Facts
Jurisdiction of the court
Undertakings
Comment
Under Order 19, Rule 28 of the Rules of the Superior Courts, the courts have jurisdiction, among other things, to strike out proceedings where the plaintiff has no reasonable cause of action. They also have an inherent jurisdiction to dismiss proceedings where they constitute an abuse of process. Both jurisdictions were addressed recently by Justice Murphy in Coleman v O'Neill,(1) although the focus was on the former.
The plaintiff, a solicitor, sued the defendants, directors of a credit union, for alleged negligence, breach of duty and/or breach of fiduciary duty, in and about the granting of loan facilities to certain individuals. The plaintiff had also made allegations of fraud and misfeasance of public office and breach of duty against the defendants. The plaintiff claimed that the defendants had wrongfully accepted various written undertakings given on behalf of his firm.
The defendants applied for an order, pursuant to Order 19, Rule 28 of the Rules of the Superior Courts, to strike out the proceedings on the grounds that the plaintiff had no reasonable cause of action. In the alternative, they sought an order, pursuant to the inherent jurisdiction of the court, dismissing the plaintiff's claim on the ground that his action constituted an abuse of process.
Order 19, Rule 28 of the Rules of the Superior Courts provides as follows:
"The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgement to be entered accordingly, as may be just."
The court acknowledged that case law provides that the jurisdiction to dismiss an action on the basis that, on admitted facts, it cannot succeed is one which the court should be slow to exercise.(2) However, it did acknowledge that where the statement of claim permits an amendment which might save the action, the proceedings should not be dismissed. It further noted that in dealing with such an application, the court must be confident that, no matter what might arise in discovery or at trial, the proceedings would be resolved in a manner that would be fatal to the plaintiff's claim. Notwithstanding those precautions, however, it was well established that the court should dismiss the claim where convinced that the plaintiff's claim must fail.(3) However, in considering whether the court might be so convinced, it was noted that the court is not limited to considering the pleadings of the parties, but is free to hear evidence on affidavit relating to the issues in the case.(4) This is precisely the basis on which the application here proceeded.
Undertakings had been given on behalf of the plaintiff's firm to the relevant credit union with regard to borrowings advanced to certain individuals, including an employee of the plaintiff's firm. That employee appears to have given several of the initial undertakings on behalf of the firm in support of the relevant borrowings. The loans involved were approved by the credit union's board of directors, which at all material times included the plaintiff who had, over time, gradually become more active in the affairs of the credit union and who was elected to the board of directors in 2001.
When the question of security for the relevant loans was raised in January 2008, the plaintiff assured the board of directors that there would be compliance with the letters of undertaking. Indeed, he provided a further letter of undertaking dated February 6 2008, reaffirming the undertakings previously furnished to the credit union. However, he claimed in the proceedings that the composite undertaking of February 6 2008 was procured by the chief executive of the credit union, allegedly on foot of a request from the auditors, and that he had been unaware of the undertakings previously given. The plaintiff claimed that as a result he had suffered substantial loss, while the individuals in respect of whose borrowings the undertakings were given still retained their assets. He also averred that no members of his staff were permitted to give undertakings on behalf of the firm, although affidavit evidence to the contrary was considered by the court.
The court cited The Guide to Professional Conduct of Solicitors in Ireland, which states that an 'undertaking':
"is any unequivocal declaration of intention addressed to someone who reasonably places reliance on it which is made by a solicitor in the course of his practice, either personally or by a member of the solicitor's staff, whereby the solicitor, or in the case of a member of his staff, his employer, becomes personally bound."
It goes on to state that: "the solicitor is responsible for honouring an undertaking given by a member of the solicitor's staff, whether such staff member is admitted to the Roll of Solicitors or not".
The court commented that a solicitor will be required to honour the terms of a professional undertaking as a matter of conduct, and opined that the plaintiff was apparently aware of his requirement to honour the terms of such a professional undertaking by virtue of his agreeing to execute a composite undertaking. It cited IPLG v Fry(5) on the nature of the solicitor's undertaking:
"The solicitor's undertaking is commonly understood as being one which can be safely relied upon. He is an officer of the court and it is long established that where a solicitor gives an undertaking, the court will compel him to carry it out, unless there is good reason for his not doing so. This jurisdiction is based on the court's right to require its officers to observe a high standard of conduct."
Ultimately, the court noted that the plaintiff, as solicitor, signed the undertaking of February 6 2008, but sought to challenge it on the basis of the credit union chief executive requiring him to do so, although there was no pleading or evidence of coercion or undue influence. The court further found that, on the balance of probabilities, the plaintiff should have been aware, and was aware, of the original undertakings, which awareness led to the provision of the composite undertaking in February 2008.
The court felt that irrespective of what would arise on discovery or in the course of the trial, and since no particulars supported the plaintiff's claim, the proceedings could not succeed. Therefore, it held that the plaintiff's claim must fail. On that basis, it granted an order striking out the plaintiff's proceedings on the grounds that the pleadings did not show a cause of action pursuant to Order 19, Rule 28 of the Rules of the Superior Courts. Furthermore, based on the affidavit evidence before it, the court dismissed the plaintiff's claim as an abuse of process. Although both jurisdictions are only sparingly used by the courts, there are instances where the courts will dismiss an unmeritorious claim and the decision represents a useful restatement of applicable principles.
For further information please contact Gearoid Carey at Matheson Ormsby Prentice by telephone (+353 1 232 2000), fax (+353 1 232 3333) or email ([email protected]).
Endnotes
(2) Sun Fat Chan v Osseous Limited [1992] 1 IR 25.
(3) Tassan Din v Banco Ambrosiano [1991] 1 IR 569.
