properly does not give rise to injustice or
unfairness. Raising the question of further discovery at that point added nothing to the
motion which Mr. Forde had already brought and which I had yet to deal with at that
stage and which I wouldn’t be dealing with until the end of cross-examination, a motion
which in any event Mr. Forde later withdrew, as I will deal with below. The notion of
asking the registrar to attend to give oral evidence was well outside the ground-rules for
Page 12 ⇓
the hearing and was never canvassed in advance. There was no suggestion that Mr.
Forde had done anything whatsoever to ask the registrar for an affidavit or even to
establish that her evidence was particularly relevant, still less necessary. An hour of
court time was merrily spent on that pointless application alone.
35.       Turning then to Mr. Molloy’s evidence, he was asked if a majority of the directors were
instructing Mr. McNelis. He said that that was not the case. He would assume that a
majority of the shareholders were instructing Mr. McNelis. Effectively he himself was
instructing Mr. McNelis for the first year or so, and Mr. McCaul and Mr. Temple were
barely involved. He agreed with Mr. McCaul that the latter had not been consulted on
affidavits filed on behalf of the company and that there hadn’t been any meetings of the
directors. He said that the company was in charge of directing the proceedings but
seemed strangely reluctant to acknowledge the fact that he was the person directing the
proceedings. However, I have to conclude that if Messrs. McCaul and Temple are taken
out of the picture, as they were, he is the only person left standing to be giving
instructions; and it is not clear why he was reluctant to admit that other than inferentially
(which is the inference I draw) because he did not think doing so would be of benefit to
his case.
36.       He accepted that in advance of the settlement he had an active part. He was part of the
settlement meeting on 17th May, 2019 and 21st May, 2019, at which a draft settlement
agreement was prepared. Mr. Molloy had paid Mr. MacGeehin €50,000 for the costs of
the hearing in May, 2019 against the three directors. He also paid €50,000 for the Court
of Appeal’s security for costs. He said that he had volunteered or agreed to release the
money lodged for the Court of Appeal for the purposes of a settlement. At para. 9 of his
own affidavit he said that “the deciding factor in my accepting terms of settlement was
that I was certain that the opposition would never agree to them and making them look
unreasonable might play well tactically”. In cross-examination he accepted that he was
agreeing to settle the matter, although I should explain here that the context was in
terms of the draft of 21st May, 2019, which was not agreed to ultimately because the
settlement ultimately arrived at took a different form. On 22nd May, 2019, the case
continued. He texted his legal team referring to the settlement the day before to the
effect that they should “run it past the other two”. It was put to him that his instructions
were to run it past the two co-directors and he agreed with that. At para. 17 of his
second affidavit he said “ye can outvote me if you want”, although he did not think that
they would. He agreed that he was operating on the basis of a majority of the directors.
37.       It had been mentioned to him before that they could outvote him although he said that
his junior counsel had a different view. No other EGMs were held in respect of decisions
of the company, such as the decision to appeal. The advice from counsel was that there
was no need. The EGM post-settlement was on his own initiative. When put to him that
at that meeting the majority of the directors accepted the settlement he replied that there
was no vote of directors at that meeting, but accepted that a majority of the directors did
in fact support it. In a second affidavit, at para. 15, he said that their counsel had given
them a five percent chance of winning the appeal. He said that there was no meeting of
Page 13 ⇓
directors on 23rd May, 2019 to discuss and vote on the settlement. It was put to him
that the proceedings were compromised and he took it on himself to try to pull down the
agreement. His reply was that he only wanted everything to be legal and that there was
no legal settlement. Asked what was illegal about the settlement he said there was no
meeting of the company and that the shareholders were not involved.
38.       I should note that at para. 8 of his first affidavit he said that if he had been advised that
the settlement was legally barred “I would have put up a more firm resistance”. That
implies that he did not put up much of a resistance to the settlement.
39.       On 7th November, 2019, Mr. MacGeehin’s affidavit was filed referring to the fact that the
directors had met outside court and their majority decision was communicated to him and
counsel. It was put to him he had not denied that or said that he was shocked to read
that and Mr. McCaul’s version. He said that he gave all the details in his second affidavit
and he would have mentioned such a meeting if there was a meeting “so in a roundabout
way I denied it”. I should add that there was quite a semantic debate throughout the
evidence about when-is-a-meeting-not-a-meeting but I deal with this further below.
Evidence of Mr. McCaul
40.       Mr. McCaul was cross-examined by Mr. Collins, Mr. Forde and Mr. Molloy. Mr. McCaul said
he was not asked his opinion as to the truth or accuracy of averments on behalf of the
company or Mr. Molloy. When asked was an EGM ever held prior to 27th June, 2019 to
give instructions relating to the proceedings he didn’t remember any such EGM. His
evidence was that prior to the settlement meeting his solicitors contacted Mr. McNelis to
advise that the settlement would in all likelihood involve the compromise of all matters
including the appeal to the Court of Appeal.
41.       The directors were in a position to make a decision on all matters. His affidavit stated
that Mr. McNelis was advised to attend but said that the matter of an overall compromise
could be left to the decision of the directors and that formal engagement of the
company’s legal team was not required for the settlement of the action.
42.       He himself attended on 17th May, 2019. It was put to him that a member of his legal
team, which seems to have been their junior counsel, had said that all directors had to
agree. He said he heard this person say it would be better if all directors agreed. He
might be wrong about that. He was engaged fully in what was on offer and was trying to
reach a conclusion. When asked why the barrister’s views were disregarded, he said that
he went ahead and continued negotiations and there was a lot of toing and froing trying
to find something that was agreeable to all parties. They were a long time outside court.
His main focus was how the stadium would be set up going forward. Mr. Molloy was there
at the early stages, he subsequently left and came back. He cannot say that Mr. Molloy
agreed but Mr. McCaul’s opinion was that what was in the settlement was such that in
time all parties would have been happy with it.
43.       He thought perhaps mistakenly that the fact that they were all still together in court when
the other two directors reached agreement that Mr. Molloy was letting them do so and
Page 14 ⇓
would come on board. There had been a meeting in the corridor outside court between
John Hayden and Michael O’Connor who were acting on behalf of the plaintiff and himself
and Kieran Temple. Legal people were also involved. They reached an agreement which
was typed up and then put to the court. The directors did not meet in the short time
between that being typed up and being presented to the court. However he was aware
from the various meetings and discussions between the directors earlier that himself and
Mr. Temple were in favour of the settlement and Mr. Molloy was against it. He said in his
affidavit that the directors understood that they were entitled to make decisions for the
company and that Mr. Molloy did not, as a director, object to the matter being decided by
the directors. The company, by a majority of the directors, agreed to the terms as
informed to the court. They said he believed he was doing it on behalf of the company
and that he acted in the interests of the company and the stadium itself.
44.       By forming a trust it would be secured forever. It was at risk within the company seeing
as the company had lost the case. He had borrowed €25,000 to pay his contribution to
the settlement. Stapleton’s, solicitors for the plaintiff, also got the €50,000 that was
lodged as a security for costs and Mr. Temple was to pay the other €25,000. Mr. Temple
wrote a cheque for €10,000 but then cancelled it, so Stapletons are currently €25,000
short on the settlement agreement. He was disagreeing with the majority shareholder
because he believed in the settlement. He said he was not against the appeal originally
but was against it since the settlement. It was put to him that he did not carry out his
duty as a director because his duty was to prosecute the appeal. He said he was against
the appeal on foot of the settlement. It was put to him that Mr. McNelis gave highly
favourable advice on the significant prospect of success in the appeal. He agreed that
such advice was given but said that he had been advised that they had a “huge chance of
succeeding” in the proceedings in the first place. The appeal was a “gamble”. He was
sceptical about the appeal because of the heavy defeat in the first place. It was put to
him that he did not have any confidence in the court system. He said going to appeal is a
risk, like in every case. He had confidence in the system but not in their appeal.
Evidence of Mr. Colm MacGeehin
45.       Mr. MacGeehin was cross-examined by Mr. Forde and Mr. Molloy. At the outset Mr. Forde
objected to Mr. MacGeehin’s affidavit of 3rd December, 2019 being filed. He said it was
unprecedented and a “denial of fundamental fair procedures” to require him to cross-
examine Mr. MacGeehin without allowing Mr. McNelis to “reply” in advance; so he applied
for an adjournment. In fact, that was his second adjournment application that day. It
was a somewhat odd application given that his previous similar adjournment application
on the same day had been refused. Much of the same grounds applied. Many of these
documents were in Mr. McNelis’s possession and certainly most of the more pertinent
ones, so there was no unfairness there. Mr. Forde had had since 1 pm on 3rd December,
2019 until 2.25 pm on 4th December, 2019, more than a full day, to take instructions
from Mr. McNelis and had yet at that point to exercise his opportunity to cross-examine
Mr. MacGeehin or to make submissions in relation to his motion, an opportunity that he
did not avail of because that motion was withdrawn. I held that the application and the
Page 15 ⇓
constant demands for adjournments were wholly without merit and seemed to be a
delaying and obfuscatory tactic.
46.       Mr. Forde then applied for liberty to have Mr. McNelis put in a further affidavit to reply to
what he called Mr. MacGeehin’s “evidence in chief”, claiming yet again that this would
avoid unfairness. Leaving aside the obvious fact that there was no evidence in chief and
that Mr. MacGeehin was simply being tendered for cross-examination, I held that no
unfairness arose for a number of reasons:
(i). There was no indication that Mr. McNelis had anything to say that was different to
any matters of legal submission.
(ii). Even if Mr. McNelis has something of evidential value to say, his case was that he
knew nothing about the drawing down of the monies, whereas it was clear from
correspondence not disclosed by Mr. McNelis that he did know something about it.
The application to now put in an affidavit was really an application seeking an
opportunity to say something that he could have said initially in his original four
affidavits.
(iii). The application for an adjournment for this purpose had already been refused and
to that extent it was inappropriate to simply make the same application repeatedly.
(iv). Mr. McNelis had much of this material anyway at all material times, and most of the
pertinent material, and also gave oral evidence that he had given the papers and
file to counsel, yet these papers were never drawn to the attention of the court
until Mr. MacGeehin did so. That situation was never explained.
(v). Material that Mr. McNelis never had does not appear to be material that he has
anything of evidential value to contribute to, so consequently pretty much all the
documents were either documents that he knew about at all material times and
could have given to the court long before or material that he had no involvement in
and had nothing to say on.
(vi). Mr. McNelis in any event had had time to consult with Mr. Forde even before his
own re-examination.
(vii). He had further time to consult with Mr. Forde before the cross-examination of Mr.
MacGeehin.
(viii). That cross-examination had, at that point, yet to take place.
(ix). The hearing of Mr. Forde’s motion looking for further documents also remained
outstanding at that particular point.
47.       There was therefore nothing particularly unfair about the situation except, as submitted
by Mr. Ó Dúlacháin, the totally abstract position that every affidavit deserved a reply.
Clearly litigation would continue ad infinitum on that basis and maybe that vista contains
Page 16 ⇓
an element of insight into Mr. Forde’s strategy in this case. Unfortunately, this has to be
regarded as a frivolous and vexatious application and a delaying tactic, especially where a
very similar application had already been refused. I made the point in turning down that
application that parties need to be economical in the conduct of litigation and that it is
well-established that failure to do so may have significant consequences in costs,
irrespective of the outcome.
48.       In the middle of his cross-examination of Mr. MacGeehin, Mr. Forde then applied for
liberty to file a further affidavit of Mr. McNelis which he had drafted in October, 2019. Mr.
McNelis said that he was not familiar with this affidavit so it did not appear to have been
sworn, let alone filed. Mr. Forde’s explanation for why this matter was emerging at the
last minute was that he did not get the pleadings from his solicitor, Mr. McNelis, until “the
very last minute” on the morning of the hearing, so he had prepared his own book the
night before. When synchronising the two books on the first day of the hearing, Mr.
Forde endeavoured to co-ordinate the pagination but could not find the affidavit drafted in
October, 2019 in Mr. McNelis’s book. He “thought there might be some error somewhere”
but he did not do anything effective about it for a number of days.
49.       Mr. Ó Dúlacháin objected to the notion of a further affidavit because it would “make the
process unmanageable”. I rejected the application to put in a further last-minute affidavit
essentially for three reasons:
(i). Firstly, the first-named defendant was totally in default on this matter. Mr. McNelis
failed to even swear the affidavit. The first-named defendant’s side failed to notice
that the affidavit had not been sworn, failed to follow it up and then failed to check
the contents of the books of pleadings properly. The book of pleadings was only
delivered to counsel at the last minute on the morning of the hearing and when Mr.
Forde noticed a discrepancy on the morning of the first day of the hearing, he did
not do anything effective about it until Mr. McNelis was long gone from the witness
box.
(ii). Secondly, to allow a further substantive affidavit of Mr. McNelis midway through the
trial of the motion, especially after Mr. McNelis had left the witness box, would be
hugely unfair to the other parties where it would raise the prospect of replying
affidavits, reopening of cross-examination and would involve significant additional
delay and expense. That may not be of much concern to the insolvent company
represented by Mr. Forde but it certainly is of concern to the other parties to the
proceedings.
(iii). Thirdly, where the first-named defendant had been involved in a series of frivolous
applications and delaying tactics, which had taken up a considerable amount of
court time, and where the first-named defendant had made repeated meritless
applications for adjournment, sometimes several times a day, it was doubly
precluded from seeking to derail the case in order to remedy its own default,
particularly where much mystery surrounded various aspects of that default.
Page 17 ⇓
50.       Turning then to Mr. MacGeehin’s evidence, he said that additional affidavits put in in
March, 2019 strengthened the case hugely in his opinion, and softened the cough of the
opposition, but that they were still dealing with huge legal bills. It was a very sharply
contested matter and there had been blazing rows in the court room. He understood and
was advised by counsel that Mr. McNelis’s email to him was unconditional authority to
settle the proceedings on behalf of the company.
51.       In his oral evidence, Mr. McNelis had said that the unanimous agreement of the directors
was required but that his letter, that is the letter of 24th June, 2019, wholeheartedly
endorses the settlement and encouraged the directors to carry out the terms of the
settlement. Mr. McNelis did not at that time by telephone, email or letter advise Mr.
MacGeehin that he had reservations about what happened.
52.       Their view was that it was important to have the company on board because a settlement
would affect the company. Mr. Forde had advised that the directors’ instructions would
apply equally to the company.
53.       Mr. McNelis’ original email of 15th May, 2019 did not refer to unanimous agreement, it
referred to what the three directors instructed. That meant what they decided after
conferring with each other, not necessarily what they decided 3-0. Unanimity would be
best but a majority decision, in Mr. MacGeehin’s view, and in the view of both counsel
with them, was a lawful decision. It was suggested that junior counsel had advised that it
had to be unanimous. Mr. MacGeehin replied that the junior counsel was there
throughout, including when the settlement was arrived at, which I may say is the obvious
point. No opposite opinion came up when the matter came to court and when the
settlement was announced there was no dissent within the ranks of the legal team.
54.       Messrs. McCaul and Temple were not prepared to risk it all. It was the kind of decision
that was often made in most cases, civil litigation normally ends in settlement. The best
settlements are sometimes the ones where both sides are a little bit dissatisfied. Asked
why he went to such lengths to accommodate Athlone Town Club, he said his clients had
the final say and his view was that a majority could make the decision. He had brought
them down from a situation that was fairly disastrous from the point of view of the three
directors to something that was far more manageable. If the stadium went into public
ownership it would be protected forever. The previous Friday there were references to
half a million euros in legal costs, which came down to an all-inclusive settlement of
€100,000 for everything and that is all the club got. Mr. MacGeehin said if you won, fine,
but if you lost it would be a disaster.
55.       He did not decide the settlement. If the directors had so instructed him, he would have
gone back in to continue the fight. The directors completed their instructions and
discussions first, and then the agreement was typed up. His recollection was that he got
the terms typed. He was not present when the decision was made by the directors to
agree the terms. It is not disputed that the two of them were for it and one against and
his information was that a meeting of the directors took place and he got instructions
from that meeting. He had no vested interest in the outcome of the case and indeed it
Page 18 ⇓
would be easy if lawyers were cynical enough to sit in court for ten days and soak up
money.
56.       His obligation was to advise clients of offers and potentially the parameters begin to
narrow. The settlement in his view retrieved the situation. Anybody would say that if
you lose in one court you are not guaranteed any success in another court. Even after
the Court of Appeal there was no guarantee that another court would not follow. There
had been a huge number of days in court and in his practice he had not experienced any
case like it. He could not see anything very different now from what he saw on 23rd May,
2019. If the settlement had not been arrived at there would have been an awful lot of
litigation.
57.       Asked where there was an order of the court for payment out of the money referred to in
the settlement of 23rd May, 2019 he said that he understood that the directors had the
power to enter into the settlement by majority; that was the view of counsel. He
understood very clearly in his own mind that Mr. McNelis was ad idem with him on that
very issue. He said the order of 23rd May, 2019 had the agreed statement attached to it
and that was what they acted upon. It was suggested that there was no order for
payment out and that the court merely noted the undertakings. He said that he got
assistance from Mr. McNelis in implementing the settlement. Mr. McNelis urged very
strongly that it be implemented.
58.       Asked why there was no narrative in his affidavit of 3rd December, 2019, he said that his
dealings in relation to releasing the moneys were in correspondence so he had nothing to
add. He said that the directors were entitled to make a global settlement and that is the
end of the entire proceedings and that he understood that to have the full backing of Mr.
McNelis.
59.       It was put to him that no reliefs were sought against the company on the specific motion
being heard on 23rd May, 2019 but he said the directors availed of the opportunity to
settle all matters. When asked what authority he had to settle the case, he said that was
from the co-directors with the blessing of the company solicitor. When asked what
instructions he had from the company to implement the settlement he said he was doing
it all with the full knowledge of Mr. McNelis. Mr. McNelis did assist him and reverted to
his letter of 3rd July, 2019 on the very same day, with copies of the orders. Mr. Molloy
did not instruct him to implement the settlement but Mr. MacGeehin was aware of Mr.
Molloy’s objections from the outset. Mr. Molloy wrote to Mr. MacGeehin on 4th July,
2019, querying the settlement. Mr. MacGeehin replied on 5th July, 2019 stating that the
settlement was within the powers of the directors and did not require a vote from the
company at the EGM. The terms of the settlement were consistent with the main
objective of the company: that is, securing a sports stadium for the people of Athlone.
Having settled the proceedings, the directors were obliged to comply with the order. He
did not feel bound by the EGM because of his conviction, knowledge and advice from
junior and senior counsel that the directors had the power to make the settlement that
they made.
Page 19 ⇓
60.       He was concerned about payment out because Mr. Stapleton was threatening to sue. The
payment out had become very bureaucratic, there was a lot of correspondence between
him and Mr. Stapleton on this issue. Mr. McNelis averred that he had been advised by
counsel in mid-July that the settlement was unlawful, but he did not contact Mr.
MacGeehin to convey those concerns at that time and waited to do so until the motion
papers were received in the latter part of September.
61.       When Mr. McNelis started corresponding with the accountant’s office on 22nd July, 2019,
Mr. MacGeehin was not copied with that and was completely unaware of it at that time.
Mr. MacGeehin wrote to the registrar regarding the need for a repayment schedule. She
wrote back saying she could draft the payment schedule subsequent to taking up a
certificate of funds on the accountant’s office. Mr. MacGeehin then requested the
certificate of funds and sent a copy of the order amending the title of the proceedings.
He obtained the certificate of funds and sent it to the registrar. She sent a payment
schedule. It is notable that despite the fact that the affidavit of Mr. McNelis raises
allegations of misrepresentations made by Mr. MacGeehin to obtain the payment out, it
was never put to Mr. MacGeehin by Mr. Forde that he engaged in any such
misrepresentations and I find as a fact that he did not.
62.       On 16th September, 2019, Mr. MacGeehin wrote to Mr. Stapleton setting out the process
to release the money. Mr. Stapleton signed a document stating acceptance of the sum
paid into court on 19th September, 2019. Mr. MacGeehin signed it on 24th September,
2019. It was not put to Mr. McNelis to sign it. Mr. MacGeehin said the Accountant’s office
must have considered that unnecessary. The money was paid out on 27th September,
2019 and Mr. MacGeehin learned about that on 30th September, 2019. He did not
contact Mr. McNelis but contacted counsel. He himself did not disburse the monies, the
documentation was already in the Accountant’s office by that stage. He did not seek
further advice from the day he began implementing the order. Mr. McNelis allowed him to
conduct the settlement and Mr. McNelis took the role of assisting Mr. MacGeehin. Only on
receipt of the letter of 20th September enclosing a notice of motion did he become aware
of Mr. McNelis agitating about the settlement. He is not sure when he got that letter. Mr.
MacGeehin was not contacted by Mr. McNelis in the run up to the service of the motion.
He was not told there was a misunderstanding and that he was only to act on the
unanimous agreement of the directors. Mr. McNelis had not commented in any way in
response to his letter of 28th May, 2019. He replied to any queries raised by Mr. Molloy.
He did not say specifically it was for facilitating the release of the money, but he was
implementing the settlement.
63.       Mr. Temple contacted Mr. MacGeehin by phone but did not write to him. He contacted Mr.
MacGeehin after he had come off record asking him to act for him but it was too late by
that stage. The other directors were not notified specifically of the process any more than
Mr. Molloy was, but the letter of 13th June, 2019 to each of his clients specifically stated
that the sum of €50,000 lodged in court would be paid out.
Findings of fact
Page 20 ⇓
64.       Without taking from any specific findings recorded above in the course of the discussion
of the oral evidence, I find the most pertinent facts to be as follows. These findings of
fact are made after having the benefit of seeing and hearing each of the witnesses and on
the totality of the evidence, having taken into account all material, whether evidential or
legal, submitted to me, including in particular Mr. Forde’s submissions regarding the
inferences that he invited me to draw from the evidence. For clarity, I will leave over
until later in this judgment a detailed discussion of those submissions but I have taken
them into account for the purposes of the findings of fact, which are as follows.
(i). There was no practice within the company of legal proceedings being conducted
with the agreement of EGMs until Mr. Molloy sought to unravel the settlement.
(ii). Prior to the settlement, Mr. MacGeehin advised Mr. McNelis that any settlement
would in all likelihood involve settlement of all matters, including matters involving
the company, such as the appeals to the Court of Appeal. Mr. McNelis was thus
aware at all material times of the likelihood that the company would be bound by
any agreement.
(iii). Mr. McNelis wrote to Mr. MacGeehin on 15th May, 2019 indicating that the directors
could give instructions on behalf of the company and that there was no need for the
company to be represented at the hearing, which was the context in which the
settlement was going to be attempted. That clearly envisages any potential
settlement as binding the company. The letter does not refer to the agreement of
the directors being unanimous. The email can only be construed as authority being
given by Mr. McNelis to Mr. MacGeehin to settle the proceedings on behalf of the
company. It amounted to tacit agreement to the directors compromising all
matters, including the appeals to the Court of Appeal on behalf of the company.
(iv). The email records that Mr. Forde advised that “there is no need for the company to
be separately represented since the three directors will be providing their
instructions and such instructions would apply equally to the company. You can
simply relay whatever has been decided on.” The only possible inference in the
light of the company’s current position is that Mr. Forde has now simply changed
his mind after his advices have been acted upon. In my view, Mr. McNelis’
evidence has subconsciously been retrospectively coloured accordingly.
(v). Mr. Forde stating to Mr. McNelis, who in turn passed this on to Mr. MacGeehin, that
Mr. MacGeehin’s clients’ instructions would apply equally to the company and that
Mr. MacGeehin could simply relay whatever had been decided, meant that Mr.
Forde and Mr. McNelis condoned a situation where the case was being settled by
Mr. MacGeehin on behalf of the company, contrary to their current protestations.
(vi). The email of 15th May, 2019, properly construed, did amount to an authority to Mr.
MacGeehin to take instructions from the directors on behalf of the company as well
as on their own behalf.
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(vii). Mr. MacGeehin acted within that authority by taking instructions from the directors,
albeit that the directors acted by majority.
(viii). The email of 15th May, 2019 clearly envisages the possibility of a settlement, the
possibility that it would also be on behalf of the company, and that Mr. McNelis
would not be involved because the directors were there in any event. Mr. McNelis’
claims that the company would not be involved in the settlement simply do not
square with the contemporaneous materials and I conclude that his recollections
and evidence have been unconsciously coloured by subsequent developments.
(ix). Mr. Molloy had previously told his fellow directors that they could outvote him if
they wanted to.
(x). Mr. McNelis voluntarily absented himself from the settlement meetings and the
hearing itself which reinforces the interpretation that he was leaving the affairs of
the company in the hands of Mr. MacGeehin acting on the instructions of the
directors.
(xi). The fluid and ongoing nature of the settlement process explains why there were
such differing views in evidence on whether a meeting or a vote of the directors
had taken place to agree the settlement. I conclude that there was no intention to
mislead the court on this particular point from anyone who gave differing views in
evidence on the question. In the light of the totality of that evidence, I consider
that there was no formal meeting of directors and no formal resolution or therefore
formal vote as such on 23rd May, 2019, and nor was there a meeting of the
directors in the very short interval between the agreed terms being typed up and
those terms being presented to the court. However, prior to the terms being typed
up, the directors did have discussions between themselves, which all of them
attended, and in which a majority of the directors decided to enter into the
agreement on the terms that were subsequently contained in the typed-up
settlement document. Whether one chooses to call that a meeting or a vote or
both is only semantic for this purpose.
(xii). Settlement of the proceedings was carried out with the agreement of the third and
fourth-named defendants who constituted a majority of the directors of the first-
named defendant company. The other director, the second-named defendant, did
indicate disagreement but not in a forceful way, so it was not unreasonable for Mr.
McCaul to have construed that as involving a degree of acquiescence.
(xiii). The intention of the majority of the directors was that the company would be bound
by the terms of the settlement, both those included in the court order and the
contractual steps set out in the agreed statement to the court.
(xiv). The intention of the agreed statement was that it was to be an agreement between
the plaintiff, the first-named defendant company on the authority of the majority of
the directors, and two of the three directors in their own capacity. Mr. Molloy in his
Page 22 ⇓
own capacity got a benefit from the agreement in the sense of having the motion
against him in his personal capacity struck out.
(xv). The directors were involved at all times themselves. By being there during the
negotiations they were by definition aware that Mr. MacGeehin was dealing with the
matter on behalf of the company as well as on behalf of the directors. In addition,
the directors themselves agreed to the settlement on behalf of the company by a
majority. The settlement was not entered into by Mr. MacGeehin on his own
authority or on the basis merely of sub-agency from Mr. McNelis which was, in any
event, given with the tacit consent of the directors. He had specific instructions.
(xvi). I accept Mr. MacGeehin’s evidence that there was no dissent within the ranks of the
directors’ legal advisers when it came to announcing the settlement to the court.
On that basis I infer that neither of his counsel had any legal objection to the
settlement. While there was some reference in evidence to junior counsel having
said at some point that the agreement between the directors should be unanimous,
that inferentially must have been a counsel of perfection and cannot have been a
legal view as to the validity of the agreement because otherwise that objection
would have been articulated when it actually became an issue.
(xvii). I accept Mr. McCaul’s evidence that his motivation was not self-interest.
(xviii). I also accept his evidence that it was not in the company’s interest to pursue the
alternative to the settlement, which was the appeal, given the risks involved.
(xix). A majority of the directors also subsequently decided that the consent order should
be implemented.
(xx). The company solicitor, Mr. McNelis, was kept informed by the directors’ solicitor,
Mr. MacGeehin, of the implementation of the agreement and cooperated with that
implementation at least to some extent. No protest was made on behalf of the
company by Mr. McNelis in relation to any of these developments at that time and
not until a very late stage in September, 2019.
(xxi). Mr. McNelis wrote to the directors on 24th June, 2019, indicating that if the consent
order was not complied with by the company and the directors there would be very
serious consequences. That can only be construed as seeking implementation of
the agreement and certainly not as expressing the concerns now being articulated
by Mr. McNelis.
(xxii). Mr. McNelis’ claims of being taken by surprise are not properly reconcilable with the
thrust of the contemporaneous documentation and I find them to have been
unconsciously retrospectively coloured by subsequent developments.
(xxiii). Contrary to the allegation made on affidavit by Mr. McNelis, no misrepresentations
whatsoever were made by Mr. MacGeehin in seeking payment out of the funds
lodged in court.
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(xxiv). Since the time when Mr. Molloy decided to seek to unravel the settlement, Mr.
McNelis has been acting on the instructions of one director alone, without reference
to the board of directors, and without any apparent consultation with the other
directors. Draft affidavits and motions filed on behalf of the company were not
shown to the other directors, nor was there any consultation with those other
directors on legal strategy.
(xxv). Allegations against the directors’ solicitor were launched on affidavit without
exhibiting much of the relevant documentation, which would have shown those
allegations to be unfounded, such documentation being in the possession of the
first-named defendant’s legal advisers at the time.
(xxvi). The affidavits of both Mr. Molloy and Mr. McNelis omitted much important
material. I don’t believe that there was any intention to mislead the court but this
situation further illustrates how the trenchant views now being expressed are
significantly coloured by what has happened since the original events.
(xxvii). I generally accept the evidence of Mr. MacGeehin and of Mr. McCaul and reject the
evidence of Mr. Molloy and of Mr. McNelis where it differs. I do not cast doubt on
the bona fides of the evidence of Mr. Molloy or Mr. McNelis, but as noted in a
number of instances above, I consider that their recollections have unconsciously or
inadvertently been coloured by the unravelling of the settlement and the general
rancour that has emerged in this case.
Motion of 25th November, 2019 seeking further information
65.       Mr. Forde submitted that this motion was otiose in the light of my decision that I was
going to deal with his application for a declaration and said that under those
circumstances whether the money was properly taken out or not becomes irrelevant. He
stated that he had no intention of pursuing it but did not want it struck out, for some
unarticulated reason, at that stage. Mr. Collins and Mr. Ó Dúlacháin asked for it to be
struck out and said there was no reason to hold it in abeyance, and Mr. Forde had not a
great deal to say in reply to that. Mr. Molloy sensibly considered that he was not
informed enough to get involved. I therefore dismissed this motion.
Application of October, 2019 to repay the money
66.       Again, Mr. Forde said that he was not pursuing that application and said he was taking
that line because the court was going to deal with his declaration application. Under
those circumstances that application also has to be dismissed.
Application of September, 2019 for a declaration that the company is not bound by the
agreement
67.       At the outset of this motion, Mr. Forde asked to amend the motion to state that the
company was not bound by the first page of the agreement either, as opposed to just the
second page, which is what the motion as issued states. That application, made at the
outset of submissions, was of course introduced at a fairly late stage of the proceedings
overall because it was after the end of all of the oral evidence. The only explanation
initially offered was that the motion had been drafted before I had dealt with the first part
Page 24 ⇓
of the motion regarding amending the order. That of course is not an explanation that
stands up to consideration. Mr. Forde then changed tack slightly to call it an “oversight”.
The critical consideration for me at that stage of the proceedings was whether it would
require reopening of the oral evidence, and Mr. Forde and Mr. Collins thought that it
would not. Mr. Ó Dúlacháin had at some previous stage during the proceedings
mentioned during the hearing that Mr. Forde’s motion was limited to the second page, but
seemingly that was not sufficient to alert anybody to address the issue. Having
considered the matter, Mr. Ó Dúlacháin also thought there was no evidential prejudice.
In the circumstances, therefore, I allowed Mr. Forde to delete the words “the second page
of” in his motion and I waived the requirement to file an amended motion paper so that
the existing motion paper would be treated simply as the amended motion.
Is the company bound by the agreed statement read out to the court?
68.       Mr. Forde offered a range of reasons as to why the company was not so bound. That
turned out to be something of a forensic Mandelbrot set. Each point spawned a
proliferation of sub-points, many of which in turn had sub-points and so on recursively,
almost ad infinitum. I have endeavoured to rationalise the points made below under 21
headings, but to do so is not necessarily a simple task. Again, I repeat for clarity that
insofar as these submissions amounted to arguments as to what facts I should find, I
have taken all of them fully into account prior to making the findings of fact which are
listed above, so what follows could be seen as further explanation and not something that
I only considered subsequent to the findings of fact. I set them out below more for clarity
of exposition but could just as well have discussed them earlier in the judgment.
Claim that there is significant substance to the merits of the appeal and legal advice
given to the directors to the contrary was so incorrect that such a state of affairs
should be taken into account in deciding that the company is not bound by the agreed
statement
69.       Mr. Forde said that the appeal was “extremely strong” and as regards the advice given to
the directors that the appeal had only a five percent chance of success asked “what
responsible lawyer would advise a client of that”. Rather deflatingly for that submission,
when Mr. Forde sat down, Mr. Molloy said that he was adopting Mr. Forde’s submissions
subject to one qualification and very fairly said that the five percent figure might have
been the honest professional opinion of the legal people involved. No expert evidence
was offered that the advice was incorrect, either at all or to an unacceptable extent. It is
not the correct procedure for a litigant to impugn the professionalism of legal practitioners
without some form of expert evidence.
70.       My view is that the company had no hope whatsoever of winning the appeal on the
trustee issue. It signed an explicit deed of trust, agreeing to step aside as a trustee if
called upon to do so. It was so called upon, but failed to step aside. It also
acknowledged that it held the property in trust rather than by way of legal ownership.
That appeal to my mind has a nil chance of success, even bearing in mind fully the
inevitability that I would say that.
71.       Conceivably, the company might on one counterfactual view have reduced the damages
somewhat if it had put up a different suite of evidence in the High Court but as the case
Page 25 ⇓
ran there were huge evidential gaps in its defence and counter-claim. Assuming for the
sake of argument that evidence to fill those gaps existed, I cannot see how those gaps
could properly be filled on appeal without huge unfairness to the plaintiff, for the simple
reason that the evidence was there from the outset and was not newly discovered. The
system of oral hearing and appeal on the basis of Hay v. O’Grady [1992] 1 I.R. 210 would
collapse if, having lost after an oral hearing, a party could say “Ah, now I see where our
strategy went wrong. Let’s have another crack at it by reconfiguring our evidence for the
appeal”. The appeal on this issue had no chance either unless appellate courts were to
diverge unexpectedly from very firmly established legal principles, which seems unlikely.
Under those circumstances I am again taking fully into account that I would say that.
72.       In any event, Mr. Forde was unable to explain, and indeed did not attempt to explain,
why incorrect advice, even if it was incorrect, meant that he was not bound by the agreed
statement.
Argument that there is no order requiring the money to be paid to Mr. Dully and no
order requiring the striking out of the appeal
73.       Merinson v. Yukos International UK [2019] EWCA Civ 830 illustrates the point that a
settlement agreement is generally contractual in nature rather than enforceable as a
court order, unless embodied in an order. That seems a legitimate interpretation here.
The “agreed statement” was contractual and not a court order by and large, but that in
itself is not a reason to contend that the company is not bound by the agreed statement.
It may not be bound by a formal order but it is bound contractually.
Argument that there is no contract with the company
74.       Mr. Forde says that the agreed statement is not signed and that there is no indication on
the face of it that the company is a party to the contract. It does not say who agreed the
statement. That argument is a misconception. On its face, it clearly binds the company,
as noted above. I find as a fact that the intention was that the company would be bound.
Argument that there is no authority to have entered into the agreement by virtue of
the email of 15th May, 2019 because the literal meaning of the email does not support
the authority
75.       Mr. Forde submits that if Prospect Law Solicitors had been authorised in the manner
contended for, the email would have been worded more clearly, but that does not get him
anywhere. In any dispute, one could look back and say the documents could have been
worded more clearly in a manner that would have avoided the dispute altogether. It is a
matter for the court to construe the email in the light of the totality of evidence. As noted
above, I find that the email properly construed did amount to an authority to Mr.
MacGeehin to take instructions from the directors on behalf of the company as well as on
their own behalf.
Argument that, assuming that there is an ambiguity in the email, Mr. McNelis’s
evidence determines what it means
76.       Mr. Forde asked me to take into account Mr. McNelis’ “so emphatic” evidence as to what
the email meant, but I reject that evidence. Mr. Forde said that Mr. McNelis “nearly
exploded with indignation” when the email was first raised in court and that “there can be
no insincerity in his evidence”. I am not saying that there is insincerity in Mr. McNelis’
Page 26 ⇓
evidence, but I am saying that his attitude to the interpretation of the email has been
unconsciously coloured retrospectively by subsequent events.
Argument that Prospect Law had an obligation to clarify any ambiguity
77.       Without explaining how such an alleged obligation arises, Mr. Forde asserts that there was
an obligation to seek clarification of the email, that this was not done, and reads from
that to say that the company is not bound by the settlement. That is totally illogical at
every level.
Argument that due to the presumption of legality, Mr. McNelis would not authorise
anything unlawful
78.       I deal with that issue below because it logically depends on the argument that the
settlement was illegal, which was best discussed under subsequent headings.
Argument that there is a general principle that an agent cannot delegate his or her
authority without the authority of a principal and that there is no evidence that the
company authorised Mr. McNelis in advance to so delegate
79.       Mr. Forde submits that this principle is reflected in art. 34 in Bowstead & Reynolds on
Agency, 21st ed. (London, 2019) p. 171. He said that such a principle was infringed here
if Mr. MacGeehin’s interpretation was correct. But even if the principle was relevant, it
was not infringed here because the principals were involved at all times themselves. By
being there during negotiations the directors were by definition aware that Mr. MacGeehin
was dealing with a proposed settlement on behalf of the company as well as on their own
behalf. In addition, the directors themselves agreed to the settlement by a majority. So
in fact there was no delegation, because the settlement was not entered into by Mr.
MacGeehin on the basis merely of sub-agency; he had specific instructions. Even if this
point was relevant, which it is not, there was huge acquiescence by Mr. McNelis after the
event. He did not protest to Mr. MacGeehin at any stage until late September, 2019.
That acquiescence would be an answer to this and to Mr. Forde’s other points even if
those points have substance, which they don’t.
Argument that to authorise another solicitor and his legal team to settle proceedings
would be treated by the Law Society as professional misconduct, therefore there is a
presumption that there was no delegation
80.       Mr. Forde submits that it would be treated by the Law Society as a failure to safeguard
the interests of his client for Mr. McNelis to have authorised Mr. MacGeehin to act in the
manner concerned, and that at a minimum, Mr. McNelis would have had to have had an
involvement in the settlement before it was concluded. Mr. Forde’s submission was that
such a situation would make the alleged authority unlawful and thus what was done was
ultra vires. I do not accept that there was any misconduct in entrusting the settlement to
Mr. MacGeehin under the particular circumstances of this case, pretty much for the
reasons articulated by Mr. Forde himself in May, 2019 and as conveyed to Mr. MacGeehin
by Mr. McNelis in the email of 15th May, 2019. Mr. Forde seems to have changed his
mind since then, but that does not mean that the settlement is not binding.
81.       Even assuming, counterfactually, that there was misconduct, that is not a ground to hold
that the company is not bound by the contract. That which is unprofessional is not
automatically unlawful. Mr. Forde’s argument was that it cannot be implied that there
was authority because that would amount to professional misconduct. That essentially is
Page 27 ⇓
the argument that I can’t have done what I did because it would have been misconduct,
therefore I didn’t do it.
82.       That is not an argument that takes him over the line. He submits that it was almost
inconceivable that Mr. McNelis would delegate to a completely different legal team the
authority to act for the company. However, it is not inconceivable, because I find that is
in fact what he did. It’s worth adding that, with his uncanny insight that penetrates
through the centuries, Friedrich Nietzsche anticipated the Dully case when he wrote in
1886: “’I have done that’ says my memory. ‘I cannot have done that’ – says my pride,
and remains adamant. At last – memory yields” (Beyond Good and Evil (Leipzig, 1886),
Part 4, s. 68 (London, Penguin, 2003, tr. by R.J. Hollingdale, p. 91).
Argument that the absence of any prior negotiations between the two solicitors or a
request by Mr. MacGeehin for authority reinforces the interpretation that there was no
delegation
83.       Mr. Forde submits that, if there is a dispute about the meaning of an agreement, one can
look at the previous inter partes negotiations, and that there were no such negotiations,
nor was there a request by Mr. MacGeehin for authority prior to this agreement. That is
not particularly decisive in the circumstances. There was no dispute at the time. The
dispute only flared up retrospectively when Mr. Molloy tried to unravel the settlement.
Argument that proceedings on the day were against the three directors only, so the
inference is that the authority given could not have been as extravagant as claimed
84.       Mr. Forde submitted that there was no evidence that Mr. McNelis was “an utterly reckless
solicitor that would allow others to settle his case without him having some involvement”.
That is a strange way of putting it. Mr. McNelis’ email did amount to an authorisation for
Mr. MacGeehin to settle the case on behalf of the company having taken instructions from
the directors, and it expressly quotes Mr. Forde’s advice to the same effect at that time.
If Mr. Forde has now changed his mind, as he seems to have done, that does not mean
that Mr. McNelis was reckless to have acted on the original advice, either utterly or at all.
85.       Mr. Forde argued that the court had no seisin of the proceedings against the company.
Mr. Dully’s claim against the company was in the Court of Appeal and the High Court had
no seisin of that dispute. That is not a full picture of the situation for two reasons.
Firstly, in any event, the costs of the High Court proceedings had yet to be adjudicated or
taxed, so the court still had a role or at least potential role, and secondly, the order
setting aside the previous costs order in the High Court was made by consent.
Argument that had Prospect Law the kind of authority claimed then they should have
come on record for the company
86.       Mr. Forde submitted that Mr. MacGeehin would have had an obligation to come on record
if his evidence was to be correct. I do not accept that at all, as that could lead to an
irrational chopping and changing of representation in a fluid situation. Even if,
counterfactually, this non-existent obligation did exist, it does not make the agreement
non-binding; nor does it support the argument that the authority given by Mr. McNelis
could not mean what it means.
Page 28 ⇓
87.       Mr. Forde also submitted that counsel negotiating the settlement for the company could
only take instructions from the solicitor on record and that Prospect Law were not that
solicitor. Of course it is worth pointing out that the order as amended under the slip rule
makes clear that the company was not formally represented at the hearing and nobody
was purporting to represent it in terms of formal appearances. The company was,
however, party to the contractual agreement, which was noted.
88.       Mr. Forde raised the question of the Code of Conduct for the Bar and said that barristers
instructed by Mr. MacGeehin would have been in breach of the Code of Conduct in
negotiating an agreement on behalf of the company unless there was “unequivocal
authority”. That was an unfortunate submission, which by a side wind cast aspersions on
counsel on the other side on day four of the hearing. No expert evidence was introduced
as to a breach professional responsibilities. There was no basis whatsoever to say that
counsel instructed by Mr. MacGeehin acted unprofessionally. The argument provides no
support to any inference that the email of May, 2019 does not mean what it means.
89.       The unhappy situation that has been arrived at is that few people are left untouched by
the sweeping allegations made by the first-named defendant. Mr. MacGeehin was
accused of misleading a court office on affidavit and was impugned in cross-examination.
He and his counsel were accused of being in breach of professional responsibilities. Mr.
Forde even made the submission that if his own solicitor, Mr. McNelis, did what I have
found him to have done, this would have been “unethical and utterly reckless”.
Ultimately, Mr. Forde was driven to say that, if by saying that Mr. MacGeehin’s clients’
instructions would apply equally to the company, and Mr. MacGeehin could simply relay
whatever had been decided meant, that Mr. Forde condoned a situation where the case
was being settled by Mr. MacGeehin on behalf of the company, which is exactly what I
find he did do, he himself would be open to a negligence action and in peril of being
reported to professional bodies. Again, the argument here is that I couldn’t have done
what I did because it would have been unethical, therefore I didn’t do it.
90.       In case anyone contrives to misunderstand what I am saying here, I find that there was
no intention on the part of any of the lay or professional witnesses to mislead the court in
relation to their evidence in the present application, or on behalf of any of the solicitors or
counsel on any side to fail in their professional and ethical obligations in relation to the
authorisation to Mr. MacGeehin in May, 2019 to settle the case on behalf of the company.
Contrary to the logic of Mr. Forde’s submissions, I don’t think his stance in May, 2019 was
unethical in any way. On the contrary, I think his initial approach was sensible, but that
he has simply changed his mind.
Argument that the presence of directors and shareholders in court is not an authority
91.       Mr. Forde submits that the company can only be in court through its solicitor on record
and that nobody had a right of audience because the solicitor on record was not there. It
consequently cannot be held against the company that Mr. Molloy did not stand up and
openly protest. Certainly it can be said that the mere presence of the directors or
shareholders in court does not in itself mean anything. However, that does not get Mr.
Forde anywhere, because Mr. MacGeehin’s position does not depend on that.
Page 29 ⇓
Argument that the director’s decision of 23rd May, 2019 was unlawful because there
was no properly constituted director’s meeting
92.       Mr. Forde says that, because what was involved here was the company disposing of all its
assets and in practical terms liquidating itself, that is something that an informal meeting
or discussion cannot do. He relies on the requirement for minutes of meetings of the
directors set out in s. 166 of the Companies Act 2014. By definition that is irrelevant to
decisions of directors taken outside the context of board meetings. Mr. Forde submits
that a company director can only make a decision on behalf of the company at a properly
convened board meeting. That is clearly an unworkable proposition. He relies on Aston
Colour Print Ltd [2005] 3 I.R. 609 per Kelly J., as he then was. But that was a totally
different situation. In that case there were two directors, who were equally divided on
the question of the appointment of an examiner, but one director was in effect
outnumbered by other members of a management board meeting that was being
retrospectively recharacterised as a board meeting. Here, all three directors were
involved, met during the settlement negotiations and discussed the approach to be
adopted. Sure, that was not a formal board meeting; but all of them, and only them,
were involved when they discussed the matter between themselves. Litigation involving
corporate entities could hardly be progressed or settled if a formal board meeting had to
be convened every time a decision had to be made. Thus, there was no substance to the
point, but even if there was it is an indoor management point.
93.       As regards Mr. Forde’s argument that the threat to the company was “existential” in the
debased modish sense of that word as a life-or-death issue, the problem for that
argument is that the company was defunct and insolvent at all material times. The only
way to determine whether the settlement was in the company’s interest is to compare the
company’s position without the settlement as against the position with the settlement.
The company initially claimed to be the legal and equitable owner of the stadium, but that
was a complete non-starter because it had signed a deed of trust recognising that its
position was only that of trustee and that it would relinquish that position on demand. It
conducted High Court and Court of Appeal litigation while insolvent. It is a matter for Mr.
Forde, as the moving party, to prove that the settlement was not in the company’s
interest. That is a mixed question of fact and law that would require adequate evidence.
Mr. Forde has not established in evidence that the settlement was contrary to the
company’s interests, so I have to reject his submission in that regard.
94.       If I am wrong about that, and if I can determine myself on the material before the court
whether the settlement is in the company’s interest, I would conclude that it was, for the
reason essentially given by Mr. McCaul in the witness box, namely that the appeal was a
risk. Mr. Forde said that the appeal was an asset but in my view it was very likely to fail.
95.       Without the settlement, the company’s assets and liabilities were as follows:
(i). The appeal, which I would value at nil (for reasons set out earlier).
Page 30 ⇓
(ii). The sum lodged as security for costs, which I would also value at nil because that
security would be forfeited to pay the costs of the other side in the event of losing
the appeal.
(iii). The claim for indemnification, which is wrapped up in the appeal and which by
virtue of Henderson v. Henderson (1843) 3 Hare 100 could not be pursued in any
hypothetical separate proceedings. In these proceedings I rejected that claim and
given the totality of the evidence I do not think it is in any way plausible to think
the Court of Appeal would have allowed Mr. Forde to rerun the oral hearing simply
because, having lost, he got further ideas about what additional evidence might
have assisted. Therefore, this can also be valued at nil.
(iv). The costs of the High Court, which would run to several hundred thousand euros.
(v). The costs of the Court of Appeal, which would also be likely to be significant.
(vi). The further liability of damages, which had been decreed in favour of the plaintiff
for €160,673.05.
(vii). As regards the alleged creditors that the company has, there was no properly
admissible evidence on this. Mr. McNelis gave evidence that there were creditors,
but that was hearsay and indeed qualified by some possibilities. I do not think it
has actually been established by admissible evidence for the purposes of this
motion that there were any creditors. A passing reference in the draft settlement
agreement of 21st May, 2019 which was not adopted to a debt to Westmeath
County Council does not constitute admissible evidence that such a debt exists.
96.       With the settlement, the company’s assets and liabilities are as follows:
(i). Costs in the High Court: There is no further liability to the company for costs
because those costs were to paid by the directors, Mr. Molloy having put up the
security for costs and the other two directors to provide the other €50,000.
(ii). Costs of the Court of Appeal which were nil because the appeals were being struck
out with no orders.
(iii). The damages decree was not specifically addressed in the settlement agreement
but reassuringly, Mr. Collins tells me that the intention was that the €100,000 sum
was regarded as “all in” so the damages figure would become nil also.
(iv). Alleged creditors: As noted above, these have not been proven for the purposes of
this motion, so that heading must also be valued at nil.
97.       On any view, therefore, the settlement was massively in the company’s interests.
Without it, the company was hopelessly insolvent, and with it, for the purposes of the
evidence before the court on this motion, the company was in balance, although
admittedly with no assets.
Page 31 ⇓
Argument that the two directors had a conflict of interest which was never declared
and that this invalidates the decision
98.       Section 231 of the 2014 Act requires a declaration by the directors who are interested in
a contract to be made at the following board meeting. There is no evidence that there
have been any board meetings since the settlement process began and inferentially there
do not seem to have been any. Presumably, if there is any obligation to make a
declaration, that will be done at the next board meeting, but that seems doubtful because
s. 231 is not really apposite to address the situation affecting all of the directors equally
where an order for a decree is attained against a company and was then sought to be
enforced against all of the directors. In any event, this is an indoor management point
and there is also acquiescence by Mr. McNelis.
Argument that in deploying company assets to, inter alia, settle proceedings against
themselves, the directors were in breach of the Companies Act 2014 and their
fiduciary duties
99.       Under this heading, Mr. Forde relies on s. 228(1)(f) of the 2014 Act. Yes, in one sense
the directors have an interest in the settlement, but that is automatic if a third party gets
an order against a company and then seeks to enforce it against the directors personally.
The fact that the directors had an interest themselves is a coincidence of interests, but
that is not necessarily equivalent to a conflict. If the settlement was in the interests of
both the directors and the company then that would not be a conflict, and that is the
situation here. If, counterfactually, it had favoured the directors at the expense of the
company, then that would have been a conflict. Further, the coincidence of interests
applies to all the directors equally. There was nobody else that could have taken the
decision to settle the proceedings. It is worth noting in this context that the settlement
agreement involved an agreement by the plaintiff to drop his claim against Mr. Molloy
personally even though Mr. Molloy had not signed on to the agreement, so all of the
directors benefitted equally to that extent. This point has no substance, but even if,
counterfactually, it had, it is an indoor management point and there is also acquiescence
by Mr. McNelis.
Argument that the directors used the company property for their own benefit,
contrary to the Companies Act
100.       Mr. Forde relies on s. 228(1)(d) of the 2014 Act which restricts the use of the company’s
property for the benefit of the directors. Mr. Forde obviously carries the onus of proof
and has not proved that this provision was breached. Anyway, it has limited relevance to
a situation where an order was obtained against the company and is sought to be
enforced against his directors. Things would be different if the directors were using the
company property in a manner not in the company’s interest, but this settlement was in
the company’s interests. In any event, the same points arise about this being a matter of
indoor management as well as there having been acquiescence. I might add that as
noted above I don’t regard the appeals as an asset in any event.
Argument that at general common law, using the company’s assets in this manner is
ultra vires
101.       There is no substance to this argument either for similar reasons.
Argument that, particularly if the company is insolvent, there was an obligation to
consider the interests of the creditors before deciding on the settlement
Page 32 ⇓
102.       This argument is a jus tertii but more fundamentally is totally unreal on these facts. It
has not been proven that there were any creditors by proper admissible evidence. Even
assuming that there were creditors, there was nothing for the creditors before the
settlement, so the fact that there was nothing for them afterwards does not worsen their
position or mean that they have any interest worth considering. In any event, it is an
indoor management point and more fundamentally still, the settlement was in the
company’s interests so therefore, insofar as it is meaningful to talk about the interests of
creditors in a company which had no assets to begin with, it is also in the creditors’
interests.
Argument that an EGM of the company was required and there was no such EGM and
indeed there was an EGM repudiating the agreement
103.       An EGM was not required here, but even if it was, this was an indoor management point
and there was subsequent acquiescence on behalf of Mr. McNelis.
Argument that even if there was a unanimous decision of the shareholders here the
agreement would be unlawful because the company was insolvent, so what happened
was a distribution of the company’s assets, inter alia for the benefit of two of its
members
104.       That is a mischaracterisation of what happened and a repeat of arguments already
rejected above. It is notable that under this heading, Mr. Forde argued not just that
there was a prohibited and ultra vires disposition but the final submission in his written
submissions was that it was “arguably” a fraudulent distribution and/or a fraudulent
trade. That is not an appropriate allegation because no allegation of fraud was put to any
of the witnesses. That was withdrawn after having been queried by the court.
Order
105.       The order therefore is as follows:
(i). as noted above, during the hearing I allowed the first-named defendant to amend
its motion to delete the words “the 2nd page of” so as to cover the undertakings on
both pages of the agreed statement, and I dispensed with the requirement to serve
an amended motion paper;
(ii). I dismiss the first-named defendant’s applications including the motion as so
amended in their entirety.
106.       At an earlier stage, Mr. Stapleton did indicate to the court that he was not going to
dispose of the €50,000 in his possession for the time being. There was no undertaking
given or injunction granted, so for the avoidance of doubt, I shall clarify that he can now
feel free to deal with the €50,000 in whatever manner he considers appropriate.
First Postscript – Costs and position of second named defendant
107.       By way of postscript as to costs of the two notices of motion, having heard from all the
parties present, there being no appearance by Mr. Temple, the costs will be dealt with by
orders as follows. There was also an application to record in the order the fact that the
second-named defendant supported and adopted the applications of the first-named
defendant. The order will be:
Page 33 ⇓
(i). an order for costs on a solicitor and client basis against the first, second and third-
named defendants, jointly and severally in favour of the plaintiff;
(ii). an order for costs on a solicitor and client basis against the first defendant, and
from the date on which Prospect Law Solicitors came off record, the second
defendant, jointly and severally, in favour of the fourth-named defendant;
(iii). an order recording the fact that, while he appeared in a formal sense as a
respondent to the motions, the second-named defendant supported and adopted
the applications;
(iv). an order adjourning the question of costs under O. 99 r. 7 against Mr. McNelis
personally as the first-named defendant’s solicitor.
Second Postscript – Stays
108.       Mr. Forde has now applied for a stay on the order for costs against the first-named
defendant. That is formally opposed but not particularly vigorously, and indeed it is
suggested by Mr. Ó Dúlacháin that the stay could be granted for a period of 28 days from
perfection of the order and if notice of appeal to the Court of Appeal is lodged within that
period then the stay would continue until the first mention date. Mr. Forde says that is
acceptable and that seems to be the appropriate order here for the simple reason that a
stay until the determination of the appeal does not seem to automatically follow because
the first-named defendant is insolvent, and the last time it appealed to the Court of
Appeal it was made the subject of an order for security for costs by that court.
109.       I can also add that Mr. Molloy later adopted Mr. Forde’s application for a stay as far as he
was concerned.
110.       Mr. Forde suggested that I should stay the costs against Mr. Temple but since he did not
see fit to appear, either at the hearing or subsequently, that would be an improvident
departure from the adversarial system, which I do not propose to embark on.
111.       So the order regarding a stay will be that:
(i). the order for costs in favour of the plaintiff and the fourth-named defendant as
against the first and second named defendants will be stayed for a period of 28
days and if a notice of appeal to the Court of Appeal is lodged within that period,
for a further period up to the first mention date in the Court of Appeal;
(ii). the question of costs against Mr. McNelis personally is to be adjourned to 20th
January, 2020.
Third Postscript – slip rule
112.       For completeness I should record that the orders (there being two, one for each of Mr.
Forde’s motions) as perfected stayed “execution on foot of this Order insofar as costs are
concerned”. That can be put down to judicial fallibility because unusually in this case I
reviewed the draft orders before perfection. That should have referred to execution
against the first and second named defendants only, and Mr. Collins applied for the
Page 34 ⇓
appropriate amendment under the slip rule, which I granted. Thus, in case clarification is
required elsewhere, the present judgment has given rise to four orders, one substantive
order dismissing each of Mr. Forde’s two motions with costs, and a further amending
order for each of the substantive orders.



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