Mc Inerney Homes & Ors v Companies Acts

Factual and Procedural Background

This opinion concerns examinership proceedings under the Companies (Amendment) Act 1990 involving several related companies collectively referred to as the Appellant. The court had previously delivered a Principal Judgment refusing to confirm a proposed scheme of arrangement, concluding that the scheme was unfairly prejudicial to a syndicate of banks ("the Banking Syndicate") that opposed it. The Banking Syndicate had proposed a long-term receivership model expected to yield a significantly higher income stream over 10 to 11 years compared to the scheme's offer.

Subsequent to the Principal Judgment, the Appellant sought to revisit that decision based on new evidence indicating a high probability that two members of the Banking Syndicate, Bank A and Bank B, would transfer their loans to the National Asset Management Agency ("NAMA"). This potential transfer would likely preclude the implementation of the long-term receivership model, which was central to the Banking Syndicate's case and the court's original decision.

The court considered the procedural history following the Principal Judgment, including the adjournment to allow parties to consider the judgment and the filing of affidavits supporting the Appellant's application to revisit the decision. The court also discussed the jurisdictional basis for revisiting a judgment before the formal order is made.

Legal Issues Presented

1. Whether the court has jurisdiction to revisit its own judgment prior to the formal sealing of the order, particularly in light of new evidence or arguments.
2. Whether the new evidence regarding the probable transfer of loans to NAMA materially affects the fairness assessment of the proposed scheme of arrangement.
3. Whether the new evidence could reasonably have been presented at the initial hearing leading to the Principal Judgment.

Arguments of the Parties

Appellant's Arguments

• The Appellant contends that new evidence, consisting of recent communications from Bank A's legal services, strongly indicates that loans held by Bank A and Bank B will be transferred to NAMA shortly.
• This transfer would likely prevent the long-term receivership model proposed by the Banking Syndicate from being implemented, undermining the basis of the Principal Judgment.
• The Appellant asserts that this evidence only became available after the Principal Judgment, preventing it from being presented during the original hearing.

Banking Syndicate's Arguments

• The Banking Syndicate acknowledges ongoing due diligence with the Appellant but asserts that the acquisition decision by NAMA was deferred until the conclusion of the examinership proceedings.
• They maintain that the loans will not transfer to NAMA prior to the end of the examinership, as confirmed by internal communications and legal advice.
• The Banking Syndicate contends that the Appellant was aware of the NAMA possibility from the outset and could have raised it during the initial hearing.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Lynagh v Mackin [1970] I.R. 180	Admission of new evidence at appellate stage under stringent conditions.	Referenced to illustrate the court's approach to admitting new evidence when proceedings are not final.
Murphy v. Minister for Defence [1991] 2 I.R. 161	Admitting new evidence on appeal with discretion exercised sparingly.	Used to support the principle that new evidence may be admitted if stringent criteria are met.
Paulin v. Paulin & Anor [2010] 1 WLR 1057	Jurisdiction of a judge to revisit a judgment before sealing the order; requirement of "strong reasons".	Central authority guiding the court’s jurisdiction to revisit its own decision in the instant case.
In re Suffield and Watts (1888) 20 QBD 693	Judge’s jurisdiction to reverse decision prior to order perfection.	Supports the principle that reversal is permissible before sealing but not after.
Stewart v. Engel [2000] 1 WLR 2268	Limits on revisiting reserved judgments; "Barrell jurisdiction".	Used to explain the narrowing of circumstances allowing judgment reversal before sealing.
In re Barrell Enterprises [1973] 1 WLR 19	Establishment of "exceptional circumstances" test for reversal prior to sealing.	Defines the standard that "strong reasons" or exceptional circumstances are required to revisit a judgment.
Pittalis v. Sherefettin [1986] 1 QB 868	Critique of strict limitation on jurisdiction to reverse judgment.	Suggests the exceptional circumstances test may be flexible in application.
Compagnie Noga D'Importation et D'Exportation SA v. Abacha [2001] 3 All ER 513	Alternative "strong reasons" test balancing interests of justice.	Supports a flexible approach to allowing reversal based on justice rather than rigid rules.
Robinson v. Fernsby [2004] WTLR 257	Application of "exceptional circumstances" and "strong reasons" tests.	Endorses the preference for a "strong reasons" approach in reviewing judgments before sealing.
Miller's Case (1876) 3 Ch. D 166	Jurisdiction to revisit judgment where material facts were not before the court.	Illustrates circumstances justifying reopening due to newly discovered material facts.
Millensted v. Grosvenor House (Park Lane) Ltd [1937] 1 KB 717	Judge revising damages award post-judgment but pre-order sealing.	Example of a judge changing mind prior to formal order without further argument.
Dietz v. Lennig Chemicals Ltd [1969] 1 AC 170	Reopening settlement approval due to material undisclosed facts.	Supports reopening where significant facts were unknown at judgment time.
In Re Vantive Holdings Ltd [2009] IESC 69	Limits on re-petitioning and finality in examinership proceedings.	Analogous reasoning applied to revisiting judgments in examinership context emphasizing finality and responsibility.
AA v. the Medical Council	Wider discretion in abuse of process cases compared to strict res judicata.	Supports the court’s discretion to reopen matters where justice demands, despite finality concerns.
Henderson v. Henderson (1843) 3 Hare 100	Principle preventing re-litigation of matters that could have been raised earlier.	Applied by analogy to emphasize responsibility to present full case initially.
Dellway v. NAMA & Ors [2010] IEHC 364	Analysis of NAMA's statutory powers and contractual position post-loan acquisition.	Used to explain the legal context of loans transferred to NAMA and their effect on contractual relations.

Court's Reasoning and Analysis

The court began by addressing the jurisdiction to revisit its own judgment prior to the sealing of the formal order. It reviewed relevant authorities and concluded that the court possesses such jurisdiction but should exercise it only for "strong reasons" or in "exceptional circumstances." The court distinguished this from reopening cases after finality or on appeal, noting the necessity of finality in litigation to prevent procedural chaos.

Turning to the substance, the court acknowledged that the Principal Judgment was based on a realistic likelihood that the Banking Syndicate would pursue a long-term receivership model, which would yield a higher return than the proposed scheme of arrangement. The new evidence suggested a high probability that loans held by two syndicate members would be transferred to NAMA, which would likely prevent the receivership model from proceeding.

The court emphasized that while the transfer of loans to NAMA does not materially alter the contractual terms for one syndicate member, the critical issue is whether this transfer reduces the likelihood of the receivership model being implemented. This factor is material to assessing whether the scheme is unfairly prejudicial.

The court found the new evidence credible and potentially significant, warranting reconsideration. However, it also found that the Appellant bore responsibility for not raising the NAMA issue earlier, as the possibility was known and could have been addressed during the initial hearing. Similarly, the Banking Syndicate bore some responsibility for not disclosing the likelihood of the transfer, which could have misled the court and the Appellant.

Balancing these considerations and guided by principles of justice and procedural fairness, the court concluded that reopening the matter was warranted. Nonetheless, the court noted that the current evidence was insufficient to reach a final determination on the likelihood of the receivership model proceeding and directed that further evidence be submitted for a resumed hearing focused solely on this issue.

The court stressed that the assessment must be substantive rather than formal, requiring a realistic evaluation of the likelihood of events rather than reliance on formal denials or positions.

Holding and Implications

The court's final ruling is to REOPEN the proceedings to allow further evidence and submissions on the likelihood that the long-term receivership model will be implemented, considering the potential transfer of loans held by two syndicate members to NAMA.

This decision directly affects the parties by permitting a reconsideration of the fairness of the proposed scheme of arrangement in light of new material evidence. The court did not set any new precedent but applied established legal principles regarding jurisdiction to revisit judgments and the admission of new evidence prior to final orders. The ruling underscores the importance of full disclosure and diligence by parties in presenting their case at the earliest opportunity to ensure procedural finality and fairness.