Moorview Developments & Ors -v- First Active PLC & Ors

Factual and Procedural Background

This judgment is the thirteenth in a series of cases arising from the collapse of a group of companies collectively referred to as the Cunningham Group. The main proceedings involved claims brought by companies in the Cunningham Group against defendants First Active Plc, an individual referred to as Mr. Jackson, and another individual referred to as Mr. Duffy. First Active Plc filed a counterclaim against four of the Cunningham Group companies relating to monies allegedly due from loans advanced and cross guarantees concerning indebtedness.

Separately, First Active brought proceedings against an individual, Mr. Cunningham, on foot of a guarantee he provided. These matters were case managed to be tried together. Issues arose about whether the Cunningham Group and Mr. Cunningham could raise certain defenses previously determined in earlier judgments, with the court concluding that res judicata barred such defenses.

This judgment addresses the remaining issues from the counterclaim and the guarantee claim against Mr. Cunningham personally.

Legal Issues Presented

1. Whether the evidence presented by First Active was adequate to establish the indebtedness of the Cunningham Group companies subject to the counterclaim.
2. Whether specific amounts included in the counterclaim were properly claimed.
3. Whether the guarantee provided by Mr. Cunningham was effective given a discrepancy in the name of the company referenced in the guarantee document.

Arguments of the Parties

Appellant's Arguments

• The Cunningham Group challenged the adequacy of First Active’s evidence regarding the indebtedness of the companies.
• They argued that credit should be given for the value of properties secured by First Active when calculating the debt owed.
• They suggested the residential portion of a development (Salthill) was sold at an undervalue, overstating liabilities.
• They questioned whether some proceeds of sale were properly credited to the Cunningham Group companies’ accounts.
• They raised concerns about the evidential sufficiency regarding expenditures by the receiver and mortgagee in possession.
• They argued that the guarantee was ineffective because it referred to a non-existent company, Moorview Properties Limited, rather than Moorview Developments Limited.

Appellee's Arguments

• First Active contended that the guarantee’s reference to Moorview Properties Limited was a clear mistake and should be corrected to Moorview Developments Limited under established principles of contractual construction.
• They submitted that the evidence, primarily from Mr. Collison, was sufficient and credible to establish the indebtedness of the Cunningham Group companies.
• They argued that credit for secured properties is only given upon actual realization of the security, not hypothetically.
• First Active maintained that the apportionment of the sale price between residential and commercial portions was reasonable and supported by evidence.
• They asserted that the expenditures by the receiver and mortgagee in possession were properly recorded and formed part of the secured liabilities.
• First Active relied on contractual provisions allowing certification by an authorized officer as binding evidence of the secured liabilities.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by addressing the guarantee issue, concluding that the reference to "Moorview Properties Limited" was a clear and obvious mistake, as no such company existed and all relevant dealings were with "Moorview Developments Limited." Applying established principles of contractual construction and correction of mistakes, the court held that the guarantee should be construed as referring to Moorview Developments Limited.

Regarding the counterclaim, the court found the evidence presented by Mr. Collison, an authorized officer of First Active, credible and sufficient. Mr. Collison personally compiled detailed schedules from the bank’s records, and the court rejected suggestions that his evidence was unreliable despite a single minor error.

The court also rejected the Cunningham Group’s argument that credit should be given for the hypothetical value of secured properties before actual realization, affirming that the debt remains until realized and credited accordingly.

On the issue of the alleged undervalue sale of the residential portion of the Salthill development, the court found no evidence to support the Cunningham Group’s claim that the apportionment of the sale price was inappropriate. The court noted the complexity and changes in the sale price allocation and accepted First Active’s evidence that the apportionment was reasonable.

The court addressed concerns about proper crediting of minor sale proceeds by allowing First Active to file affidavit evidence to clarify those matters, with the possibility of cross-examination if justified.

Finally, the court dealt with complaints about expenditures by the receiver and mortgagee in possession, finding that expenditures were properly advanced to the companies and recorded as liabilities. The court emphasized that a bank witness need not have personal involvement in every transaction to give credible evidence of the bank’s records, which constitute prima facie evidence of indebtedness.

The court noted that the Cunningham Group had previously asserted the indebtedness in the main proceedings and thus could not credibly deny it in the counterclaim.

Overall, the court found the Cunningham Group’s defenses largely without merit and expressed concern about the repeated raising of unsubstantiated points, cautioning against wasting court resources.

Holding and Implications

The court UPHELD First Active Plc’s counterclaim against the Cunningham Group companies and its claim on the guarantee against Mr. Cunningham personally.

The guarantee was held to be effective despite the mistaken company name, corrected by construction to refer to the correct entity. The evidence was sufficient to establish the indebtedness claimed, and the Cunningham Group’s arguments to reduce the amounts were rejected.

This decision results in the Cunningham Group and Mr. Cunningham being liable to pay the sums claimed by First Active, subject only to minor matters requiring further affidavit evidence. The ruling does not establish new legal precedent but confirms the application of established principles concerning contractual construction, evidential sufficiency, and secured debt recovery in the context of complex commercial litigation.