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2026 IEHC 336

THE HIGH COURT [2026] IEHC 336 Record No: HCA 2025/144 BETWEEN CONSORTIO LIMITED PLAINTIFF/APPELLANT -andJEREMIAH LYNCH AND EDWARD LYNCH DEFENDANTS/RESPONDENTS JUDGMENT of Mr Justice Dunne delivered this 26th day of May 2026 Introduction

  1. This matter comes before the Court by way of an appeal by the Plaintiff/Appellant [hereinafter the Plaintiff] of the judgement and order of the Circuit Court striking out its Circuit Court proceedings, as disclosing no reasonable cause of action, amounting to an abuse of process and as being bound to fail, on foot of the Defendants’ motion dated 1st July
  3. In the said motion the Defendants sought an order pursuant to Order 67 Rule 16 of the Circuit Court Rules 2001 applying Order 19 Rule 28 of the Rules of the Superior Courts striking out the proceedings. In the alternative the Defendants sought an order pursuant to Order 16 Rule 1 of the Circuit Court Rules and section 52 of the Companies Act, 2014 1 directing the Plaintiff to furnish security for costs. Since the Circuit Court struck out the proceedings it did not have to consider whether to order security for costs.
  4. The appeal before this Court is a de novo rehearing of the Defendants’ motion. In the absence of a directly applicable rule in the Circuit Court Rules, Order 67 Rule 16 of those Rules provides that the applicable rule in the Rules of the Superior Courts applies, which is Order 19 Rule 28 of the Rules of the Superior Courts. Background
  5. The Plaintiff herein is a limited company, based in Galway. It is the owner of 22 apartments at a development of 72 student apartments, built for the purpose of providing student accommodation, at St. Angela’s Student Residence, Atlantic Technological University, Clogherrevagh, County Sligo. The development constitutes a multi-unit development within the meaning of the Multi-unit Developments Act, 2011 [hereinafter “the MUD Act].
  6. The owners’ management company for the development, being the company established under the MUD Act, for the purposes of becoming the owner and manager of the common areas of the apartments, is St Angela's Management Company Ltd, a company limited by guarantee (hereinafter “the OMC”). By virtue of its ownership of its 22 units in the development, the Plaintiff is automatically a shareholder in the said management company, by reference to the number of apartments it owns, it is a 30.5% shareholder.
  7. The Defendants are a father and son and are the directors of the OMC. The first Defendant owns three apartments in the development, with 39 others being owned by a company called Church Ireland Property Holdings Limited, of which the Defendants are directors. Thus, the Plaintiff alleges that the Defendants own and/or control 42 of the apartments thereby controlling the majority interest in the OMC. The Defendants are 2 also the directors of a company called Slishwood Property Holdings Ltd (hereinafter “Slishwood”).
  8. In June 2005 a religious order of nuns, known as the Ursuline Sisters, agreed through its trustees, to sell a portion of its lands at St Angela’s College, Clogherrevagh, Sligo to developers, and the fee simple interest in the said lands was conveyed to those developers by deed of December
  9. Thereafter four blocks of student apartments, with ancillary facilities were constructed on those lands. The original developers sold the individual apartments by way of long leases. Ultimately the freehold interest in the development was conveyed to Slishwood, subject to the long leases of the individual apartments. By agreement of September 2006, the original developers agreed to convey the common areas of the development to the OMC. Because the OMC had been struck off the Register of Companies, this did not ultimately occur until April 2022, after the OMC was restored to the Register, when Slishwood entered into a deed of conveyance, dated 9th April 2021, to convey the fee simple interest in the common areas of development to the OMC. I caveat that statement by saying that there is a dispute between the parties as to whether all of the lands comprising the common areas to which the OMC was entitled was conveyed and the extent of the common areas to which it is entitled is very much in dispute. The Plaintiff in Circuit Court proceedings against Slishwood (Record No. 2023/E0143 Co. Sligo) claims that only part of the common areas to which the OMC was entitled were transferred. This is disputed by Slishwood who claims that the various contractual and title documents gave it the right to vary the common areas to be transferred to the OMC. This is a dispute I do not have to resolve in this application. The present proceedings
  10. The Plaintiff brings these proceedings by way of Ordinary Civil Bill issued on 27th April 2024 as the owner of 22 apartments in the development against the Defendants personally, as directors of the OMC. The gravamen of the claim relates to what the Plaintiff says is the unlawful levying of sums of money on it and other apartment owners by the OMC, as part of the common areas service charge scheme for the development. 3 It is pleaded that the Defendants have a controlling interest in the OMC and that through their control of both the OMC and Slishwood, they have commenced litigation in the High Court to secure alleged rights to use college facilities, on lands adjacent to the development, in proceedings entitled “St Angela's Management Company Limited by Guarantee and Slishwood Property Holdings Limited -.v.- St Angela's College Sligo Company Limited by Guarantee Record No. 2023/2724P.” It claims that the OMC is not a proper party to those proceedings, should not have been named as a co-plaintiff and can derive no true value or benefit from them. It claims that the sole reason why the OMC is a plaintiff in the High Court proceedings is to benefit Slishwood by reducing its exposure to the costs, of what it describes, as risky and speculative litigation. The Plaintiff claims that the OMC has wrongfully sought these ongoing contributions to legal costs which it claims are not lawfully recoverable by the OMC under the service charge scheme described in the apartment owners’ long leases and do not constitute lawful expenditure recoverable by the OMC, through annual service charges as envisaged by section 18

(1)of the MUD Act. The Plaintiff claims that this has all occurred because of the Defendants’ controlling interest in the OMC and that they are in breach of their fiduciary duties as directors of the OMC and in breach of their duty to exercise reasonable skill and care towards the OMC. It claims that because of this controlling interest, the Defendants can prevent the OMC from pursuing them for their breaches of their obligations to it. It pleads that it is entitled to a lawful scheme for service charges which accords with the provisions of its long leases and the MUD Act and that it is entitled to restitution for the monies wrongfully demanded by and paid to the OMC. 9. On foot of these claims, the Plaintiff seeks various reliefs pursuant to section 24
(3)of the MUD Act, directed towards determining that the legal costs pertaining to the High Court proceedings are not recoverable by the OMC as service charges, establishing through inspection of the OMC books and records, how much of the service charge was used on the High Court legal costs, reimbursing the monies already paid by the Plaintiff which were put towards those legal costs and amending the constitution of the OMC to prevent it happening in the future. 4
  1. The Defendants dispute the Plaintiff’s claim and have through their motion dated 1st July 2024, sought to have the Plaintiff’s proceedings dismissed as disclosing no reasonable cause of action, amounting to an abuse of process and as being bound to fail. In addition to disputing the substance of the allegations being made by the Plaintiff, they say that the claims being brought by the Plaintiff in its proceedings can be divided into two categories - claims being made on behalf of the OMC and claims being made against the OMC. In so far as the claims being made on behalf of the OMC, are concerned they say that the proceedings are in truth an attempt at a derivative action, which cannot be brought in the Circuit Court and which requires, in any event the leave of the High Court, before they can be commenced. Therefore, such claims, they argue, are bound to fail and disclose no reasonable cause of action. In so far as the claims being made against the OMC are concerned, they say that these are claims that could only be brought against the OMC itself and not its directors personally. Therefore, such claims, too, they argue are bound to fail and disclose no reasonable cause of action. The strike out jurisdiction
  2. Order 19 Rule 28 of the Rules of the Superior Courts was amended by SI 456/2023, and the relevant portion of the rule, now provides as follows:
(1)The Court may, on an application by motion on notice, strike out any claim or part of a claim which: (
  1. i)discloses no reasonable cause of action, or (
  2. ii)amounts to an abuse of the process of the Court, or (iii) is bound to fail, or (
  3. iv)has no reasonable chance of succeeding. … …. …… 5
(3)The Court may, in considering an application under sub-rule
(1)or
(2), have regard to the pleadings and, if appropriate, to evidence in any affidavit filed in support of, or in opposition to, the application. 12. Order 19, rule 28 as it now stands, amalgamates the two previously separate jurisdictions to strike out, being the inherent jurisdiction of the Court and the narrower jurisdiction given by the original Order 19 Rule 28. In O'Malley v National Standards Authority of Ireland [2024] IEHC 500, Simons J. (at para. 7) noted that: “The amendment to Order 19, rule 28 has the practical effect of eroding the previous distinction between the jurisdiction to strike out and/or to dismiss proceedings pursuant to (
  1. i)Order 19 of the Rules of the Superior Courts, and (
  2. ii)the court's inherent jurisdiction.” 13. The extent of the difference, if any, that now exists between the Court’s inherent jurisdiction and its jurisdiction pursuant to the new Order 19 Rule 28 remains to be considered in the appropriate case. Nonetheless, the principles already well established by the pre-amendment caselaw, are of assistance, in terms of the application of the new Order 19, rule 28. 14. In Beades v KBC Mortgage Finance Company [2025] IEHC 363 (para. 54) Dignam J. stated that, that caselaw elicits a number of overarching principles as follows: (
  3. i)the default position is that proceedings should go to trial and that a person should only be deprived of a trial when it is clear that there is no real risk of injustice. (
  4. ii)it is a jurisdiction to be exercised sparingly, given that it relates to the constitutional right of access to the courts. 6 (iii) the onus is on the moving party to establish that the pleadings do not disclose a reasonable cause of action or that the case is frivolous or vexatious or bound to fail or that it is an abuse of process, and the threshold to be met is a high one. (
  5. iv)the Court must take the plaintiff's claim at its high-water mark. (
  6. v)the Court must be satisfied not just that the plaintiff will not succeed but cannot succeed. (
  7. vi)the Court must be satisfied that the plaintiff's case would not be improved by an appropriate amendment to the pleadings or through the utilisation of pre-trial procedures such as discovery or by the evidence at trial. 15. Thus, in determining whether to strike out the Plaintiff’s proceedings I must apply the principles as outlined above. For this purpose, in assessing whether the Plaintiff’s claim is bound to fail or discloses no reasonable cause of action, I must take the Plaintiff’s claim at its high-water mark, assuming that every fact pleaded by the Plaintiff is correct and will be proven at trial. (See for e.g. Tracey v Minister for Justice, Equality and Law Reform [2018] IESC 45.) However, as McKechnie J. cautioned in Desmond v Moriarty [2018] IESC 34, (para. 65) taking the Plaintiff’s case at its high watermark does not involve disregarding the necessary elements for such an action to succeed. Furthermore, while the Court must assume that the facts pleaded by the Plaintiff will be proven at trial, it is entitled to examine the inferences, which the Plaintiff seeks to draw from those facts, to assess whether they can give rise to a reasonable cause of action. (See dicta of McCracken J in Fay v. Tegral Pipes Ltd [2005] IESC 34. More recently in Mohan v 7 Revenue Commissioners, Ireland and the Attorney General [2025] IEHC 63, Simons J. pointed out that the effect of the amendment of Order 19 Rule 28 was to codify the existing jurisprudence and that it followed by analogy that “the court hearing a strike out application may, to a limited extent, consider the underlying merits of the case. If it can be established that there is no credible basis for suggesting that the facts are as asserted, and that the proceedings are bound to fail on the merits, then the proceedings can be struck out pursuant to the amended rule.” (para 10). The Court is also entitled, on this motion to consider and resolve straightforward issues of law, where there is no real risk that that might lead to an injustice. (See Jeffrey v. Minister for Justice, Equality and Defence [2022] 2 IR 635. Summary of the Defendants’ arguments on striking out the proceedings 16. The Defendants as moving parties, submit that the Plaintiff’s claim is an abuse of process, discloses no reasonable cause of action and is bound to fail. They say that the Defendants are sued in their capacity as directors of the OMC in respect of allegations of breach of their directors’ duties to the OMC. They say that since the duties owed by directors of a company are owed only to the company and not to the shareholders of the company, the Plaintiff’s claim against the directors personally, for breach of their duties cannot succeed. They say that if the members of the company believe that a wrong has been done to the company by the directors of that company, but the company does not sue, the remedy is to bring a derivative action. They say that a derivative action cannot be brought in the Circuit Court at all and can only be brought in the High Court with the leave of the High Court. They rely upon the rule in Foss v Harbottle
(1843)2 Hare
  1. They say that the duties owed by directors, are owed to the company, not the shareholders, so that even if, which is forcefully denied, there was a breach of the Defendants’ duties as directors of the OMC, that is a claim for the OMC to bring, not the Plaintiff, as a shareholder in the OMC. They rely on sections 227 and 228 of the Companies Act 2014 in that regard. Thus, they say the Plaintiff is impermissibly seeking to enforce rights on behalf of the OMC and this amounts to a derivative action which they are is not entitled to bring. They further submit that in so far as the Plaintiff seeks to suggest that its proceedings are not about a loss to the OMC, but rather the direct levying by the OMC of an unlawful charge on apartment owners by way of the service 8 charge, this is a claim that could only be brought against the OMC itself and not its directors, the OMC is a separate legal entity from its directors. They point out that the reliefs claimed in this regard are all directed at the OMC, which is not a defendant in the proceedings. They submit that the Plaintiff’s reliance on sections 24 and 25 of the MUD Act as allowing it to prosecute these claims is misplaced as the MUD Act does not impose any duties on company directors that are owed to shareholders, nor does it give to shareholders of owners’ management companies the right to sue on the company’s behalf for breaches of duties owed to the company. They say that the structure created by the MUD Act, is to ensure membership rights for unit owners in the owners’ management company and as such it endorses the Companies Act 2014 structure, in terms of where the rights and obligations lie. They rely upon section 29 of the MUD Act, which provides that nothing in the Act, “shall be taken to derogate from any right or power which may, whether before or after the passing of this Act, be vested in any person or court, by statute or otherwise, and the powers conferred by this Act shall be in addition to, and not in substitution for, such other rights or powers.” Thus, it is argued that the MUD Act does not assist the Plaintiff, as it does not provide for or facilitate a shareholder, in an owners’ management company, bringing an action against the directors of that company.
  2. In so far as the proceedings relate to claims of wrongs committed by the OMC, they say that such claims should have been brought against the OMC and that since the OMC was not sued, these claims too are bound to fail. Summary of the Plaintiff’s arguments against striking out the proceedings
  3. The Plaintiff argues that its proceedings are not an abuse of process, do disclose a legitimate cause of action and are certainly not bound to fail. It says that the claim it makes is not a derivative action on behalf of the OMC nor is it trying to “take up the cudgels” on behalf of the OMC. It says that its claim is about the fact that the Plaintiff is being visited with services charges not lawfully recoverable under the long leases or indeed pursuant to the MUD Act and that this is occurring because of the control the Defendants have over the OMC, as majority shareholder (through the corporate structures) and that the wrongs visited on the Plaintiff in terms of the wrongful service charge has been “conjured” by the Defendants. It contends that the Defendants have 9 involved the OMC in the High Court litigation, which has been brought for the benefit of their company Slishwood, not the OMC, because the property rights at issue in the litigation have no true value either to the OMC or its members. It claims that while a wrong is being done to the OMC by the Defendants, that is subsidiary to the Plaintiff’s claim that it is being visited with a levy to fund the High Court litigation by way of the service charge, that it should not have to pay, as it has no legal basis either in the long leases or under the MUD Act. It says the Defendants, as directors of the OMC, owe it a duty not to carry out wrongs that will impact it as a shareholder. It relies on section 18 of the MUD Act and says that as a result of the imposition of the service charge the Defendants have acted in breach of the powers conferred on them by section 18 and have acted in breach of their fiduciary duties as company directors. It says there is nothing in section 18 that prevents or excludes an application being brought against the Directors of an owners’ management company. It says that sections 24 and 25 of the MUD Act gives the Plaintiff the right, as a party to the relevant leases and as a shareholder in the owners’ management company, the OMC, to apply to the Circuit Court for orders to enforce rights conferred and obligations imposed by the MUD Act or any rule of law. The Plaintiff also submits that the provisions of section 24 of the MUD Act are designed so that actions such as this, can be instigated by apartment owners. It argues that the breadth of reliefs available in the non-exhaustive list under section 24
(5)of the MUD Act, including an order amending the covenants in an agreement between unit owners, developers and owners management company (section 24
(5)(g)) and an order transferring ownership of an owners management company from the developer to unit owners (section 24
(5)(i)) all point to the fact that the Circuit Court has the power to make the orders sought in the proceedings.
  1. The Plaintiff says in the alternative that if the Court finds that the claims it is bringing are in fact claims to be brought against the OMC, then they can still succeed in the proceedings as constituted, by seeking at the trial of the action, to have the trial Judge disregard or lift the corporate veil to have the directors held personally liable for the actions of the OMC and they rely upon the decision of the Supreme Court in Moorview Developments Ltd & Ors v First Active Plc & Ors [2018] IESC 33 and the decision of Twomey J. in Powers v Greymountain Management Ltd (In Liquidation) [2022] IEHC
  2. 10
  3. In its final argument the Plaintiff says that it is not seeking to amend the proceedings or to join the OMC to the proceedings and is content to proceed with the case as it is but that if this Court takes the view that the Plaintiff cannot succeed in the action as against the Defendants as directors of the OMC, then it is open to the Court to amend the proceedings by joining the OMC to them, so as to “save” the proceedings. In this regard it relies on the decision of Simons J. in Mohan v Revenue Commissioners & Ors [2025] IEHC 63 as an authority for the proposition that if a statement of claim (or in this case a civil bill) admits of an amendment which might save the proceedings from dismissal, an opportunity should be afforded to a plaintiff to re-formulate its claim. The Plaintiff’s pleaded claim and reliefs sought in the Ordinary Civil Bill
  4. As set out above, the gravamen of the Plaintiff’s claim concerns what the Plaintiff says is the unlawful levying of sums of money on it and other apartment owners by the OMC, as part of the common areas service charge scheme for the development, which it says was done to fund the High Court litigation brought for Slishwood’s benefit. This is also made clear in the Affidavit evidence provided to the Court by the Plaintiff’s director Mr. McCarthy. He avers that “[t]he Plaintiff’s proceedings arise from its interest in a multiunit development and are intended to enforce its entitlement to lawful, fair and effective arrangements for the management of the common areas” and that “[t]hese proceedings arise from the manner in which that control has been exercised a. in breach of the Plaintiff’s right to a lawful scheme for levying and collection of service charges; b. to the exclusion of the Plaintiff as owner of 22 of 72 apartments from any meaningful participation in the management of the OMC.”
  5. When one examines the Plaintiff’s pleaded case as set out in the Ordinary Civil Bill, it is apparent that all the claims made are either claims of wrongs by the OMC or claims of wrongs done to the OMC by the Defendant directors. In relation to the former, the appropriate Defendant is prima facie the OMC, not its directors. In relation to the latter, the appropriate Plaintiff is the OMC. This is evident from how the case was pleaded in the Ordinary Civil Bill, where it is pleaded as follows: - 11 (i) The Defendants by joining the OMC to the High Court proceedings are in breach of their fiduciary obligations to the OMC and have acted in disregard of the OMC’s interest (para 6). (ii) The High Court proceedings have no true value to the OMC and the litigation is not a matter for the OMC (para 7). (iii) The Defendants through their controlling intertest in the OMC have wrongfully sought ongoing contributions to legal costs from the OMC (para 8). (iv) The OMC is not lawfully entitled to recover such legal costs under the service charge prescribed by the long leases, nor do the legal costs constitute lawful expenditure to be recovered through the annual service charge as envisaged by section 18
(1)of the MUD Act (para 9). (
  1. v)The Defendants, in breach of their directors’ fiduciary duties and in breach of their duty to exercise reasonable skill and diligence knowingly induced the OMC to act in breach of its obligations under the long leases and under the MUD Act (para 9). (
  2. vi)The Defendants through their majority control of the OMC can prevent the OMC from pursuing them for their breaches of their obligations to it (para10). (vii) The Plaintiff has a right to a lawful scheme for the service charges which accords with the relevant provisions of the MUD Act and the long leases and has a right to restitution for any monies wrongfully demanded and paid (para 11.) 23. The pleas at (i), (ii), (iii), and (
  3. v)above are undoubtedly claims of breach by the Defendants of their directors’ duties owed to the OMC and of wrongs done by them to that company and are, as such, claims to be brought by the OMC itself or by way of derivative action. Indeed, the plea at (
  4. vi)above, is the classic plea that one would find in a derivative action. 24. The pleas at (
  5. iv)and (vii) on the other hand are undoubtedly claims to be made against the OMC as the owners’ management company, which is tasked with the management 12 of the common areas of the development on behalf of the apartment owners and with establishing and maintaining a lawful scheme in respect of service charges. 25. When one examines the reliefs sought by the Plaintiff, the same divide, as between reliefs directed against the OMC, which the Plaintiff has not sued and reliefs for the benefit of the OMC, which is not a plaintiff, is evident. The orders sought by the Plaintiff pursuant to section 24
(3)of the MUD Act are as follows:
  1. a)An order confirming that any legal costs (whether these be costs of litigation or costs of legal advice) pertaining to the matters now in issue in the High Court proceedings bearing record number 2023/2724P are not recoverable by [the OMC] as service charges.
  2. b)An order directing the Defendants to repay to [the OMC] all money spent to date by the OMC on legal fees (whether for advice or in furtherance of litigation) pertaining to the matters now in issue in the High Court proceedings bearing record number 2023/2724P.
  3. c)An order declaring that the monies so repaid to [the OMC] are to be received by the OMC as trustee for its members and to be reimbursed to the members of the OMC including the Plaintiff without any deduction therefrom within 28 days of judgment.
  4. d)An order permitting the Plaintiff by its servants or agents to inspect free of charge within 14 days of the date of judgment, the books and records of [the OMC] to verify the amount ascribed to the expenditure on legal fees repayable by the Defendants.
  5. e)An order that [the OMC]’s constitution be amended to ensure appropriate protection for the Plaintiff as a minority member.
  6. f)Further and other order.
  7. g)Costs. 13 26. The orders sought at a), c),
  8. d)and
  9. e)are such that they would, if made, be orders as against the OMC, whereas the order sought at
  10. b)is such that it would if made, be an order in favour of the OMC. 27. Yet the OMC is not a party to the proceedings. That the Plaintiff’s entire case comprises, either claims of wrongs by the OMC or claims of wrongs done to the OMC by the Defendant directors, is also clear from the affidavit evidence submitted to the Court by the Plaintiff’s director Mr. McCarthy. Mr. McCarthy avers to the Defendants effectively controlling the OMC because of their control of 42 of the 72 apartments and excluding the Plaintiff as a shareholder from any meaningful participation in the management of the OMC. He speaks of the High Court litigation being of no benefit to the OMC and of the Defendants joining it to those proceedings through their controlling interest in the OMC. At the same time, he gives evidence as to the Plaintiff’s right to a lawful scheme for levying and collection service charges and the fact that the OMC is levying an unlawful service charge on the Plaintiff. Can the Plaintiff succeed in relation to claims of wrongs done by the OMC 28. In terms of the claims being made about the alleged wrongdoing or alleged wrongs committed by the OMC, it appears to me that the fundamental difficulty for the Plaintiff in terms of succeeding is that the Plaintiff has not sued the OMC, despite what is pleaded and despite the fact that the reliefs sought in this regard, if made into court orders, would be directed to the OMC. It was open to the Plaintiff to sue the OMC. It appears that a deliberate decision was taken not to do so, as Mr. McCarthy the director of the Plaintiff avers in his Affidavit at paragraph 23 that “the nature of the proceedings is a matter for legal argument but that by virtue of the control exercised by the Defendants, pursuit of orders against the OMC would be futile as the OMC is currently constituted. Moreover, it would result in [the Plaintiff] having to pay 22/72nd of any costs incurred even if it succeeded.” He goes on then to question the capacity of the Defendants to incur significant legal costs and also refers to previous accusations by the first Defendant that it was the Plaintiff who was the driver of costs incurred by the OMC. This appears to suggest that at least one of the reasons why it was decided not to sue the OMC as a defendant was that the Plaintiff was concerned that if it had sued the OMC and was 14 successful, the OMC would then be liable for the costs of the litigation, which costs would then ultimately have to be provided by the unit holders/shareholders in accordance with their percentage share. 29. The Plaintiff sets out three reasons why it says that regardless of this, it can bring and succeed in these claims directly as against the directors of the OMC. Firstly, it says that by virtue of sections 18, 24 and 25 of the MUD Act, it can bring the claims directly as against the directors, secondly it says that, it can, at the trial of the action seek to lift the corporate veil of the OMC to fix the directors with its liability and finally it says that if it is wrong in all of this, the Court can join the OMC to the proceedings by way of a “saving” amendment. The Multi-unit Developments Act 2011 (the MUD Act) 30. For the purposes of considering the first of these arguments, it is necessary to examine the relevant provisions of the MUD Act. In its long title it is described as an act to amend the law relating to ownership and management of the common areas of multi-unit developments and to facilitate the fair, efficient and effective management of bodies responsible for the management of such common areas, and to provide for related matters. With this in mind, it provides for the establishment of owners’ management companies. An owners’ management company (OMC) is defined in the Act as “a company established for the purposes of becoming the owner of the common areas of a multi-unit development and the management, maintenance and repair of such areas and which is a company registered under the Companies Acts.” The Act requires that before a unit in a multi-unit development is first sold, an owners’ management company (an OMC) must be established at the expense of the developer of the development and that ownership of the relevant parts of the common areas of the development together with any necessary rights of way, must be transferred to the OMC. The developer must ensure that the OMC has all the powers necessary, to perform the functions conferred or imposed by the Act, on it and to exercise any powers conferred on it by the Act, in relation to the development concerned. Upon the transfer of ownership of a residential unit, in a multi-unit development, the person becoming entitled to that ownership (whether it be a freehold or leasehold interest) becomes a member of the OMC. 15 31. Section 18 of the Act requires the OMC to establish and maintain a scheme in respect of annual service charges. Section 18
(1)provides:
(1)An owners’ management company shall, as soon as practicable, establish and maintain a scheme in respect of annual service charges from which the owners’ management company may discharge ongoing expenditure reasonably incurred on the insurance, maintenance (including cleaning and waste management services) and repair of the common areas of the multiunit development concerned and on the provision of common or shared services to the owners and occupiers of the units in the development. 32. Section 18
(2)requires that the service charge cannot be levied by the OMC unless it has been considered by the members of that company at a general meeting called for the purposes of considering an estimate of the expenditure that it is anticipated will be incurred by the company in the period. The estimate must be broken down into specific categories, namely insurance, general maintenance, repairs, waste management, cleaning, gardening and landscaping, concierge and security services, legal services and accounts preparation, and other expenditure arising in connection with the maintenance, repair and management of the common areas anticipated to arise (subsection 3). The proposed service charge must be approved by the general meeting (subsections 4 to 7). Once approved the owners of each unit are under an obligation to pay the service charge levied by the OMC (subsection 10), which service charge must be calculated on a transparent basis and be equitably apportioned between unit owners (subsection 13). 33. Section 18
(15)of the Act requires that the OMC maintain sufficient and proper records of expenditure incurred by it, to enable appropriate verification and audits to be undertaken. Section 19 of the Act provides for the establishment, by the OMC, of a building investment fund (sinking fund) to be made up of contributions from the owners of the units in the development. Section 22 of the Act provides that: “Charges under section 18 and contributions under section 19 or 20, whether requested or sought to be collected separately or together may be recovered by 16 the owners’ management company concerned as a simple contract debt in a court of competent jurisdiction.”
  1. Therefore, there can be no doubt but that the Act puts the statutory obligation on the owners’ management company (the OMC) to establish and maintain a scheme in respect of annual services charges. The annual service charge must be calculated by the OMC on a transparent basis and be equitably apportioned between unit owners. Once this is approved by the members at general meeting, there is a statutory obligation on unit owners (i.e. the members of the OMC) to pay the service charges levied on them and the OMC can recover these as a simple contract debt in a court of competent jurisdiction.
  2. Where a dispute arises, section 24 of the Act provides for applications to be brought to court. Section 26 of the Act ordains that the Circuit Court has exclusive jurisdiction to hear and determine such applications. Before considering the nature of the applications that can be brought or the orders that the Circuit Court can make, it is necessary to consider who is provided with standing to bring, or be heard on, such applications. Section 25 of the Act, identifies the persons who may apply for or appear and be heard at an application under section 24 as being: (a) the owners’ management company of the development. (b) any member of such an owners’ management company. (c) any trustee under a will, settlement or other disposition of land by such member. (d) the personal representative of a member of such an owners’ management company. (e) the developer of the multi-unit development (f) with the permission of the court, such other person as the court sees fit. 17
  3. Therefore, there is no doubt but that the Plaintiff, as a member of the OMC in these proceedings, has by virtue of section 25 of the Act, the standing to bring an application pursuant to section 24 of the MUD Act. But having standing to make an application under section 24 of the MUD Act, is not the same as having a valid claim or cause of action or one with a reasonable chance of success. Whether or not the Plaintiff has a claim under the MUD Act which has a reasonable chance of success, depends upon whether it could possibly obtain relief under section 24 of the Act in respect of it.
  4. The relevant portions of section 24 are as follows:
(1)A person specified in section 25 may make, in respect of a multi-unit development, an application to the court— (
  1. a)for an order under this section to enforce any rights conferred, or obligation imposed, by this Act or any rule of law, (
  2. b)for an order relating to any matter to which reference to making an application under this section is made in this Act. ……….
(3)In a case to which subsection
(1)(a) applies, where the court is satisfied that a right has been infringed or an obligation has not been discharged, it shall make such remedial order as it deems appropriate in the circumstances with a view to ensuring the effective enforcement of a right or the effective discharge of an obligation relating to the multi-unit development.
(4)In a case to which subsection
(1)(a) does not apply but subsection
(1)(b) applies, the court may make such order as it considers just and equitable with a view to ensuring the effective operation of the owners’ management company concerned and the quiet and peaceful occupation of the common areas of the multi-unit development concerned by the owners and occupiers of the residential units in that development. 18 38. Section 24
(5)then goes on to set down a non-exhaustive list of 13 classes of orders that can be made under subsection 3 including for example: (
  1. a)An order that the legal documentation relating to the OMC be amended (subsection 5(a)). (
  2. b)An order apportioning the funds of an owners’ management company as between its sinking fund and its service charges (subsection 5(e)). (
  3. c)An order determining the extent to which a part of the common areas of a multiunit development forms part of the relevant parts of the common areas of the development (subsection 5(f)). (
  4. d)An order amending the covenants contained in an agreement (including a lease) between the developer, owners’ management company and the unit owners (subsection 5(g)). 39. It is clear therefore from section 24
(1)that a person applying under section 24 of the Act can only succeed in getting an order from the Circuit Court either (
  1. a)“to enforce a right conferred, or an obligation imposed, by this Act or any rule of law” or (
  2. b)where the Act itself provides for the making of a specific application under the Act such as in sections 10
(3), 12
(5), 15
(3)and 19
(8). Thus for example, in terms of section 24
(1)(b), section 12
(5)of the Act gives unit owners in a multi-unit development the entitlement in certain cases, to apply under section 24 for a declaration for the benefit of its OMC that the beneficial interests in the relevant part of the development stands transferred to the OMC and that the beneficial and legal interest in that area stand merged. 40. In terms of section 24
(1)(a), both subsection
(3)and subsection
(5)of section 24 all refer back to it. Therefore, an applicant or plaintiff cannot succeed in an application pursuant to section 24
(1)(a) unless they can point to a right conferred on them either by the MUD Act or some other rule of law, or to an obligation imposed either by the MUD Act or some other rule of law, upon the person they are suing. In other words, a party can only succeed in obtaining an order under section 24 of the Act, if it is anchored in either a 19 provision of the Act itself or in some right conferred or obligation imposed either by the Act or some other rule of law.
  1. While not directly on point, the decision of Baker J. in Lee Towers Management Company Ltd v Lance Investments Ltd (in liquidation) [2020] 1 IR 260 is illustrative of the fact that orders made pursuant to section 24 of the MUD Act, must be anchored in either the MUD Act itself or some other rule of law. In that case, on foot of an application by the Management Company in the development, the Circuit Court had made various orders under section 24 of the MUD Act, including inter alia requiring the developer companies, which were in liquidation and grossly insolvent, to complete the development in accordance with the development agreement and planning permission, by carrying out works to the common areas. The official liquidator of the companies applied to the High Court, pursuant to section 631 of the Companies Act, 2014 for a determination of the issues that arose on foot of the orders made, including inter alia whether the order directing the companies to carry out the works to the common areas, so as to complete the development, were specifically enforceable and displaced the statutory scheme of priority of payments set out in section 621 of the Companies Act
  2. Baker J. stated that the issue “engages the interplay between the provisions of the MUD Act, on the one hand, and the statutory rules governing the application of the assets of a company in liquidation on the other.” (para 18). The management company argued that the order of the Circuit Court directing the completion of the development had to be complied with prior to the distribution of the assets of the companies and that the rights accruing to the management company under the MUD Act, in that regard displaced the statutory scheme of distribution on liquidation. It had relied upon section 7 of the MUD Act which provide that the transfer of the common areas in a multi-unit development did not “relieve the person who would otherwise have been responsible from the duty, obligation or responsibility to ensure completion of the development” including compliance with planning or building regulations. The management company had also relied upon section 24
(3)of the Act, which allows the Circuit Court to make such remedial orders as it deemed appropriate with a view to “ensuring the effective enforcement of a right or the effective discharge of an obligation” relating to a multi-unt development.
  1. Baker J. noted that section 7 of the MUD Act “in its plain language, suggest that a transfer of the common areas and reversions does not relieve a person from any existing 20 obligations, but [it] does not create new obligations.” (para 62). She noted that section 24 of the MUD Act permitted the making of an order by the Circuit Court “for the enforcement of an obligation with a view to ensuring the effective enforcement of a right or the effective discharge of an obligation relating to a multi-unit development.” (para 68). She was satisfied that while the MUD Act under section 24 created a form of statutory injunction by which a developer could be compelled to carry out works of repair to company with planning and building regulations requirements: “.. the availability of the remedy does not mean that a person seeking an order under s. 24 of the 2011 Act has, on account of the statutory entitlement to seek a remedy, an entitlement which is akin to a trust or which creates a proprietary interest which might give rise to an argument that the remedy lies in rem.” (para 72)
  2. Baker J. did not agree with the argument made by the management company that the remedial order made under section 24
(5)of the MUD Act displaced the statutory scheme of payments on liquidation, and created in the owners' management company a right to enforce the obligations in priority to other creditors, on the basis that the mandatory order had to be performed, and because the legislative scheme of the MUD Act made it clear that the transfer of the common areas and the reversions did not in itself relieve the developer from the obligations in a development agreement. While she agreed that the obligation to transfer the common areas had to be performed by the liquidator, she did not agree that the liquidator had to complete the common areas by expending monies over which the companies no longer had control, as a result of the liquidation and where the assets of the companies were fixed with the statutory trust. She was satisfied that: “[77] The Act provides a remedy and it has been invoked. The plaintiff is precisely in the position that the 2011 Act intended and has available to it statutory remedies, as well as remedies in contract. But the effect of the order of the Circuit Court is that [the Management Company] is an unsecured creditor. No provision exists to elevate a remedial order under s. 24
(5)to preferential status or to displace the scheme of distributions on an insolvent liquidator. The making of a court order does not in itself give such a priority.” 21
  1. In her view: - “[80] While it may have been socially desirable to offer comfort to an owners' management company or to purchasers of residential units within a multi-unit development by offering some means by which the obligation to complete a development could be enforced, the 2011 Act does not offer in any of its express terms an entitlement by which a person or body who has obtained a remedial order thereby gains priority against creditors of a company in liquidation. It would seem, from the absence of any indication in the 2011 Act from which such priority or preference could be derived, that the intention of the Oireachtas is that an order made under the 2011 Act is, in suitable cases, to be treated as an unsecured debt on the liquidation and one that would rank pari passu with other unsecured creditors.”
  2. When one looks at section 18 of the Act, which is the section upon which the Plaintiff relies, as giving rise to its right and the Defendants’ obligation, it is noteworthy that that section does not make provision for the making of a specific application under section 24
(1)(b) in respect of the annual service charge or any dispute or dissatisfaction which a unit owner may have with it. Therefore, in order to be able to succeed in its proceedings against the Defendants and obtain relief under section 24, in relation to its objection to the imposition by the OMC of what it says is an unlawful service charge, the Plaintiff must be able to rely upon section 24
(1)(a) and point to “a right conferred” on it or “an obligation imposed” on the Defendants as directors of the OMC either by the Act or “any rule of law.” 46. While section 18 of the Act, imposes obligations on an owners’ management company in a multi-unit development in respect of the annual service charge, it does not impose any obligations directly on the directors of that owners’ management company. Likewise, it does not confer upon a unit owner, such as the Plaintiff, the right to bypass the owners’ management company and obtain orders directly against its directors. In oral submissions before the Court, Counsel on behalf of the Plaintiff, whilst accepting that section 18
(1)put the obligation on the OMC to establish and maintain a scheme in respect of annual service charges, submitted that that did not stop the Plaintiff, as shareholder 22 making a claim against the directors in respect of the service charge, where their behaviour had visited the problem upon them. When asked to point the Court to the provision in section 18 or indeed to any other rule of law, which imposed upon the directors of an owners’ management company, personal obligations in respect of the service charge or which conferred upon a shareholder in an owners management company, the right to sue its directors, the only answer given by the Plaintiff through its counsel, was that there would be “lively argument about that at the trial of the action.” Yet it could not tell the Court, even by way of a most basic outline, the basis of what that argument might be or the legal basis upon which the Plaintiff would argue that the directors themselves had obligations imposed upon them, that were owed directly to the shareholders of the OMC and that it, as a shareholder had an entitlement to sue those directors personally. The Oireachtas in the MUD Act, could have, if it so wished, provided some means by which apartment owners in multi-unit developments could, in special circumstances, seek to enforce obligations owed to them by their owners’ management companies, directly against its directors. It did not do so. The MUD Act does not provide in any of its provisions, for the directors of the owners’ management company to be fixed with personal responsibility for the failure of that company to establish and maintain a scheme in respect of services charges which complies with section 18 of the Act, nor does it give shareholders in the owners’ management company the entitlement to orders under section 24 directly against those directors, in this regard.
  1. It is a well established and uncontroversial principle, that a company is a separate and distinct legal entity from its members. That a company is a “legal person” in its own right, which can sue and be sued, has been established since the decision in Salomon v A Salomon & Co. Ltd [1897] AC
  2. Having carefully considered the provisions of the MUD Act, and for the purposes of this application, accepting that the Plaintiff will be able to prove all of the allegations it makes at the trial of the action, I fail to see any legal basis upon which the Plaintiff can succeed in those claims it makes in the proceedings, in relation to the wrongs it says were committed by the OMC, in terms of the levying of the service charge, in circumstances whereby it has sued the directors rather than the OMC. 23
  3. The Plaintiff says that the fact that it has not sued the OMC and is only suing the directors doesn’t matter because it will succeed at the trial of the action in lifting the corporate veil of the OMC, to fix the directors directly with liability. This argument was put up in the vaguest of terms and was not elaborated upon either in oral or written submissions, the Plaintiff merely referring the Court to the Supreme Court decision in Moorview Development Ltd & Ors v First Active Plc & Ors [2018] IESC 33 and the decision of Twomey J. in Powers v Greymountain Management Ltd (in Liquidation) [2022] IEHC
  4. I fail to see how the decision of the Supreme Court in Moorview Development Ltd assists the Plaintiff. That case concerned the joining of a shareholder and director of the Plaintiff companies, Mr. C as a defendant to the proceedings for the purposes of fixing him with the costs incurred by the successful defendant to the proceedings. However, this was done, not on the basis of piercing the corporate veil, but on the basis that he had funded the litigation on behalf of the Plaintiff companies, which were insolvent. As McKechnie J. pointed out in his judgment, it was not about piercing the corporate veil, rather Mr. C was being held independently liable for the costs incurred by the successful party, because he had funded the unsuccessful litigation and the court had jurisdiction under the Superior Court Rules and under the Judicature Act (Ireland) 1877 to join him to the proceedings as a defendant for the purposes of making a costs order against him and the question of the corporate veil did not even arise.
  5. Likewise, I fail to see how the decision of Twomey J. in in Powers v Greymountain Management Ltd (in Liquidation) & Ors saves the Plaintiff’s proceedings. That was a case where an investor had sued the company (in liquidation) and its directors and shadow directors as a result of a fraud perpetrated upon him by virtue of enticing him to invest in a sham binary options investment scheme. The company was described by Twomey J. as “a key middleman in a chain of payments which defrauded unsuspecting members of the public” (para 1). He found that “the sole purpose of Greymountain was to defraud unsuspecting individuals of their money.” (para 145) The unchallenged evidence before the Court was that the money collected by the company (less the company’s commission) was converted to the use of its shadow directors, the company simply being used by the shadow directors, in furtherance of their scam. The company by virtue of its incorporation in Ireland, and thus the EU, gave this international scam the veneer of legitimacy. It was in this context that the Court had to consider whether the directors/shadow directors should be able to evade responsibility for their company’s 24 actions by hiding behind the veil of incorporation or whether the veil of incorporation of the first defendant company should be pierced in order that the directors could be held personally liable for the acts and omissions of their company.
  6. In the present case, it cannot be said that the sole purpose of the OMC was to be an instrument of fraud, nor indeed does the Plaintiff make any allegation of fraud in its pleadings. Furthermore, in that case, the corporate veil of the company being sued, was lifted so as to hold the directors and shadow directors liable for the actions of their company. However, in the present case, the Plaintiff is not suing the company (the OMC) and its directors with a view to lifting the corporate veil so as to fix the directors with liability for the wrongs of the company (the OMC). Rather it is asserting a direct cause of action as against the directors and has in fact chosen not to sue the OMC at all. Furthermore, in his affidavit before the Court, the director of the Plaintiff, Mr. McCarthy, clearly and unequivocally states that the proceedings seeking relief under the MUD Act “are intended to enforce its entitlement to lawful, fair and effective arrangements for the management of the commons areas.” Since arrangements for the management of those common areas is a matter for the OMC and since the Plaintiff has chosen not to sue the OMC but to instead assert a direct cause of action as against its directors, a case for piercing the corporate veil of the OMC simply does not arise, on the jurisprudence. This is not a case where any of the situations that might give rise to a piercing of the corporate veil arises. Furthermore, the Plaintiff could have brought proceedings seeking orders directly against the OMC and if successful, these orders would have been enforceable as against the OMC and the Plaintiff would have had available to it all the various enforcement mechanisms to ensure compliance. Therefore, I am satisfied that that the Plaintiff’s claim, is so far as it is based on some vague notion of lifting the corporate veil is bound to fail.
  7. The Plaintiff’s final argument, is its fall back argument, that if it is wrong on its first two arguments then, the Court must, on its own motion, save its proceedings by joining the OMC as a defendant and it relies on the caselaw to the effect that if the claim admits of an amendment that would save the proceedings from dismissal, then they should not be dismissed. Remarkably, it did not seek an opportunity to amend the proceedings, nor did it put forward to the Court, any proposed reformulation of the claim by way of amendment. Instead, it took the position that it was not asking the Court to make an 25 amendment and was happy with the proceedings the way they were, but submitted that if the Court was of the view that the proceedings as currently constituted were bound to fail, the Court could and should of its own motion amend the proceedings by joining the OMC to them, so as to save them.
  8. It is undoubtedly well established in the caselaw that if, on an application to dismiss a claim as disclosing no cause of action, the deficiency in the pleading can be rectified by means of a suggested amendment that would set out a good cause of action, then the application to dismiss should not be granted. Thus, in Mohan v Revenue Commissioners, Ireland and the Attorney General [2025] IEHC 63, Simons J. was prepared to adjourn the application to strike out the Plaintiff’s proceedings so as to allow the plaintiff to pursue an application for leave to amend his proceedings, the plaintiff having indicated that he wished to amend his statement of claim. Simons J. was satisfied that there was a realistic possibility that the deficiency in pleading might be rectified by way of an appropriate amendment. However in my view there is a distinction to be made between, amending proceedings to remedy a deficiency in the pleaded case, so as to ensure the determination of the real questions in controversy between the parties to the proceedings and reconstituting the proceedings by adding an entirely new defendant, so that the Plaintiff can pursue a cause of action against it. I am satisfied that while the caselaw makes it clear that a court should refrain from striking out proceedings if a proposed amendment might “save” them, the caselaw does not require a court to refrain from striking out proceedings against a defendant, that are bound to fail, because it may be possible for the proceedings to be reconstituted against a new and different defendant, so that a cause of action can be pursued against them. This, in reality, is what the Plaintiff is urging on the Court. Furthermore, even if, what was being suggested by the Plaintiff amounted to an amendment of the proceedings, the Plaintiff is not asking for or proposing an amendment to the proceedings.
  9. Whether there is an obligation on the Court to identify amendments and the amend the proceedings so as to “save” them, in the absence of an intimation by the plaintiff of an intention to seek to amend or an indicating of the wording of such an amendment which might be sought, has been considered in a number of judgments. In Mohan v Revenue 26 Commissioners, Ireland and the Attorney General [2025] IEHC 63, Simons J. observed that: [37] … .. It has been queried as to whether – in the absence of an intimation by a plaintiff of an intention to seek leave to amend – there is an obligation on the court to identify potential amendments itself. It would appear to cut against the adversarial nature of litigation were the court to propose amendments of its own volition.”
  10. The question as to whether there is an obligation on the court to identify potential amendments itself, arose from the dicta of Finlay Geoghegan J. in V.K. v M.W. [2018] IECA 290 where, in the course of her judgment she suggested that whilst there are obviously limits to the circumstances in which the court should consider or suggest an amendment which would result in a cause of action being pleaded, in some circumstances, “depending on the facts and submissions it may be incumbent on a judge to consider whether an amendment ought to be permitted even in the absence of an express application to amend.” (para.35). However, this comment appears to have been obiter dicta since, in that case, the Plaintiff had in fact asked to be allowed to amend his statement of claim, once he had an opportunity to inspect certain of the Defendant’s documents. Furthermore, in that case the plaintiff was a litigant in person. It was therefore within the context of what Finlay Geoghegan J. described as this “particularly difficult situation” that she made her comments. I agree with the view expressed by Holland J. in Malone and Another v Laois County Council and Others [2025] IEHC 345 that the weight of authority supports the general proposition that a plaintiff is required to propose the amendment that might save the proceedings from dismissal – if only in broad outline, but that in limited circumstances, where the interests of justice require it, lay litigants may be assisted by the court, in that regard.
  11. Thus as Flaherty J. stated on behalf of the Court of Appeal in McAndrew v Launceston Property Finance DAC, [2023] IECA 43 :“[91] Overall, I accept the defendants' counsel's argument that it is not for this Court to try and identify amendments that might conceivably save the proceedings as they stand in circumstances where no amendments have been 27 put before the Court, either by way of the plaintiff's 29 January 2018 affidavit grounding his application to amend his statement of claim or otherwise. As said by Haughton J. writing for this Court in Fulham v. Chadwicks Limited & Ors [2021] IECA 72 after reviewing the relevant caselaw, the exercise of the jurisdiction to permit an amendment to ‘save the action’ required that “the claimant or his/her lawyers will usually be required to intimate an intention to amend, or at least the general nature of the amendment suggested in response to the motion to dismiss”. In my view, that (relatively) low threshold has not been met here.”
  12. In the present case, the Plaintiff, who at all times has been represented by a solicitor, junior counsel and senior counsel, is not seeking to amend its proceedings nor join the OMC to them. Instead, it is pushing it back on the Court, in effect saying it is not seeking an amendment, it is not seeking to join the OMC but if the Court takes the view that the proceedings are bound to fail then it is up to the Court to try and “save” the proceedings by joining the OMC to them and coming up with the appropriate amendment. I am satisfied that it does not represent the law. So even if, reconstituting the proceedings by the joinder of a new party, in this case, the OMC amounted to an amendment of the same, which I do not believe it does, it is not for this Court to join the OMC to the proceedings of its own motion, when not requested to do so, and then try and identify amendments that might conceivably save the proceedings.
  13. Therefore, having carefully considered the arguments made by the Plaintiff and for the purposes of this application, assuming that the facts pleaded by it will be proven at trial, I am satisfied that the Plaintiff cannot succeed at the trial of the action with those parts of its claim against the defendants that allege wrongdoing by the OMC and seek reliefs that would in reality be orders against the OMC. Those part of the proceedings should be struck out as disclosing no reasonable cause of action, being bound to fail, and having no reasonable prospect of succeeding. 28 Can the Plaintiff succeed in relation to claims against the Defendants for breach of their directors’ duties?
  14. In relation to the claims being brought against the Defendants as directors of the OMC for breach of their directors’ duties, which said breaches it is claimed caused the OMC to act in the unlawful manner in which it did, I am satisfied that these claims are also bound to fail and have no reasonable prospect of succeeding.
  15. The Plaintiff argues that its case, in this regard is not about a wrong done to the OMC, nor is not a derivative action by another name. Rather it is a claim made directly against the directors of the OMC, who it is claimed through their control of the OMC have visited unlawful services charges upon the Plaintiff and it says that section 24 of the MUD Act is broad enough to allow it obtain orders as against the directors. I do not agree.
  16. Section 227
(1)of the Companies Act 2014 makes it clear that the duties owed by directors of a company, are owed to the company alone. In Courtney, The Law of Companies [4th edition] the author explains that this confirms the longstanding position at common law that directors stand in a fiduciary relationship to their company and accordingly owe duties to it (para16.006) and he cites the case of Percival v Wright [1902] 2 Ch 421 as the accepted authority for the proposition that directors’ duties are owed to the company and not to its shareholders. Thus, it is only in exceptional circumstances, where a director undertakes or volunteers to act on the shareholder’s behalf, that a fiduciary duty might arise. That cannot be said to be the case here. 61. Therefore, in so far as the Defendants are in breach of their directors’ duties and have wronged the OMC or acted in disregard of its interests, in favour of their own, that is prima facie a claim to be brought by the company itself. 62. That wrongs or injuries done to a company are generally only actionable by the company and not its shareholders, is well established and can be traced back to the seminal decision in Foss and Harbottle
(1843)2 Hare
  1. The Plaintiff of course says and pleads that the Defendants by themselves and through the corporate vehicles controlled by them, own 42 of the apartments in the development and thereby control the majority interest in 29 the OMC (para 3 of the Civil Bill) and that because of this it, they “can prevent the OMC from pursuing them for the breaches of their obligations to the benefit of themselves and Slishwood at the expense of the OMC” (para 10 of the Civil Bill). Assuming, as I must for the purposes of the application to dismiss, that this is so, then the appropriate way for the Plaintiff to proceed, was to apply to the High Court for permission to bring a derivative action on behalf of the OMC.
  2. The position in respect of a derivative action was explained by the Court of Appeal of England and Wales in Prudential Assurance Co Ltd v. Newman Industries Ltd (No. 2) [1982] 1 Ch 204, 201 as follows. “A derivative action is an exception to the elementary principle that A cannot, as a general rule, bring an action against B to recover damages or secure other relief on behalf of C for an injury done by B to C. C is the proper plaintiff because C is the party injured, and, therefore, the person in whom the cause of action is vested. This is sometimes referred to as the rule in Foss v. Harbottle
(1843)2 Hare 461 when applied to corporations, but it has a wider scope and is fundamental to any rational system of jurisprudence.”
  1. In O’ Neill v Ryan [1993] ILRM 557, 559 O’Flaherty J. pointed out that the basic theme of Foss v Harbottle was that where a wrong has been done to a company it is for the company itself to seek redress for the injury done to it, although in the appropriate circumstances a derivative claim by a minority shareholder may be allowed. He quoted the dicta of Lord Davey in Burland v Earle [1902] AC 83 where that judge stated: “It is an elementary principle of the law relating to joint stock companies that the court will not interfere with the internal management of companies acting within their powers, and in fact has no jurisdiction to do so. Again, it is clear law that in order to redress a wrong done to the company, or to recover moneys or damages alleged to be due to the company, the action should prima facie be brought by the company itself.”
  2. Thus, it was pointed out in by the Court of Appeal of England and Wales in Prudential Assurance Co Ltd v. Newman Industries Ltd (No. 2) that: 30 “A personal action would subvert the rule in Foss v. Harbottle and that rule is not merely a tiresome procedural obstacle placed in the path of a shareholder by a legalistic judiciary. The rule is the consequence of the fact that a corporation is a separate legal entity. Other consequences are limited liability and limited rights. The company is liable for its contracts and torts; the shareholder has no such liability. The company acquires causes of action for breaches of contract and for torts which B damage the company. No cause of action vests in the shareholder. When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting. The law confers on him the right to ensure that the company observes the limitations of its memorandum p of association and the right to ensure that other shareholders observe the rule, imposed upon them by the articles of association. If it is right that the law has conferred or should in certain restricted circumstances confer further rights on a shareholder the scope and consequences of such further rights require careful consideration.”
  3. It was not disputed by the Plaintiff, that the High Court retains exclusive jurisdiction in respect of derivative actions. Order 15 Rule 39 of the Rules of the Superior Courts sets out the procedure to be followed, if a shareholder wishes to bring a derivative action on behalf of a company. Order 15 Rule 39
(2)provides that a derivative action may not be commenced without the leave of the High Court. The Plaintiff has not sought the leave of the High Court to bring a derivative action but instead has chosen to sue the directors of the OMC personally in the Circuit Court for a claim that falls squarely within the definition of as derivative action. This, it cannot do.
  1. Neither can it be said that the MUD Act, provides a legal basis upon which the Plaintiff is entitled to seek the orders it does, directly against the defendants as directors of the OMC. I have already considered above, sections 18 and 24 of the MUD Act. Even assuming that every allegation made by the Plaintiff would be proven at trial, I am satisfied that there is no legal basis upon which the Plaintiff can successfully sue the directors of the OMC directly. As outlined above, an order under section 24 of the 31 MUD Act must be anchored in a section of the MUD Act or in a right conferred or obligation imposed, either by the Act or a rule of law. The MUD Act does not impose upon the Defendants as directors of the OMC, duties that are owed directly to the shareholders of the OMC, as opposed to the OMC itself. The Act does not in any way alter the architecture of the Companies Act 2014 or indeed the common law, in terms of where the rights and obligations of shareholders and directors lie in a corporate structure. This is evident from the express provisions of the MUD Act itself. Indeed section 29 of the MUD Act provides that “[n]othing in this Act shall be taken to derogate from any right or power which may, whether before or after the passing of this Act, be vested in any person or court, by statute or otherwise, and the powers conferred by this Act shall be in addition to, and not in substitution for, such other rights or powers.”
  2. In relation to the other argument put forward by the Plaintiff, I fail to see how the notion of piercing the corporate veil of the OMC could have any relevance to the claims that the Defendants are in breach of their directors’ duties to the OMC, nor was that explained to the Court by the Plaintiff.
  3. Therefore, having carefully considered the arguments made by the Plaintiff and for the purposes of this application, assuming that the facts pleaded by it would be proven at trial, I am satisfied that the Plaintiff cannot succeed at the trial of the action with its claims against the Defendants that allege wrongdoing against the OMC, by the breach by them of their directors duties. Those claims are bound to fail and have no reasonable prospect of succeeding. Conclusion
  4. Therefore, for the reasons, outlined above, as I am satisfied that the Plaintiff’s entire case comprises, either claims of wrongs by the OMC or claims of wrongs done to the OMC by the Defendant directors, upon which it cannot succeed, as against the Defendants. I am satisfied that the Plaintiff’s proceedings disclose no reasonable cause of action, are bound to fail, and have no reasonable prospect of succeeding. I will therefore refuse the appeal and affirm the order of the Circuit Court by striking out the proceedings. Since the proceedings are being struck out in their entirety, I do not have to consider the alternative relief sought being security for costs. 32
  5. As this judgment has been delivered electronically, the matter will be listed for mention at 10.30 am on 16th June 2026 for the purpose of making final orders and dealing with costs. 33

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