The Court of Appeal has dismissed two appeals by Eugene McCool over attempts to take over a €11 million claim brought by McCool Controls and Engineering Ltd against Honeywell Control Systems Ltd. It also dismissed Honeywell’s cross-appeal over the costs of the second application.
The dispute concerns an alleged agreement giving McCool Controls exclusive rights to distribute and install Honeywell products in Ireland. The company alleges Honeywell cut it out of a Wyeth pharmaceutical plant project in Clondalkin around 2000, causing substantial losses. Honeywell denies the claim and says the work fell outside the agreement or within its exceptions. It also relies on an alleged 2002 settlement and counterclaims for €134,052.97 for goods sold and delivered. Those claims have not been decided in these appeals.
The appeals concerned who could pursue the company’s case, not whether either side was liable. The company had been unable to fund legal representation. McCool, its director and majority shareholder, sought to be substituted as plaintiff under assignments of the proceedings made in 2017 and 2018. He said he had a close connection to the company and was seeking to protect it and bring the case to trial.
In the first appeal, the Court of Appeal upheld the High Court’s decision to discharge the Master’s order substituting McCool for the company, refuse his application to join as co-plaintiff and dismiss his application to strike out Honeywell’s pleadings. The appeal court agreed that the first assignment was a device intended to circumvent the rule that a company must be represented by a lawyer, and was an abuse of process. It also upheld the High Court’s alternative conclusion that the assignment was invalid because it savoured of champerty, including because it contemplated onward assignment. The court said a shareholder could fund the company’s litigation, but that did not make this assignment valid.
The second assignment removed the clause expressly allowing onward assignment. However, the Court of Appeal upheld the High Court’s refusal to substitute McCool on the ground of issue estoppel: the first decision had already determined that using an assignment in these circumstances was a device to avoid the company representation rule. The appeal court considered that the second application raised no material change to that issue. It did not need to decide whether the second assignment was itself champertous.
Honeywell’s cross-appeal sought solicitor-and-own-client costs for the second application. The Court of Appeal upheld the High Court’s decision to award costs on the usual party-and-party basis, finding no error in the judge’s exercise of discretion. The appeal court proposed party-and-party costs for Honeywell in both appeals and no order on the cross-appeal costs, subject to any further costs submissions within 14 days.