knowledge 28 October 2021 |

High Court Provides Clarity on the Types of Multi-Party Actions Which May be Pursued in the Irish Courts

Background

Order 15, r. 1(1) of the Rules of the Superior Courts, 1986 is a procedural rule of court which enables multiple claimants to be joined in one action where their claims arise out of:

1. the same transaction or series of transactions; and
2. a common question of law or fact arises.

The rule is one of a number of procedural options available to litigate multi-party claims in Ireland. The application of this rule was considered in a recent decision of the High Court, Faxgore Limited (In Liquidation) v Companies Act 2014 (“Faxgore”).¹

Case before the court

In Faxgore, an application was made for leave to issue proceedings against Faxgore Limited (in liquidation) and Spencer Dock Development Company Limited (in liquidation) (together, the “Respondents”).  The application was made pursuant to s. 678 of the Companies Act, 2014, which requires that leave be obtained from the court in advance of commencing proceedings against a company which is in liquidation. The application was brought on behalf of 832 intended plaintiffs, whose claims arose from alleged design and construction defects in respect of 616 apartments in the Spencer Dock Development. The applicants all had latent defects cover insurance policies, and the application was brought by their insurer on their behalf.

One of the objections raised against the grant of leave by the liquidators for the Respondents was that the proceedings had been constituted inappropriately under Order 15, r. 1(1). In reliance on that rule, one summons had been issued on behalf of the multiple intended plaintiffs. The basis for the liquidators’ objection was that the damage had become manifest in the various apartments at different times, and issues relating to the operation of the statutory limitation period would therefore differ in each of the claims.

In support of their objection, the liquidators for the Respondents relied on Mr Justice O’Moore’s decision in the recent case of Greffrath v Greymountain Management Ltd (in liquidation) (“Greffrath”).² In Greffrath, 35 individual claimants who invested money after receiving unsolicited phone calls brought a single set of proceedings alleging fraud against six individual defendants. The court’s judgment related to an application made by certain defendants to stay or strike out the proceedings as they involved separate claims, rather than claims arising from the same transaction or series of transactions, so could not proceed as a single set of proceedings. The court in Greffrath held that although there was a degree of similarity between the claims, the claims arose out of “entirely discrete transactions”, as opposed to a series of transactions. The claims could not proceed therefore under Order 15, r. 1(1) as one set of proceedings.

In the decision of the court in Faxgore, Stack J distinguished the proceedings from Greffrath on the basis that the claims of the 832 applicants related to the same development, developed by the same company, retaining the same firm of architects, the same firm of engineers and the same building contractors, as opposed to separate, individual transactions. The court was of the view that it was “absolutely inevitable” that there would be common issues of fact in relation to each of the claims. Insofar as separate issues might arise in relation to the Statute of Limitations, it seemed at present that they would turn not on any different issue of law, but on the different factual circumstance of when any alleged defects first became manifest.

The court was also of the view that the applicants’ claims in negligence relating to the construction of the buildings were matters arising out of the same transaction and their claim in contract rose out of the same series of transactions, based on the fact that they had entered into long leases with identical terms. Stack J found that unlike in Greffrath, the applicants were truly “in the one boat”, as their claims were inextricably linked to the alleged defects in the Spencer Dock Development. The court therefore concluded that the proceedings were properly constituted under Order 15, r. 1(1).

Comment

Order 15, r. 1(1) offers a basis for pursuing multi-party actions, and Faxgore provides an example of the types of multi-party claims in which the rule may be invoked. However, the limited scope of the rule leaves open the possibility of challenge to its applicability. While there are a limited number of other avenues available to litigants, the October 2020 Review of the Administration of Civil Justice³ recommended the introduction of a comprehensive multi-party action procedure in Ireland and it is hoped that this will be a reform priority of the Irish legislature.

Also contributed by Sadhbh Kelleher.