The Court of Appeal has remitted a dispute between Michael Begley and John Lally to the High Court to determine whether they had a collateral contract and whether Lally breached it. The proceedings return for that issue to be heard after the appeal court set aside the trial judge’s finding of breach and the damages award against Lally.
The court delivered its judgment on 19 March 2021, following its earlier decision of 26 June 2020. It had found there was sufficient evidence on which the trial judge could find that a collateral contract existed. But it also held that the High Court had no jurisdiction to decide that issue because Begley had not advanced the claim and Lally had not had a fair opportunity to address it.
Lally opposed remittal. He argued that a new High Court judge could be constrained by the appeal court’s view of the evidence, and that amending Begley’s claim would introduce new facts and a claim that was statute-barred. The Court of Appeal rejected the first objection, explaining that its earlier decision found only that there was evidence capable of supporting the trial judge’s finding; it did not require a High Court judge to reach that conclusion.
The court said the real controversy was whether the parties had a collateral contract. It considered the pleaded facts as a whole, including claims of breach of contract, breach of covenant and nuisance against Lally. It concluded that the case should return to the High Court, where the proposed amendment and any limitation defence could be considered fairly.
The Court of Appeal allowed Begley to amend his statement of claim to plead breach of a collateral contract. Lally may amend his defence in response. The High Court can decide whether the amended claim arises from the facts already pleaded or substantially the same facts, and whether the Statute of Limitations applies, either as a preliminary issue or at trial.
Lally was awarded the costs of the appeal, including the submissions on remittal and costs. The Court of Appeal reserved the costs of the first High Court trial for the High Court to decide at the end of the proceedings. It also ordered a stay of execution on the costs award until those proceedings are determined.