NI High Court: Ten-year ‘doomed’ dispute over sale of land in Belfast dismissed

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The High Court dismissed the seven headings of a land transfer counterclaim, finding it “clearly an abuse of process”.

The plaintiffs, lawyer Andrea McIlroy-Rose and her late father John McIlroy, filed a lawsuit in 2016 seeking an injunction and damages for an alleged campaign of harassment by the defendant, Robert McKeating.

Mr. McKeating presented a defense and counterclaim in the action, alleging that the plaintiffs were guilty of fraud, breach of contract, misrepresentation, negligence, breach of fiduciary duty, conversion, conspiracy and fraudulent misrepresentation, all allegedly resulting from a land purchase contract.

Judge Michael Humphreys ultimately dismissed the counterclaim as it failed to disclose any reasonable cause of action.

Background

The respondent is one of four sons of the late Mr. Fred McKeating Senior. His brothers are Fred Junior, Dominic and James. Fred Senior owned 0.64 acres of land at Nelson Street / Little Patrick Street in Belfast. It was agreed that a joint venture would be formed between Fred Sr. and Ruskin Developments Limited, called Ruskin & McKeating Developments Limited, to purchase the lands.

The terms of the joint venture agreement concluded in July 2004 provided that Mr McKeating Senior would provide his land, which had a face value of £ 900,000, and Ruskin would provide a financial contribution of £ 900,000 to the company JV. The two parties to the joint venture agreement owned 50 percent of the company.

Fred Senior transferred the lands to the common names of himself and his wife by a deed dated April 2, 2004. On February 11, 2005, the lands were transferred to the sole name of the eldest son, Mr. Fred McKeating Junior. The defendant’s father died in February 2006. In his will, executed in July 2003, Mr. McKeating Senior sought to bequeath the land in varying proportions to his wife and children, five per cent of them to the defendant. However, by virtue of the land transfers that took place in 2004 and 2005, the land was deemed to be.

Mr. McKeating Junior, in his capacity as beneficial owner, transferred part of the land to Ruskin and part to RMKD by separate assignments dated June 28, 2006. The portion of the land then held by Ruskin was sold to Big Picture Developments Limited July 31, 2006..

The counterclaim

The defendant’s counterclaim sought to set aside the transfer of the land and sought damages against each of the defendants on the counterclaim.

The defendant argued that his father intended to develop the land through social housing, in accordance with his selflessness and his close connection to the local community. The joint venture agreement provided for the development of social housing and a building for the then Department of Health and Social Services.

The part of the land earmarked for social housing was transferred to Ruskin (rather than RMKD) in an attempt to save on stamp duty, but also on the basis of statements made that Clanmil Housing, the developer, would be withdrawing of the agreement unless such land is transferred immediately. This land was later ceded to Big Picture Developments Limited, a company controlled by the first and fifth counterclaim defendants, for £ 3.5million, generating a profit for Ruskin.

The defendant alleges that the second counterclaim defendant, who was employed by NIHE as director of housing and regeneration, was connected with the transactions through his son, the third counterclaim defendant, who was employed by Big Picture. The pleadings argued that the conspiracy extended to the sale of other development land at a material undervaluation to a separate company controlled by the sixth defendant on the counterclaim. These seven heads of complaint are described below.

(i) Conspiracy

Ultimately, the counterclaim argued that: “This was a carefully planned conspiracy, designed and supported by the plaintiffs, Kevin Lagan, Barry Gilligan and Mr. McCaughley of NIHE to (a) defraud the McKeatings of their land (b) transfer it to Barry Gilligan and (c) create a vast profit by rezoning the entire plot as land of development opportunity ”.

However, loss or damage is an essential element of this tort, and here the court concluded that the defendant suffered no loss due to the alleged conspiracy and that there were no special circumstances enabling him to pursue the claim. claim. The court further pointed out that the fact that some of the plaintiffs and counterclaim defendants had business relationships was not sufficient to prove a conspiracy.

(ii) Fraud

The counterclaim alleged that the plaintiffs had falsely asserted that Clanmil Housing was threatening not to complete the sale of the land. The defendant claims that the land would never have been transferred without the representation that it would be developed by Clanmil and used for social housing purposes.

The court found, however, that at all material times the first plaintiff was acting for Ruskin, and not for any of the other people sued in the counterclaim. It has not been established that any of the first to sixth defendants to the counterclaim made any actionable representations.

(iii) Breach of fiduciary duty

No fact has been pleaded in the counterclaim as to why any of the plaintiffs or the defendants to the counterclaim owed a fiduciary duty to the defendant, either in their personal capacity or as a beneficiary of a so-called trust. A trustee has fiduciary duties to the beneficiaries of a trust, but no action has been taken against him.

(iv) False declaration

The same conclusions as in point (ii) above were drawn.

(v) Negligence

Again, no fact was relied on in the counterclaim to indicate that any of the plaintiffs or defendants to the counterclaim owed a duty of care to the defendant.

(vi) Breach of contract

No proper details were provided in the counterclaim describing this claim, but the only agreement referenced was the July 2004 JV Agreement. Neither party to the proceedings had any obligations under the Agreement. JV and, therefore, any breach of contract claim against the plaintiffs or defendants to the counterclaim was, in the terms of the court, doomed to failure.

(vii) Conversion

The conversion offense protects property rights in movable property. No movable property belonging to the defendant had been interfered with and, therefore, this claim was judged by the court as “unquestionably bad in law and would be struck out”.

Henderson vs. Henderson

The court made instructive comments on the rule in Henderson vs. Henderson [1843] 3 hare 100, which gives a court the power to strike out an abuse of process claim in circumstances where the doctrine of res judicata does not apply strictly, but when a question has been raised which could or should have been decided in an earlier proceeding.

In the present case, in 2009, the defendant was sued by Kevin and Michael Stanley for trespassing on the land which was transferred by Fred McKeating Junior to Ruskin in 2006. The defendant was then legally represented and was clearly open to him. de to claim that he was a beneficial owner of the land, given the trust that would have been created in 2006. In the alternative, the judge noted that the defendant could have argued that Kevin Stanley was a party to a fraud or a plot by which he had acquired the title of the Ruskin part of the land.

Instead, the defendant consented to the issuance of a permanent injunction against him preventing him from entering the land. The court ruled that it was “quite simply inconceivable that this measure had been taken if the defendant had benefited from a viable and defensible defense”.

As such, if the defendant had shown here a reasonable cause of action against the plaintiffs or defendants to counterclaim, the judge would have struck out the counterclaim, which represents an abuse of court process under the rule of law. Henderson vs. Henderson. If the defendant had a viable case, it should have been raised in these proceedings 12 years ago in 2009.

Conclusion

The High Court issued an order dismissing the counterclaim, relying on Order 18, Rule 19 (1) (a) of the Rules of the Court of Justice (NI) 1980, in that the counterclaim did not disclose any reasonable cause of action.


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