The High Court has set aside an order substituting Eugene McCool for McCool Controls and Engineering Limited (MCC) as plaintiff in its long-running dispute with Honeywell Control Systems Limited. Mr Justice Noonan held that the assignment of MCC’s claim to Mr McCool was invalid and dismissed his application to be substituted as plaintiff.
The underlying proceedings concern MCC’s allegations that Honeywell breached a 1998 agreement by securing work on a pharmaceutical plant project in Clondalkin without MCC. MCC claimed losses estimated by Mr McCool at about €11 million. Honeywell denies the claim, saying the work was outside the agreement or within its exceptions. It also pleaded that a 2002 compromise barred the claim and counterclaimed for £134,052.97 for goods sold and delivered. Those disputes were not decided in this application.
The proceedings began in 2005. In 2017, Mr McCool sought to join the case, and MCC later assigned its claim to him for €1. The Master of the High Court made an order on 8 November 2017 substituting Mr McCool as plaintiff. Honeywell applied to have that order discharged.
Mr McCool said the assignment would allow him to pursue the case for MCC’s benefit. The judgment noted that he had described himself as a director and majority shareholder and had said the company depended on him to bring the case to trial. The court concluded that the assignment’s purpose was to get around the rule that a company generally cannot be represented in court by its director or shareholder. It held that the assignment was an artifice and an abuse of process.
The court also considered the assignment’s clause allowing onward transfer. Mr McCool had told the court he had contacted litigation funders, and the judgment referred to his stated willingness to assign the proceedings to a third party that might see a financial benefit. The judge held that the assignment of a bare cause of action, with provision for transfer to a disinterested third party, savoured of champerty and was contrary to public policy.
The court therefore discharged the Master’s order and substituted an order dismissing Mr McCool’s application. It did not determine the merits of MCC’s underlying claim or Honeywell’s counterclaim.