Victoria Hall Management Ltd & Ors v Cox & Ors (Approved)

Factual and Procedural Background

The court previously delivered a Principal Judgment on 26 November 2024 concerning a dispute where the first named defendant was found to owe fiduciary duties to the first five plaintiffs and to have breached those duties by concealing a commercial opportunity to develop a student accommodation scheme at Gardiner Street and diverting its profits to himself and co-defendants. No cause of action was found against the third to eighth named defendants. This subsequent judgment addresses the form of the remedy and costs following the Principal Judgment, focusing on the position of the sixth plaintiff and the accounting for profits related to the Gardiner Street Scheme. The defendants intend to apply for a stay pending appeal of the Principal Judgment.

Legal Issues Presented

1. Whether the sixth named plaintiff is entitled to relief given the lack of privity of contract and absence of involvement in the student accommodation scheme.
2. The nature and scope of the remedy of accounting for profits versus disgorgement in the context of breach of fiduciary duty.
3. The extent to which the Carrowmore defendants are liable to account for profits and hold those profits on constructive trust for the plaintiffs.
4. The appropriate allocation of costs among the numerous parties, including whether costs should be awarded on a legal practitioner and client basis.

Arguments of the Parties

Plaintiffs' Arguments

• The remedy following the breach of fiduciary duty requires the first named defendant to account for all profits earned on the Gardiner Street Scheme, with interest.
• The plaintiffs are entitled to receive a verified narrative account of profits before electing between disgorgement and damages.
• All profits earned and held by the Carrowmore defendants should be held on constructive trust for the plaintiffs, extending the fiduciary liability to these companies.
• The third to eighth defendants should pay costs despite some being dismissed, due to their association with unsuccessful defences involving unpleaded allegations of fraud and other misconduct.
• Costs should be awarded on a legal practitioner and client basis to mark disapproval of the defendants’ conduct, especially regarding unpleaded allegations and abuse of process.

Defendants' Arguments

• The sixth named plaintiff lacks privity of contract and any relevant involvement, so its claim should be dismissed.
• The obligation of the Carrowmore defendants to account should be limited to profits attributable to Mr. Cox's shareholding interest.
• The Carrowmore defendants are distinct entities with independent shareholders and are not mere cloaks for Mr. Cox; thus, fiduciary breaches should not be attributed to them.
• Third to fifth defendants, having succeeded on the merits, are presumptively entitled to their costs.
• Sixth, seventh, and eighth defendants should recover costs from the plaintiffs as they were successful defending claims against them.
• All defendants should recover costs against the sixth plaintiff, whose claim is dismissed.
• The award of costs on a legal practitioner and client basis is not justified given the conduct of the parties.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Island Records Limited v Tring International plc [1996] 1 WLR 1256	Right of election between remedies requires access to sufficient information; court may defer judgment to allow informed election between damages and account of profits.	Supported the court's order requiring defendants to provide verified accounts of profits before plaintiffs elect remedy.
Green v Bertobell Industries Pty Limited [1983] WASC 144	Extension of fiduciary liability and account of profits to companies wholly owned and controlled by fiduciaries.	Distinguished on facts; companies here are not wholly controlled by fiduciaries, so liability does not extend similarly.
Quarter Master UK Limited (In Liquidation) v Pyke and Others [2004] EWHC 1815	Imputation of fiduciary knowledge and liability to companies formed and controlled by fiduciaries.	Distinguished due to presence of third-party interests in companies; no imputation of fiduciary breach to Carrowmore defendants.
Chubb European Group SE v. Health Insurance Authority [2022] I.R. 734	Principles governing costs awards under Legal Services Regulation Act 2015 and Rules of Superior Courts.	Guided the court's exercise of discretion in awarding costs, emphasizing conduct, success, and reasonableness.
Trafalgar Developments Ltd v. Mazepin [2020] IEHC 13	Discretion to award costs on solicitor (legal practitioner) and client basis as a mark of disapproval for improper conduct.	Informed court's approach to considering elevated costs awards; court declined such award here.
Hand v. McGregor (5 December 2024)	Exercise of discretion to award elevated costs should be sparing and reserved for serious misconduct.	Supported refusal of legal practitioner and client costs despite some inappropriate conduct.

Court's Reasoning and Analysis

The court reaffirmed that the sixth named plaintiff lacks the contractual relationship and involvement necessary to benefit from the breach of fiduciary duty finding, resulting in dismissal of its claim. It clarified the distinction between an order to account for profits (providing a verified narrative of profits) and disgorgement (actual payment of profits to plaintiffs), endorsing the plaintiffs' submission that the former must precede election of remedy. The court ordered the first and second defendants and the Carrowmore defendants to furnish verified accounts of profits related to the Gardiner Street Scheme, acknowledging that the defendants agreed to provide such accounts but contested the scope regarding the Carrowmore defendants.

Regarding disgorgement and constructive trust, the court analyzed the Principal Judgment in full and concluded that only the first and second defendants hold the profits on trust for the plaintiffs. The Carrowmore defendants, having independent shareholders and no fiduciary relationship with the plaintiffs, are not liable beyond accounting for profits attributable to the first and second defendants’ interests. The court distinguished relevant case law where fiduciaries wholly controlled the companies receiving profits, noting that here third-party interests negate such extension of liability.

In relation to costs, the court applied the Legal Services Regulation Act 2015 and Rules of Superior Courts, considering the conduct of parties and success in the proceedings. It rejected plaintiffs’ submissions seeking costs against third to fifth defendants and sixth to eighth defendants despite their unsuccessful claims against them, finding no justification to depart from the presumption that successful defendants recover costs. The court accepted that the first and second defendants should pay costs to the first five plaintiffs but declined to award costs on a legal practitioner and client basis, balancing the defendants’ improper conduct in raising unpleaded allegations with certain unsatisfactory aspects of plaintiffs’ evidence. The court emphasized the discretion to award elevated costs sparingly and reserved for serious misconduct.

Holding and Implications

The court’s final decision is as follows:

• The claim of the sixth named plaintiff is dismissed.
• Orders are made requiring the first and second defendants and the Carrowmore defendants to provide verified accounts of profits earned on the Gardiner Street Scheme.
• The first and second defendants hold the profits on trust for the first five plaintiffs and must account and pay those profits with interest.
• No cause of action is made out against the third to eighth defendants beyond what is necessary to give effect to orders against the first and second defendants.
• Costs are awarded as follows:
  • The first and second defendants must pay the costs of the first five plaintiffs on a party and party basis.
  • The first to fifth plaintiffs must pay the costs of the sixth, seventh, and eighth defendants on a party and party basis.
  • The sixth plaintiff must pay the costs of the first, second, sixth, seventh, and eighth defendants on a party and party basis.
  • No order for costs is made in respect of the third, fourth, and fifth defendants.
  • No award of costs on a legal practitioner and client basis is made.

The decision directly affects the parties’ financial liabilities and obligations to account for profits but does not establish new legal precedents. The court’s approach clarifies the application of fiduciary duty principles to corporate entities with independent shareholders and the procedural requirements for election of remedies following breach of fiduciary duty findings.