The High Court has allowed Hyper Trust Limited to amend its counterclaim against former directors Desmond Reddy and Brian Reddy to include eight additional alleged unauthorised payments. The court found those payment claims were not already included in the pleadings, but ruled that potential prejudice to the plaintiffs could be addressed without excluding the claims.
The dispute concerns proceedings brought by the Reddys after they left the company following an examinership in 2015. Hyper Trust, which owns and operates Leopardstown Inn, counterclaimed that the plaintiffs had transferred adjacent land to themselves at an undervalue and had caused company payments to be made for purposes unrelated to the business.
In an ex tempore judgment delivered on 24 May 2023, Mr Justice Rory Mulcahy considered the plaintiffs’ application to prevent the company relying on two heads of loss in an expert report, or to amend its Defence and Counterclaim to include them. The report, delivered in March 2023, valued the land at €270,000 to €585,000 and put the claimed damages relating to it at €244,605 to €559,605. It also identified eight further payments, which the judgment said would increase the counterclaim from €1,936,674 to €3,227,448.
The judge held that the land-related claim was sufficiently identified in the existing pleadings. The company had alleged that the land was transferred at an undervalue and, when asked for particulars, said it had advice that the land was worth at least IR£150,000 in 2000. The plaintiffs denied undervaluation. The judge said any uncertainty about the basis of damages could be addressed by seeking further particulars. He also allowed the company to amend its claim concerning the transfer and gave the plaintiffs an opportunity to seek particulars.
The eight additional payment claims stood differently. The existing counterclaim identified 19 transactions and said their precise amounts might be particularised later. The judge found there was no fair notice of claims concerning other payments before the expert report arrived on 3 March 2023. He therefore concluded that the eight transactions were not within the pleaded case.
However, he allowed the proposed amendment. The plaintiffs said they would need time and further discovery to meet the claims, and cited delay and their ages. The company accepted there was no real excuse for waiting until after discovery was exchanged in 2020 to advance the new claims. The judge found the plaintiffs had not shown prejudice serious enough to justify refusing the amendment; a short adjournment might address any prejudice.
The court did not decide whether the plaintiffs had destroyed company records, a disputed allegation relied on by the company to explain the claims’ late emergence. It also did not determine whether the alleged payments were unauthorised or whether the company could prove its counterclaim. The judge said the onus remained on the company to prove it. He proposed allowing the plaintiffs a short period to consider whether to seek an adjournment, with directions on the return date to prepare the case for hearing in July 2023 or soon afterwards.