The appropriate test for determining whether to dismiss and / or
strike out a third party claim was examined recently by the High
Court in IBRC and INBS v John S. Purcell, David Brophy,
Terence Cooney, Cornelius P. Power and Michael P. Walsh and Central
Bank of Ireland and KPMG [2012] No. 3279P.
Proceedings were initially instituted by the Plaintiffs against
the former directors of Irish Nationwide Building Society
("INBS") on foot of an allegation that
those directors had unlawfully and improperly delegated their
powers to the Chief Executive of INBS, Michael Fingleton. The
Central Bank had been joined to the proceedings by the first Named
Defendant on the basis that the delegation was carried out
with the full knowledge and approval of the Central Bank and,
furthermore, that the Defendants relied on the Central Bank's
guidance and approval. The application before the High Court
was the Central Bank's motion to strike out the third party
statement of claim.
Cregan J. considered the decision of Keane J in Lac Minerals v
Chevron Corporation which determined that the relevant test
is whether the Court is confident that the plaintiff's claim
cannot succeed no matter what might arise on discovery or at the
trial of action. Justice Cregan also considered Salthill
Properties Limited v Royal Bank of Scotland in which Clarke J.
held that the Court should not require a plaintiff to be in a
position to show a prima facie case, merely a stateable case.
Cregan J. noted that while the legal principles to be considered
in an application to strike out a third party statement of claim
were broadly similar to the principles the Court has to consider in
an application to strike out a plaintiff's statement of claim,
there was an important point of distinction. A plaintiff
maintains that it has suffered a wrong by virtue of the actions of
the defendant. By contrast, in a third party claim for indemnity
and / or contribution the defendant is not claiming that he has
suffered a wrong but rather that the third party owes a duty to the
plaintiff and that the defendant and the third party are concurrent
wrongdoers in respect of the plaintiff.
Cregan J. also reflected on the issue of statutory interpretation
in a strike out application and held that if a statute admits more
than one interpretation, it should be interpreted in a manner which
assists the plaintiff's case.
Cregan J. found that the Central Bank has extensive powers over
all building societies, supervising them from "the cradle to
the grave". Justice Cregan held that the Central Bank's
duty to "control" and "supervise" as set out in
the Building Societies Act, 1989, must mean, as a matter of
statutory interpretation, that the Central Bank has a statutory
duty to building societies in general and to INBS in
particular.
The Court concluded that the first named Defendant was entitled to
join the Central Bank to the proceedings on the basis that he had
shown a stateable case in respect of each of the following claims:
that the Central Bank owed a statutory duty to INBS, that the
Central Bank was liable to INBS for negligent breach of statutory
duties, that the Central Bank owed a common law duty of care to
INBS and for misfeasance of public office on the part of INBS
against the Central Bank.
The Central Bank had argued that the third party Statement of
Claim against it was bound to fail on the basis that the Central
Bank enjoys statutory immunity in damages. Whilst acknowledging
that such immunity does in fact exist, Cregan J. held that this
immunity could not prevent the Central Bank being joined as a
concurrent wrongdoer in these proceedings.
Interestingly, whilst Justice Cregan held that the first named
Defendant, as director, had a cause of action against the Central
Bank for negligent breach of both statutory and common law duties,
he ruled that such claims could not form part of a third party
claim for an indemnity or contribution, rather, they could only
form part of separate proceedings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.