Supporting Documents:
 
THE SUPREME COURT
DETERMINATION MARGARET BRENNAN PLAINTIFF / APPLICANTS AND
THOMAS FLANNERY CATHERINE FLANNERY
T & C DEVELOPMENTS LIMITED
THE NATIONAL HOUSE BUILDING GUARANTEE COMPANY LIMITED SEAMUS QUINN AND MIDLAND DESIGN SERVICES LIMITED DEFENDANTS
APPLICATION FOR LEAVE TO APPEAL TO WHICH ARTICLE 34.5.3° OF THE CONSTITUTION APPLIES
RESULT: The Court does not grant leave to the applicant to appeal to this Court from the Court of Appeal
1. This determination concerns an application by the plaintiff, Margaret Brennan, in which she seeks leave to appeal from the Court of Appeal. In accordance with Article 34.5.3 of the Constitution, the Court must, before giving such leave, be satisfied that the issues sought to be raised either involve a matter of general public importance, or alternatively that it is otherwise in the interests of justice that an appeal to this Court be permitted.
2. The consequence of promulgation and enactment by the People of Article 34 of the Constitution has been generally considered by this Court in Fox v. Mahon & Others [2015] IESC DET 2. This determination is based on the relevant principles set out in that determination. Specifically, and as is pointed out in Fox, it is a general principle that, save in exceptional circumstances outlined in Fox v. Mahon, the Court of Appeal is to provide the avenue for appeals from the High Court, and that its decision is to be final, save where there is a point of general public importance, or it is in the public interest that it should be determined further by this Court.
3. On the 19th November, 2014 a division of the Court of Appeal, (Finlay-Geoghegan J. presiding, Irvine J., Mahon J.), directed that an issue be tried as to whether the first named defendant in the proceedings, Thomas Flannery, and the second named defendant, Catherine Flannery, (Mr. and Mrs. Flannery), were personally liable for damages and costs awarded by the High Court in an order dated the 15th May, 2013. The Court of Appeal directed that this issue should be determined before any other issue in the appeal.
4. On the 9th March, 2015, the Court of Appeal (Kelly J. presiding; Irvine J., Mahon J.) delivered its judgment on this question now appealed. The Court held that Thomas Flannery, and Catherine Flannery, were not personally liable to the plaintiff, who now appeals that determination by the Court of Appeal on the preliminary issue.
5. The situation is this, Margaret Brennan, the plaintiff, commenced an action in 2003 against a series of defendants. The first three defendants were, (as now), Thomas Flannery, Catherine Flannery and T. & C. Developments. The other defendants included the National House Building Guarantee Company Ltd. Prior to the judgment of the Court of Appeal, a division of the Court of Appeal upheld an appeal brought by the National House Building Guarantee Company Ltd., and reduced the entitlement of Mrs. Brennan to damages against that company. It did so because it held there was an upper limit in the guarantee bond, which was executed in respect of the dwelling, the subject of the proceedings. The Court of Appeal concluded the trial judge wrongly awarded an amount in excess of that upper limit.
6. The matter which arises for decision herein now relates to the same general background of facts.
7. On the preliminary issue of the first and second defendants’ liability, the Court of Appeal found that, in November, 1999, Mrs. Brennan entered into two contractual agreements. She agreed with Mr. and Mrs. Flannery, the first and second defendants, for the purchase by her of a site of land, identified by contract, for a sum of £5,000. On the same day, she entered into a building agreement. In the Court of Appeal, Kelly J., speaking for the Court, held that this second agreement was, on its face, made between Mrs. Brennan and the third defendant, T. & C. Developments Limited (the company). The contract price was specified to be the sum of £80,000. Under the terms of the agreement, the company was to build the house on behalf of Mrs. Brennan.
8. Mrs. Brennan found that the house was defective. She brought an action to the High Court. It was heard by the High Court. The High Court judge’s first decision was the subject of the appeal aforesaid brought by the National House Building Guarantee Company Ltd. That judgment was directed only to the issue between Mrs. Brennan and the National House Building Guarantee Company Ltd. The issue concerning Mr. and Mrs. Flannery was heard subsequently.
9. On a subsequent date, Mr. and Mrs. Flannery did not appear in Court. The High Court was satisfied as to service of the documents and their awareness of the proceedings. It granted, in default of appearance, joint and several judgments against Mr. Thomas Flannery, his wife, Catherine Flannery, and T. & C. Developments Ltd. The judgment of the High Court was short and ex tempore, in default of appearance. Mr. and Mrs. Flannery appealed.
10. The Court of Appeal held that there had been two separate and distinct agreements entered into. First, was the land purchase agreement; second, the building agreement. Mrs. Brennan sued the Mr. & Mrs. Flannery and the company. The Court of Appeal held that the building agreement was with the company alone. It held that the defects in the building which resulted in the decree were brought about as a result of the failures on the part of the company. It held, further, that the only contractual nexus between Mrs. Brennan and Mr. and Mrs. Flannery was in respect of the land sale agreement, for which they were paid £5,000. The company was paid £80,000 for its work.
11. Kelly J. in the Court of Appeal held:
“The whole notion of establishing a limited liability company is to produce the result that the liability of the persons who are the shareholders of the company is limited. That is the danger of contracting with a limited liability company. But a company is a separate and distinct legal person from its shareholders and directors.”
12. The Court of Appeal held that what had occurred was a breach of the building agreement. It held that no case had been made out against the individual defendants, Thomas and Catherine Flannery, as opposed to the company in which they were shareholders. It also held that the High Court had failed to make any distinction between two separate agreements which were entered into. Ultimately, it concluded, that any remedy in respect of the defective construction must be against the company, and not against Mr. and Mrs. Flannery.
13. As a consequence, it held, on the preliminary point, of liability, that the defendants, Mr. and Mrs. Flannery, were not personally liable for the damages and costs awarded by the High Court on the 15th May, 2013.
14. A number of points are now made by Mrs. Brennan in her application for leave to appeal to this Court. In summary, she contends:
(a) That the company was simply the vehicle through which the respondents sought to construct the property, and should not be used as a “protective buffer” when she sought redress from Mr. and Mrs. Flannery.
(b) That it would be unconscionable to allow Mr. and Mrs. Flannery to hide behind the corporate veil in circumstances where the property was constructed with sub-standard materials, poor workmanship and in contravention of building regulations and planning permission.
(c) That these poor standards were as a result of the actions or negligence or breach of contract of the respondents.
(d) That in the circumstances the corporate veil should be lifted.
(e) That there was an implied warranty that the house should be fit for habitation, and that this was a “tripartite warranty”, which must be taken to have been personally given to the appellant.
(f) That Mr. and Mrs. Flannery retained personal control over the construction and any power of variation in the property at all times.
(g) That the Court of Appeal erred in not permitting a modification of the rule in Salomon v. Salomon & Company Limited [1897] AC 22.
(h) That the Court of Appeal erred in delimiting or preventing the appellant from adducing evidence other than the booklets of title to the property in order to establish a personal liability on the respondents, thereby failed to assess the manner in a broad and “holistic” way.
15. On this basis, it is said that the issues of law sought to be appealed from the Court of Appeal go to the very kernel of the issues between the parties. The appellant contends, that if she established that the Court of Appeal erred in their determination, then she would be able to fix Mr. and Mrs. Flannery personally with the liability for damages and costs.
Consideration
16. The matter for consideration which comes before this Court now devolves upon a body of established jurisprudence, in particular Fox v. Mahon. But, primarily, what is before this Court for determination are simple questions. Is the question one of “general importance”; or is it in the “public interest” that the matter should be determined by this Court? The Court is not persuaded that the application herein fulfils either of these criteria. This is, pre-eminently, a case which stood on its own facts. No substantive basis has been established as to why the rule in Salomon v. Salomon should be modified or varied. Indeed, it is not clear that this point was argued before the Court of Appeal. In its essence, therefore, this decision concerns the declaration of the Court of Appeal in an action for breach of a building contract, made between the appellant, on the one hand, and, the company, on the other hand. The High Court has held that Mrs. Brennan suffered a loss as a result of this defective construction work. But the question of liability, and specifically, as to whether or not liability can be attached to Mr. and Mrs. Flannery, seems now, to this Court, to be a question of individual facts applied in the individual circumstances of the case. It does not appear to the Court that there is here any question of general importance, nor that it is in the public interest that it should be determined. This is, in its essence, a determination of the Court of Appeal, on a matter standing on its own facts, and on the basis of the application of well established legal principles, which do not appear, from the judgment at least, to have been the subject of any criticism in that court. No legal basis for distinguishing Salomon has been referred to. In the circumstances, the Court must conclude that the application for leave must be declined.
And it is hereby ordered accordingly.
|