By Maeve Rowan
The High Court has upheld the striking out of proceedings brought by the owner of 22 student apartments at St Angela's Student Residence in Clogherrevagh, County Sligo, against two directors of the development's management company.
Consortio Limited owns 22 of the 72 apartments and holds about 30.5% of St Angela's Management Company Ltd, the owners' management company. It sued Jeremiah Lynch and Edward Lynch personally, alleging that their control of the management company had resulted in apartment owners being charged legal costs which Consortio said should not form part of the development's service charges.
The disputed costs relate to separate High Court litigation involving the management company and Slishwood Property Holdings Ltd concerning claimed rights to use facilities on adjoining college lands. Consortio alleged that the litigation principally benefited Slishwood and that the management company should not have been funding it through service charges.
The Circuit Court struck out Consortio's case. Its appeal to the High Court was heard afresh.
Mr Justice Dunne held that the case had a fundamental problem concerning who should sue and who should be sued. Claims that the management company itself had imposed unlawful service charges were claims against that company, which Consortio had deliberately not joined as a defendant.
Separately, allegations that Lynch and Lynch breached duties owed as directors were claims belonging to the management company. Directors generally owe those duties to the company rather than individual shareholders. If Consortio wished to pursue such a claim where those controlling the company prevented it from suing, the appropriate route was a derivative action brought with permission of the High Court.
The judge rejected arguments that the Multi-Unit Developments Act 2011 created a direct claim against the directors or that the corporate veil could be lifted to save the proceedings.
The appeal was refused and the Circuit Court order striking out the entire case was affirmed. Costs and final orders were left for a later hearing.