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Behan v. Bank of Ireland [2002] IESC 20 (19th March, 2002)
THE
SUPREME COURT
RECORD
NO: 4815P/2001
APPEAL
NO: 243/01
Denham
J.
Murray
J.
McGuinness
J.
BETWEEN/
JAMES
J. BEHAN
PLAINTIFF/RESPONDENT
and
THE
GOVERNOR AND COMPANY OF THE BANK OF IRELAND
DEFENDANT/APPELLANT
Judgment
delivered on the 19th day of March, 2002 by Denham J. [Nem Diss.]
1. Motion
to High Court
1. The
Governor and Company of the Bank of Ireland, the defendant/appellant,
hereinafter referred to as ‘the bank’, applied to the High Court
for an order striking out the proceedings herein of James J. Behan, the
plaintiff/respondent, hereinafter referred to as the ‘plaintiff’,
in the absence of any reasonable cause of action, by reason of the action as
against the bank herein being frivolous or vexatious, and being
res
judicata
.
The motion is brought pursuant to the inherent jurisdiction of this court
and/or pursuant to the provisions of Order 19, Rule 28 of the Rules of the
Superior Courts. The plaintiff sought an order for judgment in default of
defence.
2. Counsel’s
note of the decision of the High Court (Kinlen J.), adopted by the learned
trial judge, states:
“Following
having heard the contentions made on behalf of Esmonde Keane BL, Counsel for
the Defendant, and the Plaintiff who appeared in person, and having considered
the contents of the Affidavit of Patrick Monahan, Sworn on behalf of the
Defendant, dated the 17th of May 2001 and the Affidavit of Niall Browne, sworn
on the 29th day of May 2001, His Honour Mr. Justice Kinlen stated that the
application made on behalf of the Defendant herein was to strike out the
proceedings in the absence of same disclosing any reasonable cause of action
and in particular by reason of the action brought against the Defendant herein,
being
res
judicata
.
His Honour Mr. Justice Kinlen stated that Mr. Browne in his Affidavit had
stated that the matter relating to the credit obtained by the Defendant had
only come to light after a number of days into the hearing of the matter before
the High Court. The issue, accordingly, only came to light in that case and
has only recently been launched in the proceedings herein. Accordingly, His
Honour Mr. Justice Kinlen determined to dismiss the application and granted the
Defendant the costs of attending before the High Court to argue same. In
relation to the Plaintiff’s Motion for Judgment in Default of Defence,
three weeks was allowed to the Defendant for the filing of its Defence and
reserved costs of that motion to trial judge.”
3. Appeal
2. Against
that decision of the High Court the bank has appealed. The grounds of appeal,
as they appear on the Notice of Appeal, are as follows:-
“1. That
the learned High Court Judge erred both in law and in fact in holding that the
Pleadings herein disclosed any reasonable cause of action.
2. That
the learned High Court Judge erred both in law and in fact in holding that any
cause of action in the pleadings herein was not
res
judicata.
3. That
the learned High Court Judge erred in law in holding that the inclusion of the
issue (relating to the claim by the Plaintiff arising out of the receipt by the
Defendant of credit of the farm rescue package) following the commencement of
the hearing before the High Court in the proceedings between the parties herein
entitled “the High Court, 1990, No. 9665P, Between : James J. Behan
Plaintiff and The Governor and Company of the Bank of Ireland, Defendant”
(hereinafter referred to as “the earlier proceedings”), accompanied
as it was by the granting of liberty to amend the Statement of Claim and the
subsequent amendment of same (including general and consequential damages
arising from same) and further hearing the Judgement
(sic)
concerning same in the earlier proceedings, prevented the said issue and the
other issues herein from being
res judicata
.
4. That
the learned High Court Judge erred both in law and in fact in holding that
there are any new issues disclosed in the present proceedings which have not
already been determined upon in the earlier proceedings.
5. That
the learned High Court Judge erred both in law and in fact in failing to hold
that the action as shown by the Plaintiff’s Pleadings herein was not
frivolous or vexatious as against the Defendant herein.
6. That
the learned High Court Judge erred both in law and in fact in failing to
dismiss the proceedings and/or in failing to strike out the Pleadings herein.
7. That
the learned High Court Judge erred both in law and in fact in holding that
there is any issue disclosed in the current proceedings that is not
res
judicata
by reason of the decision in the earlier proceedings.”
4. Submissions
3. Full
submissions were made on behalf of both the parties. Oral submissions were
made on behalf of the bank by Mr. Daniel O’Keefe, S.C. and the plaintiff
himself made submissions.
4. Counsel
for the bank submitted that the proceedings should be struck out on the grounds
that no reasonable cause of action was disclosed, that the proceedings were
vexatious and that the matters were
res
judicata
.
Counsel also requested the court to apply the principle of estoppel.
5. Mr.
Behan submitted,
inter
alia
that there had been probable fraud by the bank related to the concealment of
their use of the farm scheme money. He argued that the fraud had been
concealed by the bank, that the bank had misled him. He referred to the
judgment of
Barron
J. in
James
Behan v Governor and Company of the Bank of Ireland
,
(Unreported, Supreme Court, 20th July, 1998). Mr. Behan submitted that he was
pleading fraud in this case. Further, he submitted, the consequences had not
been dealt with by Morris J. previously.
5. Facts
6. The
original case of the plaintiff commenced by summons dated 5th July, 1990. That
case was 18 days at hearing before the High Court. There was a very detailed
Statement of Claim. The Statement of Claim was amended with permission of the
trial judge, in mid-trial.
6. The
amended Statement of Claim was as follows:
“Amendment
to Statement of Claim:
a)
Pursuant
to the Order of the Learned Trial Judge Mr. Justice Morris, the Statement of
Claim is hereby amended by the inclusion of paragraphs P.Q.R.S. and in the
Particulars of Negligence, Breach of Duty, and Breach of Contract.
b) That
the Defendant failed to enter the Plaintiff in the Farm Rescue Package Scheme
at a time or at all when money under the Scheme could have been used to his
advantage.
c) In
failing to credit the Plaintiff’s account with money payable under the
Reduced Interest Subsidy Scheme on due dates the Plaintiff was deprived of
interest and obliged to pay interest at full prevailing Bank rates on the whole
of his borrowings over the entire period at compound interest which
considerably reduced his working capital.
d) Despite
his being approved for the Scheme the Plaintiff’s account was never
credited with any subsidy in the relevant period 1st April, 1982, to 31st
March, 1985 and the Defendant having called in the debt in April, 1985,
effectively excluded him from achieving any benefit from the Scheme.
e) That
the Defendant in drawing down the entire amount due to the Plaintiff under the
said Scheme on 30th September, 1985, which was the last day when the Scheme was
in operation for his purposes and converting that amount to its own use and
benefit deprived the Plaintiff of its use.
f) That
the Defendant in relation to the Plaintiff did not use the said Scheme for the
purpose for which it was intended.”
7. The
High Court (Morris J.) delivered a reserved judgment on the 15th day of August,
1997. The learned trial judge dealt specifically with the Reduced Interest
Subsidy Scheme for Farmers in Severe Financial Distress. Of this scheme Morris
J. stated:
“It
remains now to consider the claim that arises under the introduction of the
‘Reduced Interest Scheme for Farmers in Severe Financial Distress’,
(referred to as ‘the scheme’).
7. This
scheme was introduced by the Minister for Agriculture on the 1st April, 1982.
The scheme had as its objective the provision of some relief from high interest
rates for certain classes of farmers. It is, in my view, unnecessary to set
out in detail the conditions of the scheme. All that is required is that it be
understood that the scheme provided that a beneficial rate of interest would be
enjoyed by certain types of farmers on certain bank borrowings. The interest
rate on the relevant loans was reduced by 8
¾%
providing that in no circumstances would the rate to a farmer go below 10
½%.
The scheme operated for 3 years from the 1st April, 1982. The scheme was
operated by banking institutions and the ACC. Mr. Behan completed the
appropriate forms for inclusion in the scheme on the 28th May, 1982. However,
the admission into the scheme depended, inter alia, upon obtaining a Farm
Viability Plan which Mr. Behan obtained from ACOT on the 28th July, 1983. On
the 17th January, 1984 authority was given by the Bank of Ireland to the Carlow
Branch to ‘draw down’ on Mr. Behan’s account.
8. The
case is made on Mr. Behan’s behalf that there was unreasonable and
improper delay on the part of the bank in permitting Mr. Behan to enter and
enjoy the benefits of the scheme.
9. In
my view, entry into the scheme was not available to Mr. Behan until he had
obtained the Farm Viability Plan and it appears to me that the matter was
processed with all due diligence up to the 17th January, 1984. However,
thereafter I am of the view that the bank acted in an arbitrary and improper
manner. I am satisfied from the evidence that one had the position that on the
one hand the bank were adopting the attitude towards Mr. Behan which deprived
him of further finances with which to run his farming business and yet on the
other hand were critical of him when he devised alternative methods of
obtaining finance as, for instance, by opening an account with the AIB. The
bank were using Mr. Behan’s lack of resources as a reason for depriving
him of the benefits of inclusion in the scheme. I am satisfied that the bank
were attempting to achieve benefits for themselves by depriving or withholding
Mr. Behan’s entry into the scheme. From a practical point of view, Mr.
Behan was never entered into the scheme in the sense that he never received the
benefit of the favourable interest rates. On the 30th September, 1985 the
outstanding elements of the scheme were being wound-up. What occurred at this
stage was that the bank, notwithstanding that Mr. Behan had entered into an
agreement on the 22nd July, 1985 whereby he agreed to pay and the bank agreed
to accept £165,000 in full and final settlement, entered the three credits
to which he was entitled under the scheme, namely £6,466.35,
£6,023.15 and £5,965.68 as credits on his account and on the closure
of the account on the 1st April, 1986 applied these amounts towards a reduction
of his indebtedness to the Bank. It is clear that having made the agreement to
accept the reduced amount, the bank were not entitled to apply these monies in
the manner in which they did. Moreover on the winding up of the scheme the
bank would have been credited by the Revenue Commissioners with an equivalent
amount against its corporation tax liabilities.
10. I
am of the view that Mr. Behan is entitled to receive these amounts as money had
and received to his use. They total, on my calculation, £18,455.18.
11. The
question arises as to whether Mr. Behan suffered any consequential loss as a
result of the bank’s failure to include him in the scheme. No evidence
has been offered to me to support any such claim and I accept the evidence of
Mr. Laurence Power that given the amount of Mr. Behan’s indebtedness at
the relevant time the relief which he would have obtained from immediate
admission into the scheme was of no overall consequence.
12. He
is, in addition to the foregoing sum, entitled to interest thereon. In this
regard I accept Mr. Devlin’s evidence that the amount of interest of
which he was deprived was £2,437, making a total claim of £20,892.18.
13. During
the course of Mr. Devlin’s evidence he referred to the fact that he was
unable to identify the rate of interest at which the bank were making their
calculations and he concluded that two different rates of interest were
necessary if the figures were to be found correct. I do not think that this
gives rise to any element of claim.
14. Accordingly,
there will be Judgment for the Plaintiff in the above amount and I will hear
Counsel as to the question of costs.”
8. The
order and decision of Morris J. was appealed to the Supreme Court. The Supreme
Court heard the appeal by the plaintiff and cross appeal by the bank over two
days on 25th and 26th March, 1998 and reserved judgment. On 20th July, 1998 it
was ordered that the plaintiff’s appeal be dismissed, that the
defendant’s cross appeal be allowed in regard to the Statute of
Limitations point and dismissed in regard to the award of £20,892.18 and
the High Court order was varied accordingly. It was ordered in relation to
costs that the plaintiff do recover from the bank the costs of three days in
the High Court and that the bank do recover
from
the plaintiff the costs of ten days in the High Court all when taxed and
ascertained and that no order be made as to costs for five days. It was
ordered that the sum payable by the plaintiff for costs be set off against the
sum payable by the bank for the award of £20,892.18 and costs and that the
party to whom the excess (if any) shall be due be at liberty to issue execution
against the party to whom such excess shall be due. No order was made as to
costs in the Supreme Court.
9. In
a minority judgment Keane J. agreed with the conclusion of the trial judge that
an arrangement of the sort relied on by the plaintiff as having been entered
into at the meeting in May, 1981 was so vague and uncertain in its terms as to
be incapable of enforcement as a legal contract. However, he then went on to
analyse the scheme, which he did in considerable detail. Keane J. did not
agree with the trial judge, he stated:
“I
fear I cannot agree. The reason the plaintiff was not admitted to the farm
rescue scheme was because he failed to comply with the conditions for entry,
including the production of an acceptable farm viability plan. However,
altogether apart from that consideration, there is no question of monies having
been paid to the bank to which the plaintiff was entitled. The entry by the
bank in their books of the three sums totalling £18,455.18 represented in
arithmetical terms the difference between the commercial rate payable by the
plaintiff and the reduced interest rate payable on the farm rescue loan. A
corresponding debit appeared in an internal bank suspense account. No money
was paid by any third party to the bank to the benefit of which the plaintiff
was entitled and which was wrongfully withheld from him by the bank.
Had
the plaintiff discharged his total liabilities to the bank, he would have paid
the sum of £213,891.43 and - assuming that he had met the other conditions
for eligibility - would have been entitled to be refunded by the bank the sum
of £18,455.18 because of his participation in the farm rescue scheme.
Nothing of the sort happened. The proposition that a debtor who owes the sum
of £48,891.43 has suffered a wrong because his unpaid creditor hopes to
recoup part of the sum - £18,455.18 - from a third party is wholly
unsustainable in law or, for that matter, in simple equity.
No
doubt the bank hoped to satisfy the revenue that, since they would clearly have
been entitled to set off the £18,455.18 against their liability to
corporation tax in the event of the plaintiff having met all his outstanding
liabilities to them, they should hardly be in any worse position where, on the
contrary, he ended up owing them £48,891.43. However, neither the High
Court nor this court was or is concerned in any way with the rights
inter
se
of the bank and the Revenue Commissioners.
Counsel
for the bank also submitted that this part of the plaintiff’s claim was
in any event statute barred, since it did not appear in the plenary summons or
statement of claim: the trial judge allowed an amendment of the statement of
claim during the course of the trial on the ground that, as claimed on behalf
of the plaintiff, he or his legal advisers had not been fully aware of the
manner in which the interest refunds had been dealt with at the time the
proceedings were issued. It was urged that the trial judge’s discretion
to allow amendments to the pleadings could not be exercised in such a way as to
deprive a defendant of a defence which would otherwise be open to him under the
Statute of Limitations 1957.
In
the judgment which he is about to deliver, Barron J. refers to a number of
English decisions to the effect that a defendant may be deprived of a defence
which would otherwise be open to him under the Statute of Limitations 1957
where his conduct was ‘unconscionable’ or
‘inequitable’. On the view I take of the plaintiff’s claim,
those authorities are of no relevance. I would in any event express no opinion
on whether they correctly state the law or their applicability to the facts in
the present case, since they were not cited at any stage by counsel for the
plaintiff and counsel for the bank had no opportunity of dealing with
them.”
10. Barron
J. agreed with Keane J. that the appeal of the plaintiff should be dismissed.
In a written judgment, Barron J. set out his different reasons for dismissing
the plaintiff’s appeal. O’Flaherty J. agreed with Barron J.
“I
agree with the judgment of Keane J. that the appeal of the plaintiff should be
dismissed.
It
is unfortunate that the learned trial judge was mistaken as to the document
which showed through the copy of the farm loan analysis. As a result, he did
not accept the evidence adduced on behalf of the plaintiff.
However,
an analysis of this evidence on the basis that it is accepted in full does not
support a case entitling the plaintiff to damages.
The
plaintiff’s case lay both in contract and in tort. The farm loan
analysis is significant in relation to the claim for damages for negligent
advice. It supports the allegation of a representation that the Bank thought
highly of the plaintiff and by inference would be prepared to back him
financially through the bad days. But even upon that representation, there is
nothing to suggest that the final decision was not to be that of the plaintiff
himself.
In
relation to the claim in contract, there is nothing in the evidence to suggest
that any discussion in relation to detail which would have been expected to
have taken place did take place nor were the terms alleged of sufficient
precision to found an agreement.
Of
equal difficulty for the plaintiff was the delay in bringing proceedings. It
was clear from an early date and well before the six-year period prior to the
issue of proceedings that not only was the advice of the Bank poor but that it
was not abiding by its obligations towards the plaintiff. Admittedly,
customers of banks are in different positions from many debtors in that by
contesting a claim against the Bank they may find themselves without the
finance necessary to pursue their commercial interests. That may have been the
case in 1983 when it was clear that the Bank did not consider itself bound by
any agreement. But once the settlement was reached in 1985, there was no
longer any such impediment.
As
regards the plaintiff’s case that in July 1985 cheques were dishonoured
in breach of a specific and temporary arrangement for an overdraft, there was
no evidence adduced that the dates of dishonour were within the statutory
limitation period. Counsel asserted this fact and subsequently indicated to a
specific portion of the transcript of evidence. That however also was an
assertion by counsel in the course of submissions to the learned trial judge.
Accordingly, there remains no evidence to establish the dates of dishonour.
In
relation to the defendant’s cross-appeal, it seems to me that the
following is an appropriate analysis of the relevant facts.
1. In
1995, the plaintiff’s total indebtedness to the Bank stood at the sum of
£215,000 approximately. An agreement was arrived at whereby the Bank
would accept £165,000 in full satisfaction to be paid in unequal
instalments.
2. At
the time that that agreement was entered into the Bank maintained, as it was
entitled to do, that the plaintiff, though eligible for the farm rescue
package, was not entitled to its benefit.
Accordingly,
the debt of £215,000 approximately did not take into account the benefit
which would have accrued to the plaintiff if he had been so entitled.
3. The
agreement was concluded on this basis. The Bank however did so on the
understanding, not communicated to the plaintiff, that it could obtain the
fiscal advantage associated with the allowance of the benefit to the scheme to
a customer.
4. Accordingly,
the Bank subsequently made various bookkeeping entries not communicated to the
plaintiff as a result of which an account of the plaintiff with the Bank was
credited with the benefit of the farm rescue package. This amounted to the sum
of £18,000 approximately.
5. That
sum was not paid to the plaintiff but taken against the unsatisfied liabilities
of the plaintiff which by the agreement had amounted to some £50,000
thereby reducing them to some £30,000.
6. The
fact of the payment by the Bank to the plaintiff of a sum of £18,000
approximately in accordance with the provisions of the farm rescue package was
returned to the Revenue so as to obtain a fiscal advantage upon which the
scheme was based.
7.
Until the hearing of this case was several days at hearing, the plaintiff was
unaware that his account had been dealt with in the manner indicated.
It
is the legal effect of these facts which is in issue. The Bank submits that it
was a bookkeeping transaction and no more. I do not accept this submission.
At the date of the crediting of the plaintiff’s account, the relationship
between the plaintiff and the Bank was governed by an agreement entered into
two months before. This was silent on the issue of the farm rescue package.
Prima
facie therefore the Bank by crediting the benefit of the scheme to the
plaintiff’s account acknowledge the plaintiff’s right to that sum.
By seeking the fiscal advantage, the Bank represented to the Revenue that the
sum of £18,000 approximately had been paid to the plaintiff.
Clearly,
the Bank did not intend that this should be paid to the plaintiff. The
plaintiff has no merits to receive this sum since he settled with the Bank in
full knowledge that he was not getting the benefit of the farm rescue package.
But neither did he think that the Bank was in effect writing off less than it
appeared to be doing.
In
the final analysis, it seems to me that the legal position must be that the
Bank having credited the plaintiff’s account at a time when the
plaintiff’s liability to the Bank had been agreed is now estopped from
saying that it was entitled to recoup itself of that amount because a larger
sum owed by the plaintiff to the Bank was waived in the course of previous
settlement negotiations. I would hold the Bank estopped from making any such
claim.
It
is submitted that in any event this claim is barred by the provisions of the
Statute of Limitations, 1957. The answer to that, if there is an answer, lies
in the provisions of s. 71(1)(b) of the same Act.
The
provision is as follows:
‘(1)
Where, in the case of an action for which a period of limitation is fixed by
this Act,
(b)
the right of action is concealed by the fraud of any such person, the
period of limitation shall not begin to run until the plaintiff has discovered
the fraud or could with reasonable diligence have discovered it’
16. The
identical provisions in the English Act - s.26(a) and (b) of Limitation Act,
1939 - was considered in
Beaman
v A.R.T.S. Limited
1949 1 All ER p. 465”
17. Barron
J. then considered a number of decisions of England and Wales concluding:
“Accordingly,
in my view a defence of the Statute of Limitations would not avail the defendant.
I
would accordingly affirm the judgment of the learned President on this
issue.”
11. The
statement of claim of the plaintiff in this action was delivered on 30th March,
2001. I am satisfied that it is essentially the same as the amended statement
of claim in the plaintiff’s previous action. This can be illustrated by
the particulars of special damages/losses claimed.
12. In
the Statement of Claim delivered on 6th day of November, 1995 it is claimed:
“PARTICULARS
OF SPECIAL DAMAGES/LOSSES
1. Estimated
Loss of Lands at Dollardstown and
18. Grangerosnolvin: £960,000.00
2. Estimated
Loss of Profits:
£770,000.00
3. Estimated
Loss of Mill and Profits:
£200,000.00
4. Interest
charged by the Defendant on
money
borrowed:
£440,000.00
5. Estimated
Aggregate of total sums borrowed
from
the Defendant:
£200,000.00
6. Estimated
Other Losses:
£290,000.00
TOTAL
ESTIMATED:
£2.860,000.00”
13. In
the Statement of Claim delivered on 30th March, 2001 in this, the second action
of the plaintiff, the claim as to special damage and losses is:
19. Estimated
loss of lands at Dollardstown and Grangerosnolvin
IR£2,530,000
20. Estimated
loss of profit 8 years @ £10,000
IR£
80,000
11
years @ £15,000
IR£
165,000
21. Interest
on loss of profits @ 10% 19 years
IR£
465,500
22. Loss
of Mill and Milling Business
IR£
200,000
23. Loss
of machinery and equipment
IR£
200,000
24. Damage
to farm buildings
IR£
50,000
25. Damage
and neglect to domestic dwelling
IR£
50,000
26. Sale
of furniture and antiques from home
IR£
40,000
TOTAL: IR£
3,780,500
14. It
is clear that the claim in this case is similar to the claim heard and
determined before Morris J. It is quite clear that the scheme was at issue in
that case and that a determination was made in relation to it in the High
Court and Supreme Court, previously.
15. The
issues have been litigated already. Morris J. took care to include the issues
raised by the plaintiff. The fact that all the evidence the plaintiff would
now
wish to present to the court was not presented then does not mean that the
matter can be reopened. This is not closing out the applicant on a technical
point. It is clear that the consequences were the same, whether they flowed
from alleged fraud or alleged negligence. The issue of the consequences was
before Morris J.
16. The
High Court erred in determining that the matter was not
res
judicata
.
The issue of the scheme was litigated previously by the parties. Further, the
consequences for the Applicant were the same whether being considered under an
allegation of negligence or fraud. The damages were the same.
17. The
proceedings are
res
judicata
,
the issues have been determined. Once, as here, substantially the same cause
of action has been determined the matter is
res
judicata
:
White
v Spendlove
[1942] IR 224. The point has been litigated:
D
v C
[1994] ILRM 173. The applicant is attempting to relitigate the issue which has
already been determined against him:
McCauley
v McDermot
[1997] 2 ILRM 486.
18. It
is impossible not to have sympathy at a personal level for the plaintiff. He
spoke to the court of the plan drawn up by ACOT on his behalf - that it was a
viable plan - that it was accepted. That money was paid to the bank. That the
bank had given him the impression that he was not in the scheme and when he
sold out monies were paid to the bank. The plaintiff has a strong sense of
grievance against the bank, he spoke of his success in developing farm related
projects. However, sympathy is not sufficient to ground success for the
plaintiff’s case.
19. Whilst
I can understand the plaintiff’s wish to continue to pursue the bank he
may not do so in law. Whilst it may be of concern that monies were given so
freely to him in circumstances that are of doubtful economic merit (as
originally done by the bank) the issues have already been litigated. The
plaintiff may not reopen the matter. There must be finality in litigation.
20. I
would allow the appeal and strike out the plaintiff’s proceedings.
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