BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £5, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

1. The Plenary Summons and the Statement of Claim herein were issued and delivered respectively on the 5 March 1997. The relief claimed by the Plaintiffs in these proceedings may be summarised by extracting the following paragraphs from the general endorsement of claim, namely:-

1. A declaration that by maintaining their personal claims in the proceedings referred to in the first schedule hereto ("the Tara proceedings") and in the proceedings referred to in the second schedule hereto ("the Bank proceedings") the Defendants have acted and are continuing to act in breach of their fiduciary duties as directors of Bula Holdings ("Holdings") and Bula Limited ("Bula").

4. A declaration that by maintaining their personal claims in the Tara proceedings and in the Bank proceedings and by frustrating and obstructing all or any attempts to compromise both sets of proceedings, the Defendants have acted and are continuing to act in breach of the Plaintiffs constitutional rights to their livelihood, their good names, their property rights and other rights under Article 40.3 of the Constitution of Ireland.

5. An order restraining the Defendants or either of them from frustrating or otherwise impeding attempts made by or on behalf of the second and third named Plaintiffs to compromise the Tara proceedings and the Bank proceedings by continuing to maintain their personal claims in both or in either the Tara proceedings and the Bank proceedings.

6. An order directing the Defendants to withdraw their personal claims in the Tara proceedings and in the Bank proceedings in order that further attempts may be made by and on behalf of the Plaintiffs to compromise both the Tara proceedings and the Bank proceedings on behalf of all of the Plaintiffs in those proceedings (if necessary, subject to the supervision and approval of the Court).

By notice of motion returned for hearing on the 10 of March 1997 at 2.00 pm (and subsequently adjourned to the 20 of March) the Plaintiffs claimed by way of interlocutory relief the restrictive and mandatory injunctions identified in the general endorsement of claim.

Three affidavits have been sworn by the individual Plaintiffs in support of the motion and two by Mr Michael J Wymes in opposition thereto. No defence has as yet been delivered but the Applicants sought and, notwithstanding the opposition of the Respondents, I granted an order treating the motion as the trial of the action. I was satisfied that the urgency of the matter made this procedure highly desirable.

The Plaintiffs claim the far-reaching relief on two grounds. First that in the special circumstances of the case the Defendants in maintaining and pursuing the litigation (the Bank proceedings and the Tara proceedings) on behalf of the corporate Plaintiffs in those proceedings owed a fiduciary duty to the Plaintiffs herein (the Roches) and that the maintenance and perseverance in the individual claims on behalf of the Defendants in these proceedings (the W Group) to the detriment of the corporate claims constituted a breach of that trust. Alternatively it was contended, again in the special circumstances of the case, that the exercise by the W Group of their constitutional rights to assert individual claims flowing from or dependent upon the rights of the corporate Plaintiffs in that litigation constituted an abuse of the constitutional rights of the Roches.

That the powers conferred the members of the W Group as Directors of Bula Holdings (hereinafter referred to as "Holdings") and Bula Limited (hereinafter referred to as "Bula") are fiduciary in their nature does not admit of dispute. What Counsel on behalf of the Plaintiffs contended on the basis of a far-reaching analysis of English, Australian and New Zealand was that this duty was owed not only to the companies concerned or the general body of shareholders therein but to the Roches specifically or Crindle Investments representing their interest as shareholders. Much of the argument presented on behalf of the Plaintiffs was designed to establish that the well-known case of Percival v Wright [1902] 2 CH 421 which held that directors owed no fiduciary duty to individual or particular shareholders had been wrongly decided or alternatively was not applicable to the facts of the present case. In the New Zealand case of Coleman v Myers [1977] 2 NZLR 225 the Supreme Court of Auckland (Mahon J) concluded (see page 274) that the case had been incorrectly decided. The Court of Appeal did not accept that conclusion. On appeal Woodhouse J (at page 324) analysed the restricted nature of the argument addressed to the court in Percival and Wright and the limited value of the judgment to be derived therefrom. He went on to explain -- in my view correctly -- the relationship between corporate officers and members in the following terms:-

"In my opinion it is not the law that anybody holding the office of director of a limited liability company is for that reason alone to be released from what otherwise would be regarded as a fiduciary responsibility owed to those in a position of shareholders of the same company. Certainly their status as directors did not protect the defendants in a Canadian case which finally made its way to the Privy Council (see Allen and Hyatt [1914] 30 TLR 444). The decision in that case turned upon the point that the directors of the company had put themselves in a fiduciary relationship with some of their shareholders because they had undertaken to sell shares of the shareholders in an agency capacity. But there is nothing in the decision to suggest that in the case of a director that the fiduciary relationship can arise only in an agency situation. On the other hand, the mere status of Company Director should not produce that sort of responsibility to a shareholder and in my opinion it does not do so. The existence of such a relationship must depend, in my opinion, upon all the facts of a particular case."

The comments by Woodhouse J on the judgment of the lower Court are, in my view likewise correct and equally instructive. They were as follows:-

"When dealing with this part of the present case Mahon J himself came to the conclusion that Percival and Wright had been wrongly decided. Then he expressed his opinion generally upon the point in the following way:-

"The essential basis of breach of a fiduciary duty is the improper advantage taken by the defendant of a confidence reposed in him either by or for the benefit of the plaintiff. When one considers the legal relationship between the shareholder in a limited liability company and the directors entrusted with the management of that company, it appears to me that in any transaction involving a sale of shares between director and shareholder the director is the repository of confidence and trust necessarily vested in him by the shareholder, or by his legal status, in relationship to the existence of information affecting the true value of those shares."

He then qualified that conclusion by restricting it to those holding office as directors in private companies. It may be that he intended some qualification beyond that but if he did not then, with respect, I think myself the conclusion is too broadly stated."

I think Counsel on behalf of each of the parties would accept the proposition that the mere fact of the relationship of director and individual shareholder does not give rise to a fiduciary duty but on the other hand that where such duty does arise the existence of the corporate structure would not prevent the particular shareholder from enforcing or relying upon the existence of the fiduciary duty. In those circumstances other authorities were referred to for the purpose of illustrating the circumstances in which such a duty might arise. Allen and Hyatt was one. The case of Coleman v Myers itself was another. In that case the conduct of the directors in purchasing and more particularly negotiating the purchase of shares from certain shareholders was held by the Appellate Court to amount not merely to a breach of a fiduciary duty but to constitute negligence and even fraud. Perhaps a more pertinent example was the decision of the Supreme Court of Western Australian in Biala Property Limited v Mallina Holdings Limited (Australian Corporation and Securities Reports [1996] page 255). In that case the plaintiffs who were minority shareholders in Mallina Holdings Limited alleged a breach of trust by Dempster Nominee Property Limited which was associated with Mallina in a mining project. The significance of the case was that although a claim that a Mr Dempster of Dempster Nominees was a director owing fiduciary duties to the Plaintiffs failed for lack of evidence the trial judge went on to determine the relationship between the parties (at page 304) in the following manner:-

"Mallina and Dempster Nominees associated together for the purpose of undertaking a single but continuing venture out of which they hoped to make profits which they agreed to share equally. It is not necessary to decide whether they were partners in the strict sense (although I think that they probably were) or whether they were joint venturers. Whatever the characterisation of the relationship it was plainly based on mutual confidence and trust . . . Their relationship was founded on the mutual trust and confidence of each in the skill, knowledge and integrity of the other. In the words of Mason, Brennan and Dean JJ in United Dominions Corporation v Bryan Pay Limited [1985] 157 CLR 1 at 13 each participant in the joint venture was under a fiduciary duty to refrain from pursuing, obtaining or retaining for itself or himself any collateral advantage in relation to the proposed project without the knowledge and informed assent of the other participants.""

That analysis is echoed by Counsel on behalf of the Plaintiffs reviewing the facts of the present case. He points to the plans and hopes to develop the Navan ore body. The special nature of the company formed for that purpose. The business relationship between Mr Roche Senior and Mr Wood Senior. The family relationship between the Roches and Mr Wymes and above all the actual trust reposed by each of the shareholders or promoters in the others of them. This confidence, it is said, was continued up to and subsequent to the initiation of the litigation. It is not disputed that the Plaintiffs joined willingly therein in their corporate and personal capacities. What is said is that this arrangement continued and worked perhaps satisfactorily until the W Group to whom had been entrusted the conduct of the litigation steadfastly and unreasonably refused to consider any reasonable offer for the compromise thereof and instead persisted in the claims and that on the basis of inadequate evidence and advice.

It is argued that as a result of these facts the relationship between the W group and the Roches is not governed by the corporate structures but by fiduciary duties and obligations in equity by those in whom confidence has been reposed to those by whom it was entrusted as happened in Coleman v Myers and Biala v Mallina.

Over a period of years I have had occasion to indicate my concern that the course being adopted at the behest of the W Group was imprudent and even improvident. At the present time I have no doubt the continuance of the litigation without exploring fairly and fully the prospects of settlement is wholly irresponsible. On the other hand I cannot find sufficient material on which to infer the existence of duties in the nature of a trust imposed on the W Group or either of them above or beyond such duties as they would have in their capacities as Directors of the companies concerned. Whilst I recognise that the original enterprise and perhaps even the litigation following upon it was something in the nature of a joint enterprise, that undertaking was conceived and consciously promoted in the form of a company incorporated under the Companies Acts 1963 and it was the requirements of that legislation which governed the relationship between the parties. Whilst I have already indicated that I accept that duties may be imposed or accepted by parties above and beyond those derived from particular offices or status I believe that the presumption must be that parties who elect to have their relationship governed by corporate structures rather than, say, a partnership intend their duties -- and where appropriate their rights and remedies -- to be governed by the legal provisions relating to such structures and not otherwise. It would require, in my view, reasonably clear evidence to impose obligations on directors or shareholders above and beyond those prescribed by legislation or identified by long established legal principles. In my view the requisite evidence is not forthcoming in the present case and accordingly the claim under this heading must be dismissed.

I should add that even if I had reached a different conclusion as to the existence of a fiduciary duty I would not accept that I was entitled to grant the particular relief sought. The breach of trust, if there had been one, was not the acquisition of a right which resulted in a conflict with the performance of a duty. Nor was it the failure to make adequate disclosure of any potential or actual conflict between fiduciary and absolute rights. At worst the breach consisted of acting in a situation where the two categories of right were in potential conflict. As the machinery of the Companies Act 1963 confers upon the Courts adequate powers to resolve this conflict by terminating, limiting or supervising the exercise of the fiduciary power I cannot see that the Court exercising its historic equitable jurisdiction -- even in the widest and most innovative manner -- would be justified in resolving the conflict by expropriating the personal right or preventing their exercise.

In relation to the constitutional argument certain propositions were advanced on behalf of the Plaintiffs which did not admit of serious dispute, namely, that the Roches had directly or indirectly a right of property in relation to Bula which was entitled to constitutional protection; that the right of the Roches to their good name was an unenumerated constitutional right (see In re Haughey [1971] IR 217) which they are entitled to assert and have protected; that the constitutional right of one citizen must be protected by the Courts against infringement by another citizen (see Attorney General v Society for the Protection of the Unborn Child and Open Door Counselling Limited [1988] IR 593); that a constitutional right can be protected or enforced by an action even though such action may not fit in to any of the ordinary forms of procedure in either common law or equity (see Meskell v Coras Iompar Eireann [1973] IR 121).

Accepting these established principles of constitutional law one turns to apply them to the facts of the present case. In so doing it must be recognised that the Defendants have a constitutionally recognised right of property in the claims which they assert in the pending litigation and an unenumerated constitutional right of access to the Courts to protect that right. But it has been argued on behalf of the Plaintiffs that the rights of the individual Defendants in the litigation is contingent or dependent upon the success of the corporate claims. Attention was drawn to the fact that Mr Wymes having earlier argued forcefully in favour of his individual claim abandoned it or recognised in the course of the Tara proceedings that his claim was subsumed in that of Bula. No such concession was made in respect of the claim of Mr Wood. Moreover in earlier proceedings it was pointed out by the then Chief Justice that circumstances could be envisaged in which the claims of the individual Plaintiffs would succeed in the Tara proceedings even if those of the company failed. The position of the individual Plaintiffs in the Bank proceedings is clearer. They, that is to say, both the W Group and the Roches guaranteed the indebtedness to the Banks of Bula. They have accordingly a clear independent legal right to protect and whilst the success of the corporate claim would automatically release the individual Plaintiffs from their liability one could envisage circumstances in which the claim of Bula (as the primary debtor) might fail that of the individual Plaintiffs in their special position as guarantors could succeed.

The W Group may be pursuing their individual claims for the purpose of preventing a settlement of the corporate claim. Would that motivation constitute an abuse or infringement of any constitutional right of the Roches? In my view it would not. Unless some wrongdoing can be established I see no basis on which the Court can restrict or abridge the constitutional rights of the W Group so that those of the Roches may be exercised more effectively or beneficially. The reality of the matter -- particularly in relation to the Bank proceedings -- is that the promoters of the original enterprise entered into orthodox commercial transactions which included the formation of a company; the borrowing by it of substantial sums of money and the guarantee of that indebtedness by the promoters. Those arrangements involved in part the exercise by all of the parties of their constitutional rights and the necessary limitation of those rights by the commercial commitments which they had made in the course thereof. Such restrictions may be so extensive as to amount to the abandonment of a particular constitutional right -- a gift would fall in to at category -- or the transaction may be such, as is the case here that the constitutional rights of the parties have been so intertwined as a result of arrangements freely entered into by them as to make it difficult if not impossible for them to exercise their individual rights otherwise than in conjunction with their associates. That such difficulties may arise as a result of commercial transactions it is of course recognised by legislation and Section 205 of the Companies Act 1963 is a particular example of the endeavours of the legislature to prevent one group or party unfairly abusing the rights of another. However even in that case the legislative remedy cannot be invoked unless some wrongful element is identified. In my view the conduct of the Defendants in the present action in refusing or declining to cooperate with Bula and Holdings in negotiating a settlement at the instigation of the Roches amounts to folly in the extreme and a course which I believe they will have every reason to regret but that does not give me the right to restrain it. Indeed the nature and essence of a constitutional right is the freedom to exercise it in a way which popular and expert opinion may regard as ill advised.

In the circumstances it seems to me that the claim based on the constitutional arguments likewise fails.

Accordingly I must dismiss the motion and action in this matter.