by Matthew Austin October-28-2015 in Litigation & Dispute Resolution, Commercial & Business
The High Court was recently asked to re-consider the question of whether a director and principal shareholder of a company could represent that company in legal proceedings involving the company.
In McDonald v McCaughey Developments Limited and Anor [2014] IEHC 455 a director and principal shareholder (Martin McCaughey) of McCaughey Developments Limited wanted the court’s permission to represent the company in challenging the appointment of a Receiver over the assets of the company by Danske Bank. Mr McCaughey argued that the probity of the Bank’s actions in appointing the Receiver was in question and that the company was at risk if it had no representation to highlight material facts to the Court. It was clear that neither the company nor Mr McCaughey had sufficient funds to retain lawyers to represent the company.
Judge Gilligan analysed both Irish and international authorities on the issue. The Judge noted the decision of the Supreme Court in Battle v Irish Art Promotion Centre [1968] IR 252 and stated:
“In Battle, the Supreme Court were of the view that as a company director, in setting up the company, availed of a separate legal persona from the company, one cannot then come before the court and seek to reverse that and speak on the company’s behalf. Fennelly J. stated that in such circumstances, the only option available to a company director was to use his own funds to place the company in a position whereby it could engage legal representation.”
Judge Gilligan went on to draw his conclusion and found that he was obliged to follow the position set out by Fennelly J in Battle. In doing so Judge Gilligan quoted Fennelly J as follows:
“This ruling proceeds from the fact that the incorporated company is as a strict matter of law a legal person separate from its members and from its directors and management. Nonetheless in practice the courts have to deal on a daily basis with difficult cases involving unrepresented companies frequently because they are simply no funds to provide for legal representation. The company being a purely legal or notional person cannot speak except through a representative of some kind. If it has no legal representation, it will not be represented at all. Although that is far from ideal, it represents the present law.
Judge Gilligan refused Mr McCaughey’s application to allow him represent the company in the legal proceedings and indicated that the situations where a company could be represented in Court by anyone other than a qualified solicitor or barrister would be very rare.
It should be noted that Mr McCaughey appealed Judge Gilligan’s Order in this regard and the matter came before the Court of Appeal. At that point it was agreed between the parties that as Mr McCaughey was, along with the company, a named Defendant in the proceedings he was entitled to represent himself and, in doing so, could include points, make arguments and adduce evidence which would inure for the benefit of the company. As such, on the Court of Appeal’s analysis of the facts of the particular case the question of Mr McCaughey’s ability to represent the company did not fall for decision by the Court.
Click for full copies of the judgements from the High Court and Court of Appeal.
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About the Author
Matthew Austin
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.