The High Court has refused an application by Grace Healthcare (Holdings) Ireland Limited to strike out warranty claims brought by Seamus Brady and Derry Shaw in a dispute over the sale of shares in a company that owned a nursing home.
In a judgment delivered on 15 September 2023, Ms Justice Bolger ruled that the counterclaim should remain in the proceedings at this interlocutory stage. She made no finding on whether the warranty claim was barred by the parties’ agreement or whether it challenged a binding determination by an independent expert. She said those issues were more appropriately addressed at trial.
The dispute arose from a share purchase agreement under which the defendants retained €500,000 pending finalisation of completion accounts. The agreement required notice of warranty claims by 17 October 2020 and the issue and service of proceedings by 21 May 2021, according to the judgment. The plaintiffs began proceedings in June 2020 seeking €500,000. Grace Healthcare accepted it had no bona fide defence to that claim, and the money was lodged in court under a July 2021 consent order.
The defendants delivered their counterclaim on 26 July 2021, claiming an indemnity and breach of warranty. The plaintiffs argued the warranty claims should be excluded because of the agreement’s time limits and because they allegedly undermined the expert’s determination of the completion accounts.
The judge said the plaintiffs had not met the burden required to exclude the counterclaim under the court rules. She found there was a case to be made that the plaintiffs had a duty to speak up while the parties were dealing with the expert process and before the contractual deadline they relied on had passed. The plaintiffs later agreed to a consent order that provided for the counterclaim to be delivered and for the lodged money to be dealt with in accordance with its outcome. The judge left the effect of that engagement, and the agreement’s time limit, for the trial judge to decide.
She also found the plaintiffs had identified no tangible prejudice from allowing the warranty claim to proceed. By contrast, the defendants would face the real prejudice of being unable to pursue the claim because of the passage of time if it were struck out. The parties also disagreed over whether the warranty sums were covered by the expert’s remit, an issue the judge said should be resolved at trial.
The court refused the strike-out application. Its indicative view was that the defendants should receive their costs of the application, with execution stayed until the entire proceedings are resolved. The judge listed the matter for further submissions on costs and final orders on 10 October 2023.