Irish ruling highlights acting without delay critical to legal challenges over settlements

In its judgment, the High Court dismissed an action for specific performance of a settlement agreement because the plaintiff applicant failed to take necessary and required actions in a timely manner. 

The ruling is a firm reminder to all to proactively pursue proceedings and an illustration of the judiciary's crucial role in navigating the important legal test for striking out a claim for delay towards equitable and timely outcomes in settlement enforcement actions. The case also highlights that the intrinsic public policy favouring dispute resolution through settlements could be jeopardised if settlements lead to further litigation that is not actively pursued. It sets a clear understanding for the diligent prosecution of legal disputes and the definitive resolution of settlement agreements.

The case centred around a claim seeking specific performance of a settlement agreement entered into in 2009 following the parties’ initial proceedings in 2003. The settlement agreement related to water damage disputes between the defendants and the plaintiffs, operators of the City Limits Comedy and Night Club in Cork.

The proceedings concerning the settlement were issued in April 2011. Under the settlement agreement, each defendant was to carry out what the court characterised as “relatively minor” works. Pleadings closed and the plaintiffs set the matter down for trial in 2014. However, there were two three-year periods where nothing was done to progress proceedings at all. Notwithstanding the settlement's aim to conclusively address the disputes, the proceedings were marred by delays, notably due to the plaintiffs' changes in legal representation and requests for discovery in 2017 and further particulars in 2022. As a result, the third and fourth defendants sought the dismissal of the claim for want of prosecution in 2023.

The High Court dismissed the plaintiffs’ claim for specific performance against the third and fourth defendants, as it found the prosecutorial delays by the plaintiffs to be both extensive and without justification, alongside identifiable prejudice to the defendants.

The impact of procedural delay on the principles of legal justice

In the court’s analysis, Justice Mulcahy applied the three-step test on dismissing proceedings for delay established by the Supreme Court in 2018, in Primor plc v Stokes Kennedy Crowley. The test requires that for a claim to be dismissed on grounds of delay, there has to be inordinate delay, the delay must be inexcusable, and the balance of justice must favour the dismissal of the claim.

While all three limbs of the test would have to be satisfied for the relevant threshold to be met, the court held that “[i]n circumstances where no excuse is offered for the delay, the delay is almost axiomatically inexcusable.”

The question in this case fell under the third limb of the test: reflecting on the balance of justice whether the defendants would be prejudiced if the case proceeded.

The first plaintiff argued that allowing the case to continue would not prejudice the defendants as the defendants' expert engineer, tasked with certifying the works completed under the settlement agreement, was still available to testify. Moreover, the plaintiff pointed out that a thorough examination by a qualified expert would definitively reveal whether the work done under the settlement meets the required standards, which is at the heart of the current dispute.

The court disagreed and pointed out that if such an examination was all that was required to be addressed for the purpose of determining liability, then “whatever about prejudice, it is an argument which proves too much when it comes to the issue of delay”.

The court’s analysis also extended to an assessment of the broader ramifications of procedural delay on the principles of legal justice and the effective enforcement of settlement agreements. Justice Mulcahy's deliberation on procedural diligence reflects the importance on the balance of justice, requiring a demonstration of specific prejudice arising from the delay.

Justice Mulcahy said that the delay caused by the plaintiffs significantly disadvantaged the third and fourth defendants. These defendants missed the chance to use indemnities from the first defendant, who had since entered into a personal insolvency arrangement (PIA). While the plaintiffs argued that this loss was not prejudicial since the indemnities supposedly offered no real benefit, the judge disagreed. The settlement required certain works by the third and fourth defendants, with all four defendants together needing to certify the completed works. The indemnities covered the third and fourth defendants for any related damages, costs, and expenses from the 2003 proceedings, suggesting a broad protective scope. The judge highlighted that, irrespective of whether the indemnities' argument would ultimately succeed, the mere ability to make such a claim presented a clear advantage. Losing this potential due to the first defendant's PIA significantly prejudiced the third and fourth defendants, as it deprived them of valuable legal strategies.

Justice Mulcahy's judgment not only applies the principles of the Primor case to a set of unique circumstances, but also reinforces fundamental legal tenets governing case management and the execution of settlements in Ireland. This case serves as a reminder to parties and their legal representatives of their responsibilities to manage their cases proactively. Moreover, it highlights the judiciary's critical role in ensuring that neither the litigation process nor the enforcement of settlements is compromised by unnecessary procedural delays.

Co-written by Lynsey Burke of Pinsent Masons.