Civil Wrongs Non-PI
Cases
O’Connell v Building & Allied Trades Union
[2014] IEHC 360, Ryan J.
Judgment of Mr Justice Ryan delivered the 17th July, 2014
1. The plaintiff is a litigant in person who pursued and conducted this lengthy and complex litigation with determination and resourcefulness. He alleges that the Building and Allied Trades Union (“BATU” or “the Union”) and its officials firstly deprived him of membership and then sought to prevent him from working because he was not in the Union, conduct that together or separately he claims to have been unlawful or unconstitutional. The plaintiff says that his capacity to earn a living was severely diminished as a result and the situation has continued from 2000 to date.
2. The plaintiff issued his plenary summons in 2002 against the Union and three officials. He applied to join the Construction Industry Federation (“CIF”) as another defendant at a very late stage in the litigation process, claiming that it conspired with the other defendants to keep him out of work, and succeeded on appeal to the Supreme Court in a decision of June, 2012. He now seeks injunctions and damages. The defendants have filed full defences denying the plaintiff’s claims and the CIF relies on the Statute of Limitations.
3. Mr Karl Sweeney, Barrister, appeared for the BATU defendants; Mr Mark Connaughton S.C. and Ms Lorna Lynch BL acted for the CIF.
4. Mr John O’Connell was born in Canada of Irish parents and came to live in Limerick in or about 1978 when he was in his twenties. He qualified as a blocklayer through AnCO and worked on building sites in the Limerick area. He joined the Ancient Guild of Incorporated Brick and Stonelayers, which later amalgamated with another union to become the Building and Allied Trades Union, the first defendant in the case.
5. Prior to amalgamation, the local representative of the Union in Limerick was the late Mr Jim Kemmy, sometime T.D. and long time trade unionist. Times were hard for building tradesmen in the 1980s with work in short supply. Mr O’Connell had a good relationship with Mr Kemmy, whom he held in high regard. He sometimes worked as a direct employee and at other times as an independent contractor under the Revenue Commissioners’ C2 scheme. Although these arrangements were not in accord with union policy, Mr Kemmy took an indulgent view of them, understanding how hard it was for his members to make a living.
6. During the 1990s the plaintiff had to go abroad to get work and his Union dues fell into arrears and his membership may have lapsed. On his return in or about 1997, he again took up building work either as a direct employee or as a C2 independent contractor.
7. On the plaintiff’s homecoming, he found a changed working environment in Limerick. There were new Union officials who had an uncompromising attitude on Union rules and were determined to enforce them. Following the establishment of BATU, and perhaps even before that happened, the Union began to impose a strict and even militant policy as to Union membership on building sites. There was to be no more free movement between direct employment as a Union member and work as a C2 contractor. The Union actually wanted to enforce a regime on building sites of having directly employed craftsmen only, eliminating C2 contracting. Mr O’Connell encountered this new policy when he went to revive his Union membership or to join BATU, whichever is the appropriate description of the process.
8. The plaintiff claims that the personal defendants as officials of BATU would not let him join the Union. He claims that they imposed unreasonable conditions on membership and put up obstacles to his candidacy. Eventually, they did admit him to probationary membership but subject to unfair and even unlawful terms, specially tailored to his individual situation and not designed to suit him but rather to discomfit him. He did not graduate to full membership and further acrimony ensued.
9. Then, the plaintiff complains, the Union and its officials blacked him on building sites in and around Limerick and prevented him from getting work. He has been unable to overturn the BATU ban despite appeals to the Irish Congress of Trade Unions (“ICTU”) and the Construction Industry Federation. He argues that the latter body, indeed, instead of upholding his rights, actually conspired with the other defendants in keeping him out of work.
Pleadings
10. In his plenary summons issued on the 16th October, 2002, Mr O’Connell firstly sought injunctions restraining BATU and the officials from:-
(a) Intentionally or recklessly interfering with his trade, business or economic activities;
(b) Interfering with his previous or potential future employers;
(c) Inducing breaches of his contracts of employment;
(d) Intimidating either Mr O’Connell or his employers;
(e) Interfering with his constitutional right to work;
(f) Interfering with his constitutional right to associate and dissociate;
(g) Wrongfully excluding him from membership of BATU;
(h) Watching and besetting Mr O’Connell; and
(i) Conspiring with others to commit any of the above acts.
11. Secondly, he claimed declarations that BATU wrongfully and unlawfully excluded him from their organisation and had failed to consider his application for membership. Thirdly, he sought an injunction to compel BATU to treat any application made by him for membership in accordance with natural justice and with regard to his constitutional rights.
12. Finally, he claimed damages for loss, mental distress, upset and inconvenience suffered.
13. In his statement of claim delivered on the 19th February, 2004, the plaintiff pleaded that since 1997, each of the defendants and their servants and agents had wrongfully and unlawfully advised building contractors not to employ him unless he was a member of BATU and they tried to impose preconditions on his membership, extending to the tax regime and eligibility for certain contracts based on membership of the Union.
14. In 1997 Mr Edward Morris, BATU regional organiser for the south east, told the plaintiff that he could not work in Limerick as a bricklayer or mason until he complied with the directions imposed. It is the plaintiff’s case that potential employers were threatened with industrial action and were disinclined to hire him as a result. He says that each of the defendants has interfered with his right to work, to earn a living and to retain employment and gave details of substantial past and continuing losses, pleading mental distress, damage to reputation and upset.
15. BATU’s defence dated the 11th May, 2004, is a traverse of the plaintiff’s allegations.
16. By notice of motion dated 7th February, 2011, the plaintiff applied to the Master for an order amending the plenary summons of the 16th October, 2002, to add the Construction Industry Federation as a defendant. In June, 2012 the Supreme Court allowed the plaintiff’s appeal and granted leave to join the Construction Industry Federation as a co-defendant to the proceedings. (O’Connell v. The Building and Allied Trades Union and Ors. [2012] 2 I.R. 371)
17. The plaintiff delivered an amended statement of claim on the 8th August, 2012, in which he pleaded that on divers dates the co-defendants’ officials orchestrated and/or arranged and/or purported to instruct their members to interfere with the plaintiff’s right to employment over a period of time. Because of the interference, the plaintiff’s relationships with his employers was damaged and resulted in his unlawful dismissal from a number of sites. The plaintiff had employment contracts with:
(a) Stephen Finn Contractors
(b) Cusack / O’Connor Contractors
(c) Davin Builders
(d) Frank McGrath Builders
18. The plaintiff alleged that BATU and the CIF did not ballot their members to decide whether recruitment on building sites should be confined to members of a trade union; the CIF acknowledged and made offers to Mr O’Connell to address the wrongful acts of the other defendants; BATU and the CIF conspired to threaten and break the plaintiff’s employment contracts by unlawful means; and, in a variety of ways, unlawfully interfered with his right to work, right to associate/dissociate, conspired against him and deprived him of the opportunity to earn a living.
19. The CIF delivered a defence on the 22nd November, 2012, in which they first, predictably, pleaded the Statute of Limitations. They pleaded that they were strangers to the proceedings and denied they, or anyone associated to them, had interfered or conspired to interfere with the plaintiff’s rights to earn a livelihood, retain employment, associate/dissociate, or that they in any way caused the plaintiff mental distress. The CIF denied that they ever used their position as members of a trade union society to obstruct, interfere, control or abuse their position of power. They also denied that they in any way interfered with the plaintiff’s right to earn a living/obtain employment.
20. In particulars dated the 5th December, 2012, Mr O’Connell gave details of the locations of each site he claimed the CIF had interfered with his employment, all in Limerick, between October 1999 and July 2002 as follows;
Monaleen (11th October, 1999)
Eastway Industrial Estate (August 2000)
Hanover Tyres (December / January 2001)
Castleoaks Hotel (8th July, 2002)
21. Mr O’Connell also alleged that the most recent interference by the CIF with his employment rights was January, 2010. When requested by the CIF to specify the acts where they allegedly abused their power, Mr O’Connell alleged that the CIF had not held a ballot of members for the purpose of implementing lawful agreements. He said these CIF carried out the alleged acts between February 1997 to present (2012). Mr O’Connell also alleged that employees of the CIF (Mr Eddie Keenan, Mr Creedon and Ms Winters) had undertaken to him to address the wrongful actions of the first four defendants in; November 1998, 2000, January 2001, July 2002 and January 2004. The first three undertakings were made orally to him and the final one in 2004 was in writing.
Evidence
22. The evidence in the case was given by the plaintiff, the three BATU officials who are the named defendants, building employers who came to court under subpoena by the plaintiff, a senior official of ICTU and serving or retired personnel from the CIF. The case fell into two relatively discrete areas of inquiry, namely, the issue of union membership, which did not involve the CIF, and the alleged interference by the Union defendants with the plaintiff’s employment. This did not mean that there was a sharp temporal divide because the evidence on the second area ranged over a time period from before the plaintiff’s attempts to join BATU to his later experience following the process of application and probation. The background to the case and the important events appear from the following chronology.
23. While the plaintiff was working outside of Ireland in the early and middle 1990s changes were occurring in the relations between unions and employers in regard to the employment of blocklayers and associated trades in the Limerick region. It will be recalled from the introductory paragraphs that Mr O’Connell qualified as a blocklayer and he testified that he joined the Union, the Ancient Guild, in 1980. Mr O’Shaughnessy, now the general secretary of BATU, became assistant general secretary of the Ancient Guild of Incorporated Brick and Stonelayers in September, 1978.
24. In the mid-1990s, as Mr Joe O’Brien, then CIF Director for the southern region, recalled, bricklayers in Limerick who were members of BATU were there by choice; a lot were not members and it did not cause any great difficulty. When Mr Morris became involved in 1997, he set about very vigorously trying to get rid of subcontracting and ensuring that all bricklayers in Limerick were members of BATU.
25. In December, 1996 the CIF sent out a document to all of its members relating to a proposal for a revised agreement for sub-contractors. At a CIF Midwest branch meeting in 1996, Mr John Flynn, since deceased but who was the chairman of BATU in Limerick at the time, and Eddie Morris attended by arrangement and Jim Kemmy introduced the latter. Mr Morris proceeded to outline his philosophy and policy that he would enforce in the Limerick area in relation to bricklayers. He made it clear that C2s and C45s were illegal as far as he was concerned. Subcontracting was completely out and, from the 1st January, 1997, he would be strictly enforcing the BATU rule of union cards for every member of BATU and that employees would be unable to work in Limerick without having a current BATU card. That was not an agreement. That was a statement by Eddie Morris which did not go down well with all the CIF members.
26. In 1997 the CIF set up an association catering for bricklaying sub-contractors. Between 1997 and 1998, BATU’s policy caused a lot of grief to members and to the CIF as an organisation, so much so that in 2001 they made a decision to employ a person virtually full time in Limerick to deal with industrial relations. Mr O’Brien had no direct evidence of Mr O’Connell, or other non-union members, being harassed or being run off sites. He heard stories from contractors but they were hearsay. He said that outside of Limerick the influence had not spread to the same degree but a contractor working on a high profile site in Limerick city centre made sure the bricklayers were members of BATU. If they were working somewhere else, in Clare for example, it did not really matter.
27. The plaintiff described how a problem arose in December, 1997 when he was offered work as a mason with an employer in Limerick. Mr Morris required tax information and his approval before a member could begin a job on a Union site. Mr O’Connell went to the tax office but did not give the documentation required. Mr Morris refused him membership of the Union and correspondence between the plaintiff and the Union began.
28. Mr O’Connell did not want to give his tax details to Mr Morris; he said that the Tax office told him he did not have to provide the information because it was private. He offered to give pay slips and a letter from a Commissioner for Oaths but his position was that the tax office informed him he should keep his revenue details private and that was what he was trying to do. He was also annoyed that he had to rejoin the Union – as a long serving member he did not see why that had to be the position and why he would need to provide private information to do so. Another issue, he said, was that Mr Morris wanted him to join in unofficial action and wanted members to go to sites where, if someone was not complying with his new conditions, they might be subject to pickets. Mr Morris was not renewing other bricklayers’ cards as well and Mr O’Connell felt that he should instead be encouraging people to join the Union. Mr Morris refused him a union card and he was subsequently refused work, which continued until 1999 when he was on a site working for the builder Stephen Finn from Monaleen in Castletroy.
29. Mr Morris gave evidence that he became a full time paid Union official in November, 1996. Direct employment was an issue that he raised at sites he visited across Limerick. Mr O’Connell rang him in relation to taking a job and told Mr Morris he did not have C2, at which point Mr Morris said he would need to get a one-line letter from Revenue to say that. At no point did he ask for P60s or P45s. He said that the position was that if Mr O’Connell had a C2 he would have been ineligible to join the Union but could have given up his C2 and applied with no difficulty.
30. Mr Michael McNamara, the BATU branch secretary in Limerick, speaking of the Union policy, said that it was not a case that there were new conditions imposed after Jim Kemmy died, more a case that the existing conditions were finally being imposed.
31. In a letter of the 8th December, 1997, Mr O’Connell told Mr Morris that for social welfare purposes he needed a letter outlining why he had been refused membership of BATU. Mr Morris replied on the 10th December, 1997, rejecting the implied allegation of refusal, enclosing a union membership application form and outlining details of the local meetings and point of contact. In an immediate response Mr O’Connell referred to a telephone call of the previous day and said that John Flynn went over the application form with him and informed him that the tax letter requirement was “Ed Morris’s new requirement” and admission to the Union would not be granted without it. The evidence is all the one way on that point.
32. Between December, 1997 and October, 1999 when a confrontation occurred outside Mr Morris’s home in Kilkenny, there was protracted correspondence between the plaintiff and Union officials. Mr O’Shaughnessy became general secretary in 1998 and was based at the BATU headquarters in Dublin while Mr McNamara was the local official in Limerick.
33. The plaintiff in his letters made points including that he was already a member of the Union and should not have to re-apply; that he was being unfairly refused membership; that the demand for Revenue confirmation was unjustified; that he was not being furnished with the Union rules; and that John Flynn had told him not to bother applying for membership as he would be refused. Mr O’Connell also said he had been advised to seek legal advice. In correspondence with Mr O’Shaughnessy the plaintiff maintained, and the general secretary denied, that he had enclosed his union book with a cheque for dues.
34. Mr Edward Keenan of the CIF said that Mr O’Connell contacted him in relation to the issue he had with BATU, but while he had sympathy for Mr O’Connell and the fact that he could not get a union card, he was unable to help him because he was not a member of the CIF. He suggested Mr O’Connell go to ICTU.
35. Mr O’Connell testified that in October, 1999 he furnished a Revenue letter to BATU stating that he did not have a C2 certificate. In that month, he lost his job on Stephen Finn Builder’s site in Castletroy. There is a note dated 26th October, 1999, of Mr O’Connell’s application for social welfare following his removal from the site in 1999, stating:-
“Remarks: Applicant attended the office not knowing whether his job was gone or not. On 11/10/99 the union visited the site he worked on and as he was not a union member the employers had to let him go. Applicant stated he has tried to join the union on two/three occasions but was not allowed. He appealed but got nowhere. I rang Stephen Finn and they confirmed this statement. P45 being issued to applicant. Applicant on DB for period 13/10/99 22/10/99. Hopes to return to work shortly as dispute with union sorted out. T Moynihan, 26/10/99”.
36. On the allegation that he was forced to leave the site in Castletroy, we have the evidence of Mr O’Connell, Mr McNamara and Mr Morris.
37. The plaintiff’s evidence is that he was on the site in Castletroy working for the builder Stephen Finn. A Union official, Mr McNamara, appeared on the site and told the rest of the masons to cease work until Mr O’Connell left or was evicted off the site. That continued from site to site. He tried contacting Mr Morris numerous times but his calls were never returned.
38. Mr McNamara said that he called to the Monaleen site because of a dispute involving another bricklayer. He did not know that Mr O’Connell was evicted off the Stephen Finn site later that day nor did he say to other bricklayers that he would fine them for working with Mr O’Connell.
39. Mr Morris said that Mr O’Connell left a message saying that Stephen Finn, his ex-employer, had told him to contact him as he had been let go and if Mr Morris was unable to sort it out, Mr O’Connell would have to call up to his house to try to resolve it.
40. That was the background to a confrontation that happened in Kilkenny on 13th October, 1999. The position at that time was that the plaintiff had not been admitted to membership of the Union. He had not provided the required letter that the Union demanded as a condition of entry. He had lost his job because of non-membership and his employer suggested that he contact Mr Morris, who had told employers of the new strict union card policy shortly after he was appointed.
41. Mr O’Connell said that he had been corresponding with Mr Morris and had previously met him. He called him numerous times at the business number, at his office but he never answered so he called to the address on the business card Mr Morris had given, which was in Kilkenny and which he believed was Mr Morris’s office as well as his home. When Mr Morris would not talk to him, he said he was going to have a peaceful protest there, to show that he was putting somebody out of work.
42. While he was protesting with a placard that he had prepared in advance, he said that Mr Morris ran him over with his car.
43. Mr Morris’s evidence of the events was that the plaintiff did not phone him and ask for a meeting and that when he came home for his lunch, Mr O’Connell was in his van parked outside the house. He had been there earlier.
44. Mr Morris felt that the plaintiff had interfered with his family. He explained to Mr O’Connell that his mother in law had just come home from hospital, recuperating from a serious illness and his wife also had problems at the time, but Mr O’Connell did not care about that. He asked Mr O’Connell to go back to Limerick and make his application there but he became sort of hostile. They went out to the van and the plaintiff produced a letter from Jim Kemmy but again Mr Morris insisted that he was not in a position to issue a union card and that he would have to apply in Limerick. When he was at his lunch, his wife noticed Mr O’Connell outside picketing up and down. When Mr Morris was reversing his car, the plaintiff came into his path and the car struck him. Mr Morris accepted he was at fault reversing out.
45. The plaintiff, he said, had put him and his family through hell and has been doing that since he first came in contact with him, writing to his house constantly.
46. The plaintiff said that immediately after the incident in Kilkenny, when he got back to Limerick, John Flynn phoned that night proposing a meeting to sort things out because they had gone too far. The meeting took place on the 1st November, 1999, and was attended by the plaintiff, Michael McNamara and John Flynn. The subject was Mr O’Connell’s rejoining the Union. Mr O’Connell said that he was told he owed IR£400 in arrears, which he paid in cash. There was a further request for a joining fee for 1999 (£200 plus a further £156 which he paid using post-dated cheques) and he was required to sign a document that included a special condition applicable only to him. He asked for a copy of the document but Mr Flynn said it was going into a cabinet and no one would see it.
47. The special condition of the agreement stated:-
“I, the undersigned, do hereby agree to abide by the rules and regulations of the above trade union if granted membership and furthermore I agree to accept the conditions for membership as set out here. No. 1 then that all business that I will conduct with the said trade union shall be carried out with the Limerick branch and all payments and correspondence will be directed to Mechanics Institute Limerick. That I will refrain from making contact with branch regional organiser Mr Eddie Morris or his family home in Kilkenny in any manner or make contact by way of phone call by myself or any person acting on my behalf. I accept and acknowledge the rules governing re-entry to membership of the above trade union. I also accept that I will pay the sum of £200 rejoin fee, £156 subscription fee for the year 1999 and the sum of £400 arrears due by me since 1996 to date.”
48. The document was signed by Mr McNamara and Mr O’Connell and was witnessed by John Flynn on the 1st November, 1999.
49. Mr O’Connell had an issue with the section referring to Kilkenny and felt that he was being told not to speak with the gardaí or anyone else about the incident. He had consulted with his solicitor previously and knew that Mr Morris was going to be getting a letter in relation to his claim for the medical expenses and fees so he told Mr Flynn at that point, which is why, he believes, he was then put on probation. Probation, he said, was something that happened when one initially joined the Union – new members received probation cards.
50. The plaintiff said that he noticed that something was wrong even during the probation period of eight weeks when the Union people started calling to his site and had not cashed his cheques. His employer did not want any trouble so Mr O’Connell left and took a job with a smaller builder, Cusack Construction, in Limerick. Mr O’Connell believes that after the incident in Kilkenny, Mr Morris only agreed to let him into the Union so as to gag or appease him. His belief in this is vindicated, he says, by the fact that he was put on probation only when he mentioned that a letter from his solicitor was being sent to Mr Morris.
51. By the 4th January, 2000, Mr O’Connell had not received his union book so he wrote to Mr O’Shaughnessy at his home address and said he would have to call to him, saying that this was as advised by ICTU. This was contrary to the agreement Mr O’Connell had signed with the Union.
52. At that point the Union, Mr O’Shaughnessy and Mr Morris, obtained an injunction restraining Mr O’Connell from calling to their homes. They claimed that he had deliberately intended on the injury to him in Kilkenny occurring to make a false claim against Mr Morris. Mr O’Connell did not defend the injunction application and it was made permanent in 2003. BATU were awarded costs. He did not appeal the granting of the injunction and did not even know that the permanent injunction hearing had taken place. Mr O’Connell wrote again on 18th January, 2000, to Mr O’Shaughnessy at his home address, which violated the injunction. On the 7th January and 3rd February, 2000, the solicitors for Mr O’Shaughnessy wrote to Mr O’Connell reiterating the terms of the injunction and encouraging him to deal directly with the Limerick and Dublin branches of BATU by post. Mr O’Connell said he only continued to correspond with the Union leaders at their home addresses because he was constantly being accused of breaking their rules.
53. The plaintiff gave evidence of working at the Cusack Builders site in March, 2000. He said that Mr McNamara started calling to that site and claiming that he was breaking Union rules. Mr O’Connell did not know what rules he was supposedly breaking as he was never told. Mr McNamara made allegations that he was working illegally, as a result of which Mr O’Connell was let go after nine or ten months. He got another job straight after with Davins Builders. At that stage BATU did not want him in the Union so he joined another union, the Union of Construction Allied Trades and Technicians (“UCATT”), while he was working for Cusack Construction.
54. Mr McNamara said that he called to the Kieran Cusack site on the Ballysimon Road around the end of March, 2000 looking for a Mr Trevor Vaughan who wanted to join the Limerick branch, and while there he encountered a bricklayer named Mike Fogarty. He said that Mr O’Connell interjected while he was trying to communicate with Mr Fogarty, saying that he would still like to resolve the issue with BATU if possible. Mr McNamara advised Mr O’Connell that because the issue had escalated (by that stage Mr O’Connell had written to the general secretary and BATU’s solicitors had written to him) that there would not be anything that Mr McNamara could do locally but Mr O’Connell could contact the general secretary or the National Executive Committee if he wished to at that point. Mr McNamara also told him that if he had not been happy with the conditions of the agreement in the first place he could have appealed it.
55. Mr Cusack gave evidence that union officials often called to sites but he had never been pressurised by them to fire someone. He had no recollection of the specific allegations Mr O’Connell made about Mr McNamara calling to Cusack’s site on two occasions.
56. In September, 2000 Mr O’Connell was working for Davins Builders. He said that on his first or second day, Paddy Gallagher, a director of the company, got a phone call from Mr McNamara who was threatening a lot of trouble. Mr O’Connell showed Mr Gallagher his union card (UCATT) and things were quiet for a couple of days. It seems that BATU were unhappy with the situation but Mr Gallagher stood up for Mr O’Connell, pointing out that UCATT were a good union and he failed to see the difference. BATU said they did not recognise UCATT and were calling Mr Gallagher every day to have Mr O’Connell removed from site. He worked with Davin Builders for two or three months until the section he was working on was complete. He believed he was on call for the company when his section finished. However, Davins let him go. His partner on the previous job was re-hired so Mr O’Connell took a claim for unfair dismissal at that point as Davins had assured him he was a good worker and they did not want him to leave. He believed that the problem with the Union was troubling for them. He lost and appealed the decision in 2002.
57. Mr Michael McNamara’s evidence was that he called to Davins Builders’ office on Mr Ger Fitzgerald’s behalf on 22nd September, 2000. He met Paddy Gallagher who said he had a John O’Connell there, and Mr McNamara said “Well, he is not a member of our union, you know what the custom and practice is in relation to that”. Paddy Gallagher asked “Well, what do you want me to do then? Do you want me to get rid of him?” and Mr McNamara said, “No, there’s no point getting rid of him, you can keep him there and finish the job, it’s nothing to do with me now anyway”.
58. Mr Paddy Gallagher of Davins gave evidence that he has been a member of the building trade in Limerick since 1968 and a member of the CIF. He received a complaint from the Union about Mr O’Connell’s employment with his firm about 13 or 14 years ago, in relation to the building job on the Ballysimon Road. Mr McNamara approached him and said Mr O’Connell was not in BATU and therefore could not be employed on the site. He knew Mr O’Connell was in a different union as he had produced a union card for that other union. Mr Gallagher said there were never any threats made to him by Mr McNamara and that he had a good working relationship with him. There was an agreement with BATU in relation to using their members on his sites but it was not a formal written agreement, more of a policy. He did not know whether Mr McNamara took exception to Mr O’Connell or whether he would have had an issue with anyone on the site who was not a member of BATU. He said Mr McNamara told him that Mr O’Connell could continue until the job was finished but not to hire him again as he was not a BATU member.
59. The plaintiff described how he was dismissed from another job when he was employed by a builder named Frank McGrath on the 9th July, 2002. His evidence was that about two or three days into his job, other bricklayers walked off the site. Gardaí came to escort him off the site and he was unable to resume work. He took a case against Mr McGrath and the Labour Court awarded him around €500.
60. Mr McNamara’s evidence in relation to the Frank McGrath site was that he had called there to sort out union membership for a new apprentice bricklayer. He met Frank McGrath on the site and explained he was there to meet the “new guy” who was starting. It transpired that two new workers had started, one of whom was John O’Connell. Frank McGrath believed Mr O’Connell was a member of BATU but Mr McNamara laughed and explained that there had been difficulty in the past with Mr O’Connell in relation to joining the Union. Mr McGrath asked if he should call Mr O’Connell in to have a chat with him but Mr McNamara said he did not want to speak with him and left the site.
61. In cross examination, Mr McNamara said his understanding of the “walk off” by other masons on Mr McGrath’s site was due to the fact that Mr O’Connell wanted them to be used as his witnesses as he was planning on pursuing a case.
62. Mr Conor O’Connell also gave evidence on the plaintiff’s dismissal from Frank McGrath’s site. As the CIF Union Representative, he dealt with the subsequent case on behalf of the builder/employer before the Rights Commissioner and Labour Court. His evidence was that the situation in Limerick city at the time was in favour of unions and it was common practice for all employers to ask about union membership. Frank McGrath Construction had a pre-requisite that their employees had to be members of the Union – other companies did not have this condition – and Mr O’Connell was not a member. He acknowledged that at that time, Frank McGrath was short of masons and he also agreed that industrial action had been threatened because of Mr O’Connell’s employment with the company.
63. Mr Frank McGrath gave evidence that he could not recall Mr O’Connell coming to work for him but knew he had worked for him at some stage. He said that Mr O’Connell asked the site foreman for a job in Castleconnell, saying that he would produce his union card in due course. Mr McNamara later visited the site to speak to some of the other blocklayers and he became aware that Mr O’Connell was on the site. He spoke to the foreman about it and the foreman told him that Mr O’Connell had a union card but Michael McNamara pointed out that he did not have a BATU card. The foreman approached Mr O’Connell and told him that he could not continue to work on the site because it had been a tradition in Limerick that only BATU members worked as blocklayers and that was a kind of a custom and practice that had been observed for many years and was always observed by Mr McGrath’s company.
64. In his submission to the Labour Court, Mr McGrath had stated that he was happy with Mr O’Connell working for him until BATU became involved. In relation to the employment contract produced before the Labour Court, Mr McGrath said they were drawn up by either the contracts or commercial managers he employed from 2000 on. In the contract it states that a person must be a member of the “appropriate trade union”. Mr McGrath said he did not know who decided what the appropriate trade union was and he could not recall ever balloting members to give exclusive rights to BATU in relation to this.
65. Mr O’Connell had initially told his company that he had a union card and the contract he was given was standard and not drawn up for him specifically. In relation to the “appropriate trade union”, counsel said the interpretation was that meant a trade union appropriate to a particular trade so for bricklayers, that would be BATU. Mr McGrath explained that Mr McNamara did not call to the site seeking out Mr O’Connell, he had called to speak with other bricklayers on site and that Mr O’Connell saying he had the relevant union card when he did not was a breach of the contract of employment. He did not think Mr O’Connell lied, he just did not have the right union card and the fact that it was Mr McNamara who had informed him that Mr O’Connell was not a member of BATU was irrelevant as the result would have been the same regardless. The policy of the site was BATU membership; it was expressly written into the contract and applied equally to all employees.
66. Mr Peter Rigney, Secretary of the appeals board of ICTU, gave evidence that in December, 2004, he arranged for Fergus Whelan, former bricklayer and president of BATU, to meet with Mr O’Connell to try to broker a settlement which did not succeed. BATU officials did not attend because, as an internal procedure, it was voluntary. In a letter of 12th of April, 2005, to Mr O’Connell the appeals board stated:-
“The board did consider the plenary summons issued on your behalf on the 16th of October 2002 and the notice for trial dated the 20th of October 2004. The purpose of the appeals board is to function as an appeals mechanism within the trade union movement. It has always taken the view that union members have a right to pursue a complaint against a union either to the board or to the court. The latter right is enshrined in Bunreacht na hÉireann. Having regard to this the board took the view that the legal proceedings at present are extant between yourself and BATU constitutes an impediment to the board in hearing your case.”
67. Mr Rigney said that the board did not form any view on the merits of the case, they were simply communicating to Mr O’Connell that they could not investigate his claim because, without BATU’s involvement, it would have breached the natural rules and justice. That was the end of the 2005 case and a further case arose in 2008 and 2009.
68. Mr Patrick O’Shaughnessy gave evidence that it was March, 1998 when he first came into contact with Mr O’Connell. He said that the membership process for joining the Union is relatively informal and explained that the eight weeks probation was there, for instance, if an applicant had to pay dues, to allow him eight weeks to pay it and, if membership is refused to any proposed member, there is an appeals process. He stated that Mr O’Connell was not refused membership and that the reason his membership never matured past probation was because he had failed to follow up after the eight week probation period.
69. Mr McNamara was also of this opinion with regard to the onus being on Mr O’Connell to follow up after the eight week probation period. He said in evidence:-
“I didn’t level any charges against you, Mr O’Connell. You failed to come back. The rules are you must come back within the eight weeks of the union – eight weeks of the probation card to take out your card. You failed to do that. That’s a breach of the rules.”
70. Between 2008 and 2010 the plaintiff continued to make representations to try to further his claim. He was in contact with the Department of Enterprise, Trade and Employment, which was then the Tánaiste’s office, and correspondence passed between the Department and ICTU on Mr O’Connell’s behalf. On the 14th September, 2010, Mr O’Connell wrote to the CIF informing them of his intention to join them to the proceedings.
Legal Submissions
Submissions of Mr O’Connell in relation to the CIF
71. The decision of the CIF to enter into an agreement with the Construction Groups of the Trade Unions of Congress in December, 1996 resulted in a situation that employees of contractors and sub-contractors had to be members of a trade union, and for BATU members particularly, that they had to be “fully paid up”. This new agreement essentially meant that Mr O’Connell had to become a member of a certain union in order to work.
72. The agreement changed a custom and practice in relation to the dispute procedure between CIF employers and BATU. But for this new agreement, that dispute procedure would have been available to Mr O’Connell as a lapsed member or member in arrears of BATU. The agreement is essential the reason he was wrongfully dismissed without notice from the second, third and fourth defendants.
73. Because of the agreement a contractor lost the right to employ who they wished and it put an end to the situation whereby a member employed outside Limerick did not have to be a member of a trade union. It also created a closed shop because all employees had to become members of the appropriate union. This requirement breached Mr O’Connell’s constitutional right to work because if he did not join, he could not work in the industry.
74. The CIF were negligent in making the agreement by not showing a duty of care that all workers must be members of an appropriate trade union. BATU had a monopoly which they were abusing, which affected their members. The CIF entered into the agreement without any regard for the harm which could be caused and without adequate safeguards or codes of practice. This breached Mr O’Connell’s right to fair procedures and interfered with who Mr O’Connell could associate with or be employed with.
75. The agreement and the CIF’s decisions prevented him from joining UCATT because the agreement’s rules stipulated that UCATT was not an appropriate union. This decision denied Mr O’Connell union rights and the protection of his employment benefits including pension, sick pay and death benefit. The CIF’s decision not to engage in a dispute resolution procedure at two sites was a breach of the agreement they had with Mr O’Connell, as set out in the Registered Employment Agreement, and a breach under s. 9(2) of the Industrial Relations Act 1990. This was a breach of his constitutional right to fair procedures.
76. The CIF in their actions and decisions exceeded their power over their members by deciding that UCATT, an appropriate trade union holding a negotiation licence for workers employed in the industry and which Mr O’Connell joined, was not appropriate for CIF members to associate with. The CIF further made remarks at the Labour Court on the 17th September, 2003, to the effect that Mr O’Connell was not to be employed in the future because of industrial action that had occurred where he had been employed. Mr O’Connell says this was an attack on his character and had an effect on future opportunities for him within the industry.
77. The CIF was aware of BATU’s resentment to sub-contractors, yet they failed Mr O’Connell by not putting in place safeguards to protect him from an unjustified attack. It was wrong of the CIF to recognise a licence with BATU which gave it and the CIF the right to obstruct Mr O’Connell from carrying out his trade with any potential contractors. The CIF failed to put in safeguards and lacked fair procedures. The CIF suggested all the wrongs which occurred were the fault of BATU but Mr O’Connell discovered the details of the Registered Employment Agreement in 1999.
Submissions of the CIF
78. The plaintiff’s claim is statute barred. The proceedings commenced on 16th October, 2002, against BATU but the CIF was joined by an order of the Supreme Court on 27th July, 2012. The plaintiff is also guilty of inordinate, inexcusable and unconscionable delay in the prosecution of his proceedings against the CIF. His primary complaint is with BATU and their alleged failure to readmit him to the Union and the consequences that flowed from that decision and, insofar as he may have a cause of action, it is not against the CIF.
79. Mr O’Connell complains about the Registered Employment Agreement but although the CIF signed it on behalf of members, its enforcement was dealt with by the Labour Court under Part III of the Industrial Relations Act 1946. The CIF’s role in relation to the operation of provisions of the REA was limited. The variation to the agreement permitting greater use of sub-contractors was challenged by BATU and the CIF only participated as a notice party. The CIF challenged BATU’s position in terms of unlawful restrictions on employment of sub-contractors. Mr O’Connell did not suggest that he was prevented from working as a sub-contractor during the relevant period.
80. The REA does not provide for the creation of a pre-entry closed shop agreement with BATU or any union but only provided a facility whereby dues could be deducted by agreement and then remitted to the Union. That does not amount to a pre-entry closed shop agreement. The REA does not require employees of contractors or sub-contractors to be union members: Clause 10 specifically provides that such employees “should be free to engage approved contractors in any trade or activity in the industry”.
81. Mr O’Connell submitted that there was a new agreement in relation to trade union membership based on minutes of a meeting of the 10th December, 1996, and a letter dated 11th December, 1996, from Mr Joe O’Brien to members of the CIF. Neither of these documents support Mr O’Connell’s allegations. Mr O’Brien’s evidence was that the correspondence was only akin to a circular, getting the information out to the members because the CIF had been told by BATU that enforcement of their rule on union card was going to begin from January, 1997.
82. Further, there is no evidence to support Mr O’Connell’s claim that the CIF were party to an agreement which removed the custom and practice under which employers were free to select workers. The evidence submitted was that the custom and practice in Limerick was that blocklayers would be members of BATU. Equally, certain employers, such as Frank McGrath, had a contract of employment which required union membership. This was not a requirement imposed by the CIF and Conor O’Connell gave evidence that the CIF would not recommend such a condition and did not give any direction in relation to same.
83. Mr O’Connell submitted no evidence to prove that the CIF acted unlawfully or in any way that was contrary to Mr O’Connell’s rights, prevented him from securing employment or caused him to be dismissed. Mr O’Connell brought legal proceedings against Davin Builders and Frank McGrath. The CIF were not party to those proceedings and both were dismissed, the former because it was out of time and the latter because the relevant contract of employment specified that the employees had to be union members. Therefore there is no basis for the contention that the CIF is vicariously liable for any alleged wrongdoings committed against the plaintiff by individual employers.
84. The allegation that the CIF failed to use dispute procedures pursuant to the REA is unfounded because there was no trade dispute involving Mr O’Connell.
85. Mr O’Connell alleges that the CIF made statements at the Labour Court hearing on 17th September, 2003, to the effect that he should not be employed in the future. Mr O’Connell said that this comment was an attack on his character and breached his constitutional right to work. The CIF submit that Mr Conor O’Connell dealt with this case and gave evidence confirming that Frank McGrath had informed him that industrial action was threatened during Mr O’Connell’s employment because other masons refused to work with him. There was a serious threat of industrial action because it was a term of Frank McGrath’s contract of employment that an employee had to be a member of an appropriate trade union.
86. The CIF went to great lengths to stand up for their members rights to use sub-contractors. The CIF did not collude with BATU to prevent him from working, neither did they induce breaches of Mr O’Connell’s contracts with employers. It was submitted that no evidence has been adduced to support Mr O’Connell’s claim that the CIF persuaded any of its member employers to breach contracts of employment with Mr O’Connell and further, this allegation is inconsistent with the CIF’s clear position in relation to supporting sub-contractors in securing employment.
87. Mr O’Connell has not shown that his constitutional rights were interfered with by the CIF or that they were guilty of intimidation. The plaintiff did not adduce any evidence of a threat delivered by or on behalf of the CIF. In the few engagements Mr O’Connell had with the representatives of the CIF, he was encouraged to bring his dispute regarding union membership to the attention of the Irish Congress of Trade Unions. In those circumstances, the CIF cannot be accused of intimidation.
BATU Defendants’ Submissions
88. The Industrial Relations Act 1946 provided a framework whereby employers and workers in a particular industry could come together with a view to agreeing on terms and conditions of employment for a particular industry. Such an agreement was made for the Construction Industry and was varied a number of times over the years.
89. In this case, it is submitted that BATU is a voluntary organisation and is entitled to establish its own rules for membership. The plaintiff was advised of the requirement to provide a letter from the Revenue, confirming he was not a sub-contractor, in order to join the Union. The Rules of the Union explicitly state that it is open to “workers”. BATU say this is people who are employed on a PAYE basis as opposed to the self-employed paying tax under a different scheme.
90. The plaintiff did not comply with this requirement and began a campaign of harassment against union officials. Mr O’Connell, it transpired later, was a sub-contractor back in 1997 when he applied for membership/to re-join, but he did not have a valid reason at that time for refusing to supply the required letter. He did furnish the required letter in October, 1999 and was admitted as a member subject to certain conditions; the first being to desist from contacting Mr Morris and the second, to pay arrears and abide by Union rules. Mr O’Connell could have appealed this condition but did not do so. Pursuant to Rule 22(b) of the Union, re-admittance of a member was subject to terms and conditions on a case by case basis. Mr O’Connell was aware of the content of the document he was asked to sign when re-joining.
91. It is submitted that Mr O’Connell intended to “bully” his way into the Union, as evidenced by his behaviour outside Mr Morris’s home. Following his re-admittance he was advised that it was subject to a probationary period until January, 2000 and yet he took no steps to advance his membership and submitted no evidence as to why he failed to do so. From January, 2000 Mr O’Connell engaged in abusive and threatening correspondence with Mr Morris and the Union, making threats that he would “visit” the home of the general secretary.
92. From 1st January, 2000, onwards the plaintiff claims that there was a conspiracy between BATU and the CIF to keep him from being employed on building sites in Limerick. The evidence adduced does not support this contention. The evidence suggests that there was tension between BATU and the CIF at the time because they were representing different interests.
93. The plaintiff’s allegation that he was “put off sites” by BATU are made against Mr McNamara only. Mr McNamara denied all allegations as to harassing Mr O’Connell. Mr Kieran Cusack could not recall being forced to dismiss Mr O’Connell or saying that he did not wish to do so but “had no choice”. His evidence was that blocklayers were employed on a needs basis and when they had completed their work, they would be let go and perhaps might be hired again if further work was secured. Mr Cusack’s evidence was that Mr O’Connell was not forced to leave his site and that Mr McNamara, or any BATU official, had not called to the site to discuss Mr O’Connell and had no influence in Mr O’Connell’s employment coming to an end.
94. In the case of the McGrath site, Mr Frank McGrath gave evidence that in the Contract of Employment for his firm, it was stated that an employee had to be a member of the appropriate trade union. Paragraph 14 of his standard contract of employment reflected the policy of his firm. Mr O’Connell had a union card but did not have the relevant union card. The position would have been the same for any other employee who was not in possession of the appropriate union card. Mr McGrath also stated that no one from BATU had ever contacted him specifically about Mr O’Connell.
95. The first defendant denies the plaintiff’s allegation that it conspired with the CIF in an effort to prevent him from working. It is submitted that because the plaintiff adduced no evidence to support this allegation, it remains unfounded and must fail.
The Law
96. A collective agreement between employers’ associations or employers and trade unions may be recognised and incorporated into an employee’s contract of employment but there are certain restrictions. In Joel v. Cammell Laird (Ship Repairers) [1969] I.T.R. 206, it was held that before a collective agreement could be incorporated by way of implication there must (a) specific knowledge of the agreement; (b) employee conduct that shows he/she accepts the incorporation of the agreement; and (c) some indication of incorporation of the agreement into the contract.
97. Employees retain the right to dissociate from unions. In Educational Co. of Ireland Ltd & Anor. v. Fitzpatrick & Ors. (No. 2) [1961] I.R. 345, it was suggested that it is not unlawful to attach to the conditions of a job offer, a requirement to join a particular union or to strike in support of a closed shop. Kingsmill Moore J. at p. 397 stated that the:-
“claim to picket and the claim to strike….involve many different considerations. The right to dispose of one’s labour and to withdraw it seem to me a fundamental personal right which, though not specifically mentioned in the Constitution as being guaranteed, is a right of a nature which I cannot conceive to have been adversely affected by anything within the intendment of the Constitution.”
98. Referring to the issue as to hiring workers on the condition that they join a particular union, Kingsmill Moore J. sought to distinguish “coercion” from the exercise of “economic pressure”, with which the law has “no concern….in general”.
99. In Becton Dickinson v. Lee [1973] I.R.1, the defendants, members of union A, agreed to transfer to union N while working for the plaintiff. However, on taking up their employment, the defendants refused to relinquish their membership of union A and began picketing with the objective of forcing the plaintiff to recognise their union. Henchy J., dissenting, stated that if an argument is made to join one union with the consequence that you cannot be a member of another then freedom of association is not derogated, but exercised.
100. The Supreme Court deemed it unnecessary “to express any opinion upon the question of how far, or in what circumstances, a person can contract out of a constitutional right; or to what extent such an agreement would be enforced” (Walsh J at pp. 40 – 41). Walsh J. said that he had reached his decision based on the assumption that “the term in the contract of employment with regard to trade-union membership is not one which would be held to be void” under the Constitution.
101. Abbott & Whelan v. Irish Transport & General Workers’ Union (Unreported, High Court, McWilliam J., 2nd December, 1980) involved a situation where an employer refused to negotiate with the union of which it was a member, and instead sought to recognise another union. McWilliam J. held that “…an employer is not prevented from exercising his legal rights merely because this may encourage a workman to join a particular union”.
102. In Murphy v. Stewart [1973] I.R. 97, the plaintiff sought to change unions but was precluded from doing so without the consent of his existing union. The plaintiff claimed that this breached his constitutional right under Article 40.6.1°.iii. The Supreme Court held that Article 40.6.1°.iii did not guarantee citizens a right to join unions or association, merely a right to form them. Walsh J. made the following obiter observation at p. 117:-
“….among the unspecified personal right guaranteed by the Constitution is the right to work; I accept that proposition. The question of whether that right is being infringed or not must depend upon the particular circumstances of any given case; if the right to work was reserved exclusively to members of a trade union which held a monopoly in this field and the trade union was abusing the monopoly in such a way as to effectively prevent the exercise of a person’s constitutional right to work, the question of compelling that union to accept the person concerned into membership (or, indeed, of breaking the monopoly) would fall to be considered for the purpose of vindicating the right to work.”
103. In Meskell v. Coras Iompair Eireann [1973] I.R. 121, which is relied on by the plaintiff, the Supreme Court held that an agreement between the defendant company and a trade union, under which the company only hired union members and tried to enforce this by dismissing all employees and offering them re-employment provided that they agreed to join the union, amounted to a conspiracy to deprive the plaintiff of his constitutional right to abstain from joining a particular association, which had been recognised in Educational Co. of Ireland Ltd & Anor. v. Fitzpatrick & Ors. (No. 2) [1961] I.R. 345 as correlative to his right of association. Walsh J. said at p. 135:-
“To exercise what may be loosely called a common-law right of dismissal as a method of compelling a person to abandon a constitutional right, or as a penalty for not doing so, must necessarily be regarded as an abuse of the common-law right because it is an infringement, and an abuse, of the Constitution which is superior to the common law and which must prevail, if there is a conflict between the two.”
104. The issue as to closed shops is not provided for specifically under Irish law. There are two categories; pre and post entry. Pre-entry means that a person must undertake to join a specific union before they can obtain certain jobs. Post-entry is where existing employees are required to join a specific union after they have been employed (as per Meskell). The decisions on the subject suggest that employees have a right to dissociate where a closed shop arrangement is introduced in the post-entry scenario.
105. In Young & Ors. v. The United Kingdom (1982) EHRR 38, the court found there was a violation of Article 11 of the ECHR in circumstances where the plaintiffs were dismissed from their employment for failing to join a union, a rule which was established post-entry to their employment. The court held at para. 54:-
“As a consequence of the agreement concluded in 1975 (see paragraph 29 above), the applicants were faced with the dilemma either of joining NUR (in the case of Mr James) or TSSA or NUR (in the cases of Mr Young and Mr Webster) or of losing jobs for which union membership had not been a requirement when they were first engaged and which two of them had held for several years.”
106. More recently, closed shops have been held to be incompatible with the European Convention, notably in Sorensen and Rasmussen v. Denmark (2008) 46 EHRR 29. In Sorensen, the applicant’s complaint was that, having agreed to accept temporary work on the condition that he would join a designated trade union, he was dismissed when he objected to the union’s subscription being deducted from his salary. The court did not differentiate between pre and post-entry establishment of closed shops but said that exceptional circumstances could exist that renders the practice acceptable in some instances. The objection in Sorensen was that the applicant was subjected to “a form of such compulsion which….strikes at the very substance of the freedom of association guaranteed by Article 11” at para. 54.
107. While the Irish courts have not ruled definitively on the constitutionality of either pre or post-entry closed shops as applicable to new employees, it is likely that any judgment on the matter would refer to the Sorensen decision.
Discussion
108. By the late 1990s, the Union & its officials had achieved a large part of their ambitions for Limerick. Building contractors would only employ bricklayers who were members of BATU. A bricklayer could not move between employed status and working as an independent contractor. An employer could not refuse to take on direct labour at full union rates and benefits and cut down costs by using C2 tradesmen. This gave the Union great power, but with it came responsibility.
109. The plaintiff, Mr O’Connell, was a difficult person to deal with. He was insistent and quarrelsome. He professed loyalty to the former leader and claimed that he was already a member. The Union thought he might have been working as a C2 contractor in conflict with their policy. He would not get the Revenue letter that Mr Morris insisted was a condition of admission. He must have been a visible challenge to the Union when officials called to sites where he was working. In the circumstances, trouble was not long in coming.
110. The plaintiff however, was not actually opposed to union policy. He was willing, even keen, to be a member. He claimed privacy as a reason for not furnishing the form of confirmation of status the Union demanded but he did offer alternative proof. And eventually, in late 1999, he satisfied the conditions for membership. So it is not easy to know what problem the Union had with admitting him to membership.
111. It is clear from the evidence that the plaintiff was experiencing difficulty with the local union administration at the Mechanics Institute in Limerick. He was not getting into the Union, as he understood from Mr Flynn.
112. In October, 1999 Mr O’Connell lost his job with Stephen Finn as a result of Union pressure. That is confirmed by Mr Finn’s advice that he “sort it out with Mr Morris” and the message left on the latter’s phone. The plaintiff was unable to sort out the problem because he was being frustrated by being referred back to Limerick but failing to make any progress there. I accept his evidence in that regard.
113. The plaintiff drove to Kilkenny to see Mr Morris because he and Mr Finn perceived that the Union power resided there. Mr O’Connell was evidently not particularly sanguine about his prospects since he brought with him a prepared placard. Mr Morris worked from his home and his car so he did not have an office that Mr O’Connell could go to. The official bitterly resented being confronted at his home and it must indeed have been galling to be the subject of a picket.
114. But the plaintiff’s position is that he had just recently lost his job because of Union pressure. Although he was willing to join and qualified to do so he could not gain admission to the Union. His frustration and determination are understandable. There was an unfortunate collision between Mr Morris’s car and the plaintiff that caused injury.
115. The meeting of the 1st November, 1999, took place between the late Mr Flynn and Mr McNamara of BATU and Mr O’Connell. Agreement was reached, but Mr O’Connell says that an unreasonable and unlawful condition was introduced as to his membership of the Union, prohibiting him from communicating with anybody other than the Limerick officials. The plaintiff maintains that this condition was intended to prevent him from pursuing his complaint or claim against Mr Morris for the personal injuries that he sustained while picketing in Kilkenny. Mr O’Connell had at this time already consulted a solicitor and an originating letter was at the time of this meeting in preparation and soon afterwards went to Mr Morris. The claim was eventually heard some years later at Kilkenny Circuit Court when Mr O’Connell was successful and awarded around €12,000 but of course it was a personal injuries action arising out of a motor accident and there was no union background that was relevant to the injuries. It does seem however that the case was hard fought with liability fully in issue, but ultimately the plaintiff succeeded.
116. The next stage was the probationary period of eight weeks membership from the 1st November, 1999, when he had now been admitted or re-admitted to BATU. It is anomalous that he was admitted as a new member and thus subject to probation in circumstances where he was previously a member and was being visited with charges for arrears of subscription. However, the fact is that Mr O’Connell was now a probationary member of BATU and was presumably free to go and get work on building sites and without incurring any union displeasure.
117. The plaintiff did not become a full member of the Union but the Union witnesses did not provide any solid reason for that. Mr O’Connell never got his full union card during, or at the end, of the probationary period. The Union officials gave evidence that he did not come back to get his full union card but that makes no sense. It is frankly absurd in a situation so fraught with serious consequences for the plaintiff to propose that explanation as a reason for depriving an otherwise qualified applicant. Neither is it suggested that anybody informed the plaintiff of this simple step that would give him the membership he sought.
118. In my view the probationary period should have led to full membership unless something happened during the period that would have disentitled the probationer from progressing. Mr O’Connell did not progress, but there is no evidence that he did anything to disqualify himself from doing so. He was therefore entitled on his case and on this assumption to full membership but the Union did not grant him that status and did not furnish any reason for that decision.
119. Then Mr O’Connell approached the general secretary, Mr O’Shaughnessy, looking for his Union card. Mr O’Connell has an unfortunate capacity to create problems for himself and on this occasion he seems to have muddied the waters by ascertaining Mr O’Shaughnessy’s home address and writing to him there as well as at his office and saying that he would call around to Mr O’Shaughnessy’s home to collect the card. The latter reacted indignantly to that threat as he saw it and the Union instituted proceedings to restrain Mr O’Connell from doing any such thing. Mr O’Connell did not defend the proceedings and so the orders were made by default and a permanent injunction was granted. In the result Mr O’Connell was enjoined from approaching Mr O’Shaughnessy. This episode had the capacity to confuse the issue as to why Mr O’Connell was not given full membership of BATU and the appropriate union card but the question remains why the Union did not give it to him.
120. BATU and the officials could have avoided the problem presented by the plaintiff by actually giving him what he wanted and what they agreed in evidence he was entitled to have, namely, membership of the Union and the documentation to go with it.
121. At this time in early 2000, the Union treated the plaintiff as an undesirable non-union person with whom its members would not co-operate and the Union also put pressure on employers not to employ him or to stop employing him if he was actually at work. This was a difficult time in Limerick with shortage of work and union militancy and with BATU trying to enforce a closed shop. The plaintiff was deprived of work, and actually put out of work, because he was not a member of BATU.
122. The evidence is clear and consistent that BATU sought to enforce a closed shop for blocklayers so that only their members were employed on building sites and, at the same time, excluded the plaintiff from membership. There is independent evidence that one builder was warned about employing Mr O’Connell after the particular job ended. It is a matter of inference from the evidence as a whole that the Union policy would have prevented him from getting work or of retaining it when the officials became aware that he was on a building site. The plaintiff’s own testimony coheres with the known or admitted facts and his behaviour over the years since these events happened is consistent with his account.
123. First, there is the plaintiff’s experience with Mr Stephen Finn. Second, his evidence is that he would have been re-employed by Cusack Builders if he had been in the Union. Third, the evidence as to McGrath Construction confirms the policy, power and attitude of the Union. Fourth, the evidence of Mr Paddy Gallagher illustrates the capacity of the Union officials to dictate whether and when a tradesman might be permitted to work.
124. In regard to the plaintiff’s experience on building sites in the wake of his probationary period, I prefer the evidence of the plaintiff and the employers to that of Mr McNamara where there is conflict. The social welfare document is also as far as it goes some corroboration of Mr O’Connell’s evidence of removal from site. It is too much of a coincidence that Mr McNamara came to be visiting the plaintiff’s sites on other separate business and yet had nothing to do with what happened to the plaintiff. Besides, his recalled reticence is quite inconsistent with the policy that he and his colleagues had announced and were not just implementing but enforcing.
125. Mr O’Connell was entitled to a full Union card but he was treated as a pariah from early in the year 2000 and was prevented from working. In desperation, he joined UCATT so as to be a member of a union, some union, and thus not be open to the objection that he was a non-union blocklayer. However UCATT backed off when BATU made a complaint to Congress that it had given membership to a blocklayer, but that is merely a side issue and is not really relevant.
126. Mr O’Connell kept up a struggle in various ways to try to get himself freed from the blacking that BATU had imposed on him. He made a protest to ICTU and to the CIF and he also instituted proceedings. The CIF tried to be helpful and gave advice but was ultimately unable to do anything for Mr O’Connell. ICTU took the position that it would not intervene when there was litigation involved. Its position – which might possibly be considered a comfortable or convenient one, but which has a good deal of rationality behind it – was that a person could pursue remedies by way of litigation or alternatively by negotiation and compromise through the good offices of ICTU but it was not happy to engage when there was already litigation in existence. That door was accordingly closed to Mr O’Connell. Moreover, BATU refused to cooperate with an investigation by ICTU.
Conclusions
Building and Allied Trades Union
127. A person has a constitutional right to work: In Re Article 26 and the Employment Equality Bill 1996 [1997] 2 IR 321, where Hamilton C.J. held at p. 342:-
“It has been held in several cases in the High Court and in this Court that, among the unenumerated personal rights guaranteed by this Article, is the right to work and the right to earn a livelihood. (See Murtagh Properties v. Cleary [1972] I.R. 330 and Murphy v. Stewart [1973] I.R. 97.)”
128. A person has a constitutional right to associate and dissociate. A trade union or other association has similar rights. BATU was not obliged to admit Mr O’Connell as a member. However, its power was not unfettered.
129. The prescient comment made by Walsh J. in Murphy v. Stewart [1973] I.R. 97 at p. 117, which is quoted a little more fully above, is admittedly obiter, but coming from such a source is deserving of the highest respect and bears repetition:-
“if the right to work was reserved exclusively to members of a trade union which held a monopoly in this field and the trade union was abusing the monopoly in such a way as to effectively prevent the exercise of a person’s constitutional right to work, the question of compelling that union to accept the person concerned into membership (or, indeed, of breaking the monopoly) would fall to be considered for the purpose of vindicating the right to work.”
130. It is logical as well as just to condemn as unlawful the capricious abuse of power by an association when it achieves exclusivity for its members but excludes a qualified tradesman and then audaciously objects to his presence and prevents him from working or restricts his opportunities to provide for his family.
131. BATU was legally permitted to approach employers individually or collectively through the CIF to make it a condition of employment that blocklayers be members of the Union. The CIF was legally permitted to recommend to their members that they introduce such an employment term and builders were entitled to do that.
132. BATU was not entitled to stigmatise the plaintiff, to have him removed from a site where he was employed on the ground that he was not a member. The Union could not legally instruct or encourage its members to walk off unless Mr O’Connell was dismissed. Such wrongful conduct was in breach of the plaintiff’s constitutional rights and he can sue the Union and its officers if they were involved. He can also sue in tort for intimidation.
133. It was and is wrongful under the Constitution as well as at common law for a union to operate a closed shop policy but refuse a qualified person membership, subject to some quite exceptional circumstances that do not arise in this case.
134. The fact that a candidate is, or appears to the Union, to be an awkward, difficult person or even unpleasant or troublesome cannot justify a policy by trade union and its officers of excluding the worker not only from the Union but from working at all.
135. This case is not about the entitlement of BATU to enforce a closed shop on building sites in Limerick at the material times. Neither is it concerned with a refusal by a worker to join a union in pursuance of a right not to associate. Mr O’Connell wanted to work as a blocklayer on building sites and was happy to be a member of the Union. He had previously been a member and contended that he continued to be one. The problem was that BATU insisted that blocklayers had to be members of the Union but would not admit him as a member. BATU was not entitled to insist on operating a closed shop restricted to their members and yet refuse Mr O’Connell membership and prevent him from working.
136. Mr O’Connell had a right to work while not a member of BATU. The Union, its officials and members were not entitled to prevent this and it was an unlawful conspiracy for BATU to instruct its members to walk off a site because Mr O’Connell was employed there.
137. The plaintiff may have been troublesome, unpleasant, demanding and aggressive in his relations with BATU officials but that did not justify the Union’s conduct. BATU submitted that Mr O’Connell tried to bully his way into membership but my view is that just the reverse was the situation.
138. The plaintiff was wrongfully excluded from the Union which then put him out of work because he was not a member. In the result BATU and its officers breached the plaintiff’s constitutional rights and engaged in a campaign against the plaintiff that constituted the torts of intimidation and conspiracy by excluding him from membership and threatening builders who employed him.
139. In the result the plaintiff’s claim succeeds against BATU and its officials for breach of constitutional rights, conspiracy and intimidation. There will be a separate hearing to assess the plaintiff’s damages taking into account the impact of the defendants’ wrongs on the plaintiff’s earning capacity and his rights. It does not follow from my findings that the plaintiff is entitled to be compensated for all the time from when the wrongs were first done to him. It will be for him to prove all the elements of loss actually sustained and properly recoverable, subject to any legally appropriate reductions. That hearing will also consider injunctive and ancillary reliefs.
The Construction Industry Federation
140. By contrast with the case against the other defendants, the claim against the CIF must fail; it is statute barred for a long time and there is no evidence of conspiracy or even agreement between the confederation and the Union or its officials.
141. The CIF was joined very late in the proceedings, many years after the plenary summons was issued and following a successful appeal by Mr O’Connell to the Supreme Court against a High Court order. The Supreme Court concentrated in its decision on the proper approach for a court of first instance to adopt in an application to join a defendant when the likelihood is that a proposed new defendant will plead the Statute of Limitations. Mac Menamin J. held that a court should be slow to inquire whether the claim may be statute barred on a motion merely to join a defendant. The court should engage in a limited inquiry as to whether the claim is manifestly statute barred and whether there are no circumstances in which the intended defendant would be debarred in law or equity from relying on the statute.
142. In the absence of an affidavit from the CIF, the Supreme Court was unable to conclude that joining the defendant would be futile and that a plea of the statute would be made and, if made, would be bound to succeed. In the circumstances, since the Statute of Limitations was a matter of defence that had to be specifically pleaded and it was not inevitable that the new defendant would plead the statute, the Court concluded that it was proper to join the CIF as a defendant. In the result the CIF was joined and did plead the statute the limitations as well as a series of other defences.
143. Since the matters that are in issue in the case arose out of events between 1997 and 2001 it is obvious that a party just recently joined in 2012 is entitled to the benefit of the Statute of Limitations if it pleads it. Although the plaintiff maintained in his application to join the CIF that there was more recent wrongful action by that party, the evidence fell hopelessly short of proving any such conduct. Therefore the CIF must win on the Statute of Limitations.
144. Additionally and more fundamental and central to the case, that defendant is also entitled to succeed on other grounds. There is simply no basis in the evidence on which the plaintiff can succeed against this defendant in conspiracy or other legal wrong. There is no evidence of conspiracy on the part of the CIF with BATU or the other defendants to deprive Mr O’Connell of work as a blocklayer in Limerick at any material time.
145. Although Mr O’Connell alleged that the CIF and BATU conspired together against him to keep him out of employment in his sector, Mr Joe O’Brien said that CIF would not conspire with BATU about anything as it would be of no interest to the CIF who is employed by member companies. Mr O’Brien said that at the time there was nothing in the registered employment agreement about employment of the trade union labour whatsoever. It was silent on the employment of trade union labour. The CIF was not involved or concerned in recognition of UCATT.
146. I accept generally the submissions and reasoning of the CIF which are outlined above. I also reject the additional submissions put forward by the plaintiff, to which counsel for both parties properly objected as attempting to introduce new evidence, misrepresenting evidence given in the case and making arguments that did not arise out of pleadings.
147. The claim against the CIF accordingly fails and will be dismissed.
148. Obviously, the CIF will not be involved in the further hearing as to the relief to which the plaintiff is entitled.
Bailey v Commissioner of An Garda Siochana
[2017] IECA 220
JOINT JUDGMENT delivered by Mr. Justice George Birmingham and Mr. Justice Gerard Hogan on the 26th day of July 2017
Part I: General Introduction
1. At some stage in the late evening of Sunday, 22 December 1996 or the early morning of Monday, 23 December 1996, the French film producer, Mme. Sophie Toscan du Plantier, was brutally murdered outside her holiday home which was located near Toormore, Schull, Co. Cork. Mme. du Plantier’s body was later found in the lane leading to her house in the course of the mid to late afternoon of 23rd December 1996.
2. No person has to date ever been charged with her murder in this jurisdiction. The failure to apprehend her killer and the circumstances which surrounded the subsequent police investigation have all given rise to enormous controversy in the twenty years which have ensued in the interval.
3. As might be expected, the murder shattered the tranquillity of the West Cork community and gave rise to a major Garda investigation. The plaintiff, Mr. Ian Bailey, was the major focus of this investigation. Mr. Bailey is a British journalist who resides in Schull. It is only fair to record that he has always steadfastly denied any involvement in the murder.
4. Mr. Bailey was, however, twice arrested – once on 10th February 1997 and then subsequently on 27th January 1998 – in relation to this murder. The plaintiff’s dwelling was searched on 21st September 2000. While files were sent to the Director of Public Prosecutions, the DPP decided that there was insufficient evidence to justify a prosecution against Mr. Bailey. This decision not to prosecute has, apparently, been reviewed by the Director on a number of occasions, most recently in 2007, but the original decision has always been confirmed. The reasons for the decision not to prosecute have been set out in a detailed document (running to some 44 pages) prepared by Mr. Robert Sheehan in May 2001, who was then a senior official employed in the DPP’s office. This document loomed large in evidence given in the High Court and we propose to return to this matter at a later stage in this judgment.
5. Returning, however, it the narrative, it should also be said that the French Republic sought the surrender of Mr. Bailey in respect of the murder of Mme. du Plantier pursuant to the provisions of the European Arrest Warrant Act 2003. Mr. Bailey was arrested on 23rd April 2010 pursuant to that request and then released on bail on the following day. This request was ultimately refused by the Supreme Court by a decision of 1st March 2012: see Minister for Justice, Equality and Law Reform v. Bailey [2012] IEHC 16, [2012] 4 I.R. 1.
6. How, then, did these events give rise to the present proceedings? Shortly put, Mr. Bailey has alleged that (named) members of An Garda Síochána involved in the investigation engaged in a conspiracy to injure his reputation and to violate his constitutional rights. Specifically, his contention was that they sought to procure statements from a number of persons – including a Ms. Marie Farrell – which either incriminated Mr. Bailey or which placed him close to the scene of the crime in a manner which was either unlawful in itself or which, even if the means were lawful, was actuated by malice and improper motives. Ms. Farrell was, in many respects, one of the most critical witnesses in the course of this trial, since she was the only person who has ever made a statement (which she has since retracted) which identified a person corresponding to Mr. Bailey close to the scene of the crime, namely, an alleged sighting at Kealfadda Bridge on 23rd December 1996.
7. The present proceedings were accordingly commenced on 1st May 2007. The reliefs claimed in the plenary summons were in the following terms:
“(i). Damages, for unlawful arrest, false imprisonment, malicious prosecution, assault, battery, and trespass to the person, intentional infliction of emotional and psychological harm, harassment, intimidation, terrorising and oppressive behaviour, severe personal injuries.
(ii.) Aggravated damages in that the defendants, their servants or agents, engaged in abuse of authority and the defendants and their servants and their agents continued their actions against the plaintiff when they knew or ought to have known that no such actions were justified and amounted to continuing assault and trespass to the person of the plaintiff and were continued in a malicious manner against the plaintiff.
(iii.) Costs incidental to and arising from the proceedings.
(iv.) Interest pursuant to statute.”
8. It is, perhaps, only fair to observe at the outset that the plenary summons was supplemented by a very detailed statement of claim delivered on the 8th August 2007. The prayer for relief included some new claims as follows:
“And the plaintiff therefore claim damages for unlawful arrest, false imprisonment, conspiracy, unlawful means conspiracy, assault, battery, trespass to the person, intentional infliction of emotional and psychological harm, harassment, intimidation, terrorising and oppressive behaviour and breach of his constitutional rights.” (emphasis supplied)
9. The claims we have taken the liberty of highlighting are new. Possibly through an oversight, however, there is no claim for either malicious prosecution or personal injuries, although such was pleaded in the indorsement of claim in the plenary summons.
10. The date on which the proceedings were commenced is of some importance because of the six year limitation period contained in the Statute of Limitations 1957 (“the 1957 Act”) and many of the events which were said to constitute the conspiracy pre-dated the six year limitation period prescribed by s. 11 of the 1957 Act. These proceedings ultimately came on for trial in the High Court (Hedigan J. and a jury) on 4th November 2014.
11. After a lengthy and eventful trial in which a host of witnesses gave evidence on behalf of both the plaintiff and the defence, the question of whether the claims were statute-barred was addressed towards the close of the trial with counsel for both sides making formal submissions on the limitations point on days 60 and 61. In his ruling delivered on day 62, Hedigan J. ruled that most of the plaintiff’s claim was statute-barred. He did, however, rule that part of what was described as “over-arching” conspiracy claim was not statute-barred and, in the event, two specific questions were put to the jury regarding the alleged suborning of Ms. Marie Farrell to give evidence and to make statements implicating Mr. Bailey in the murder and the jury ultimately ruled adversely to the plaintiff.
12. The questions as put to the jury were:
“(a) Did Detective Gardaí Jim Fitzgerald, Kevin Kelliher and Jim Slattery or any combination of them conspired together to implicate Ian Bailey in the murder of Sophie Toscan du Plantier by obtaining statements from Marie Farrell by threats, inducement and intimidation which reportedly identified him as the man she saw near the scene of the murder at Kealfadda Bridge in the early hours of the morning, 23rd December 1996 when they knew they were false?
(b) Did Detective Sergeant Maurice Walsh conspire by threats, inducement or intimidation to get statements by Marie Farrell that Ian Bailey intimidated her when they knew they were false?”
13. The jury answered both questions in the negative. The plaintiff has now appealed to this Court against this decision and verdict. His appeal really takes the form of a challenge to the statute-barred ruling as well, as a variety of other challenges to particular rulings given in the course of the trial by the trial judge in relation, inter alia, to the admissibility of certain evidence. The State parties have cross-appealed insofar as they contend that the entire action should have been regarded statute-barred.
14. Before proceeding further, it may be convenient if, having given this general introduction, we were now to indicate the structure of the remainder of the judgment. In Part II we set out a summary of the key evidence and the rulings which occurred in the course of the trial. In Part III we address the question of whether the State was entitled to raise the Statute of Limitations and whether the action was indeed statute-barred, whether in whole or in part. In Part IV we address the rulings made by the trial judge in relation to opinion evidence and the evidence tendered by two former Directors of Public Prosecutions, Mr. Eamonn Barnes and Mr. James Hamilton, along with a senior official then working in the DPP’s office. In Part V we address the question of certain other rulings made by the trial judge, including the admissibility of the opinion of a senior British police officer, Robert Quick, and a warning given by the trial judge to Ms. Farrell in the presence of the jury. In Part VI we summarise our conclusions.
Part II: The main evidence and the issues in the trial
15. As we have already indicated, the trial lasted for some 63 days with 79 witnesses. It would be impossible to do anything more than to effect a brief summary of the issues and the evidence. It is, in any event, unnecessary to do anything more than to outline these issues for the purposes of addressing the questions which arise on this appeal.
The legality of the arrests of Mr. Bailey
16. It is accepted that the first arrest took place on 10th February 1997 when Mr. Bailey was arrested under s. 4 of the Criminal Justice Act 1984 (“the 1984 Act”) by Garda Paul Culligan. Garda Culligan gave evidence that the reasons for the arrest were as follows: First, he said that Mr. Bailey had been given an opportunity to account for his movements, yet he could not satisfactorily explain his whereabouts on the night in question. Second, he had scratches on both arms which Mr. Bailey put down to the fact that he killed turkeys in the run-up to Christmas, but which Gardaí suspected arose from the struggle between Mme. du Plantier and her killer. Third, the fact that he had been seen at Kealfadda Bridge at 3a.m. in the morning of the 23rd December 1996. Fourth, the Gardaí had information that Mr. Bailey had been very violent towards his partner, Ms. Jules Thomas. Fifth, Mr. Bailey had (apparently) told a number of local people not only that he had committed the murder, but also how he had done so (namely, with a rock).
17. The second arrest was effected on 26th January 1998 pursuant to a District Court order which had been made under s. 10 of the 1984 Act.(Given that there had been one arrest of the plaintiff already in respect of this charge, it was necessary for the purposes of s. 10 of the 1984 Act to secure a District Court order permitting Mr. Bailey’s re-arrest). On this occasion, Superintendent Ted Murphy applied on a sworn information to the District Court for an order under s. 10 of the 1984 Act permitting a second arrest of Mr. Bailey. In that information Superintendent Murphy listed nine items he felt provided reasonable grounds for believing and suspecting that Mr. Bailey had committed the crime and that all that information had come to attention of the Gardaí since his first arrest in February 1997. These items included matters stated by Mr. Bailey to a number of journalists and others, alleged attempts to influence Ms. Farrell and statements made by Mr. Bailey to newspapers concerning the injuries suffered by Mme. Du Plantier and the interior of her home.
The taking of the statements from Ms. Marie Farrell
18. In 1996 Ms. Marie Farrell and her husband rented a house in Schull where they lived with their five children. They ran a drapery business in the Main St., Schull, but in the lead-up to Christmas 1996 Ms. Farrell also had a stall at the Coal Quay market in Cork.
19. Following the murder of Mme. du Plantier the Gardaí arranged for a house to house questionnaire of all local residents which Ms. Farrell duly completed. The Gardaí then arranged for the first of twelve statements to be taken from Ms. Farrell on 27th December 1996 culminating in the final statement on 17th April 1998 in the course of the initial investigation. For completeness, it should also be added that Ms. Farrell also gave a series of interviews to other officers investigating the case between 2002 and 2004. She also made a series of statements retracting her earlier statements in 2006-2007. Ms. Farrell also made a statement to Gardaí in the presence of a French investigator on 5th October 2011. Finally, Ms. Farrell also made a series of statements to the Garda Síochána Ombudsman Commission in April, May and June 2012.
20. It is, however, the earlier statements to the initial investigating team which were the focus in these proceedings. The critical statement made by Ms. Farrell was, one dated 28th January 1997. In that statement she said that she had been travelling as a passenger in a car with a friend from Barley Cove to Goleen and from there on to Schull on the early morning of 23rd December 1996 when she saw a man whom she now recognised to be Mr. Bailey at the Kealfadda Bridge at about 3am. (Kealfadda Bridge lies close to where Mme. du Plantier’s body was found on the 23rd December 1996.) This was a critical aspect of the statement, because it was the only identification evidence which directly placed Mr. Bailey close to the scene of the crime.
21. Ms. Farrell was subsequently asked to make a number of other statements to the Gardaí. In particular, Ms. Farrell was asked to identify the person with whom she had been travelling by car on the evening of the 22nd December and the early morning of the 23rd December, something which steadfastly refused to do. We propose to return to consider Ms. Farrell’s evidence and the warnings given to her about her evidence by Hedigan J. at a later stage of this judgment.
The efforts made to ensure that Martin Graham would befriend Mr. Bailey and seek to obtain an admission from him
22. Mr. Martin Graham was an acquaintance of Mr. Bailey. It appears that the Gardaí became aware of this fact after Mr. Bailey had spoken with Mr. Graham after his release from custody in January 1997. Mr. Graham went back and informed the Gardaí that Mr. Bailey had been very stressed by the experience and that he (Mr. Graham) considered that Mr. Bailey needed a “good smoke” (i.e., cannabis) in order to relax. (It appears to be accepted that Mr. Bailey was at the time a cannabis smoker). Mr. Graham maintained that named members of the Gardaí offered him cannabis so that he could join Mr. Bailey, smoke some cannabis with him and then to see whether he said anything about the murder of Mme. du Plantier which might be of interest to the Gardaí.
23. It is only proper to record that the Gardaí in question emphatically denied making an offer of this kind. It was, however, accepted that they did supply some clothes, tobacco and money to Mr. Graham with a view to assisting the latter to befriend Mr. Bailey.
24. It was also suggested that Mr. Graham had told a Garda Leahy that Mr. Bailey had made an admission to him regarding the murder of Mme. Du Plantier. This, however, was also strenuously denied by Mr. Graham.
The Malachy Boohig incident
25. The Garda file had been sent to the DPP in September 1997 and the initial indications were that no prosecution against Mr. Bailey would be forthcoming. The Gardaí involved in the investigation were admittedly unhappy with this. This unease was communicated to the State Solicitor for Co. Cork at the time, Mr. Malachy Boohig. Mr. Boohig said that in March 1998 he had been asked by senior Gardaí to attend a case conference in the matter in Bandon Garda Station where their unhappiness with the DPP’s attitude was made known. Mr. Boohig said that as he left the meeting one of the senior Gardaí approached him privately to inquire whether he had not been to College with the then Minister for Justice (Mr. John O’Donoghue T.D.). Mr. Boohig further stated that this officer then said that as he (i.e., Mr. Boohig) knew the Minister personally he inquired whether Mr. Boohig could not approach him with a view to getting Mr. O’Donoghue to put pressure on the Director to direct a prosecution against Mr. Bailey.
26. Mr. Boohig was naturally perturbed by these comments and, indeed, contacted the Director immediately thereafter to discuss this matter and to express these concerns. There the matter rested until 2011 when the former Director (Mr. Barnes) learnt that there was a real possibility that Mr. Bailey might be surrendered to France in the EAW proceedings. Mr. Barnes then contacted the then DPP (Mr. Hamilton) because of his concerns and reminded the then incumbent of what had occurred in 1998 in relation to Mr. Boohig and sent a detailed email him to this effect. Given that the EAW appeal involving Mr. Bailey was then pending before the Supreme Court, the matter was then referred to the Attorney General. She determined that the relevant files and Mr. Barnes’ email in 2011 should be disclosed by the State authorities to Mr. Bailey. This was how this particular information first came to Mr. Bailey’s attention.
The libel proceedings against the newspapers
27. Following his arrest in February 1997, Mr. Bailey was named as a suspect in the murder by a number of newspapers. He then commenced defamation proceedings which were heard in the Circuit Cork in November 2003. The Circuit Court found against the plaintiff. Mr. Bailey then appealed this decision to the High Court where the proceedings were ultimately settled and compromised. Mr. Bailey maintains that Gardaí improperly disclosed information gleaned from the Marie Farrell statements to the newspapers in advance of the Circuit Court hearing.
The European Arrest Warrant proceedings
28. The plaintiff was arrested on a Friday evening in April 2010 was brought before the High Court on the following day pursuant to the European Arrest Warrant request from the French authorities. As we have already noted, the Supreme Court ultimately ruled that an order for surrender to France should not be made.
Part III: Whether the State was entitled to raise the Statute of Limitations
and whether the action was statute-barred, whether in whole or in part
29. In his ruling on the statute-barring issue given on day 62 of the hearing, Hedigan J. said as follows:
“The Statute of Limitations is clear and provides for this type of action no grace based upon a date of knowledge. These proceedings were issued on 1st May 2007. It is agreed the statutory period is six years. The claims made are in the nature of trespass against the person and are actionable per se. In relation to such actions the statute runs from the date of accrual. The date of accrual runs from the time when the act is committed. Where there is a continuing trespass a fresh cause of action arises die in diem. Thus any claims based upon actions occurring prior to 1st May 2001 are barred by operation of law, save those that gave rise to a continuing trespass.
Dealing first with the two arrests, one in February 1997, the second in June 1998. These two arrests are discrete claims each standing on their own facts. They are each events occurring and completed in, respectively, February 1997 and January 1998. The action arising there from is, therefore, statute-barred. I may say that not only are they barred by the Statute but having heard all of the evidence I think they would also likely have been withdrawn from the jury on the basis that no jury, properly instructed, could reasonably find that the Gardaí did not have reasonable suspicion upon which they could base a lawful arrest. The grounds for suspicion in both arrests were so strong that had the Gardaí not arrested Ian Bailey, they would have been derelict in their duty.
It should be noted that these arrests were based on suspicion grounded on numerous reasons other than the statements of Marie Farrell, each of which together or separately would, in my judgment, give grounds for reasonable suspicion of involvement in the offence in question and, thus, reasonable grounds for arrest.
What of the rest of the case?
A. Damages for loss of reputation ought to be brought under the provisions of the Defamation Act. Such proceedings were, in fact, brought again the newspapers in 2003, they cannot be pursued in proceedings such as herein.
B. There is no general supervisory role of the courts over the Garda Síochána as to the manner in which they conduct investigations. No claim pleaded can proceed on such a basis.
C. The claim concerning Martin Graham is also caught by the Statute occurring prior to May 2001. The events surrounding Martin Graham also are actions, if his evidence were accepted, without any consequence for Ian Bailey since no confession or prejudicial information was, in fact, obtained.
D. Damaging ongoing publicity or media attention. It is impossible to disentangle the pre and post 2001 media coverage. Claims arising from the former are statute-barred and the latter was inevitable and uncontrollable by anyone. No claim can arise out of that on the evidence that has been brought before the Court.
E. The libel actions: These claims were settled by accord and satisfaction following an appeal to the High Court. The terms have not been disclosed by the plaintiff. By virtue of this no claim can arise herein based upon those proceedings. It must be noted that Marie Farrell had retracted her statements after the date of the Circuit Court judgment and before the High Court appeal.
F. The European Arrest Warrant: The authorities of the French Republic applied to the Ministry of Justice on foot of a European Arrest Warrant and pursuant to the Mutual Assistance Act provisions. This warrant was dated 19th February 2010. The French had applied originally in 2006 for mutual assistance in their investigation into the murder of Sophie Toscan du Plantier. It was not until the Garda Síochána informed the Department that there would be no prosecution that the Department was free to activate the 2008 request, according to Mr. Fennell. What transpired was a process in which Ian Bailey was brought before the District Court, the High Court and, finally, the Supreme Court. It was a process provided by law in accordance with Ireland’s international obligations as a part of the fight against crime on a European level. It resulted in a refusal by the Supreme Court, on legal grounds, to deliver Ian Bailey to the French authorities. I can readily accept that such a process may be highly stressful and frightening for one subjected to it, it is, however, a process provided by law and no Garda misdeeds could stymie such a process. Moreover, it is clear from the evidence that the French authorities conducted their own investigation, they obtained the full Garda file, including evidence of retractions of her statements by Marie Farrell. They interviewed Gardaí, and other witnesses, including Marie Farrell. They sent a forensic team to examine microscopic samples of certain exhibits held by the Gardaí, they still have outstanding a request for further interviews of witnesses. It is, thus, impossible to speculate as to what reasons the French had or have for their investigations. No action can arise from these European Arrest Warrant proceedings.
The attempt alleged to pressure the Director of Public Prosecutions was an act that occurred in 1998 and is also statute-barred, knowledge not being a requirement.
The conspiracy claim: This claim is that a number of Gardaí, Fitzgerald, Kelleher, Walsh and Slattery conspired to implicate Ian Bailey in the murder of Mme. Sophie Toscan du Plantier by obtaining from Marie Farrell statements identifying him close to the scene of the crime on the same early morning around the time of its commission and statements accusing Ian Bailey of intimidating Marie Farrell when they knew these statements were false. The claim is that they procured these statements through threats and intimidation. The plaintiff claims this was a campaign to pervert the course of justice by fixing him with guilt for the murder in the full knowledge of his innocence. As a result the plaintiff claims he has endured years of vilification and demonisation in the eyes of the public.
The claim in respect of Marie Farrell’s statements arises from the pre 2001 statute-barred period but is this, as the plaintiff claims, a continuing cause of action giving rise to a fresh cause of action to die in diem. I think it is in respect of Marie Farrell’s statements for the following reasons:
The statements made by Marie Farrell remain in existence on a Garda file. The Gardaí insist these were true statements made by Marie Farrell and are an accurate account of what she said. The investigation of the murder is still alive. Ian Bailey remains a person of interest.
If the Gardaí did what the plaintiff alleges it was an action that was an affront to all norms of law and an attack on the rule of law. It would be, if true, an attempt to pervert the course of justice and remains a live attempt if true. Thus these statements remain lying heavily upon the reputation of the plaintiff, although retracted by Marie Farrell, who says now that they are false, the Gardaí insist today that they wrote down exactly what Marie Farrell said at the time.
In my judgment this alleged conspiracy, if it existed, is alive and continuing today. Whether it happened or not is a matter for the decision of the jury. It seems to me therefore in broad terms that the questions that remain for the jury are limited to what, indeed, seems to me in many ways to have been the central plank of the case from the beginning: Did Gardaí Fitzgerald, Kelleher, Walsh and Slattery, or any combination of them, conspire to implicate Ian Bailey as the murderer of Sophie Toscan du Plantier by obtaining statements from Marie Farrell by use of threats, inducements or intimidation identifying him as the man whom she saw at the scene of the murder when they knew these statements to be false? Secondly, did Gardaí Fitzgerald and Walsh conspire together to obtain from Marie Farrell by threats, inducements or intimidation statements that Ian Bailey had intimidated her? That is the end of the decision.”
Whether the defendants should be permitted to raise the Statute of Limitations
30. The first question which the trial judge was required to confront was whether the defendants should be permitted to raise the defence that the action was statute-barred at such a late stage in the trial. The issue was raised towards the end of the trial after no less then 79 witnesses had given evidence and the two days (day 60 and day 61) were set aside after the completion of the oral evidence for legal argument on this point. It must be said, however, that the issue of the Statute had at all times been raised by and relied on by the defendants in their pleadings. Thus, paragraph 1 of the defendants’ defence delivered on the 18th January 2008 pleaded by way of preliminary objection that the plaintiff’s claim was barred by the operation of the Statute of Limitations. It should also be noted that the issue of the Statute was mentioned by the plaintiff’s counsel in his opening to the jury, although the issue was not raised again until very late in the trial.
31. The plaintiff submitted that it was unfair for the defendants to raise this question so late in the trial. It is true, of course, that the court will not generally allow an amendment late in the course of the trial which raises the Statute for the first time: see Kettemann v. Hansel Properties Ltd. [1987] A.C. 189. In that case a majority of the House of Lords held that a defendant could not make an application to “amend to plead a limitation defence during the course of the final speeches.” As Lord Griffiths explained ([1987] A.C. 189, 219):
“If, therefore, no plea of limitation is raised in the defence the plaintiff is entitled to assume that the defendant does not wish to rely on a time bar but prefers the courts to adjudicate on the issues raised in the dispute between the parties. If both parties on this assumption prepare their cases to context the factual and legal issues arising in the dispute and they are litigated to the point of judgment, the issues will by this time have been fully investigated and a plea of limitation no longer serves its purposes as a procedural bar.
If a defendant decides not to plead a limitation defence and to fight the case on the merits he should not be permitted to fall back on a plea of limitation as a second line of defence at the end of the trial when it is apparent that he likely to lose on the merits.” (emphasis supplied)
32. This, however, is not what occurred in the present case because, as we have already noted, the defendants had always pleaded the Statute from the very first paragraph of its defence.
33. It is also the case that there may be some circumstances where a defendant will be held to be estopped from raising the Statute, particularly where a plaintiff has been lulled into the belief that the Statute will not be raised. But in such circumstances, a “clear and unambiguous….promise, assurance or representation” that the Statute will not be raised is required: see Doran v. Thompson Ltd. [1978] I.R. 223, 231, per Griffin J. In the present case it cannot be suggested that there was ever a promise, assurance or representation to this effect from the defendants such as might have lulled the plaintiff into a false sense of complacency regarding the Statute or which suggested that the question of whether the action was time-barred did not at all times remain a live issue.
34. One may agree that in other circumstances it might possibly have been more satisfactory had the question of the Statute been more fully addressed at an earlier point in the trial. But the plaintiff’s essential claim was a complex one of an over-arching conspiracy on the part of the Gardaí. In those circumstances the question of whether and if so, to what extent, the claim was statute-barred did not lend itself to easy adjudication in advance of the Court hearing all the relevant evidence. In these circumstances, this Court is obliged to conclude that Hedigan J. correctly held that it was not unfair to permit the State defendants to raise the application of the Statute and there is no question of any estoppel in this regard arising in favour of the plaintiff.
The plaintiff’s conspiracy claims and the Statute of Limitations
35. Section 11(6) of the Civil Liability Act 1961 (“the 1961 Act”) provides that:
“For the purposes of any enactment referring to a specific tort, an action for a conspiracy to commit that tort shall be deemed to be an action for that tort.”
36. The 1957 Act is, of course, an enactment which refers to specific torts. It follows, therefore, that the limitation periods for specific, nominate torts contained in the 1957 Act are accordingly deemed also to apply to any conspiracy to commit such torts by virtue of s. 11(6) of the 1961 Act. Section 11(2)(a) of the 1957 Act, as amended by s.3(2) of the Statute of Limitations (Amendment) Act 1991 (“the 1991 Act”), provides that:
“Subject to paragraphs (b) and (c) of this subsection, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”
37. It should be added that these limitation periods also apply to any claim brought by the plaintiff for breaches of constitutional rights. Insofar, therefore, as the plaintiff is maintaining a claim for a breach of constitutional rights which is separate and distinct from any claim for a breach of a nominate torts, it should be recalled that such a claim is, in any event, a “tort” for the purposes of the Statute of Limitations: see McDonnell v. Ireland [1998] 1 I.R. 134. It may also be observed that the various nominate torts (and associated claims) advanced by Mr. Bailey in his pleadings are not claims to which a “date of knowledge” exception applies by virtue of s.2 of the 1991 Act. Counsel for the plaintiff did not at any stage seek to argue otherwise.
38. The fundamental questions which accordingly confronted the trial judge were, first, was it permissible for the defendants to raise the Statute issue at this late stage of the trial. Second, on the assumption that it was, what was the date at which the plaintiff’s cause or causes of action can be said to have accrued and, third, whether these causes of action have continue to subsist die de diem. It is to a consideration of these issues to which we can now turn.
39. It is important here to stress that there was no real dispute that the majority of the nominate torts (however described) were clearly statute-barred, even if the plaintiff’s account of events were otherwise to be accepted.
40. If, for example, either one of the plaintiff’s arrests were unlawful, then the six year limitation period had expired at the latest by January 2004 (i.e., six years from the date of the second arrest in January 1998). It is true, of course, that the unlawful disclosure of confidential information to members of the media by members of the Gardaí may amount either to negligence (Hanahoe v. Hussey [1998] 3 IR 69) or to a violation of the constitutional right to privacy (Gray v. Minister for Justice [2007] IEHC 52, [2007] 2 IR 654). But if so, then subject to one possible exception in relation to the defamation proceedings against the newspapers in 2003, any such unlawful disclosure occurred at the latest in September 2000, so that the present proceedings commenced several months after the expiration of the statutory period in September 2006.
41. The first of these alleged improper acts of disclosure occurred in January 1997 when photographers were present to see the plaintiff being brought to Bandon Garda Station following his arrest, Mr. Bailey’s surmise being that the Gardaí had alerted the media in advance to the fact that he was going to be arrested and brought to the Garda Station at a particular time and place. Other claims of improper disclosure are also said to have occurred either during the 1997-1998 period or, possibly, in the immediate aftermath of the search of Mr. Bailey’s dwelling in September 2000. Again, however, subject to the defamation proceedings issue, all of such claims are plainly statute-barred for the reasons just mentioned.
42. If Mr. Graham was wrongly suborned by members of the Gardaí with offers to supply him with money, clothes and cannabis with a view to getting him to talk privately with Mr. Bailey about the murder and, perhaps, thereby secure an admission from him, then the action for misfeasance of public office crystallised at some stage in mid-1997 when all of this is said to have occurred.
43. In Taylor v. Smith [1991] 1 I.R. 142, 170 McCarthy J. approved of the earlier reasoning in McGowan v. Murphy (Supreme Court, 10th April 1967), saying:
“If conspiracy be inchoate it is difficult to see how it can have caused damage, a necessary ingredient of every tort. If it be executed, then the cause of action derives from the execution whether it be because of the unlawful nature of the act done or the unlawful means used.”
44. It seems to follow from this judgment that the execution of the conspiracy is the event which triggers the cause of action, in part because it seems that damage is presumed by reason of the very execution of the conspiracy. At all events, it seems clear from Taylor that in conspiracy cases, time runs from the date of the execution of the conspiracy.
45. What, then, was the alleged over-arching conspiracy? Even taking the plaintiff’s case at its highest – and expressing no view at all on either the factual or legal merits of these claims – this conspiracy was indeed put into effect between 1997-1998. On the plaintiff’s view of the case, then during this period Ms. Farrell was suborned by Gardaí to make a false statement implicating Ms. Bailey; Mr. Bailey was falsely arrested, not once, but twice; Mr. Graham was supplied with money, clothes and cannabis with a view to befriending Mr. Bailey in the hope that the latter would make an admission and Mr. Boohig was spoken to by senior Garda officers in the hope that he would speak to the then Minister for Justice with a view to pressurising the DPP to launch a prosecution.
46. It is true that Mr. Bailey’s dwelling was searched at a slightly later stage in September 2000, but even then any cause of action arising from the search had become statute-barred in September 2006, several months before the present proceedings were commenced.
47. Accordingly, in the light of the comments of McCarthy J. in Taylor, we find ourselves compelled to the conclusion that, subject to two important exceptions, Mr. Bailey’s cause of action in conspiracy crystallised at this point – at all events no later than 1998 – because on his version of events the conspiracy was executed by members of the Gardaí during this period. It is not necessary for this Court to determine precisely what the relevant dates in 1997 and 1998 for this purpose actually were, because, on any view, these events long pre-dated 2nd May 2001, i.e., the last day of the six year time period permitted by s. 11 of the 1957 Act (read in conjunction with s. 11(6) of the 1961 Act) given that these proceedings were issued on 1st May 2007.
48. There are, we think, two exceptions to this. First, we agree with the ruling of Hedigan J. to the effect that if the plaintiff’s fundamental contention was correct and there had been a conspiracy on the part of the Gardaí to suborn Ms. Farrell as a witness, this was a continuing conspiracy which operated die de diem. After all, Ms. Farrell’s statement implicating Mr. Bailey remained on the Garda file and it was capable of being acted upon by the authorities. In this respect, therefore, we agree with Hedigan J. that this particular aspect of the plaintiff’s claim was not statute-barred and that he was accordingly correct in allowing this matter to go to the jury. To that extent, therefore, we would dismiss the State defendant’s cross-appeal against this aspect of the findings of the trial judge.
49. The other exception relates to the alleged unlawful disclosure of confidential information by the Gardaí to the media in anticipation of the hearing of the defamation proceedings by the Circuit Court in November/December 2003. It is true that an order for third party discovery of such witness statements was made by the Circuit Court at the start of the trial, but the plaintiff’s case is that there had already been an unlawful disclosure of such information by members of the Gardaí to, inter alia, the solicitors for the defendant newspapers in advance of any such order and that he accordingly has a cause of action for either unlawful means conspiracy and/or a breach of his constitutional right to privacy.
50. This issue was raised by counsel for the plaintiff, Mr. Creed S.C., with the trial judge on day 60. The trial judge ruled as follows:
“Mr. JUSTICE HEDIGAN: Well, I think that you are on very thin ground but I think it probably is just about something for the jury to decide. Why weren’t the solicitors called, who were intended to be called if such evidence was actually given. So, its all highly speculative, but it may well be something for the jury to deal with.
Mr. CREED: If the jury accept that that information came from the Gardaí and I absolutely accept, judge, it’s a matter for the jury, that they are entitled to say my privacy was breached thereby.”
51. We acknowledge, of course, that the plaintiff’s defamation appeal was ultimately compromised on terms which remain confidential to the plaintiff and the various newspapers. If, however, there was a conspiracy which was put into effect – as the plaintiff alleges – then, in the light of the comments of McCarthy J. in Taylor, this would seem to be actionable in itself. This matter is not statute-barred and while it is true that viewed against the large panorama of complaints against members of the force this, may, on one view, amount to issue of lesser importance, the Court cannot, with respect, agree with the trial judge that if such disclosure occurred it was impossible to separate it out from earlier advance publicity which had been generated prior to 2001 and accordingly statute-barred.
52. The Court is, accordingly, of the view that the appeal must be allowed in respect of this separate discrete claim and this claim (namely, whether there was an unlawful disclosure of information contained in witness statements by members of the Gardaí to, inter alia, the solicitors for the defendant newspapers in advance of any such discovery order and that he accordingly has a cause of action for a breach for either unlawful means conspiracy and/or a breach of his constitutional right to privacy. must be remitted to the High Court for a re-hearing.
Part IV: The rulings in relation to opinion evidence
53. In this Part we address the rulings made by the trial judge in relation to opinion evidence and the evidence tendered by two former Directors of Public Prosecutions, Mr. Eamonn Barnes and Mr. James Hamilton, along with a senior official then working in the DPP’s office.
54. A further issue on the appeal arises from constraints that were imposed on the plaintiff/appellant at trial when he called a number of witnesses, referred to collectively by the shorthand “the expert witnesses”. The witnesses are, in the order they gave evidence, Mr. Eamonn Barnes, former Director of Public Prosecutions, Mr. Robert Sheehan, formerly a professional officer in the Office of the Director of Public Prosecutions to whom reference has already been made in the course of this judgment, and Mr. James Hamilton, also a former Director of Public Prosecutions and the successor to Mr. Eamonn Barnes in that office.
55. It will be necessary to consider the appearances of each of these witnesses in greater detail, but at this stage, by way of overview, it should be explained that the State defendants were concerned to prevent the witnesses offering evidence, in the nature of opinion evidence in relation to the nature and quality of the Garda investigation and also concerned lest the witnesses’ testimony would facilitate the introduction into the trial of large amounts of hearsay evidence.
56. The witnesses in question gave evidence on days 34 and 35 of the trial. Day 34 opened with an intervention by Mr. Luán Ó Braonáin, Senior Counsel for the defendants who expressed a concern that every effort should be made to ensure that the witnesses that it was anticipated would be giving evidence that day should avoid hearsay and every effort made to ensure that no opinion evidence would be adduced.
57. Mr. Tom Creed, Senior Counsel, responded to the intervention offering a degree of comfort. He explained that Mr. Malachy Boohig, the State Solicitor for West Cork would be giving evidence and that Mr. Sheehan and Mr. Barnes would be giving evidence of having been contacted by Mr. Boohig. He continued that when he called Mr. Sheehan to give evidence that he would not be seeking to put the witnesses’ critique into evidence as the judge had already ruled on that matter. That was a reference to a debate and ruling that had occurred on Day 4 of the trial. Counsel added that the DPP was represented in court that day by counsel and that Mr. Sheehan had received certain directions from the Director about areas that he was not to address while giving evidence. It seems the concerns of the DPP were grounded in the fact that the Sophie Toscan du Plantier investigation remained live. Counsel for the appellant indicated that he was very alive to the fact that Mr. Sheehan could not be invited to say that particular material that had been gathered was true or false, however, he felt that he was entitled to ask Mr. Sheehan about the DPP’s file and the dealings that Mr. Sheehan had with the Gardaí.
58. Counsel for the respondents indicated that it was difficult to adopt a firm position in the abstract as it were, as he was unclear just what evidence would be sought to be adduced, but that if it was intended to ask Mr. Sheehan to express an opinion on the investigation, then that was impermissible. In ruling on the matter the trial judge began his remarks by saying that in the absence of a concrete objection to a particular piece of evidence, it was difficult to say very much at that stage. He indicated that where persons were going to be called to give evidence, that the hearsay evidence rule might be relaxed to a certain extent in order to allow the evidence to be presented in a comprehensive and fluid fashion. In effect, therefore, the judge was indicating that if both parties to a conversation or a transaction were going to be called to give evidence then it was not necessary to impose artificial restrictions on one individual giving an account of what had occurred.
59. Mr. Malachy Boohig was then called and gave his evidence without controversy. The key aspect of his evidence was what he had to say about attending a meeting in Bandon Garda Station in March 1998 during the Cork Criminal Sessions and the fact that he said that at the end of the meeting he was followed from the room by Detective Chief Superintendent Sean Camon of the National Bureau of Criminal Investigation and he believed Detective Chief Superintendent Dwyer was also present. According to Mr. Boohig, Detective Chief Superintendent Camon said that he understood that Mr. Boohig had been in college with Mr. John O’Donoghue T.D., the then Minister for Justice. Mr. Boohig said that Detective Chief Superintendent Camon asked him to contact Minister O’Donoghue with a view to having him contact the DPP in order to secure the proffering of a charge. Mr. Boohig said that the following day he spoke by telephone to Mr. Barnes, informed him of what had occurred and that later that day also spoke with Mr. Sheehan. Some months later he attended at the Office of the Director of Public Prosecutions in Dublin in order to review the file with Mr. Sheehan and had a brief meeting with Director Barnes on that occasion.
60. Mr. Eamonn Barnes was then called who explained to the jury that he was appointed as the State’s first Director of Public Prosecutions in January 1975 and served in that position until September 1999. He described from memory his involvement with the Sophie Toscan du Plantier file. It was a significant file with which he had a personal involvement and he also discussed the case with Mr. Sheehan and with other officials in his office. In 2011 he was on holidays in Spain, when he became aware via an Irish Times story that the French authorities were seeking the surrender of Mr. Bailey pursuant to an EAW. He was aware of judicial procedures in France and felt that perhaps the whole story of the Bailey case was not being made known to the French authorities and felt that it might be important that it should be. He made contact with the Office of the DPP while journeying home, ringing from Paris, and spoke to a senior official there. He expressed his anxiety about the matter and said that he felt that the issue should be brought to the attention of the Attorney General. Having reflected on the matter further on his return, he contacted his successor, Mr. James Hamilton, who asked him to put his concerns in writing. He then wrote and sent an e-mail.
61. Counsel for the appellant asked him what was in the e-mail, inviting him to refer to it if he wanted to. Counsel commented “he is entitled to refresh his memory”. This gave rise to an intervention from counsel for the defendants to say that the e-mail was quite clearly not a contemporaneous note of Mr. Boohig. With the acquiescence of the judge, Mr. Barnes then began to read the e-mail, which was a very lengthy one, to the Court and jury. At one stage counsel for the defendants intervened to protest that what was happening was that a statement was being read out rather than that evidence was being given. It appears that up to that stage the trial judge had not got the e-mail before him, but he was provided with a copy and his attention was directed to the concluding section. The jury was then sent for an early lunch and it would seem that the matter was considered further over lunch by the trial judge because when the Court resumed, in exchanges with counsel he commented, “not only is it a question of an opinion being expressed by Mr. Barnes, which of course he is perfectly entitled to hold, but it also goes to the very core of what the jury is here to actually decide. The judge indicated that his particular concern was with the last six lines of the memo. He then observed,
“There is then an outline of Mr. Barnes’ opinion of that particular investigation and that is the core issue before the Court. That is the core issue for the jury to decide and I think the law is fairly clear in that regard. Evidence of opinion of that sort ought not to be given because it is their function to decide, not Mr. Barnes’ role. That indeed is what I was referring to when I dealt with the French summation of the case against Mr. Bailey, which I said also was highly prejudicial and was an assessment of the very core issue that was for the jury to decide, and equally the Sheehan one.”
62. In response counsel for the plaintiff made lengthy submissions. In particular he made the point that he was anxious that the jury should know why Mr. Barnes intervened as he did. He said that if that happened he would have no problem with the judge reminding the jury, at the conclusion of the evidence of Mr. Barnes, that it was they and not Mr. Barnes who decided the case. The judge concluded with the judge ruling as follows,
“I have considered the matter. The first moment that I read this just before lunch, it positively leapt off the page at me as being a highly prejudicial opinion expressed by somebody who is perfectly entitled to hold that opinion and I have not the slightest doubt holds it in a bona fide [manner] but it is a highly prejudicial opinion expressed on a matter which is, as I referred to earlier, as the core issue before the Court which, in fact in the submissions that have been put to me is described also as, I think, the ultimate issue. I think you can use the two words as one wishes. The authority is Midland Bank v. Hett, Stubbs and Kemp (a firm) [1979] Ch. 384 Mr Justice Oliver, in a phrase that has been repeatedly referred to in the Irish courts and often opened before me, there said:
“… whilst evidence of the witnesses’ view of what, as a matter of law, the solicitor’s duty was in the particular circumstances of the case is, I should have thought, inadmissible, for that is the very question which it is the court’s function to decide.”
The end of that e-mail, starting with “presumably” and going down to the end “appropriate attention” is, in my view, clearly inadmissible as a highly prejudicial opinion expressed on the matter, which is the core issue for the jury to decide. I think it is a matter that should not be opened to the jury either in evidence now by Mr. Barnes nor, indeed, if it is intended to, is it intended to put this document in by the way? Did I understand or misunderstand?”
Counsel commented:
“No, Judge.”
The judge then added in exchange with counsel that there was the option of putting in the document with the section that he had excluded redacted. At that point and arising from what had occurred there followed what might be described as preliminary skirmishing about the position of Mr. Sheehan, counsel for Mr. Bailey commenting that his colleague could not, as he put it with one fell swoop, before any evidence of Mr. Sheehan was adduced seek to have it excluded. Counsel for the appellant was told that the Court’s ruling was there and that counsel had to interpret it and that court time should not be wasted in pointless objections. During the course of further exchanges the trial judge addressed counsel for Mr. Bailey in order to remind him, that evidence which had been ruled inadmissible should not be referred to. In later remarks the judge referenced the Sheehan Report and the EAW making clear that he had taken a similar position to each and had done so for similar reasons.
63. The section of the Barnes e-mail to which successful objection was taken was, as set out in the written submissions on behalf of the defendants/respondents as follows:
“There is now, apparently, a real possibility that Bailey may be charged in France and perhaps receive a lengthy prison sentence, presumably on the basis inter alia of “evidence” and “conclusions”, provided by what I regarded at the time as having been a thoroughly flawed and prejudiced Garda investigation culminating in a grossly improper attempt to achieve or even force a prosecutorial decision which accorded with that prejudice. I felt accordingly that as a matter of ordinary justice to bring the matter to appropriate attention.”
64. We find it hard to see on what basis it could be contended that an e-mail drafted and sent in 2011 could be admissible in the context of a case primarily concerned with events that occurred in 1997 and 1998. The most that could properly be said was that Mr. Barnes became concerned in 2011 that Mr. Bailey faced being surrendered to France and therefore contacted his successor. What he had to say to Mr. Hamilton or anybody else in a written document was simply not admissible. We cannot see that any witness was entitled to say that he regarded, or was of opinion, that the Garda investigation was thoroughly flawed and prejudiced.
65. It may be noted that this section of the e-mail read to the Court prior to objection being taken included the statement
“I expressed my gratitude and praise to Mr. Boohig for his action in coming to me, which I assumed was because he wanted me to be aware that the Garda investigation was lacking in objectivity and was, indeed, heavily prejudiced and also to forewarn me of the possibility of further pressure being brought to bear on the office.”
Overall, the Court does not believe that there was any unfairness to the appellant in how the evidence of Mr. Barnes was dealt with.
66. The second of the so-called expert witnesses was Mr. Robert Sheehan. He began his evidence by telling the jury that in November, 1996, he joined the Office of the DPP as a directing officer having previously served as head of the Criminal Trials Section in the Chief State Solicitor’s Office. Then, in the course of what were essentially introductory remarks, he explained that at the time in question he was dealing with hundreds of files, some quite small, some quite large. This particular case was a huge one, involving thousands of pages of statements. So he expressed the hope that the judge would permit him, if necessary, rather than have him rely on a photographic memory, which he did not possess, to refresh his memory by reference to notes, an exercise which he felt might be very useful to the jury. He then proceeded to continue
“In that context I might add that yesterday in preparation for my testimony…”
at which point counsel for the defendants interjected,
“If they are contemporaneous notes obviously…”
Mr. Sheehan continued,
“If I might just finish, Judge – in that context in relation to preparation of my testimony today, I have dealt with some notes, which basically I have deleted all opinion from, and they contain only factual matters which relate to materials referred to the Office by the Gardaí and which would be quite impossible for me to simply regurgitate from memory. I am afraid I couldn’t simply do that. If I am not permitted to do so, I will of course, do my best.”
67. The circumstances in which Mr. Sheehan would be permitted to refresh his memory became a significant issue during the course of his evidence. The witness had prepared a document in advance of the hearing and that he would be curtailed in referring to this is understandable. Unfortunately, it never really emerged with any real clarity what document or documents were utilised by Mr. Sheehan in preparing for the hearing. He did say that he did not have access to the file since 2003, when he was taken off the case and it was assigned to somebody else. But it seems he did have access to what he described as “historical notes”. He explained that he had removed all expressions of opinion. However, what did not really emerge was whether these historic notes were themselves created contemporaneously with the events with which they dealt, or at some time remove on a look back basis. The fact that they contained expressions of opinion which Mr. Sheehan felt proper to excise might suggest that the latter is more likely.
68. The judge was clear that Mr. Sheehan was free to refer to contemporaneous notes, referring to these as the gold standards but not to any other notes. He ruled on the matter in these terms:
“I think contemporaneous notes, as you know, may well be referred to and, indeed contemporaneous notes are the gold standard of evidence because they tend to provide a clear indication of what actually happened at that time rather than all the overlay that people have in between the moment being recollected and the time they recollect which, of course, is always in the present. But contemporaneous notes only can be referred to. No other notes can be referred to other than documentation which you want to refer to along the way. You may be able to assist him in that regard but do the best you can, Mr. Sheehan, nobody expects you to be Superman.”
69. As Mr. Sheehan continued to give evidence, a degree of what might be described as tetchiness developed between judge and witness. At one stage Mr. Sheehan was referring to the fact that he made clear to Gardaí that Ms. Farrell was absolutely unreliable, instancing the fact that she had made a statement in December 1996, in which she had described a man she had seen in Schull as being “average height and thin build” and then adding in language which reflected that of Mr. Sheehan’s 44-page memo, that when the Gardaí wanted Mr. Bailey as a suspect lo and behold she changed her statement to saying “he was a very big man”. This precipitated an intervention by counsel for the defendants, leading to the judge advising the witness to steer clear of expressions of opinion.
70. When the jury was asked to withdraw by counsel for the appellant, the judge indicated that he wanted evidence to be given in a completely calm and dispassionate manner, avoiding commitments to any particular position. In further exchanges the judge indicated that there should not be “any melodramatics such as ‘lo and behold’”, this a reference to the fact that Mr. Sheehan, in his report and when giving evidence, felt that Ms. Farrell having first provided one description, then “low and behold” provided another.
71. At this remove some of the skirmishing that surrounded the evidence of Mr. Sheehan seems somewhat unnecessary. Counsel for the plaintiff made clear that his interest was in establishing through the witness that at a very early stage the Gardaí were informed that in the view of the DPP’s office Ms. Farrell was an unreliable witness. He stressed that insofar as Mr. Sheehan was expressing that view, this was not for the purpose of establishing that Ms. Farrell was or was not unreliable but for the purpose of highlighting that the Gardaí had been advised of Mr. Sheehan’s assessment at the time.
72. The plaintiff was not in a position to establish as a fact because of the assessment made by the witness that the Garda investigation was flawed and deficient but he was in a position and did in fact establish that the witness formed a view at an early stage and that view was communicated to the Director.
73. The skirmishing, and the resulting tetchiness, was unfortunate, and no one, witness, counsel on either side or judge can perhaps be totally absolved from blame. It is, however, certainly not the case that the restrictions imposed on Mr. Sheehan rendered the trial unsatisfactory or the outcome unsafe. The real purpose of calling him was to establish that those charged with consideration of the matter within the Office of the Director of Public Prosecutions formed a particular view at an early stage and that view was communicated to An Garda Síochána and that objective was achieved.
74. Mr. Sheehan was followed to the witness box by Mr. James Hamilton. At the suggestion of Mr. Creed, Senior Counsel for Mr. Bailey, he was examined initially in the absence of the jury. When Mr. Hamilton completed his direct evidence in the course of the voir dire, counsel for the defendants indicated that he would have a problem with similar evidence being given in the presence of the jury as it had contained expressions of opinion and belief as opposed to factual statements. Counsel referred to the fact that Mr. Hamilton had said that there were many shortcomings in the investigation, and contended that this expression of opinion was inadmissible. In response to an invitation from the judge to list his concerns, he referred to the observations about “many shortcomings in the investigation”. He referred also to what Mr. Hamilton had to say about media reports which indicated a familiarity with the case as advanced by the prosecution, such as a statement as fact that Mr. Bailey had been seen at Keelfadda bridge, that there were scratches on his person and so on. Mr. Hamilton had said that no one in his office was the source for these stories. Counsel instanced also that Mr. Hamilton had referred to the fact that his office was prepared to make its analysis document available to the Office of the Attorney General but it was declined. Mr. Hamilton, in the intervention, clarified that he should not have spoken of shortcomings, as the document, which slightly to Mr. Hamilton’s irritation, was being referred to as the “Sheehan document”, analysed shortcomings in the evidence. In some cases that was because evidence was not available and it did not suggest that the investigators did anything wrong.
75. Another issue of some significance that arose during the course of the voir dire was whether the French authorities were given the reasons why the DPP had decided not to commence a prosecution. Mr. Hamilton assumed that this was so following his interaction with the Attorney General, but it became clear that while that was his assumption, he was not in a position to state that was so as a matter of fact of his own knowledge. The issue was left somewhat in abeyance on the basis that Mr. Hamilton could be asked whether he provided his reasons to the Central Authority and then a witness from the Central Authority, when called, could be asked whether the reasons given to them were furnished to the French authorities. The evidence thereafter given by Mr. Hamilton in the presence of the jury was brief and largely non controversial.
76. The overall picture that emerges is that the evidence of the various professional witnesses gave rise to debate about the extent to which they could be permitted to express opinions on the issues that arose in the case. The trial judge took a strict approach to the issue and certainly he was fully entitled to do that and, indeed, probably was bound to do so.
77. The appellant’s attitude was that the conclusions reached by those charged by statute to decide whether there should be a prosecution meant that the relevant statutory authorities had decided that the Garda investigation was deficient, or inadequate or ill-founded and that this was indicative of how the disputes between the parties should be decided and indeed determinative of how those issues should be decided. In the view of the Court, if that was the approach of the appellant then it was not soundly based. That that is so emerges clearly from the riposte of the respondents who ask rhetorically “what would the position have been if a different professional officer had submitted a different recommendation or a DPP had directed differently?”
78. This was the very point which was addressed by the Supreme Court in Mannix v. Pluck [1975] I.R. 169. In that case the plaintiff had sued the defendant lorry driver for negligence as a result of personal injuries sustained in the course of a collision. He had appealed to the Supreme Court against a jury finding that the defendant had not been negligent. In the course of the hearing it had been put to the plaintiff that neither he nor his solicitor thought very much of his chances of his success.
79. The Supreme Court held that this line of cross-examination was inadmissible and directed a new trial. As Ó Dálaigh C.J. explained ([1975] I.R. 169, 173-174):
“But the real question here is whether the plaintiff’s opinion as to the strength of his own case (or his solicitor’s opinion on the same subject) is relevant. The general rule as I understand is that opinions in so far as they are based on no evidence, or illegal evidence, are worthless and equally are to be rejected, where founded on legal evidence, as tending to usurp the functions of the tribunal whose province alone it is to draw conclusions of law and fact…..
This matter becomes clearer if we strip the case of inference and discuss it in terms of direct evidence. First, should a party in a running-down case be permitted, either on direct or on cross examination, to give evidence as to what he thinks of his own case; secondly, having given the evidence, should the jury be allowed to take it into account as a relevant factor? Evidence is a double-edged sword. If a plaintiff, being pressed in cross-examination about his opinion of the strength of his case says he believes, and is advised, that he had a strong case, may a jury give such weight to this as they think proper? I would answer my questions by saying:-“Surely not.” This is for the tribunal to try. In the course of the trial of running-down cases, how often has a witness (whether party or not) been stopped from giving his opinion and told to confine his evidence to what he observed? When the question is posed in relation to a solicitor’s opinion of his client’s case, the enormity of the suggestion becomes apparent. In what circumstances could a solicitor be permitted to tell a tribunal that he did not think much of his client’s case which was then at trial before the tribunal? In what circumstances could a judge in effect tell a jury that the poor opinion that the plaintiff’s solicitor entertained of his client’s case could, in deciding the case, be thrown into the balance against the plaintiff? The matter in my opinion does not require further discussion to demonstrate how untenable the defendant’s ground is in this case.”
80. Much the same could be said of the opinion evidence which the plaintiff had proposed to tender here. It amounted to saying that in the respective opinions of three (admittedly very distinguished) professional witnesses the prosecution case against Mr. Bailey was a poor one. But this is precisely the type of opinion evidence which, as the Supreme Court made clear in Mannix, cannot be tendered by either party.
81. It follows, therefore, that we are quite satisfied that the issues that arose during the course of the evidence of Mr. Barnes, Mr. Sheehan and Mr. Hamilton did not provide any basis for concluding that the trial was other than satisfactory.
Part V: Other rulings made by the trial judge
82. In this Part we address the question of certain other rulings made by the trial judge, including the admissibility of the opinion of a senior British police officer, Robert Quick, and a warning given by the trial judge to Ms. Farrell in the presence of the jury.
The exclusion of the evidence of Robert Quick
83. The plaintiff sought to tender as an expert witness, Mr. Robert Quick, who is a former Assistant Commissioner of London’s Metropolitan Police Service. Mr Quick’s evidence was heard by way of voir dire in its entirety before being ruled out by the trial judge. It should be said immediately that Mr. Quick possessed extensive experience in the investigation of serious and organised crime, counter-terrorism and counter-corruption. He certainly had enormous experience qua senior police officer.
84. This, however, was not the basis upon which the State defendants sought to have his evidence excluded. Their case rather was that Mr. Quick had insufficient expertise in terms of Irish police practice and procedure to qualify as an expert for the purposes of this trial. This was, in effect, the entire thrust of his cross-examination by counsel for the State defendants on Day 36:
“MR O’HIGGINS. What was the law in Ireland about taking statements in 1996 and 1997?
A. Well, forgive me, I thought you asked me whether there had been changes.
Q. We are talking about your proposing to give expert evidence about something that happened in 1996/1997?
A. Yes.
Q. Do you know anything about the Supreme Court decisions in Ireland as to what the law was?
A. No.
Q. Nothing?
A. No…..
Q. You don’t know anything about what the situation was in Ireland?
A. I wouldn’t profess to be an expert on Irish law at all.
Q. Including what the Supreme Court had laid down as being the circumstances of the admissibility of statements taken?
A. Including that, yes……..
Q. You mentioned highly trained officers taking statements. Do you know anything about what the position was here?
A. Not verbatim, I have a vague impression from my contact with Garda officers.
Q. Can I ask you, you talked about the alteration of a statement being a very serious thing, what do you know about the circumstances in which any statement is said to have been altered in this case?
A. I don’t know anything about the circumstances. I’ve been allowed to read some transcripts.
Q. What transcripts?
A. Transcripts of interview.
Q. Yes?
A. Sorry, of telephone conversations.
Q. Yes?
A. I have read verbatim those transcripts and the context of the wider conversations as well as specific words that were indicative of an intent to change the statements.
Q. Are you aware of all the relevant evidence which has been given in the case in relation to these matters?
A. No, of course not, no.
Q. You haven’t examined even the transcripts of evidence?
A. No.
Q. The trial has being going on for 35 days?
A. Absolutely, not, I have not followed this case and I don’t know the detail of the evidence……
Q. Do you know what happened in this case? I mean do you know what Mr. Bailey is suing for?
A. Only in the vaguest terms.
Q. So, you don’t know what is alleged in the case?
A. On one level I hope I am not sort of contaminated by the story in its wider sense. I have been asked as an experienced police officer with some experience of working with Garda and other countries to give a comment or give some evidence in relation to some transcripts of telephone conversations. So, I have read those transcripts
Q. Based on a tiny fragment of evidence in circumstances where you have never heard the tapes and don’t know anything about the context?
A. I wouldn’t purport for it to be anything other than I have read those transcripts of those telephone conversations and I have commented upon them as per my evidence earlier today………
Q. Can I suggest to you that no expert should ever give an opinion, assuming they are doing it in the question of expertise, which I suggest it is not scientific or vocational expertise can assist, no expert should do that without informing themselves of all the relevant evidence to the expression of that opinion and that you have informed yourself of almost none?
A. There may be pros and cons in that but all I can say is that I have been asked to examine transcripts of telephone conversations and I have given my evidence about them.”
85. The purpose of Mr Quick’s evidence was, it seems, to allow him to give his expert view, by reference to approved police practice, of the correct manner of giving and taking statements and of handling witnesses and informants. The difficulty, however, is that while Mr. Quick is plainly a distinguished former police officer, he simply was not aware of the relevant law or standards applicable in Ireland at the time in question in 1996-1997. On that basis his proposed evidence as to standard police practice did not meet the threshold of an expert witness. As such, the evidence was inadmissible insofar as it was not probative of any material fact.
86. In relation to his opinion as to the meaning of the content of various tape recordings, it must be observed that it emerged from the cross-examination of Mr. Quick that he did not profess to have any real knowledge of the plaintiff’s case, nor of the background to the recordings or the identities of the speakers. In effect, Mr. Quick would have being giving evidence as to what he understood by the use of certain words which was not, in any event, a matter for expert evidence. The question of interpretation of the recordings was fundamentally a matter solely for the jury.
87. In these circumstances the conclusion must be that the trial judge was correct to exclude the proposed evidence of Mr. Quick. The foundations by which expert evidence might properly have been given by him in respect of the taking of statements, police practices in this jurisdiction in 1996-1997 and so forth were simply not laid in his evidence on the voir dire. Much the same can be said of the evidence he proposed to give in relation to the interpretation of certain other evidence, a matter which, in any event, was principally a matter for the jury. Any other conclusion would have presented the grave risk that inadmissible evidence which would otherwise have fallen foul of the rules of evidence with regard to hearsay, opinion evidence, expert evidence and evidence as to the ultimate issue might well have tendered.
The evidence of Marie Farrell
88. So far as the evidence of Ms. Marie Farrell is concerned, it should be noted that she commenced giving evidence on Day 16. Her cross-examination commenced on Day 19. On the morning of Day 21 as she was being cross-examined as to identity of the identity of the individual in her company on 22-23 December 1996 when she (allegedly) witnessed Mr. Bailey at Kealfadda Bridge, Ms. Farrell abruptly stood up from the witness box and left the court. She returned to Court that afternoon and her cross-examination continued until Day 24.
89. Before this Court, the plaintiff made two fundamental complaints about the rulings of Hedigan J. First, it was said that he ought not to have issued warnings to Ms. Farrell in the presence of the jury. Second, it was suggested that counsel for the defendants ought not to have asserted in his opinion that Ms. Farrell was telling lies in the course of putting questions to her in the course of cross-examination.
90. There is no doubt but that in many respects Ms. Farrell was a very singular witness. She had admitted at the outset of her evidence that she was a perjurer and that she had made a dishonest claim in respect of an insurance policy. The critical evidence related, of course, to the various statements which she had first made (on a variety of occasions) to members of An Garda Síochána in relation to Mme. du Plantier’s murder but which she either later retracted or significantly varied, claiming that she had been suborned by members of An Garda Síochána.
91. Ms. Farrell had originally contacted the Gardaí by telephone in the wake of the murder, saying that she had seen a strange man loitering outside her shop in the days preceding the murder. She completed a questionnaire which Gardaí had circulated to local residents in the immediate aftermath of the murder saying that she had seen a man on Saturday 21 December 1996 “hanging around” outside her shop. She stated that he was in his late 30s and was about 5ft 10ins.
92. Ms. Farrell then made a series of formal statements to Gardaí, some of which we have already described. It is, perhaps, unnecessary for present purposes to record all of the (apparently) inconsistent and contradictory statements made by Ms. Farrell in the course of her evidence in the days leading up to the judge’s warning, but the following three instance may be given as representative.
93. In the course of the trial on Day 16 Ms. Farrell stated that the stranger she had seen outside her clothes shop on 21st December 1996 was wearing a cost which had been adorned with silver buttons. This was a detail which had never featured in any of the many statements which she had previously made concerning the stranger she had seen on that day. Not surprisingly, her failure to mention this detail was a matter which the State defendants raised in the course of cross-examination and it was put to her that her failure to mention this previously undermined her credibility.
94. On Day 21 Ms. Farrell was pressed in cross-examination to identify the person who accompanied her on the evening of 22nd/23rd December 1996 at the time of the sighting at Kealfadda Bridge. At that point Ms. Farrell was prompted to walk out of the courtroom saying that she wanted “nothing more to do with it.” She, however, returned to court that afternoon.
95. When she returned to court and resumed giving evidence, Ms. Farrell stated that she had not encountered any difficulties with the Department of Social Services in the U.K. when she had lived there with her husband. On the application of the State defendants, a video was then played of a recording of her interview with An Garda Síochána Ombudsman Commission (“GSOC”). This GSOC recording dated from April / May 2012 and in the course of which she acknowledged in some detail that she had fraudulently claimed income support from the British Department of Social Services.
96. Ms. Farrell also denied in evidence that when Mr. Bailey entered her shop on the 28th June 1997 he had threatened her with personal information in relation to these events. She denied that Mr. Bailey had threatened to inform on her to the British Social Services. She maintained on the contrary that a Garda statement ascribed to her on the 10th July 2007 detailing these matters as false. She confirmed this in cross examination. At that point a further video recording of her interviews with GSOC was played. In that video recording, (which this Court had itself seen), Ms. Farrell can be seen and heard reciting that Mr. Bailey had indeed threatened her and, specifically, had threatened to report the fact that she had committed benefit fraud to the U.K. Department of Social Services.
97. Ms. Farrell was then pressed by counsel for the State defendant as to explain the conflicting versions. In response, Ms. Farrell replied she could merely state that she was “getting confused with fact and fiction” and was “mixed up”. Shortly after this point Hedigan J. warned Ms. Farrell in the presence of the jury as follows:-
“Q. Mr. Justice Hedigan: Just two things, Ms. Farrell, any further walkouts will be your last walkout of these proceedings, do you understand that…?
A. Ms. Farrell: Yes, I apologise for that.
Q. Mr. Justice Hedigan: Secondly, I would like you to give very careful consideration to the manner in which you are giving evidence and bear in mind that there are very severe penal sanctions for people who commit perjury.
A. Ms. Farrell: I’m not, I am telling the truth.
Q. Mr. Justice Hedigan: Just don’t say anything. Think about it overnight, if you would be so kind.”
98. Hedigan J. subsequently rejected an application made by and on behalf of Mr. Bailey to have the jury discharged by reason of the fact that these comments were made in the presence of the jury. This argument was rejected by him in the course of an ex tempore ruling given on the following day, Day 22. In the course of that ex tempore ruling Hedigan J. said:
“…I think every judge has a duty to give a warning to witnesses while giving evidence in court where it appears that it is appropriate to do so but they should bear in mind that there are severe criminal penalties that are available in relation to anybody who is found to commit perjury, which is a scandalous thing to do in any kind of place but particularly, of course, in court in a case of such enormous importance. A warning is not a conclusion, this is a complete misunderstanding of what occurred yesterday on the part of [counsel] to work on the basis that he does that the warning is somehow a conclusion. It is obviously not and never could be. As I say, a judge has a duty to warn anybody in court that may be getting themselves into that situation. That is particularly appropriate in a case in which the witness in question is somebody on the plaintiff’s own case which participates on the falsification of statements on the plaintiff’s case – not the defendant – whether under pressure from the Gardaí or otherwise as the case may be. It is obviously more appropriate in the case of a witness, who is apparently giving false evidence in libel proceedings, practically one of the first pieces evidence that she gave. It is something that this witness must be warned about and I am satisfied that the warning was thoroughly appropriate. … as the effect it has on the jury that lies basically on the responsibility of the witness herself.”
99. Hedigan J. returned to this issue on Day 64 in the course of his closing address to the jury. He said:-
“I am not going to go into Ms.Farrell’s evidence. You’ve heard it all but I was simply asking you to note that she presented in Court at the outset as a person who admitted that she had lied on the evidence she gave in the Circuit Court…is that story true or is it false, like the evidence she gave in the Circuit Court. That is alone for you to decide.”
100. Hedigan J. further stated in respect of the warning he had given on Day 21:
“You heard me during the course of her evidence at a particularly dramatic time in the cross examination of her, warn her about the serious implications for committing perjury and I want you to careful to remember this: a warning is not a conclusion, it is a warning. It is not often that a judge has to warn a witness to consider their position, but it does happen. It is a warning and that is all it is. The decision on the credibility of Marie Farrell is yours and yours alone.”
101. The plaintiff’s contention is that the trial judge was wrong to have administered a warning to Ms. Farrell regarding her evidence and that he compounded that error in the presence of the jury.
102. While it is true that a trial judge should generally be slow to warn a witness as to the credibility of their evidence, practical experience has shown that this is sometimes necessary. If, however, there was ever a case where such a warning was necessary it was probably in the case of Ms. Farrell. She was a key witness who had previously been given a myriad of opportunities to tender a true account of what she had seen in the days leading up to the murder and its immediate aftermath. She had already retracted her statements, saying that she had been suborned by members of the Gardaí. Central to all of this was the issue whether she had been pressurised by members of An Garda Síochána to make the statement(s) against the plaintiff or whether she had retracted those statements by reason of what amounted to blackmail on the part of the plaintiff.
103. This evidence, therefore, had assumed a vital significance for the trial. Yet Ms. Farrell had immediately prior to the warning unilaterally left the witness box and, upon her return, just given evidence on these critical issues which was diametrically at variance with the detailed evidence she had given under solemn circumstances to GSOC less then three years previously and which had been recorded on video. Given the dramatic inconsistencies between the two accounts, it would be hard to avoid the conclusion that at least in one or other accounts the witness had told a deliberate untruth. Ms. Farrell had, in any event, admitted in her evidence that she had previously committed perjury.
104. In these circumstances, a warning was both appropriate and timely. It must be recalled that the Supreme Court has stressed that even in the context of a criminal prosecution “it is open to a judge in an appropriate case to express an opinion that a particular verdict of guilty is the only one which would be reasonable or proper on the evidence, but that must of necessity fall short of the right to direct a verdict of guilty”: see The People (Director of Public Prosecutions) v. Davis [1993] 2 I.R. 1, 14, per Finlay C.J.
105. If this is so, it follows a fortiori that in a civil action for defamation the judge is entitled to express a view as to the evidence given by a witness, provided the ultimate role of the jury in assessing credibility is not thereby compromised. The trial judge could not, of course, have usurped the function of the jury to make a decision as to the credibility of the witness, but we are quite clear that in the present case Hedigan J. was at pains not to do so. Indeed, this is what he stressed to the jury in his address to them at the close of the trial some forty days later.
Conclusions on the warning issue
106. It is true that in ordinary circumstances it might have been preferable had the warning not been administered in the presence of the jury. But given the dramatic circumstances of the day’s evidence the judge can hardly be faulted for administering the warning in the presence of the jury. In any event, this was just one single episode in the context of a lengthy trial and, moreover, the trial judge was scrupulously careful to stress to the jury in his summing that the assessment of the credibility was entirely a matter for them.
The cross-examination of Ms. Farrell
107. It is next necessary to consider an objection to a particular question or statement made by counsel for the defendants in the course of the cross-examination of Ms. Farrell where he stated that he believed that she was lying. The background to this objection is as follows.
108. In the course of her evidence in chief Ms. Farrell had stated that one of the investigating Gardaí, Garda Fitzgerald, had committed an unnamed act that would cause him embarrassment were she to reveal it. On Day 20 counsel for the State defendants then cross-examined Ms. Farrell regarding this issue:
“Q. Can I ask you so we are not all trying this case in blinkers please what is the dark secret which you seek to hold over Detective Garda Fitzgerald?
A. It is just something personal.
Q. I am not prepared to deal with just something personal in a public trial. We all have to look at reality in this case, what was the matter which you have never told Mr. Buttimer about Detective Garda Fitzgerald, or anybody else, which I believe is what you are say.”
109. There then followed the following exchanges:
“MR. O’HIGGINS: Let us hear what it was now because I need to know because Detective Garda Fitzgerald needs to deal with this in evidence when he gives it. Let us not have hidden agendas. Let us hear just what is there please?
MR. JUSTICE HEDIGAN: You are obliged to tell the truth, the whole truth and nothing but the truth, so you must tell the whole of the story, not part of it. You must answer the question
A. Okay. When I lived in Schull I looked after a house for an English doctor and I would clean it on a Saturday if there were changeovers, it was let to some tourists at times, and one particular Saturday Jim Fitzgerald called to the house, he called just to see the house and at one stage I went upstairs and when I came down Jim Fitzgerald was in a downstairs bedroom, he was stripped naked and he asked me for sex.
Q. What happened then?
A. I told him to “get the fuck out”.
Q. Okay. You hadn’t told anyone that publicly for how many years? What year did this happen by the way?
A. Maybe ’97 or ’98, I am not exactly sure. It was well after I met him.
Q. It happened in 1997 or 1998, why didn’t you tell anyone since then?
A. It is not something that you would go round telling.
Q. Well it didn’t restrain you from saying things about Detective Sergeant Walsh, did it?
A. No.
Q. Yeah. Do you believe that a Garda who would do something like that…(INTERJECTION)
A. It did happen.
Q. Do you think that a Garda who would do something like that is fit to be a Member of An Garda Síochána released on duty before members of the public?
A. That is what happened….. Do you think that I am sitting here telling this lightly? I already had to explain to my daughter about Maurice Walsh, now…(INTERJECTION)
Q. Ms. Farrell I think you are sitting there telling the jury lies as you feel like doing?
A. I am not telling lies, I am not. Do you think I want to be sitting here and another headline in the paper about Marie Farrell and what was going on?
Q. Mrs. Farrell I really don’t know what your relationship with newspaper headlines is, we may take a look at that, I don’t know and I am still trying to work you out Mrs. Farrell. Can I ask you what was the doctor’s name please?
A. The doctor who owned the house?
Q. Yes.
A. John Smith.
Q. Where was the house?
A. It was, it was outside Schull, it was called Heather Rock.
Q. For how long did you clean it?
A. A few years….
Q. By agreement with whom did you clean it?
A. With the people who owned it.
Q. Yes. When do you say that this episode took place?
A. I don’t know was it ’97 or ’98.
Q. Are you really seriously telling the Ladies and Gentlemen of the Jury that you cannot tell when an incident like that happened whether it was 1997 or 1998?
A. I don’t know it was one, it was summer of ’97 or ’98.
Q. Mrs. Farrell really…(INTERJECTION)
A. I cannot remember the exact month, it was a year or so maybe after I met him.
Q. How often do naked policemen parade themselves wholly or partly in your vicinity?
A. Well I have had two episodes.
Q. You say that you were a put upon person who was in terrible trouble having to keep making statements at the instance of Detective Garda Fitzgerald and others, can I suggest to you that if ever you wanted to get out of ever having to make any more statement ever again all you needed to do was to tell Detective Garda Fitzgerald that that is it?
A. I did tell him many times that is it.
Q. Didn’t you know that you had him exactly where you wanted him, so to speak, if you were going to release what you say is the truth?
A. Look if you think I am telling lies –
Q. Yes, I do think you are telling lies, Mrs. Farrell?
A. — low down on his stomach he had like a little, a growth. How would I know that unless he stripped naked in front of me? I am telling you that did happen. I am not a liar. I am not a liar.
Q. Mrs. Farrell can I suggest to you it is wholly incredible, wholly incredible…(INTERJECTION)
A. Everything that happened down there was wholly incredible.
Q. That this should happen in circumstances where you cannot remember even as to the year when it did?
A. I can’t remember exactly. It did happen, I am not lying. It did happen.”
110. Objection is taken by the plaintiff to the two questions put by counsel for the defendants which we have underlined. It is true that in the course of the examination of witnesses counsel should normally refrain from expressing personal views, since – certainly if unchecked – it would tend to blur the line between the true questioning of the witness and the incorporation of inadmissible comment. This would be unfair to the witness.
111. This was the very point which was made by the English Court of Appeal observed in R. v. Farooqi [2013] EWCA Civ. 1349 :
“We do not suggest that the principle of fairness to the witness requires the somewhat dated formulaic use of the word “put” as integral to the process. Assuming that there is material to justify the allegation, “Were you driving at 120 mph?” is more effective than, “I put it you, that you were driving at 120 mph?” What ought to be avoided is the increasing modern habit of assertion, (often in tendentious terms or incorporating comment), which is not true cross-examination. This is unfair to the witness and blurs the line from a jury’s perspective between evidence from the witness and inadmissible comment from the advocate.”
112. So far as the facts of the present case are concerned, the two comments made by counsel were isolated in character and would readily be understood by all concerned – judge, opposing counsel, jury and not least the witness – as amounting to a suggestion that Ms. Farrell was lying. The basic for that suggestion had been fully laid and explored with the witness in the course of the cross-examination. The failure to preface either question with the words “I suggest” or “Is it not the case” can at worst be regarded as a minor slip-up on the part of counsel. There can, therefore, be no question in the circumstances of any possible unfairness to the witness, which, after all, is the rationale for the rule against comment by counsel in the course of cross-examination.
113. In these circumstances we would entirely reject the argument that the failure to preface the questions with words “I suggest” or similar words amounted to any unfairness on the part of State counsel and such a failure was at worst a form of harmless error.
Part VI – Conclusions
114. It remains only to summarise our conclusions. As will have been seen, the Court is of the view that, save in one minor respect, the appeal should be dismissed and the cross-appeal brought by the State defendants should also be dismissed.
115. First, while it may be that in other circumstances it might possibly have been more satisfactory had the question of the Statute been more fully addressed at an earlier point in the trial. But the plaintiff’s essential claim was a complex one of an over-arching conspiracy on the part of the Gardaí. In those circumstances the question of whether and if so, to what extent, the claim was statute-barred did not lend itself to easy adjudication in advance of the Court hearing all the relevant evidence. In these circumstances, this Court is obliged to conclude that it would not be unfair to permit the State defendants to raise the application of the Statute and there is no question of any estoppel in this regard arising in favour of the plaintiff.
116. Second, with one single exception, the rest of the plaintiff’s claim in respect of nominate torts and breaches of constitutional rights occurred even on his account of matters all prior to May 2001, i.e., six years before the present proceedings were commenced in May 2007. These claims are accordingly statute-barred.
117. Third, the claim in respect of the alleged unlawful disclosure by members of the Gardaí of confidential information prior to the hearing of the defamation proceedings is not statute-barred and, to that limited extent, the appeal should be allowed and a re-trial ordered.
118. Fourth, we agree with the ruling of Hedigan J. to the effect that if the plaintiff’s fundamental contention was correct and there had been a conspiracy on the part of the Gardaí to suborn Ms. Farrell as a witness, this constituted a continuing conspiracy which operated die de diem. In this respect, therefore, we agree with Hedigan J. that this particular aspect of the plaintiff’s claim was not statute-barred and that he was accordingly correct in allowing this matter to go to the jury. To that extent, therefore, we would dismiss the State defendant’s cross-appeal against this aspect of the findings of the trial judge.
119. Fifth, we agree with the trial judge’s rulings in respect of the evidence of Messrs. Sheehan, Hamilton and Barnes.
120. Sixth, we agree that the trial judge was correct to exclude the proposed evidence of Mr. Quick following a voir dire in the absence of the jury. The foundations by which expert evidence might properly have been given by Mr. Quick in respect of the taking of statements, police practices in this jurisdiction in 1996-1997 and so forth, were simply not laid in his evidence on the voir dire. Much the same can be said of the evidence he proposed to give in relation to the interpretation of certain other evidence, a matter which, in any event, was principally a matter for the jury. Any other conclusion would have presented the grave risk that inadmissible evidence which would otherwise have fallen foul of the rules of evidence with regard to hearsay, opinion evidence, expert evidence and evidence as to the ultimate issue might well have tendered.
121. Seventh, we consider it was permissible for the trial judge to administer the warning to Ms. Farrell. Even if he was wrong to have done this in the presence of the jury, he was at pains to stress that the assessment of her credibility was entirely a matter for the jury and we are satisfied that there was no real prejudice to the plaintiff.
122. As will have been seen, we are, accordingly, of the view that, save in one minor respect, the appeal should be dismissed and the cross-appeal brought by the State defendants should also be dismissed. We would, however, allow the appeal in respect of the ruling that the claim in respect of the alleged wrongful disclosure of the information by the Gardaí in advance of the defamation proceedings in December 2003 was statute-barred and direct a re-trial in respect of that part only of the plaintiff’s claim.
Anna Hegarty v Francis O’Loughran and Gerald Edwards
1987 Nos. 215 and 295
Supreme Court
8 February 1990
[1990] I.L.R.M. 403
(Finlay CJ, Walsh, Griffin, Hederman, McCarthy JJ)
8 February 1990
FINLAY CJ
delivered his judgment on 8 February 1990 saying: This is an appeal brought by the plaintiff and a cross-appeal brought by the defendants against an order of the High Court made by Barron J on 27 May 1987 upon the hearing by him of an issue heard on oral evidence concerning the question as to whether the plaintiff’s claim was statute barred by virtue of the provisions of s. 11(2)(b) of the Statute of Limitations 1957 in which order the learned trial judge declared that the plaintiff’s claim was barred against both defendants by the said subsection.
The plaintiff’s claim
The plaintiff instituted proceedings by a plenary summons issued on 19 October 1982. Her claim is that the first defendant in or about the year 1973 performed a septal resection upon her as treatment for trouble with an airway blockage in her nose and that he did so negligently, causing the septal resection to collapse following the operation. As against the second-named defendant the plaintiff’s claim was that the second-named defendant performed an operation in or about the year 1974 to remedy the situation arising from the first operation, consisting of a silastic bridge inlay upon the plaintiff. The plaintiff alleges that the inlay was initially successful and improved the plaintiff’s appearance but subsequently the same deteriorated and claims that that deterioration was caused by the negligence of the second-named defendant.
The plaintiff alleges that she suffered great pain and suffered injury and was deformed and had incurred losses and expenses.
The defendants in addition to a claim that the plaintiff’s claim was barred by virtue of the provisions of s. 11(2)(b) of the Statute of Limitations 1957 denied the negligence alleged against them, and also denied that the plaintiff had suffered any loss or damage.
Statutory provision
S. 11(2)(b) of the Statute of Limitations 1957 reads as follows:
An action claiming damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of a provision made by or under a statute or independently of any contract or any such provision), where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to any person, shall not be brought after the expiration of three years from the date on which the cause of action accrued.
It is, of course, clear that this subsection applies to the plaintiff’s claim in this case.
Decision of the High Court
In a reserved judgment Barron J concluded that having regard to the decision of the former Supreme Court in Carroll v Kildare County Council [1950] IR 258 that the cause of action must be taken to have accrued within the meaning of the subsection when the act causing the damage was committed, and that accordingly the cause of action, if it existed against the first-named defendant would have accrued in 1973, and the cause of action against the second-named defendant would have accrued in 1974.
In the course of that judgment the learned trial judge identified the two submissions made to him as being on behalf of the defendants that the cause of action accrued when each operation was performed and on behalf of the plaintiff that the cause of action accrued when a reasonable man exercising reasonable diligence with regard to his own affairs could have discovered the manifestation of the damage. He noted that he was referred to the decision of Carroll J in the High Court in Morgan v Park Developments Ltd [1983] ILRM 156. He also noted that whilst in the course of the argument before him reference was made to submissions in other cases that the provisions of s. 11(2)(b) of the Act of 1957 were invalid, having regard to the provisions of the Constitution, no such issue arose before him either on the pleadings or in argument.
With regard to the facts the learned trial judge indicated that had he taken the view that discoverability was the test as to the date of the accrual of a cause of action that the claim against the first-named defendant would still be barred by the subsection, since time would have begun to run, at latest, when the plaintiff was advised to have the remedial operation by the second-named defendant.
With regard to the position of the second-named defendant, in the event of that being the legal position he stated as follows:
In regard to the claim against the second-named defendant the evidence establishes that the plaintiff was dissatisfied with the result of the operation by the year 1976. Although she did speak about the matter to a doctor she appears not to have consulted him professionally until 1978. His advice to her then was to leave her nose alone. On balance it seems to me that there was no reason for her to seek legal advice at that stage. This she should have done first in 1980. Accordingly, her cause of action would have been in time.
Although in the preceding portion of the judgment dealing with the submission made on behalf of the plaintiff the learned trial judge has referred to what might be described as the reasonable discoverability of the manifestation of damage, the portion of his judgment which I have just quoted and which is the only portion which would bring either of the plaintiff’s claims within the time limited, if the legal position were otherwise than the learned trial judge had found it to be, would seem to be directed towards a finding on the facts of the the time at which the plaintiff not only discovered the manifestation of her damage, but also discovered or could reasonably have discovered the existence of a possible or probable cause of action.
The issues arising before this Court
Having regard to the particular finding of fact made by the learned trial judge to which I have referred, three possible alternative constructions of the subsection were debated in argument before this Court. The first was a construction whereby the cause of action would be deemed to have accrued when the wrongful act was committed. The second was that the cause of action would be deemed to have accrued at the time when a wrongful act having been committed, it was followed by damage which, it was submitted on behalf of the defendants, in the case of personal injury, was the time when that personal injury manifested itself.
The third interpretation was that for which the plaintiff necessarily contended, namely, that the cause of action only accrued when the injured party not only had suffered the committing of a wrongful act but had also suffered damage and could, by the exercise of reasonable diligence, in addition have discovered that such damage was caused by the wrongful act complained of.
Carroll v Kildare County Council
I am satisfied that the principles laid down by the former Supreme Court in this case do not apply to the interpretation of s. 11(2)(b) of the Statute of Limitations 1957, and as I understood the defendants’ argument they did not seriously contend that they did.
The time limitation in issue in Carroll v Kildare County Council was that provided by s. 1(a) of the Public Authorities Protection Act 1893 which reads as follows:
1. Where after the commencement of this Act any action, prosecution or other proceeding is commenced in the United Kingdom against any person for any act done in pursuance, or execution, or intended execution of any Act of Parliament, or of any public duty or authority, or in respect of any alleged neglect or default in the execution of any such act, duty or authority, the following provisions shall have effect:
(a) The action, prosecution or proceeding shall not lie or be instituted unless it is commenced within six months next after the act, neglect or default complained of or in the case of a continuance of injury or damage, within six months next after the ceasing thereof.
What was the essential time created by this limitation subsection was in the first instance a specific and express provision that time commenced to run at the time when the act, neglect or default complained of occurred and secondly an alternative saver or qualification that where there was a continuance of injury or damage that the time commenced at the time when the continued injury or damage ceased. A consideration of the arguments and judgments in that case clearly indicate that the real issue before the court was whether on the particular facts there was a continuance of injury or damage within the meaning of the subsection.
Leaving aside any doubt one might entertain as to the correctness of the decision in Carroll v Kildare County Council in respect of the facts which were in issue in that case, I am satisfied that it does not apply to the provisions of s. 11(2)(b) of the Act of 1957 which introduce a wholly different concept for the commencement of the running of the time limit, namely, the accrual of a cause of action.
A tort is not completed until such time as damage has been caused by a wrong, a wrong which does not cause damage not being actionable in the context with which we are dealing.
It must necessarily follow that a cause of action in tort has not accrued until at least such time as the two necessary component parts of the tort have occurred, namely, the wrong and the damage.
The ‘time of the act, neglect or default complained of’ cannot, therefore, be equated with ‘the date on which the cause of action accrued.’
It is, therefore, necessary to consider what is the proper interpretation of this latter phrase which is contained in s. 11(2)(b) of the Act of 1957.
The main contention made on behalf of the defendants on this issue was a relatively simple one, namely, that the meaning of ‘the accrual of a cause of action in tort, breach of duty or breach of contract was well and clearly established by the common law at the time of the passing of the Act of 1957, and that this Court should not otherwise construe the subsection unless there were compelling reasons so to do and that there are no such compelling reasons’.
In particular, the defendants relied upon the decision of the Court of Appeal in Read v Browne (1888) 22 QBD 128. That case concerned the regional jurisdiction of the Mayor’s Court in London which depended upon establishing that a cause of action was one which was arising wholly or in part within the City of London or the Liberties thereof.
Lord Esher, Master of the Rolls, in delivering what was in effect the unanimous judgment of the Court of Appeal, stated as follows:
What is the real meaning of the phrase ‘a cause of action arising in the City?’ It has been defined in Cooke v Gill to be this: ‘Every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court.’ It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.
The defendants submit that applying the reasoning contained in this judgment to an action for tort, breach of duty or breach of contract, causing personal injuries, that the essential facts which a plaintiff would have to prove in order to succeed in obtaining judgment would firstly be the wrong, and secondly would be the existence of a personal injury caused by that wrong. The contention is that as soon as there has occurred to the plaintiff in such an action a manifestation of personal injury which was caused by a wrong previously committed that a cause of action has come into being. That, it is said, is the time when the cause of action has accrued.
The plaintiff contends that although she does not challenge the constitutional validity of the subsection, since it is contained in a post-constitutional statute the court should, if possible, construe it in a manner which would give to it a constitutionally acceptable effect.
To interpret ‘the accrual of a cause of action’ as being earlier than the time when a person ought to have been aware of the existence of the cause of action is, it is submitted, harsh and unjust and fails adequately to protect the constitutional right of the plaintiff to litigate.
Reliance is placed upon the decision of Carroll J in Morgan v Park Developments Ltd [1983] ILRM 156 and the authorities therein cited with approval.
In that case, which was a claim for damages for negligence in the construction of the foundations of a house, which caused a major structural failure in a wall, the learned trial judge held that two possible interpretations of s. 11(2)(a) of the Act of 1957 which provides a time limit from the ‘date of the accrual of the cause of action’ were open. Having so concluded, she decided that having regard to the presumption of constitutional validity applying to the section, her duty was to construe it in the manner causing less hardship and that, she decided, was that the cause of action had only accrued when the. defect in the house was discovered or should have been discovered.
On the facts proved in that case, the damage caused by the defect had been manifest long before the defect was discovered. The decision, in effect, therefore, postpones the accrual of the cause of action beyond the manifestation of the damage to the discovery of the causation, when this was later.
Reference is made in that decision to the case of Cartledge v E. Jopling & Sons Ltd [1963] AC 758, which contains some of the most trenchant criticisms of the situation where an individual suffering personal injury by reason of a tort may, by the limitation of time applicable to his case, have lost his cause of action before he realises, or ought to have realised, that he has it.
The decision of the House of Lords in Cartledge’s case was that s. 26 of the English Limitation Act of 1939 which provided special provisions for where fraud or mistake was involved made it impossible to construe s. 2 of the Act which provided a time limit from the time ‘the cause of action accrued’ otherwise than as providing a time limit from the infliction of the injury, irrespective as to whether the person injured was or was not aware of that injury.
The view of the court in that case was summarised by Evershed MR when, at page 774 of the report, he stated:
To postpone the date in such a case as the present would in my opinion necessarily require the insertion of some words qualifying the statutory formula. My Lords, the well established principles of the interpretation of statutes by the courts of this country forbid such an insertion; and more particularly so having regard to the express provision in s. 26 of the same Act for postponing the date of the accrual of the cause of action in cases involving fraud or mistake, to the date when the fraud or mistake was, or could with reasonable diligence, have been discovered.
Carroll J in the course of her judgment in Morgan v Park Developments Ltd, dealing with the decision in Cartledge v E. Jopling & Sons Ltd and the decision in Pirelli General Cable Works Ltd v Oscar Faber and Partners [1983] 2 AC 1 which followed that case, pointed out that the position in our law was different from that in the law of England by reason of our Constitution and the existence of a presumption of constitutional validity in the construction of the statutes of the Oireachtas. This distinction is correctly identified but becomes relevant only if there are two or more alternative constructions of the statutory provisions open.
After careful consideration, I find that I must disagree with Carroll J in the conclusion reached by her in Morgan v Park Developments Ltd, that two or more alternative constructions of s. 11(2)(a) of the Act of 1957 are open, and if I reach that conclusion I must also find it impossible to conclude that two alternative constructions of the provisions of s. 11(2)(b) of that Act are open.
S. 71(1) of the Act of 1957 provides as follows:
1. Where in the case of an action for which a period of limitation is fixed by this Act either (a) the action is based on the fraud of the defendant or his agent or of any person through whom he claims or his agent, or
(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.
If the true meaning of the date at which the cause of action accrued were as is contended the date at which the plaintiff discovered or ought to have discovered that he had a cause of action, then s. 71 would be an entirely superfluous section.
Similar considerations would appear to apply to the provisions of s. 48 of the Act of 1957 dealing with disability, certainly in so far as such disability consists of unsoundness of mind. The extent and nature of the provisions of the English Limitation Act of 1963, noted by Henchy J in his judgment in Cahill v Sutton [1980] IR 269 at 280, which introduced into English law a discoverability context in the limitation of actions and the recommendations of the Law Reform Commission in this country with a like objective, strongly support the conclusion that to interpret this subsection as being based on discoverability, though possibly very desirable, would be to legislate.
As I have already indicated, no challenge is made in these proceedings to the constitutional validity of this subsection. I do not accept that to construe it as meaning that the time limit commenced when provable personal injury, capable of attracting monetary compensation occurred, is necessarily to construe it as a constitutionally flawed provision.
In legislation creating a time limit for the commencement of actions, the time provided for any particular type of action; the absolute or qualified nature of the limit; whether the court is vested with a discretion in certain cases in the interests of justice; and the special instances, if any, in which exceptions from the general time limit are provided are with others all matters in the formulation of which the legislature must seek to balance between, on the one hand, the desirability of enabling persons with causes of action to litigate them, and on the other hand, the desirability of finality and certainty in the potential liability which citizens may incur into the future.
It is quite clear that what is sometimes classified as the harshness and injustice of a person failing to bring a cause of action to trial by reason of exceeding a time limit not due to his or her own particular fault, may well be counterbalanced by the harshness and injustice of a defendant called upon to defend himself at a time when by the passage of years his recollection, the availability of his witnesses and even documentary evidence relevant to a claim in tort or contract have disappeared.
If and when a challenge is made to the constitutional validity of this subsection by a person adversely affected by it, and the matter is fully argued on the facts established in a particular case, it will be necessary for the courts to make a decision upon it. Until that time, however, I would reserve my view on the question of its constitutional validity other than to presume it constitutional, as I must do.
I would, therefore, conclude that the proper construction of this subsection is that contended for on behalf of the defendant and that it is that the time limit commenced to run at the time when a provable personal injury, capable of attracting compensation, occurred to the plaintiff which was the completion of the tort alleged to be committed against her.
Barron J has found as a fact that ‘the plaintiff was dissatisfied with the operation by the year 1976’. In the context of his judgment and the other findings in it and of the evidence upon which it was based, it is quite clear, firstly, that this is a reference to the second operation carried out by the second-named defendant and, secondly, that the dissatisfaction there mentioned was the commencement of what is alleged to be the collapse of the nose notwithstanding that operation. In these circumstances, it seems clear that applying the appropriate legal test, not only as has already been found by the learned trial judge was the claim against the first-named defendant clearly out of time, but the claim against the second-named defendant was also out of time. The proceedings were not commenced until 1982, and that would appear to be upwards of five to six years after the time limit had expired.
I, therefore, agree with the decision of the learned trial judge, though for somewhat different reasons, and would dismiss this appeal.
GRIFFIN J:
I agree with the judgment delivered by the Chief Justice. As however the question in issue on this appeal is of general importance, I should like to add a few observations.
Statutes of limitation are to be found in all common law countries and in most other systems of jurisprudence. The main purpose of such statutes would appear to be to protect potential defendants against stale claims since it would be unjust to such persons if they were not put on notice of a potential claim within a specified period. The respective periods of limitation fixed for various causes of action represents the balance struck by the legislature between the rights of the plaintiff to bring an action and the rights of the defendant to be protected from such stale claims. When, therefore, the prescribed period has expired, the potential defendant should be entitled to assume that he is no longer at risk from the particular stale claim and to order his affairs accordingly.
The earliest statute in Ireland imposing periods of limitation for inter alia actions of tort was the Irish Statute of 1634. An earlier English Act (the Limitation Act 1623) did not apply to Ireland, but both statutes contained substantially similar provisions. These included provisions that actions upon the case (other than for slander) must be commenced within six years next after the cause of such actions. Actions upon the case included actions for negligence, and the gist of such actions was the consequential damage. These provisions of the Statute of 1634 were repealed by the Common Law Procedure (Ireland) Act 1853, and replaced by s. 20 of that Act, which again provided a six year period of limitation for actions on the case. The provisions of s. 20 continued in force until they were repealed by the Statute of Limitations 1957.
For the purpose of this appeal, the relevant section of the Act of 1957 is s. 11(2)(b). Under that subsection an action claiming damages for negligence, nuisance or breach of duty, where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to any person, shall not be brought after the expiration of three years from the date on which the cause of action accrued . The period of limitation therefore begins to run from the date on which the cause of action accrued, i.e. when a complete and available cause of action first comes into existence. When a wrongful act is actionable per se without proof of damage, as in, for example, libel, assault, or trespass to lands or goods, the statute runs from the time at which the act was committed. Where, however, when the wrong is not actionable without actual damage, as in the case of negligence, the cause of action is not complete and the period of limitation cannot begin to run until that damage happens or occurs. In personal injury cases the time at which the wrongful act is committed and the time at which the damage occurs will very frequently coincide. For example, where a person involved in a motor accident, or an employee who falls from a scaffold or becomes entangled in a machine in a factory, sustains injuries such as fractured limbs, head injuries, severe lacerations, extensive bruising and the like, it will be apparent that damage has been caused to such person by the wrongful act at the time of its commission, and time will begin to run from that date.
There have, however, been many cases in which persons involved in violent accidents have escaped apparently unscathed, or at worst with only such trivial injuries as would not warrant an award of compensation. Nevertheless several months or even years later such persons have become gravely ill from a condition which was attributable to the particular accident. Likewise, there have been instances in which persons involved in trivial accidents, in which they sustained no apparent injury, later exhibited symptoms of serious injury such as brain damage. Again, there have been cases in which a foreign body was negligently left in a patient after an operation, and the patient had been totally oblivious of its presence for a considerable time before suffering any ill-effects from it. In cases such as these, if time were to run from the date of the occurrence of the wrongful act, the period of limitation of three years might very well expire before there is any manifestation of the damage suffered in consequence of the wrongful act. However, in s. 11(2)(b) of the Act of 1957 time is not expressed to run from the date of the occurrence of the wrongful act and should not in my view be interpreted as if it was. The relevant date under the subsection is the date on which the cause of action accrues. Until and unless the plaintiff is in a position to establish by evidence that damage has been caused to him, his cause of action is not complete and the period of limitation fixed by that subsection does not commence to run.
I entirely agree with the Chief Justice that the proper construction of the subsection is that time does not begin to run until a provable personal injury, capable of attracting compensation, occurred to the plaintiff. In the instant case, as the learned trial judge has found that the plaintiff was dissatisfied with the corrective operation performed by the second defendant by the year 1976, and did not commence proceedings until 1982, her claim against both defendants is clearly barred by s. 11(2)(b) of the Act of 1957 and the learned trial Judge was correct in dismissing the action. I would accordingly dismiss this appeal.
McCARTHY J:
I share the view of the learned trial judge (Barron J) that the date on which the cause of action accrued was, in respect of the claim against each of the defendants, the date upon which, in each case, the act causing the damage was committed. I agree with the Chief Justice that the principles laid down by the former Supreme Court in Carroll v Kildare County Council [1950] IR 258 do not apply to the interpretation of s. 11(2)(b) of the Statute of Limitations 1957.
Cahill v Sutton [1980] IR 269 turned on the standing of the plaintiff to maintain the constitutional challenge based upon a particular line of argument, the absence of a statutory saver such as was inserted by the British Parliament in s. 1 of the Limitation Act 1963. The case did not deal, save, perhaps, inferentially, with the meaning of the term ‘accrual of the cause of action.’ Henchy J, with whose judgment the other members of the court agreed, pointed out (at 288):
That the justice and fairness of attaching to that sub-section a saver such as was inserted by the British Parliament in s. 1 of the Limitation Act, 1963 are so obvious that the enactment by our Parliament of a similar provision would merit urgent consideration.
S. 1 of the Act of 1963 was a direct reaction of the legislature to the decision of the House of Lords in Cartledge v E. Jopling & Sons Ltd [1963] AC 758.
Lord Reid said at 771:
It is now too late for the courts to question or modify the rules that a cause of action accrues as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer, and that further injury arising from the same act at a later date does not give rise to a further cause of action. It appears to me to be unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury and therefore before it is possible to raise any action. If this were a matter governed by the common law I would hold that a cause of action ought not to be held to accrue until either the injured person has discovered the injury or it would be possible for him to discover it if he took such steps as were reasonable in the circumstances. The common law ought never to produce a wholly unreasonable result, nor ought existing authorities to be read so literally as to produce such a result in circumstances never contemplated when they were decided.
But the present question depends on statute, the Limitation Act, 1939, and s. 26 of that Act appears to me to make it impossible to reach the result which I have indicated. That section makes special provision where fraud or mistake is involved: it provides that time shall not begin to run until the fraud has been discovered or could with reasonable diligence have been discovered. Fraud here has been given a wide interpretation, but obviously it could not be extended to cover this case. The necessary implication from that section is that, where fraud or mistake is not involved, time begins to run whether or not the damage could be discovered. So the mischief in the present case can only be prevented by further legislation.
S. 71 of the 1957 Statute corresponds with s. 26 of the British Act of 1939. I find the reasoning of Lord Reid to be wholly convincing. I recognize the force of what was said by Carroll J in Morgan v Park Developments Ltd [1983] ILRM 156 based upon the constitutional presumption attaching to all legislation enacted after the Constitution came into force. I wholly agree with the trenchant criticism by Lord Reid and his colleagues of the harsh and unjust consequence that follows from this statutory interpretation; I accept that where two constructions or interpretations of the statutory provision are open, the courts must adopt that which is not in conflict with the Constitution. This presupposes that two interpretations are open; in my opinion, the words of s. 11(2)(b) are so clear as not to admit of any interpretation save that expressed in Cartledge.
The argument for the defendants concedes a somewhat broader interpretation, as detailed in the judgment of the Chief Justice: that as soon as there has occurred to the plaintiff in such an action a manifestation of personal injury which was caused by a wrong previously committed that a cause of action has come into being. It would be sufficient to determine this appeal in the defendants favour if the sub-section were to be so construed, without the stricter interpretation upheld in Cartledge. Ordinarily, one might be content to accept a defendant’s concession for the purpose of determining an appeal, but where this involves the construction of a statute which must affect the fortunes of many others, such a concession should not be accepted unless one is satisfied that it is correct. I am not so satisfied.
Some wrongs, such as assault or libel, of themselves constitute the cause of action and, consequently, the cause of action accrues from the moment of the commission of the wrong; others are actionable only on proof of damage, in which case the cause of action does not accrue until some damage actually occurs. But the occurrence of damage and the manifestation of damage do not, necessarily, coincide. This is such a case; there must be many others in the whole area of personal injuries or, more especially where such injuries result from medical treatment.
In my opinion, the case of Read v Brown (1888) 22 QBD 128 does not support the ‘manifestation’ argument. It supports the proposition that there may be more than one ingredient to a cause of action but not that the existence or accrual of a cause of action depends upon the plaintiff’s awareness of the existence of such ingredient. The use of the term ‘accrual of a cause of action’ goes back at least to the Limitation Act, 1623; in actions for damages for personal injuries the interpretation upheld in Cartledge was sought to be remedied in the Act of 1963 subsequently described by Lord Reid in Central Asbestos Co. Ltd v Dodd [1973] AC 518 at 529 as having ‘a strong claim to the distinction of being the worst drafted Act on the statute book’.
The general law in England, as stated in the Act of 1939, remained unchanged. In Sparham-Souter v Town & Country Developments (Essex) Ltd [1976] QB 858, the Court of Appeal laid down that the cause of action would only arise when the plaintiff suffers damage and that that happens when he discovers, or ought with reasonable diligence to have discovered, damage to the building. In Pirelli General Cable Works Ltd v Oscar Faber and Partners [1983] 2 AC 1 the House of Lords, applying Cartledge, held that a cause of action in tort for negligence in the design or workmanship of a building accrued at the date when physical damage occurred to the building, whether or not the damage could have been discovered with reasonable diligence at that date. Sparham-Souter was overruled but, more importantly for the purpose of the instant appeal, the alleged distinction to be drawn between damage to property and personal injuries was held to be unfounded, quoting Lord Pearce in Cartledge where he said (at 778–779):
It would be impossible to hold that while the X-ray photographs are being taken he cannot yet have suffered any damage to his body, but that immediately the result of them is told to him, he has from that moment suffered damage. It is for a judge or jury to decide whether a man has suffered any actionable harm and in borderline cases it is a question of degree.
It would seem, accordingly, that so far as the authorities cited to this Court are concerned, the law on this side of the Atlantic favours the narrow construction. Included in the most helpful purpose bound book of authorities provided by the appellant’s solicitors are two reports of decisions of the United States Supreme Court — United States v Kubrick (1979) 444 US 111; Urie v Thompson (1949) 337 US 163 — and two articles from learned journals — (1982) 68 Virginia Law Review 615; (1982) 43 University of Pittsburgh Law Review 501.
The policies behind statutes of limitations have been identified by courts and commentators.
First, these statutes provide repose for potential defendants by relieving them from the risk of liability for acts that occurred in the distant past. It is thought to be unfair to compel a person to defend himself against a claim he reasonably had assumed was forgotten. Repose also allows a potential defendant to plan for the future without fear that his activities will be disrupted by a lawsuit. Second, statutes of limitations eliminate many of the evidentiary problems that can interfere with the just resolution of stale claims, such as the unavailability of witnesses or evidence and the deterioration of memories over time. Finally, the statutes require those genuinely wishing to protect their legal rights to bring their actions quickly, thus limiting the potential for misuse of the legal system by plaintiffs asserting fraudulent claims or bringing actions merely to harass defendants (68 Virginia Law Review at p. 619).
In Urie v Thompson the plaintiff was exposed to silica dust from 1910 to 1940 when he was diagnosed as suffering from silicosis. He started his action in 1941 under federal statutes with a three year limitation; the United States Supreme Court held he could recover damages for the entire period. The judgment of Rutledge J, delivering the opinion of the Court, said (at 170):
We do not think the humane legislative plan intended such consequences to attach to blameless ignorance. Nor do we think those consequences can be reconciled with the traditional purposes of statutes of limitations, which conventionally require the assertion of claims within a specified period of time after notice of the invasion of legal rights.
In United States v Kubrick the tort claim against the United States was barred unless presented in writing to the appropriate federal agency within two years after such claim accrued. In 1968 the plaintiff suffered a hearing loss after having an infected leg treated with an antibiotic. In January 1969 he was informed by a private physician that it was highly possible that the hearing loss was as a result of the treatment. Subsequently in June 1971 another physician told the plaintiff that the antibiotic had caused his injury and should not have been administered. The court of trial rejected the limitation defence holding that the plaintiff had no reason to suspect negligence until his conversation with the second physician; the Court of Appeals for the Third Circuit affirmed, holding that if a medical malpractice claim does not accrue until a plaintiff is aware of his injury and its cause, neither should it accrue until he knows or should suspect that the doctor who caused the injury was legally blameworthy. The US Supreme Court held that a claim accrues within the meaning of the statutory provision when the plaintiff knows both the existence and the cause of his injury, and not at a later time when he also knows that the acts inflicting the injury may constitute medical malpractice. The court, having adverted to the discovery rule which appeared to have gained support in the United States, where it was discovery of the fact of injury was involved, said (at 122):
We are unconvinced that for statute of limitation purposes a plaintiff’s ignorance of his legal rights and his ignorance of the fact of his injury or its cause should receive identical treatment. That he has been injured in fact may be unknown or unknowable until the injury manifests itself; and the facts about causation may be in the control of the putative defendant, unavailable to the plaintiff or at least very difficult to obtain. The prospect is not so bleak for a plaintiff in possession of the critical facts that he has been hurt and who has inflicted the injury. He is no longer at the mercy of the latter. There are others who can tell him if he has been wronged and he need only ask. If he does ask and if the defendant has failed to live up to minimum standards of medical proficiency, the odds are that a competent doctor will so inform the plaintiff.
I am not convinced of the latter circumstance within this jurisdiction. In his dissenting opinion, with which Brennan and Marshall JJ, joined, Stevens J said:
Normally a tort claim accrues at the time of the plaintiff’s injury. In most cases that event provides adequate notice to the plaintiff of the possibility that his legal rights have been invaded. It is well settled, however, that the normal rule does not apply to medical malpractice claims under the Federal Torts Claims Act. The reason for this exception is essentially the same as the reason for the general rule itself. The victim of medical malpractice frequently has no reason to believe that his legal rights have been invaded simply because some misfortune has followed medical treatment. Sometimes he may not even be aware of the actual injury until years have passed; at other times, he may recognize the harm but not know its cause; or, as in this case, he may have knowledge of the injury and its cause, but have no reason to suspect that a physician has been guilty of any malpractice. In such cases — until today — the rule that has been applied in the federal courts is that the statute of limitations does not begin to run until after fair notice of the invasion of the plaintiff’s legal rights. Essentially, there are two possible approaches to construction of the word ‘accrues’ in statutes of limitations:
(1) A claim might be deemed to accrue at the moment of injury without regard to the potentially harsh consequence of barring a meritorious claim before the plaintiff has a reasonable chance to assert his legal rights, or
(2) It might accrue when a diligent plaintiff has knowledge of facts sufficient to put him on notice of an invasion of his legal rights. The benefits that flow from certainty in the administration of our affairs favour the former approach in most commercial situations but in medical malpractice cases the harsh consequences of that approach have generally been considered unacceptable. In all events, this court adopted the latter approach over 30 years ago when it endorsed the principle that ‘blameless ignorance’ should not cause the loss of a valid claim for medical injuries (Urie v Thompson) …. This rule has been consistently applied by the Courts of Appeals in the intervening decades without any suggestion of complaint from Congress. In my judgment, a fair application of this rule forecloses the Court’s attempt to distinguish between a plaintiff’s knowledge of the cause of his injury on the one hand and his knowledge of the doctor’s failure to meet acceptable medical standards on the other. For in both situations the typical plaintiff will, and normally should, rely on his doctor’s explanation of the situation.
Stevens J noted that the Secondary Statement of Torts said:
That the nature of the tort itself and the character of the injury will frequently prevent knowledge of what is wrong, so that the plaintiff is forced to rely upon what he is told by the physician or surgeon.
The court has not been referred to any other decisions of common law jurisdictions. Indeed, the more one peruses the outpourings, both judicial and academic, on the topic, the clearer it is that one must revert to first principles. The fundamental principle is that words in a statute must be given their ordinary meaning and, for myself, I am unable to conclude that a cause of action accrues on the date of discovery of its existence rather than on the date on which, if it had been discovered, proceedings could lawfully have been instituted. I recognize the unfairness, the harshness, the obscurantism that underlies this rule, but it is there and will remain there unless qualified by the legislature or invalidated root and branch by this Court. It may be that special provision ought to be made to deal with medical malpractice cases; I have sought to identify some of the arguments in favour of doing so, but that is for the legislature, which might consider it appropriate to provide a saving clause based upon whether or not the court considers in all the circumstances that it is reasonable to extend the time. If the discovery principle is to be applied I see no logical reason why it should not extend to discovery of actionable cause. I reject either construction as being inconsistent with the wording of the statute.
I have already referred to the comments by US judges on one special circumstance attaching to medical negligence cases; the patient, who is the potential plaintiff, is likely to continue as a patient of the doctor against whom the action may lie. This factor makes it most unlikely that the patient will appreciate the relationship, if any, between treatment and the now discovered condition, or, if the patient does so consider, the doctor will, quite bona fide, seek to allay any such suspicion. Experience does not encourage belief that other medical practitioners in Ireland will be prepared to point the finger of blame.
In its Report on the Statute of Limitations: Claims in Respect of Latent Personal Injuries (LRC 21 — 1987), the Law Reform Commission recommended that the discoverability test should be incorporated explicitly in legislative provisions and further that time should begin to run only where the plaintiff becomes or ought to become aware that the injury is attributable, in at least some degree, to the conduct of another. I share these views but I recognize that such legislative provision would increase the spread of a different harm to society. The increase in the number of medical malpractice suits has, it is said, led to the practice of defensive medicine, which has patient/practitioner, social and economic effects. The case for a no-fault system of compensation for those who suffer injury as a result of medical treatment seems so strong as to be virtually unanswerable. That also is a matter for the legislature.
I would dismiss this appeal.
R.C -v- Minsiter for Health & Children
[2012] IEHC 204 (30 March 2012)
Judgment by: Irvine J.
Status of Judgment: Approved
Neutral Citation Number: 2012 [IEHC] 204
THE HIGH COURT
[2011 No.4 C.T.]
IN THE MATTER OF AN APPEAL PURSUANT TO SECTION 5 (15) OF THE HEPATITIS C COMPENSATION TRIBUNAL ACT 1997, AS AMENDED, AND
IN THE MATTER OF A CLAIM BY R.C. AND
IN THE MATTER OF A DECISION OF THE HEPATITIS C AND HIV COMPENSATION TRIBUNAL ON 9TH MARCH, 2011 AND
IN THE MATTER OF AN APPEAL BY R.C.
BETWEEN
R.C.
APPELLANT
AND
THE MINISTER FOR HEALTH AND CHILDREN
RESPONDENT
JUDGMENT of Ms. Justice Irvine delivered on the 30th day of March, 2012
1. This is an appeal from a decision of the Hepatitis C and HIV Tribunal (“the Tribunal”) made on 9th March, 2011.
2. R.C. had applied to the Tribunal for compensation pursuant to s. 4(1)(g) of the Hepatitis C Compensation Act 1997 (hereafter referred to as “the 1997 Act”). That is the section that permits the children or spouse of a person who contracted HIV from contaminated blood products within the State to themselves claim compensation if they have been diagnosed positive for HIV. Her application was rejected by the Tribunal which concluded that she did not come within the definition of “spouse” as defined by s. 1 of the Act and was thus not entitled to compensation. The hearing before me is consequently a full de novo application for compensation.
Background
3. R.C. was born on 8th July, 1985 and is now 26 years of age. She presently lives with her parents at Ballycragh, Dublin 24. It is accepted that R.C. has been diagnosed positive for HIV and that she contracted her infection in the course of an intimate relationship with A.F. who himself has been compensated by the Tribunal as a person who contracted his infection from contaminated blood products used in the treatment of his haemophiliac condition.
4. In the course of the present appeal, I heard medical evidence from Prof. Colm Bergin, Consultant in Infectious Diseases. I also heard evidence from R.C. and both of her parents in addition to evidence from A.F’s mother, E.F. Regrettably, at the time of the hearing, A.F. was very ill and awaiting liver transplantation in London consequent upon his co-infection with HCV.
5. The evidence given by R.C. on the present appeal was at times somewhat different from that given by her to the Tribunal, particularly in relation to a number of relevant dates. Likewise, R.C. and A.F’s mother were not agreed as to the dates when R.C. moved in to reside with A.F. in an apartment he purchased in Lucan. Neither were they in agreement as to the date upon which the couple vacated that apartment or the date upon which their relationship eventually came to an end. However, I think little turns upon these differences having regard to the closing legal submissions made by the parties. I am also entirely satisfied that all of the witnesses, including R.C., gave evidence with the intention of fully and truthfully informing the court as to their recollection of all relevant events.
6. I do not intend in the course of the present judgment to record the evidence given by the various witnesses. However, having regard to that evidence I will now set out my findings of fact as to the nature of the relationship which existed between R.C. and A.F. prior to its termination. I will then deal with the circumstances relevant to R.C’s infection with HIV prior to ruling on her entitlement to compensation under s. 4(1)(g) of the 1997 Act.
Findings of Fact
7. A.F. was born in 1982. He is the eldest of three adopted children and is a haemophiliac. Sadly, in the course of his treatment for that condition, he went on to contract both HIV and HCV from contaminated blood products. A.F. coped badly with his diagnosis and illness. He has apparently never discussed his condition or its consequences with his mother and father. He rarely told anyone about his infections and when he did, such disclosure, according to his mother, was not always well received. Accordingly she advised him to be very careful about sharing his diagnosis with anyone unless they really had to be appraised of his status.
8. A.F. met R.C. in 2003. I accept that they entered into a sexual relationship shortly thereafter albeit that the same was somewhat curtailed by the fact that they were mostly residing in the homes of their respective parents. This continued until they went to live with each other in an apartment in Lucan which A.F. bought out of the compensation obtained by him in respect of his HIV and HCV infections. The purchase of the relevant apartment was completed on 5th December, 2003 and I am satisfied that R.C. and A.F. moved into it prior to Christmas 2003. I believe that R.C. is mistaken in her recollection that she made that move in October 2003 as this could not have occurred prior to the completion of the purchase.
9. I accept that in December 2003, R.C. moved her clothes and belongings into the Lucan apartment and that thereafter she spent a good deal of her social welfare income on items such as towels, bed linen, photo frames, cutlery, pots and pans etc. all of which helped to make her life with A.F. more comfortable than it might otherwise have been.
10. As to the relationship between R.C. and A.F. in general, I am satisfied that from the earliest of times that they were a committed couple who rarely if at all socialised separately. They went on holidays together, at home and abroad, and in the initial phase of their relationship regularly stayed with each other in their respective parent’s homes.
11. During the period when R.C. and A.F. were together, they were treated by their respective families as a normal couple in that they went together to all family functions such as christenings, weddings and Christmas day festivities. They also attended R.C’s mother for an extended family lunch each Sunday.
12. Having heard the evidence of A.F.’s mother and R.C.’s mother and father, I am absolutely satisfied that R.C. and A.F. lived together entirely committed to each other for a period of seven to eight months in A.F.’s apartment. During that period, I am convinced that they enjoyed a close and loving relationship. I accept R.C.’s evidence that she was in love with A.F. and he with her and that to those who knew them best, namely their family, they appeared to be the same as any other couple who were looking forward to a life together. In this respect, A.F.’s mother told the court that she believed that after they moved in together she expected them to get engaged and ultimately marry. In particular, she said that she was relieved when they went to live together because to her it meant that A.F. would no longer have to search for a life partner which was something that was very difficult for him because of his co-infection. She felt that when he moved in with R.C. that one of the greatest difficulties which he was likely to encounter in his life had come to an end and her worries in that regard were also over. I am satisfied from all of the evidence that I have heard that when A.F. and R.C. moved in to live together in Lucan and until such a time as their relationship ended they were each committed to each other in the hope and belief that they would support each other indefinitely into the future.
13. As to why the couple ultimately left the Lucan apartment and went back to live with their respective parents is somewhat of a mystery. R.C. told the court that the reason they went back to live with their parents was because A.F. had advised her that he could no longer financially afford to keep the apartment. While she was upset about having to move out of their apartment, it did not in any way alter her feelings for A.F. Notwithstanding the evidence of R.C. on this issue, I feel that the account of events as given by A.F’s mother is probably closer to the truth of what occurred. She recalls receiving a phone call from A.F. on one particular day when he told her that he was not able to cope and asked her to come over and bring him home. I accept her evidence that at that stage, she believed that A.F. was very depressed and that he had refused to engage with the psychiatric services or talk about his troubles notwithstanding the efforts of herself and her husband in this regard.
14. I do not accept as a matter of fact that the reason A.F. went back to live with his mother was because he was not committed to R.C. or because their relationship was, as suggested by counsel for the respondent, some type of extended adolescent relationship devoid of the type of depth of feeling and commitment which one would normally find in a couple who had taken the significant step of setting up home together. In reaching my findings of fact as to why A.F. suddenly moved back to live with his mother and yet continued his apparently loving relationship with R.C., I cannot exclude from my evaluation of the evidence the facts of life as they applied to A.F. at that time.
15. A.F. through no fault of his own became infected with two life threatening diseases which drastically reduced all of the opportunities open to him in life including his prospects of family life, the ability to obtain and retain sustainable employment and to enjoy even modest good health. As I write this judgment, A.F’s life is in the balance in a hospital in London, awaiting liver transplantation. He is 28 years of age and according to his mother has never come to terms with his diagnosis or co-infection. When he phoned her stating he was not able to cope and needed to return to her care, I cannot be certain what was at the back of his mind but it is highly likely that whatever it was, it had nothing to do his lack of commitment to R.C. and most likely had a great deal to do with his physical and psychological health deriving from his co-infection. It is simply not normal for a 24 year old man who lived out of home for seven to eight months with his girlfriend to ask his mother to come to collect him and confess that he was not able to cope and then continue that relationship over a further extended period.
16. Mr. Mac Eochaidh, S.C., on behalf of the respondent made a specific submission as to the findings of fact I should make arising from the fact that R.C. and A.F. went back to live with their respective parents after their period of life together in the apartment in Lucan. He urged the court to look at the overall circumstances of this couple for the whole of the period they were together. He submitted that the evidence established that they moved in together, not by reason of any particular commitment that they had to each other, but by reason of the fact that A.F. had received compensation from the Tribunal in respect of his HIV infection. They would never have bought a house or moved in together were it not for that fact. In truth, he submitted that this was a teenage relationship where through happenstance one of them was able to buy a flat allowing them to move in together. Further, the fact that everything stayed the same between them after they stopped living together was also indicative of the fact that they were not cohabiting together in the sense in which that term is used to trigger certain legal effects. For reasons I will now refer to, I do not accept that the relationship between R.C. and A.F. can, on the balance of probabilities, be viewed in this way. To do so would be in the teeth of the evidence of R.C., that of her mother and father and that of A.F’s mother. Further it would require me to have little or no regard for A.F.’s health and prognosis at the time he made that decision and the fairly unique circumstances of the case in general.
17. In this context the submissions made on behalf of the respondent, the medical evidence as to A.F.’s health at the time he made that phone call to his mother is of significance. In 2002, he had been taken off all of the medication he had been taking to suppress both infections. Dr Bergin told the Court that consequently his HIV escalated to its highest point in September 2004. It is all too easy when trying to assess the nature of the relationship and the commitment which existed between R.C. and A.F. during the period of time they were living together, to sanitise the detail of their lives and forget the disastrous medical scenario that was unfolding for A.F. at the time he moved back home. His condition at that time, to use Prof. Bergin’s words “revved up” to its highest point. In these circumstances, I am not surprised that at a time when A.F. appeared to be in love with and committed to R.C. that he nonetheless felt the need to move back to be cared for by his mother and continue his relationship with R.C. in that environment.
18. After R.C. and A.F. went back to live with their respective parents, they continued to have a close and intimate relationship and continued to socialise in the same way as they had done since they met. Later in 2006, sometime after R.C.’s 21st birthday in July of that year, R.C. became aware of the fact that on some prior occasion, A.F. may have been unfaithful to her and she decided to terminate the relationship.
19. In the aforementioned circumstances, I cannot make the finding of fact which has been urged by Mr. Mac Eochaidh, on behalf of the respondent.
Infection
20. Prior to dealing with the legal issues on this appeal, I have carefully considered the evidence of Prof. Colm Bergin, Consultant in Infectious Diseases. He told the court that R.C. was referred to him from Tallaght Hospital in March 2009 with a diagnosis of HIV. In the course of investigating her sexual history, it became clear that she had been infected by A.F. who was known to Prof. Bergin. Access to A.F. ‘s medical history has made it much easier that would otherwise have been the case for me to decide when, on the balance of probabilities, R.C. is likely to have contracted HIV from A.F.
21. In endeavouring to establish R.C.’s likely date of infection, I have had regard to the evidence of Prof. Bergin who told the court that the CD4 count of a patient who contracts HIV usually goes up 80- 100 points per year from the date of infection. In this regard, R.C.’s CD4 count in March 2009 was 235. He also told the court that the factors which influence infection are the frequency of sexual contact, the transmissibility of the exposure and the infectivity of the source.
22. In looking at the infectivity of A.F., Prof. Bergin told the court that this patient, prior to 2002, was on suboptimal treatment which left him with detectable virus but a stable CD4 count. This means he would have had a low viral load but would nonetheless have been infective. Because he had a resistant virus, it was decided to stop his treatment completely but continue to monitor his progress. Accordingly, his anti-HIV medication was discontinued in 2002 and he continued to attend for review. When he was off treatment, his viral load escalated and his CD4 count started to fall. To use Dr. Bergin’s expression, his HIV “revved up”. His viral load had only been 500 copies per ml in June 2001 but by August/September 2004, it was 17,000 copies per ml and his CD4 count had collapsed. Because of this very significant deterioration in A.F.’s condition, he was commenced on anti-retro viral drugs in September 2004. These successfully brought his infection under control by December 2004 when his virus was undetectable and his CD4 count satisfactory.
23. Prof. Bergin stressed that there is a very significant correlation between viral load and the transmission of this virus, albeit that the virus can be transmitted in the course of any individual sexual encounter including the first sexual encounter between a couple where one party is infectious.
24. It was Prof. Bergin’s evidence that R.C. was most likely infected at a time when A.F. was off treatment i.e. between June 2003 and September 2004 and that as between the last six months of 2003 and the first eight or nine months of 2004 that it was more likely that R.C. was infected in the latter period. During that time, A.F. would have been at his most viremic given the impact of the time he had been off treatment on his CD4 count and viral load.
25. Prof. Bergin was satisfied that it was highly unlikely that R.C. was infected after October 2004 and certainly not after December 2004 as at that stage, A.F.’s virus was fully suppressed as a result of his new drug regime. He was clear that A.F. was much more infective between January and September 2004 than at any time during the previous two years and that there would have been a progressive rise in A.F’s infectivity over all of the period following the cessation of his medication.
26. For the aforementioned reasons, whilst it is possible that R.C. was infected prior to moving in to cohabit with A.F. in December 2003, I am satisfied that having regard to the frequency of sexual contact prior to that date, the infectivity of A.F. during the period of their cohabitation and R.C’s exposure to A.F. over that period that I should conclude that R.C. was, on the balance of probabilities, infected while the parties were living together at A.F’s apartment in Lucan. In these circumstances, I have no difficulty in concluding that R.C. was infected at a “material time” within the meaning of s. 1 of the 1997 Act.
27. Having decided as a matter of fact that R.C. became infected with HIV when she was living with A.F. between December 2003 and the late summer of 2004 and having regard to the other findings I have made as to their relationship, I now have to decide whether or not she is entitled to compensation to somebody who falls within s. 4(1)(g) of the Act.
Relevant Statutory Provisions
28. Section 4(1) of the 1997 Act, as amended, provides:-
“The following persons may make a claim for compensation to the Tribunal-
…
(f) a person who has been diagnosed positive for HIV as a result of receiving a relevant product within the State,
(g) children or any spouse of a person referred to in paragraph (f) who have themselves been diagnosed positive for HIV…”
29. The relevant provision of s. 4(8A) of the 1997 Act, as relates to A.F. provides as follows:-
“A claimant referred to in paragraph (f), (g), (h), (i) or (j) of subsection (1) shall, as the case may be, establish to the satisfaction of the Tribunal, on the balance of probabilities-
(a) that the HIV in respect of which the claimant has been diagnosed positive from resulted from a relevant product received by the claimant within the State…”
30. Section 1 of the 1997 Act provides:-
“‘spouse’ in relation to a person includes a person with whom the person is or was at a material time cohabiting.”
The Act is silent as to the meaning of the terms “at a material time” and “cohabiting”.
31. Given that counsel for the respondent has relied significantly upon the provisions of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (hereafter referred to as ‘the 20 I 0 Act’), it is relevant to set out the provisions of s. 172 which provides, inter alia:-
(1) For the purposes of this Part, a cohabitant is one of 2 adults (whether of the same or the opposite sex) who live together as a couple in an intimate and committed relationship and who are not related to each other within the prohibited degrees of relationship or married to each other or civil partners of each other.
(2) In determining whether or not 2 adults are cohabitants, the court shall take into account all the circumstances of the relationship and in particular shall have regard to the following:
(a) the duration of the relationship;
(b) the basis on which the couple live together;
(c) the degree of financial dependence of either adult on the other and any agreements in respect of their finances;
(d) the degree and nature of any financial arrangements between the adults including any joint purchase of an estate or interest in land or joint acquisition of personal property;
(e) whether there are one or more dependent children;
(f) whether one of the adults cares for and supports the children of the other; and
(g) the degree to which the adults present themselves to others as a couple.”
32. Section 5 of the Interpretation Act 2005 (hereafter referred to as ‘the 2005 Act’) provides inter alia:-
“(1) In construing a provision of any Act (other than a provision that relates to the imposition of a penal or other sanction)-
(a) that is obscure or ambiguous, or
(b) that on a literal interpretation would be absurd or would fail to reflect the plain intention of–
(i) in the case of an Act to which paragraph (a) of the definition of “Act” in section 2 (1) relates, the Oireachtas, or
(ii) in the case of an Act to which paragraph (b) of that definition relates, the parliament concerned, the provision shall be given a construction that reflects the plain intention of the Oireachtas or parliament concerned, as the case may be, where that intention can be ascertained from the Act as a whole.
33. Section 6 of the 2005 Act provides:-
“In construing a provision of any Act or statutory instrument, a court may make allowances for any changes in the law, social conditions, technology, the meaning of words used in that Act or statutory instrument and other relevant matters, which have occurred since the date of the passing of that Act or the making of that statutory instrument, but only in so far as its text, purpose and context permit.”
Submissions of the Appellant
34. For the purpose of this appeal, I received written submissions on behalf of both parties and these have been fully considered for the purposes of this judgment.
35. The appellant submitted that the words used in the statute should be given their natural and ordinary meaning. It was argued that the word “cohabiting” is not ambiguous either by reference to its ordinary or colloquial meaning or a dictionary defined meaning. The appellant pointed to the Oxford English Dictionary entry for ‘cohabit’, which defines the term as “live together and have a sexual relationship without being married”. While the hearing before me was the de novo hearing it is appropriate to record that the written submissions dealt with the approach adopted by the Tribunal in reaching its decision and in this regard the appellant argued that the Tribunal had been incorrect in adopting the purposive approach to section I of the 1997 Act when it stated:-
“The Hepatitis C Act provides very little guidance on the definition of cohabitation but, merely, states that if a person is not a spouse being a cohabitant suffices.
It would seem that the intention of the legislature here is to include persons who are in relationships which are de facto marriages albeit not married recognising the reality of modem day relationships.”
36. Counsel for the appellant argued that R.C. and A.F. were clearly “cohabiting” within the ordinary meaning and the dictionary definition of the word. R.C. and A.F., on the evidence, had lived together as a couple in an intimate, co-dependent and committed relationship. It was further submitted that there was no justification in the Act for the Tribunal introducing into its considerations the concept of a “de facto marriage”.
37. The appellant referred to the meaning of the term ‘cohabitation’ in Huxtable v. Huxtable (1899) 68 LJP 83 where Jeune P held:-
“Cohabitation may be of two sorts, one continuous, the other intermittent. The parties may reside together constantly, or there may be only occasional intercourse between them which may, nevertheless, amount to cohabitation in the legal sense of the term. Such cohabitation may indeed exist together with an agreement to live apart… The circumstances of life, such as business duties, domestic service, and other things, may separate husband and wife, and yet notwithstanding, there may be cohabitation.” (at p. 85)
38. The appellant also relied upon the Law Reform Commission Report on the Rights and Duties of Cohabitants (LRC 2006 at 26 and 27), and submitted that the Court should have regard to the definition recommended therein.
39. It was submitted that the Court should have regard to s. 172 of the 2010 Act. The appellant argued that the circumstances of the case at hand clearly bring her under the meaning of “cohabitant” for the purposes of that section.
40. In relation to the duration of cohabitation, the appellant argued that the 1997 Act does not lay down a minimum period in the definition of cohabitation and criticised the Tribunal for concluding:-
“There is very little evidence that this couple, actually, cohabited for more than a couple of months. We are not satisfied that Ms. Cahill was a spouse within the meaning of the Act.”
The appellant submitted that the Tribunal applied an unidentified duration requirement which is not comprised in the 1997 Act. It was claimed that the Tribunal in this regard mistakenly relied upon the definition of “qualified cohabitants” under ss. 172(5) and 172(6) of the 2010 Act rather than the definition of “cohabitants” in ss. 172(1) – 172(3). The appellant further submitted that the Tribunal’s focus on the time periods distracted from the fundamental question of the interpretation of the 1997 Act which sets down no such period.
41. The appellant claimed that the Tribunal also appeared to rely on the three year requirement relating to consortium claims under the 2002 Amendment Act and cited in this regard the following finding of the Tribunal:-
“The intention of the legislature when drafting the 2002 Amendment Act and when introducing the loss of consortium claim, clearly, envisaged that a period of, at least, three years cohabiting was needed to establish a claim.”
It was submitted that the fact that the legislature had provided a time limit in respect of the right of a person to make a Loss of Consortium claim was a clear example of why the court should not impose a time limit on an entitlement to claim compensation of a different type where no such qualifying period had been provided for in the legislation.
Submissions of the Respondent
42. It was accepted by the respondent firstly that A.F. was infected with Hepatitis C and HIV as a result of receiving blood products within the State and secondly that the HIV was transmitted from A.F to R.C. Further, in his closing submissions, Mr. Mac Eochaidh, S.C., did not put in issue the fact that R.C. was infected at a “material time” within the meaning of s. 1 of the 1997 Act, once she could established that she was “cohabiting” with A.F. so as to come within the definition of “spouse” within that section.
43. The respondent referred to the 2005 Act and submitted that, although no definition of “cohabiting” was provided in the 1997 Act, the definition of “cohabitant” in the 2010 Act should be adopted for the purposes of interpreting the 1997 Act.
44. The respondent also submitted that the 1997 Act should be given an updated construction under s. 6 of the 2005 Act.
45. It was argued that the term “cohabited” as used for various purposes in the social welfare code is construed in accordance with the definition introduced ins. 172 of the 2010 Act and that guidance to that effect has been issued by the Department of Social Protection.
46. The respondent submitted that there is a difference between living together on the one hand and co-habiting for the purposes of the 1997 Act on the other. It was argued that cohabitation involves a committed and long-term relationship, and consequently is treated as a spousal relationship for the purposes of the 1997 Act. The respondent submitted that the fact that the A.F. and R.C. moved out of the house when A.F, felt he “could not cope” but otherwise continued their relationship demonstrated that any degree of cohabitation was due to A.F. having received compensation in respect of his infection and not due to the level of commitment in the relationship. He submitted that the key to understanding cohabitation is that it is marriage by any other name but without a ceremony.
Conclusions
47. The respondent in this case has firstly accepted that A.F. was infected with Hepatitis C and HIV as a result of receiving relevant blood products within the State, and therefore s. 4(8A)(a) of the 1997 Act is not in issue. Secondly, the respondent has also accepted that the HIV was transmitted to R.C. from A.F., so therefore s. 4(8A)(b) is not in issue.
48. In essence, therefore, the issue for determination before the Court is whether R.C. constitutes a “spouse” within the meaning of s. 1 of the 1997 Act.
49. The starting point for interpretation of any statute is the literal approach; the precise words used should be interpreted using their plain and ordinary meaning. If the provision is obscure or ambiguous or if a literal interpretation would result in an absurd construction or one which fails to reflect the plain intention of the legislature, the Court should construe the provision in such a way as to reflect the plain intention of the legislature if that intention can be ascertained from the Act as a whole. If at that point the meaning of the statute is still not clear, then the Court should apply other rules of construction.
50. In D.B. v. Minister for Health [2003] 3 IR 12, the Supreme court held that the trial judge erred in taking a purposive approach to the interpretation of s. 5(9)(a) of the 1997 Act. Denham J., as she then was, stated:-
“It is necessary to consider the precise words of s. 5(9)(a). In construing statutes, words should be given their natural and ordinary meaning. The approach taken by the courts to the construction of statutes was described by Blayney J in Howard v. Commissioners of Public Works [1994] 1 IR 101. He emphasised that the cardinal rule for the construction of statutes was that they be construed according to the intention expressed in the Acts themselves. If the words of the statute are precise and unambiguous then no more is necessary than to give them their ordinary sense. When the words are clear and unambiguous they declare best the intention of the legislature. If the meaning of the statute is not plain, then a court may move on to apply other rules of construction; it is not the role of the court to speculate as to the intention of the legislature. In that case I held that statutes should be construed according to the intention expressed in the legislation and that the words used in the statute declare best the intent of the Act. I took a similar approach in MO ‘C v. Minister for Health [2002] 1 IR 232, holding that it was well established that in construing statutes, effect should be given to clear and unambiguous words, for the words of the statute best declare the purpose of the Act. In addition, in that case, I noted that a purposive approach would have yielded a similar result.” (at pp. 21-22)
51. Section 5 of the 2005 Act puts this position on a statutory footing.
52. This approach was recently applied by this Court in C.M v. Minister for Health [2011] IEHC 132, where it was stated:-
“In seeking to construe the provisions of s. 5(15), the first decision I have to make is whether or not that provision is obscure or ambiguous or whether, on a literal interpretation, it can be considered either to be absurd or amounts to a provision which fails to reflect the plain intention of the Oireachtas. If it falls into any of these categories, the Court should then try to construe the provision in a manner that reflects the clear intention of the Oireachtas if that can be gleaned from the Act as a whole. If the interpretation of the provision is still at that stage unclear other rules of construction may be deployed. If, however, the provision is not obscure or ambiguous and the words are clearly capable of only one meaning, even if the provision may prove to be harsh or perhaps contrary to common sense, I must nonetheless apply the law as it stands. To do otherwise would be to usurp the role of the legislature. I am not entitled to commence my interpretation of the section by looking at the entirety of the Act and then, having considered concepts such as fairness or equity, to adopt my own subjective view as to the meaning of the words in the provision.” (at para. 31)
53. In Inspector of Taxes v. Kiernan [1981] IR 117, Henchy J set out three rules of interpretation, stating:-
“Leaving aside any judicial decision on the point, I would approach the matter by the application of three basic rules of statutory interpretation. First, if the statutory provision is one directed to the public at large, rather than to a particular class who may be expected to use the word or expression in question in either a narrowed or an extended connotation, or as a term of art, then, in the absence of internal evidence suggesting the contrary, the word or expression should be given its ordinary or colloquial meaning. As Lord Esher put in Urwin v. Hanson, 1981 I.L.R.M 157, at p. 119 of the report:-
‘If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business, or transaction, knows and understands to have a particular meaning in it, then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words.’
…
Secondly, if a word or expression is used in a statute creating a penal or taxation liability, and there is looseness or ambiguity attaching to it, the word should be construed strictly so as to prevent a fresh imposition of liability from being created unfairly by the use of oblique or slack language…
Thirdly, when the word which requires to be given its natural and ordinary meaning is a simple word which has a widespread and unambiguous currency, the judge construing it should draw primarily on his own experience of its use. Dictionaries or other literary sources should be looked at only when alternative meanings, regional usages or other obliquities are shown to cast doubt on the singularity of its ordinary meaning, or when there are grounds for suggesting that the meaning of the word has changed since the statute in question was passed…” (at pp. 121-122)
54. Hit is the view of this Court that the word “cohabiting” within the meaning of s. 1 of the 1997 Act is not obscure or ambiguous by reference to its ordinary or colloquial meaning and so the Court can rely upon a literal interpretation of the term.
55. Of some interest to how the court should view the term “cohabiting” in s. 1 of the 1997 Act is the Law Reform Commission Report on the Rights and Duties of Cohabitants (LRC 2006 at 26 and 27) which recommended defining cohabitants as “couples who live together in an intimate relationship, whether they are of the same-sex or opposite-sex”. The Commission further recommended that, in establishing cohabitation, the general term ‘living together’ be used and that all the circumstances of the relationship should be taken into account, including: the duration of the relationship; the nature and extent of common residence; whether or not a sexual relationship exists; the degree of financial dependence or independence; any arrangements for financial support between the parties; the ownership and acquisition of property; the degree of mutual commitment to a shared life; the care and support of children; the performance of household duties and; the reputation and; public aspects of the relationship. In the case at hand, R.C. and A.F. were partners from the time they met in June 2003 until the relationship ended in November 2006. R.C. moved into A.F.’s apartment in Lucan and they spent six months living together. R.C. moved various possessions in with her and purchased further household items. They maintained a loving and committed relationship while living together. R.C. and A.F. socialised together, spent the majority of their spare time in each other’s company and at all times held themselves out as being in a relationship. Members of both R.C’s and A.F.’s family viewed the pair as a couple and anticipated that they would get married. Assessing the relationship of A.F. and R.C. against the backdrop of the criteria advised by the Commission, it seems to me that one would have to consider that for the period of time when R.C. and A.F. were living together in Lucan that they were cohabiting.
56. Guidance as to the meaning of “cohabiting” for the purposes of s. 1 of the 1997 Act can also be gleaned from s. 172(1) of the 2010 Act, which defines “cohabitant” as “one of two adults…who live together as a couple in an intimate and committed relationship” and who are not related to each other, married to each other, or civil partners of each other. Section 172(2) provides that the court will take into account all the circumstances of the relationship, and sets out a non-exhaustive list of the factors to be taken into account in this regard, including the duration of the relationship, the basis on which the couple live together, the degree of financial dependence of either adult on the other and any agreements in respect of their finances, the degree and nature of any financial arrangements between the adults including any joint purchase of an estate or interest in land or joint acquisition of personal property, whether there are one or more dependent children, whether one of the adults cares for and supports the children of the other and the degree to which the adults present themselves to others as a couple.
57. It is important to note at this juncture that the 1997 Act is concerned with health and safety concerns and the compensation of persons infected by relevant blood products, whereas the 2010 Act deals with property rights. It is entirely reasonable that living together in a committed relationship would be the only criterion for the purposes of health and safety issues, whereas the creation of property rights would require additional qualifying criteria. However, if guidance is taken from the aforementioned definition of cohabitant, it is my view that, having regard to the evidence heard on the present application, the court would nonetheless have to conclude that the parties were cohabiting at the material time.
58. It is relevant that the 1997 Act did not include a qualifying period of cohabitation for the purposes of s. 1. By contrast, ss. 172(5) of the 2010 Act lays down a minimum duration of cohabitation in relation to “qualified cohabitants” of 2 years where the couple are parents of dependent children, and 5 years in other cases. Similarly, s. 47(1) of the Civil Liability Act 1961 provides for a time limit of three years in the case of cohabitants. The 1997 Act, as amended itself includes a time limit in respect of s. 4(1)(h), which provides that compensation for loss of consortium can be claimed by inter alia people who have lived together for a continuous period of not less than three years. S. 3C of the 1997 Act, as amended, provides that, for the purposes of ss. 3A and 38 (the former providing for claims for post-traumatic stress disorder and nervous shock and the latter providing for loss of society), the term “spouse” means inter alia a person who had been living with the deceased as husband and wife for a continuous period of not less than three years.
59. It is clear that if the legislature had intended that the right to compensation be dependent upon a particular period of cohabitation, then that would have been provided for in the 1997 Act. A spouse within the meaning of s. 4(1)(g) need not have been living with the person for any specific duration. The clear intention of the legislation, manifested by the distinction between the lack of a specified duration in s. 4(1)(g) on the one hand, and the specific periods of cohabitation provided for ins. 4(1)(h) and s. 3 on the other, was to include a wider range of applicant in respect of claims by persons diagnosed with HIV than the narrower range of applicant in respect of claims for loss of consortium, post-traumatic stress disorder, nervous shock and loss of society.
60. Having regard to all the foregoing, I am satisfied that R.C. contracted HIV from A.F., on the balance of probabilities, during the time when R.C. and A.F. were living together in his apartment in Lucan. I am also satisfied that as a matter of law, R.C. is entitled to be compensated pursuant to s. 4(1)(g) of the I997 Act. I reject the findings of fact which I have been asked to make on behalf of the respondent as to the nature of the relationship between R.C. and A.F. at the time material to her infection. I am satisfied on the facts of the case that R.C. and A.F. were at the time of her infection living together in a loving, committed and intimate relationship. The public and private aspects of their relationship were such that they must be considered as a couple. I believe that R.C. fully expected to marry A.F; and that her relationship with him during the period of time they resided together in Lucan is consistent with that aspiration. I am satisfied that A.F. and R.C. were clearly cohabiting within the ordinary meaning of the term and that R.C. is therefore entitled to compensation under s. 4(1)(g) of the 1997 Act.
Moran v Bell
[2012] IEHC 111
Judgment of Mr. Justice Hedigan delivered the 5th day of March 2012
1. The plaintiff resides at Mastergeeha, Kilcummin, Killarney, Co Kerry. The first named defendant resides at Firies, Co Kerry. The second named defendant resides at Parkavonear, Aghadoe, Killarney, Co Kerry. The third named defendant resides at Coolmagort, Beaufort, Co Kerry.
2. The events upon which this case is based date back to June 2004. On the 17th January 2011, the plaintiff issued an Ordinary Civil Bill and Indorsement of Claim in the South Western Circuit Court at Tralee. In February 2011, the defendants issued a notice of Motion to Strike out the Claim. The motion was heard on the 2nd June 2011, before Circuit Judge O’Sullivan who struck out the claim on three grounds:-
a) The issues raised were not justicable before a secular court
b) No publication to an identified party was pleaded
c) No special damage was pleaded.
On the 8th June 2011, the plaintiff purported to issue a Notice of Appeal in the High Court on Circuit in Tralee. On the 7th November 2011, the plaintiff’s purported appeal was heard by Edwards J. sitting at Tralee. The defendants submitted that pursuant to s. 37 of the Courts of Justice Act 1936 the appeal should have been made to the High Court sitting in Dublin. Edwards J accepted he had no jurisdiction and dismissed the appeal. The plaintiff applied to the Master of the High Court for an order extending the time for bringing an appeal. On the 21st December, 2011 the Master gave this extension of time to appeal and fixed a return date of the 30th January, 2011 for hearing the appeal. On the 28th December, 2011 the defendants filed a Notice of Motion to overturn the purported Order of the Master as made without jurisdiction and sought to dismiss the application for leave to appeal as out of time. On the 30th January 2012, the President, by consent, ordered the two applications be heard on the 27th February, 2012.
Submissions of the Plaintiff
3.1 In this action the plaintiff seeks damages for slander and a declaration that she did not commit slander herself. The events upon which this case is founded date back to June
2004. At that time the plaintiff was a member of the Killarney Congregation of Jehovah’s Witnesses. The plaintiff claims that in June 2004 the second and third named defendants, who are elders of the Killarney Congregation of Jehovah’s Witnesses, called to her home and accused her of slander. The plaintiff claims that she was not informed of what the alleged slander was.
3.2 At a meeting of the of the Killarney Congregation Jehovah’s Witnesses in June 2004, the first named defendant attended and gave evidence as to the alleged slander. The plaintiff was disfellowshiped from the Killarney Congregation Jehovah’s Witnesses. The plaintiff appealed this decision in August 2004. Evidence was given that the plaintiff had informed a fellow Jehovah’s Witness that a certain woman E.G. had spent weekends away with the plaintiffs husband. The plaintiff claims that she was accused of slander in that she had implied that her husband was an adulterer. In a separate meeting the plaintiffs husband denied this allegation.
3.3 Following the hearings the plaintiff was disfellowshiped from the Killarney Congregation Jehovah’s Witnesses for slandering her husband. The plaintiff claims she wrote a letter of complaint to the branch office of Jehovah’s Witnesses in Greystones Co Wicklow which included photographs of her husband on a weekend break in Galway with E.G. A letter was sent to the appeal committee and the committee then changed their decision and said they “forgave” the plaintiff. The plaintiff did not accept this as she claims she did not slander anyone. She alleges the second and third named defendants apologised to the plaintiff, but informed the plaintiff there was no need to inform the witnesses that there had been a mistake, and the accusation of slander was not withdrawn.
3.4 The plaintiff claims that in April 2009, the first defendant Martyn Bell stated to the plaintiff that she was a slanderer and that he telephoned her again and claimed that she was a slanderer. On the 20th April 2009, the plaintiff instructed her solicitor to issue proceedings. The branch office in Greystones informed her if she abandoned the proceedings the problem would be sorted out. The plaintiff claims that on the basis of this assurance she instructed her solicitor to close the case.
3.5 In December 2009, the first named defendant Martyn Bell wrote to the plaintiff. The following are extracts from this letter:-
“a) I understand Brother Parker has explained to you what the appeal committee’s decision was five years ago and that the Branch extended mercy to you.
b) Why can you not accept that kindness and let get on with our peace?
c) Would they approve of having their Christian law overridden by the law of this world. Legal action to prevent or change Christian principles… is a defeat for you.
d) I understand you have now withdrawn the legal action.”
The plaintiff submits that the said words given their natural and ordinary meaning meant that the defendant had slandered her husband. The first named defendant incorrectly claimed that Mr Parker informed the plaintiff that she was convicted as a slanderer. The plaintiff further submits that the first named defendant was claiming that the plaintiff should accept that she is a slanderer and was trying to upset Christian principles.
3.6 She claims that in February 2010, the Elders of the Killarney Congregation of Jehovah’s Witnesses refused to allow her to speak at a meeting. The plaintiff formally left the Jehovah’s Witnesses. Since the plaintiff left, all her friends who are witnesses are forbidden to speak to her. The said words she claims were understood to mean that the plaintiff was not an honourable person, was dishonest and could not be trusted. The plaintiff claims she has suffered great injury to her reputation and health and has been brought into public hatred, contempt and ridicule. The plaintiff seeks a declaration that she did not commit slander and she seeks damages for slander.
Submissions on behalf of the Defendants
5.1 The defendants submit that the matters raised by the plaintiff in her pleadings, although in the form of a claim of slander are in substance an attempt to litigate before a secular Court issues relating to Church discipline that are specifically excluded from the jurisdiction of the Courts at Common Law. They further plead that the plaintiffs essential grievance and cause of action (if any) arose in 2004. It was subject to a three year time limit under the Statute of Limitations. The proceedings have been instituted on the 17th January, 2011 and are clearly out of time. Moreover, no special damage nor publication has been pleaded as required by the law of defamation.
Decision of the Court
6.1 The plaintiff appeals against the order of the Circuit Court of the 2nd June, 2011 dismissing her claim. On that date the Circuit Court Judge struck out the plaintiff s case on the basis that-
a) It was an action that raised the issue of church discipline that was not justicable before the secular courts,
b) There was no publication to an identified third party and
c) No pecuniary loss was pleaded as Special Damage.
The plaintiff appealed but did not do so in accordance with s. 37 of the Courts of Justice Act 1936 which mandates that in circumstances such as herein, the appeal must be made to the High Court sitting in Dublin. The plaintiffs appeal was dismissed on the 7th November 2011, by Edwards J on this jurisdictional ground. On the 21st December 2011, the plaintiff applied to the Master of the High Court who made an order extending the time for bringing an appeal. On the 28th December 2011, the defendants filed a Notice of Motion to overturn the purported Order of the Master as made without jurisdiction. On the 30th January 2012, the President of the High Court on consent ordered the two applications be heard on the 27th February 2012. On the 2nd February this Court heard these two matters together and in the interest of finality will treat this matter as the appeal from the decision of the Circuit Court. I am conscious that the plaintiff has always wished to appeal the decision of the Circuit Court. She is a lay litigant and her efforts to appeal have fallen foul of procedural regulation.
6.2 The events at the heart of the plaintiffs claim date back to 2004. The plaintiff claims that in June 2004, Peter Van Benthem (the second named defendant) and Andrew Beeston (the third named defendant) both Elder’s of the Killarney Congregation of Jehovah’s Witnesses called to her home and accused her of slander. The plaintiff further claims that at a meeting of the of the Killarney Congregation of Jehovah’s Witnesses in June 2004, Martyn Bell (the first named defendant) attended as a witness and gave evidence about the alleged slander. The plaintiff was disfellowshiped from the Killarney Congregation Jehovah’s Witnesses. The plaintiff wrote a letter of complaint to the branch office of Jehovah’s Witnesses. A rising out of this she was informed that the appeal committee had changed the decision.
6.3 The plaintiff alleges that on the 12th August 2009, Martyn Bell wrote to the plaintiff accusing her of slander. She alleges his letter was defamatory but no publication of this letter is alleged. Publication to the plaintiff herself alone is not publication for the purposes of an action in defamation. Thus no cause of act ion emerges from the facts pleaded.
6.4 Proceedings for slander must be brought within three years of the date on which the cause of action accrued. Section 11 (2) (c) of the Statute of Limitations 1957, provides:-
“An action claiming damages for slander shall not be brought after the expiration of three years from the d ate on which the cause of act ion accrued.”
These proceedings issued on the 17th January, 2011. Thus no action is maintainable in respect of events pre dating the 17th January, 2008.
6.5 The plaintiff refers to the actions by Elders of her congregation at meetings in August 2009 and the 1st and 2nd of October 2010 but none of the parties referred to in her pleadings are named as defendants herein. Justiciability of the issues involved at these meetings docs not therefore arise.
6.6 The plaintiffs claim is not against the congregation. It is solely against the three defendants. It is not alleged that any publication occurred of the slander alleged against these three either in 2004 or subsequently in 2009. The events of 2004 are clearly statute barred. In respect of the events of August 2009 and October 2010, there being no publication alleged, nor special damage claimed , the plaintiff’s pleadings disclose no cause of action against the three defendants named and will therefore be dismissed.
Murray v Sheridan
[2013] IEHC 303
Judgment of Ms. Justice Iseult O’Malley delivered the 27th June. 2013.
Introduction
1. The defendants in this case have brought a motion to dismiss the plaintiff’s claim, pursuant to the inherent jurisdiction of the court, on the grounds that the claim itself is frivolous and vexatious and that maintenance of the claim constitutes an abuse of the court. There is also an application for an order that no further proceedings be instituted by the plaintiff against these defendants, their employees, servants or agents, without the leave of the court.
2. The plaintiff is described as a qualified emergency medical technician and has in the past engaged in what he has described as the provision of “emergency and non-emergency medical transportation to the socially and financially disadvantaged”. The use of a vehicle described as an ambulance, for the purposes of this activity, apparently brought him into confrontation with a number of members of An Garda Síochana in the Dun Laoghaire area and led to a large number of charges under the provisions of the Road Traffic Acts. The plaintiff has, as a result, what he perceives as a long-standing grievance against various Gardaí including the first named defendant.
3. The first named defendant is a member of An Garda Síochana. At all material times he held the rank of Sergeant.
Background
4. Before detailing the current proceedings it is necessary to consider the plaintiffs previous litigation against the second and third named defendants.
5. Between the years 2000 and 2006 inclusive, the plaintiff and, in one instance, his company Air Ambulance Services Limited, commenced ten sets of proceedings against Ireland and the Attorney General and a number of members of An Garda Síochana. The first named defendant in this case was not a defendant in any of those proceedings.
6. By order of MacMenamin J. made on the 30th July, 2007, the proceedings were consolidated and on the 9th January, 2008 a consolidated statement of claim was delivered. This document, which was 72 paragraphs long, set out complaints against the Gardaí in relation to the various prosecutions brought against him and the seizure by Gardaí of his ambulance. It was also alleged that the Gardaí permitted a named third party to threaten, assault and harass the plaintiff. The reliefs sought were damages for breach of constitutional rights, malicious prosecution and/or conspiracy to injure, breach of duty and/or conversion and for loss of business. The plaintiff also sought a mandatory injunction directing the return of his ambulance.
7. By orders made on 1st February, 2010 certain parts of the claim (paragraphs 43- 56) were held to be statute-barred. The remaining portions were split, with part to be dealt with by a judge alone (paragraphs 10-22) and the remainder by judge and jury.
8. The first part, to be tried by a judge alone, related to the claim of conversion in respect of the ambulance. The subject matter of the second part was, almost entirely, related to the alleged misbehaviour of different members of An Garda Síochana in and around the various road traffic prosecutions.
9. On the 2nd February, 2010 the jury trial commenced before Ryan J. and a jury. After the case was opened by counsel for the plaintiff, Ryan J. discharged the jury on the application of the defence. It is clear from the transcript that this occurred because of a surprising number of inappropriate and prejudicial remarks by counsel. The matter was then adjourned out of the jury session.
10. On the 23rd July, 2010, after a full hearing on various dates in March and April of that year, Ryan J. dismissed the part of the claim that was concerned with the alleged conversion of the ambulance.
11. On the 15th February, 2011 the jury trial came on again before Dunne J. Again, the jury was discharged on the basis of counsel’s opening, for the similar reasons as before.
12. Subsequently, the defendants issued a motion seeking an order dismissing the proceedings on the basis that they were frivolous and vexatious or an abuse of the court. In a written judgment delivered on the 18th January, 2012, Michael White J. acceded to this application. It was his view (with which one would have to agree) that the behaviour of counsel at the second jury trial before Dunne J. was a serious abuse of the process of the court. He noted that it had been suggested by MacMenamin J., in the course of hearing a preliminary issue before the motion to dismiss, that different counsel should be retained but that had not happened. The same counsel had argued the motion before White J. and had made it clear to him that he would continue to be the advocate in the jury trial if it was permitted to proceed. White J. stated that he was certain that if the action were to be permitted to be heard before a jury again with the same counsel the same problem would arise. He therefore concluded that the proceedings were being conducted in a vexatious manner, in the absence of reasonable cause to justify what had happened, and accordingly struck out the proceedings.
13. The result of all of the foregoing is that complaints arising from the following matters have been determined as follows:
A. Statute-barred matters
(i) The actions of one Raymond Kinsella between 1991 and May, 1995 and the alleged Jack of response of An Garda Síochana thereto, or collusion therewith.
(ii) The prosecution, and acquittal on appeal, in 1995, of the plaintiff on a charge of larceny and actions of the Gardaí in relation thereto.
(iii) Alleged actions by Gardaí in 1994 leading to the Joss of the plaintiffs employment and an alleged attempt to have him removed as a member of his Parish Pastoral Council.
(iv) Alleged efforts by the Gardaí to obtain details of the plaintiff’s bank accounts.
(v) The alleged refusal of the Gardaí to concern themselves with the unlawful taking of a vehicle belonging to the plaintiff in the early 1990s.
B. Dismissed after plenary hearing by Ryan J.
(vi) The seizure of the plaintiff’s ambulance on the 23rd August, 2000 and the subsequent detention of the vehicle.
C. Dismissed by Michael White J. on the basis of the vexatious conduct of the proceedings
(vii) The prosecution of the plaintiff for road traffic offences dealt with in the District Court on the 4th April, 2000.
(viii) The prosecution of the plaintiff for road traffic offences, alleged to have been committed on the 11th July, 2000, dealt with in the District Court on the 26th January, 2001 and, on appeal, the Circuit Court on the 19th April, 2002.
(ix) The prosecution of the plaintiff for road traffic offences alleged to have been committed on the 23rd August, 2000, dealt with in the District Court on the 26th January, 2001 and, on appeal, the Circuit Court on the 19th April, 2002.
(x) The prosecution of the plaintiff for road traffic offences, alleged to have been committed on the 30th August, 2000, dealt with in the District Court on the 26th January, 2001and, on appeal, in the Circuit Court on the 19th April, 2002.
(xi) The prosecution of the plaintiff for road traffic offences and an assault contrary to s. 2 of the Non Fatal Offences Against the Person Act, 1997 alleged to have been committed on the 31st October, 2000 dealt with in the District Court on the 26th January, 2001 and, on appeal, in the Circuit Court on the 19th April, 2002.
(xii) An allegedly malicious application by Garda Declan Hartley for a summons for no insurance in respect of the 23rd December, 2000.
14. It will be apparent that the only claim dealt with on the merits was that arising from the seizure of the ambulance.
The current proceedings
15. The plaintiff is now representing himself. He has issued a plenary summons and filed a statement of claim, both dated the 17th October, 2012. The defendants very belatedly entered an appearance on the 1st February, 2013, the plaintiff having consented to an extension of time after bringing a motion for judgment in default. They have not filed a defence.
16. In these proceedings the plaintiff claims damages for defamation, injurious falsehood, misfeasance in public office, breach of duty and infringement of constitutional rights including the right to his good name and the right to earn a livelihood. These claims all relate to alleged actions by the first named defendant.
17. It is important to bear in mind that the first named defendant was not named as a defendant in any of the original ten plenary summonses but was referred to in the consolidated statement of claim.
18. It was stated therein that he was present at the plaintiffs home on the 31st October, 2000, the occasion of the alleged s. 2 assault by the plaintiff, and that he roared at and threatened (“sometime in jest”) the plaintiffs son. Clearly, this cannot constitute a cause of action for the plaintiff himself and I consider that it is included by way of evidential colour.
19. The first named defendant was also said, in that statement of claim, to have conducted the prosecution of the plaintiff on the charge of assault, on foot of which the plaintiff was convicted and sentenced to thirty days imprisonment. It was alleged that he stood outside the District Court on that day, the 26th January, 2001, after the plaintiff had been convicted and sentenced, so that he could wave “an animated and enthusiastic farewell” as the plaintiff was taken away in a prison van. Again, this might well be considered to be unprofessional discourtesy on the part of a Garda officer but is not actionable in itself.
20. In the current statement of claim the plaintiff complains in paragraph 2 that the first named defendant insulted and upset him in 2001 by making a sarcastic remark about his medical qualifications. This was at a time when he was moving from Dublin to Longford, with the intention of setting up a new medical business. Again, this would not be actionable in itself.
21. Also in paragraph 2, the plaintiff again complains of the incident after court on the 26th January, 2001.
22. In paragraph 5 the plaintiff claims that in 1999 the defendant obtained a number of documents relating to him, described as including a “Confidential Credentials Portfolio”, personal material and commercially sensitive documents. He says that the defendant brought these documents into court on the 26th January, 2001and told the judge that the credentials claimed by the plaintiff were “bogus”.
23. Also in paragraph 5 the plaintiff claims that, on the 11th July, 2000, “…the First Defendant did write, produce, publish and circulate throughout the national Garda force a document which was entirely false and malicious…” The words complained of are said to be in the third paragraph of the document and state that “Murray represents himself as an emergency medical technician …this man is clearly a fraud”.
24. This document is referred to later in the statement of claim, in paragraph 8, where the plaintiff says that a Garda Gill, who seized his ambulance on the 23rd August, 2000, gave evidence before Ryan J. in the hearing related to that incident (the claim for conversion) that he had read it and relied upon it. (It will be remembered that that hearing took place in the months of March and April, 2010.) The plaintiff says that this was the first occasion on which he became aware of the document, which is described by the defendants as an internal Garda memorandum. He further says that the document was handed to Garda Gill in court by the first named defendant, and he therefore makes the case that the first named defendant published it on that occasion.
25. Although he lost that action, the plaintiff claims that Ryan J. found that the Gardaí were negligent in confiscating “what turned out to be an insured ambulance” and says that the learned judge directed that the jury in the then forthcoming trial could be told about it. He then goes on to claim that Senior Counsel for the State misrepresented this ruling to Dunne J. in the second jury trial.
26. In paragraphs 6 and 7 of the statement of claim, the plaintiff again refers to the effect of the actions of the Gardaí on his reputation in his home area and mentions again his position on the Pastoral Council.
27. In paragraphs 9 to 14, the plaintiff complains that the actions of the Gardaí have caused an ongoing depression on his part, damage to his reputation leading to the failure of his Longford project to get off the ground despite obtaining planning permission for it and damage to his future employment or self employment prospects.
The application to dismiss
28. The application is grounded upon the affidavit of Pamela Hanley, a solicitor in the Office of the Chief State Solicitor who was involved in the previous litigation.
29. Having set out the history of the earlier case Ms. Hanley refers to the current proceedings and avers that the plaintiff is seeking to recite many of the matters alleged in the original case.
30. Referring to the defamation claim in respect of the document described by the plaintiff, Ms. Hanley says that the document was an internal Garda memorandum which drew attention to “the fact that the plaintiff was purporting to operate as the provider of an authorised ambulance service”. She says that this claim seems on its face to be statute barred and/or to involve remarks the publication of which enjoyed qualified privilege and for public interest. Further, she says that the allegedly defamatory remarks arose from the same context of dealings with the plaintiff which were the subject of the previous proceedings and that the plaintiff is merely seeking to revisit those matters. She believes that this is an abuse of the court process, and that the plaintiff wishes to abuse the privilege attaching to court proceedings to utter unfounded allegations against the defendants.
31. Ms. Hanley goes on to say that the plaintiff has “persistently instituted frivolous, vexatious and groundless claims against the second and third named defendants and their employees, members of An Garda Síochana” and that this is an abuse of the process of the courts.
32. Counsel for the defendants did not refer the court to any authority other than the rulings made in the previous proceedings.
33. The plaintiff is adamant, in both his written and oral submissions, that he is not attempting tore-litigate any matter. The main focus of his submissions is on the allegedly defamatory matters arising in the District Court on the 26th January, 2001 and in the High Court during the course of the conversion action in 2010, neither of which featured in the previous proceedings, and on the document referred to as the internal Garda memorandum.
34. The plaintiff makes the case that the first named defendant was not in the witness-box, as such, when the two courtroom incidents of alleged defamation occurred. He says that any privilege that may have been enjoyed was displaced by malice. He has made diligent efforts to refer to relevant law in that regard but unfortunately has not dealt with the Irish authorities or legislation relating to privilege or limitation periods.
35. As far as the Garda memorandum is concerned, the plaintiff says that he is entitled to presume that it had previously been published on other occasions since 11th July, 2000.
Discussion of authorities and conclusions
36. In this application the defendants invoke the inherent jurisdiction of the court to dismiss a claim which is bound to fail. This jurisdiction, established in Irish law with the judgment of Costello J. in Barry v. Buckley [1981) I.R. 306, was endorsed by the Supreme Court in Sun Fat Chan v. Osseous [1992) 11.R. 425 and, in O’Neill v Ryan [1992) 1 I.R. 166.
37. The defendants say that the plaintiff’s claim is bound to fail because parts of it repeat claims that have already been disposed of, or that are statute barred, or that relate to matters that are manifestly covered by privilege.
38. The first issue then is whether the plaintiffs claim has already been disposed of. The principles applicable in a case where the moving party relies on a previous dismiss of the claim were analysed by Clarke J. in Moffitt v. ACC [2007) IEHC 245.
The passages relevant to the instant case are as follows: –
‘The jurisdiction of this court to dismiss proceedings which are bound to fail has been clear since the decision of Costello]. in Barry v. Buckley [1981] I.R. 306. The relevant principles are well settled. It is a jurisdiction to be exercised sparingly and the onus rests upon the defendant to satisfy the court that there is no prospect of success. In addition the court should not judge the matter on a narrow or technical basis referable to the pleadings. It is well settled that, even if the proceedings as currently drafted might have no chance of success, the proceedings ought not be dismissed if, by an appropriate amendment, the proceedings could be recast in a fashion which would give rise to a prospect of success. (See the judgments of McCarthy]. in Sun Fat Chan v. Osseous Limited [1992} 1 i.R. 425 and Fennelly]. in Lawlor v. Ross (Unreported, Supreme Court, Fennelly]., 22nd November, 2001 at p. 10).
The principal basis advanced on behalf of ACC for suggesting that these proceedings are bound to fail is that the same issues have already been determined. In that context it is important to identify the scope of the doctrine of res judicata. It is well settled that in order for a plea of res judicata to succeed, the judgment upon which it is founded must be a final and conclusive judgment on the merits…
…In that context there is an issue as to whether a dismissal on the basis that proceedings are frivolous and vexatious or are an abuse of process amounts to a judgment on the merits…
… There may well be cases where the fact that proceedings are dismissed as being frivolous or vexatious may not give rise to a bar to further proceedings. However it seems to me that where proceedings are dismissed as being bound to fail following on from a hearing in which the court considered the merits of the case for the purposes of determining whether the case had any chance of success, then it follows that fresh proceedings on the same basis are barred. In order to determine that proceedings are bound to fail, the court must enter into a consideration of the merits. Indeed it does so on the basis of allowing the benefit of the doubt concerning any factual or complex legal issues to be determined in favour of the plaintiff
The proceedings will only be dismissed, under Barry v. Buckley, where the court is satisfied that there is no prospect of success on the merits. Such a hearing can, in my view, be properly described as a hearing on the merits.
There may, of course, be other reasons why proceedings may be dismissed as being frivolous or vexatious which would not require the court to go fully into the merits of the case. In those circumstances a dismissal may not amount to a bar to future proceedings.
39. Applying those principles to the instant case, it will be seen that if the plaintiff attempted to re-litigate issues relating to the seizure of the ambulance he would be “bound to fail”, on the basis that the conversion claim has already been determined on the merits by Ryan J. However, his statement of claim in these proceedings does not, in my view, trespass into that area. I therefore consider that the argument of the defendants that the matters complained should be dismissed because they have already been disposed of is not well founded.
40. Separate considerations arise in relation to the questions of privilege and the limitation periods as regards the defamation claims based on what was said in the District Court prosecution and the High Court civil action.
41. At common law, words spoken in the ordinary course of proceedings in court, whether by judges, counsel, jury, witnesses or parties, were absolutely privileged – see Halsbury, 4th ed. val 28. This position is currently continued by s. 17 of the Defamation Act, 2009.
42. In Looney v. Bank of Ireland [1996] 11.R. 157 the alleged defamatory statement was contained in an affidavit sworn for the purpose of court proceedings. In giving judgment on the defendant’s motion to dismiss the plaintiffs claim, Murphy J. said at p.159:
“The basis of the present motion is that such an action cannot be sustained because the statement made by the second defendant in her affidavit, whether true or false, enjoys absolute privilege. That is the contention on behalf of the applicant, the defendants in the present case. There is no doubt, that this has always been regarded as the law in this country. One may take one brief sentence confirming that proposition from Kennedy v. Hilliard (1859) 10 Ir. Com. Law Rep.195 from the judgment of Pigot C.B. at the end of p. 200 where he says:-
‘I take the following propositions, as to the points with which they deal, to state correctly the law in reference to immunity, on the one hand, and liability on the other, of a party making a false and defamatory imputation, written or spoken, to the injury of another. First; for what is stated by a party on his own behalf, or a witness in giving evidence in the ordinary course of a judicial proceeding, there is absolute immunity from liability to an action for libel or slander.’
If that is good law then indeed the plaintiffs claim in the present case must fail and I would have really no option but to strike out this claim in fairness both to the defendants and to the plaintiff because there could be no purpose in proceeding further with it.”
43. Further on, Murphy J. said
“At no stage, as far as I am aware, has it ever been doubted or questioned in any jurisdiction that there is absolute privilege in relation to matters in issue in legal proceedings. Such debate as has arisen has concerned matters, or the extension of privilege to matters, which are not directly in issue.”
44. Upholding Murphy J. in the Supreme Court (Supreme Court, unrep.,9th May, 1997) O’Flaherty J. confirmed the necessity to give immunity to witnesses, whether giving evidence orally or by affidavit. He acknowledged that
“The price that has to be paid is that civil actions cannot be brought against witnesses even in a very blatant case, which of course this case is not, but even in a case of perjury- which would be such a case- the law says that an action cannot lie.”
45. In Fagan v. Burgess [1999] 3 IR 306, O’Higgins J. applied the principles set out in Looney where the claim was for damages for alleged perjury by the defendant in giving evidence in another case.
46. It is clear therefore that a witness has absolute immunity from suit when dealing with matters in issue in the proceedings, as does a party or representative. A Garda prosecuting in the District Court may in some cases play a variety of roles in the same case and will enjoy the same immunity in each. Since the privilege is absolute, it is not destroyed by malice.
47. Where a witness giving evidence mentions a document and that document is handed in to be referred to, the act of handing it in cannot constitute publication, by the person who gives it to the witness, for the purposes of the law of defamation.
48. Finally, on the issue of defamation, there is the argument made by the defendants that the claims are statute barred.
49. Section 11 of the Statute of Limitations Act, 1957, which governed defamation actions until amended by the Defamation Act, 2009, provided a three year limitation period for actions for slander and six for libel.
50. There can therefore be no doubt about the fact that the claim in respect of what was said in the District Court in 2001 is statute barred.
51. By the time of the hearing of the conversion action before Ryan J., the Act of 2009 was in force. The applicable provision is s.38 which provides for a limitation period of one year, or such longer period as the court may direct, not exceeding two years, from the date on which the cause of action accrued. The date of the accrual of the cause of action is the date upon which the defamatory statement is first published.
52. The plaintiff argues that it can be assumed that the Garda memorandum had been published to others in the years preceding the court hearing. He may very well be right, but the insuperable problem that arises is that the Act does not, on the face of it, allow for any extension of time in a case where a plaintiff was unaware of the fact of publication of a defamatory statement, such as where it is published to a specially limited audience of which the plaintiff is not part.
53. In any event, no argument in relation to discoverability could avail the plaintiff on the facts of this case. This document was produced in court, to the knowledge of the plaintiff, on one of the hearing dates in the High Court in March or April of 2010. The plenary summons was not issued until the 17th October, 2012. There is no power to extend time in those circumstances.
54. It is well-established law that a limitation period operates as defence, rather than extinguishing a cause of action, and I have therefore considered whether it should be required that a defence be filed before an application of this sort be brought. However, in the circumstances it seems to me that there can be no doubt as to the intention of the defendants to rely upon the Statute, given the contents of Ms. Hanley’s affidavit. Equally, there can be no doubt but that the defence would have to succeed. It seems to me, therefore, absolutely clear that the plaintiff has no chance of success in relation to his defamation claims and that his action must be dismissed on the basis that it is bound to fail.
55. Apart from defamation, the plaintiff has not demonstrated any basis on which his other claims of, injurious falsehood, misfeasance in public office, breach of duty and infringement of constitutional rights including the right to his good name and the right to earn a livelihood could be founded.
56. The defendants’ notice of motion seeks an order that no further proceedings be issued by the plaintiff against these defendants, their employees, servants or agents without the leave of the court. I do not think that any specific argument was addressed to the court in this regard and I will therefore refuse that application.
Watson v Campos and MGN trading as Irish Sunday Mirror
[2016] IEHC 18
JUDGMENT of Mr Justice Max Barrett delivered on 14th January, 2016.
Part I: Background.
1. The awfulness of Mr Durran’s crime was such that it attracted a blaze of publicity. After he was convicted of rape, the victim,his daughter, waived her right to anonymity and gave an interview to the Sunday Mirror newspaper. The article that followed that interview explained how immediately after the crime occurred, the daughter complained to a “female occupant of the house” where the rape occurred.This “female occupant”,the article indicates, was at first somewhat incredulous regarding the daughter’s claim.
2. Ms Watson claims that she is the “female occupant” in question and that she has been defamed by the article in that it suggests, to borrow from her affidavit evidence, “that I was sympathetic to a rapist or somehow complicit in a rape or the cover up of the crime or/and that I declined assistance to a victim of rape”.
3. The difficulty that Ms Watson faces in continuing her claim at this time is that she is outside the standard one year limitation period that, pursuant to s.38 of the Defamation Act 2009, normally applies to the commencement of defamation claims. So Ms Watson comes now to court seeking that pursuant to the same provision, it now extendthe limitation period in order that Ms Watson may continue these proceedings.
Part II: Chronology.
4. A summary chronology of the pertinent background facts follows:
16.02.2014. Article appears in the Sunday Mirror. On what seems to be the back page of the newspaper, the required publisher details are stated as follows: “Published by MGN Ltd. at One Canada Square, Canary Wharf, London, E14 5AP (020 7293 3000) and printed at […]…Registered as a newspaper at the Post Office Serial No. 2538.” [1]
08.07.2014 Ms Watson’s solicitor issues letter to Sunday Mirror complaining of alleged defamation.[2]
03.12.2014 Ms Watson’s solicitor issues letter to Sunday Mirror seeking confirmation of identities of appropriate defendants and name of editor or person nominated to defend.[3] Notably, this letter includes the following text:
“We now have High Court proceedings drafted and settled by Senior Counsel and which we are ready to issue and perhaps you would first of all provide is with the name of your editor, who we intend naming in the proceedings together with the journalist in question and responsible for the article”. [4]
06.02.2015 Ms Watson’s solicitor issues further letter to Sunday Mirror seeking confirmation of identity of editor.[5]
09.06.2015 Ms Watson’s solicitor issues further letter to Sunday Mirror seeking confirmation of identity of editor.[6]
18.06.2015. Defamation summons issues.[7]
[1] At the hearing of the within application, it was sought to make some play of the fact that the address given is a United Kingdom address. The court sees no significance to this. There is no reason why a summons cannot be served readily on a corporate party at its registered address in another European Union member state.
[2] By this date, less than five months after the Sunday Mirror article was published and seven months before a year elapsed from the date of publication, Ms Watson had professional legal advice. Her advisors would doubtless have been aware of the standard one-year timeframe arising for a defamation claim.
[3] Although there was no harm in Ms Watson’s solicitor sending this letter, there was and is no obligation on the Sunday Mirror to assist Ms Watson in her quest to sue the Sunday Mirror.
[4] By this date, still well within the standard one-year timeframe, all was ready to go. The quest for the editor’s name is a ‘red herring’. First, it was not necessary for the bringing of proceedings. Second, MGN had been stated in the Sunday Mirror of 16th February to be the publisher and could have been (as it has been) sued. As publisher, it was vicariously liable for the editor’s actions. Third, even if the name of the editor was required and unavailable, the proceedings could have been commenced and his name added at a later stage, following production of the correspondence that sought unsuccessfully to discover the editor’s identity. Fourth, the court must admit to some mystification as to why no-one just called ++ 44 20 7293 3000, the contact telephone number for the Sunday Mirror that was published in the Sunday Mirror of 16th February, and asked the Sunday Mirrorreceptionist, the editor’s PA, or someone in the Legal Department for the name of the Sunday Mirror’seditor. Even a Google search would have yielded the relevant detail.
[5], [6] Again, for the reasons stated at [4], this quest for the editor’s name is a ‘red herring’.
[7] This date is 16 months after the date of publication, four months outside the standard one-year timeframe.
Part III: Some relevant legislation.
5. Section 38(1)(a) of the Defamation Act 2009 introduces a new s.11(2)(c) into the Statute of Limitations 1957. This new sub-section (c) provides as follows:
“(c)A defamation action within the meaning of the Defamation Act 2009 shall not be brought after the expiration of –
(i) one year, or
(ii) such longer period as the court may direct not exceeding 2 years,
from the date on which the cause of action accrued.”
6. So, to put matters succinctly, when it comes to bringing a defamation action, as defined, a one-year limitation period is standard, more than one yearis exceptional.
7. Section 38(1)(b) of the Defamation Act 2009 introduces a new s.11(3A) into the Act of 1957. This prohibits the court from granting the direction referred to in the new s.11(2)(c)(ii) unless certain criteria are satisfied. Thus, per s.11(3A) of the Act of 1957:
“(3A) The court shall not give a direction under subsection (2)(c)(ii)…unless it is satisfied that –
(a) the interests of justice require the giving of the direction, and
(b) the prejudice that the plaintiff would suffer if the direction were not given would significantly outweigh the prejudice that the defendant would suffer if the direction were given,
and the court shall, in deciding whether to give such a direction, have regard [c]to the reason for the failure to bring the action within the period specified in subparagraph (i) of the said subsection (2)(c) and [d]the extent to which any evidence relevant to the matter is by virtue of the delay no longer capable of being adduced.”
8. The court notes the use of the mandatory form ‘shall’; the court must not give a direction unless (1) (a) and (b) are satisfied; and (2) it has had regard to [c] and [d]. As a process, it seems appropriate logically to deal with matters backwards, i.e. by dealing with [d], then [c], then (b) and then (a) in that order.
Part IV. Order 1B of the Rules of the Superior Courts (1986), as amended.
9. The court must admit to some sense that there has been a touch of ‘cart before horse’ about the within application. It is clear from the new s.11(2)(c) of the Act of 1957 that a defamation action“shall not be brought” after (i) one year or (ii) such longer period as the court may direct, not exceeding two years.
10. Strictly speaking, it seems to the court from the foregoing that once a plaintiff is outside the standard one-year limitation period, a direction ought to be sought for the extension of the limitation period so that – assuming the extension is granted – a defamation action may then commence, rather than a defamation action commencing and a direction then being sought. It is true that O.1B, r.3(2) appears implicitly to acknowledge that either approach is possible. Thus it refers to the process to be adopted “[w]here a defamation action has not been brought…” and so appears to contemplate that a situation may arise ‘where a defamation action has been brought…’, notwithstanding that, as mentioned above, s.11(2)(c) appears to contemplate that no defamation action can be brought after one year, absent the previous issuance of a direction under s.11(2)(c)(ii). Not a lot may ride on the foregoing in substance, save for the not-so-minor fact that, absent a determination of unconstitutionality, it is necessary for the courts, and the rules of court, to conform with what our elected lawmakers prescribe in statute. In the within application, the issue is perhaps met by the fact that here the application made by the plaintiff has in any event failed and so any issue arising in this regard is therefore rendered largely moot.
Part V. Some applicable case-law.
i. Overview.
11. Counsel for MGN has referred the court to a helpful trio of cases. These are briefly considered hereafter and point respectively to (i) what might be called the ‘need for speed’ in the pursuit of defamation actions, and (ii) the need for an adequate explanation to be provided by a plaintiff as to why a direction is being sought under a s.11.(2)(c)(ii) of the Act of 1957.
ii. Ewins v. Independent Newspapers (Ireland) Limited
[2003] 1 I.R.583.
12. This was a libel action in which the impugned article had been published in April 1995, a plenary summons issued in December 1995, a notice of intention to proceed was served in November 2000, and a statement of claim was delivered in February 2001. An application was made to strike out the proceedings for want of prosecution. This failed in the High Court but was successful on appeal to the Supreme Court. In his judgment in that case, Keane C.J. observed, at 590, that:
“A plaintiff in defamation proceedings, as opposed to many other forms of proceedings, is under a particular onus to institute his proceedings instantly and without delay and, of course, not simply because he will otherwise be met with the response that it cannot have been of such significance to his reputation if he delayed so long to bring the proceedings but also in his own interests in order, at once, to restore the damage that he sees to have been done to his reputation by the offending publication. Therefore, I do not think that an issue such as arose in this case is to be tested by what would be extraordinarily unlikely conduct for a plaintiff bringing anything in the nature of bona fide proceedings for defamation, namely, that he would wait until close to the expiration of the limitation period.”
13. This is a judgment that is doubtlessmuch beloved of newspaper proprietors for obvious reasons. However, it is also perhaps a judgment that has been somewhat overtaken by subsequent events, in particular by the enactment of the Act of 2009. That Act, and the remarkably short timeframe for defamation actions established thereby, represents an even greater level of protection to newspaper proprietors than the learned observations of Keane C.J in Ewins.Moreover, that Actwould appear also to have the effect that Ewins must be viewed as a creature of its time and, to some extent, redundant in our time. In particular, the court would note the following:
(i) Keane C.J.’s judgment was fashioned in the context of a six-year limitation period and the factors to which he makes reference in that case seem to be less pressing in the context of the standard one-year limitation period (and, exceptionally, up to two-year limitation period) now applicable pursuant to s.38 of the Act of 2009.
(ii) if one is to meet that one-year limitation period and not to be reliant on the grace-and-favour of the High Court pursuant to a s.11.(2)(c)(ii) direction application, then one is effectively obliged to act “instantly and without delay”. Indeed the notion that a person who meets the one-year period could ever convincingly be accused to have acted with such sluggishness as to have implicitly conceded the insignificance of a publication vis-à-vis her reputation seems a mite fantastic. Of course, if a person does not act within the one-year period, particularly where she has the benefit of legal advice, then this is an argument that could still convincingly be made in the context of any s.11(2)(c)(ii) application that might follow.
(iii) as to the notion of delay prior to the end of a limitation period, it seems to this Court that (ignoring precedent for a moment) as a matter of principle it is an inappropriate intrusion by the courts into the province of our elected lawmakers ever to have regard to delay within a limitation period. If our elected lawmakers set a limitation period of Date A to Date B, then it seems to this Court that one has until the last second on Date B to proceed, and that it impinges upon and constrains that freedom of action which our elected lawmakers contemplate as arising between these two dates for the courts to have negative regard to a person’s actions or inactionwithin that period, for example in an application for strike-out based on inordinate and inexcusable delay. The court is conscious that there is an abundance of precedent to suggest otherwise…and yet an inconsistency between precedent and principle appears to arise in this regard. Of course, in the within application a rather different scenario presents. Here the plaintiff has acted outside the limitation period, and that immediately places her on the back-foot: she must apply for an extension of the limitation period and, per s.11(3A) of the Act of 1957, “[t]he court shall not give a direction” unless it is satisfied as to some matters and had regard to other matters (which matters are identified in Part III above).
14. In short, there is no doubt that the general ‘need for speed’ identified in Ewins remains extant. However, the practical significance of that judgment seems lessened by the fact that the Oireachtas has since ‘waded in’ via the medium of the Act of 2009 and required an even more accelerated process than could have been contemplated in 2003, in the context of the limitation period then pertaining.
iii. Desmond v. MGN Limited
[2009] 1 IR 737.
15. Mr Desmond, a prominent businessman, instituted certain libel proceedings in May 1998 concerning alleged payments to a politician. In February, 2005 a letter was sent to MGN indicating that a notice of intention to proceed would issue. Mr Desmond indicated that he had delayed acting because of legal advice that he should not proceed during the currency of a then extant tribunal of inquiry. MGN sought dismissal of the proceedings on grounds of inordinate and inexcusable delay by Mr Desmond. It failed in the High Court and, on appeal, in the Supreme Court.
16. In the within proceedings, the court’s attention has been drawn by counsel for MGN to the observation of Macken J., at 759, that “It is…axiomatic that in the case of a claim to vindicate the reputation of a person, the rule is that proceedings such as those for defamation must be progressed with extra diligence.”(One also finds reference to this axiom in the judgment of Dunne J. in Desmond v. Times Newspapers Ltd [2009] IEHC 271 at 23 et seq).
17. The Supreme Court decision in Desmond was handed down in October 2008. (The decision of Dunne J. was handed down in June 2009). The Act of 2009 was enacted in July2009. So although the axiom identified by Macken J. and later echoed by Dunne J., as with the ‘need for speed’ identified in Ewins clearly remain extant, it seems to the court that they will invariably be satisfied if a plaintiff moves in such a manner as to satisfy the incredibly short but still standard one-year timeframe established by the Act of 2009. It is when an extension of that timeframe is sought, by way of application for a direction under s.11(2)(c)(ii) of the Act of 1957, that allegations of sluggishness appear to acquire real potency.
18. In this last regard, the court notes that s.11(3A) of the Act of 1957 expressly requires that “the court shall [i.e. must], in deciding whether to give such a direction, have regard to the reason for the failure to bring the action within the [standard one-year] period specified in [s.11(2)(c)(i) of the Act of 1957]”. So this is a situation where our elected lawmakers expressly require of the courts that they have regard to behaviour (delay) within a limitation period in deciding whether or not an extension of same should be allowed. Indeed the fact that our lawmakers expressly make such provision might be construed as support for the general proposition that our lawmakers otherwise perceive the norm to be that, absent such provision, delay within a statutorily prescribed limitation period ought not to yield an adverse effect.
iv. Reed Elsevier UK Limited (t/a LexisNexis) v. Berry
[2014] EWCA Cv.1411.
19. There appear to be no previous written judgments of the Irish courts on the seeking of a direction under s.11(2)(c)(i) of the Act of 1957. Counsel for MGN indicated at the hearing that he is aware anecdotally of one such application that was brought and refused. However, while the court naturally accepts the truthfulness of what counsel had to say in this regard and appreciates his bid to be of assistance, the court cannot have regard to an ex tempore decision of uncertain vintage, of which there appears to be no written record, which seems unlikely by its very nature to have involved any meaningful consideration of the applicable law and principle, and of which, ultimately, only the final outcome appears to be known.
20. More helpful was counsel’s reference to Reed Elsevier, a decision of the English Court of Appeal concerning whether or not the limitation period applicable to libel actions under the United Kingdom’s Limitation Act 1980 ought to have been dis-applied by a lower court.
21. Almost a century on from Independence, this Court must admit to some scepticism as to the general persuasiveness of contemporary United Kingdom precedent concerning specific points of statute-law (as opposed to questions solely concerned with common law matters), (I)save in circumstances where (1) the court is looking at (i) pre-Independence legislation, (ii)Irish legislation directly modelled on United Kingdom legislation (now a rare species), or (iii)Irish legislation that derives from a common source, such as a requirement of European Union law, or (2) a United Kingdom judge opines on a question of principle which sits somewhat apart from the specific statutory point arising before her or him and can be transmuted via the ether of the common law into a principle of our separate but similar Irish legal system, and (II)subject always to viewing such precedent through the filter of the very different cultural and social circumstances and outlook that present in Ireland (there is, after all, a reason why, as a nation, our forebears elected that we should strike out on our own and form an independent state, notwithstanding the commonalities, friendship and shared interests that so often present when it comes to our nearest neighbour).
22. The point of relevance to the within proceedings that falls to be drawn from Reed Elsevier sits within category (I)(2) above. Thus at p.3 of her judgment in that case, Sharp L.J. observes as follows:
“8.The onus is on the claimant to make out a case for disapplication….Unexplained or inadequately explained delay deprives the court of the material it needs to determine the reasons for the delay and to arrive at a conclusion that is fair to both sides in the litigation. A claimant who does not ‘get on with it’ and provides vague and unsatisfactory evidence to explain his or her delay or ‘place[s] as little information before the court when inviting a section 32A discretion to be exercised in their favour should not be surprised if the court is unwilling to find that it is equitable to grant them their request.’ per Brooke LJ in Steedman at para.45.”
23. It seems to this Court that this observation applies, mutatis mutandis, with equal vigour in the context of an application made for a direction under s.11.(2)(c)(ii) of the Act of 1957.
Part VI: Application of law to facts presenting.
(i) Evidence no longer capable of being adduced?
24. Parties obviously want to ‘put the best foot forward’ in proceedings. However, the court must admit to reading with a degree of incredulity the averment in the affidavit by MGN’s solicitor that “[MGN] is prejudiced by the passage of time and its effect on the recollection of witnesses. The passage of time means that the evidence required to make that argument becomes increasingly difficult, if not altogether impossible, to adduce and [MGN]…will be significantly prejudiced in its defence of the claim as result.” The impugned article was published in February of 2014. It was in effect an account by a crime victim of an awful crime that had been perpetrated upon her in a quiet Dublin suburb. The court would hazard with some confidence that many people in or fromthat suburb remember entirely well the crime, the ensuing prosecution, the parties involved, the article that resulted, and their reaction thereto. If one has regard to the specific wording of s.11(3A) of the Act of 1957, the court does not accept as credible the notion that any evidence relevant to Ms Watson’s defamation action is by virtue of the delay presenting no longer capable of being adduced.
(ii) What is the reason for the delay in bringing the action?
25. The reason for Ms Watson’s delay remains completely unexplained. The repeated efforts to get the name of the Sunday Mirror editor offer, for the reasons stated above, no basis or justification for the delay presenting. Moreover, Ms Watson had the benefit from an early stage of legal advice and, by her solicitor’s letter of 3rd December, 2014, was ‘ready to roll’ in terms of commencing litigation well within the standard one-year limitation period, apart from the (spurious) need to obtain the details of the editor of the Sunday Mirror before proceeding further. In this regard, the court cannot but recall the above-quoted observation of Sharp L.J. in Reed Elsevier as to the onus on a claimant in the analogous situation where a disapplication of a limitation period is sought under the United Kingdom’s Limitation Act 1980 – and to the likely conclusion that such a claimant can generally anticipate where she does not ‘get on with’ proceedings and then provides an inadequate explanation as to why she did not.
(iii) The balance of prejudice arising.
26. What is the prejudice that Ms Watson will suffer if the direction is not given? She will not be able to bring a defamation action that, with the benefit of legal advice, she was ready to commence within the standard one-year limitation period and, for no identified reason, did not. What is the prejudice that MGN will suffer if the direction is given? It will be required to defend a defamation action that was eminently capable of being commenced within the one-year limitation period and, for no identified reason, was not. Even on this analysis, there is no good reason presenting – and none has been presented by Ms Watson – as to why MGN should suffer for Ms Watson’s unexplained inaction. This is not a case, for example, where Ms Watson was prevented by want of legal advice from bringing her proceedings in a timely manner. Nor, for example, has she suffered from a bout of serious ill-health, or some other such factor that prevented her from learning of the alleged defamation and/or bringing her action in a timely manner. Though it is not stated in the statute, the court considers that it is these types of factor – incidents where delay is either blameless or where delay ought because of some mitigating reason to be excused – that would justify the issuance of a direction under s.11(2)(c)(ii) of the Act of 1957. No such factor or incident presents here. Thus the court considers that the balance of prejudice that Ms Watson would suffer if the direction is not given does not “significantly outweigh” (indeed the court considers it is significantly less than) the prejudice that MGN would suffer if the direction were now given.
(iv) The interests of justice.
27. As the court reaches the end of writing this judgment, it looks to the portrait of the late President Kennedyon the wall opposite. A flawed man but a great man, Kennedycontinues to raise our eyes to a vision of our better selves. It was he who observed, in a speech to the American Newspaper Publishers Association back in 1961, that:
“Without debate, without criticism, no Administration and no country can succeed – and no republic can survive. That is why the Athenian lawmaker Solon decreed it a crime for any citizen to shrink from controversy. And that is why our press was protected by the First Amendment – the only business in America specifically protected by the Constitution – not primarily to amuse and entertain, not to emphasise the trivial and the sentimental, not to simply ‘give the public what it wants’ – but to inform, to arouse, to reflect, to state our dangers and our opportunities, to indicate our crises and our choices, to lead, mould, educate and sometimes even anger public opinion.”
28. That is the great public interest to which s.38 of the Defamation Act 2009 is directed. The Act recognises that the liberty of our nation is inextricably linked to the freeness of speech, that individuals must enjoy the right to vindicate their good name when the press gets it wrong, but that journalists and editors must not in the process be condemned to a Janus-like existence in which they must ever look backwards, while seeking to move forwards. It sets a one-year limitation period as standard. It implicitly acknowledges the challenges that such a short limitation period may sometimes present by allowing the court to direct an extension of that period up to two years when circumstances so require. But there is nothing in the facts of this case which would require such an extension. Ms Watson dallied in the commencement of her proceedings. No good reason has been offered as to why she did so. The interests of justice in her case, and the wider public interest in a responsible but free press, do not justify the exceptional extension of the standard one-year limitation period in her defamation proceedings to some longer timeframe. The court must therefore decline her application for the direction sought.
Rooney v Shell E&P Ireland Ltd
[2017] IEHC 63
JUDGMENT of Ms Justice Ní Raifeartaigh delivered on Friday 20th January, 2017
1. The issue in this case is whether the plaintiff should be permitted to bring defamation proceedings outside the statutory time limit of one year provided for by the Statute of Limitations Act, 1957, as amended by the Defamation Act, 2009. The Court has a discretion to permit the bringing of a defamation action after the expiration of one year within a further period not exceeding two years pursuant to section 11(2)(c) of the 1957 Act as inserted by section 38(1)(a) of the Defamation Act, 2009. The question arising is whether this discretion should be exercised in favour of the plaintiff in the particular circumstances of the present case.
2. Section 38 of the Defamation Act, 2009 provides:
“Limitation of actions.
38.— (1) Section 11 of the Act of 1957 is amended—
(a) in subsection (2), by the substitution of the following paragraph for paragraph (c):
“(c) A defamation action within the meaning of the Defamation Act 2009 shall not be brought after the expiration of—
(i) one year, or
(ii) such longer period as the court may direct not exceeding 2 years,
from the date on which the cause of action accrued.”,
and
(b) the insertion of the following subsections:
“(3A) The court shall not give a direction under subsection (2)(c)(ii) (inserted by section 38 (1) (a) of the Defamation Act 2009) unless it is satisfied that—
(a) the interests of justice require the giving of the direction,
(b) the prejudice that the plaintiff would suffer if the direction were not given would significantly outweigh the prejudice that the defendant would suffer if the direction were given,
and the court shall, in deciding whether to give such a direction, have regard to the reason for the failure to bring the action within the period specified in subparagraph (i) of the said subsection (2)(c) and the extent to which any evidence relevant to the matter is by virtue of the delay no longer capable of being adduced.
(3B) For the purposes of bringing a defamation action within the meaning of the Defamation Act 2009, the date of accrual of the cause of action shall be the date upon which the defamatory statement is first published and, where the statement is published through the medium of the internet, the date on which it is first capable of being viewed or listened to through that medium.”.
(2) Section 49 of the Act of 1957 is amended by the substitution of the following subsection for subsection (3):
“(3) In the case of defamation actions within the meaning of the Defamation Act 2009, subsection (1) of this section shall have effect as if for the words ‘six years’ there were substituted the words ‘one year or such longer period as the court may direct not exceeding two years’.”.”
3. Accordingly, it is clear from the statutory provisions above that, if the discretion to extend the time period is to be exercised in favour of a plaintiff, the court must be satisfied of two separate matters: (a) that the interests of justice require the giving of the direction; and (b) the prejudice that the plaintiff would suffer if the direction were not given would ‘significantly outweigh’ the prejudice that the defendant would suffer if the direction were given. The Court is specifically directed to have regard to two matters in particular, namely, the reason for the failure to bring the action within the one year period, and the extent to which any evidence relevant to the matter is, by virtue of the delay, no longer capable of being adduced.
4. The following events constitute the context in which this issue arises. The plaintiff through a company, OSSL, had provided goods and services to the defendant company in connection with its Corrib Gas project in County Mayo for a number of years from the year 2004 onwards. This relationship broke down for reasons which are not necessary to explore in this application. On the 5th September, 2014, the Plaintiff made a request pursuant to data protection legislation seeking information as to the data held by the defendant concerning him. By letter dated the 15th October 2014, he received a reply to this request by letter from a Mr. Paul Walsh on behalf of the defendant company, which stated, inter alia:
“I confirm that Shell E&P Ireland Limited (‘SEPIL’) and other companies within the Shell Group of companies processed personal data about you for the purposes of business execution, including concluding and executing agreements with customers, suppliers and business partners, organisation and management of the business, health safety and security of Shell assets and individuals and for legal and regulatory compliance.
I can also confirm that:
• the source of your personal data is yourself, OSSL and companies within the Shell Group, a number of media sources which are referred to in the attached document and Mr John Donovan.
• the categories of data are your contact details (name, address and email address) details of the work that you were involved in on behalf of OSSL Company and disputes between OSSL Company and SEPIL (insofar as they involved your personal data).
• the recipients of your personal data were SEPIL, other companies within the Shell Group and those third party organizations providing administration or other services to the Shell Group.”
A document was enclosed with this letter and this set out a number of data entries. One of these was an entry dated the 7th March, 2014, stating that the plaintiff had been prosecuted by the Northern Ireland Environment Agency for illegal transportation and dumping of toxic waste, in respect of which he received a conviction and a substantial fine. The entry contained a link to a webpage of the Northern Ireland Department of Environment website, which contained further details of the illegal dumping case. In fact, the plaintiff had never been convicted of any such offence. The person who had been convicted of the offence in question was not the plaintiff, but another person of the same name. The core of the defamation case that the plaintiff wishes to bring is based upon the publication of this particular entry.
5. As the letter of 15th October, 2014, made clear, the recipients of the information in question were “SEPIL, other companies within the Shell Group, and those third party organizations providing administration or other services to the Shell Group.” From the affidavits sworn for the purposes of the present application, there would appear to be a factual conflict as to whether the information was additionally published to parties other than those identified in the letter of the 15th October, 2014, but it is not necessary to resolve that conflict for present purposes. It is not entirely clear in what format the information was published, but my understanding is that it was in some sort of electronic format such as an electronic database to which the recipients had access. At the hearing, complaint was made by the plaintiff that the date of publication was not in fact clear, and might have been later than the 7th March, 2014, but counsel for the applicant ultimately confirmed that this was the date of publication. If this is so, the cause of action accrued on that date in accordance with the statute, and the one year deadline for the bringing of defamation proceedings expired on or about the 7th March, 2015. However, the plaintiff did not issue defamation proceedings until October, 2015, six months after the expiry of the deadline, and further, did not serve those proceedings until January, 2016.
6. It was a most unsatisfactory feature of the plaintiff’s approach to this case that his grounding affidavit made no reference to some important correspondence that followed between him and the defendant company in the months following his receipt of the data. His first affidavit merely exhibited two emails dated the 23rd and 24th October, 2014, and even those two emails appear to be in edited form. It was not until a replying affidavit was sworn on behalf of the defendant company that the relevant correspondence was exhibited. Further emails were subsequently exhibited by the plaintiff in a second affidavit, again in edited form. Given that the onus is on the plaintiff to satisfy the Court that the circumstances warrant an extension of time, this less than comprehensive approach to the facts is to be deprecated.
7. Reconstructing the chronology of communications following the letter of the 15th October, 2014, as best I can from the various exhibits laid before the Court, what transpired between the plaintiff and defendant after that date appears to be as follows.
8. At 9.10am on the 23rd October, 2014, the plaintiff sent an email containing the following: “Are you aware there was a Shell headed letter sent to my family home containing claims of criminal activity which have shocked myself and my family, what on earth is going on…. I need clarification on this immediately…”. At 2.13pm on the same date, he sent another email, saying:
“I have exhausted every avenue… To get an answer to the damming lies that have been printed and transmitted by Shell reference toxic waste…
can you provide any assistance or point me in the right direction so I may get to the root of this within Shell….
My family has read the fabricated toxic waste story…. my elderly parents are in shock and i require immediate assistance to resolve this matter…
I have travelled to Dublin today to seek assistance. But I have been told by reception that none of the persons I have asked for are there.. And in any case no one will speak with me…..
The matter is urgent… Please help..”
The references above to his family appear to arise from the fact that the letter, addressed to the plaintiff, was sent to his family home and that the plaintiff either showed the letter to family members or it otherwise came to their attention.
9. In the exhibit to his grounding affidavit the plaintiff provided details of another email dated the 24th October, 2014, which he referred to as “An email from 3rd Party (OSSL) to SEPIL and Royal Dutch Shell” and which stated:
“It is reported to me that you have communicated a Shell document indicating that Mr Neil Rooney has been involve in criminal activity resulting in a prosecution.
You state as a fact that Rooney is or was involved in the illegal transportation of toxic waste from the Republic of Ireland across the border to Northern Ireland.
Mr Rooney has an exemplary record of outstanding service to the Corrib both for Enterprise Energy and later for Shell ….until your CEO called to his office and demanded that he falsify a freely and honestly given account of an incident at Pollathomish Pier in which Shell and the Irish police were involved.”
10. On the 3rd November, 2014, according to the affidavit sworn on behalf of the defendant company, a telephone conversation took place between the plaintiff and Mr. Paul Walsh, the IT Service and Operations Manager of Shell for the UK and Ireland, during which Mr. Walsh told the plaintiff that the data had not been circulated outside of the Shell Group and that the defendant would write to the plaintiff explaining his options if he was unhappy with any of the data being held. The plaintiff has not given any account of this conversation in either of his affidavits.
11. By letter dated the 4th November, 2014, Mr. Walsh wrote to the plaintiff in the following terms:
“I refer to your recent email to me and others within the Shell group of companies (‘Shell Group’), in relation to the response to your subject access request of 5 September 2014.
I understand that you consider that some of the personal data processed about you by SEPIL and/or its affiliates within the Shell Group is inaccurate.
Please note that you have the right under the applicable law (the Data Protection Acts 1988 & 2003) to request that personal data is rectified, blocked or deleted if it is inaccurate or incomplete and also to object, on compelling legitimate grounds, to the processing of your personal data.
I would be grateful if you would confirm which specific data item you are referring to and what steps you are requesting SEPIL and/or its affiliates takes in relation to the personal data.
We will rectify, delete or cease processing such personal data (as appropriate) in response to the request unless we are satisfied there is a legitimate basis for continuing to process such personal data.”
Thus, the defendant company’s approach at this stage was to invite the plaintiff to make a request via a data protection avenue. The letter does not show any clear awareness on the part of the defendant company that they had made a mistake with regard to the data entry of the 7th March, 2014, concerning the environmental pollution offence. On the contrary, the letter asks the plaintiff to confirm “which specific data item you are referring to”. It was at all times submitted on behalf of the plaintiff that he told the defendant that he was not convicted of any environmental offence, but in my view, a close reading of the emails set out above does not lead to the conclusion that his emails, at least, had made this clear. Insofar as there were telephone calls in which this was made clear by the plaintiff, he has not provided any evidence of these in his affidavits.
12. A further email from the plaintiff, exhibited in the case, was dated the 25th November, 2014, and stated:
“I have written to you and spoke with you on the telephone regarding your grotesque circulation of a Shell generated document indicating criminal activity on my behalf.
You have been made aware that your claims regarding my involvement in toxic waste dumping are a complete falsehood.
You have failed to respond to my requests to rectify and apologise for this damnable situation.
Why?”
This email appears to me to go further than the previous emails insofar as it clearly identifies his complaint that the assertion that he was involved in toxic waste dumping was false.
13. Mr. Walsh, by letter dated 10 December, 2014, wrote as follows:
“Further to your phone call of the 3rd November, our correspondence to you of the same date, and your recent email, we have as yet received no letter from you.
You will recall from our conversation that we need you to state exactly in writing any issue under the Data Protection Acts you may have with our response to your Data Subject Access Request.”
14. By letter dated the 27th January, 2015, the plaintiff wrote to Mr. Walsh at the defendant company as follows:
“In your covering letter of 15/10/2014 you ‘confirm’; allude to, and intimate, that the above-mentioned data-file was instantiated and processed by Shell E&P Ireland Limited (SEPIL). Furthermore, you also confirm that the ‘recipients’ of said data-file ‘were SEPIL and ‘other companies’ within the Shell Group and other ‘third party organisations providing administration or other services to the Shell Group’.
The collection and dissemination of erroneous and counter-factual data/information concerning my ‘character’ and my reputation, constitutes a gross violation of my human rights vis HRA (acts 1998/2003) and overarching European Convention on Human Rights.
Some of the information included in the data-file is patently not attributable to me and is therefore libellous and causative of harm and detriment to myself; my family and my extended social circle. I also believe that the false (criminal) attribution contained within the data-file has and will continue to constrain my prospects for future employment in general and specifically in the petrochemical industry.
I consider this mis-appropriation of erroneous information to my person as an act of ‘defamation’. Ex-post-facto; it is not possible to assuage the harm done to my person by any remedial action including: ‘rectification’; ‘blocking’; ‘deletion’, or any other means.
I have taken legal advice on the foregoing and have instructed my legal team to pursue above matters with due diligence.
The data-file and other pertinent/relevant materials will be forwarded to the Office of the Data Commissioner for their perusal and consideration. I am of the opinion that the findings and ultimate decision of said organisation will corroborate my position vis the application of ‘false information’ to my good name and character.”
A number of points may be made about this letter. First, it is clear from this letter that by this stage, January, 2015, the plaintiff had engaged legal advice. Further, the language for the first time specifically invokes the concept of defamation, although it could not be said to constitute a ‘warning letter’ of the usual type in defamation proceedings. On the contrary, the indications from the plaintiff are that he will make a complaint to the Data Protection Commissioner. Thirdly, at no point does the plaintiff request the defendant to delete the information, despite the fact that he had been asked several times whether this is what he wants. In fact, he seems to reject this remedy, saying that “it is not possible to assuage the harm done to my person by any remedial action including rectification, blocking, deletion, or any other means”.
15. On the 14th October, 2015, a plenary summons issued, seeking damages for defamation. It was not until three months later that proceedings were served, on the 12th January, 2016. An appearance was entered on behalf of the defendant on the 21st January, 2016. An application was made for an extension of time within which to bring the proceedings by notice of motion dated the 10th February, 2016, grounded on an affidavit sworn by the plaintiff on the 2nd February, 2016. A statement of claim was delivered on the 17th February, 2016, notwithstanding that no order of the Court had been obtained.
The reason for the delay
16. As noted earlier, section 38 of the Defamation Act, 2009, specifically requires the Court to have regard, inter alia, to the “reason for the failure to bring the action within the period specified”. In this regard, the plaintiff, in an affidavit sworn on the 2nd February, 2016, said as follows:
“I say that in or around early January 2015 I contacted solicitors and was advised that I had until 15 October 2015 to initiate proceedings. I instructed them that I wished to initiate proceedings immediately.
I say that I was unhappy with the speed at which my case was progressing and on 31 July 2015 I met with my current solicitors to discuss this case and other related matters. I say that my file was transferred to my current solicitors on 1 September 2015; I say and believe that when my solicitors received my file and on advice from counsel, they noted that the date of publication of the statement in issue was in fact 7 March 2014. I further say that the plenary summons then issued in early October 2015.”
In the affidavit sworn on behalf of the defendant company, criticism was made at paragraph 55, in particular, as to: the lack of clarity and precision on the part of the plaintiff as to the instructions he gave to his original solicitors; the absence of any explanation of the further delays that occurred; the absence of a letter of claim; and the three month delay before the plenary summons was served. In his second affidavit, the plaintiff did not respond to these criticisms in any way and there is, accordingly, no further explanation as to the delay other than what is set out above.
17. A number of Irish and English authorities have dealt with explanations for delay in issuing defamation proceedings in other cases. In Watson v Campos and MGN Limited trading as Irish Mirror, [2016] IEHC 18, Barrett J. refused to exercise his discretion in favour of a plaintiff who sought to bring defamation proceedings outside of the one-year time limit. The case arose out of a newspaper’s coverage of a particular criminal trial, which allegedly impugned the reputation of a person who was not the subject of the trial but was effectively described as someone who had condoned the criminal activity in question. Barrett J’s refusal of the application to extend time arose in circumstances where he found, inter alia, that the plaintiff’s delay remained ‘completely unexplained’. The reason for delay which had been put forward on behalf of the plaintiff was that there had been repeated efforts to get the name of the Sunday Mirror editor before proceedings could be launched. This quest for the editor’s name was described by Barrett J. as a “red herring” and not a valid reason for failing to initiate proceedings against the newspaper. Barrett J also discussed the long-established principle of the ‘need for speed’ in issuing defamation proceedings, and said: “to put matters succinctly, when it comes to bringing a defamation action, as defined, a one-year limitation period is standard, more than one year is exceptional.”
18. In Taheny v. Honeyman, Fox, the Irish Prison Service and the Minister for Justice, Equality and Law Reform (Unreported, High Court, 6th February, 2014), Peart J. also refused to exercise his discretion in favour of a plaintiff who sought an extension of time within which to bring defamation proceedings. The plaintiff was a prison officer who wished to bring proceedings concerning allegations that he and another officer were party to the smuggling of contraband, including drugs, into the prison in which he worked. An issue arose in the case as to when he became aware of the defamatory allegations; whether on the 16th March, 2012, or an earlier date. A letter sent on his behalf by his solicitor, dated the 16th March, 2012, referred to his having become aware of the allegations on the 10th March, 2012. The plaintiff sought to argue that this was an error on the part of his then solicitor and that the correct date of knowledge was the 16th March, 2012, the date of the letter itself. This was rejected by Peart J. who commented in the following passage:
“In relation to that issue, it is the plaintiff who bears the burden of proving that this two year ‘long stop’ limit had not been exceeded by the 10th March 2014. To do that he must establish, on the basis of a probability, that he became aware of the allegations for the first time on the 16th March 2012. He does not contend for any other date between the 10th and the 16th March 2012. He says it was the 16th March 2012, being the same date on which he wrote his letter to the Governor to which I have referred. As I have already set forth, the defendants have produced his solicitor’s letter which refers to Saturday the 10th March 2012 as the date on which he first learned of the allegations. The plaintiff must rebut that evidence not by mere assertion of an error on the part of his solicitor but by something more. He has not sought to do so. He has not sought to adduce any evidence from his former solicitor which might acknowledge the error. He has not exhibited any notes or memoranda which his then solicitor may have put on his file recording what the plaintiff said to him at what must have been a lengthy consultation leading to that very detailed letter to the Governor. The plaintiff has not deposed that he has attempted to get his file or a copy of any such note or memorandum which may be on that file, and that his solicitor has refused to hand it over. All he states is that his then solicitor made an error.”
These comments are of assistance in the context of the present case, where the plaintiff seeks to blame his solicitor for the delay in bringing proceedings within the one-year time limit, albeit that the alleged error in the Taheny case was as to the date of knowledge of the plaintiff and not an error as to the time-limit for issuing proceedings, as is alleged in the present case. In my view, the relevance of the comments of Peart J is that a plaintiff who seeks to blame a former solicitor for an error which is relevant to his explanation for delay must do more than make a generalised assertion if he wishes the court to be satisfied of the validity of the complaint against his solicitor.
19. In the course of delivering his judgment, Peart J. also made the following comments as to the proper approach to an application for an extension of time in the present context:
“That onus is discharged in my view firstly by providing an explanation which excuses the delay so that the Court could be satisfied that the interests of justice are best served by allowing the case to proceed, and by satisfying the Court additionally that the prejudice which the plaintiff will suffer by being refused a direction outweighs the prejudice which the defendants will suffer if the direction is granted. It is insufficient in my view that there is a reason simpliciter for the delay. The Court must consider the quality and justifying nature of the reason or reasons put forward, and also weigh the respective prejudices. These requirements are evident from the words used in section 11, subsection 3A of the Act of 1957.”
I agree with the view that the court should conduct a qualitative assessment of the reason offered for the delay, and that the mere proferring of a reason is not necessarily sufficient in and of itself.
20. In Steedman and others v. BBC, [2001] EWCA Civ 1534, the Court of Appeal considered a similar legislative provision in the United Kingdom providing for a one-year limitation period in defamation actions as well as for a discretion for the period to be extended by a court. This arose in the context of a defamation action which eight police officers wished to bring in connection with a television broadcast about the death of a man which took place following his interaction with police officers. The death of the man took place on the 11th January, 1999. A firm of solicitors were instructed by the Police Federation in early course with regard to any disciplinary or criminal charges against the police officers. The broadcast complained of took place in April 1999, on the date of the man’s funeral. A transcript of the broadcast was sent to the firm of solicitors within a week. The Court described what subsequently happened as ‘entirely obscure’. The police officers sought to issue their defamation claim on the 26th June 2000, some 15 months after the broadcast. The Court was critical of the paucity of information put before it as to why the defamation matter was not addressed sooner by the solicitors, saying:
“10. It is notable that this evidence fails to furnish either directly or indirectly any information from the claimants, or their former solicitors, as to the instructions given by the claimants following the broadcast, the purpose of obtaining the transcript or even any indication as to whether there were any discussions between the solicitors and their clients about notification of a complaint to the BBC.
11. What is certain is that no communication, let alone complaint, was ever made at any stage to the defendants. The file remained in the charge of a member of the firm who was concerned with the criminal and disciplinary aspects of the case. We were told that, at a later and unidentified stage, the file was transferred in unspecified circumstances to a person with defamation experience. Even then no complaint was made, let alone proceedings commenced.”
On this point, Steel J said, in its conclusions,
“The statute expressly requires that there be consideration of the length and reasons for the delay. The delay in terms of time is significant and it is almost wholly unexplained. Certainly no good reason for the delay has been advanced. Given the terms of the particulars of claim as to the alleged impact of the broadcast on the claimants and on the administration of justice, it may properly be surmised either that there was no contemporary concern about the terms of the broadcast (at least as regards defamation) or that there was some tactical reason for not complaining.”
21. The case of Reed Elsevier Limited (t/a Lexis Nexis) & Anor v. Bewry [2014] EWCA Civ 1411, concerned the electronic publication of information about a court case in respect of which the plaintiff, a foster carer of young boys, wished to bring defamation proceedings on the basis that the report suggested that he had engaged in sexual impropriety with the boys. He sought an extension of time within which to bring the proceedings and in the course of its judgment, the Court said:
“The onus is on the claimant to make out a case for disapplication: per Hale LJ in Steedman at para 33. Unexplained or inadequately explained delay deprives the court of the material it needs to determine the reasons for the delay and to arrive at a conclusion that is fair to both sides in the litigation. A claimant who does not “get on with it” and provides vague and unsatisfactory evidence to explain his or her delay, or “place[s] as little information before the court when inviting a section 32A discretion to be exercised in their favour …should not be surprised if the court is unwilling to find that it is equitable to grant them their request.” per Brooke LJ in Steedman at para 45.”
The Court also examined a particular claim made by the man that he did not know of the limitation period until a certain date and said;
“The relevant paragraph of the claimant’s witness statement did not state when he took legal advice; indeed it seems to have been deliberately couched in vague language, which obscured rather than clarified what was (on the claimant’s case at least) this important factual issue. Nor did the witness statement say that the claimant was not aware of the relevant limitation period before he took legal advice. I mention this point because the claimant is no stranger to the civil courts as the judge himself observed and has been involved in a considerable amount of litigation in the last 15 years. It is not necessary to refer to any of that litigation, except to say that it has involved proceedings for judicial review and employment claims with much shorter time limits (strictly applied) than are involved here. I think Mr Rushbrooke is entitled to say that this should have led to a sceptical rather than a benevolent interpretation of the claimant’s evidence.”
This again makes it clear that a person seeking to persuade the court to exercise its discretion in his favour must provide full and adequate information as to the particular reasons for delay that he relies upon to support his application.
22. The authorities, therefore, make it clear that the onus is on the plaintiff to explain the delay, and that the evidence offered in support of the explanation must reach an appropriate level of detail and cogency. In the present case, the plaintiff has provided minimal explanation and very little detail as to the reason for not issuing before 7th March, 2015, which he blames on an error made by his former solicitor as to the date from which the period of one year is to run. He fails to explain why, having instructed new solicitors in July, 2015, proceedings did not issue until October, 2015. He also fails to explain, at all, the delay between October, 2015, and January, 2016, in serving the proceedings which were issued. All of this sits uneasily with his assertions concerning the grave nature of the defamation and the serious impact it had upon him. I am not satisfied that the entirety of the delay has been satisfactorily explained or that the explanation offered for some of the delay has been sufficiently substantiated.
The extent to which any evidence relevant to the matter is, by virtue of the delay, no longer capable of being adduced.
23. A second factor to which the Court is required by the statute to have regard is the extent to which any evidence relevant to the matter is, by virtue of the delay, no longer capable of being adduced. In the present case, the defendant company did not seek to rely on this factor in order to resist the application.
Whether the prejudice that the plaintiff would suffer if the direction were not given would significantly outweigh the prejudice that the defendant would suffer if the direction were given.
24. As regards the issue of prejudice, the plaintiff relies in particular on the grave nature of the defamation, involving as it does, an incorrect assertion that he had been convicted by a Court of an environmental pollution offence for which he received a large fine, in circumstances where he is a businessman. He also relies on the potentially large group of people to whom the defamation was published, given the size of the Shell company. The prejudice to the plaintiff if he were refused the extension of time, taken at its height, would be his being deprived of the opportunity to pursue a defamation claim involving allegations of serious criminality to a wide audience.
25. As regards the prejudice to the defendant if the extension of time were granted, this concept of prejudice is wider than the concept of lost evidence. Not only must this be so by reason of the words of the statutory provisions, which provide separately that the loss of evidence to be considered by the Court is a discrete factor, but this is also the interpretation adopted in the authorities referred to.
26. The defendant relies upon a number of matters in respect of the potential relative prejudice of the plaintiff and defendant. First, it is argued that if, as the plaintiff asserts, the reason for the delay was his former solicitor’s failure to issue proceedings within one year from the date of publication because the solicitor made an error of law, he will have a cause of action against the solicitor, and this alternative remedy is relevant to the question of prejudice. Secondly, the defendant argues that the defamation claim is a weak claim because the publication in question is covered by the defence of qualified privilege. Thirdly, the defendant argues that it is relevant that the material was taken down from the website, and that there is no plea of justification ‘left hanging’, as there was, for example, in the case of Desmond v. MGN Limited [2009] 1 IR 737.
27. The issue of how a potential claim against a former solicitor should be considered in the present context was discussed in Steedman and others v. BBC, [2001] EWCA Civ 1534. Steel J. said:
“24 I turn now to the complaint that the learned judge should not have taken account of the claimants’ ability to sue their own solicitors or at least that he placed excessive weight on that aspect. Given the absence of any explanation for the delay, it is not easy to determine whether they are justified in placing the blame upon their legal advisors. But since that was indeed the claimants’ case, in my judgment the judge was fully entitled to take some account of it.
25 The suggestion that it is a wholly irrelevant consideration was rejected by this court in Firman v Ellis [1978] QB 886 . The argument that the judge accorded excessive weight to the issue is not a promising line of attack on an exercise of discretion. The fact remains that the existence of the claim against the solicitors ameliorates to some extent such prejudice as flows from the impact of the limitation period. The extent of that prejudice in turn depends upon the strength or otherwise of the claim.
26 It has to be remembered that none of the officers were named in the broadcast or, indeed, in any of the contemporary newspaper reports. The defendants contend, with some force, that a particular difficulty about the claim is the apparent need in those circumstances for the claimants to rely upon relatives, friends and colleagues to establish that they were being referred to. Of course it is wholly inappropriate to make any determination of the merits of the claim. But its nature and form suggest that the prejudice of not being able to pursue it is of a low order.
27 In this connection, it is instructive to focus upon the complaint that, if the claimants were left to their claim against the solicitors, they would not thereby be able to vindicate themselves appropriately. But as was submitted on behalf of the defendants, it is very difficult to see how the claimants can seriously suggest that they have any expectation of vindication as a result of the pursuit of the defamation proceedings. That would only be achieved, if at all, in the light of the outcome of the inquest when it is resumed. Absent any contemporary complaint, the pursuit of vindication as a result of a claim to an apology some 15 months or more after the event, strikes me as an entirely empty gesture.
28 The appellants sought to suggest that this approach had the effect of visiting the faults of the claimants’ lawyers on the claimants. I readily accept that, on the assumption that the delay was the solicitors’ fault, such would be impermissible: see Corbin v. Penfold Metallising Company Ltd [2000] Lloyd’s Rep Med 247 and the cases there cited. But that is to confuse two quite separate considerations. As Lord Diplock observed in Thompson v. Brown ,supra:—
‘If he has acted promptly and reasonably it is not to be counted against him, when it comes to weighing conduct, that his lawyers have been dilatory and allowed the primary limitation to expire without issuing a writ. Nevertheless, when weighing what degree of prejudice the plaintiff has suffered, the fact that he will have a claim over against his solicitor for the full damages that he could have recovered against the defendant if the action had proceeded must be a highly relevant consideration.’”
He went on to say,
“To some extent the prejudice is counter-balanced by prejudice to the claimants in not having the time-bar lifted. But the claim would not appear to be a strong one, certainly if vindication is the aim. If it is stronger than it appears, the prejudice is ameliorated by the ability to claim against the former solicitors.”
28. It seems to me that it is correct to say that the potential availability of a remedy against his solicitor on the part of the plaintiff is relevant to the court’s discretion. It is also relevant in this regard that the only relief sought in the defamation proceedings which the plaintiff seeks to bring is the remedy of compensation.
29. As regards the strength or otherwise of the plaintiff’s claim, it was argued on behalf of the plaintiff that the issue of malice, which would defeat a claim of qualified privilege, was in the case, at the very least, from mid-November, 2014, onwards, because by this time the plaintiff had notified the defendant company that the information was false and yet the information was not removed from the database for another 14 months. To this the defendant replied that malice had not been pleaded in the Statement of Claim. There was also the factual issue, to which I made a brief reference earlier, as to whether or not the defendant had published the information outside of the company. It is not necessary for the court to enter upon a detailed analysis of these matters for present purposes. For the present, I am prepared to take the plaintiff’s case at its height and to accept that that it would not necessarily be an ‘open and shut’ case where a defence of qualified privilege would apply to the entire claim. Nonetheless, I am also prepared to accept that it is likely that qualified privilege will apply as a defence to at least some of the plaintiff’s claim.
30. It is certainly true, however, that there is no plea of justification and that the material has now in fact been removed from the database, albeit that this was only done in January 2016. In Desmond v. MGN Limited [2009] 1 IR 737, the Court pointed out that a plea of justification would be a factor which could weigh heavily in the balance against allowing proceedings to be struck out for inordinate and inexcusable delay. Obviously the present case, being an application for extension of time within which to bring proceedings, is an application of a different type but the logic of the proposition would seem to me to apply with similar force.
The interests of justice
31. As regards the overall interests of justice, the plaintiff relies upon the fact that the underlying right which he seeks to vindicate in his defamation action is a right explicitly protected by Article 40.3.2 of the Constitution, namely his right to a good name. I am willing to take this into account, although this may be unduly generous to the plaintiff as it must be presumed that the Oireachtas was well aware of the constitutional status of the right to a good name underlying defamation proceedings when it crafted the regime in the Defamation Act, 2009, combining the one-year time limit with the Court’s discretion to extend it up to two years. To put the constitutional right to a good name into the balance again may be a form of ‘double-counting’, but I am prepared to do so for present purposes.
32. It is also argued on behalf of the plaintiff that no press freedom issue arises in the present case, unlike the Watson case, where the issue of press freedom was referenced at paragraph 28 of the judgment of Barrett J. I am not convinced that the issue of press freedom necessarily alters the balance in a case such as this. Article 40.6.1(i) guarantees the right of freedom of expression to ‘citizens’ and there seems to be no reason to view the policy underlying the one-year limitation period in defamation actions as being linked to press-related publications as distinct from other forms of publication or non-media authors.
33. The plaintiff also relied heavily on the fact that the defendant company knew from mid-November, 2014, that the information published was false and chose not to take it down from the database until January, 2016, after the proceedings were served. I am not entirely convinced, having regard to the content of the emails sent by the plaintiff to the defendant laid before the Court, that it was crystal clear to the defendant company by mid-November of the specific nature of the problem, namely, that they had made an error in assuming that the person convicted of the environmental offence was the plaintiff, but I am prepared to take the view that the defendant company was at least on notice that something might be amiss with regard to this particular piece of information. On the other hand, they expressly invited the plaintiff several times to indicate whether he wished certain information to be deleted, and he indicated by letter dated January 2015 that he did not, and that he wished instead to pursue a complaint to the Data Protection Commissioner. This may explain the failure of the defendant to remove the material until proceedings issued, although it would obviously have been more prudent if they had removed it immediately and investigated the circumstances more thoroughly. In all the circumstances, I do not consider the defendant company’s behaviour to have been so egregious as to tilt the balance of justice decisively in favour of the plaintiff.
Conclusions
34. To summarise my views as set out above, the factors weighing in the balance in favour of the plaintiff are:
(a) the constitutional nature of the right to a good name which underlies the defamation proceedings he wishes to bring;
(b) the gravity of the defamation;
(c) the large number of persons to whom it appears to have been circulated; and
(d) the failure of the defendant company to remove the material from its database from mid-November 2014 or investigate the accuracy of the material, when it had been put on notice, at the very least, of the fact that something was wrong.
35. The factors weighing in favour of the defendant are:
(a) the failure of the plaintiff satisfactorily to explain the delay;
(b) the existence of a defence of qualified privilege which appears to me likely to apply to at least some of the period, but not necessarily all, and at least some, although again not necessarily all, of the recipients of the defamatory material;
(c) the fact that plaintiff has an alternative remedy against the solicitor who misadvised him as to the time limit, if what he avers in this regard is true;
(d) that the material is no longer on the database and there is no plea of justification in the case.
While I consider the matter to be rather finely balanced, particularly by reason of the mid-November response of the defendant company to the plaintiff’s complaints, I am of the view that the Court’s discretion should be exercised so as to refuse the plaintiff’s application. His failure to satisfactorily explain the delays in issuing and serving proceedings, together with the availability of an alternative remedy against his former solicitor, if what he says is true about their error as to the time limit, are important factors in my view. I do not think that the interests of justice require that the Court exercise its discretion in favour of the plaintiff. Nor do I consider that the prejudice to the plaintiff in being prevented from bringing these proceedings would significantly outweigh the prejudice to the defendant in losing its statute of limitations defence.
36. I note that in the present case, the proceedings were issued and a motion then served seeking an extension of time, rather than seeking the leave of the Court before issuing proceedings. As the Court is exercising its discretion against the plaintiff, it does not appear necessary to rule on what the appropriate procedure is, but I would have thought that the appropriate procedure might be to issue a motion seeking the Court’s leave, with a grounding affidavit exhibiting a draft plenary summons and statement of claim. I say this in passing, because there was no argument on the point and nothing turns on it in the present case.
37. I refuse the relief sought by the plaintiff.
Burke v Eircom Ltd (Trading as Eir)
(Approved) [2020] IEHC 204 (07 May 2020)
JUDGMENT of Mr Justice Max Barrett delivered on 7th May 2020
1. On 8 March 2019, Mr Burke, a litigant in person, commenced the within proceedings against Eir for (i) defamation and (ii) failure to comply with a Freedom of Information (“FOI”) request. The alleged defamation is particularised as follows in the statement of claim: “Eir defamed me in an email address to ComReg dated 6 March 2015, by intimating that I had called in ‘to make a payment’ when no such payment was due. Eir continues to maintain notations on my file stating that disconnection of services was due to non-payment.”. By notice of motion of 5 November 2019, Eir seeks, inter alia, “an Order pursuant to O.19, r.28 RSC dismissing the Plaintiff’s claim and/or the Plaintiff’s claim in defamation, against the Defendant on the grounds that it is out of time and statute barred, discloses no reasonable cause of action and/or is frivolous or vexatious and/or is bound to fail.”. The background to the within proceedings is set out hereafter.
2. It is admitted that Eir disconnected Mr Burke’s services for a short period on or about 5 March 2015. It is further admitted that this should not have occurred. Mr Burke spoke to a servant or agent of Eir on the date of the disconnection, Eir apologised for same, re-connected Mr Burke and applied a goodwill credit to his account. Eir also wrote by letter to Mr Burke on 31 March 2015 regarding a complaint made by Mr Burke to the Commission for Communications Regulation as to how he had been treated, again apologising for what had occurred.
3. Mr Burke was apparently prepared to let matters rest at this time and move on with life. However, in January 2016, he had a further ‘run in’ with Eir regarding a price increase concerning, and charges to, his account. In his dealings with Eir at this time, Mr Burke apparently came to suspect that there were adverse annotations on his customer file regarding why he had been disconnected in March 2015, when Eir had accepted that it was in the wrong as regards same. Sometime around May 2016, Mr Burke asked that the annotations on his account be amended to reflect the truth of what had occurred in March 2015, viz. that the disconnection of service was due to an error on Eir’s part and not due to an arrears and overdue payment on his part. On 16 May 2016, Mr Burke received a letter from Eir stating, inter alia, that “I would like to advise that as per your request I have amended the notes on your account to specify that the disconnection of service was due to an error on our side and was not due to a delayed payment by yourself”. It is perhaps not immediately clear from the foregoing that this involved supplementing the existing annotations on Mr Burke’s account, not excising any of the previous annotations.
4. Mr Burke also submitted a data access request to Eir in May 2016. Not having received a timely reply to this request, he again contacted Eir in August 2016 and September 2017. Thereafter, having still received no reply to his data access request, Mr Burke made complaint to the Data Protection Commissioner. Soon afterwards, he received, in March 2017, a reply to his request of May 2016. In December 2018, Mr Burke was the beneficiary of a decision by the Data Protection Commissioner who held, unsurprisingly, that Eir had breached the 40-day statutory turnaround time (in s.4 of the Data Protection Acts) for responding to Mr Burke’s data access request.
5. The documentation received with the data access request did not fully tally with the documentation that Mr Burke already had to hand – he knew he had received correspondence that did not feature in the documentation received with the data access request – so Mr Burke queried this with Eir. Getting no meaningful reply, he engaged the assistance of a solicitor. Eir initially denied receiving correspondence from this solicitor. However, it has since admitted that it did receive this correspondence and this solicitor’s intervention appears, on Mr Burke’s account, to have elicited a reply from Eir of 22 May 2019, that included “copious additional documents and correspondence…[which] should have been included with the response, to my access request, made by Eir on 29th March 2017”.
6. This additional documentation appears to Mr Burke to explain a further adverse experience that he claims to have suffered in July 2017, and which he describes as follows in his reply to Eir’s defence:
“On 7th July 2017 I called with a friend, to Currys PC World based in the Airside Estate in Swords to purchase a new mobile phone. The sales assistant informed me that I was entitled to a ‘free upgrade’ and attempted to complete the transaction. He was barred from completing the transaction as there was a prohibiting notice on file. I immediately went to the Eir store in the Pavilions Shopping Centre where I was again informed that I qualified for a free upgrade. The application was again rejected. Over the following days I was obliged to phone Eir…on a number of occasions, each time being told that there was a reject code 20 – ‘legacy account’ on file. I also called into the Eir store on four occasions, without success. Eventually, the phone was replaced on 12th July, 2017….[After referring to certain of the details supplied on 29 March 2017 and which refers to on-file annotations that reference ‘legacy account’ and ‘mailbox’ issues, Mr Burke moves on to observe that] I believe that the ‘legacy account’ and ‘mailbox’ issues mentioned may relate to notations referring to disconnection for non-payment [i.e. the event of March 2015 for which he bears no responsibility].
7. The events of July 2017 do not appear in the statement of claim in the within proceedings (issued in March 2019) because Mr Burke, on his account, appears not to have appreciated that he may have been defamed in July 2017 until he belatedly received the FOI documentation supplied to him in May 2019, by which time the within proceedings had commenced. Nonetheless, Eir issued a letter of 4 November 2019 to Mr Burke treating with the issues raised, stating, inter alia, as follows:
“4. We again reiterate that we have corrected the inaccurate information on our systems [albeit by including a supplementary annotation, not by excising a previous annotation]….With regard to having your information erased, this cannot be done in circumstances where you are still an eir customer….If you wish to have your data erased and/or anonymised as is permitted under GDPR, please note you would first need to move provides and no longer receive services from eir. Should you wish to do that we can then move on to erase and/or anonymise your data so that it is no longer visible on the system and/or attributable to you. We are happy to assist you with this should you decide that this is the course of action that you wish to take. There will be no early cease charges for such a move to another operator and it will achieve the aim you appear to seek; namely that your personal or identifying data is erased and/or anonymised save as required by law.
5. Please note that we were in the process of moving from Outlook to Gsuite at the time of drafting our Defence and it appears the initial migration of some data from one system to the other may have failed, without our knowledge. As such, we mistakenly stated at that time that we had not received a letter from your solicitor…which was incorrect. It is now admitted that same was received and that we provided data under a Data Access Request to your solicitor in 2019. We will formally apply to amend our Defence accordingly. As regards what was provided to…[your solicitor] in 2019 and what was provided to you in 2017; given the passage of time the data provided to [your solicitor]…would be more extensive as it would have included data for an additional 2 year period.
6. It is entirely incorrect to state that the ‘legacy account’ and ‘mailbox issues’ experienced when you tried to upgrade had anything to do with any alleged non-payment in the past. This was a regrettable systems issue with no relation to any alleged non-payment. We note that this issue was resolved and, by your own admission, the phone was replaced 5 days after your initial request. It is admitted that Curry’s have limited access to customer data in order to process sales and provide upgrades. It is suggested that you were aware that this was the case given by your attendance at Curry’s PC World…on 7 July 2017 to request an upgrade. Please note that Curry’s only have access to limited data to allow them [to] action sales and upgrades and do not have access to all customer data.”
8. There are two sides to every story, both sides have been outlined in the foregoing paragraphs, this is not a judgment following on a substantive hearing of the dispute between the parties, and the court has and offers no view on whether Eir has exposed itself to any liability towards Mr Burke in its above-recounted dealings with him. It was necessary to recount the facts in a little detail solely to explain the background to the application now made by Eir and the court’s adjudication on same.
9. As mentioned, by notice of motion of 5 November 2019, Eir seeks, inter alia, “an Order pursuant to O.19, r.28 RSC dismissing the Plaintiff’s claim and/or the Plaintiff’s claim in defamation, against the Defendant on the grounds that it is out of time and statute barred, discloses no reasonable cause of action and/or is frivolous or vexatious and/or is bound to fail.”. Order 19, Rule 28 of the Rules of the Superior Courts (“RSC”) provides that “The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just.”
10. The statement of claim, as presently worded, indicates Mr Burke’s claim to be for damages “as compensation for the defamatory statement made in Eir’s mail to ComRef on 6 March 2015 on 6 March 2015 and for failing to comply with a request for release of information under the Data Protection Acts 1988 & 2003”. Eir correctly makes the point that an action for defamation alleged to have occurred in 2015 falls hopelessly outside the one + (potential and maximum additional) one-year period for bringing such a claim under s.11 of the Statute of Limitations 1957, as amended by s.38(1)(a) of the Defamation Act 2009. This portion of Mr Burke’s claim, having been brought out of time, falls to, and will, be struck out. How Mr Burke might proceed in respect of the alleged defamation in July 2017 is a matter for him separately to decide and is not a matter for adjudication by this Court at this time.
11. Eir contends that Mr Burke’s claim against it for breach of its obligations under the Data Protection Acts should likewise be struck out on the basis that “[T]he Plaintiff has already litigated this issue by making a complaint to the Data Protection Commissioner…[which] was subject a determination in December 2018”. The court respectfully does not accept Eir’s submissions in this regard for the following reasons:
(i) the determination of the Data Protection Commissioner can only relate to the complaint that was before her. However, it is clear from Mr Burke’s submissions that he means to make complaint in respect of both (a) what went before the Data Protection Commissioner and (b) the treatment of his data access request subsequent to that complaint and up to the date on which the within proceedings were commenced.
(ii) as regards the just-mentioned point (i)(a), yes, Mr Burke’s complaint to the Data Protection Commissioner has been the subject of a determination favourable to him by the Data Protection Commissioner on 21 December 2018; however, as the Data Protection Commissioner expressly makes clear in that determination, she has no role to play in whether a liability presents under s.7 of the Data Protection Acts and, in truth, what Mr Burke is seeking to claim, armed with the said favourable determination, is that such a liability presents. Mr Burke may be right in this claim, he may be wrong in this claim but the court does not see that he is out of time in making this claim (any breach of statutory duty presenting – negligence is not alleged – would have occurred after the expiry of 40 days from the date when the data access request was submitted in May 2016 and the within proceedings were commenced in March 2019), nor has his being out of time in this regard even been contended; what has been contended, in effect, is that Mr Burke has exhausted the reliefs available to him in the data protection context, but, with respect, he has not.
(iii) what has been contended is that having received a favourable determination from the Data Protection Commissioner, Mr Burke has “litigated” this matter to an end. Three points might be made in this regard: (i) the process in which Mr Burke has engaged before the Data Protection Commissioner is not adversarial litigation; it is a non-judicial, inquisitorial process contemplated by s.10 of the Data Protection Acts, that sits apart from a suit for breach of statutory duty; (ii) the determination of the Data Protection Commissioner is properly being viewed/used by Mr Burke as a strength to be relied upon in the case he now wishes to bring; (iii) the determination of the Data Protection Commissioner following her inquisitorial consideration of matters does not yield some form of res judicata as regards the bringing of an associated claim for breach of statutory duty; although there can no longer be an appeal against the determination of the Data Protection Commissioner to the Circuit Court, there has been no final decision concerning breach of statutory duty which cannot be appealed from; this is because there has never been a decision at all on the issue of breach of statutory duty.
(iv) as mentioned at (i), the determination of the Data Protection Commissioner in any event can only relate to the complaint that was before her, so it cannot relate to what happened after that complaint. Mr Burke’s grievance on the data protection front, it is clear from the pleadings, extends to occurrences that post-date his complaint to the Data Protection Commissioner and pre-date his commencement of the within proceedings.
12. For the reasons identified above, the court declines to strike out Mr Burke’s claim insofar as it relates to the Data Protection Acts.
Result: The court refused to strike out Mr. Burke’s claim in relation to the Data Protection Acts.
Harmon v Irish Life Assurance Plc
[2018] IEHC 801
JUDGMENT of Ms. Justice Creedon delivered on the 26th October day of 2018;
Background
1. These proceedings commenced by way of plenary summons dated the 14th February 2012. The proceedings arise out of events concerning the alleged mis-selling of a unit linked Protection Plan (the policy) in September 1995 to the plaintiff by Irish Progressive Life Assurance Company Ltd. (Irish Progressive) the defendants’ predecessor. The plaintiffs’ broker Carroll and Associates made an application for a life assurance policy to Irish Progressive Life Assurance Company Ltd. (Irish Progressive). The brokers stated that the plaintiff required cover to allow Mr. Harmon make a draw down on a rental investment property. The policy is currently still in force with life cover of €145,515.
2. The policy bears policy number 75036245 and includes life assurance. The plaintiff says that he completed the proposal form for the policy with the assistance of Ms. Carroll (the broker) on the 5th September 1995 and sought cover for depression. The plaintiff submits he required both critical illness cover on the proposal form and also ticked the box for permanent disability as at the material time the plaintiff was suffering from depression and anxiety.
3. The proposal form of Mr. Harmon forwarded by his brokers to Irish Progressive sought three aspects of life cover namely,
(i) life assurance;
(ii) specific critical illness cover;
(iii) permanent total disability cover.
4. The defendants say that in reply Irish Progressive Life only proposed the specified critical illness and life assurance cover. They say that permanent total disability cover was declined. The policy documentation sent to the plaintiffs’ broker and copied to the plaintiff requested that Mr. Harmon satisfy himself that the cover proposed met his requirements. The plaintiff signed an acceptance form on the 5th September 1995 acknowledging acceptance of the critical illness and life insurance cover proposed. The policy subsequently issued on the 7th September 1995.
5.The defendants say that in June 1997, the plaintiff contacted Irish Progressive and requested permanent total disability cover be added to his policy along with increased critical illness cover. They say the plaintiff never replied to further correspondence and details sent by Irish Progressive on the 27th June 1997. Irish Progressive was subsequently taken over by Irish Life Assurance plc.
6. The plaintiff seeks inter alia , damages for breach of duty, breach of contract, deceit, negligent misstatement together with repayment of all premiums paid by operation of restitution, rescission or the setting aside of the contract.
Evidence
7. At trial, evidence was given by Mr. John Harmon the plaintiff on behalf of the plaintiff’s case. On behalf of the defendant evidence was given by Mr. Colin Aylward Compliance and Agency Manager of Irish Life Assurance plc, Ms. Carol Symes, New Business Department, previously of Irish Progressive and now of Irish Life Assurance PLC. and Elizabeth Sweetman underwriter, again formerly of Irish Progressive, and now working for Irish Life Assurance PLC.
8. The plaintiffs say that the proceedings herein arise from the mis- selling of an insurance policy “critical illness” (the policy) which was signed on the 21st September 1995 by Irish Progressive Life Assurance Company Ltd. via an insurance broker who assisted the plaintiff in completing the proposal, that is Carroll and Associates. The policy bears policy number 75036245 and includes life assurance. The plaintiff says that he completed the proposal form for the policy with the assistance of Ms. Carroll (the broker) on the 5th September 1995 and sought cover for depression. The plaintiff submits he required both critical illness cover on the proposal form and also ticked the box for permanent disability as at the material time the plaintiff was suffering from depression and anxiety.
9. Prior to finalisation of the insurance contract between the parties and having regard to the depression disclosed to the defendant by the plaintiff at the material time, the defendant referred the plaintiff to two psychiatrists prior to the initiation of the policy in June 1995 and the plaintiff says that the defendant applied a loading to the said policy which the plaintiff believed was due to his specific requirement to be covered for depression on the said policy.
10. The plaintiff was employed at the Garda Forensic Laboratory in the Phoenix Park, and due to his depression he was compelled to resign his job in March 2009.
11. Following his retirement from work in May 2009 the plaintiff claimed for depression on foot of his critical illness plan number 75036245 (the policy). The plaintiff submits that at all material times the plaintiff believed he was covered for such an illness and in fact an excess of 50% was applied to the plaintiff’s life cover and critical illness premium by the defendant following a medical examination at the request of the defendant prior to the initiation of the said policy on the 7th September 1995. The plaintiff says that at all material times the plaintiff disclosed his depression and specifically sought cover for same. It is submitted by the plaintiff that he purchased the said policy via an insurance broker Ms. Carroll.
12. The position of the broker as agent is set out by statute. An agent is defined as acting for the insurer where he helps the proposer complete the proposal. In that regard the plaintiff sets out s.51 of the Insurance Act 1989 Part 5 as follows: –
“51(1) An insurance agent shall be deemed to be acting as the agent of the undertaking to whom a proposal for insurance is being made when, for the purpose of the formation of the insurance contract, he completes in his own hand or helps the proposer of an insurance policy to complete a proposal for insurance. In such circumstances only, the insurer shall be responsible for any errors or omissions in the completed proposal.
(2) An undertaking shall be responsible for any act or omission of its tied insurance agent in respect of any matter pertaining to a contract of insurance offered or issued by that undertaking, as if the tied insurance agent was an employee of that undertaking.”
13. The plaintiff says that the broker has a duty of care to ensure the client has the best available cover to meet his requirements. The plaintiff says a brokers’ duty is to: –
(i) Ascertain the clients’ requirements;
(ii) Take reasonable steps to satisfy those requirements.
Mr Colin Aylward gave evidence that from his examination of the files, the status of Carroll & Associates from 1987 was as Insurance Brokers and not tied agents of Irish Progressive. Mr Aylward gave evidence of written confirmation now held on the files of Irish Life Assurance PLC confirming that in 1987 Carroll & Associates were confirmed to be on the list of Brokers used by Irish Progressive Life Assurance Company Ltd. (Irish Progressive) the defendants’ predecessor. He gave evidence of further written confirmation currently held on the file of Carroll & Associates applying in 2004 to come off the approved list of brokers.
14. Ms Carol Symes worked for Irish Progressive in their New Business Department in 1995. This company merged with Irish Life Assurance PLC in 1995 with which she still works. She gave extensive evidence of the administrative steps that she took on receipt of the letter from Carroll & Associates on the 26th of May 1995 on behalf of the plaintiff Mr Harmon. She took all the necessary steps to open a new file and liaised with the Underwriting Department in respect of their requirement in particular medical examinations and other medical tests required by the underwriters. She gave evidence that Swiss Re a reassurance company based in the UK ultimately confirmed that for Life Assurance and Critical Illness they proposed a loading of plus 50% and they were declining PTD and waiver of premium. She sent a letter of acceptance to Carroll & Associates. She had contact from Mr Harmon who said that he hadn’t received it so she sent a duplicate to him. The letter of acceptance was returned on the 7th of September 1995 signed and dated the 5th of September 1995. The policy was then put in force.
15. A further communication was received on the 18th of June 1997 from the plaintiff requesting a revised premium if Critical Illness was increased to £50,000 and PTD of £50,000 was to be added to the policy. The company wrote to the plaintiff on the 23rd June 1997 setting out what the proposed rates would be and enclosing a proposal form for completion. The company received no response to that correspondence.
16. Ms Elizabeth Sweetman confirmed in her evidence that Swiss Re would have referred all of the medical information to their internal Chief Medical Officer who decided that for Life Assurance and Critical Illness Cover they were rating plus 50%. She said as was standard practice then that if a case was rated for Life Assurance or Critical Illness Cover any additional benefits such as PTD or waiver of premium were automatically declined.
Legal arguments
17. Legal arguments put forward by the plaintiff are as follows: –
(i) Uberrima fides
The plaintiff says that any consideration of this case is governed by the reciprocal duties of the utmost good faith which the insurer owes to the insured under the doctrine of u berrima fides . This duty they say, extends to precluding the insurer from raising defences otherwise available to it against the claims of the insured. They opened the text of Buckley on Insurance Law, 3rd Ed. at pp. 160 – 161, para. 3-140 and 3-141 and the judgment of McMahon J. in Manor Park v. AIG (2008) IEHC 174 (2009) ILRM 190. The plaintiffs say that in that case the defendant accepted that the duty of utmost good faith applies to the insurer. He submits that the defendant, either by itself or through its agent, has a duty to act in the utmost good faith and that that obligation includes an obligation to disclose to the plaintiff material facts within the defendants’ knowledge. The plaintiff says that it was reasonably foreseeable that there is a risk on the plaintiff’s specifically sought insurance to cover risks associated with depression and anxiety which depression and anxiety could result in loss and damage if he was sold a policy by the defendant and/or its agents which excluded cover for depression and anxiety risks without informing the plaintiff and clearly explaining to him that he was not being covered as he had requested. The plaintiff submits that this goes to both the materiality of the risk and the recoverability of the claim. The plaintiff says that the defendant failed to provide the policy sufficient to meet the stated requirements of the plaintiff.
(ii) No consensus ad idem
The plaintiff suffered from episodes of depression and says that he specifically requested of the defendant insurance cover against loss of income from his job as a lab technician in the event that he suffered a depressive episode. The plaintiff says that his request was clear and unambiguous in relation to it, and the insurer carried out an extensive and detailed investigation of the medical history of the insured, and required further medical examination of the insured. The plaintiff says that this investigation led to a quote for cover 50% higher than the normal.
The plaintiff says that he assumed entirely reasonably that this quote was in response to his request for insurance cover against the depression particularly as he had had requested no other cover. The plaintiff says that all this was done seemingly in accordance with the insurers’ normal procedures otherwise than face to face with the applicant. The plaintiff says that the first explanation given by the insurer as to what was covered by their policy put in place was that given by the insurer on the occasion of their refusal to pay the insured when he claimed payment and suffering loss of income because of an episode of depression. The plaintiff says that had such an explanation as to the nature of the cover been given to the insured when it should have been, that is namely when the policy was being taken out, then the plaintiff would have been alerted to the disparity between what he was being given and what he had requested. The plaintiff therefore says that there was no consensus ad idem between the parties and accordingly no contract. The plaintiff says that in the circumstances the plaintiff should receive back from the defendant all premiums paid by him with interest.
Statute of limitations / financial Ombudsman
18. The plaintiff says that following the decline of the plaintiffs’ claim in 2010 the plaintiff appealed same via the internal Irish Life Appeals process and the appeal was unsuccessful. The plaintiff submits that by letter dated the 7th January 2011, the plaintiff sought an investigation of the failure of the defendant to pay his claim on foot of the material policy by the Financial Services Ombudsman. The plaintiff submits that following correspondence the Financial Ombudsman sent a letter to the plaintiff dated the 26th January 2012 and the following was contained in the said letter: –
“This section expressly provides that the conduct complained of must have occurred within six years of the complainant making the complaint. The complainant says that his complaint only arose when the company refused to meet his claim and accordingly the six – year limitation period only begins then. Unfortunately, this is not the position, as the legislation specifically refers to the conduct complained of. All of the conduct complained of in this instance occurred at the time the policy was sold to the complainant in 1995 and accordingly this complaint cannot be investigated by this office as it is out of time. The complaint is not upheld pursuant to s. 57 C 1(1)(b) of the Central Bank Act 1942 (As Amended by the Central Bank and Financial Services Authority of Ireland Act, 2004). The above finding is legally binding on the parties subject only to an appeal to the High Court within 21 calendar days.”
The plaintiff submits that in the circumstances there was no adjudication of the said complaint by the Financial Services Ombudsman and the plaintiff therefore submits that the plaintiff is not precluded from the within proceedings. The plaintiff submits that he should not be deprived of his constitutional right of access to the courts.
19. In addressing the Statute of Limitations the plaintiff says that the mechanism adopted by the insurer was to offer to the plaintiff and enter into if possible a new agreement each year if terms could be agreed and that is what happened in this case each year after the first year. The plaintiff says that each and every year after the first year of insurance the plaintiff was offered fresh terms of insurance by the defendant particularly as to indexation and given the opportunity, if he agreed to the proffered terms to be insured for the coming year.
Insurance brokers, insurance agents and the Insurance Act, 1989
20. The plaintiff submits that the broker has a duty of care to ensure the client has the best available cover to meet his requirements. The plaintiff submits that a brokers’ duty is to: –
(i) Ascertain the client’s requirements; and
(ii) Take reasonable steps to satisfy those requirements.
21. The plaintiff submits that the broker herein as the defendants’ agent should have inter alia: –
(i) Drawn the attention of the plaintiff to the lacuna between the client’s requirements and the policy on offer;
(ii) Made him aware of the absence of critical illness cover as relating to depression and anxiety;
(iii) Take instructions from the client regarding the lacuna between his requirements and the policy;
(iv) Should have ensured the clients’ interest were not adversely affected.
22. The plaintiff submits that the test for professional negligence is as set out in Bolam v. Freirn Hospital Management Committee [1957] 1 WLR 582 at pp. 586 – 587, adopted in Ireland in Dunne v. National Maternity Hospital [1989] 1 IR 91 and 116. The plaintiff says that in the case of Dunne, it was stated as follows: –
“The test of the standard which you should apply is that of the ordinary skilled obstetrician exercising the ordinary degrees of professional skill. It is a matter for you, ladies and gentlemen, in the light of the evidence to decide whether in the handling of the plaintiff Dr. Jackson fell below the standard of the ordinary skilled obstetrician”.
The plaintiff says that it was held that a professional should act with the reasonable standard expected that an individual of “…like specification and skill would have followed had he been taking the ordinary care required for a person of his qualifications”.
23. The plaintiff submits that the broker herein was required to act with the skill of an ordinary competent broker and failed to do so. The plaintiff goes on to say there is no evidence of any letter signed by the plaintiff to the effect that he is aware the policy did not cover depression and anxiety related claims. It is further submitted that the broker assisted the plaintiff in completing the proposal form as is evidenced by the writing on the form itself. It was further submitted by the plaintiff that the broker then became an agent of the defendant by virtue of the said assistance.
24. The plaintiff says there was a contractual relationship between the plaintiff and the defendant. The plaintiff opens the case of McKenna v. Best Travel Ltd. T/A Cyprianna Holidays [1999] 3 IR 57 in which the Supreme Court found that a travel agent had a duty of care re: advising their clients of risks relating to their travel. In those circumstances the plaintiff had been injured by a stone thrown whilst on holidays. Both Hamilton C.J. and Keane C.J. concurred and observed that the duty of care in tort arises from the proximity created by the contractual relationship. The plaintiff makes reference to a text of McMahon and Binchy, 4th Ed. Bloomsbury,at para. 6.91.
25. Furthermore, it is submitted by the plaintiff that there is a duty to disclose which must at least extend to disclosing all facts known to the defendant which are material either to the nature of the risks sought to be covered or the recoverability of a claim under the policy. In that regard the plaintiff opened the case of Banque Keyser Ullmann S.A. v. Scandia (UK) Insurance Company Ltd. and Ors [1990] 1QB 665 at p. 772 which stated as follows: –
“In adopting the well – established principles relating to the duty of disclosure falling upon the insured to the observe case of the insurer himself due account must be taken of the rather different reasons for which the insured and the insurer require the protection of full disclosure. In our judgment, the duty falling upon the insurer must at least extend to disclosing all facts known to him which are material either to the nature of the risks sought to be covered, or the recoverability of a claim under the policy which a prudent insurer would take into account in deciding whether or not to place the risk for which he seeks cover with that insurer”.
26. The plaintiff says that the defendant did not disclose at the material time that the plaintiff was not covered for depression. The plaintiff further says that at all material times the plaintiff disclosed his depression to the defendant and elected for permanent disability on the form and paid a higher premium. The plaintiff says that as a consequence of same the plaintiff believed he was insured by the defendant for depression and anxiety and it was not the plaintiff who failed to meet the requisite standards of disclosure of uberrima fides.
27. The plaintiff refers the court to the case of William Harney v. The Century Insurance Company Ltd. Unreported, 22nd February 1983, where the court, following a submission in re: Mutual Life Insurance Company of New York [1925] AC 344 and the judgment of Lord Salveson on behalf of the Privy Council which McWilliam J. held as follows: –
“To this I would add that the options open to an insurer are to accept the contract, refuse the contract or make a new offer at an increased premium. There cannot be any course of accepting the premium and waiting until it was seen how the proposers’ health progressed so that if the infection cleared up the proposal would be held in future with his premium based for future reference as of the effective date by that if some complication developed the proposers’ premium would be returned to him and the policy cancelled.”
28. The plaintiff says that the defendant in this case was well aware of the risk but had sought to avoid payment on foot of the policy in breach of his obligation to the plaintiff. The plaintiff opens the case of re: Dixon v. Devitt & Co [1917] 86 LJKB at p. 315 when an insurance broker is employed to effect insurance and the client (as in the plaintiff herein) is entitled to rely on the broker carrying out instructions and is not bound to examine the documents drawn up on performance of those instructions and whether his instructions have in fact been carried out by the broker. The plaintiff says that the broker cannot expect to be exculpated if they fail to draw a client’s attention to any particular term other than the terms instructed by the client. They quote from the case as follows: –
“The client of an insurance broker is not bound to see whether his instructions to insure had been carried out and for that purpose to look at the documents himself.”
29. The plaintiff goes on to open the case of re: Latham v. Hibernian Insurance Company Ltd. v. Peter J. Sheridan & Company Ltd . [1991] and submits that in that case the insurance broker was held liable in circumstances where he failed to disclose a material fact as he was under an obligation to examine such facts. They say that this arose when the insurers themselves had voided the insurance policy. The plaintiff submits as a matter of law the broker, that is Ms. Carroll, is an agent of the defendant and failed to properly advise and ascertain that the policy was suitable for the plaintiff having regard to the material circumstances.
30. He goes on to open the case of re: Chariot Inns Ltd. v. Assicurazioni Generali SPA and Coyle Hamilton [1981] ILRM 173 at p. 178 Kenny J. held that a broker owes a duty in both tort and contract, it was held as follows: –
“An insurance broker owes a contractual duty to his client to possess the skill and knowledge which he holds himself out to the public as having, and to exercise this in doing the clients’ business. He is also liable in tort if he fails to exercise that skill and knowledge.”
Application of the European Communities (Unfair terms in Consumer Contracts) Regulations 1995
31.The plaintiff opens s. 3.5 which states as follows: –
“The fact that a specific term or any aspect of a term has been individually negotiated shall not exclude the application of this Regulation to the rest of the contract if an overall assessment of the contract indicates that it is nevertheless a contract as described in paragraph (4) of this Regulation referred to in Article 3.2 of the Council Directive as a pre-formulated standard contract”.
S. 5.2 states as follows: –
“Where there is a doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail”.
32. S. 6.1 states as follows: –
“An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer.”
33. The plaintiff submits that the Unfair Terms as above apply to the contract and in the circumstances the interpretation of the true meaning of the policy should be read in terms as most favourable to the plaintiff. The plaintiff further submits that the contra – preferendum rule should apply herein as the policy documents were prepared as set out herein by the defendant. Additionally, the plaintiff submits that the plaintiff is entitled to the reliefs claimed by him in these proceedings as against the insurer and the defendant.
The defendant’s replies to the legal arguments
34. Uberrima fides – utmost good faith says that whilst the duty of utmost good faith requires an insurer to act in accordance with commercial standards of decency and fairness and to conduct itself reasonably, transparently and with candour, it is submitted that its application does not preclude the defendant from defending its position against the claims raised by the plaintiff. It is submitted that the defendant complied with its duty of uberrima fides in dealing fairly with the plaintiff and considering his interests and disclosing all material facts pertaining to the extent of cover.
35. The defendant says that they clearly stated to the plaintiff and his broker that the policy terms offered should be read to make sure it met their approval. Futhermore, the cases of Manor Park Homebuilders Ltd. v. AIG Europe (Ireland) Ltd. [2008] IECH 174 [2009] 1 ILRM 190 and Earls v. Financial Services Ombudsman and FBD Insurance plc . [2015] IEHC 536 are readily distinguishable on their facts from the plaintiffs’ claim. They say that these cases concerned unsuccessful claims under fire policies. The defendant refers the court to the text of Buckley on Insurance Law, 4th Ed. 2006, at pp. 237 – 241, on “An insurers’ duty of good faith”. By way of contrast, the defendant says the plaintiff has had his own broker to advise and consult on the policy terms proposed. In addition, they say that the plaintiff obtained life insurance cover which was required for a property investment. This cover continues to apply. They refer the court to Eggers & Ors. Good faith and Insurance Contracts, 3rd Ed, 2010 at pp.129-130.
Consensus ad idem
36. The defendant submits that there was agreement between the parties. The defendant says that as stated at para D.2 of the defendant’s legal submissions, the plaintiff completed the proposal form for the policy with the assistance of his broker, Carroll and Associates. In correspondence, the broker specified that the plaintiff required cover to allow him make a draw down on a rental investment property. The policy is currently still in force with life cover of €145,515. As detailed at para. A3 of the defendants’ legal submissions, the policy documentation was sent to the plaintiff’s broker and copied to the plaintiff. The defendant says that the plaintiff was required to attend Carroll and Associates offices in order to sign an acceptance form acknowledging acceptance of the critical illness and life insurance cover proposed. The defendant says that this was accordingly completed by the plaintiff on the 5th September 1995. The defendant further asserts that at that stage the plaintiff was afforded a cooling off period in which he could cancel the policy if after further consideration with his broker, he did not find it suitable for his needs. The defendant said that the plaintiff chose not to avail of this option having presumably satisfied himself as to the policy and signed the letter of acceptance on the 5th September 1995.
Statute of limitations and the Financial Services Ombudsman
37. The defendant says that the defendant is not precluded by the principle of utmost good faith from relying on the principle of res judicata as otherwise pleaded in its amended defence.
38. The defendant says that the plaintiff is in error in submitting that the Ombudsman expressly declined to deal with this complaint. The defendant says that where a complaint was made to the Financial Services Ombudsman under its legislation, it may either be substantiated or not substantiated. They say that the Ombudsman in his findings stated that the complaint was not substantiated under s. 57C 1(1)(b) of the Central Bank Act 1942 (as amended by the Central Bank and Financial Services Authority of Ireland Act, 2004). The Ombudsman’s letter of the 26th January 2012 in compliance with s. 57 C (1)(9) of the Act, states that: – “The above finding is legally binding on the parties subject only to an appeal to the High Court within 21 days”.
39. The defendant says that s. 57CA (3)(a) of the Act provides for an appeal to the High Court against the Financial Services Ombudsman’s finding within such period as may be provided by Rules of Court of the High Court. This appeal is provided for by order 84C of the Rules of the Superior Courts on procedure and statutory appeals (SI no. 14 of 2007). O. 84, r. 1 (5)(a) provides for an appeal to the High Court within 21 days following notice of the deciding body’s decision. The appeal is by way of notice of motion and grounding affidavit, returnable before the High Court in the non – jury judicial review motion list.
40. The defendant says that an appeal to the High Court under s. 57 CL of the Act was the appellate jurisdiction for the plaintiff to have engaged and advance a claim for such relief as the High Court might provide or direct. The plaintiff says that the plenary jurisdiction of the High Court is further engaged in the courts’ jurisdiction under Bunreacht nahÉireann Article 34.3.1°. In Murphy v. Canada Life Insurance Ltd and Irish Life Assurance plc [2016] IECA 128, the Court of Appeal dismissed High Court plenary proceedings commenced after an unsuccessful finding of the Financial Services Ombudsman. The Court of Appeal judgment in paras. 8 – 15 otherwise applied the principle of res judicata to decisions of the Ombudsman not otherwise appealed under the designated procedure as stipulated by the Act. The defendant says that in the case of Murphy , the Supreme Court refused leave to appeal reference (2016 IESC DET 115).
41. The defendant says that the plaintiff has also sought in these proceedings to claim additional reliefs to those claimed before the Financial Services Ombudsman. The defendant says that the plaintiff is further estopped from making such claims. The defendant says that the plaintiffs’ claim is further statute barred for reasons previously addressed by the defendants and the court was referred to the Statute of Limitations 1957 section 11 which sets out the six year limitation period applicable in this case.
Insurance brokers, insurance agents and the Insurance Act, 1989
42. The plaintiff says that s. 2 of the Insurance Act, 1989 defines an insurance broker as a person acting with the freedom of choice who brings together persons seeking insurance and carries out work preparatory to the conclusion of contracts of insurance. The defendant says that of utmost significance is the caveat in the definition that an insurance broker in s. 2: – “does not include an insurance agent or an employee of an insurer when the employee is acting for that insurer”. An insurance agent is defined in the interpretation of s. 2 as: –
“. . .any person who holds an appointment in writing from an insurer enabling him to place insurance business with that insurer, but does not include an insurance broker”
43. The defendant says that the plaintiff is misguided in asserting that his brokers Carroll and Associates, are an “agent” as defined in s. 51 of the Insurance Act 1989. The defendant says that that section relates solely to “tied insurance agents”. The defendant says that such form of agency would only apply to Carroll and Associates of they had a contract with the defendant. The defendant says that this is not the case. They say rather that Carroll and Associates at all material times acted solely as insurance broker for the plaintiff.
44. The defendant says that all of the duties of care alleged against the defendant in para. D 9 of the plaintiff’s legal submissions might more properly be advanced against Carroll and Associates as brokers, but not against the defendant insurer. The defendant says that the insurance brokers relationship with his client is well discussed in the text Buckley and Insurance Law, 4th Ed. 2016, pp. 75 – 83. The defendants say that they have no application to the plaintiff’s claim against the defendant in these proceedings.
European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995
45. The defendant says that it is submitted that the above regulation and the provisions relied upon by the plaintiff have no application in the instant proceedings. The defendant says that there can be no doubt as to the meaning of any term of the policy as required by Regulation 5(2) of the above regulations. The defendant says that the discussion in the texts Eager’s Good Faith and Insurance Contracts, 3rd Ed. 2010, at pp. 129 – 130 and also in Clarke on Contract Law in Ireland, 8th Ed. 2016, at pp. 320 – 327 does not advance matters. The defendant says that while the commentators consider the relevant EU Directive 93/13 it has been little considered by the Superior Courts in this jurisdiction.
46. The defendant notes that notwithstanding his admitted defective eyesight only disclosed to the defendant in the plaintiff’s reply in the amended defence delivered on the 3rd February 2017, the plaintiff did not rely on his broker to assist in ensuring that he adequately considered and understood the terms of the policy before signing the letter of acceptance on the 5th September 1995.
47. In summary, he says that having regard to the legal principles outlined and made in reply to the plaintiff’s legal submissions, it is submitted by the defendant that the plaintiff’s claim is ill – considered. They say it has been rejected in an un-appealed finding by the Financial Services Ombudsman. They say there is no entitlement to re- litigate under the guise of a separate plenary proceedings this unsuccessful claim. They say the principle of res judicata is also applicable in the absence of an appeal to the High Court of the above findings where they say that the plaintiff’s claim is statute barred.
Decision
Findings of fact
48. The court having considered the evidence finds the facts as follows: –
(i) The plaintiff, Mr. Harmon, completed a life assurance proposal form with the benefit of independent advice from his broker Carroll and Associates.
(ii) The policy requested was for various forms of life insurance cover with options to increase and this commenced from the policy dated the 7th December 1995 grounding life assurance cover of IR£50,000 and critical illness cover of IR£25,000 with options to increase.
(iii) There was one life insurance contract and not a fresh contract being entered into from year to year.
(v) Carroll and Associates provided their service as Insurance Brokers advising the plaintiff, Mr. Harmon, and not otherwise.
(vi) Mr. Harmon was a client of Carroll and Associates and completed the proposal form with their expert brokers’ assistance. The insurance policy issued on the 7th September 1995 for life assurance and critical illness cover and clearly did not include permanent total disability.
(vii) The plaintiff benefited from the life assurance policy and assigned it to Irish Life Finance on the 11th December 1995.
(viii) Mr Harmon sought to add Permanent Total Disability cover by contacting Irish Progressive in June 1997 and was sent a proposal form for that by letter dated the 23rd June 1997. This increased critical illness cover to IR£50,000 (from IR£25,000) and added permanent total disability cover for IR£50,000. Mr. Harmon the plaintiff did not take up that proposal.
(ix) On the 31st July 2004, Carroll and Associates transferred their Insurance Brokers practice as investment product intermediaries to John Webber Financial Services. At that time Carroll and Associates had insurance brokers agreements with ten life assurance companies.
(x) The plaintiff’s complaint to the Financial Services Ombudsman following rejection by Irish Life of a specified illness claim was rejected in a finding dated the 26th January 2012 which is binding on the plaintiff and Irish Life unless appealed to the High Court within a period of 21 days.
(xi) No appeal was initiated by the plaintiff under O. 84 (c) of the Rules of the Superior Courts appealing to the High Court the finding of the Financial Services Ombudsman in the manner contemplated by the Central Bank Act, 1942, as amended.
The Law
49. The court has considered the legal arguments on both sides, and in light of the law and the facts as found, the court is persuaded by the arguments of the defendant. The court is satisfied that the defendant complied with its duty of Uberrima fides in its dealings with the plaintiff.
50. The court is similarly satisfied that the evidence amply supports consensus between the parties.
51. Further having considered the law and facts the court is entirely satisfied that Carroll & Associates at all material times acted solely as Insurance Broker for the plaintiff.
52. The court finds that European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995 have no application to the instant proceedings.
53. With regard to the statute of limitations the critical date is the date of the issue of the plenary summons in this case which is the 14th February 2012. The policy in question was entered into and is dated the 7th September 1995, a period of almost sixteen years before the summons was issued. The request for additional permanent total disability cover by the plaintiff in June 1997 was a period of over fourteen years before the plenary summons was issued.
54. The plaintiff argued that if they do not succeed on the statute of limitations point that their claim is statute barred, then they want to rely on the finding of the Financial Services Ombudsman. The court finds that the finding of the Financial Services Ombudsman is binding on the parties. There is an appeal to the High Court within a period of 21 days and that is contained in the legislation. The relevant legislation is the Central Bank Act, 1942, as amended by the Central Bank and Financial Services Authority of Ireland Act, 2004. The plaintiff did not initiate any such appeal to the High Court within the time limit as provided for in the legislation.
55. Accordingly, the court dismisses the plaintiffs claim and refuses the reliefs sought.
Murphy v. Minister for the Marine
[1996] 2 I.L.R.M. 297, Morris J.
This matter comes before the court on the trial of a preliminary issue. The issue which I have to determine is whether part of the plaintiff’s claim as set out in the amended statement of claim delivered on 2 November 1995 is statute barred pursuant to the provisions of s. 11 of the Statute Limitations 1957.
The case has an involved history and it becomes necessary to give an outline of this history for the purpose of determining the issues now before the court. I summarise this history as follows.
The plaintiff is a fisherman and he applied to the Minister for the Marine (the minister) for a licence entitling him to fish for sea fish pursuant to the provisions of s. 222(b) of the Fisheries Act 1959 (the licence). He made his application in December 1988. At the time, the plaintiff intended, if successful in obtaining the licence, to purchase a vessel ‘De Zeeadelt’. This vessel would be of no practical use to him without the licence and accordingly, he delayed the purchase of the vessel while his application was before the minister for adjudication. He remained in contact with the minister’s officials and in April 1989, he alleges that he was informed by one of the minister’s officials that his application was before the minister. He remained in contact with the minister’s officials and in April 1989, he says that he was informed by one of the officials that his application was in order and that it was before the minister for authorisation and a decision would be made within some weeks. The opportunity to buy the original vessel had passed and instead an opportunity to buy a second vessel ‘De Zwerver’ arose. He made all necessary arrangements to substitute the name of this vessel for the original vessel and again in May 1989, he received new assurances from the minister’s official that the licensing application was to be presented to the minister for decision. He says that in June 1989, he received an assurance from the official of the minister that the licence would be issued ‘within a very short period’ and he should complete the purchase of the vessel. The plaintiff acted on this advice and purchased the vessel at the cost of £120,000. He says that on 31 August 1989 he was notified that the minister had suspended all licensing applications. This resulted in the plaintiff having his solicitor enter into correspondence with the minister and the Chief State Solicitor and complaints were made concerning the delay of the minister in determining the plaintiff’s application for the licence. In July 1991, the plaintiff sought and obtained liberty to seek an order of mandamus by way of judicial review requiring the minister to determine his application. However, shortly prior to the date when this judicial review matter was to come before the court, the minister adjudicated upon the plaintiff’s application and refused his application. Accordingly, when the matter came before the court, the only issue remaining was one of costs and the plaintiff obtained an order for costs against the minister.
At or near the same time as the plaintiff instituted the proceedings by way of judicial review, he issued the plenary summons in this matter. The summons was issued on 30 July 1991. The reliefs claimed in the original statement of claim include claims that the minister’s determination not to grant the plaintiff a licence was not valid, that it was contrary to natural justice and the claim includes a claim for damages for negligence. All of these claims are based, inter alia, upon the allegations made by the minister’s official and referred to above.
In December 1994, counsel for the plaintiff advised that the statement of claim should be amended. However, in circumstances which I shall refer to later in this judgment, no amendment was ever made and it was not until shortly prior to the date set for the hearing of this action, namely 2 November 1995, that it was realised that no amendment had been made. As a result, that date was given over to a hearing of an application by the plaintiff for liberty to deliver an amended statement of claim. This order was duly made. However, it was subject to the express provision that the amendment was ‘with effect from the date hereof’ (2 November 1995). The reason for this expressed provision is as follows. The amendment proposed now for the first time introduced into the statement of claim an allegation that the minister, in the month of May 1989, expressly confirmed to a senator that the plaintiff’s licence would be granted to him and the plaintiff says that he acted upon this assurance and relied upon it in going ahead and making the purchase of the vessel. In the amended statement of claim, he now claims reliefs based upon these assurances.
It is the defendants’ submission that claims based upon the alleged assurances given by the minister to the senator fall outside of the limitation period and since the leave granted by the court to amend the statement of claim ‘with effect from this date’, any claim which the plaintiff now bases upon these alleged assurances is barred by the statute.
The amended statement of claim having been delivered, and the amended defence having been delivered, a motion was brought on 11 March 1996 seeking and obtaining an order that the following issue be tried prior to the hearing of the action. The issue is:
Whether the further claims contained in the amendments to the plaintiff’s amended statement of claim (including the alleged facts pleaded underlined and denied) delivered on 2 November 1995 pursuant to the order of the High Court (Carroll J) made on 2 November 1995 was statute barred.
The submissions of counsel for the defendants before me can be summarised as follows. He submits that the new matters now contained in the amended statement of claim all arise from alleged assurances which it is alleged were given by the minister in May 1989. Since the ‘cut-off point’ for the statute expired prior to 2 November 1995 and since the leave to amend the statement of claim was given with the express provision that it was to have ‘effect from the date hereof’, then reliefs claimed upon that alleged assurance are out of time by approximately six months.
He submits that while it is not clear exactly what reliefs the plaintiff is claiming from these alleged assurances, that the main thrust of his claim is founded upon tort and accordingly, it falls directly within the ambit of the Statute of Limitations which provides for a six-year limitation period.
The relevant section of the Statute of Limitations 1957 is s. 11 as amended by s. 3(2)(a) of the Statute of Limitations (Amendment) Act 1991. This provides:
Subject to paragraph (c) of this subsection and to s. 3(1) of the Statute of Limitations (Amendment) Act 1991 an action founded on tort shall not be brought after the expiration of six years from the date upon which the cause of action accrued.
What is central to this case, therefore, is the date upon which any cause of action based upon the minister’s alleged representations accrued.
Insofar as any of the reliefs claimed by the plaintiff are equitable reliefs, the statute has no application save as provided by s. 5 of the Statute of 1957, which provides ‘nothing in this Act shall affect any equitable jurisdiction to refuse relief on the grounds of acquiescence or otherwise’.
It remains only necessary to consider the amended statement of claim insofar as the plaintiff claims reliefs ‘founded on tort’.
It has been submitted to me by counsel for the plaintiff that the plaintiff’s cause of action arose, not at the time when the alleged assurances were given in May 1989, but when the minister was in breach of the alleged assurances which event occurred, it is alleged, when he made his determination to refuse the applicant the licence, and this occurred on 8 November 1991. I am satisfied that this submission is correct. I am satisfied on the authority of Hegarty v. O’Loughran [1990] 1 IR 148; [1990] ILRM 403 that the cause of action accrued on the date of breach of the alleged assurances alleged to have been given by the minister and not prior to that date. That being so, the amended statement of claim being within the six-year period, I am satisfied that any claim which the plaintiff makes, based on tort, is brought within time.
An issue arose during the course of the case which I think it proper to refer to. I have heard evidence from the plaintiff’s solicitor that after he received counsel’s advices that an amended statement of claim should be delivered, he wrote to the Chief State Solicitor on 5 May 1995 enclosing a draft amended statement of claim and asking if there would be opposition to the delivery of the amended statement of claim. It appears that this letter enclosing the draft statement of claim did not arrive at the Chief State Solicitor’s office.
It was submitted to me that in view of this letter, the defendants were estopped from raising the plea that the claim is statute barred because, it is alleged, the defendants’ solicitors had notice of the claim in the form of the draft since May 1989 (which would have been within the six-year period).
I do not agree with this submission. On the authority of Doran v. Thomas Thompson & Son Ltd [1978] IR 223, I am satisfied that if there was some course of conduct on the part of the defendants which resulted in the plaintiff being taken at a disadvantage, then the point would have merit. However, on the facts of the case as I find them, the letter and the draft statement of claim never came to the defendants’ notice, they never conducted themselves in any manner as to justifiably cause the plaintiff to consider that it was unnecessary for him to apply to the court for liberty to deliver an amended statement of claim and I do not accept the submission that the plaintiff was led to form that opinion.
I am satisfied that the following are the facts. I accept without reservation the evidence of Mr Halley, solicitor for the plaintiff. He, as solicitor for the plaintiff, did send the letter of 5 May 1995 but it was not delivered to the defendants’ solicitors in the sense that it came to their notice. I am satisfied that the defendants’ solicitors failed to react to that letter only because they did not have notice of it. I am not satisfied that at any stage the plaintiff’s solicitors were led astray by this lack of action and I am satisfied that the lack of progress in the case only came to light when the parties were preparing for the hearing. I am of the view that no estoppel can arise in this case.
I have been informed by counsel for the plaintiff that he has no objection to an order being made giving the defendants liberty to plead laches in an amended defence. I accordingly will make an order giving the defendants liberty to amend the defence so as to raise the plea of laches which would be the appropriate plea to resist any claim seeking equitable relief.
Accordingly, I deal with the issue raised in the order of 11 March 1996 by holding that the ‘further claims contained in the amendments to the plaintiff’s statement of claim are not statute barred’.
Gallagher v ACC Bank Plc
[2012] IESC 35
JUDGMENT of Mr. Justice Fennelly delivered the 7th day of June 2012.
1. The question on this appeal is whether the claim of the respondent (whom I will call “the plaintiff”) against the appellant (whom I will call “the Bank”) is statute-barred. The plaintiff claims damages against the Bank for the alleged “miss-selling” to him of an investment bond. The Court has been taken on an excursion through a large number of cases in which the English courts have grappled with the accrual of the cause of action in cases of financial loss. Our courts have not previously had to cope with these problems. The High Court of Australia has cast doubt on at least some of the English jurisprudence.
2. Kelly J gave liberty to the Bank to seek a preliminary determination, based on the pleadings, of whether the plaintiff’s claim was time-barred. The result of that determination will, we are told, govern a large number of claims pending in the Commercial Court. Charleton J decided that the claim was not statute-barred. He held that the plaintiff, assuming his claim to be a valid one, did not suffer any immediate loss when he purchased the bond, but faced only a contingent loss.
The Solid World Bond
3. In October 2003, the Bank advertised and marketed an investment bond under the name of “Solid World Bond 4.” The plaintiff invested €500,000 in the bond. Crucially, he borrowed that money from the Bank. His essential complaint is that he was induced to purchase a combined “borrow to invest” financial product which was completely unsuitable for him or for any investor as the investment would have had to far outperform the market if he were to get any return over and above the interest he had to pay on the sum he borrowed.
4. The Solid World Bond offered investors a 100% guarantee of the return of the amount invested linked to 80% of any net increase in the value of a “Deep Blue” basket of shares in ten specified companies each of which was claimed to be “renowned for its financial strength and for the wide marketability of its products and services.” The term of the investment was five years and eleven months. The bond could not be encashed during the term and no withdrawals were permitted prior to maturity. The terms of the bond provided for a degree of protection against negative movement in the value of the “Deep Blue Basket” by averaging over the last twelve months of the term. The shares were selected and specified in advance, but the investor’s money was not directly invested in them; it did not benefit from any share dividends; the shares were not actively managed; the bond passively tracked their progress; under normal conditions the basket was not to change over the term of the bond.
5. The plaintiff agreed to invest €500,000 in the bond. No additional charges were to be applied.
6. The Bank’s marketing document emphasised the high quality of the shares being tracked. It included a table showing spectacularly high returns over successive prior periods of five years and eleven months, but cautioned: “Past performance may not be a reliable guide to future performance. Investments may fall as well as rise in value.” The brochure said that the money was “invested in ACC Bank plc, a wholly owned subsidiary of Rabobank, an ‘AAA’ rated Bank.”
7. Contemporaneously with his investment in the bond, the plaintiff borrowed the entire sum of €500,000 from the Bank pursuant to a facility letter dated 26th September 2003. The amount of the loan was to be drawn down in one lump sum. The plaintiff was obliged to use it only to finance his investment in the bond. The term of the loan coincided with that of the bond.
The plaintiff’s complaint
8. The plaintiff commenced his proceedings by plenary summons on 10th June 2010, i.e., more than six years after he had made his investment. He claimed damages for negligence, breach of contract, breach of duty (including breach of statutory duty and of fiduciary duty), and negligent misstatement. He also claimed equitable rescission, no longer relevant as the claim in contract has been ruled out. It is not disputed that the proceedings were issued more than six years after the purchase by the plaintiff of the bond and of his entry into the loan transaction with the Bank.
9. By order dated 23 November 2011, it was ordered by consent that the plaintiff’s claims “for breach of contract and Statute (under Fair Contract Terms) are statute barred.” The High Court judgment under appeal does not deal with the issue of fiduciary duty. The appeal before this Court was confined to whether the plaintiff’s claim in tort is statute barred. That will depend on when the plaintiff alleges that he suffered loss or damage.
10. The statement of claim was delivered on 25th May 2011. Paragraph 16 is headed: “The Wrongs committed by the Defendant.” It commences with the following paragraph, which was the central focus of the Bank’s case on the appeal, and which alleges that:
“Wrongfully and in breach of the various duties and contractual terms particularised ante the Defendant caused the Plaintiff to enter into transactions that were unsuitable for the Plaintiff and caused the Plaintiff loss and damage and the Defendant made the representations referred to above negligently. Without prejudice to the specific particulars set out hereunder the marketing of the SolidWorld Bond product as a borrow to invest product made it wholly unsuitable for the Plaintiff or indeed any investor. Given that the Plaintiff was borrowing money from the Defendant to invest in the product taking into account the cost of the said borrowing and the tax that the Plaintiff would have to pay on any gains, the product would have had to far out perform the market’s view of the likely performance of the basket of shares in order for the Plaintiff to make any or any significant gain.”
11. The foregoing paragraph is followed by “Particulars,” set out under eighteen headings. These particulars repeatedly emphasise that the bond and related loan agreement constituted a single transaction. It was a combined “borrow to invest” product. Complaint is made of lack of explanation of features of the product by the Bank and allegations are made of conflict of interest and that the Bank stood to profit hugely from the transaction.
12. The core of the plaintiff’s complaint, insofar as it is claimed to have caused loss to the plaintiff, is, however, that the product was not a “suitable product to borrow money to invest in and that it was most unlikely that the bond would deliver any return sufficient to offset the cost of the loan transaction.”
13. For present purposes, we are not concerned with particulars given of alleged misrepresentation such as failure to explain the downside potential for investments or exaggeration of the reliability of past performance of the basket of shares, the use of pressurised and misleading selling techniques and the like. These may be relevant to the issue of liability. For the purposes of the hearing of a preliminary issue such as the present, it must be assumed that these allegations will be borne out at the hearing and that the liability of the Bank will be established.
14. One aspect of these particulars, however, calls for comment. The plaintiff alleges that the Bank placed some 79% of the sum invested straight back on interest-bearing deposit, which “conferred no benefit on the plaintiff but which generated at least .75% fees per annum for the Bank” calculated on the difference between the interest charged to the plaintiff and the interest earned on the deposit. It is then pleaded that at least 4% was paid in fees to the defendant. Finally, it is claimed that the Bank, without informing the plaintiff, used the remaining 17% of the sum borrowed to purchase an option to cover the “upside promise and pay further commissions,” adding that, had the plaintiff known of the “small cost of the upside promise,” it would immediately have been apparent to him that it was most unlikely that the bond would deliver any significant return. These particulars relate in part to a possible claim that the Bank improperly made undisclosed profits or earned fees at the plaintiff’s expense, which may relate to the fiduciary claim. For the rest, however, they are further particulars of the Bank’s alleged wrongful and misleading representations regarding the likely performance of the basket of shares.
15. At paragraph 18 of the statement of claim it is pleaded that, as a result of the matters complained of, the plaintiff “has suffered loss, damage, inconvenience and expense in the amount of the interest paid by him on the loan transaction.”
16. The relief claimed, insofar as it relates to the claim in tort, is “an order compelling the Defendant to repay to the Plaintiff all sums paid by the plaintiff to the defendant pursuant to the said terms” and general damages.
17. As matters turned out, it seems that the performance of the basket of shares over the term of the bond was insufficient to pay any of the loan interest. The plaintiff paid some €41,000 to the Bank by way of interest.
18. In parentheses, it should be noted that the plaintiff has introduced a plea of fraud in the reply, delivered subsequent to the judgment of the High Court. The Bank informed the Court that it objects to that plea being made. At any rate, the matter of that plea was not before the High Court and is not before this Court.
Proceedings to date
19. By order of the High Court dated 18 May 2011, it was provided that, if the Bank wished to have a determination as to whether the plaintiff’s claim was time barred, it should apply by way of notice of motion returnable for 20th July 2011. The notice of motion to that effect was duly issued and served. No order was made setting down the matter as an issue for preliminary determination pursuant to Order 25, rule 1 of the Rules of the Superior Courts or otherwise. Charleton J treated the matter as being a motion to dismiss the proceedings.
20. Charleton J delivered his judgment, [2011] IEHC 367, on 7th October 2011. “Ordinarily,” he stated, “on the plaintiff suffering damage, a cause of action in tort accrues.” Since the proceedings were issued more than six years after the plaintiff had entered into the transaction of which he complained his claim would be statute barred if he suffered damage at that time. He noted that, in Hegarty v O’Loughran [1990] 1 IR 148, it had been held by this Court that accrual of the cause of action in tort is complete from the date when the damage occurs. He cited the dictum of Lord Esher M.R. in Read v. Brown (1889) 22 Q.B.D. 128 at 131 on the question of when damage occurs, which is when the plaintiff can establish:
“…every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.”
21. The learned judge thought, however, that there was more scope for debate as to when damage is manifest in cases of economic torts. He continued:
“Each case is to be judged on the facts as to when the tort occurred, and whether damage resulted at that time or whether the wrong initiated a course of action that later resulted in a loss.”
22. He suggested that two questions might helpfully be addressed:
1) Firstly, would a claim initiated immediately upon the acquisition of the instrument, or supposed financial benefit, in question then succeed?
2) Secondly, whether the plaintiff suffered any immediate loss on entering into the transaction in question.
23. In considering the second question, he thought that market conditions might render the transaction more or less valuable over the passage of time, in which case the accrual of the cause of action might be regarded as contingent upon an event which might or might not happen in the future. That he described as a “delay and find out approach…”
24. The learned judge referred to Irish, English and Australian authority. He alluded to the difficulty in ascertaining the date of occurrence of loss or damage where a claim was based on alleged negligent financial advice. He was concerned at situations which were fluid in financial terms or where “one side of a contingency [is] capable of turning out negatively, in terms of financial result, as well as positively.” He expressed these difficulties vividly. Firstly, at paragraph 36:
“If, however, the contingency depends upon an investment or transaction being floated on a more volatile financial sea than the one which the investor wished to embark upon, then, it seems to me, the damage occurs when the plaintiff’s boat founders in rough waters.”
25. Returning to his metaphor at paragraph 41 he observed:
“There might be a loss in the future, but equally there might be a gain; the vessel of financial promise might founder on turbulent financial seas and it might enter a port of plenty.”
In his view, an “ immediate loss might be said to be suffered had the result been that Mr. Gallagher had something that was immediately worthless, or unambiguously worth less than that which had been held out to him, in consequences of the misrepresentation.”
26. He summed up the situation of the plaintiff as he saw it at paragraph 42:
“Manifestly, the transaction in purchasing the bonds entered the holders of the investment into a situation of market return that during the currency of the plaintiff holding the bond could turn out for better or for worse. On the purchase of the bond, therefore, the holders did not suffer an immediate loss but were left facing a contingent loss. The quantification of damages in such a case was not simply difficult, but it was impossible because no loss had then occurred and a buoyant performance over the lifetime of the bonds was possible. After all, it should be remembered that such an attractive prospect is why the plaintiff purchased the bonds and it is the basis, as well, on which the bank claims to have sold this ultimately disappointing financial product. Thus, if there was misrepresentation, the tort only became complete when a financial loss crystallised.” (emphasis added)
27. The underlined sentence contains the essence of the decision. The learned judge held that the plaintiff’s claim in tort was not statute barred.
The appeal: appellant’s submissions
28. The Bank says that, although there is not a single principle covering every case, the present case is within a category where time began to run at the date of the investment. There are many claims pending in the High Court, where identical complaints are made.
29. The Bank challenges the analysis of the High Court judge. It criticises, in particular, his suggestion that a financial loss must crystallise or the period of an investment must terminate before a party can allege that damage has occurred in tort. The plaintiff does not complain of any mismanagement of his investment. Rather he claims that the investment was inappropriate and unsuitable and ought never to have been offered to investors at all.
30. The consequence of this analysis, in the case of a lengthy investment period, would be that the six year period would run from the end of the investment and that, conversely, disappointed investors would be unable to initiate proceedings until after the end of the term, except where the investment was, to quote him, “immediately worthless, or unambiguously worth less than” had been represented.
31. Furthermore, there would be a sharp difference between the limitation periods for claims in contract and in tort. The limitation period in contract would, in some cases, have expired before the tort claim had even accrued.
32. The Bank submits that the kernel of the plaintiff’s case is expressed in paragraph 16 of the statement of claim, quoted at paragraph above. In short, the Solid World Bond was a “borrow to invest product,” which made it wholly unsuitable for the Plaintiff or indeed any investor. The plaintiff’s complaints all relate to inherent features of the bond. No complaint is made with regard to the management of the investments or that the Bank departed from the investment strategy as originally outlined to him.
33. The Bank, in the absence of any Irish authority directly in point, relied on a range of English decisions, in particular: Forster v. Outred [1982] 1 WLR 86; DW Moore & Co. v. Ferrier [1988] 1 WLR 267; Iron Trade Mutual Insurance Co. v. Buckenham [1990] 1 All ER 808; Bell v. Peter Browne & Co. [1990] 2 QB 495; Knapp v. Ecclesiastical Insurance Group plc [1998] PNLR 172; Nykredit Mortgage Bank plc v Edward Erdman Group Ltd. (No. 2) [1997] 1 WLR 1627; Martin v. Britannia Life Ltd. [2000] Lloyd’s Rep. P.N. 412; Law Society v. Sephton [2006] 2 AC 543; Shore v. Sedgwick Financial Services Ltd. [2008] PNLR 37; AXA Insurance v. Akther & Darby [2010] 1 WLR 1662; Pegasus Management Holdings v. Ernst & Young [2010] 3 All ER 297. There was much discussion of the apparent divergence between the decision of the High Court of Australia in Wardley Australia Limited v. State of Western Australia (1992) 175 CLR 514 and the general trend in the English cases, although the House of Lords sought to reconcile them. The English cases stood broadly for the proposition that once a party relies on advice to his detriment by entering into a transaction whereby he fails to get that to which he was entitled, the cause of action is complete, notwithstanding the fact that quantification of the loss might be difficult.
34. The Bank says that the learned trial judge confused the question of whether the plaintiff could be said to have suffered loss from the time he made the investment in 2003 with questions of quantification of the loss, whereas, on the authorities, it is not necessary to be able to quantify the loss for the purpose of showing that the cause of action has accrued. The Bank encapsulated its submissions in the following seven general propositions:
1. While it is recognised that time runs differently in contract and tort cases, the policy of the law should be to minimise rather than to expand that disparity;
2. Equally, the policy of the law should be to advance rather than to retard the accrual of a cause of action;
3. A clear distinction has been recognised between cases where the plaintiff complains of being exposed to a contingent liability, which may or may not result in actual liability and “transaction” cases where the value of what has been acquired has been diminished by the negligence of the defendant;
4. Where the “bundle of rights” acquired in the transaction does not correspond with what the plaintiff ought to have acquired, then prima facie, time begins to run at that point;
5. Where an investor enters into a riskier investment than he would otherwise have done by reason of the negligence of a financial adviser, as a general rule time will start to run at that point, i.e., the time of entering into the transaction;
6. Difficulties of assessment do not imply that time has not begun to run;
7. If, in a claim for damages for breach of contract brought immediately after the transaction, more than nominal damages would be awarded, it would appear to follow that there is damage sufficient to start time running.
The Appeal: respondent’s submissions
35. The plaintiff confirms that his claim is that he would never have entered into the transaction had the Bank not been negligent as is alleged. However, he cannot maintain an action for damages against the Bank unless he has suffered damage and, he claims, there is no evidence whatsoever of damage having been suffered by the Plaintiff prior to the maturity of the investment. The Bank, on the other hand, contends that the Plaintiff would have had a completed cause of action when he entered into the loan and investment transactions even if he might appear to be substantially better off at any point during or at the conclusion of the transaction.
36. The investment made by the plaintiff was absolutely fixed in its duration and its nature. There was no management and no withdrawal or encashment was permitted during the investment period. The plaintiff describes the transaction as a simple bet on what the value of the shares would be at the end o the term.
37. Assessment of the date of accrual of the cause of action should be “fact specific.” There were times, during the life of the Solid World Bond, when the return on the bond exceeded the interest paid by the plaintiff on the loan. At such times, the plaintiff could not be said to have a complete cause of action. The plaintiff does not accept the Bank’s seven general propositions.
38. The plaintiff relied on the English decisions in UBAF Ltd v European American Banking Corporation [1984] Q.B. 713, per Ackner L.J. and First National Commercial Bank plc v. Humberts [1995] EWCA Civ J0113-9. Both were cases in which a bank claimed to have suffered loss by lending on security which, as a result of the negligence of the defendant, turned out to be less valuable than it should have been. In these cases, unlike all those cited by the Bank (except Sephton) the cause of action was held not to be statute-barred.
Discussion of the issues
39. Section 11(1)(a) of The Statute of Limitations, 1957 lays down a limitation period of six years for the bringing of any action, inter alia, “founded on simple contract.”
40. Section 11(2)(a) of the Act of 1957, as amended by section 3(2) of the Statute of Limitations (Amendment) Act, 1991, provides:
“(a) Subject to paragraph (c) of this subsection and to section 3(1) of the Statute of Limitations (Amendment) Act, 1991, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”
41. The amendment of 1991 provides that the limitation period is to run from the date of knowledge of the plaintiff rather than accrual of the cause of action but only for personal-injury claims. The present appeal turns on the question of when the plaintiff’s cause of action accrued. While the Act of 1957 lays down some rules for the accrual of causes of action in cases of actions to recover land (see sections 14 to 18), it leaves it to the common law so far as actions in tort are concerned to provide for the date of accrual. In the case of torts actionable without proof of special damage, the cause of action accrues when the wrongful act is committed. The tort of negligence is not actionable in the absence of proof of actual damage. The debate in the present case revolves round when the plaintiff, on analysis of his pleadings, suffered damage.
42. The courts have had to consider accrual of causes of action in negligence in the case of three broad categories of damage or loss: personal injury; damage to physical objects, typically in cases of building and engineering works; financial loss. In respect of the first category, the Act of 1957 has been amended to remove the injustice caused to plaintiffs who were unaware that they had suffered injury until the limitation period had expired. It is notable that no such amelioration of the strict rule has been applied in our law to the second or third categories of loss. The second category has been addressed in our case-law, discussed below, after a period of some uncertainty. For the sake of completeness, it should be noted that s. 7 of the Liability for Defective Products Act, 1991 applies a reasonable discoverability test in the case of actions in relation to defective products. The third category has caused the most difficulty. The Bank has been driven, in the absence of direct authority from our own courts, to cite a large body of English law, and one decision of the High Court of Australia.
The Irish case-law
43. It is, nonetheless, most appropriate, in my view, to start from a consideration of decisions of our own courts.
44. Hegarty v O’Loughran [1990] 1 IR 148 was a case of alleged medical negligence. This Court was asked to interpret s. 11(2)(b) of the Act of 1957 as it stood before amendment in 1991. Thus, the three-year time-limit applicable to all cases, including person injury, was to run from the date when “the cause of action accrued.” The central issue in the case was whether the plaintiff’s cause of action could have accrued before she was aware that she had one. The plaintiff submitted that such a cause of action accrued when a reasonable man exercising reasonable care and diligence could have discovered the “manifestation of the damage.” Finlay C.J. summarised, at page 152, the three alternatives which had been debated as follows:
“The first was a construction whereby the cause of action would be deemed to have accrued when the wrongful act was committed. The second was that the cause of action would be deemed to have accrued at the time when, a wrongful act having been committed, it was followed by damage which, it was submitted on behalf of the defendants, in the case of personal injury, was the time when that personal injury manifested itself.
The third interpretation was that for which the plaintiff necessarily contended, namely, that the cause of action only accrued when the injured party not only had suffered the committing of a wrongful act but had also suffered damage and could, by the exercise of reasonable diligence, in addition have discovered that such damage was caused by the wrongful act complained of.”
45. The Chief Justice rule out the first proposition, namely that time could run from the date when the wrongful act occurred, at page 153, because:
“A tort is not completed until such time as damage has been caused by a wrong, a wrong which does not cause damage not being actionable in the context with which we are dealing. It must necessarily follow that a cause of action in tort has not accrued until at least such time as the two necessary component parts of the tort have occurred, namely, the wrong and the damage.”
46. Finlay C.J. next addressed the third question, namely whether the accrual of the cause of action was postponed until a time when the plaintiff could, with reasonable diligence have discovered the damage. The decision of Carroll J in Morgan v Park Developments [1983] I.L.R.M. had the effect that the accrual of the cause of action was postponed “beyond the manifestation of the damage to the discovery of the causation, when this was later.” The Chief Justice referred with approval to the judgment of Evershed M.R. in Cartledge v. E.F. Jopling & Sons [1963] A.C. 758. Dealing with the corresponding English limitation provision , the Master of the Rolls commented that any such postponement would “necessarily require the insertion of some words qualifying the statutory formula.” (page 774 of the report). The Chief Justice came to a similar conclusion regarding section 11 of the Act of 1957. The section was not, he held, open, for the purpose of adopting an interpretation compatible with the Constitution pursuant to the double-construction rule, to two alternative constructions, one of which would have involved adopting a “reasonable discoverability” test. He reserved any question of whether the provision was compatible with the Constitution for consideration when there was a case where the issue arose. Having thus eliminated the first and third propositions, he chose the second in the following terms:
“I would, therefore, conclude that the proper construction of this sub-section is that contended for on behalf of the defendants and that it is that the time limit commenced to run at the time when a provable personal injury, capable of attracting compensation, occurred to the plaintiff which was the completion of the tort alleged to be committed against her.” (emphasis added)
47. It will be noted that the Chief Justice did not, in this passage, express himself in terms of when the damage “manifested” itself, which was how the defendant had expressed it in the second of the three alternative propositions. He spoke of a “provable personal injury, capable of attracting compensation.” McCarthy J, in his concurring judgment, expressed the view that the defendant had made a concession by referring to “manifestation of damage.” As McCarthy J also said, any “alleged distinction …between damage to property and personal injuries” was unfounded.
48. The principle established by Hegarty is that the cause of action in the tort of negligence is complete and the cause of action accrues when damage occurs. Finlay C. J., in using the term “provable,” was not importing any requirement of knowledge. It may be significant that, earlier in the judgment, he had, like Charleton J in the present case, cited the dictum of Lord Esher M.R. in Read v Brown referring to “every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court.” Nonetheless, the solution adopted in Hegarty is not necessarily so clear as to be capable of simple and obvious application in every case, above all in cases of financial loss.
49. Hegarty itself was a case where the plaintiff claimed that each of two defendants had negligently performed operations on her nose. The first defendant had carried out an operation of septal resection to treat an airway blockage in her nose and the plaintiff claimed that, due to negligence, the resection later collapsed. Barron J had decided that the cause of action accrued when the act causing the damage had been committed. As we have seen, Finlay C.J. rejected that approach. Nonetheless, in the case of surgical negligence cases at least, there must be a real question as to whether damage of some sort has been caused at the time of the operation, even though the consequences do not become apparent until later. Griffin J, in his concurring judgment mentioned some practical aspects at page 158:
“In personal injury cases the time at which the wrongful act is committed and the time at which the damage occurs will very frequently coincide. For example, where a person involved in a motor accident, or an employee who falls from a scaffold or becomes entangled in a machine in a factory, sustains injuries such as fractured limbs, head injuries, severe lacerations, extensive bruising and the like, it will be apparent that damage has been caused to such person by the wrongful act at the time of its commission, and time will begin to run from that date.
“There have, however, been many cases in which persons involved in violent accidents have escaped apparently unscathed, or at worst with only such trivial injuries as would not warrant an award of compensation. Nevertheless several months, or even years, later such persons have become gravely ill from a condition which was attributable to the particular accident. Likewise, there have been instances in which persons involved in trivial accidents, in which they sustained no apparent injury, later exhibited symptoms of serious injury such as brain damage. Again, there have been cases in which a foreign body was negligently left in a patient after an operation, and the patient had been totally oblivious of its presence for a considerable time before suffering any ill-effects from it. In cases such as these, if time were to run from the date of the occurrence of the wrongful act, the period of limitation of three years might very well expire before there is any manifestation of the damage suffered in consequence of the wrongful act. However, in s. 11, sub-s. 2 (b) of the Act of 1957, time is not expressed to run from the date of the occurrence of the wrongful act and should not in my view be interpreted as if it was. The relevant date under the subsection is the date on which the cause of action accrues. Until and unless the plaintiff is in a position to establish by evidence that damage has been caused to him, his cause of action is not complete and the period of limitation fixed by that sub-section does not commence to run.
50. The date of accrual, in this passage, is the date when the plaintiff is in a position to establish by evidence that he has suffered damage. At least to some extent, the test, thus expressed, renders less certain the distinction between the date of commission of the wrongful act and the occurrence of damage.
51. Both Finlay C.J. and McCarthy J cited the decision of the House of Lords in Pirelli General Cable Works v Faber [1983] 2 A.C. 1. That case concerned the accrual of the cause of action where the claim was made against a firm of consulting engineers for negligence in the design of a factory chimney, the negligence consisting in the use of an unsuitable material. The work was completed in June or July 1969; not later than April 1970 cracks developed at the top of the chimney; it was found that the plaintiffs could not, with reasonable diligence, have discovered the damage prior to October 1972; they discovered it in fact in November1977 and issued proceedings in October1978. The decision of the House of Lords, applying Cartledge v. E.F. Jopling & Sons, cited above, as stated in the headnote was that:
“…the date of accrual of a cause of action in tort for damage caused by the negligent design or construction of a building was the date when the damage came into existence, and not the date when the damage was discovered or should with reasonable diligence have been discovered, that the plaintiffs’ cause of action therefore accrued not later than April 1970, when the cracks occurred in the chimney, and that since that date was more than six years before the issue of the writ, the claim was statute barred…”
52. The House drew a distinction between a defect which might give rise to damages and the actual damage caused by the defect. Lord Fraser of Tullybelton, in a passage referred to by McCarthy J in Hegarty (at page 161) said at page 14:
“It seems to me that, except perhaps where the advice of an architect or consulting engineer leads to the erection of a building which is so defective as to be doomed from the start, the cause of action accrues only when physical damage occurs to the building. In the present case that was April 1970 when, as found by the judge, cracks must have occurred at the top of the chimney, even though that was before the date of discoverability.”
53. Tuohy v Courtney [1994] 3 I.R. 1 concerned an action for professional negligence against a solicitor in handling a purchase of a dwelling house. The plaintiff believed he was buying a 99-year lease with the right to acquire the fee simple. In fact, he got a lease with 41 years to run and no right to acquire the fee simple. The true extent of the limited title he had acquired did not become apparent to the plaintiff until he went to sell the house. By then, six years had run from the date of the original purchase. The reported decision concerns the plaintiff’s unsuccessful challenge to the constitutionality of s.11(2)(a) of the Act of 1957, the provision with which this case is concerned. The plaintiff’s claim was governed by the judgment in Hegarty v O’Loughran, which had been delivered on 8th February 1990. Blayney J, whose decision is not reported (but mentioned at page 2 of the report in the constitutional action), held on 9th April 1991, that the claim was statute-barred. Lynch J held, for the purposes of the constitutional action, that the solicitor had been negligent (see page 21).
54. The decision of this Court in Tuohy v Courtney necessarily related only to the question of the compatibility of s. 11(2)(a) of the Act of 1957 with the Constitution. Nevertheless, the judgment of the Court contains observations concerning the effects of limitation periods which may assist in the interpretation of that provision. Firstly, at page 45 of the judgment of Finlay C.J., the Court recognised the constitutionally protected status of the right to litigate:
“Interpreting the right to litigate in the case of a plaintiff at least, as the right to achieve by action in the courts the appropriate remedy upon proof of an actionable wrong causing damage or loss as recognised by law, this Court would accept both this analysis of the right which the plaintiff claims to have been invaded and the fact that it must constitute an unenumerated personal constitutional right.”
55. Secondly, at page 47, Finlay C.J.recognised, at a practical level, though without propounding any interpretative rule, the potential for injustice in the operation of limitation periods:
“It cannot be disputed that a person whose right to seek a legal remedy for wrong is barred by a statutory time limit before he, without fault or neglect on his part, becomes aware of the existence of that right has suffered a severe apparent injustice and would be entitled reasonably to entertain a major sense of grievance.”
56. This passage was written in the knowledge that the Court had already held, in Hegarty v O’Loughran, that the double-construction rule did not require that the section be interpreted so as to cause the time to run only from the date the plaintiff acquired knowledge of the damage. Nonetheless, it acknowledges the potential for injustice arising from strict interpretation of the limitation period. In the result, Irish law does not allow the accrual of a cause of action in tort to be postponed so that a limitation period will not run against an injured party until the existence of the cause of action can reasonably be discovered except in two cases specifically covered by statute. This is so even though the Law Reform Commission has made relevant recommendations on the subject. No issue of discoverability arises on the facts of this case.
57. The only Irish decision to date on the question of accrual of a cause of action in negligence where financial loss is claimed is that of Irvine J in Darby v. Shanley t/a Oliver Shanley & Co. Solicitors [2009] IEHC 459.
58. Before moving to consider the many English decisions on financial loss, I believe that it is important to bear in mind the change in the law in that jurisdiction which has not been followed in this. In Hegarty v O’Loughran, Finlay C.J. remarked on the trenchant criticism in Cartledge of a state of the law where a plaintiff might, by virtue of the application of a limitation period, lose his right to be compensated for a wrong even before he realised he had a claim. Lord Diplock in Pirelli thought that the law as it then was “was a matter of no pride.” (page 19). In the event, the (English) Latent Damage Act, 1986 introduced a new section 14A into the Limitation Act, 1980 mitigating the severity of the existing law by providing for an alternative three-year time limit running from the date of knowledge. No corresponding provision exists in our law, except in cases of personal injury and liability for defective products. In one phase in the English cases, as we have seen from Cartledge and Pirelli, the courts deplored the injustice of the existing law. In a second group of cases, decided after the legislative change, some courts regretted that the facts had occurred prior to the change in the law and that the plaintiff might have had a remedy. After the change had taken effect, it was possible to remedy any injustice and courts may have been content to adopt a strict interpretation. Judges have repeatedly stated that the entire question of accrual of the cause of action in tort incases of financial loss is “troublesome.” (See, for example, Lord Hoffmann in Sephton at page 548, citing Nicholls L.J. in Bell v Peter Browne & co).
English cases on accrual of cause of action in financial-loss cases
59. The first in time of the large number of English cases to which we were referred, and it was the Bank that principally relied upon them, is the decision of the Court of Appeal in Forster v Outred [1982] 1 W.L.R. 87. That decision is either applied or discussed to some degree in all the subsequent cases. Lord Hoffmann, in his speech in Law Society v. Sephton in 2006, to be discussed later, thought it unnecessary to “go back further.” The High Court of Australia gave it particular consideration in Wardley, cited above. Forster is, therefore, an important point of reference. It is particularly so because of the significance of its treatment of uncertain or contingent future events.
60. The case came before the court on a preliminary issue. The relevant facts considered by the court were those pleaded in the statement of claim. The plaintiff owned a farm, which she mortgaged in 1973 in favour of a mortgage lender to secure the debts of her “unfortunately improvident son.” She pleaded that she did so in the belief that the mortgage was to provide only temporary security for a bridging loan from the lender to enable her son to purchase an hotel. In fact, no long-term mortgage had been arranged and she executed a mortgage covering all present and future liabilities of her son. The plaintiff complained that her solicitors had not explained any of these matters to her. In fact, the hotel venture was a failure and the son went bankrupt. The plaintiff became liable on the mortgage and, on being pursued by the mortgage lender, discharged the son’s liabilities in August 1975.
61. The plaintiff commenced proceedings against the solicitors originally in 1977 but, for complex procedural reasons which it is not necessary to explain, the reference date was that of new proceedings issue in January 1980 and that was outside the limitation period, on the assumption that her cause of action accrued on her execution of the deed. On the other hand, it was within time, if the cause of action accrued either when demand was made on her to pay her son’s debts in 1974 or when she actually paid in 1975.
62. The plaintiff contended that the claim was not statute-barred. The answer depended on when the plaintiff first suffered damage. The cause of action did not accrue, she claimed, until she suffered damage which was at the earliest when demand was made. The defendant submitted that she suffered damage on the execution of the mortgage, because she then encumbered her freehold interest in her property and subjected herself to liability to discharge her son’s debts. The freehold was then encumbered with a charge and its value was reduced. Stephenson L.J. delivered a judgment with which Dunn L.J. and Sir Richard Cairns agreed. He records a submission made by defendant’s counsel, which has been cited and analysed in several of the subsequent cases. It offered the following definition of actual damage:
“…… it is any detriment, liability or loss capable of assessment in money terms and it includes liabilities which may arise on a contingency, particularly a contingency over which the plaintiff has no control; things like loss of earning capacity, loss of a chance or bargain, loss of profit, losses incurred from onerous provisions or covenants in leases.”
63. This very broad definition covers both contingent or uncertain future loss and contingent liability. It was later questioned by Lord Hoffmann, at page 549, in Sephton insofar as it extended to “liabilities which may arise on a contingency.” Otherwise, it has remained intact in England. Stephenson L.J. applied counsel’s definition and held that the plaintiff had suffered actual damage by entering into a mortgage deed which encumbered her interest in her freehold estate and subjected her to a liability which might, according to matters completely outside her control “mature into financial loss.”
64. Forster v Outred was followed or, as the headnotes say, “applied” in two subsequent solicitor’s negligence cases. DW Moore & Co. v. Ferrier [1988] 1 WLR 267 concerned a company which had taken in a new shareholder and director. It and its other directors instructed their solicitor to prepare a contract which would restrict the director, if he left the company, from engaging in competing business in a specified area for a specified time. The clause was defectively drafted and completely ineffective. The director left the company; he set up in competition and could not be stopped. In an action for damages against the solicitor, the question arose as to whether the cause of action accrued when the original contract was signed or when the director set up in competition. The Court of Appeal held that the damage occurred at the time of executing the agreements. That was when the company and its directors received a worthless covenant rather than a valuable chose in action. It is tempting to remark on the difficulty for the company or the other directors in initiating litigation against the solicitor immediately after the new director had joined the firm. Neill L.J. said that, if an action had been brought at that time or shortly after, “the actual assessment of damages would have depended on the likely future attitude of [the new director].” However, “the imponderables which future behaviour presented relates to the quantification of damages and not to the existence of the cause of action.”
65. Bingham L.J. took the same view, at page 279:
“It seems to me clear beyond argument that from the moment of executing each agreement the plaintiffs suffered damage because instead of receiving a potentially valuable chose in action they received one which was valueless……
“If the quantification of the plaintiffs’ damage had fallen to be considered shortly after the execution of either agreement, problems of assessment would undoubtedly have arisen…. In making his assessment the judge would have had to attach a money value to a possible future contingency; but judges do this every day in awarding claimants damages for the risk of epilepsy, the risk of osteoarthritis, the risk of possible future operations, the risk of losing a job and so on. The valuation exercise is, of course, different, but the difference is one of subject matter, not of kind.”
66. Bell v. Peter Browne & Co. [1990] 2 QB 495 also arose from a solicitor’s negligence. In the context of divorce proceedings, it was agreed that the family home would be transferred into the wife’s name with the husband’s one-sixth interest in the equity to be paid to him, if the wife were to sell it in the future. The solicitors failed to take any steps to protect this interest of the husband. The wife sold the house some eight years later but failed to account to him for his share. The husband’s cause of action against the solicitors was held to have accrued when the husband executed the transfer and not when the wife later sold the house. Nicholls L.J., at page 502, reiterated that “a cause of action based on negligence does not accrue until damage is suffered,” observing that the question of damage and the limitation period in tort had been a “troublesome” one. He held that “the uncertainty surrounding [the wife’s] future intentions [went] only to the quantum of the loss of the plaintiff sustained when the transfer was executed without him having the same degree of protection as would be provided by a formal document.” He reached this conclusion “with reluctance” (see page 504). He drew attention to different rules which would have applied if the then recently passed Latent Damage Act, 1986 had applied to the case, acknowledging that this was “cold comfort to the plaintiff.”
67. The English courts applied the principles derived from Forster v Outred in two cases (Iron Trade Mutual Insurance Co. v. Buckenham [1990] 1 All ER 808; Knapp v. Ecclesiastical Insurance Group plc [1998] PNLR 172) where it was claimed that insurance brokers had negligently failed to make full disclosure to insurers (in one case a reinsurer) when proposing for insurance policies, with the consequence that the insurer could avoid the policies. Damage was held to have accrued when the insurance contract was executed, not when it was avoided. The reasoning was that the plaintiff had not obtained a valid and effective insurance policy but only one which was voidable. Hobhouse L.J., in his judgment in Knapp v. Ecclesiastical Insurance Group plc disposed of the problem of the uncertainty or contingency of the insured’s situation by, echoing Bingham L.J. in Moore v Ferrier. He explained that:
“The fact that how serious the consequences of the negligence would be depended upon subsequent events and contingencies does not alter this; such considerations go to the quantification of the Plaintiff’s loss not to whether they have suffered loss.”
68. There are then the two decisions, cited by the plaintiff, where the result went the other way. In UBAF Ltd v European American Banking Corporation [1984] 1 Q.B. 713, the plaintiff bank agreed to the proposal of the defendant, an American bank, to take a participation in two loans to Panamanian companies on what they claimed were representations that the investment would be sound and profitable. The Panamanian companies failed and the plaintiff suffered loss. The claim against the American bank was brought more than six years after the grant of the loans and the defendant argued that the claim was statute–barred. Ackner L.J. did not accept that the plaintiff had suffered damage at the moment of entering the loan contract. It was possible that the value of the chose of action they had acquired had been not less than the amount they had lent. Evidence would be required to establish whether the case of action accrued at the time of the loan.
69. The second of these cases is First National Commercial Bank plc v. Humberts. The Court of Appeal held that a claim by a bank that a firm of valuers had negligently overvalued a property investment which they financed by their lending was not statute-barred. The developer became insolvent and the bank lost money because the security was insufficient. Saville L.J., for a unanimous court, held that the case had to be considered as one where the bank, but for the negligent over-valuation, would not have entered into the transaction. His summary of the accrual of the cause of action in tort differs from some of the later cases. He said at page 676:
“It is the law that a cause of action for the tort of negligence only arises when there has been a breach of duty resulting in actual (as opposed to potential or prospective) loss or damage of a kind recognised by the law.” (emphasis added)
70. He distinguished Forster v Outred, Iron Trade Mutual Insurance Co. v. Buckenham and Bell v. Peter Browne & Co. as cases where the plaintiff then and there suffered loss “on the basis that if the injured party had been put in the position he would have occupied but for the breach of duty, the transaction in question would have provided greater rights, or imposed lesser liabilities or obligations than was the case…” (see page 679).
71. Before referring to the more recent English cases, it is appropriate to take particular note of the somewhat more sceptical approach adopted by the High Court of Australia, particularly to Forster v Outred, in Wardley Australia Limited v. State of Western Australia, cited above, and also because it received strong approval in the subsequent English cases. Wardley concerned a claim made by the State of Western Australia alleging misleading and deceptive conduct against a merchant bank. The State alleged that, based on false representations made by the merchant bank, it had granted an indemnity to another bank against loss on a facility granted by the bank to a company called Rothwells. The false representations related to the assets and financial condition of Rothwells. The indemnity was given in 1987. The State was required to pay pursuant to the indemnity when the company failed to meet its obligations under the facility. The relevant claim against the merchant bank was made in 1991, outside the three-year statutory limitation period.
72. The question of law was whether the State’s cause of action accrued when it executed the indemnity, as was held by the first-instance judge, or whether, the indemnity created an executory or contingent obligation, which crystallised only when the bank called on the State to indemnify it, as was held by the Federal Court and as was upheld on appeal by the High Court of Australia. That Court held, at page 524, that the indemnity “created a liability on the part of [the State] to the Bank to make payment if and when the Bank’s relevant “net loss” was ascertained and quantified.” The majority judgment, delivered by Mason C.J., Dawson, Gaudron and McHugh JJ, was described by Lord Hoffmann in Sephton as a “masterly exposition of the law.” The court accepted the authority of Forster v Outred, as being “explicable by reference to the immediate effect of the execution of the mortgage on the plaintiff’s equity of redemption…” (page 529). In a passage expressly approved by Lord Hoffmann in Sephton, the court observed at page 531:
“It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry into an agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is a loss upon a contingency. For our part, we doubt that the decisions travel so far. Rather, it seems to us, the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date ((36) Forster v. Outred and Co. and D.W. Moore and Co. v. Ferrier illustrate the point.).”
73. Brennan J adverted to the range of different circumstances in which financial loss might occur. He emphasised the difference between the measure of damages in contract and in tort, by saying, at page 535, that question was “not how much worse off is the State than it would have been had the alleged misrepresentation been true, but how much worse off is the State than it would have been had it not relied on the alleged misrepresentation and entered into the transaction.” In a passage, at pages 536 to 537, quoted in two subsequent English cases, he said:
“A plaintiff may suffer economic loss or damage in a number of ways: by payment of money, by transfer of property, by diminution in the value of an asset or by the incurring of a liability. Whether loss or damage is actually suffered when any of those events occurs depends on the value of the benefit, if any, acquired by the plaintiff by paying the money, transferring the property, having the value of the asset diminished or incurring the liability. If the plaintiff acquires no benefit, the loss or damage is suffered when the event occurs. At that time, the plaintiff’s net worth is reduced. And that is so even if the quantification of that loss or damage is not then ascertainable. But if a benefit is acquired by the plaintiff, it may not be possible to ascertain whether loss or damage has been suffered at the time when the burden is borne – that is, at the time of the payment, the transfer, the diminution in value of the asset or the incurring of the liability. A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If the balance cannot be struck until certain events occur, no loss is suffered until those events occur…… The quantification of the diminution in value of an asset or of a liability incurred or the value of any benefit acquired may not be ascertainable at the time when the burden of the transaction is borne. In that event, the suffering of any loss cannot be said to occur before it is reasonably ascertainable (not before it is ascertained) that the burdens which the plaintiff has borne are greater than the value of the benefits that the plaintiff has acquired or will acquire. In other words, no loss is suffered until it is reasonably ascertainable that, by bearing the burdens, the plaintiff is “worse off than if he had not entered into the transaction”.”
74. The decision of the House of Lords, particularly the speech of Lord Nicholls, in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd. (No. 2) [1997] 1 WLR 1627 was in part relied on by both parties on the appeal. The Bank cited it for the two very general policy-based propositions that, firstly, the policy of the law should be, “within the bounds of sense and reasonableness……to advance rather than retard, the accrual of a causes of action,” and, secondly, that the disparity between parallel causes of action in contract and tort should be smaller rather than greater. (see page 1633).
75. The case before the House related to interest on damages which flowed from the liability of valuers for negligent valuation of properties leading a mortgage lender to lend on a false assumption as to the value of its security. In that sense the question of when the cause of action accrued was relevant, and this led Lord Nicholls to embark on a discussion, during which he cited the statement of Brennan J in Wardley, of cases in which, on the one hand, the lender suffered loss as soon as he parted with his money and, on the other, there was no certainty that he would suffer any loss. “The moment at which the comparison (between the position of the lender’s position if the defendant had not been negligent and his actual position) will,” he thought, “depend on the facts of each case.” While he left room for the possibility that, in some cases, the borrower’s covenant might have value, “and until there is default the lender may presently sustain no loss even though the security is less than the amount of the loan,” Lord Nicholls stressed at page 1632:
“But the difficulties of assessment at the earlier stage do not seem to me to lead to the conclusion that at the earlier stage the lender has suffered no measurable loss and has no cause of action, and that it is only when the assessment becomes more straightforward or final that loss first arises and with it the cause of action.”
Lord Nicholls believed that “for the cause of action to arise only when the lender realises his security would be a highly unattractive proposition.” The complexities of Nykredit arise from the context of multiple uncertainties in mortgage lending transactions. The valuer might negligently overvalue the security, but it might still be enough to pay off the loan; alternatively, the borrower might have other property. In some cases, the cause of action accrues with the loan; in cases of greater uncertainty, its accrual may be postponed. This decision clearly gives rise to great uncertainty. Although Lord Nicholls referred to the judgment of Savill L.J. in First National Commercial Bank plc v. Humberts, he did not advert to the notable difference of emphasis.
76. The type of loss at issue in Law Society v. Sephton, cited above, was similar to that in Wardley. The Law Society sued a firm of accountants for its negligent audit of the accounts of a solicitor for the purpose of the annual report to the Law Society. The solicitor had in fact misappropriated large sums from his client account. The Society was compelled to make payments out of its compensation fund to clients of the solicitor. The Society’s claim against the accountants would be statute-barred, if its cause of action accrued from the date of receipt of the relevant accountant’s report, but not if it accrued when the compensation claims were made. The House of Lords held, as set out in the headnote at page 543, that “a contingent liability, such as the obligation to pay money in the future, was not in itself damage until the contingency occurred.”
77. Lord Hoffmann, having expressed complete agreement with the dictum quoted above from the majority judgment in Wardley, considered that, under the rules of the compensation fund, the solicitor’s “misappropriations gave rise to the possibility of a liability to pay a grant out of the fund, contingent upon the misappropriation not being otherwise made good and a claim in proper form being made.” On those facts, “until a claim was actually made, no loss or damage had been sustained by the fund.” Thus, no cause of action had accrued. Lord Hoffmann placed cases of contingent liability in a category of their own, as distinct from Forster v Outred where the value of the plaintiff’s property was immediately reduced. In Sephton, there was no damage until the contingent event occurred.
78. Lord Hoffmann sought to reconcile the other cases as well as Wardley, by making a distinction between two types of case. The first was where the measure of damage was, as he said at page 551, “the extent to which the lender is worse off than he would have been if he had not entered into the transaction.” In those cases, following Brennan J, he thought the plaintiff suffered loss “only when it is possible to say that he is on balance worse off.” The other class of case was where “the liability [was] for the difference between what the plaintiff got and what he would have got if the defendant had done what he was supposed to have done.” He placed DW Moore & Co. v. Ferrier and Knapp v. Ecclesiastical Insurance Group plc in this category and thought it would be relatively easy to say that the plaintiff had suffered some immediate damage.
79. Lord Walker of Gestingthorpe and Lord Mance agreed in the result. Lord Mance, having noted that, in Forster v Outred the plaintiff claimed that she would never have entered the transaction at all but for the solicitor’s negligence, stated at page 565:
“However, while a defendant’s failure to preserve or protect a particular asset by proper performance of his duty in relation to a particular transaction may readily be seen to have caused measurable loss, negligence causing a claimant to enter into a transaction which he would not otherwise have entered may not immediately, or indeed ever, cause measurable loss to any particular asset.”
80. Each of the three speeches in Sephton make reference to differences between cases where the measure of loss is the difference between what the plaintiff would have obtained if the defendant had not been negligent and what he obtained in fact, on the one hand, and those where the plaintiff’s actual position is measured against what it would have been if he had never entered into the transaction. Lord Walker referred to the first category as “transaction cases.” Sephton does not appear, however, to establish any principle of law save to the effect that in pure-contingency cases, the cause of action does not accrue until the contingency arises. At most, Sephton may establish that, in the first case, it may be “relatively easy” to show (Lord Hoffmann) or one may “readily” show (Lord Mance) immediate loss, whereas, in the second case, no loss may ever be suffered. These, it seems to me, are mere matters of practical likelihood rather than of principle. Insofar as DW Moore & Co. v. Ferrier is placed in the first category, it might equally be said that there was no certainty that the director would ever leave the firm or set up in competition. The same analysis could be applied to the insurance cases: the insurer might never have sought to avoid the policy. I cannot see that the cases are susceptible of any such neat categorisation.
81. Lord Mance laid particular emphasis, at page 568, on the fact that there had been no change in the Law Society’s legal position until a claim was made. He also considered that it was not possible, until after a claim was received, to know which clients of the solicitor might suffer what loss and be able to justify a grant out of the fund. The authorities, to which he referred, showed that a cause of action accrued in the event of a contingent liability provided that there was an associated change in legal position or diminution in value of an asset. In such cases, he remarked that the authorities took “a clear-cut, though perhaps rather strict view.” It is interesting that he saw reason to observe that the House had “not been asked to review such authorities…” In sum, he saw “no reason to add to the strictness of the English legal position by treating the claimant as having suffered measurable loss before the contingency materialised.”
82. The difficulties in discerning a clear principle from these cases were compounded by the extra step taken by the Court of Appeal in England in Shore v. Sedgwick Financial Services Ltd. [2008] PNLR 37. The plaintiff was the managing director of a substantial company and entitled to valuable benefits under its occupational pension scheme. He was approaching retirement. When the company was being taken over, he obtained financial advice from the defendants. On their advice, in 1997 he transferred his then very valuable accrued benefits in the occupational scheme, under which his benefits would have been guaranteed, to a personal income withdrawal plan, which was more risky. He discovered, in particular in 2004, that the benefits under the new scheme were very substantially less than he had expected. Proceedings against the defendant advisers were issued in 2005. The question, according to Dyson L.J., who gave judgment on behalf of a unanimous Court of Appeal, was whether the plaintiff suffered damage as soon as he gave up his rights under the occupational pension scheme and transferred to the income withdrawal plan.
83. Shore illustrates the different approaches to damage, particularly whether risk of damage suffices, which were considered by Charleton J in the present case. It has established the soubriquet, “Shore loss.”
84. Dyson L.J. referred to Sephton and drew a sharp distinction between “pure contingent liability” and “contingent risk.” The plaintiff was undoubtedly exposed to risk, but not to a liability. He dismissed the plaintiff’s argument that he had paid market value when he transferred to the income withdrawal plan and that this was analogous to paying £100 for shares instead of government bonds. It was no answer to say that the plaintiff’s investment was worth what he paid for it. It was more risky: “A claim for damages immediately upon the acquisition of the shares would succeed. The investor would at least be entitled to the difference between the cost of buying the …bonds and the cost of buying and selling the shares.” Appearing to reverse the burden he said it was “not possible to say that Mr Shore did not suffer financial loss ……when he invested in the [income withdrawal] scheme.” He said, at page 886, that the essence of the reasoning in the cases was “the fact that the risk to which the claimant was exposed by the defendant’s negligence might not eventuate did not mean that the claimant did not suffer loss as a result of being exposed to that risk.” Next he took from Moore v Ferrier that “it was possible that the director would not leave the plaintiff’s employment” and “would not act in breach of the covenant,” and from Bell v Peter Browne & Co that “it was possible that the former wife would not deny the plaintiff his one-sixth share in the proceeds of the matrimonial home.”
85. Dyson L.J. then deduced that:
“It is the possibility of actual financial harm that constitutes the loss. That possibility is present even if there is also the possibility that the claimant will be financially better off as a result of being exposed to the risk. In my view, therefore, it is irrelevant that, as things turned out, Mr Shore might have been financially better off under the PFW scheme than he would have been if he had deferred taking his pension under the [occupational] scheme…” (emphasis added)
86. The emphasis on “possibility” of loss in this passage does not appear to me to be justified by his premiss that loss would possibly not have occurred in the earlier two cases. It is far removed from the view of the High Court of Australia in Wardley, and in particular that of Brennan J, quoted above, that a “transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck.” It seems also difficult to reconcile with Lord Hoffmann’s acceptance that, at least in certain cases, damage is suffered “only when it is possible to say that [the plaintiff] is on balance worse off.” It contrasts with the approach of Ackner L.J. in UBAF Ltd v European American Banking Corporation, already quoted.
87. Counsel referred us in argument to a comment in Jackson & Powell on Professional Liability (Fourth Supplement to the Sixth Edition. October 2010 Sweet & Maxwell. Thomson Reuters) to the effect that Dyson L.J.’s reference to the “possibility” of actual financial harm “is not the conventional analysis of the “transaction” cases…” The authors commented:
“It is right to say that the reason why rights are less valuable may be that the claimant is exposed to a risk or contingency against which he should have been protected, but that is not the same as saying that the risk or contingency itself constitutes the loss.”
88. The reservations expressed in this passage do not reappear in the (most recent) Seventh Edition of the same work. The decision in Shore has been, at least implicitly, accepted in later decisions but, so far as we have been informed, has not yet been considered by the Supreme Court.
89. The narrow scope of application of the Sephton rule that time does not commence to run in cases of pure contingent liability was shown by the Court of Appeal decision in AXA Insurance v. Akther & Darby [2010] 1 WLR 1662. The appellants rely on it as showing Sephton to be exceptional. The plaintiff insurers brought an action against panel solicitors operating a scheme for funding the costs incurred by their clients in bringing personal-injury claims. The insurers provided after-the-event legal expenses insurance enabling the clients to bring personal injury claims on a no win, no fee basis. The scheme depended on each claim being vetted by the solicitors as having a 51% chance of success and being worth at east £1,000 and the solicitors notifying the solicitors if that chance fell below 50% or the value below £1,000. They sued the solicitors alleging that they had been negligent in performing each of these duties in respect of a large number of claims.
90. A limitation issue arose. The proceedings were commenced more than six years after the inception of the policies and, in other cases, more than six years after the alleged failure to notify. The first point is sufficient for present purposes.
91. The court, in particular Arden L.J., subjected the reasoning and even the logic of Sephton to intensive scrutiny. She noted differences between the speech of Lord Mance and that of Lord Hoffmann. Lord Mance, she pointed out, had adopted a test, the first part of which depended on whether the legal position of the Law Society had changed, which it had not done until it received a claim from a client of the dishonest solicitor. She expressed her own view that “the legal position of a person……is changed when he incurs a contingent liability.” (page 1673, par. 24). She had difficulty in seeing why an unsecured guarantor (though that was not the Sephton case) should be in a better position vis-a vis the limitation period than a guarantor (as in Forster) who grants security over his property (par. 28) She found a number of the distinctions flowing from the existing case-law “difficult to rationalise.” She thought some aspects of Sephton should be “revisited by the Supreme Court,” and that the rule in Forster benefits the wrongdoer. Nonetheless, the Court concluded that the liability incurred by the insurers in taking on the after-the-event insurers did not benefit from the “pure contingency” rule in Sephton. The insurers suffered loss and the time began to run in favour of the solicitors as soon as they entered into the policies.
92. It is worth noting that Lloyd L.J. dissented. His interpretation of Sephton led him to conclude, at page 1711, that the insurers “entered into a contract as a result of the solicitors’ negligence which exposed it to a contingent liability.” The court was, therefore, divided, as Arden L.J. explained at page 1686, on the question of “whether the contingent liability of [the insurers] under the policies that it issued stood alone, or whether [the insurers] incurred other measurable loss at the time those policies were issued.” In her view they did. In the view of Lloyd L.J., the adverse effect on the commercial and economic position of the insurers did not answer the question of whether, “in the eyes of the law [they] had already suffered actual damage.”
93. Having wrestled with the complexities of this case-law, I find it difficult not to join in the lament of Lewison J in Pegasus Management Holdings v. Ernst & Young [2009] P.N.L.R. 209 at 226, i.e., prior to the AXA decision, but referring to three decisions of the House of Lords and the fact that the question had been examined on “countless occasions by the Court of Appeal” that “this concentration of judicial firepower does not give easy answers for the first instance judge.”
Searching for an answer
94. This large body of English case-law is notable for the almost complete absence of expressions of regret of the kind recorded in the earlier cases of Cartledge v. E.F. Jopling & Sons and Pirelli General Cable Works v Faber at a state of the law in which a person suffering financial loss should be shut out from relief and statute-barred not only before he knew he had a cause of action but in circumstances where he could not reasonably have been expected to sue. It may be that the explanation lies in the mitigating provisions introduced in 1986, whereby an alternative three-year time limit runs from the date of knowledge. Nonetheless, the recent cases exhibit little concern for the striking of a just balance between the rights of plaintiffs and defendants.
95. I do not intend to rehearse again the cases which have led the English courts to adopt what Lord Mance in Sephton called a strict interpretation of when loss occurs. Moore v Ferrier is one of the earlier sheet-anchor cases relying on a judgment by no less a figure than Bingham L.J. It still seems to me remarkable that the cause of action against the solicitors was held to have accrued immediately following the negligent drafting of the non-compete clause. At that time, the new director had just joined the company. Were the other directors on their own behalf or on behalf of the company seriously expected to sue the solicitors at a time when there was no reason to expect the new director to leave the company or, a fortiori, to set up in competition within the forbidden geographical area?
96. In Bell v. Peter Browne & Co, the husband was implicitly expected to sue the solicitors immediately after the negligent drafting of the deed conveying the family home to the wife and, therefore, on the assumption that the wife would not only sell the house but would also fail to account for his one-sixth share and dissipate the proceeds. Lord Nicholls in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd. (No. 2) made a number of fine distinctions in his examination of what should be a comparatively simple notion of actual damage. To say the least, these do not lead to a clear-cut result. Perhaps the case with which I have the greatest difficulty is Shore v. Sedgwick Financial Services Ltd. It seems to have been accepted that the plaintiff, Mr Shore, got full market value (at the time) for the rights which he transferred out of the occupational pension scheme into the personal income withdrawal plan. Dyson L.J. explained that it was “the possibility of actual financial harm that constitutes the loss.”
97. Sephton has been established as the only leading case in which time did not run against the plaintiff. It placed pure contingent liability in a separate category and, as Dyson L.J. held in Shore v. Sedgwick Financial Services Ltd, that was, so far as the running of time was concerned to be distinguished from contingent risk. I fail to see the logic behind that distinction. Some of the cases contain endless prognostication and fine distinctions are drawn. It is clear that Arden L.J. in the AXA case had difficulty with some of the reasoning.
98. I also have difficulty in accepting the first two general propositions advance on behalf of the Bank, whose provenance is apparently the speech of Lord Nicholls in Nykredit. Firstly, he suggested, at page 1633, that “within the bounds of sense and reasonableness the policy of the law should be to advance, rather than to retard, the accrual of a cause of action.” Secondly, he added that this was “especially so if the law provides parallel causes of action in contract and in tort in respect of the same cause of action.” He thought: “The disparity between the time when these parallel causes of action should be smaller rather than greater.
99. No reason has been put forward in support of the proposition that the policy of the law should be to advance rather than to retard the accrual of a cause of action. I cannot accept a rule of interpretation which would favour the defendant at the expense of the plaintiff. We are concerned with the interpretation of a limitation period laid down by statute, an Act of the Oireachtas. The policy of the Oireachtas is to be gleaned from the words of the Act.
100. It is true that, in Tuohy v Courtney, Finlay C.J, speaking for the Court at page 48, identified one of the purposes of the limitation period under review as being “to promote as far as possible expeditious trials of action so that a court may have before it as the material upon which it must make its decision oral evidence which has the accuracy of recent recollection and documentary proof which is complete, features which must make a major contribution to the correctness and justice of the decision arrived at.” This recognition of a legitimate legislative objective does not, however, lead to any particular interpretation of the legislation as enacted. In particular, the Chief Justice went on to recognise “the necessity as far as is practicable, or as best it may, for the State to ensure that such time limits do not unreasonably or unjustly impose hardship.”
101. Nor can I accept that the courts should adopt a general policy of interpreting an Act of the Oireachtas so as to minimise rather than to expand the disparity between the running of time in cases of contract rather than tort. It does not appear that Lord Nicholls proposals have met with universal approval. Lord Mance observed in Sephton, at page 569, that “differences between the limitation periods in contract and tort do however exist.” He recalled that Lord Goff of Chieveley in Henderson v Merrett Syndicates Ltd. [1995] 2 AC 145 rejected the “temptation of elegance,” explaining the essential difference that a remedy in contract is due to the will of the parties whereas that in tort is imposed by the general law and saying that he did not find it “objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him.” I do not think the Bank’s seventh proposition that if, in a contract claim, more than nominal damages would be awarded, it follows that there is damage sufficient to start time running, is of any assistance in establishing a test. The fourth and fifth propositions presume a comparison between what the plaintiff obtained under the transaction and what he should have obtained. This is, however, a “no transaction” case. The plaintiff says he would not have entered into the transaction but for the Bank’s negligence.
102. This brings us back to the basic question of when the cause of action accrues in cases of financial loss where the cause of action is in tort. It does not accrue merely when the wrong is committed. Actual damage is necessary. The English cases demonstrate and the judges have repeatedly said that cases of financial loss present particular difficulties.
103. Some attempts have been made to establish classifications. I will assume that, as in this case, the cause of action is in negligence. In some cases, the claim is that the plaintiff would not have entered into the transaction but for the negligence of the defendant. Then the measure of loss will prima facie be the difference between the plaintiff’s position as it is after entering into the transaction and what it would have been without it. In many cases, particularly cases of professional negligence, the loss is measured by reference to what the situation would have been if the defendant had not been negligent as against the plaintiff’s actual position. These cases include negligence alleged against solicitors, valuers, insurance brokers and financial advisers. These cases approximate the measure of loss to what it would be in contract. In some of the English cases (for example by Lord Hoffmann in Sephton) it is suggested that it may be easier to assume loss from the moment of entry into the transaction, whereas in “no-transaction” cases, there may be no loss or it may be necessary to wait and see how things turn out. I do not see this distinction as providing a basis for a rule. Nykredit Mortgage Bank plc v Edward Erdman Group Ltd. (No. 2) shows how difficult it is to devise anything like a straightforward rule. In either case, there may be immediate damage or it may not be possible to say that there will be damage until a later date.
104. Fortunately, it is not necessary for us to choose between the differing approaches considered in the English cases.
105. I return to the language of Finlay C.J. in Hegarty v O’Loughran. That was a personal-injury case, so he spoke of a “provable personal injury.” In Read v Brown, to which Finlay C.J. referred, Lord Esher suggested a test of accrual in terms that: “…every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court.” The principle must be the same whether the damage takes the form of personal injury, damage to physical property or financial loss, recognising, as one must, that the last category presents special difficulties. The cause of action accrues in the case of financial loss when the plaintiff has suffered actual damage. The problem is that actual financial loss may take many forms. I doubt whether it is going to be possible to lay down a rule capably of easy application in every case.
106. In Darby v. Shanley t/a Oliver Shanley & Co. Solicitors, a claim against solicitors for negligence in drafting a will, Irvine J held that time did not begin to run until the disappointed party had compromised later proceedings. Only then could it be said that he “had sustained a loss arising from the negligence alleged against the defendants.” She does not appear to have been referred to any of the English decisions.
107. I do not think that the mere possibility of loss, at least in terms of Shore v. Sedgwick Financial Services Ltd, is enough. Dyson L.J. applied a type of pure logic in saying that Mr Shore had got a risky product, which he did not want. However, it was clear that, at the date of the transfer from the occupational pension scheme to the personal income withdrawal plan, he got what was then full market value. It would not have been possible then to show that Mr Shore was at a loss. He, like many others, had the bad luck to encounter a downturn in the markets. But the logic should apply even in better market conditions. I do not think it was just or fair to apply such relentless logic to an uncertain situation. Some account has to be taken of probability. That is not, of course, necessarily decisive. It is true that damages can be recovered for the possibility of loss in certain types of case. (See Philp v Ryan [2004] 4 IR 241). Normally that arises, as in possibility of future arthritis, epilepsy and so on, where some primary damage has been proved.
108. The possible situations vary infinitely. Where a person has been led by what he alleges to be negligent advice or other negligent action, such as , for example, negligent valuation of an asset, to enter into a transaction, I do not think the cause of action accrues when there is a mere possibility of loss. To hold otherwise would be doubly unfair to the plaintiff. If he sues early, he may be unable to quantify his loss. The defendant may be able to point to imponderables and uncertainties and argue reasonably that the plaintiff is unable to prove on the balance of probabilities that he has suffered any actual damage. If, on the other hand, the plaintiff waits until his loss materialises, his claim will be held to be statute-barred, if mere possibility of loss is the test.
109. Brennan J in the passage from pages 536 and 537 in Wardley, provided a useful framework of analysis. In particular, it is helpful to bear in mind the following:
“A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If the balance cannot be struck until certain events occur, no loss is suffered until those events occur…”
110. This is close to the analysis applied by Charleton J in the present case. I would not quarrel with his statement that:
“Each case is to be judged on the facts as to when the tort occurred, and whether damage resulted at that time or whether the wrong initiated a course of action that later resulted in a loss.”
111. However, there will be cases where there is immediate loss, even if there are difficulties of quantification and there are uncertainties and contingencies. The analogy with personal-injury claims can be helpful. A claim for damages will include amounts for immediate compensation and estimations, often based on a combination of medical and actuarial expertise, of future loss of earnings and of other costs. In other words, uncertainties do not in themselves prevent the early accrual of the cause of action, subject to the proviso that the plaintiff has suffered actual loss at the time of entry into the transaction.
112. It is best to turn to the facts as pleaded in the present case. The key complaint of the plaintiff is that he was induced by the negligence of the Bank to invest in the SolidWorld Bond, which was a “borrow to invest” product, a feature which made it “wholly unsuitable for the Plaintiff or indeed any investor.” Put otherwise, the product was not a “suitable product to borrow money to invest in and that it was most unlikely that the bond would deliver any return sufficient to offset the cost of the loan transaction.” He would not have entered into the transaction were it not for the negligence and misrepresentations of the Bank.
113. The plaintiff does not and cannot make any complaint about the quality of management of the investments in the SolidWorld Bond. There was no fund to be managed. The basket of shares was designated at the start and could not be changed. No complaint is made about the shares chosen. The plaintiff was locked in to the SolidWorld Bond for the entire term of five years and eleven months.
114. The complaint as pleaded is that the Bank caused the plaintiff to enter into the transactions. The loss claimed is the amount of the interest paid by him on the loan transaction. There could be no other. The plaintiff could not suffer any loss on the shares. The value of the Bond was guaranteed.
115. There are three possible approaches to the accrual of the cause of action: firstly, it could accrue when the plaintiff entered the transaction by borrowing the money and purchasing the bond; secondly, it might accrue at some intermediate date when the plaintiff could prove that he was at a loss in terms of a calculation of his liability for interest against movements in the value of the shares; thirdly, it could accrue at the end of the period of the investment.
116. It is to my mind inescapable that the plaintiff’s claim as pleaded is that he suffered damage by the very fact of entering the transaction and purchasing the Bond. The cause of action then accrued. That was also the date when he entered into a contractual relationship with the Bank.
117. In logic, if the plaintiff’s loss was too uncertain at the start of the period, the same would be true to a greater or lesser extent at every point during the currency of the Bond. No loss could be established during the term, since the plaintiff could not withdraw from the Bond. If the plaintiff could not sue at the beginning, because of the need to await the development of the value of the Bond, equally it is unlikely that he could sue on any intermediate date. The plaintiff stated in his written submissions that there was no evidence whatever of any damage being suffered by him prior to the maturity of the investment.
118. The only possible alternative date of accrual would be at the end of the period of five year eleven months when it could be seen whether the plaintiff suffered loss by measuring any gains in the shares against the interest paid on the loan. That alternative view would apply no matter what the length of the Bond, which would mean that, in the case of a Bond for ten, fifteen or even thirty years, the defendant could say that no damage had been caused. That approach might be the correct one in the cases of a different kind of investment, especially one where obligations of management and investment were undertaken. The implication in the present case would be that the cause of action in tort would not even have accrued although the six-year limitation period for any claim in contract would have almost expired, as the maturity date of the bond was five years and eleven months. On the pleaded facts of the present case, as set out in paragraph 10 of this judgment, the damage accrued on the entry into the Bond, when the plaintiff was sold a bond which was “wholly unsuitable” for him.
119. This case, therefore, is, on its own particular pleaded facts, a clear one. The cause of action accrued when the plaintiff purchased the Bond. Since that was more than six years before he commenced the proceedings, his claim is statute-barred. I would accordingly allow the appeal, set aside the order of the High Court and order that the claim if the plaintiff is barred by the provisions of Section 11(2)(a) of the Statute of Limitations, 1957.
McDonald v McBain
[1991] ILRM 764 Morris J
At the conclusion of the plaintiff’s evidence counsel for the defendant applied to me for a non-suit on the grounds that the plaintiff is precluded from proceeding with this action as the proceedings were not instituted within the time limit specified by s. 11 of the Statute of Limitations 1957. The limitation period in the circumstances of this case is six years and the following are the relevant dates.
The premises, the subject matter of these proceedings, were burnt on 29 March 1974. The limitation period would, accordingly, have expired on 29 March 1980. The action was commenced by way of plenary summons issued on 10 April 1985. The plaintiff claims damages for the destruction of the house and contents, basing her claim on the allegations of breach of contract, trespass and negligence on the part of the defendant.
It would appear in the first instance that the claim is statute barred. However, counsel on behalf of the plaintiff contends that the claim based on trespass is not barred by virtue of s. 71 of the Statute of Limitations 1957 because, he says, the plaintiff’s right of action was concealed by the fraud on the part of the defendant and accordingly, the limitation period should not run until the plaintiff discovered the fraud or could, with reasonable diligence, have done so.
A further argument is then addressed to me on the basis that the claim based on trespass could only arise when the plaintiff had knowledge of the fact that the defendant was the person who actually set fire to the premises and since she only learnt this when the defendant admitted the fact to her on 22 October 1983 that it was only at that stage that the limitation period commenced to run.
Counsel for the plaintiff has argued that the defendant’s failure to disclose that he was the perpetrator of the wrong can, in the circumstances, amount to fraud within the meaning of the Statute of Limitations 1957. In support of this argument he cites King v Victor Parsons & Co. [1973] 1 WLR 29, and he relies on that part of Lord Denning’s judgment where he says (at 33–34):
In order to show that he concealed the right of action ‘by fraud’ it is not necessary to show that he took active steps to conceal his wrongdoing or breach of contract. It is sufficient that he knowingly committed it and did not tell the owner anything about it. He did the wrong or committed the breach secretly. By saying nothing he kept it secret. He conceals the right of action. He conceals it by ‘fraud’ as those words have been interpreted in the cases. To this word ‘knowingly’ there must be added ‘recklessly’.
Counsel argues that in the present case the defendant’s failure to come forward and acknowledge that he set fire to the premises constituted fraud within that definition.
He also relies on Beaman v ARTS Ltd [1949] 1 KB 550 and seeks support from the judgment of the Chief Justice in Hegarty v O’Loughran [1990] 1 IR 148, 157 where he says:
I would, therefore, conclude that the proper construction of this sub-section is that contended for on behalf of the defendants and that it is that the time limit commenced to run at the time when a provable personal injury, capable of attracting compensation, occurred to the plaintiff which was the completion of the tort alleged to be committed against her.
He argues that the tort of trespass in this case only became ‘provable’ at the stage where the defendant acknowledged that he had set fire to the premises on 22 October 1983.
Counsel for the defendant in reply has argued that very soon after 29 March 1974 when the premises went on fire, and long before 22 October 1983 the plaintiff was in possession of all the necessary information to enable her to institute proceedings and that the only element which was added on 22 October 1983 was the alleged admission on the part of the defendant. He says that this goes to the strength of the case but did not add any element which enabled the plaintiff to institute proceedings which was not already there.
He also argues that the circumstances in Beaman v ARTS Ltd are quite different in that the bailiees of the goods stored disposed of the chattels without the plaintiff’s knowledge. He differentiates the present case in that the plaintiff had at all times full knowledge of the burning of the property and the loss.
It is my opinion that if the circumstances were such that the plaintiff in the present case had her property destroyed by fire deliberately by a third party and that third party, either by stealth or silence, succeeded in hiding that fact from the plaintiff, and she was left in complete and total ignorance of the identity of the wrongdoer, then that conduct on the part of the wrongdoer would amount *767 to fraud within the meaning of the Statute of Limitations. I would in such circumstances find no difficulty in adopting, in the main, the approach of Lord Denning MR in King v Victor Parsons & Co. However, in the present case it is my opinion that the circumstances were such that the plaintiff was possessed of sufficient information to enable her to institute the proceedings had she chosen to do so. I point to the fact that prior to the burning (29 March 1974) difficulties had arisen about the completion of the transaction. A cheque for the balance of the purchase price was either stopped (or dishonoured depending on which view one takes) and differences of opinion had arisen in this regard. Further differences had arisen because of the failure on the part of the defendant to deliver up vacant possession of cottages on the land and it must have been clear to the plaintiff that the defendant was less than satisfied with the sale or the progress that it was making. We know subsequently that it was necessary for the plaintiff to bring specific performance proceedings against the defendant to have the sale completed.
Then there is this extraordinary conduct on the part of the defendant in attending at the house on the evening before the fire and bringing with him what has been described to me in detail as all the necessary ingredients for the burning of a house. This equipment included cylinders of gas, pieces of carpet underfelt etc . Then there is the fact that the defendant requested that these objects be brought into the house at a time when it would be singularly inappropriate to do so as he had sold the house and the plaintiff and her husband were in the process of taking up occupation of the premises. Then there is the fact that the defendant is supposed to have said words to the effect — ‘I am going to put an end to all this’.
The premises having been burnt to the ground that very night, not unnaturally, the plaintiff and her husband pointed the finger of suspicion at the defendant. They notified the gardaí and apparently told the guards of the defendant’s unusual behaviour as a result of which the guards interviewed the defendant.
Then in 1976 two gentlemen, a Mr King and a Mr Bishop, apparently reported to the plaintiff and her husband that it was in fact the defendant who set fire to the premises. I appreciate that this statement was subsequently retracted when they were interviewed by the guards but nevertheless it appears that it was common knowledge and indeed well known to the plaintiff and her husband that the premises had been used for a ‘farewell party’ without their permission by the defendant on the night of the fire.
In my opinion the defendant’s contention is correct. What was missing from the case and what was supplied on 22 October 1983 was an item of proof which could be adduced to strengthen the plaintiff’s case if and when it came to a hearing. Certain proof was already available to the plaintiff upon which she could rely in an attempt to persuade the court that on the balance of probabilities the defendant was responsible for the deliberate burning of the property.
I see a clear distinction between the present case where the plaintiff has evidence which she may adduce to the court to connect the defendant with the deliberate burning and a case where the wrongdoer remains entirely undiscovered. I know of no authority which allows the plaintiff to postpone bringing her case until she has available to her evidence which she believes will copperfasten the matter in her favour.
Accordingly, I am of the opinion that s. 71 of the Statute of Limitations 1957 does not have any relevance and I am of the opinion that the plaintiff was in a position to bring an action based on trespass. In the circumstances of this case I hold that this action is statute barred by virtue of s. 11(2)(a) of the said Statute.
Devlin v. Roche
[2002] 2 I.L.R.M. 192
JUDGMENT of Mr. Justice Geoghegan delivered the 30th day of April 2002 [Nem Diss.]
1. This is a personal injury action brought against the defendants in respect of alleged assault and battery by the first and fifth-named defendants being members of the Garda Síochána on the 12th of August, 1991 at or near Wayside Celtic Football Grounds, Stepaside, Co. Dublin. The proceedings were commenced by a plenary summons issued on the 12th of August, 1994. The fifth-named defendant was not a party named in the original plenary summons but became an added party by order of the High Court. In both the original and the amended plenary summons, the plaintiff’s claim is expressed to be ” for damages to include aggravated damages for assault and battery, negligence, breach of duty and breach of statutory duty on the part of the defendants whereby the plaintiff sustained severe personal injuries, loss and damage. ” The fifth-named defendant had been added to the proceedings by order of the High Court made the 24th of February, 1997. This defendant delivered a defence on the 23rd of October, 1997 paragraph 1 of which reads as follows:-
“The plaintiff’s claim is barred by virtue of the provisions of the Statute of Limitations, 1957, as amended by the Statute of Limitations (Amendment) Act, 1991.”
2. By order made on the 27th of April, 1998 in the High Court by Johnson J. it was ordered that a preliminary issue be tried before a judge sitting without a jury wherein the fifth-named defendant should be plaintiff and the plaintiff should be defendant, the question at the trial of such issue to be whether the plaintiff’s claim as against the fifth-named defendant was statute barred by virtue of the provisions of the Statute of Limitations, 1957 as amended by the Statute of Limitations (Amendment) Act, 1991. Pleadings were delivered in the separate issue and it came to be tried before the High Court (Morris P.) on the 1st of February, 2001. At the hearing the plaintiff/respondent accepted that in so far as his claim might be based on negligence or breach of statutory duty it was statute barred as his proceedings were not commenced within the three year limitation period. He claimed however that in so far as his action was based on assault and battery the relevant limitation period was six years and that claim was therefore not statute barred.
3. Section 11(2)(a) of the Statute of Limitations 1957 as amended by section 3(2)(a) of the Statute of Limitations (Amendment) Act, 1991 provides that ” an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.” But section 3(1) provides ” an action, other than one to which section 6 of this Act applies, claiming damages in respect of personal injuries to a person caused by negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of a provision made by or under a statute or independently of any contract or any such provision) shall not be brought after the expiration of three years from the date on which the cause of action accrued to the knowledge (if later) of the person injured.” In effect, therefore the issue which the High Court had to try was whether a personal injury claim based on an allegation of intentional assault was statute barred after three years or only after six years.
4. Morris P. delivered a reserved judgment on the 4th of April, 2001. In his introductory remarks he commented that as far as he was aware this issue had not been decided by the Irish courts although it had been considered on a number of occasions in the English courts. He pointed out that the wording of the relevant part of the English statutes was identical. The learned President held that the plaintiff’s claim for damages for assault was not statute barred. The fifth-named defendant has appealed against that decision to this court.
5. As the President correctly observed, the issue has been debated in the English courts in a number of cases but it is now clear from the hearing of this appeal that it has also been considered by the Australian courts in the context of more or less exactly similar legislation. As will become clear, when I review the case law, there is highly respectable judicial opinion on both sides of the issue but the view taken by Morris P. is in accordance with the only decision of the House of Lords on the point namely, Stubbings v. Webb [1993] A.C. 498. The appellate committee consisted of Lord Templeman, Lord Bridge of Harwich, Lord Griffiths, Lord Ackner and Lord Slynn of Hadley and its unanimous opinion was delivered in a speech of Lord Griffiths. But in so deciding, the House of Lords was reversing a strong court of appeal consisting of Sir Nicholas Browne-Wilkinson V-C, Bingham L.J. and Nolan L.J. all future law lords. To some extent the Court of Appeal had felt bound by an earlier decision of the same court in Letang v. Cooper [1964] 2 All ER 929 which was itself a strong court comprising Lord Denning M.R., Danckwerts L.J. and Diplock L.J. Bingham L.J. who delivered the judgment of the court in Stubbings made it clear that he agreed with the decision in Letang and elaborated on his reasons for so doing. In two Australian cases cited before this court and to which I will be referring, the view of the English Court of Appeal rather than the view of the House of Lords was adopted. In Letang the Court of Appeal was in turn reversing the decision of the High Court contained in a judgment of Elwes J. [1964] 1 All E.R. 668. I mention this because to some extent that judgment contains an admirably clear exposition of the view of the law ultimately approved of by the House of Lords at least in relation to intentional assaults.
6. As different arguments have been put forward by the judges in support of both points of view I think it helpful to treat of the case law chronologically.
7. Of the cases which I intend to cite, the first is a judgment of Adam J. in the Supreme Court of Victoria, Kruber v. Grzesiak [1963] VR 621. That was an action which started as a claim for personal injuries due to the negligent driving of a motor car. The plaintiff had been hit while riding a bicycle. The action was brought outside of a three year limitation period and the statute was pleaded. The plaintiff then tried to mend his hand by applying to the court to amend his statement of claim so as to frame his action for damages in trespass to the person, the argument being that the relevant limitation period for such an action would be six years. The statutory provision which the learned judge had to consider was similar to the provision considered by Morris P. It appears to have been accepted in argument that an action for damages would not lie for unintentional trespass to the person in the absence of negligence. The judge was unimpressed by arguments based on the old forms of action and in particular on the distinction that the ordinary action for negligence is an action on the case and therefore only actionable on proof of damages whereas an action of trespass is actionable per se . He pointed out that in the case of unintentional trespass no action lay in the absence of negligence and he considered that the word ” negligence” in the relevant statutory provision should be regarded as a non-technical expression embracing both types of action. If his judgment had ended there it would not have been particularly relevant to this case because what is alleged in this case is intentional trespass and not unintentional trespass. But the learned judge went on to express the view that even if he was wrong in that interpretation he would ” see no sufficient reason for excluding such an action from the description of an action for damages for breach of duty, especially when it is provided that the duty may be one existing independently of any contract or any provision made by or under a statute.” The learned judge went on to opine that all torts arose from breach of duty, the tort of trespass to the person arising from the breach of a general duty not to inflict, direct and immediate injury to the person of another either intentionally or negligently in the absence of lawful excuse.
Letang v. Cooper cited above was the next case in which the point arose. In the High Court, Elwes J. rejected the contention that the action for damages for trespass to the person is an action for breach of duty. He traced the respective historical origins of the action on the case and the action for trespass and he pointed out that in negligence the plaintiff has no action until he proves a particular duty owed to him by the defendant and a breach of that duty resulting in damages sustained by him. He went on to point out that in trespass the plaintiff was not concerned to prove the breach of a particular duty. The learned judge accepted that it could be said that a defendant in trespass to the person must always be proved to have been in breach of a general duty not to inflict injury on anybody but that was ” not to use the language of precision as known to the law”. The judge observed that to construe the words ” breach of duty” in any sense less precisely definable was to evade the obligation which devolved on the court to interpret a statute in accordance with the law and that that obligation had ” especially peremptory character when a statute of limitation is under consideration, since the purpose of such an Act is to cut down rights at common law. It must be strictly construed much as a penal statute is.” As I have already mentioned the Court of Appeal took a diametrically opposite view but there were nuances of difference between the judgments of Lord Denning and of Diplock L.J. It should perhaps be explained that the facts of that case were that the plaintiff was staying at an hotel and was sunbathing on a plot of grass where cars were parked when she was run over by a car due to negligent driving. Lord Denning characteristically expressed a strong aversion to any relevance being attached to the distinction between the old forms of action of trespass and case. The former Master of the Rolls expressed the view that the true division of causes of action in modern times was on the one hand actions for intentional harm and on the other actions for unintentional harm. He accepted a decision in Fowler v. Lanning [1959] 1 All E.R. 290 in which Diplock J. had held that negligence was a necessary ingredient in an action for unintentional trespass but he expressly went a step further by stating that in his view the only cause of action is negligence and not trespass in such a situation. Again, of course that part of his judgment is not strictly relevant to this case because this is a case in which intentional trespass is claimed. Lord Denning, however, went on to give an alternative basis for his judgment. He said that if he had been wrong in the view he had taken, then he was of the view that a trespass to the person action was covered under the expression ” breach of duty” He expressly approved of the judgment of Adam J. in Kruber v. Grzesiak cited above. Diplock L.J. in his judgment gave the example that if A by failing to exercise reasonable care inflicts direct personal injuries on B it is permissible to describe that factual situation indifferently either as a cause of action in negligence or a cause of action in trespass and the action brought to obtain a remedy for this factual situation as an action for negligence or an action for trespass to the person. When the trespass is unintentional Diplock L.J. was of the view that there are not two causes of action but rather two apt descriptions of the same cause of action. The learned judge then went on to hold in the alternative that trespass to the person is at any rate a breach of duty. It is a breach of a duty not to inflict direct injury to the person of anyone but by its very nature it is owed only to those who are within range which as Diplock L.J. put it are ” a narrower circle of Atkinsonian neighbours than in the tort of negligence”. Diplock L.J. therefore came down strongly in favour of the wide interpretation of the expression ” breach of duty” .
When Stubbings v. Webb came before the English Court of Appeal Bingham L.J. delivered the main judgment. He pointed out that all three judges of the Court of Appeal in Letang had construed the statutory language as embracing a claim based on unintentional and intentional trespass to the person and that he considered the Court of Appeal’s ruling to be binding but he went on to make clear that he fully agreed with the decision. Nolan L.J. and Sir Nicholas Brown-Wilkinson V-C took a similar view.
8. I now turn to the decision of the House of Lords which was adopted by the President and in which the Court of Appeal was reversed. As I have already mentioned, the opinion of the court was delivered in a speech of Lord Griffiths. It is only fair to say that a large part of that speech was taken up with the legislative history of the Law Reform (Limitation of Actions etc.) Act, 1954 in England, the point being that that Act had adopted recommendations of a committee headed by Lord Tucker and that it was clear from the Tucker Committee Report that trespass to the person actions would not have been included in the expression ” breach of duty” . Even though one might reasonably argue that the relevant statutory provision which first appeared in our law in the Statute of Limitations, 1957 was a copy of the English statutory provision I would think it a doubtful exercise to take into account English legislative history especially as Lord Griffiths to some extent relied on the modern House of Lords practice of reading Hansard. As I do not find it necessary to do so, I am expressing no opinion as to the extent, if at all, to which this court could consider English legislative history in construing an Irish statute. But the passage of the speech of Lord Griffiths which is relevant appears towards the end and is at p. 508 of the report and reads as follows:-
“Even without reference to Hansard I should not myself have construed breach of duty as including a deliberate assault. The phrase lying in juxtaposition with negligence and nuisance carries with it the implication of a breach of duty of care not to cause personal injury, rather than an obligation not to infringe any legal right of another person. If I invite a lady to my house one would naturally think of a duty to take care that the house is safe but would one really be thinking of a duty not to rape her.”
9. Subject to a small proviso I find myself in agreement with that passage of Lord Griffiths. I would prefer if the words ” particular breach of duty” had been used rather than ” breach of duty of care” . A breach of a duty of care is really the same thing as negligence. But the law of tort traditionally recognised particular breaches of duty which were governed by their own principles rather than by Donoghue v. Stevenson . The Rylands v. Fletcher duty, the duty to an invitee at common law and the absolute duty in respect of dangerous goods or articles are all examples of breaches of duty which would not always be accurately described as breaches of duty of care but which nevertheless clearly come within the statutory provision. But I cannot accept that a breach of some general duty not to commit a civil wrong of any sort could come within the expression ” breach of duty” in the statutory provision which clearly has to be interpreted in the context of the words next to it i.e. negligence and nuisance. A breach of contract is, of course, also included but that is perfectly logical as that does not arise from a general duty but rather from a particular duty undertaken by a promise to another party. A breach of statutory duty is clearly analogous to a breach of a common law duty of care. I would, therefore, find myself in agreement with the House of Lords and with the learned President.
10. Since the House of Lords decision, the Court of Appeal of the Supreme Court of Victoria in a case of Mason v. Mason , judgment delivered 23rd of July, 1996, disagreed with the House of Lords and reaffirmed Kruber v. Grzesiak . It is clear therefore that there are two perfectly legitimate viewpoints on this question but, for the reasons which I have given, I favour that taken by the former President of the High Court based on the decision of the House of Lords and in particular the dicta of Lord Griffiths cited above and I would, therefore, dismiss the appeal.
11. I should make it clear that my judgment is based on the claim being one of intentional trespass. I am expressing no opinion on what the situation would be if the claim was for unintentional trespass. While the view that such an action should be treated as an action for negligence is attractive because it forestalls an anomaly, it seems clear from the treatment of the subject in McMahon and Binchy – “The Law of Torts” that the law relating to unintentional trespass is not settled in Ireland. Not only would there be the question as to whether negligence is an essential ingredient but also the question as to the onus of proof in relation to such negligence. As far as I am aware the decision in Fowler v. Lanning has not been considered in the Irish courts.
Murphy v McInerney Construction Ltd
[2008] I.E.H.C 323
JUDGMENT delivered by Ms. Justice Dunne on the 22nd day of October 2008
The plaintiffs claim damages against the first named defendant for negligence and breach of duty arising out of the construction of and repair to a dwelling house at 1 Muckross Close, Powerscourt, Co. Waterford. They also claim damages for negligence breach of duty and breach of contract arising out of an inspection and survey of 1 Muckross Close, Powerscourt, Co. Waterford prior to their purchase of that dwelling house. The inspection concerned took place on the 25th of September, 1997. It is now conceded by the plaintiffs that the claim against the second named defendant arising in respect of an alleged breach of contract based on the inspection and survey of the dwelling house by the second named defendant on the 25th September, 1997, is statute barred.
The principal complaint made by the plaintiffs against the first named defendant as set out in the statement of claim is that the first named defendant was negligent and in breach of duty in constructing the property in May 1987. In 1996 it is alleged that the first named defendant acknowledged defects in the structure of the property to its then owner and agreed with the then owner to carry out repairs and remedial works to the property. Thus it is alleged that the first named defendant was negligent and in breach of duty in constructing the property and in effecting the said repair and remedial work thereto.
Insofar as the second named defendant is concerned it is pleaded that he was negligent and in breach of duty in the inspection and examination of the property and in preparation of his report on the structural condition of the property for the plaintiffs which report was furnished on the 25th September 1997.
Each of the defendants herein has pleaded that these proceedings are statute barred under and by virtue of the Statute of Limitations 1957. The reply to the defence in each case is similar and I will quote expressly from that furnished to the defence of the first named defendant, where it is pleaded as follows:-
“It is denied the plaintiffs’ claim is barred by the provisions of
s. 11(2)(a) of the Statute of Limitations Act (sic) 1957, or at all. The plaintiffs will contend their cause of action accrued upon the discovery of the first named defendant’s negligence and breach of duty when the latent defects in the property became manifest and within six years prior to the issue of the within proceedings.”
Section 11(2)(a) of the Statute of Limitations 1957, as amended, provides:-
“Subject to paragraph (c) of this subsection and to subsection 3 (1) of the Statute of Limitations (Amendment) Act 1991, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”
An order was made on the 26th November, 2007 directing the trial of a preliminary issue as to whether or not the plaintiffs’ claim is statute barred. Certain facts have been agreed by the parties for the purpose of the trial of this preliminary issue. They are as follows:-
1. That the first named defendant constructed No. 1 Muckross Close, Powerscourt, Co. Waterford in 1987 and that in 1996 the first named defendant acknowledged defects in the structure of the property to its then owner, George McDonald and agreed with Mr. McDonald to carry out repairs and remedial works to the property.
2. That in or about the month of September 1997, the plaintiffs were desirous of purchasing a property known as No. 1 Muckross Close, Powerscourt, Co. Waterford.
3. That in September 1997, the plaintiffs retained the second named defendant to inspect the aforesaid property and to advise on its structural condition prior to the completion of negotiations with the purchase of the property in consideration of the sum of €145.20.
4. That on the 25th September, 1997, the second named defendant furnished his report of that date to the plaintiffs’ solicitor which concluded that the principle structural elements of the property were deemed to be in good structural order with no apparent defects.
5. That it was a term or condition of the contract of retainer between the plaintiffs and the second named defendant and/or the second named defendant warranted and represented that he had and would exercise all reasonable care, skill and diligence as a consultant engineering the inspection and examination of the property and in furnishing his report on the structural condition of the property.
6. That the second named defendant acted in breach of contract, negligently and in breach of duty in failing to exercise all due care, skill and diligence in the inspection and examination of the property and in the preparation of his report.
7. That the first named defendant was negligent and in breach of duty in constructing the property and in affecting the said repair and remedial work thereto.
8. That the particulars of loss are as pleaded.
9. That these proceedings commenced by issue of plenary summons on the 30th September, 2004.
So far as those agreed facts are concerned, those in relation to the alleged breach of contract of the second named defendant are no longer of any relevance, given the acceptance that the claim against the second named defendant in respect of breach of contract is statute barred.
The principal point made on behalf of the defendants herein is that the house in question was constructed in 1987, remedial works were carried out in 1996 and any defects now complained of in the structure or indeed in relation to the remedial works carried out were in existence at that time and indeed in 1997, when the property was purchased by the plaintiffs. Thus, they say, the period of six years had expired since the cause of action accrued and that the proceedings were issued more than six years after the cause of action accrued. The plaintiffs contend that the cause of action against the first and second named defendants in negligence accrued when the latent defects in the property became manifest or as it was put in the affidavit of Rory O’Connor, solicitor, sworn herein on the 19th November, 2007, on behalf of the plaintiffs referring to the plea contained in the Reply to Defence:-
“Therein the plaintiffs rely on the contention that their cause of action accrued upon discovery of the first named defendant’s negligence and breach of duty, when the latent defects in the property became apparent and when they became aware of the first named defendant’s negligence and breach of duty which discovery occurred within six years prior to the issue of the within proceedings.”
Thus, it can be seen that the plaintiffs contend that the statute does not run until the date of the discovery of the defects alleged. Each of the defendants in their respective submissions have rejected this contention and have relied on the Supreme Court decision in the case of Hegarty v. O’Loughran [1990] 1 I.R. 14, in which the Supreme Court rejected the concept of a discoverability test and held that the Statute of Limitations runs from the date on which damage happens or occurs and not on the date that the damage or defect was discoverable.
Prior to the decision of the Supreme Court in the case of Hegarty v. O’Loughran, the interpretation of s. 11(2)(a) of the Statute of Limitations was considered in the case of Morgan v. Park Developments Limited [1983] ILRM 156. The facts of that case are not dissimilar from those of the present case. In that case the plaintiff had purchased a house from the defendants in 1962. Shortly after moving into the house, the plaintiff notified the defendants of defects which had occurred in the premises. The defendants repaired the defects including a large crack in the corner of the house which reappeared and required further repairs by the defendants in 1965. The plaintiff was informed that the crack was merely a settlement crack and that it would take some years to settle. Nothing further was done by the plaintiff until 1975 when he had an extension built to the house and his contractor unsuccessfully attempted to repair the wall. In 1979 he consulted an architect who told him that the problem was with the foundations of the house which had resulted in a major structural fault. Proceedings were issued in 1980 and the defendants claimed that the plaintiff’s case was statute barred and that the proper date of accrual of a right of action was when the damage had occurred and when the breach of contract was committed. The plaintiff submitted that the date of accrual was when the damage was discoverable and that this had been postponed by reason of a representation made by the defendant’s agent, who had lulled the plaintiff into a false sense of security by saying that the crack was a settlement crack and that this was sufficient to preclude the defendants from pleading the statute. It was held in that case that the date of accrual in the action for negligence in the building of a house is the date the defect either was discovered or should have reasonably been discovered. It was further held that the date of accrual of the right of action under the plaintiff’s contract with the defendant was the date in 1965, when the defendants had finished the remedial works. In the circumstances of that case the court was of the view that the plaintiff’s claim was statute barred and the view expressed by the defendant’s foreman as to the nature of the crack in the wall was held to be merely a statement of opinion and not sufficient to enable the plaintiff to prove fraudulent concealment. In the course of her judgment at p. 160 Carroll J. made the following comment:-
“However, it seems to me that the provisions regarding fraud or mistake do not preclude the interpretation which takes the date of discoverability as the date of accrual. In my opinion the provisions of s. 71 can co-exist with that interpretation. Therefore of the two possible interpretations I prefer the one adopted in the Sparham-Souter case which has the date of discoverability as the date of accrual. Whatever hardship there may be to a defendant in dealing with a claim years afterwards, it must be less than the hardship to a plaintiff whose action is barred before he knows he has one. The latter interpretation appears to me indefensible in the light of the constitution.
Accordingly I hold that the date of accrual in an action for negligence in the building of a house is the date of discoverability, meaning the date the defect either was discovered or should reasonably have been discovered.”
In that case a particular feature was the issue of concealment and the provisions of s. 71(1) of the Statute of Limitations which provides as follows:-
“Where, in the case of an action for which a period of limitation is fixed by this Act, either –
(a) the action is based on the fraud of the defendant or his agent or of any person through whom he claims or his agent, or
(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.”
The concealment in that case relied on but rejected as insufficient to amount to fraudulent concealment was the statement by the defendant’s agent, the site foreman that the crack was merely a settlement crack that would take some years to settle.
In the course of her judgment in that case Carroll J. referred, inter alia, to the decision in Pirelli General Cable Works Limited v. Oscar Faber and Partners [1983] 2 W.L.R. 6 in which the House of Lords held that the accrual of a right of action in actions for negligence in the construction or design of a building was the date the damage came into existence and not the date when the damage was discovered or should with reasonable diligence have been discovered. That decision is one which has been characterised in the English courts as producing a result that is “harsh and absurd”. The House of Lords in the Pirelli case applied the decision of the House of Lords in the case of Cartledge v. E.F. Jopling and Sons Limited [1963] A.C. 758, which held that s. 26 of the Limitation Act 1939, (which was similar in terms to s. 71 of the 1957 Statute of Limitations), made it impossible to hold that a cause of action ought not to accrue until the injury is discovered. Carroll J. declined to follow the decisions of the English courts referred to above. She was of the view that a law that could be characterised as “harsh and absurd” could not be constitutional. (See p. 160 of her judgement.)
Notwithstanding the views of Carroll J., the decision in the case of Cartledge v. E. F. Jopling and Sons was approved by the Supreme Court in the case of Hegarty v. O’Loughran, referred to above, in the course of which the Supreme Court overruled the decision of the High Court in Morgan v. Park Developments. The facts of the Hegarty case are somewhat different in that it concerned an action for damages for personal injury. In that case the plaintiff underwent surgery to her nose performed by the first defendant in 1973. Because the surgery was unsuccessful in 1974, the second named defendant performed a remedial operation which subsequently began to deteriorate by 1976. Proceedings were instituted against both defendants in 1982, claiming damages for personal injuries. The defendants denied negligence and pleaded that the claim was statute barred by reason of the provision of s. 11(2)(b) of the Act of 1957. It was held in the High Court that the date on which the cause of action accrued was the date on which the act causing the injury was committed and that therefore the plaintiff’s claim was statute barred. That decision was appealed to the Supreme Court and it was argued that the court should adopt an interpretation of s. 11(2)(b) consistent with the provisions of the Constitution of Ireland 1937 and that an interpretation of “accrual of the cause of action” such that the date of accrual could arise before the plaintiff was aware of the existence of the cause of action failed to vindicate the plaintiff’s constitutional right to litigate. It was held by the Supreme Court, inter alia, that the cause of action accrued at the time when provable personal injury capable of attracting compensation occurred to the plaintiff which was the completion of the tort alleged to have been committed against her; that the tort of negligence was not complete until damage had been caused by the defendant’s wrongful act; that since the provisions of s. 71 of the Act of 1957, provided that in the case of fraud, time did not begin to run against a plaintiff until the fraud was discovered or could, with reasonable diligence have been discovered, by implication in cases where there was no allegation of fraud, time began to run whether or not the damage could have been discovered; that the presumption in favour of a constitutionally valid construction of a statute only applied where there were two or more possible interpretations of a statute and the provisions of s. 11(2)(b) were so clear that only one interpretation was open to the court; that it was not unconstitutional for the legislature to set a time limit (even if such limit was absolute) within which a particular action had to be brought, that such limit represented a balance between the plaintiff’s right to litigate and the defendant’s interest in certainty in relation to potential liability.
Finlay C.J., in the course of his judgment, expressly rejected the decision of Carroll J. in the case of Morgan v. Park Developments at p. 155 of his judgment, when, having referred to the decision in Cartledge v. E.F. Jopling and Son, he stated:-
“Carroll J. in the course of her judgment in Morgan v. Park Developments [1983] I.L.R.M. 156, dealing with the decision in Carthledge v. E.F. Jopling and Son [1963] A.C. 758, and the decision in Pirelli General Cables Limited v. Faber [1983] 1 AC 1, which followed that case, pointed out that the position in our law was different from that in the law of England by reason of our Constitution and the existence of a presumption of constitutional validity in the construction of the statutes of the Oireachtas. This distinction is correctly identified but becomes relevant only if there are two or more alternative constructions of the statutory provisions open.
After careful consideration I find that I must disagree with Carroll J. in the conclusion reached by her in Morgan v. Park Developments [1983] ILRM 156, that two or more alternative constructions of s. 11(2)(a) of the Act of 1957, are open and if I reach that conclusion I must also find it impossible to conclude that two alternative constructions of the provisions of s. 11(2)(b) of that Act are open.”
He went on to comment:-
“In legislation creating a time limit for the commencement of actions, the time provided for any particular type of action; the absolute or unqualified nature of the limit; whether the court is vested with a discretion in certain cases in the interest of justice; and the special instances, if any, in which exceptions from the general time limit are provided, are, with others, all matters in the formulation of which the legislation must seek to balance between, on the one hand, the desirability of enabling persons with causes of action to litigate them, and on the other hand the desirability of finality and certainty in the potential liability which citizens may incur into the future.
It is quite clear that what is sometimes classified as the harshness and injustice of the person failing to bring a cause of action to trial by reason of exceeding a time limit not due to his or her own particular fault, may well be counterbalanced by the harshness and injustice of a defendant called upon to defend himself at a time when by the passage of years his recollection, the availability of his witnesses and even documentary evidence relevant to a claim in contract or tort have disappeared.”
He went on to conclude:-
“…that the proper construction of this subsection is that contended for on behalf of the defendants and that it is that the time limit commenced to run at the time when a provable personal injury, capable of attracting compensation, occurred to the plaintiff which was the completion of the tort alleged to be committed against her.”
In the same case Griffin J. at p. 158 of his judgment stated:-
“The period of limitation therefore begins to run from the date on which the cause of action accrued, i.e. when a complete and available cause of action first comes into existence. When a wrongful act is actionable per se without proof of damage, as in, for example, libel, assault or trespass to land or goods, the statute runs from the time at which the act was committed. However, when the wrong is not actionable without actual damage, as in the case of negligence, the cause of action is not complete and the period of limitation cannot begin to run until that damage happens or occurs.”
In the course of the submissions made by counsel on all sides herein, reference was made to number of decisions in which the concept of a discoverability test has been considered. It was considered in the case of Touhy v. Courtney [1994] 3 I.R. 1, a case in which the interpretation of the phrase “the date on which the cause of action accrued” was considered and in which the Supreme Court also had to consider the issue of the constitutionality of the Statute of Limitations 1957. That case upheld the constitutionality of the limitation period at issue and it was further noted in that case that the legislature was not obliged to introduce a “date of discoverability” rule by way of exception to the periods of limitation provided for by the Act of 1957, merely because of the fact that there existed a jurisdiction in the courts to dismiss a claim against a defendant (if brought within a limitation period) on the grounds that there had been gross delay in instituting the proceedings. Subsequently in the case of Doyle v. C. & D. Providers (Wexford) Limited [1994] 3 I.R. 57, O’Hanlon J. commented on the state of the law as follows:-
“The relevant provisions of the Statute of Limitations, 1957, which apply in relation to actions in contract and tort are to be found in s. 11 of the Act, which provides that actions founded on simple contract and actions founded on tort (with certain exceptions which do not apply) ‘shall not be brought after the expiration of six years from the date on which the cause of action accrued.’
The interpretation of the phrase ‘the date on which the cause of action accrued’ was considered by the court in the cases referred to and the constitutionality of the limitation period was challenged in Touhy v. Courtney [1994] 3 I.R. 1, but unsuccessfully.
The strictness of the rule was ameliorated in relation to claims for damages for personal injuries in the Act of 1991, s. 3 of which provided that time should begin to run from the date on which the cause of action accrued ‘or the date of knowledge (if later) of the person injured’. However, this left unchanged the general rule already recited in relation to other claims based on breach of contract and tort. The justification for the failure of the Oireachtas to relax the stringent rule of limitation in such other actions, even in relation to cases where the plaintiff did not become aware of the damage caused for a long time after the cause of action accrued, through no fault of his own, is spelt out in the judgment of the Supreme Court, delivered by Finlay C.J., in Touhy v. Courtney [1994] 3 I.R. 1.”
In the light of those decisions, is there any possibility that the plaintiffs’ case herein is not statute barred? Is the contention in the Reply to Defence correct, namely, that the cause of action accrued when the latent defects in their property became manifest and apparent and when they became aware that the defendants were negligent and in breach of duty, as suggested. It is worth recalling the words used by Finlay C.J. in the case of Touhy v. Courtney referred to above at p. 47, where he stated:-
“It cannot be disputed that a person whose right to seek a legal remedy for wrong is barred by a statutory time limit before he, without fault or neglect on his part, becomes aware of the existence of that right has suffered a severe apparent injustice and would be entitled reasonably to entertain a major sense of grievance.
So to state however does not of itself solve the question as to whether a statute which in a sense permits that to occur is by that fact inconsistent with the Constitution.
Statutes of limitation have been part of the legal system in Ireland for very many years and were a feature of the system of law operating in force in Ireland apparently both before and after the Act of Union and have continued from 1922 up to the present (cf. the judgment of Griffin J. in Hegarty v. O’Loughran [1990] 1 IR 148 at p. 157).
The primary purpose would appear to be, firstly, to protect defendants against stale claims and avoid the injustices which might occur to them were they asked to defend themselves from claims which were not notified to them within a reasonable time.
Secondly, they are designed to promote as far as possible expeditious trials of action so that a court may have before it as the material upon which it must make its decision oral evidence which has the accuracy of recent recollection and documentary proof which is complete, features which must make a major contribution to the correctness and justice of the decision arrived at.
Thirdly, they are designed to promote as far as possible and proper a certainty of finality in potential claims which will permit individuals to arrange their affairs whether on a domestic, commercial or professional level in reliance to the maximum extent possible upon the absence of unknown or unexpected liabilities.”
Thus it would appear that the position in law is clear. However, reliance has been placed by counsel on behalf of the plaintiffs on the decision of the High Court in the case of O’Donnell v. Kilsarin Concrete Limited [2002] 1 ILRM 551, a decision of Herbert J. and on the case of Invercargill City Council v. Hamlin [1996] AC 624, a decision of the Privy Council. Before considering that decision, I want to look at the decision in the case of O’Donnell v. Kilsarrin Concrete Limited referred to above. In that case the plaintiffs entered into a contract with the second defendant to build a dwelling house in May 1987. An Architect’s Certificate of Practical Completion was issued in March 1988. In 1991, cracks appeared in the outside walls. The area was re-plastered and no further difficulties arose until 1997 when a civil engineer was consulted by the Architect after cracking in the plaster in the same area was discovered. This cracking was due to the presence of a certain mineral in the concrete block. The engineer was satisfied that these cracks were of “recent origin” but it was unable to express any opinion on the 1991 cracking. He accepted that the concrete blocks were unsuitable and defective from the outset. In June 1999, the plaintiffs claimed damages for a breach of contract and negligence against the defendants. It was held that the plaintiffs were statute barred from a action for breach of contract but not statute barred from taking an action for negligence in that the cause of action in contract accrued when the breach of contract occurred and time for the purposes of the statute of limitation ran from the time of the occurrence of that breach. Secondly it was held that in the case of negligence, time began to run once the damage occurred. The court expressly followed the decision of the Supreme Court in the case of Touhy v. Courtney. In the course of his judgment, it was noted by Herbert J. that counsel for the plaintiffs in that case argued that the damage did not occur until 1997 or 1998, and that accordingly their cause of action did not accrue until then. Counsel for the defendants argued that the damage occurred in 1988 or alternatively in 1991 and that accordingly the plaintiff’s right to recover in tort is time barred. Herbert J. concluded at p. 191 of the judgment as follows:-
“In the present case, I am satisfied on the evidence that the damage only came into existence not long prior to October 1998, or in the terminology used by Geoghegan J. was not manifest until then. It is not necessary for the court to express an opinion on the vexed question of ‘discoverability’, because in this case the damage having come into existence not long prior to October 1998, it was drawn to the attention of Mr. Lawlor in May 1998 and by Mr. McLoughlin in October 1998 and the plenary summons was issued on the 4th June, 1999, well within the limitation period.”
In those circumstances it was found that the cause of action in negligence was not time barred. The reference in that passage to Geoghegan J. is a decision of the High Court (Geoghegan J.) in the case of Irish Equine Foundation Limited v. Robinson [1999] I.R. 442. That was a case in which a construction of an equine centre took place. A certificate of completion was issued in March 1986, with a final certificate in November 1987. Water started leaking through the ceiling in 1991 and the plaintiff issued proceedings in January 1996. The statute was raised as a defence. The plaintiff claimed that, as there had been no manifestation of the damage until the leak had occurred, the limitation period only ran from that time. It was held by the High Court that the defects in the building could have been detected by experts at any stage after the construction of the building. The defects had manifested themselves from the time the building had been erected and the statutory period had commenced running from then. At p. 448 of his judgment Geoghegan J. stated:-
“It would seem to me that if the roof, the subject matter of this action, was defectively designed for the reasons suggested by the plaintiff, this would have been manifest at any time to any expert who examined it. I agree with the submission in this regard made by counsel for R.K. & D., that if experts with the same qualifications as these defendants had been retained just after the roof was constructed to inspect and report and, assuming that the plaintiff’s allegations are correct, they could and would have reported that the roof was defectively designed. I am satisfied, therefore, that in so far as this action is founded on negligence in the design of the roof, it is clearly statute barred.”
Geoghegan J. further commented as follows at pp. 444 – 445 of his judgment:-
“It is obvious from those dates that the action in contract is clearly statute barred. It is trite law that the limitation period commences on the date of the breach of contract and not on the date when the damage is caused. In other words, a breach of contract per se gives rise to a cause of action. The only question which I have to consider, therefore, is whether the action in so far as it is founded on tort, (i.e. the tort of negligence) is likewise statute barred. The contention of the plaintiff is that there was no damage, or at least no damage manifested itself, until the ingress of water through the ceiling of the centre in late 1991. If the period commenced on that date then, quite obviously, the action in so far as it is founded on tort is not statute barred.
It is common case that discoverability, as such, cannot be relevant in considering what is the appropriate commencement date in respect of the limitation period. On this point at least, the view of the House of Lords taken in Pirelli v. Oscar Faber & Partners [1983] 2 A.C. 1, represents Irish law also. This is quite clear from the decision of the Supreme Court in Hegarty v. O’Loughran [1990] 1 IR 148, even though that particular case dealt with personal injuries and not damage to a building. The reasoning contained in the several judgments in Hegarty v. O’Loughran and the criticism voiced of the decision of Carroll J. in Morgan v. Park Developments [1983] I.L.R.M. 156, indicate beyond doubt that the Supreme Court rejects the discoverability test no matter what the nature of the damage claimed is.”
It is interesting to contrast that view of Geoghegan J. with the views expressed by Herbert J. on the “vexed question of discoverability”. I have to say that having regard to the various decisions to which reference has already been made, I find it difficult to come to any conclusion other than that the question of a discoverability test simply does not arise. It is quite clear from the authorities referred to above that a discoverability test does not avail a plaintiff when dealing with a plea that a claim is statute barred under Irish law.
As mentioned above, counsel on behalf of the plaintiffs also placed reliance on the decision in the case of Invercargill City Council v. Hamlin [1996] AC 624. In that case a firm of builders in New Zealand built a house for the plaintiffs in 1972. During the course of its construction a building inspector employed by the City Council carried out a number of inspections as required by the city bye laws and approved the foundations. In 1974 cracks began to appear in the building and in 1989 the plaintiff called in another builder who told him that the foundations were defective. In 1990 the plaintiff commenced proceedings against the builders and the Council seeking a sum as the cost of repairs. It was held, inter alia, that in the particular context of latent damage to a building that the plaintiffs claim was for economic loss rather than for physical damage to the house or foundations; that such loss occurred only when the market value of the house had been depreciated by reason of the defective foundations having been discovered, the measure of the loss being the cost of repairs if it was reasonable to repair or that depreciation in the market value if it was not; and that, accordingly, the judge had applied the correct test under the law of New Zealand in holding that the plaintiffs cause of action had accrued when the defects would have become apparent to any reasonable home owner and, since there were no grounds for disturbing the findings of fact, the plaintiff’s action had been brought in time and the Council were liable for damages in negligence. The Privy Council declined to follow the decision in Pirrelli. Particular emphasis was laid on the fact that the loss in the case was economic loss which occurred only when the market value of the house concerned had been depreciated by reason of the defective foundations having been discovered. In the course of the judgment of the Privy Council in that case, Lord Lloyd of Berwick commented at p. 648 as follows:-
“In other words, the cause of action accrues when the cracks become so bad, or the defects so obvious, that any reasonable home owner would call in an expert. Since the defects would then be obvious to a potential buyer or his expert, that marks the moment when the market value of the building is depreciated and therefore when the economic loss occurs. Their Lordships do not think it is possible to define the moment more accurately. The measure of the loss would then be the cost of repairs, if it is reasonable to repair, or the depreciation in the market value if it is not. . . .
This approach avoids almost all the practical and theoretical difficulties to which the academic commentators have drawn attention, and which led to the rejection of the Pirrelli decision [1983] 2 A.C. 1, by the Supreme Court of Canada in the Kamloops case, 10 D.L.R. (4) 641. The approach is consistent with the underlying principle that a cause of action accrues when, but not before, all the elements necessary to support the plaintiff’s claim are in existence. For in the case of a latent defect in a building the element of loss or damage which is necessary to support a claim for economic loss in tort does not exist so long as the market value of the house is unaffected. Whether or not it is right to describe an undiscoverable crack as damage, it clearly cannot affect the value of the building on the market. The existence of such a crack is thus irrelevant to the cause of action.”
He went on to comment:-
“It is regrettable that there should be any divergence between English and New Zealand law on a point of fundamental principle. Whether the Pirrelli case, [1983] 2 A.C. 1, should still be regarded as good law in England is not for their Lordships to say. What is clear is that it is not good law in New Zealand.”
It is my view that the decision does not assist this Court in reaching a decision. The law in this jurisdiction is clear as to the interpretation of the Statute of Limitations. In any event, the plaintiffs have not sought to make out a case for damages for economic loss in their pleadings.
The phrase “the date on which the cause of action accrued” is key to the determination of the issue that arises in this case. The interpretation of that phrase has been considered by the courts in this jurisdiction and the Supreme Court has made clear how it should be determined. It is necessary in applying the interpretation of that phrase to consider the facts of this case. One of the points made by counsel on behalf of the plaintiffs was that the cause of action was not complete until such time as it was clear that the cracks in the property were structural. This did not become known to the plaintiffs until 2000 when a further inspection was carried out in respect of the property. It was argued that until this time the plaintiffs could not have sued. The plaintiffs when purchasing the property in 1997 took the prudent course of having the property surveyed. Although there were visible cracks apparent at that time it was not clear to the plaintiffs that the cracks were structural. In this context I think it is important to consider and look at the particulars raised on behalf of the second named defendant in this respect and the replies thereto.
In a letter of the 21st March, 2006, the following particulars were raised and replies were furnished on the 14th July, 2006, as follows:-
“5. Particularise (a) the remedial works which had been carried out to the property, reference to which is made a para. 8.2 of the statement of claim; and (b) the condition or efficacy of the same as at 25th September, 1997.
Reply: The plaintiffs will furnish full details of the remedial works carried out to the property upon obtaining discovery from the first named defendant. Without prejudice, the plaintiffs believe that settlement cracks in the upstairs portion of the property were repaired by the first named defendant over the duration of a number of days. The condition of the remedial works as and at the 25th September, 1997, will be furnished upon receipt of discovery from the first named defendant.
6. Specify the manner in which the second named defendant’s inspection and examination of the property was “inadequate” as pleaded at para. 8.3 of the statement of claim.
Reply: The second named defendant’s inspection and examination was inadequate in that he failed to identify and ascertain that remedial works had been carried out to the property and failed to attach any or any adequate significance to the cracks he observed in the structure.
10. State whether it is alleged by the plaintiff’s that the defects referred to in the two preceding paragraphs were (a) manifest and (b) ought to have been evident to the second named defendant.
Reply: We refer you to the second named defendant’s report attached herewith. The second named defendant noted some cracks which “were not considered to be any cause for alarm or any cause of immediate threat to the integrity of the structure, nevertheless ought to be attended to”. The two areas were (a) on the external face of the garage wall and (b) on the plasterwork of the chimney. The plaintiff asserts that the second named defendant noted the cracks in question, but failed to attach any or any adequate or proper significance to same.”
Having regard to the pleadings in this case and the facts agreed before me I cannot come to the conclusion that the cause of action against the first and second named defendants accrued within the six years prior to the issue of these proceedings. There is nothing whatsoever to suggest that the damage complained of occurred within that time-frame. What is contended is that “the latent defects became manifest” within the time frame. That is nothing short of a discoverability test. Contrary to the position as set out and found by Herbert J. in the case of O’Donnell v. Kilsarin Concrete Limited, this is not a case where one could say that the damage was of recent origin.
The words of McCarthy J. in the case of Hegarty v O’Loughran at p.164 are apposite:-
“The fundamental principle is that words in a statute must be given their ordinary meaning and, for myself, I am unable to conclude that a cause of action accrues on the date of discovery of its existence rather than on the date on which, if it had been discovered, proceedings could lawfully have been instituted. I recognise the unfairness, the harshness, the obscurantism that underlies this rule, but it is there and will remain there unless qualified by the legislature or invalidated root and branch by this Court.”
As mentioned above, the rule has been qualified by the legislature in the case of personal injuries actions but the attempt in Tuohy v Courtney to invalidate the rule failed. Unfortunately, it follows that the plaintiffs’ claim is statute barred.
I want to deal briefly with one final matter raised on behalf of the plaintiffs in the written and oral submissions. It was suggested that the underlying causes for the development of the structural defects were hidden and concealed from the plaintiffs, both after the initial construction works and by the subsequent remedial works. Accordingly it was contended on behalf of the plaintiffs that the defects were “concealed” within the meaning of s. 71 of the Statute of Limitations 1957. It was also contended that this was unconscionable and thus brought s. 71 into play. Counsel for the first named defendant took particular issue to this argument being made. It was pointed out that the plaintiffs had not raised any issue in their pleadings in respect of s. 71 of the Statute of Limitations 1957. I have to say that I accept that submission. In order to rely on s. 71, the plaintiffs would have had to lay the ground for making such an assertion. No attempt to do so has been made either in the pleadings themselves or in any other appropriate way. There are simply no facts before the court that could lead to such a conclusion. In those circumstances, s. 71 cannot be relied upon by the plaintiffs.
Brandley v Deane
[2017] IESC 83
THE SUPREME COURT
[Appeal Nos. 39/2016 and 40/2016]
Clarke C.J.
McKechnie J.
MacMenamin J.
Dunne J.
O’Malley J.
Between /
LIAM BRANDLEY and WJB DEVELOPMENTS LIMITED
Plaintiffs/Respondents
-and-
HUBERT DEANE trading as HUBERT DEANE & ASSOCIATES and JOHN LOHAN trading as JOHN LOHAN GROUNDWORKS CONTRACTOR
Defendants/Appellants
JUDGMENT of Mr. Justice William M. McKechnie delivered on the 15th day of November, 2017
Introduction
1. This judgment concerns the commencement date of the six-year limitation period for property damage claims founded in the tort of negligence. The Appellants contend that the Court of Appeal has, in substance, applied a test of discoverability in this case, despite stating in its judgment that such was not the test. This Court certified three points upon which leave to appeal was granted, although in essence these points ask but one question: when does time run for the purposes of the Statute of Limitations in such claims? Of central importance to the determination of this appeal is when the cause of action in negligence accrued. That issue in turn hinges on what constitutes actionable ‘damage’ for the purposes of the law of negligence.
Definitions and Descriptions
2. As will become clear over the course of this judgment, there would appear to be five distinct possible starting points from which the clock might run for limitation purposes. This area of the law has been bedevilled with misdescription, lack of clarity and confusion between terms which are quite different, and with their interchangeable use when it is ill-judged and inappropriate to do so. Thus, it may be worth explaining in a little more detail at the outset what each of these different commencement points means. It will be appreciated that they form a spectrum of potential starting points for the limitation clock, with the date of the wrongful act being the earliest and thus the most defendant-friendly, and the date of actual discovery being – usually – the furthest along that spectrum and therefore the most beneficial to the plaintiff. What is meant by some of these events may seem obvious, and will be on some occasions, but not always; others must be ascribed a more technical meaning, and the distinction between them, even though subtle and nuanced, can be critical. In practice some of these dates may frequently coincide with one another, but that will not always be so.
3. The following list sets out just what is meant by each of these terms for the purposes of this judgment:
i. The date of the wrongful act – this refers to the date on which the defendant committed the act or omission said to constitute the wrong, even if the consequent damage did not result on that same date. This is the date of the breach of duty.
ii. The date that the damage occurs – this refers to the date on which the loss which is sought to be recovered actually happened, even where that is subsequent in point of time to the wrong which caused it.
iii. The date that the damage is manifest – this refers to the date on which the damage was capable of being discovered and capable of being proved, even if there was no reasonable or realistic prospect of that being so.
iv. The date of discoverability – this refers to the date on which the damage could or ought with reasonable diligence to have been discovered.
v. The date on which the damage is actually discovered – this refers to the date on which the plaintiff in fact discovered the property damage.
Each of these descriptions is deliberately succinct as the same are intended as an interpretive tool to aid the reader in navigating this judgment. It should be noted, however, that such terms are more fully discussed in the rest of this judgment and are again summarised, in greater detail, in the conclusion section hereof.
Background and Procedural History
Background Facts
4. This case arises out of alleged negligence, breach of duty, including breach of statutory duty, and breach of contract in the construction of two houses at Sycamore Court, Corrolough, Williamstown, Co. Galway. Mr. Liam Brandley, operating through his company, the Second Named Plaintiff/Respondent, WJB Developments Ltd., was the developer of this project. Mr. Brandley and the company are collectively referred to in this judgment as “the Plaintiffs” or “the Respondents”. The First Named Defendant/Appellant, Mr. Hubert Deane, is a consulting engineer who was retained to supervise the construction of the foundations and to inspect them when they were originally laid, as well as to certify, which he did, that the foundations and the houses built thereon were in compliance with the relevant planning permission and building regulations. The Second Named Defendant/Appellant, Mr. John Lohan, was the contractor whose work included laying the foundations of the houses; this was done in March, 2004. Mr. Deane and Mr. Lohan are together referred to as “the Defendants” or “the Appellants.”
5. The two houses in question were part of a small terrace of three houses which were constructed on one common raft foundation. The Plaintiffs’ case is that the two houses developed cracks in December, 2005. It is their contention that this happened as a result of the use of inadequate, soft and compressible materials in the foundations, in that the wrong type of stone was used. As the issue on this appeal concerns the Statute of Limitations, it is useful at the juncture to set out a timeline of the relevant dates. They are as follows:
• The foundations were completed in March, 2004.
• On the 4th September, 2004, Mr. Deane issued his Certificate of Compliance with planning permission and with the building regulations.
• The houses in question were completed some time between September, 2004 and January/February, 2005.
• In December, 2005, Mr. Brandley observed that cracks had appeared in each of the houses.
• The Plaintiffs issued their Plenary Summons on the 30th November, 2010.
The precise date of completion of the houses was the subject of some debate at trial – see paras. 15 and 17, infra.
6. It is worth pointing out as part of the lead-in that the other house on the common foundation, which was completed earlier than the other two at the behest of its prospective purchaser, was also the subject of litigation. Its owner, Mr Aidan Conneely, sued both defendants named in this case, as well as WJB Developments Limited, in respect of cracks that appeared in his house in December, 2005. In those proceedings, which did not involve a limitation issue, the High Court determined that both the engineer and contractor were negligent, although since the amount of damages had been agreed by these parties, it was not necessary to apportion liability as between them. The claim over against WJB Developments for a contribution was dismissed by judgment of the High Court delivered on the 11th November, 2011.
7. As is well known, the general limitation period for an action founded on tort (subject to several exceptions, such as personal injuries and defamation actions) is six years from the date on which the cause of action accrued (section 11(2)(a) of the Statute of Limitations 1957, as amended (“the Statute of Limitations” or “the 1957 Act”)). The Plaintiffs’ case is one founded solely on common law negligence, as it is acknowledged by all that their cause of action in contract is clearly statute-barred. The critical question, therefore, is when did the cause of action accrue: if the relevant date is March or September, 2004, then the proceedings are out of time and the claim cannot proceed; on the other hand, if, as the Plaintiffs contend, the cause of action accrued when the cracks appeared in December, 2005, then their case was initiated within time. It was with this sole point that the judgments of the High Court, the Court of Appeal and now this Court are concerned.
The High Court
8. As above noted, the Plenary Summons issued on the 30th November, 2010, with the Statement of Claim being dated the 9th March, 2011. The particulars of negligence alleged against Mr Deane included, inter alia, the furnishing of a certificate that both houses were structurally sound, failing to ensure that adequate material was used in the foundations, and failing to supervise or adequately monitor the work carried out by Mr Lohan. As against Mr Lohan it was alleged, inter alia, that he caused or permitted a defective and dangerous foundation to be laid, that he used materials that were soft, compressible and inappropriate for use as constituent elements of a foundation, and that he caused or permitted cracks to appear in the houses. Mr Lohan’s Defence was delivered on the 25th July, 2012, and that of Mr Deane followed on the 15th November, 2012. Both Defendants alleged, as their only substantive plea, that the claim was statute barred having regard to the Statute of Limitations 1957. By Notice of Motion dated the 15th July, 2014, the First Named Defendant sought a trial of preliminary objections raised in his Defence, namely, the plea concerning the time bar (and related matters which are no longer relevant), with a view to having the Plaintiffs’ claim against him dismissed without a determination on the merits.
9. Mr Deane’s application was heard by Barr J. in the High Court. The learned judge delivered a reserved judgment on the 28th November, 2014. He took the view that as there was a factual dispute between the parties as to when the actual damage occurred to the property, the same could not be determined on affidavit only. In such circumstances it would be necessary to hear oral evidence in order to reach a conclusion on that issue and thus on the Statute of Limitations point. The application was therefore refused, but the limitation plea was allowed to remain a live issue, to be determined thereafter as part of the trial of the action.
10. Curiously, there does not appear to have been any similar application made by Mr Lohan or his company; however, in light of the fact that the limitation point was now to be determined as part of the overall case, these defendants fully engaged with this issue as if they too had separately sought to have the claim dismissed under the 1957 Act.
11. The case itself, which was heard before Kearns P. on the 16th April, 2015, proceeded in a very truncated fashion, with the learned President declaring at the outset that as the point was essentially a net legal one, “only short formal evidence [would] be required to establish the key dates of the laying of foundations, the purchase by the client [and] when the defects became apparent”. As no objection was taken to this, the case proceeded thus. Accordingly, only two witnesses gave evidence: Mr Brandley and Mr Deane.
12. Following his direct examination, Mr Brandley was cross-examined by counsel on behalf of each Defendant. Mr Deane then gave evidence, and was cross-examined by counsel for the Second Named Defendant and counsel for the Plaintiffs. As will be seen, the Appellants/Defendants very much put all of their eggs in one basket, in that negligence was quite freely admitted; their defence, in effect, certainly on the liability side, relied solely on the success of the limitation plea. This must surely have been the correct approach in light of the High Court’s findings in the earlier Conneely case (see also paragraph 6, supra, and paragraphs 37 and 38, infra).
13. First, however, to deal with Mr Brandley’s testimony. The following exchanges from his examination-in-chief are of relevance to the issue before the Court:
“Q. Was there any damage evident when [Mr Conneely] bought the [first] house from you … when he moved in in December, 2004?
A. No none, none whatsoever.
Q. You, in fact, do you know Mr Conneely?
A. I do, I used drink in the same bar in the same town. I knew him well like.
Q. When was the first time that you became aware of any damage to his house or when did the damage occur to his house?
A. It would be December, 2005. Around that time he came to me and he said he had cracks appearing in the walls. And I thought they might be just hairline cracks. You get cracks from first off in any house so he said it was December 2005 going into 2006 I looked at it again.
Q. What happened as a result of that?
A. The cracks got worse and … then he came back to me then again and I hired an engineer to look at it.
Q. Then we know that ultimately he brought proceedings against you and the other two parties that were the subject matter of the previous case. Now, in relation to house 2 and 3, can you indicate when damage occurred to those houses?
A. Probably hairline cracks appeared in 2005, or the end of 2005 into 2006 there was hairline cracks like.
Q. You had been renting out those houses yourself. Did you go to inspect after Mr Conneely complained or how?
A. Oh I did. I looked around to see what was there in the other two but it looked like hairline cracks. Then he [came] back to me later on and said they were getting worse so I hired an engineer to look at it.
Q. Prior to letting out those houses in January/February 2005, was there any damage to them at that stage?
A. No.”
14. Following a brief aside, the direct examination continued as follows, starting with an intervention from the judge:
“The President: […] The issue is did the damage occur prior to six years before the 30th November, 2010, or did it not. That is the real issue.
Q. You know what the issue now is in the case Mr Brandley. The judge has just succinctly summarised it. As far as you are aware, when did the damage start?
A. December 2005, into 2006 Aidan Conneely came to me about the cracks and that. That is the first time I seen any of them.
Q. There was never any complaint to you before that?
A. No.
Q. And when you were renting out the property in early 2005 was there any damage?
A. Tenants never said anything.
Q. Did you see any damage yourself?
A. Not until I went in and looked and I seen hairline cracks afterwards but I never had reason to go into the houses because they were rented and they made no complaint to me so.”
15. Under cross-examination, Mr Brandley accepted that the last certificate issued by Mr Deane was dated the 4th September, 2004, and that this defendant had no further dealings with the development after that, although he stressed that the houses were not finished until December, 2004. He refused to accept that the foundations must have been defective from the day they went in, and maintained that he saw no flaws or “snags” in the house prior to December, 2005. He also acknowledged that he himself had been sued over the foundations by Mr Conneely a number of years before the issue of his own proceedings in 2010.
16. In his own examination-in-chief, Mr Deane stated that he had been asked to submit a Commencement Notice for the project, that the foundations were in situ in March, 2004 and that he sent the Notice in early April, 2004. He said that the last certification of the development was on the 4th September, 2004. Mr Deane gave evidence that he certified that the houses were in compliance with building and planning regulations and that the foundations were put in in a good manner; however, he also said that he had not inspected the stone going in, but instead had inspected the steel in the foundation when that was in. It is worth setting out the entirety of the brief cross-examination of Mr Deane by counsel on behalf of Mr Lohan. It went as follows:
“Q. Mr Deane, the foundation was defective, isn’t that right?
A. It appears so.
Q. It was defective in that or because inadequate materials were used in its construction?
A. That is what I am led to believe. I didn’t inspect the stone going in but that is what we’re led to believe.
Q. If you had carried out an inspection, you would have detected the difficulty, wouldn’t you?
A. Absolutely, yes.
Q. Putting it another way, whether you carried it out or anyone of your skill would have carried it out, they would have detected the flaw or the defect in that foundation?
A. Correct.
Q. They would have done so at any time from the moment the foundation was laid, which is March 2004?
A. Correct.
Q. The flaw was there from the very beginning?
A. It appears so.
Q. The defect, the problems that [are] set out through the Plaintiff’s legal team, the complaint that they didn’t use proper materials. Would you accept [that] Mr Lohan did not use proper materials and do you accept that to be the case?
A. It appears to be the case at this stage.
Q. And, as I say, it is in March 2004 [that] the foundations were laid and then of course the rest of the construction continued but it is now a problem that is going to emerge hereafter?
A. Yes.
Q. The flaw, the defect, the want of care on the part of the constructor has taken place, isn’t that right?
A. Correct. Yes.”
17. Mr Deane was next cross-examined by counsel for the Plaintiffs. The following relevant exchanges occurred:
“Q. You didn’t inspect the foundations that were opened and poured, or did you?
A. I didn’t inspect the dig. The foundations were opened at steel level before they poured the concrete and I would consider that an open foundation which would be trenches and the steel laid in place and it is shuttered out ready to receive concrete.
Q. In fairness to you, Mr Deane, you do accept you carried out an inadequate inspection and you are not trying to stand over that, isn’t that right?
A. I probably should not have done what I did at the time. If right was right I should have gone back and taken out the forty or fifty loads of fill. The project was right beside my own office. We are all mates. We all socialise together. I don’t think I would be too well got if I ordered fifty loads of stone to come out and I had to inspect a dig.”
Mr Deane disagreed when it was put to him that the building was finished only in December, 2004; he stated that he would not have issued a certificate of compliance in September of that year if he had not considered that the houses were complete. Although the houses needed fits outs, painting etc. ahead of a prospective purchaser moving in, Mr Deane was of the view that the structures of the houses were finished in September, 2004. He also stated that he had no idea when the cracks appeared in the houses.
18. That was the entirety of the evidence. Having heard from the two witnesses, the President concluded that the Plaintiffs could not succeed. He took the view that the case law firmly excludes a discoverability test:
“I have come to the conclusion, somewhat regretfully, that the plaintiff can’t succeed and no authority has been opened to me to displace the views expressed by Ms Justice Dunne … in Murphy v. McInerney Construction Limited [2008] IEHC 323, along with other cases which are referred to by Mr Justice Barr in his judgment, [which] firmly exclude a discoverability test as being the relevant starting date and I would have thought if there was any authority that could be invoked on behalf of the plaintiff in this particular case it would have been … [and] that they would have been included in a book of authorities which comprehensively laid out the law to suggest that a different view could be taken and it was open to the Court to take a different view than has been taken in the cases and judgments of Mr Justice McCarthy and the judgment of Mr Justice Birmingham and the judgment of Ms Justice Dunne.”
The reference to Mr Justice McCarthy must relate to the judgment of McCarthy J. in Hegarty v. O’Loughran & Edwards [1990] 1 IR 148 and the reference to Mr Justice Birmingham must refer to his judgment in Hegarty v. D&S Flanagan Brothers Ballymore Ltd and ors [2013] IEHC 263, both of which are referred to later in this judgment.
19. The learned President also noted that Mr Brandley may have recourse to an alternative remedy arising from the fact that no proceedings were commenced within the statutory period; that, however, was a matter for another day. However, in the absence of any law being opened to suggest a different view on the limitation point, Kearns P. was of the opinion that he had no alternative but to uphold the Defendants’ contention and dismiss the Plaintiffs’ claim.
20. The above represents the entirety of the judgment; as such it can be seen that no findings of fact upon which his conclusion was based were made or set forth therein. In particular, it does not appear that the High Court determined, as a matter of primary or secondary fact, when the cracks in the properties occurred or became manifest. This failure presents considerable difficulties in a number of areas, including those of analysis, determining the appropriate test, and, depending on what that test might be, in deciding what final Order this Court can or should make.
The Court of Appeal
21. The plaintiffs appealed to the Court of Appeal. The judgment of that Court was delivered by Ryan P. (Irvine and Hogan JJ. concurring) on the 2nd March, 2016 ([2016] IECA 54). The learned President of that Court took the view that Kearns P. “was in error in this case”; as he explained at paragraph 15 of his judgment:
“15. … It is clear that negligence by itself without the accompaniment of damage or loss is not actionable. The plaintiffs did not suffer damage at the time when the defective foundations were installed. When the defective foundation was put in, the only complaint that the plaintiffs could have had was that the foundation was defective. They had not suffered any damage at that point – there was merely a defective foundation – but that is not damage of a kind that is actionable in tort. Indeed, it seems to me to be very questionable whether there was an action in breach of contract at that time, but I do not have to consider that on this appeal.”
22. The President then referred to recent jurisprudence in the neighbouring jurisdiction which in his view made it clear that financial loss in respect of specific defects does not give rise to a cause of action in negligence unless the defects result in damage to other property (see Robinson v. P.E. Jones (Contractors) Ltd. [2011] 3 WLR 815). Returning to the case at hand, Ryan P. found that the cause of action accrued in December, 2005, as the defective foundations did not constitute ‘damage’ for the purpose of the tort of negligence:
“17. The evidence here is that the foundation of these houses was defective, but it did not cause damage at that time. It caused damage in December 2005. The evidence is not that there was hidden damage which became discoverable at a later point; it is that the damage resulting from the defective foundations happened in December 2005.
18. It seems to me to be clear that no damage resulted to the plaintiffs in March 2004 when the foundations were installed. I do not agree that the plaintiffs had any right of action at that point. They could not prove any loss. Moreover, it seems to me that it would have been quite open to the second defendant, Mr. Lohan, or the first defendant, as the consulting engineer, to have subsequently discovered or decided to investigate the condition of the foundations. They would have been entitled to put right any defects that they identified and the plaintiffs would have had no right of action as a result. There could have been some delay in the completion of the project, but that would have given rise to entirely different considerations. In respect of the specific acts of negligence, the fact that the defendants might have identified the defects and remedied them is an illustration of the absence of loss at that point and the unavailability to the plaintiffs of any right of action there and then.”
23. The learned President noted that these observations were “no more than an expatiation upon the proposition outlined in [Hegarty v. O’Loughran & Edwards [1990] 1 IR 148 (“Hegarty v. O’Loughran”)], namely, that the cause of action does not arise until loss or damage have been sustained by the plaintiff.” Accordingly, he found that the Defendants had “pitched the beginning of the period of limitation at too early a point that does not take account of the requirement that damage be actually suffered by the plaintiff in order to complete the cause of action” (para. 20). Ryan P. therefore allowed the appeal. Given the express admissions of negligence, he would have remitted the matter to the High Court for an assessment of damages only, but as that issue was not before the Court of Appeal he left it as a question to be decided by the High Court.
Application for Leave to Appeal to this Court
24. The Defendants/Appellants each sought leave to appeal from the entire decision of the Court of Appeal, which applications were opposed by the Plaintiffs/Respondents. By a Determination dated the 1st June, 2016 ([2016] IESC DET. 70), this Court, having asked rhetorically whether the law was altered by the Court of Appeal, held that the applications had raised a matter of general public importance and granted leave to appeal on the following points:
i. Does time run for the purpose of the Statute of Limitations in property damage claims from when the damage is manifest? (“Manifest”)
ii. Does time run for the purpose of the Statute of Limitations in property damage claims from when the damage is discovered? (“Discovered”)
iii. Does time run for the purpose of the Statute of Limitations in property damage claims from when the damage occurs? (“Occurs”)
25. As will readily be appreciated, these three points in essence represent separate possible answers to what is really the overarching question to be determined on this appeal; simply put, it asks from when does time run for the purpose of the Statute of Limitations in property damage claims? Indeed, although leave was not granted directly on any further possibility, it will also be necessary, as is evident from paras. 2 and 3, supra, to address a fourth and even a fifth option, namely, whether time runs from when the act or omission said to constitute negligence took place (“the Wrongful Act”) or from when the damage could or ought reasonably to have been discovered (“Discoverability”). It will become apparent over the course of this judgment that the key issue in this case is the question of what constitutes actionable ‘damage’ for the purposes of the tort of negligence, for the same will determine when the cause of action can be said to have accrued.
Submissions
Submissions of the Appellants
26. The written submissions filed on behalf of each Appellant are virtually verbatim copies of one another. Therefore, unless otherwise indicated, the following can be considered to represent the position of both Appellants. They submit that the Court of Appeal erred in law in holding that the defective foundations did not constitute damage for the purposes of the tort of negligence, and that that Court misapplied the established test for determining the date on which a cause of damage founded on property damage accrues in law. It is submitted that the Court of Appeal should have dismissed the Plaintiffs’ appeal based on Mr. Deane’s evidence that he would readily have detected defects in the foundations had he inspected them when they were laid in March, 2004. That Court, in failing to hold that the defective foundations constituted damage, and finding instead that damage only occurred when cracks appeared in the walls of the houses in December, 2005, in substance applied the test of discoverability, despite unequivocally stating earlier in its judgment that that was not the test to be applied in property damage claims in negligence.
27. The Appellants submit that there was uncontroverted evidence from Mr. Deane to the effect that the foundations were defective from the moment they were laid. The Court of Appeal ignored this evidence and instead drew a notional and unreal distinction between the defective foundations and the cracks in the walls, with only the latter being recognised as ‘damage’. It is submitted that there was no evidential or other basis for the Court of Appeal to treat the defective foundations other than as damaged foundations and therefore actionable damage. Thus ‘damage’ clearly occurred in March, 2004 or, at the latest, September, 2004, so far as the negligent certification by Mr. Deane is concerned; either way, proceedings were not commenced until November, 2010, in excess of six years after the critical date. The cause of action is therefore statute barred.
28. The Appellants refer to much case law in support of these submissions. Hegarty v. O’Loughran is relied upon for the proposition that the time limit in negligence actions begins to accrue on the date on which damage actually occurs and manifests itself, and not from the date on which damage is discovered. They also cite the decision in Irish Equine Foundation Ltd v. Robinson [1999] 2 IR 442, where the High Court (Geoghegan J.) held that the defects in the roof of an equine centre had manifested themselves from the time that the building had been erected and not on the later date when leaks occurred. The plaintiff’s claim in that case was, accordingly, held to be statute-barred, as proceedings had not issued within six years of the construction of the buildings. The Appellants further rely on the judgment of Dunne J. in Murphy and Anor v. McInerney Construction Ltd [2008] IEHC 323 as authority for the submission that there is no discoverability rule for property damage claims under Irish law.
29. The Appellants cite the decision of this Court in Gallagher v ACC Bank PLC trading as ACC Bank [2012] 2 I.R. 620 (“Gallagher v. ACC Bank”) in support of the contention that it is not necessary for a plaintiff to wait for the full quantification of losses before commencing an action for damages and that the date of accrual for a cause of action for property damage commences when there is a defect/damage which is discernable and provable. In other words, time begins to run once provable property damage, which will require the plaintiff to incur costs in remedying it, and thereby a defect capable of attracting compensation, occurs in or to a plaintiff’s property. A defect in property which requires remediation therefore constitutes damage, and proceedings in respect thereof must be commenced within a period of six years. It is submitted that the date on which the foundations were laid in March, 2004, is the date on which damage was discernable and provable in the context of negligence. As the defective foundations are a particular of negligence alleged by the Respondents in their Statement of Claim, it follows that the cause of action accrued at that time, notwithstanding that subsequent damage was caused to the walls in December, 2005 and 2006.
30. The Appellants also cite the High Court decisions in Hegarty v. D&S Flanagan Brothers Ballymore Ltd and ors [2013] IEHC 263 (Birmingham J.) and Murphy v. Joe O’Toole & Sons Ltd and Anor [2014] IEHC 486 (Baker J.). Applying those cases to the facts of the within proceedings, it is said that it is clear that the foundations were laid more than six years prior to the commencement of the proceedings and that they were defective at that time; accordingly, any negligence and accompanying damage (i.e. the defects in the foundations which later caused further damage) occurred more than six years prior to the institution of proceedings, and therefore the claim is time barred. The Appellants moreover rely on the judgment in Murphy v. Joe O’Toole & Sons and that of O’Donnell J. in Gallagher v. ACC Bank in support of the contention that where a claim is made in both contract and tort, a court should scrutinise it carefully to ascertain whether the true cause of action is grounded in contract and should not engage in an artificial exercise of distinguishing between or decoupling the two claims. It is submitted that on either basis, the claim against the Appellants is statute barred.
31. Finally, Mr Deane has submitted that by reason of the undisputed evidence that his last involvement in the matter concluded with the certification in September, 2004, it should follow that as proceedings were not instituted within six years of that point the claim as against him is stale. He also asserts that as the reasonable inference from the judgment of the Court below is that the status of the works until in or about December, 2004 did not give rise to a cause of action, and as it was the Second Named Respondent as builder of the development who carried out works after March, 2004, it is difficult to avoid the conclusion that it was the Second Named Respondent which caused or contributed to the “damage” which rendered the matter actionable. Any such subsequent works were not certified by Mr Deane and thus there is no basis to bring a claim against him in relation to such works. Accordingly, Mr Deane contends that the claim against him, at least, must be statute barred.
Submissions of the Respondents
32. The core of the Respondents’ submissions is that the damage in this case occurred and manifested itself in December, 2005, and that the summons issued within time. There was no evidence of damage occurring or manifesting at an earlier date. They submit that the Appellants are asking the Court to hold that time runs from a period in which a defect was not manifest and was, as a matter of practicality, undiscoverable.
33. It is pointed out that Mr Brandley gave evidence that damage occurred in or around December, 2005 and that he was not challenged on his dates; instead Mr Deane, who did not in fact inspect the foundations or stone as laid at the time of his admittedly negligent certification, stated that had he carried out such an inspection, he may have detected a flaw or defect. The Respondents submit that this evidence of Mr Deane was self-serving speculation in the context of a preliminary application concerning the Statute of Limitations. Furthermore, Mr Deane did not give evidence to contradict Mr Brandley’s evidence as to when the damage occurred. As the onus of proof rested on the Appellants on the limitation point (see, for example, Clarke v. O’Gorman [2014] 3 I.R. 340 and Wicklow County Council v. Fortune [2012] IEHC 406), it is submitted that the categorical evidence of Mr Brandley as to when the damage occurred and manifested itself should be preferred to Mr Deane’s speculation in relation to a defect.
34. The core of the Respondents’ submissions is that a defect does not equate to damage. They cite much case law in support of this proposition, including Pirelli General Cable Works Ltd. v. Oscar Faber & Partners [1983] 2 A.C. 1, London Congregational Union Incorporated v. Harriss and Anor [1988] 1 All ER 15 and Ketteman v. Hansel Properties Ltd. [1987] 1 AC 189. They state that this was acknowledged by Birmingham J. in Hegarty v. D&S Flanagan Bros. [2013] IEHC 263. These cases are analysed in some detail below. They rely also on O’Donnell v. Kilsaran Concrete Ltd. [2001] 1 I.L.R.M. 551 and note that the distinction between ‘defect’ and ‘damage’ was not addressed in Irish Equine. The Respondents submit that the Appellants are mistaken in equating the alleged defect in the foundations with damage, and that they called no evidence to the effect that the defective foundations caused damage or gave rise to any loss to the Respondents. Defects in the foundations do not amount to damage such as to make the tort of negligence actionable. There could be no claim until the damage occurred and manifested itself (which the Respondents take to mean “became apparent”). A defect might never cause damage and the Appellants have conflated the two. Moreover, the Respondents point out that at no stage have the Appellants relied on the “doomed from the start” principle which emerges from Pirelli.
35. The Respondents rely on several decisions of this Court to the effect that the tort of negligence is not actionable in the absence of proof of actual damage, i.e. that a cause of action in tort does not accrue until the two component parts have occurred, namely, the wrong and the damage (Hegarty v O’Loughran; Gallagher v ACC Bank). They also refer to several cases, including Pirelli, in support of the proposition that a cause of action will accrue only when physical damage occurs to the building. Moreover, they cite Gallagher v. ACC Bank in support of their submission that a plaintiff will only have a cause of action in negligence when there is a breach of duty resulting in actual as opposed to prospective loss or damage; per Fennelly J. at p. 656 of that judgment, “I do not think the cause of action accrues when there is a mere possibility of loss.”
36. The Respondents stress at several points in their written submissions that they are not making a case for a discoverability test in property damage claims. On their central argument, discoverability is not needed to defeat the Statute in this case. Simply put, the cause of action accrued when the damage manifested itself, which was when the cracking occurred. The Respondents do, however, note that a discoverability test was preferred in New Zealand and upheld by the Privy Council in Invercargill City Council v. Hamlin [1996] AC 624. They also observe that the Supreme Court of Canada in Kamloops v. Nielsen [1994] 2 SCR 2 declined to follow Pirelli, considering a discoverability test, potentially involving the investigation by the courts of facts many years after their occurrence, to be a lesser evil than a law which bars a claim before a plaintiff is even aware of its existence.
Discussion/Decision
37. It may be useful to state at the outset what this case is not about; this can be deduced from the manner in which it was both pleaded and argued. The Defendants/Appellants freely admitted that a duty was owed and that negligence was committed – their sole point of defence related to the Statute of Limitations. Such was the context within which the trial judge was asked to resolve the limitation issue, and to do so in accordance with conventional principles. Therefore no issue arises as to when or in what circumstances a builder might owe a duty of care in respect of the construction or repairing of a house, or the class of persons to whom such a duty might be owed, or the type of damage which such duty is intended to cover. For example, this case is not about whether damages for qualitative non-dangerous defects, discovered and remedied at a loss before causing physical injury or damage to other property, is recoverable.
38. In addition, the position of public authorities, discharging public or statutory functions, does not arise either directly or by analogy. Moreover, the case was never presented as one involving pure economic loss, nor did any of the parties submit or even suggest that the case law in that respect, in particular that from the neighbouring jurisdiction, should be consulted, let alone considered or applied. Thus consideration of cases such as Ward v. McMaster [1988] I.R. 337, Junior Books Ltd v. Veitchi [1983] AC 520, Murphy v. Brentwood District Council [1991] 1 AC 398, Invercargill City Council v. Hamlin [1994] 3 NZLR 513, Glencar Exploration v. Mayo County Council (No. 2) [2002] 1 IR 84 and many other decisions in this field of jurisprudence is not required, at least insofar as the policy question of the existence and extent of a duty of care is concerned, nor would it be desirable to do so in the absence of necessity and submissions to that effect (see, in this regard, McMahon and Binchy, Law of Torts (4th Ed., Bloomsbury Professional, Dublin, 2013) at paras 13.71-13.75).
Introduction to the Statute of Limitations
39. Section 11(2)(a) and (b) of the Statute of Limitations 1957, as originally enacted, provided as follows:
“11.—(2)(a) Subject to paragraphs (b) and (c) of this subsection, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.
(b) An action claiming damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of a provision made by or under a statute or independently of any contract or any such provision), where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to any person, shall not be brought after the expiration of three years from the date on which the cause of action accrued.
(c) … [not relevant]”
40. In circumstances which will later be explored, section 3(2) of the Statute of Limitations (Amendment) Act 1991 (“the 1991 Act”) substituted a single new paragraph for paras. 11(2)(a) and (b) above. In its amended form, it reads as follows:
“11.—(2)(a) Subject to paragraph (c) of this subsection and to section 3(1) of the Statute of Limitations (Amendment) Act, 1991, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”
This section and its predecessor have previously been considered by this Court in several well-known decisions. The references to section 11(2)(c) and section 3(1) of the 1991 amendment exclude from this limitation period defamation actions and certain personal injuries actions, respectively. The former has no direct relevance to the within appeal, but as the law in this area has in some measure been developed in personal injuries cases, the latter is indeed of some significance.
41. In Tuohy v. Courtney & Ors [1994] 3 I.R. 1 (“Tuohy”), Finlay C.J., giving judgment for this Court on the constitutionality of section 11 of the 1957 Act, in particular subsections 1(a) (actions founded on simple contract) and 2(a) (actions founded on tort), explored the underlying rationale for having limitation periods in the first instance, as well as what the legislature is endeavouring to achieve in enacting them. As explained by the former Chief Justice:
“It has been agreed by counsel, and in the opinion of the Court, quite correctly agreed, that the Oireachtas in legislating for time limits on the bringing of actions is essentially engaged in a balancing of constitutional rights and duties. What has to be balanced is the constitutional right of the plaintiff to litigate against two other contesting rights or duties, firstly, the constitutional right of the defendant in his property to be protected against unjust or burdensome claims and, secondly, the interest of the public constituting an interest or requirement of the common good which is involved in the avoidance of stale or delayed claims.” (p.47 of the report)
42. Finlay C.J. expanded on this as follows:
“The primary purpose would appear to be, firstly, to protect defendants against stale claims and avoid the injustices which might occur to them were they asked to defend themselves from claims which were not notified to them within a reasonable time.
Secondly, they are designed to promote as far as possible expeditious trials of action so that a court may have before it as the material upon which it must make its decision, oral evidence which has the accuracy of recent recollection, and documentary proof which is complete, features which must make a major contribution to the correctness and justice of the decision arrived at.
Thirdly, they are designed to promote as far as possible and proper a certainty of finality in potential claims which will permit individuals to arrange their affairs whether on a domestic, commercial or professional level in reliance to the maximum extent possible upon the absence of unknown or unexpected liabilities.
The counter-balance to these objectives is the necessity as far as is practicable, or as best it may, for the State to ensure that such time limits do not unreasonably or unjustly impose hardship. Any time limit statutorily imposed upon the bringing of actions is potentially going to impose some hardship on some individual.” (p. 48 of the Report)
Such is not an exhaustive account of the considerations underpinning the existence of limitation periods but it certainly gives a broad overview of the competing interests at play and the balancing exercise which such statutes seek to achieve.
43. Another matter addressed by the Chief Justice in Tuohy was the precise nature of the constitutional right which the plaintiff claimed had been infringed. Referring to the judgment of Henchy J. in O’Domhnaill v. Merrick [1984] I.R. 151, he stated that the Statute of Limitations does not constitute an invasion of the constitutional right of access to the courts. The reason for this was that it has long been understood that the statute will bar a claim if, and only if, it constitutes a defence plea. Thus the statute does not impact on a plaintiff’s right to sue, but rather on his right to succeed.
44. Finlay C.J. went on to refer to O’Brien v. Keogh [1972] I.R. 144, which established that the right to litigate is a personal right of the citizen within Article 40 of the Constitution. He agreed that this right is an unenumerated personal right protected by Article 40.3.1°. However, on the facts of Tuohy, the Chief Justice did not find it necessary to conclusively determine whether that right also finds protection as an aspect of the property right protected under Article 40.3.2°; no mention was made of Article 43. In his view, on the facts of the case before him, there was no material difference in the constitutional protection which the right to litigate would have depending on which provision of the Constitution it fell under. This issue, which has not been definitively settled, does not require further consideration in the instant case.
45. This Court, of course, upheld the constitutionality of section 11 in Tuohy. In so holding it was guided by a number of considerations: these included, inter alia, first, the fact that, objectively viewed, the period of six years is a substantial one; second, that the periods specified in the 1957 Act can be extended in cases of disability, acknowledgment, part payment, fraud and mistake, and that such is a significant encroachment on the certainty of finality otherwise provided for by the Statute; and, third, that the other options available to a defendant who has been sued within the permitted time, for example to have the action dismissed for gross or unreasonable delay, are much less secure and offer far less protection against loss, than does a fixed time limit as found in the Statute.
46. Whilst all of this is of interest as background context to the Statute of Limitations generally, it does not directly advance the point under appeal. However, before turning to the central issue before the Court, could I make one or two observations on the passage from Tuohy summarised at para. 43, supra.
47. That statement by the Court is undoubtedly true if what Finlay C.J. had in mind was that a limitation period is quite unlike, say, the external restriction of the Attorney General’s fiat, condemned in Macauley v. Minister for Posts and Telegraphs [1966] I.R. 345, and as a result, unlike the fiat, it does not constitute a barrier to access at the point of entry. However, there can be no doubting but that access to the courts, an aspect of which is the right to sue, to litigate or to bring proceedings, is an unenumerated personal right guaranteed by Article 40.3.1° of the Constitution (Murphy v. Minister for Justice [2001] I.R. 95): accordingly, such is a fundamental right of every person, citizen or not, within this jurisdiction (Murphy v. Green [1990] 2 I.R. 566 at 578). Furthermore, as acknowledged in Byrne v. Ireland [1972] I.R. 289 at 297, it is the primary vehicle by which both personal and all fundamental constitutional rights can be articulated and given effect to. Thus it is the ultimate route to this end. Therefore it must be positioned in its rightful place in our constitutional order. Nothing short of that will suffice.
48. The reason why the courts have shown an obvious reluctance to constitutionally condemn statutes of this type is that their enactment is largely policy-based, with the prescribed periods reflecting a good deal of legislative discretion (see In Re Illegal Immigrants (Trafficking) Bill 1999 [2000] 2 I.R. 380 at 393). This very point has been expressed in many cases, such as White v. Dublin City Council [2004] 1 IR 545 at 568, where this Court said that the task of weighing all of the relevant considerations and striking a balance is “quintessentially a matter for the judgment of the legislator.” However, this indulgence cannot be looked upon as open-ended; in fact, it is far removed from that. To give but one example, any restriction on the right to litigate, through which other fundamental rights are ultimately given effect, would not be tolerated if such curtailment was disproportionate or oppressive to the preservation of that right (see Ryan v. Attorney General [1965] IR 294 at 312-313). There are several other examples of situations which would demand a similar response. Due regard to the respective positions of each branch of government is a two-way process, with its practical implementation always seen against one of the most fundamental obligations of the judicial branch, which is to act impartially and independently as the custodian and ultimate enforcer of the entire Constitution on all persons or bodies, public or private, who are subject to it.
49. Finally, I am not at all sure about the validity of the final point mentioned at para. 45, supra. It seems to me that, if anything, the contrary is the true position: defendants have an array of artillery at their disposal capable of terminating an action well short of being disposed by a decision on the merits. These include time limits/equitable delay; cases being struck out as an abuse of process or as being bound to fail; res judicata; security for costs; and the rule in Henderson v. Henderson (1843) 3 Hare 100, to name but some. As can be seen, there are a substantial number of procedural steps available, any one of which can lead to a dismissal of the action. Accordingly, it is somewhat unclear why there was such emphasis on the defendant’s position in the constitutional challenge in Tuohy.
The Lead-In to Hegarty v. O’Loughran
50. In Cartledge v. E Jopling & Sons Ltd [1963] A.C. 758, a personal injuries case, Lord Reid, whilst agreeing with Lord Pearse and commenting on the equivalent provision under UK law to section 11(2) of the 1957 Act, namely, section 2(1) of the Limitation Act 1939, stated at pp. 771-772 that:
“It is now too late for the courts to question or modify the rules that a cause of action accrues as soon as a wrongful act has caused personal injury beyond what can be regarded as negligible, even when that injury is unknown to and cannot be discovered by the sufferer, and that further injury arising from the same act at a later date does not give rise to a further cause of action. It appears to me to be unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury and, therefore, before it is possible to raise any action. If this were a matter governed by the common law I would hold that a cause of action ought not to be held to accrue until either the injured person has discovered the injury or it would be possible for him to discover it if he took such steps as were reasonable in the circumstances. The common law ought never to produce a wholly unreasonable result, nor ought existing authorities to be read so literally as to produce such a result in circumstances never contemplated when they were decided.
But the present question depends on statute, the Limitation Act, 1939, and section 26 of that Act appears to me to make it impossible to reach the result which I have indicated. That section makes special provisions where fraud or mistake is involved: it provides that time shall not begin to run until the fraud has been or could with reasonable diligence have been discovered. Fraud here has been given a wide interpretation, but obviously it could not be extended to cover this case. The necessary implication from that section is that, where fraud or mistake is not involved, time begins to run whether or not the damage could be discovered. So the mischief in the present case can only be prevented by further legislation.”
The provisions of section 26 are similar to those of section 71 of the 1957 Act (fraud) and also section 72 of that Act (mistake).
51. In that case Lord Pearce also, and with similar regret, dismissed the appeal, agreeing that it was a “harsh result”. As a direct consequence of this decision, the law in the UK was subsequently changed within a matter of months to allow for a “discoverability test” in personal injuries cases (section 1 of the Limitation Act 1963), but no such change was made at that time in relation to property damage cases.
52. The common law position ebbed and flowed until 1983 when the House of Lords looked at the issue in Pirelli General Cable Works Ltd. v. Oscar Faber & Partners [1983] 2 A.C. 1. There the appellants (the defendants) were engaged by the respondents in or about March, 1969 to advise them in relation to the building of a new services block, which included a chimney about 160 feet high. As part of their retainer they also accepted responsibility for the design of the block. Unfortunately, the concrete used for the inner lining of the chimney was made of a material which was unfit for purpose. Cracks developed and eventually the chimney, which was built during June and July, 1969, had to be partly demolished and replaced. In the resulting proceedings Pirelli sought damages, in negligence, against the consulting engineers for the loss caused. The limitation point was the only issue for determination by the court.
53. The trial judge held that whilst damage, in the form of cracks near the top of the chimney, must have occurred not later than April, 1970, these as a matter of fact were not discovered by the plaintiffs until November, 1977. He found that the defendants had not established that the plaintiffs ought, with reasonable diligence, to have discovered the damage before October, 1972, which was six years before the writ was issued on the 17th October, 1978. The judge went on to hold that the cause of action accrued on the date of discoverability, i.e. the date on which the damage was actually discovered or that on which it ought with reasonable diligence to have been discovered, whichever was earlier. In so doing he followed the test outlined by the Court of Appeal in Sparham-Souter v. Town & Country Developments (Essex) Ltd [1976] 2 AER 65. Thus he held that the claim was not statute barred. The Court of Appeal upheld his decision.
54. On appeal to the House of Lords, both parties accepted all findings of fact made by the trial court. The sole issue was a question of law as to the date on which the cause of action accrued. The appellants suggested three possible dates: when the plaintiffs acted in reliance on the defendants’ advice to install the chimney, which was between March and June, 1969; when the chimney was completed in July, 1969; or when cracks occurred in April, 1970. If any of these dates was to find favour with the court, then the action was obviously time barred. The House of Lords, having reviewed the relevant case law, came to the conclusion that “the cause of action accrues only when physical damage occurs to the building” (p. 18), which in this case was in April, 1970, when cracks must have occurred at the top of the chimney. This was before the date of discoverability, as that term was used by the trial judge. Accordingly, Sparham-Souter was wrongly decided, the action was time barred and the appeal was allowed.
55. Lord Fraser, with whom the other Law Lords agreed, acknowledged that the continuing position in all bar personal injuries actions “appears to be unreasonable and contrary to principle”, but believed that “the law is now so firmly established that only Parliament can alter it”. He continued as follows:
“If there is any question of altering this branch of the law, this is, in my opinion, a clear case where any alteration should be made by legislation, and not by judicial decision, because this is, in the words of Lord Simon of Glaisdale in Miliangos v. George Frank (Textiles) Ltd.[1976] A.C. 443, 480: ‘a decision which demands a far wider range of review than is available to courts following our traditional and valuable adversary system – the sort of review compassed by an interdepartmental committee.’ I express the hope that Parliament will soon take action to remedy the unsatisfactory state of the law on this subject.” (p. 19 of the report)
56. For Lord Scarman, it was “unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury (or damage).” He continued by stating that “[a] law which produces such a result … is harsh and absurd”. He too advocated a change, but accepted that:
“[T]he reform needed is not the substitution of a new principle or rule of law for an existing one but a detailed set of provisions to replace existing statute law. The true way forward is not by departure from precedent but by amending legislation.” (p. 19 of the Report)
These remarks and those of Lord Fraser very much echoed what the Law Lords had previously said in Cartledge.
57. The law in England has since been amended to include a form of discoverability test in property damage cases arising out of tortious negligence. This change was effected by section 1 of the Latent Damage Act 1986, which inserted a new section 14A into the Limitation Act 1980, which by then had replaced the 1939 Act. Whilst the six-year limitation period continues to run from the date when the damage occurred, the Act also makes provision for a three-year extension. As a result, the position is that an action may not be brought after the expiration of either six years from the date on which the cause of action accrued or three years from “the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action”, whichever is later (section 14A(4) and (5)). Therefore, even if the six-year period has expired before the damage was “discoverable”, a plaintiff will still have a further three-year period, commencing on the date of discovery, within which to sue. Without dwelling too long on the section, it is of interest that “knowledge” in subsection (5) refers, inter alia, to knowledge i) of the material facts about the damage in respect of which damages are claimed; ii) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and iii) of the identity of the defendant. As will later become apparent, this is but one formula which has been used to give expression to a “discoverability” test.
Hegarty v. O’Loughran & Edwards [1990] 1 IR 148
58. Hegarty v. O’Loughran had, and still has, a major influence on which of the options referred to at paragraphs 24 and 25, supra, currently represents the law in this jurisdiction; indeed, even other possibilities not mentioned by this Court in granting leave were considered in that case. Accordingly, it becomes necessary to refer to all three judgments given by the Court. Before so doing, however, the facts should be noted.
59. The plaintiff underwent surgery to her nose in 1973; this was performed by the first defendant. In 1974 she underwent further surgery, this time with Dr. Edwards, in order to remedy the collapse of the septal resection originally carried out. Whilst this second surgery was initially successfully, her condition would later deteriorate, causing her great pain. Findings of fact were made in the High Court to the effect that she must have been dissatisfied with the result of the second operation by the year 1976, although she did not consult her doctor professionally about this matter until 1978, and further that his advice to her was to leave her nose alone. Finally, the court held that she had no reason to seek legal advice at that stage, although she should have done so in 1980. She issued her plenary summons in October, 1982.
60. The subsection directly under consideration in Hegarty v. O’Loughran was the now repealed subsection 11(2)(b) of the 1957 Act, which related solely to personal injuries (para. 39, supra); however, the relevant wording of that subsection, “the date on which the cause of action accrued”, was the same as that in subsection 11(2)(a), which applied to tort actions in general. It is worth recalling the three possible starting points which were canvassed before the Court: the date of the wrongful act; the date when personal injury was manifest; and the date when the personal injury was discoverable with reasonable diligence. These, and the two other possibilities above outlined (paras. 24 and 25, supra), will be discussed in the sequence next appearing. Given this manner of analysis, it will unfortunately be necessary to refer to some of the judgments in Hegarty v. O’Loughran on more than one occasion.
61. At the outset two general points, which are entirely uncontroversial, can be made. The first reflects what Lord Esher M.R. said in Read v. Brown (1888) 22 QBD 128 at p. 131:
“What is the real meaning of the phrase ‘a cause of action arising in the City?’ It has been defined in Cooke v. Gill Law Rep. 8 C.P. 107 to be this: every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.” (Emphasis added)
That statement, however, was made in the context of discussing the regional jurisdiction conferred on the Mayor’s Court in London: such could only exist if each element necessary to constitute a particular cause of action occurred within the city or the liberties thereof. Contrary to what is suggested in some text books and indeed in some case law, the judgment of Lord Esher M.R., with whom the other judges agreed, did not suggest that the accrual date for limitation purposes is dependent on the plaintiff’s knowledge of each such ingredient, and therefore it is not of much help in determining the date upon which a cause of action accrues.
62. The second point is that in negligence, some actual damage, beyond what can be regarded as negligible, must occur before the tort can be said to be complete. More accurately, without such damage a tortious cause of action does not exist. This is unlike actions “per se”, re-occurring or continuous trespass cases, actions for the recovery of land, claims in respect of trust property, proceedings under the Succession Act 1965, those in admiralty proceedings, and many more. Damage, injury, harm or loss, recognisable as such, is an essential requirement of the cause of action in question in this case.
Points on the Spectrum
63. I will address the possible commencement dates in the following order: first, the date of the wrongful act; then the date of discoverability, followed by the date of actual discovery; and finally the dates of occurrence of damage and of manifestation of damage. The reason for this is that the first three of those options can be disposed of rather expeditiously, whereas the other two potential start dates require rather more analysis.
The Date of the Wrongful Act
64. It becomes immediately apparent from what is stated in para. 62, above, that the occurrence of a wrongful act, even one resulting from an established breach of duty, will not of itself constitute a cause of action. Therefore if the circumstances of any given situation are confined to that framework of fact, there can be no question of such act or omission constituting the start date for limitation purposes.
65. That this is so is quite evident from what Finlay C.J., with whom Walsh, Griffin and Hederman JJ. agreed, said at pp. 153-154 of Hegarty:
“A tort is not completed until such time as damage has been caused by a wrong, a wrong which does not cause damage not being actionable in the context with which we are dealing. It must necessarily follow that a cause of action in tort has not accrued until at least such time as the two necessary component parts of the tort have occurred, namely, the wrong and the damage. The ‘time of the act, neglect or default complained of’ cannot, therefore, be equated with ‘the date on which the cause of action accrued.’” (Emphasis added)
66. Despite a suggestion in the judgment of McCarthy J. that the date of the wrongful act is the relevant one, it seems clear from a reading of his entire judgment that such was not his intention and that he did not favour this option (see paras. 95-99, infra). Indeed from the text of the Statute itself, this could not be the correct test: per section 11(2)(a), time will not run until the date on which the cause of action accrues, and as is clear, without damage resulting from the act complained of, there is no actionable wrong in negligence. Therefore the date of the wrongful act, without damage, is not the accrual date. Consequently, the first option discussed in Hegarty v. O’Loughran cannot be correct: it must therefore be discounted. In fairness to the parties, no contrary reading of the section was advanced in this case.
“Discoverability” – Yes or No?
67. Although ‘discoverability’ is, broadly speaking, a readily understandable concept, precisely what is meant by a discoverability test can vary between statute and the common law. To take but one representative example of common law discoverability, the phrase “date of discoverability” was said by Lord Fraser in Pirelli to mean “the date on which the damage was actually discovered, or the date on which it ought with reasonable diligence to have been discovered, whichever is the earlier” (p. 12). However, the discoverability test as introduced in personal injuries cases by the Statute of Limitations (Amendment) Act 1991 is more prescriptive, with section 3 stating that an action claiming damages for personal injuries caused by negligence “shall not be brought after the expiration of [two] years from the date on which the cause of action accrued or the date of knowledge (if later) of the person injured.” Section 2 of the 1991 Act contains a detailed definition of the term “date of knowledge”, which is said to be the first date on which the plaintiff had knowledge, inter alia, that he had been injured; that the injury in question was significant; that the injury was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and of the identity of the defendant. There is no question of that statute applying to property damage claims. However, the question of whether some manner of discoverability test could be read into the terms of section 11(2) of the 1957 Act has been central to much of the case law in this area.
68. In what was seen at the time as a ground-breaking decision, in Morgan v. Park Developments Limited [1983] I.L.R.M. 156 (“Morgan v. Park Developments”), which was a property damage claim, Carroll J. held that to give section 11(2)(a) of the 1957 Act the same meaning as Cartledge did in respect of its UK equivalent would, as the House of Lords freely acknowledged in that case, give rise to a harsh and unjust rule of law. As a result, the learned judge looked for and identified an alternative interpretation which would not breach one’s constitutional right to sue: in short, she settled on what can be described as a “discoverability” test. This meant that time should not begin to run until the damage was or should with reasonable diligence have been discovered. Accordingly, in her view, this was the proper interpretation of the section.
69. In Hegarty v. O’Loughran, each member of this Court refused to accept that the section could be so read. Finlay C.J., giving the lead judgment, did not consider the provision to be ambiguous; thus, unlike Carroll J., he declined to apply the double construction rule. He noted that no constitutional challenge had been made to its validity and held that his suggested interpretation of the section (the manifest test – see para. 87 et seq., infra) did not render the measure constitutionally flawed. In so doing he relied heavily on section 71 of the 1957 Act (Fraud and Concealment) and, to a lesser extent, on section 48 (Disability – Unsoundness of Mind), saying that both provisions would be redundant if the interpretation favoured by Carroll J. was correct. Although I have never been convinced by this reasoning, which reflects in large measure the views of Lord Reid in Cartledge v. E Jopling & Sons Ltd [1963] A.C. 758, nonetheless the same formed the principle basis of the judge’s decision.
70. In support of this view, the Chief Justice also referred to what Henchy J. had noted in Cahill v. Sutton [1980] I.R. 269 at p. 280, to the amendment introduced in England following Cartledge v. Jopling, and to the recommendation of the Law Reform Commission, all of which suggested that some type of a discoverability test should be introduced: such, in his view, would not have been necessary if the same was reasonably open as the section then read. Griffin J., in agreeing with Finlay C.J., concentrated more in his concurring judgment on what the test should be, rather than focusing on why discoverability should be rejected.
71. The third judgment was that of McCarthy J. who stated at p. 164 of the Report that:
“The fundamental principle is that words in a statute must be given their ordinary meaning and, for myself, I am unable to conclude that a cause of action accrues on the date of discovery of its existence rather than on the date on which, if it had been discovered, proceedings could lawfully have been instituted.” (Emphasis added)
I do not read the emphasised words as any indication of what such a test might look like, if it should otherwise be appropriate.
72. This unanimous rejection by the Court of a discoverability test has been endorsed in many subsequent decisions of the superior courts. Ryan P. in the instant case said at para. 7 of his judgment:
“The parties are not in dispute about some fundamental points. It is agreed that the test is not based on discoverability; that is appropriate to personal injury actions by reason of the amendment of the Statute of Limitations, but it does not arise in regard to property damage of this kind. …”
73. Another example is to be found in Irish Equine Foundation Ltd v. Robinson, where Geoghegan J. in the High Court stated that:
“It is common case that discoverability, as such, cannot be relevant in considering what is the appropriate commencement date in respect of the limitation period. On this point at least, the view of the House of Lords taken in Pirelli v. Oscar Faber & Partners [1983] 2 A.C. 1 represents Irish law also. This is quite clear from the decision of the Supreme Court in Hegarty v. O’Loughran, even though that particular case dealt with personal injuries and not damage to a building. The reasoning contained in the several judgments in Hegarty v. O’Loughran and the criticism voiced of the decision of Carroll J. in Morgan v. Park Developments [1983] I.L.R.M. 156 indicate beyond doubt that the Supreme Court rejects the discoverability test no matter what the nature of the damage claimed is.”
74. The above passage was cited with approval by Birmingham J. in Hegarty v. D&S Flanagan Brothers Ballymore Ltd and ors [2013] IEHC 263. In O’Donnell v. Kilsaran Concrete Ltd [2002] 1 ILRM 551 (“O’Donnell v. Kilsaran Concrete”), Herbert J. felt that on the facts of the case it was not necessary “to express an opinion on the vexed question of ‘discoverability’”. However, in Murphy v. McInerney Construction Ltd & Griffin [2008] IEHC 323 (“Murphy v. McInerney Construction”), Dunne J., then in the High Court, contrasted the views of Geoghegan J. with those of Herbert J. and concluded that:
“I have to say that having regard to the various decisions to which reference has already been made, I find it difficult to come to any conclusion other than that the question of a discoverability test simply does not arise. It is quite clear from the authorities referred to above that a discoverability test does not avail a plaintiff when dealing with a plea that a claim is statute barred under Irish law.”
75. It is therefore clear that discoverability is not the test in property damage claims. Indeed the Respondents have not in any meaningful way advocated for such an approach or for any other change to the law, nor do they seek to ask this Court to depart from or distinguish its previous decisions in this area. In fact they go further and insist that they have not made the case at any previous hearing or otherwise that the test should be one based on discoverability. Instead they have concentrated on pursuing the case on very traditional grounds, all within the existing parameters of the law on limitation periods (see also paras. 36 and 86 of this judgment). Quite obviously it is also the Appellants’ position that discoverability cannot be relevant in considering what is the appropriate commencement date. Accordingly, no serious argument was ever taken up on the point.
76. The Respondents do note in passing, in their written submissions, that if this Court wishes to “cure the mischief” which the present test can occasionally produce, the discoverability rule has found favour in other jurisdictions, with the implication being an invitation to the Court to introduce such a rule. It is true that the courts have long bemoaned the harshness of the present state of the law. In Hegarty v. O’Loughran, immediately after the passage quoted at para. 71, supra, McCarthy J. recognised “the unfairness, the harshness, the obscurantism” that underlies the absence of a discoverability rule, but stated that such will remain the case “unless qualified by the legislature or invalidated root and branch by this Court.” In Hegarty v. D&S Flanagan Bros, Birmingham J., in the same vein, said that “the case law in this jurisdiction points to a very clear, albeit very harsh, conclusion.” Many other statements to the same effect can be found elsewhere.
77. One further statement in like manner is worthy of note: it is that of Finlay C.J. in Hegarty where he stated that “to interpret this sub-section as being based on discoverability, though possibly very desirable, would be to legislate” (p. 156). The Chief Justice took the same view in Tuohy, where in his conclusion he said that:
“For the Oireachtas to reach a decision either to add or not to add to the extensions of limitation periods contained in Part III of the Act of 1957 an extension relating to discoverability with regard to this particular time limit imposed by that Act, is a decision which in the view of this Court can be supported by just and reasonable policy decisions and is not accordingly a proper matter for judicial intervention.” (pp. 49-50 of the report)
78. Notwithstanding these views, which for the most part have been forcibly expressed, and despite the passage of considerable time, the position remains, as also acknowledged by Lord Reid in Cartledge, by Lord Fraser and Lord Scarman in Pirelli, and by McCarthy J. in Hegarty (subject to the caveat as noted), that it is for parliament, not the courts, to remedy this unfair position. Such continuing deference at judicial level is perhaps surprising: however, there has been no indication of any movement on the judicial side for the past thirty years, with the remarks of McCarthy J. still being the only reservation of note to date.
79. There are of course some exceptions where statute has intervened. Presently there exists a type of discoverability test in respect of, inter alia, personal injuries (sections 2 and 3 of the Statute of Limitations (Amendment) Act 1991), wrongful death claims (section 6 of the 1991 Act, which applies to actions under section 48 of the Civil Liability Act 1961) and product liability actions (section 7 of the Liability For Defective Products Act 1991). As noted, with regard to personal injuries, the Oireachtas intervened in the form of sections 2 and 3 of the 1991 Act, which introduced a discoverability test by providing that such claims “shall not be brought after the expiration of three years from the date on which the cause of action accrued or the date of knowledge (if later) of the person injured.” That period has since been reduced to two years by section 7 of the Civil Liability and Courts Act 2004, although section 221 of the Legal Services Regulation Act 2015 has again increased it to three years in the case of clinical negligence as defined in Part 2A of the 2004 Act. As noted at para. 67, supra, in the amending Act the “date of knowledge” was defined as the date on which the plaintiff first had knowledge of, inter alia, the following facts: that he had been injured; that the injury was significant; that it was attributable in whole or in part to the act or omission which is alleged to constitute the negligence, nuisance or breach of duty in question; and the identity of the defendant (section 2(1) of the 1991 Act). Although not related to personal injuries, it is of interest to compare that formula with the statutory conditions set out in section 1 of the UK Latent Damage Act 1986 (para. 57, supra).
80. There are of course many other variations, both within statute and case law, of a test which, loosely described, can be said to be one based on “discoverability”. One is when a plaintiff becomes aware – or could have become aware if exercising reasonable diligence – of the existence of (i) a cause of action; (ii) the relevant or material facts relating to that action; and, on rare occasions, (iii) the evidence necessary to support a case if essential matters are put in issue; another formulation is where by the same diligence a plaintiff knows or could have known that the loss sued for has occurred, has been caused by the defendant’s conduct, and that such loss warranted the issue of proceedings. There are multiple other versions, derived from judicial decisions, statutory draftsmen and other sources. Most are subjectively orientated, with some objective elements. The facts of any given case may be so clear that a similar conclusion can be reached via a number of different models (e.g. Bolger v. O’Brien [1999] 2 IR 431). In essence, whatever the individual detail might be, such a test depends on the acquisition of knowledge, either directly or constructively, of specified matters and issues. Interestingly, what was proposed in Morgan v. Park Developments was much more benign from the defendant’s perspective than, for example, the statutory criteria now applied in personal injury cases. In any event, this is an aside as the establishment of a discoverability test, in whichever form, is not open to any serious consideration by this Court, certainly on the run of the instant case.
81. In respect of property damage cases, no reform has ever been introduced in this jurisdiction. One might wonder why the Oireachtas has not yet intervened in this area, as the potential effect of being statute barred before even an exacting or an assiduous person could have known of a cause of action is inherently offensive to one’s sense of justice: such is by no means confined to the pre-1991 personal injuries regime. As alluded to above, and as the following will further show, the courts have lamented the unjustness of this situation for many decades now.
82. As far back as 1983, as we have seen, Carroll J. attempted, in Morgan v. Park Developments, to read a discoverability test into the 1957 Act, endorsing the view that to do otherwise would produce a “harsh and absurd” or “unconstitutional and unreasonable” result. McCarthy J. in Hegarty v. O’Loughran and Birmingham J. in Hegarty v. D&S Flanagan Bros also both drew clear attention to the undesirable consequences underlying the present rule. The outcome of Pirelli attracted much criticism, even from the judges who delivered the decision. As a result it was not followed in New Zealand or in Canada. The Law Reform Commission’s 2001 Report on the Statutes of Limitations: Claims in Contract and Tort in Respect of Latent Damage (other than Personal Injury) (LRC 64 – 2001) recommended the introduction of a discoverability test in latent property damage cases; the LRC repeated its call for such a test in its 2011 Report on Limitation of Actions (LRC 104 – 2011). Several others have raised concerns to the same effect. I would add my voice to those who say that the law on limitation periods in latent damage cases urgently needs reform.
83. In light of this, it is, may I respectfully suggest, perplexing why legislative silence, whether due to inertia, indifference or some other undisclosed reason, has persisted for so long, indeed for more than 30 years now after the passing of the Latent Damage Act 1986 in the UK. The voices and concerns of judges seem to matter little. If this should continue, I would see no reason why, in an appropriate case, the type of “root and branch” re-assessment of judicial deference in the face of ongoing legislative inaction, as mentioned by McCarthy J. in Hegarty, should not take place. That is unless, of course, Tuohy is considered the last word on the section.
84. Be that as it may, and notwithstanding these serious concerns, the decision in Hegarty v. O’Loughran has never been resiled from. According to that decision, a discoverability test cannot be read into or deduced from section 11(2) of the 1957 Act, and such conclusion has consistently been applied by the courts ever since. As a result, as matters presently stand, this Court cannot provide for any manner of discoverability test in cases of this nature, even though the introduction of such a test would greatly enhance the clarity of the law and also defeat the harshness and injustice which persist under the current scheme. That, as above stated, is a most regrettable state of affairs.
When damage is “actually discovered” is not the test
85. One of the three questions upon which leave was given asks whether time runs from when damage is discovered, i.e. actually discovered. This option can be disposed of rather quickly. Simply put, the answer is ‘no’. As stated by Birmingham J. in Hegarty v. D&S Flanagan Bros [2013] IEHC 263 (“Hegarty v. D&S Flanagan Bros”), “[t]he time-limit on negligence actions begins to accrue on the date on which damage manifests itself, and not from the date on which the damage is discovered.” This must be correct. The section refers to “the date on which the cause of action accrued”. The cause of action will not accrue, of course, until actionable damage has been caused. No method of statutory interpretation has been referred to by which the quoted words can be construed as meaning “the date on which the damage was discovered”.
86. Indeed I do not understand the Respondents to be arguing for such a commencement date, as they resile even from the less radical (and, from their perspective, less favourable) position based on discoverability, never mind the actual date of discovery itself. As previously adverted to, the Respondents have for the most part been content to argue the appeal by reference to the date when the damage occurred; the most probable reason for this is that they stand over the Court of Appeal’s conclusion that the damage did not occur until December, 2005, and if such be correct they win regardless of which starting point is applied: in so saying I am discounting the date of the wrongful act, which has never seriously been in contention. In any event, as for the accrual date being “when the damage is discovered”, I would not even consider such a possibility in the absence of any argument to that effect from the Respondents, as it would be a radical departure from the existing case law and does not appear to me to be open on the wording of section 11(2)(a) of the 1957 Act. Therefore this option must also be disregarded.
The Proper Test
87. If it can confidently be said that the date from which the limitation period begins to run is not the date of the wrongful act, nor the date on which damage could or ought to have been discovered or the actual discovery date, this then leaves two possibilities from those on which the Court granted leave to appeal. Which, then, is the relevant date: when the damage occurred, or when it was manifest? Again the answer, at least in principle, is to be found in Hegarty v. O’Loughran, but a number of other decisions must be considered and, if necessary, explained and reconciled.
88. That there is, at least in principle, a clear distinction between the date of occurrence of damage and that of manifestation of damage is apparent from a comparison of the judgments in Hegarty v. O’Loughran. Indeed, such is also apparent in the questions posed by this Court in granting leave, which treat the date of occurrence and the date of manifestation as different possibilities for limitation purposes. This is certainly an implicit recognition of a difference between the two. What, then, is meant by damage being “manifest”? Before addressing that important question, it is necessary to chart our way through what case law there exists in this regard.
89. By reference to Finlay C.J.’s mention of “provable” personal injury at p. 157 of Hegarty v. O’Loughran, and also to the judgment of Griffin J. in the same case, where at p. 158 he referred to a plaintiff being in a position “to establish by evidence that damage has been caused to him”, I take “manifest” to mean that the damage must have been capable of being discovered and capable of being proved by a plaintiff. Such should not be taken as deferring the start date until the plaintiff is possessed of evidence sufficient to sustain the action. The manifest test must of course be considered in the context of the distinction between latent defects in a building and the damage caused thereby, a topic discussed at paragraphs 111-137 of this judgment. As will become apparent, it is not the defect which needs to be capable of discovery: it is the subsequent physical damage caused by that defect. I believe that this interpretation is consistent with the wording of the section in question. It is important to be clear that whilst the “discoverability” test above discussed imports an element of reasonableness to the plaintiff’s ability to discover the injury, such is absent in the case of a “manifest” test and this is one of the facts which differentiates the two: a manifest injury or manifest damage need only be capable of being discovered, meaning that it must be provable.
90. In Hegarty, Finlay C.J., set out what he believed to be the true meaning of the section at p. 157 of the report, where he stated that:
“I would, therefore, conclude that the proper construction of this sub-section is that contended for on behalf of the defendants and that it is that the time limit commenced to run at the time when a provable personal injury, capable of attracting compensation, occurred to the plaintiff which was the completion of the tort alleged to be committed against her.” (Emphasis added)
In passing it may be observed that this formula has a similar ring to what Lord Esher M.R. said in Read v. Brown, although, as pointed out at para. 61, supra, that case is far distant from Hegarty in terms of the issues.
91. This statement by the Chief Justice can better be understood when the submission he referred to is quoted; it reads:
“The defendants submit that applying the reasoning contained in [Read v. Brown] … the essential facts which a plaintiff would have to prove in order to succeed in obtaining judgment would be, firstly, the wrong, and secondly, the existence of a personal injury caused by that wrong. The contention [of the defendants] is that as soon as there has occurred to the plaintiff in such an action a manifestation of personal injury which was caused by a wrong previously committed, a cause of action has come into being. That, it is said, is the time when the cause of action has accrued.” (p. 154)
For present purposes the critical phrase is the ‘manifestation of injury’. Thus although, as has been noted by commentators, the Chief Justice did not himself expressly label his approach as a ‘manifest’ test, he did in fact endorse the defendants’ submission to that effect.
92. Griffin J. in his judgment held as follows:
“The period of limitation therefore begins to run from the date on which the cause of action accrued, i.e. when a complete and available cause of action first comes into existence. When a wrongful act is actionable per se without proof of damage, as in, for example, libel, assault, or trespass to land or goods, the statute runs from the time at which the act was committed. However, when the wrong is not actionable without actual damage, as in the case of negligence, the cause of action is not complete and the period of limitation cannot begin to run until that damage happens or occurs. In personal injury cases the time at which the wrongful act is committed and the time at which the damage occurs will very frequently coincide. … There have, however, been many cases in which persons involved in violent accidents have escaped apparently unscathed, or at worst with only such trivial injuries as would not warrant an award of compensation. Nevertheless several months, or even years, later such persons have become gravely ill from a condition which was attributable to the particular accident. … In cases such as these, if time were to run from the date of the occurrence of the wrongful act, the period of limitation of three years might very well expire before there is any manifestation of the damage suffered in consequence of the wrongful act. However, in s. 11, sub-s. 2 (b) of the Act of 1957, time is not expressed to run from the date of the occurrence of the wrongful act and should not in my view be interpreted as if it was. The relevant date under the subsection is the date on which the cause of action accrues. Until and unless the plaintiff is in a position to establish by evidence that damage has been caused to him, his cause of action is not complete and the period of limitation fixed by that sub-section does not commence to run.” (p. 158 of the report) (Emphasis added)
93. If this passage constituted the ratio of the judgment of the learned judge, it must be acknowledged that the end point would be shaded in uncertainty. There is a reference to when “damage happens or occurs”, as well as to the plaintiff being in a position “to establish by evidence that damage has been caused”. Those first remarks might point to a date when the damage was caused, with the latter going so far as to suggest that no cause of action accrues until evidence to prove the damage has become known. If these observations remained in isolation, it would be very difficult to extract a test with any precedential value.
94. However, there is also a reference in that passage to the “manifestation of the damage suffered”, which must be read in conjunction with the significant statement by the learned judge that he entirely agreed with the Chief Justice that “time does not begin to run until a provable personal injury capable of attracting compensation, occurred to the plaintiff”. It seems clear, therefore, from his overall judgment, that for Griffin J. the correct test was that time would start to run once the damage was manifest, rather than from any other date or event. It is equally evident that he saw no distinction whatsoever between his proposal and the formula suggested by the Chief Justice. As the trial judge in Hegarty had found that the plaintiff was dissatisfied with the corrective surgery performed by the second defendant by the year 1976, and did not commence proceedings until 1982, her claims against that defendant (and quite evidently against the first defendant) were clearly statute-barred. What manifestation of damage or “manifest” means is a question I will come back to later in this judgment.
95. However, this approach was not followed in the judgment of McCarthy J. At first glance it appears that he may have favoured an interpretation based on the date of occurrence of the wrongful act (see para. 66, supra). At p. 159 of the report he stated that:
“I share the view of the learned trial judge (Barron J.) that the date on which the cause of action accrued was, in respect of the claim against each of the defendants, the date upon which, in each case, the act causing the damage was committed.”
96. In fairness to McCarthy J., however, this sentence may not reflect his true position, as a reading of the rest of his judgment suggests that he saw the real starting point as the date on which the damage occurred, rather than when the harmful act was committed. Subsequent to the passage last quoted, he did acknowledge that the cause of action does not accrue until some damage occurs and later, when summarising his position, he went on to say that:
“I am unable to conclude that a cause of action accrues on the date of discovery of its existence rather than on the date on which, if it had been discovered, proceedings could lawfully have been instituted.” (p.164)
This certainly reflects the need for damage to have been caused. Furthermore, it is highly unlikely that the learned judge, given his outstanding knowledge and understanding of the law, intended to pitch the starting point before the accrual of the cause of action. Moreover, such would represent a view discounted by a great number of imminent legal minds. May I respectfully suggest that the views of the Court on the “date of the wrongful act” most probably also reflected the position of McCarthy J. Those views, it will be recalled, appear in the quotation cited above (para. 65, supra), where the Chief Justice stated that “the ‘time of the act, neglect or default complained of’ cannot…be equated with ‘the date on which the cause of action accrued’.” As the other members of the Court agreed with his judgment, I take Hegarty as having conclusively established that the date of occurrence of the wrongful act is not the relevant one for limitation purposes.
97. The true position of McCarthy J. becomes even clearer when the following is considered. In Hegarty, the defendants had conceded that a cause of action came into being upon a manifestation of personal injury which was caused by a previously committed wrong; they were satisfied to do so because even on such basis they could still succeed on the limitation plea. However, McCarthy J. was not willing to accept this concession as he did not feel that it was the correct construction of the Statute; he preferred what he saw as the stricter interpretation laid down in Cartledge, i.e. one based on the date of occurrence of damage. At p. 160 he stated:
“The argument for the defendants concedes a somewhat broader interpretation, as detailed in the judgment of the Chief Justice: that as soon as there has occurred to the plaintiff in such an action a manifestation of personal injury which was caused by a wrong previously committed that a cause of action has come into being. It would be sufficient to determine this appeal in the defendants’ favour if the sub-section were to be so construed, without the stricter interpretation upheld in Cartledge v. Jopling. Ordinarily, one might be content to accept a defendant’s concession for the purpose of determining an appeal, but where this involves the construction of a statute which must affect the fortunes of many others, such a concession should not be accepted unless one is satisfied that it is correct. I am not so satisfied.”
The learned judge would therefore have picked the date of occurrence of damage as the pivotal date, there being no necessity to await any manifestation of such damage.
98. One further observation should be made: it seems, from his judgment as a whole, that there is a possibility that McCarthy J. may possibly have been conflating the concepts of ‘discoverability’ and ‘manifestation of damage’, although on this it is impossible to be sure. What is clear beyond doubt, however, is that he saw a definitive distinction between the “occurrence” and “manifestation” of damage. Such is inferred from the passage last quoted; it is expressly so stated in the extract next appearing :
“Some wrongs, such as assault or libel, of themselves constitute the cause of action and, consequently, the cause of action accrues from the moment of the commission of the wrong. Others are actionable only on proof of damage, in which case the cause of action does not accrue until some damage actually occurs. But the occurrence of damage and the manifestation of damage do not, necessarily, coincide. This is such a case. There must be many others in the whole area of personal injuries or, more especially, where such injuries result from medical treatment.” (p. 160 of the report) (Emphasis added)
99. In summary, it seems clear that in endorsing Cartledge as he did, McCarthy J. was evidently of the view that the date of occurrence was the start point. It is equally apparent that the learned judge saw a distinction between that date, and the date of the manifestation of damage. This distinction, fine though it may be, appears to have perhaps been lost, overlooked or even misunderstood in some of the subsequent judgments given in this jurisdiction. This is an important matter and one to which I will return in due course.
100. One final point: one might think that any doubt as to the test favoured by the majority would be dispelled by seeing how the limitation provision was applied in Hegarty itself. Unfortunately, the result of that search remains far from clear.
101. At the outset it should be pointed out that on any of the bases canvassed, by 1974, when the second operation was carried out, the plaintiff had actual knowledge of the first surgeon’s failure; otherwise remedial steps would not have been required. With regard to Dr. Edwards, in his conclusion Finlay C.J. expressly noted the finding of fact made in the High Court to the effect that the plaintiff was dissatisfied with the operation by the year 1976. The Law Reform Commission (LRC 64 – 2001 at para. 1.03) and the authors McMahon and Binchy (Law of Torts, Fourth Ed., 2013 at para. 46.21) both interpret this to mean that the clock did not start to run until 1976, which certainly reflects a test based on a manifestation of the injury, rather than its occurrence (which on the facts, would have been in 1974). However, in the penultimate sentence of his judgment, the Chief Justice stated that “[t]he proceedings were not commenced until 1982, and that would appear to be upwards of five to six years after the time limit had expired” (emphasis added). Working backwards, this suggests that time expired in either 1977 or 1976; that means it would have started to run a further three years before that, so in 1974 or 1973. This, then, seems to be an application of a test based on the date of the wrongful act, i.e. the clock ran from the time of the surgeries. However, it is almost impossible to accept that this could have been his true intention, as he went to great lengths to eliminate that as a possible start point. It is also entirely inconsistent with the final paragraph of the judgment of Griffin J., which strongly suggests that, for him, time ran from 1976. It is, in the circumstances, highly regrettable that this is not also definitive from the judgment of Finlay C.J.
102. As the discussion in the preceding paragraphs indicates, I have taken the view that Griffin J. favoured a ‘manifestation of damage’ test, as did Finlay C.J., although it must be acknowledged that such is not at first immediately evident from the judgment of the Chief Justice. His reference to a “provable” personal injury, however, and his approval of the defendant’s contention that a cause of action accrues only when there is a manifestation of personal injury would suggest that the Chief Justice in fact favoured a “manifest damage” test over one based on any alternative start date. It therefore seems to me that although Hegarty did not perhaps definitively settle the point beyond debate, in my view the better reading of the case is that the majority of the Court saw the date of manifestation as being the relevant date for limitation purposes. The questions then arise (i) whether any of the subsequent case law has shed any light on, or perhaps even altered, this interpretation, (ii) whether the same is also applicable in property damage claims and (iii) if it is, what in fact does it mean?.
103. The view which I have just expressed was also the reading of Hegarty taken by Geoghegan J. in Irish Equine Foundation Limited v. Robinson [1999] 2 IR 442 (“Irish Equine”). In a passage at pp. 447-448 of the report, the learned judge stated that:
“I think, therefore, that Hegarty v. O’Loughran must be taken as authority for the view that prior to the Act of 1991, the cause of action for personal injury did not arise until the injury was manifest but it did then arise irrespective of whether it ever occurred to the party injured or could ever have reasonably occurred to the party injured that it resulted from the negligence of somebody else. Personal injury cases, of course, are now governed by the Act of 1991 and the views of the Supreme Court in Hegarty v. O’Loughran are only relevant in so far as they can and should be adapted to actions for property damage.
In my view, it is at least arguable that the nature of personal injury damage is so different from the nature of damage resulting from defects in a building that the concept of an injury becoming manifest as being relevant to the commencement of the limitation period may only be applicable to personal injury cases but I accept that the opposite can also be argued. I find it quite unnecessary to decide this point and that being so, I do not think that I should decide it.”
104. The first paragraph of those quoted seems to me to represent a correct analysis of the decision in Hegarty insofar as it applies to personal injuries, although it must be said that the reference by the learned trial judge to “… the negligence of somebody else” never featured in that case, unless of course he was simply referring to the wrongful act or omission complained of. Whatever about that point, however, I do not share the sentiment voiced in the second paragraph, which was purely obiter in any event. Although accepting that there may be some difference in nature between personal injuries and property damage, I am not convinced that any such difference would warrant a separate or discrete test in respect of those two classes of action. The potential injustice of the section applies no less when the damage is property-related; accordingly, if a start date based on ‘manifestation’ is appropriate in one case, I do not see why it should not equally be appropriate in the other. McCarthy J. seemed to be of a similar view in Hegarty v. O’Loughran, citing with apparent approval at p. 161 the finding in Pirelli that “the alleged distinction to be drawn between damage to property and personal injuries was … unfounded.” I will later return to Irish Equine in the context of the central issue of whether defective foundations can be said to constitute damage for the purposes of the law of negligence. That case, however, is not the only one to raise the matter of whether Hegarty can be transposed to property damage and pure economic loss cases. It is therefore necessary to examine the subsequent cases.
105. Two High Court judgments which lend some support to an affirmative answer to that question are those of Herbert J. in O’Donnell v. Kilsaran Concrete and that of Birmingham J. in Hegarty v. D&S Flanagan Bros, both of which have previously been referred to. In the former, Herbert J. endorsed Irish Equine on that point and applied it to the facts of the case before him, which was a claim for property damage. He concluded on the evidence that “the damage only came into existence not long prior to October 1998 or in the terminology used by Geoghegan J was not manifest until then.” On the one hand this seems to support the need for damage to be manifest; on another reading, however, it merely conflates the date of manifestation with that of occurrence. There is also a third possibility, of course, namely, that the occurrence and manifestation of the damage happened at the same time. In Hegarty v. D&S Flanagan Bros, Birmingham J. said that the “time-limit on negligence actions begins to accrue on the date on which damage manifests itself, and not from the date on which the damage is discovered.” At face value this correctly distinguishes between two points on the spectrum of options and, if intended as such, it cannot be questioned. However, Birmingham J. quoted the judgment of McCarthy J. in Hegarty v. O’Loughran in support of this contention, whereas it is clear that for McCarthy J. it was the date of the occurrence, rather than the date of manifestation, which was the critical one. Therefore one cannot be certain whether Birmingham J. truly intended to suggest that the date of manifestation is different to the date of occurrence.
106. Less encouraging for the Plaintiffs/Respondents is the judgment of Dunne J. in Murphy v. McInerney Construction. There the learned judge considered a submission that “the cause of action was not complete until such time as it was clear that the cracks in the property were structural.” She had regard to the particulars raised in that case and the replies thereto, and concluded as follows:
“Having regard to the pleadings in this case and the facts agreed before me I cannot come to the conclusion that the cause of action against the first and second named defendants accrued within the six years prior to the issue of these proceedings. There is nothing whatsoever to suggest that the damage complained of occurred within that time-frame. What is contended is that ‘the latent defects became manifest’ within the time frame. That is nothing short of a discoverability test.”
Thus Dunne J. appears to have been far less embracing of any possible distinction between manifestation and occurrence. Moreover, it seems to be suggested that requiring that damage be “manifest” would be very close to, if not even identical to, a discoverability test. However, it must be acknowledged, in fairness to the learned trial judge, that the facts of the case before her made it very difficult to articulate a clear-cut distinction between these three concepts.
107. There is one other case which must be noted, namely, Gallagher v. ACC Bank [2012] 2 I.R. 620. There, the defendant bank advertised and marketed a financial product called a “Solid World Bond 4”, which the plaintiff agreed to purchase. For this purpose he also availed of a loan of €500,000 from the Bank, which it was offering to prospective investors as part of the package. His complaint was that he was induced to acquire this product, which was totally unsuitable for him as it would have had to far out-perform the market if he was to get any return above the interest which had accrued on the associated borrowings. The live issue turned on when the cause of action accrued for the purposes of the negligence claim against the defendant.
108. Having conducted a wide ranging and extensive survey of the cases, essentially from the UK and Australia, Fennelly J. returned to the authorities in this jurisdiction, aided by the judgment of Brennan J. in Wardley Australia Ltd v. Western Australia [1992] 175 C.L.R. 514 for the answer. The conclusion of the learned judge, with whom all of the members of the Court agreed, can be summarised as follows:
(i) Lord Esher was correct in Read v. Brown: every fact necessary to support judgment must exist before a cause of action can be said to arise. Accordingly, the commission of a wrongful act, of itself, is not sufficient – actual damage is necessary.
(ii) Mere possibility of loss will not be suffice: some level of probability will be necessary in most situations, with the exception of cases like Philip v. Ryan [2004] 4 IR 241. To hold otherwise would be unfair to a plaintiff who, if he moves too early, may not be able to prove damages; on the other hand, if he waits until his loss fully materialises, he may be statute barred.
(iii) Where the transaction involves benefits and burdens, damage will only arise if, on an evaluation, an adverse balance is struck; put another way, damages may be caused at the time of the wrongful act or that act may simply initiate a course of action that will result in loss at some later date.
(iv) For present purposes, it is relevant that at paragraph 117 the learned judge identified three possible start points for the limitation period: “firstly, it could accrue when the plaintiff entered the transaction by borrowing the money and purchasing the bond; secondly, it might accrue at some intermediate date when the plaintiff could prove that he was at a loss in terms of a calculation of his liability for interest against movements in the value of the shares; thirdly, it could accrue at the end of the period of the investment.”
(v) Of these, Fennelly J. was firmly of the view, expressed in paragraph 118, that the date first mentioned must be the correct one: “It is to my mind inescapable that the plaintiff’s claim as pleaded is that he suffered damage by the very fact of entering the transaction and purchasing the bond. The cause of action then accrued. That was also the date when he entered into a contractual relationship with the defendant.”
(vi) Finally, the learned judge concluded at paragraph 121 that the case, “on its own particular pleaded facts”, was a clear one: the cause of action accrued when the plaintiff purchased the bond, more than six years before he commenced proceedings, and thus the claim was statute barred.
Given the express recognition that the case was decided by reference to the specific nature of the plaintiff’s pleadings, it can fairly be said that at the level of principle it offers little assistance to the point directly under consideration on this appeal.
109. What the above case law establishes beyond doubt is that the date of the wrongful act, the date on which the damage was discoverable or ought reasonably to have been discovered, and the date of actual discovery are not the start date for limitation purposes. The general consensus would appear to be that Hegarty v. O’Loughran decided, in personal injuries claims at least, that the date of manifestation of damage is the critical one. However, there has been a looseness of language in some of the subsequent judgments which has seen that date conflated with the date of occurrence of damage, on the one hand, and sometimes even with the date of discoverability, on the other. This is of course explicable by the fact that in some cases the date of occurrence and of manifestation may be the same; in others the date of manifestation and of discoverability may be the same; indeed, sometimes all three may overlap and present on the same date. However, if one is to consider the dates of occurrence, manifestation and discoverability as three distinct concepts, which is how they were treated in Hegarty v. O’Loughran and is how I believe they ought to be treated, then a clear answer to the questions posed on this appeal may be given.
110. In my view, time begins to run from the date of manifestation of damage, which means it runs from the time that the damage was capable of being discovered and capable of being proved by the plaintiff. This was the conclusion reached in respect of personal injuries claims in Hegarty v. O’Loughran. The case law since then is ambiguous as to whether such a commencement date should or indeed has been transposed to property damage claims. However, for the reasons articulated up to this point of the judgment, I am satisfied that the date of manifestation of damage is also the appropriate start point in property damage claims, and the 1957 Act should be construed accordingly.
Real issue on the appeal: what constitutes actionable ‘damage’ for the purposes of the law of negligence?
111. Leaving aside for a moment the wording of the questions certified by this Court, in one sense the resolution of the precise point from which time runs for limitation purposes is not really necessary for this appeal. The reason is this: the above-cited case law puts it beyond doubt that time will not begin to run until the cause of action accrues; equally, it is unquestionable that a cause of action in negligence is not complete until actionable damage has occurred. It is quite clear that Ryan P. in the Court of Appeal decided the case on the basis that “damage” to the houses first occurred in December, 2005 (para. 22, supra). This was the critical issue from that court’s point of view. Questions of the damage being manifest, or discoverable, or even discovered, simply did not arise; even on the test which takes the date upon which the damage occurred as its starting point, the Court of Appeal was still satisfied that Mr Brandley was within time. In essence, given the timeline involved, the damage actually happened less than six years before the institution of proceedings.
112. In order to arrive at this conclusion, the learned President drew a distinction between the initially defective foundations, which in his view did not constitute actionable damage, and the subsequent cracks appearing in the walls, which did. The Appellants have submitted that there is no logical or rational basis to treat the defective foundations as anything other than damage capable of sustaining a cause of action, and that by doing otherwise the Court of Appeal in substance applied a test of discoverability. Accordingly, it is necessary to further explore this central question of whether the laying of defective foundations in March, 2004 constituted actionable damage and whether that damage would have been manifest at that time, for if it was, and in the absence of a test based on discoverability, the Appellants must surely prevail.
113. In principle, at several different levels and for several different purposes, a distinction clearly exists between defect and damage. This distinction between defect and damage has also been clearly established in the case law. Griffin J. in Hegarty v. O’Loughan makes this perfectly clear and supports his view with concrete illustrations, as does President Ryan in the instant case. In addition, though it was not cited by the court below, Pirelli, the facts of which have been recited above (paras. 52 and 53, supra), is also a strong authority on this point. It will be recalled that the wrong material was used for the inner lining of a pre-cast concrete chimney. In his speech, Lord Fraser addressed this issue as follows:
“[T]here is an element of confusion between damage to the plaintiff’s body and latent defect in the foundations of a building. Unless the defect is very gross, it may never lead to any damage at all to the building. It would be analogous to a predisposition or natural weakness in the human body which may never develop into disease or injury. The plaintiff’s cause of action will not accrue until damage occurs, which will commonly consist of cracks coming into existence as a result of the defect even though the cracks or the defect may be undiscovered and undiscoverable.” (p. 16 of the report) (Emphasis in original)
114. The learned Law Lord went on to refer to the “exceptional” cases in which “the defect is so gross that the building is doomed from the start”, noting that in such cases the owner’s cause of action would accrue as soon as the building is built. He elaborated somewhat on this later at pp. 18-19 of the report:
“It seems to me that, except perhaps where the advice of an architect or consulting engineer leads to the erection of a building which is so defective as to be doomed from the start, the cause of action accrues only when physical damage occurs to the building. In the present case that was April 1970 when, as found by the judge, cracks must have occurred at the top of the chimney, even though that was before the date of discoverability.”
Incidentally, virtually all of the later cases on this topic have distanced themselves from the “doomed from the start” exception, which has never gained any sort of traction and which has in effect been obsolete for very many years.
115. This distinction between ‘defect’ and ‘damage’ is again evident in the judgment of Ralph Gibson L.J. in London Congressional Union Incorporated v. Harriss and Anor [1988] 1 All E.R. 15 (Court of Appeal) (“London Congressional Union”), where it was stated that:
“I am unable to find that the defect in design can or should be treated as physical damage to the building. … The defect in design in this case was, in my judgment, as latent, and as distinct from subsequent physical damage caused by it, as was the negligent incorporation of unsuitable material in Pirelli’s chimney.”
A similar point was made by Lord Keith of Kinkel in Ketteman v. Hansel Properties Limited [1987] A.C. 189 (“Ketteman v. Hansel”). These cases are discussed in more detail below.
116. If all of this seems to supports the Respondents’ case, it must be said that there is authority from this jurisdiction which would certainly seem to favour the Appellants, that is, the judgment of Geoghegan J. in Irish Equine. There the defendants had been retained in December, 1979 to act as architects to design and supervise the construction of the Irish Equine Centre in Co. Kildare. A certificate of practical completion in respect of the centre was issued in March, 1986, with the final certificate issuing on the 18th November, 1987. There was an ingress of water through the ceiling of the centre in late 1991; proceedings issued on the 4th January, 1996. The question of whether the action, founded on negligence, was statute barred was tried as a preliminary issue. The plaintiff contended that there was no damage, or at least that no damage manifested itself, until the ingress of water in late 1991. If that proposition had been accepted, then naturally the proceedings would have been within time.
117. Geoghegan J. did not believe that English cases such as Pirelli afforded any real support to the plaintiff’s case, although in his view the judgments of Finlay C.J. and particularly Griffin J. in Hegarty did bolster their argument to some extent. As above noted, on his analysis of that case, Geoghegan J. was satisfied that that case had to be taken as authority for the proposition that, prior to the Act of 1991, “a cause of action for personal injury did not arise until the injury was manifest but it did then arise irrespective of whether it ever occurred to the party injured or could ever have reasonably occurred to the party injured that it resulted from the negligence of somebody else” (p. 447 of the report). Having made this point and having expressly reserved his view on whether a manifest test applied to property claims, the learned judge then went on to dispose of the case before him as follows:
“It would seem to me that if the roof, the subject matter of this action, was defectively designed for the reasons suggested by the plaintiff, this would have been manifest at any time to any expert who examined it. I agree with the submission in this regard made by counsel for [the defendants], that if experts with the same qualifications as these defendants had been retained just after the roof was constructed to inspect and report and, assuming that the plaintiff’s allegations are correct, they could and would have reported that the roof was defectively designed. I am satisfied, therefore, that in so far as this action is founded on negligence in the design of the roof, it is clearly statute barred.” (p. 448 of the report)
118. The kernel of the Appellants’ case on this appeal is similar: that it would have been manifest to any expert who examined the foundations any time after they were put in that they were defective. The Respondents, however, suggest that Irish Equine did not deal with the distinction between a defect and damage, and support this argument by pointing to the Law Reform Commission’s Report on the Statute of Limitations: Claims in Contract and Tort in Respect of Latent Damage (other than Personal Injury) (LRC 64 – 2001). There Irish Equine is said to illustrate “the hardship caused to a plaintiff by allowing the cause of action to accrue when … economic loss occurs” (para 6.31). The LRC analysed the case as follows:
“The plaintiff had a cause of action in tort arising in 1986 or 1987 for the economic loss suffered in making good the defects in the defectively designed roof. At this point, (or perhaps earlier, at the date the negligent design plan was made) the cause of action was complete, and the subsequent physical damage was immaterial to the date of accrual of the cause of action. This was the outcome of Geoghegan J’s analysis of the facts. However, it is unclear whether the learned judge mistakenly applied the rule in Pirelli to the defect itself, as opposed to the actual physical damage, or whether Geoghegan J was in fact applying the exception to the rule in Pirelli, known as the ‘doomed from the start’ exception … to arrive at this result. Had the learned Judge correctly applied the rule in Pirelli the limitation period would not start to run until 1991 when physical damage occurred.” (para. 6.32)
119. It is clear that Geoghegan J. considered the primary claim to be for “the alleged cost of removing existing slating, retaining existing roof structure and sheeting with metal decking with counter batons and slating over”. He expressly approached the case as being based on a claim for pure economic loss; see, for example, p. 448, where he stated that “[f]or all practicable purposes, this is a claim for what is known in the English authorities as ‘pure economic loss’” and p. 448-449, where he said that “there is no doubt that the statement of claim is alleging a cause of action in the form of a breach of a duty of care not to cause pure economic loss.” This perhaps makes it easier to understand why the learned judge seems to have conflated defect with damage: in a pure economic loss case, the defect was the damage ab initio. It was for this reason that he stated at p. 449 that “the economic loss arose immediately the defectively designed roof was constructed and possibly even at an earlier stage”. However, by reference to UK case law, Geoghegan J. did acknowledge that “damage which was likely to cause danger in the future might also be sufficient to ground a cause of action but it would still have to be physical damage.” Thus it followed that “it would only be in the rarest of cases that the cause of action would commence upon the construction of the building.” The judge continued by differentiating the case before him:
“But, if as is pleaded in this statement of claim, damages can be recoverable in negligence quite apart from contract for the pure economic loss involved in making good defective design of workmanship, then quite clearly the loss arises from the beginning.”
120. In so holding, it seems to me that the learned judge was drawing a distinction between the time when the clock might start to run in pure economic loss cases, on the one hand, and in property damage claims, on the other. As Irish Equine fit into the former category, the time started to run earlier, i.e., from the time of the construction of the roof, rather than when the damage manifested in the form of the ingress of water. This would account for his application of the “manifest” test to the defective design rather than the subsequent damage, as on the pleadings before him the defect was the damage, and hence the occurrence and manifestation of damage were both in 1987.
121. Such an approach was espoused in Ketteman v. Hansel, but did not commend itself to the House of Lords; for example, Lord Brandon of Oakbrook, though dissenting on other grounds, stated as follows:
“The argument of counsel, as I understand it, proceeded as follows. Where a house was built on defective foundations, a buyer of it might suffer two kinds of damage. The first kind of damage was physical, in the form of consequential structural failure or damage. The second kind of damage was economic loss, in the form of diminution in market value. In the case of the first kind of damage, the buyer’s cause of action against any party for negligence in respect of the defective foundations accrued when the consequential structural failure or damage occurred. But, in the case of the second kind of damage, the diminution of market value was present from the time of the original construction, and it was at that earlier time that the buyer’s cause of action in respect of such diminution accrued. The plaintiffs in the present case had sued for the second kind of damage, namely, diminution of market value. Their causes of action had, therefore, accrued at the date when the houses were built.
In my opinion this contention cannot be supported. I do not know what special cases Lord Fraser of Tullybelton had in mind when he referred in his speech in the Pirelli case to buildings ‘doomed from the start.’ It may be that he was only keeping open the possibility of the existence of such special cases out of major caution. Be that as it may, however, I am quite sure that he was not seeking to differentiate between causes of action in respect of making good defects or damage on the one hand, and causes of action in respect of diminution in market value on the other. In any case, on the facts of the present case it seems that the plaintiffs, in re-selling their houses at a loss, were acting reasonably in mitigation of their damage, so that the distinction between the two kinds of damage relied on is one of form rather than substance.”
Lord Brandon was satisfied that the cause of action accrued on the date on which the consequential structural damage to the house first came into existence.
122. Whether Geoghegan J. intended to endorse the approach which previously had been rejected by Lord Brandon is uncertain; in any event his comments to that effect were obiter, as Irish Equine was in substance decided on the basis that damage was manifest from 1987 or earlier.
123. The judgment of Geoghegan J. in Irish Equine can be explained on a numbered of bases. He expressly decided that case on its pleadings, where the central claim was for pure economic loss. It is also possible, as has been above stated, that he misapplied the test in Pirelli to the defect, or that he was in fact applying the “doomed from the start” exception from that case. Whichever be the case, it is clear in any event that the learned judge was not addressed on, and the judgment does not deal with, the distinction between ‘defect’ and ‘damage’ which is central to the within appeal. Accordingly, I take the view that the already cited UK authorities are of more direct relevance on this point.
124. The facts and decision in Pirelli have been above described (paras. 52-56, supra). That case was later applied by the Court of Appeal in London Congressional Union. There the trial judge awarded the plaintiffs damages for negligence in the design of the surface water drains and damp-proofing of a new church and hall which were completed and handed over in January, 1970. The surface water drains functioned properly for about 20 months. “Disaster occurred” following heavy rains on the 3rd August, 1971, as the sewer filled with water, which came up through the pipes and flowed into the hall, causing damage to the floors and plaster. By mid-1975 the hall had flooded in this fashion on some eleven occasions – in one such incident, the hall flooded to a depth of two feet. A writ was issued on the 18th February, 1977; thus the relevant date for deciding whether or not the claims were barred was the 18th February, 1971. The sole question for the Court of Appeal was whether the plaintiffs’ action was barred by the Limitation Act 1939. If the cause of action in respect of the defectively designed drains accrued on handing over the building in January, 1970, the plaintiffs were out of time; conversely, if the cause of action did not accrue until physical damage was caused to the building by the defective design in August, 1971, the claim was not statute barred.
125. Ralph Gibson L.J., in analysing the decision in Pirelli, stated in relation to the speech of Lord Fraser that:
“[T]here was in my judgment a decision that in law a defect such as in foundations resulting from negligent advice or design is distinct from the damage which it later causes to the building and, save in a class of exceptional cases which must be considered later in this judgment, the cause of action does not arise until the damage occurs. There was, moreover, a finding that on the facts of that case, where by negligent design the defendants caused the presence of a defect in the building from which damage to the building later resulted, the cause of action accrued when the damage came into existence and not at any earlier date.
I can see no relevant difference between the relationship of the defendant consulting engineers in Pirelli to their clients, the plaintiffs, and the relationship of the defendant architects in this case to their clients, the United Reform Church of East Finchley. In both cases there was negligent design which was latent in the sense that for a time the building and the various parts of it functioned as those parts were expected and required to function, and which was later the cause of physical damage to the building. I therefore conclude that unless this case can be distinguished on the facts in some way from Pirelli’s case, or unless it falls within an exception from the rule established by that case, the cause of action in respect of the negligent design of the drains must be held to have accrued when the flooding occurred and not before.”
126. Ralph Gibson L.J. went on to refer to an unreported judgment of His Honour Judge Sir William Stabb, Tozer Kemsley & Millbourn (Holdings) Limited v J. Jarvis and Sons Limited and Others (the 5th May, 1983), which concerned the negligent design and installation of a heating and air conditioning plant in an office block. The judge had held on the pleaded allegations that the plant was defectively designed and constructed from the time that it was installed. As reflected in the London CUI judgment, Judge Sir William Stabb went on to say that:
“I think that a defect in the construction of the building, be it as a result of a faulty design or construction of part of that building or its services, means and can only mean that a building in that defective state is a damaged building. It is a damaged article in the sense that it is not a sound one. … [A] building is a manufactured thing, and if it is unsuitable or defective when it is handed over it seems to me that the cause of action arises when the person acquires it in its defective state. It may well be that to quantify the economic loss that flows or will flow from that defective state will be impossible at that time, but that is the time when the cause of action arises.”
127. It is useful to set out at some length the comments of Ralph Gibson L.J. in relation to the passage just quoted, as they go some way to explaining the distinction between a defect, on the one hand, and damage, on the other. He said that:
“The first thing to be noted is that Judge Sir William Stabb was not required in that case to decide whether in law the plaintiff lessees were entitled to recover the alleged or any damages against the defendants, and in particular against the defendant architects or consulting engineers. His decision was that, if causes of action in negligence had accrued, they were statute barred. It is not necessary for this court in this case to decide whether in the circumstances indicated in the Tozer Kemsley case the plaintiffs could have succeeded in negligence against any of the defendants for the loss resulting not from damage caused by the defective operation of the plant, whether to itself or to any other part of the building, but from expense or inconvenience arising from a heating and air conditioning plant which did not work as well as such plant might reasonably be expected to work. Making the assumption that the learned judge made I would accept that on the facts there alleged any cause of action for damage resulting from negligent design of, or supervision of, installation of the plant was rightly treated as arising when the building in that state was handed over to the client. In applying the principle established in Pirelli’s case, as Judge Sir William Stabb sought to do in the Tozer Kemsley case, I see no reason why on the facts of a particular case the defect resulting from negligent design or supervision should not constitute the physical damage to the building provided that the damaging consequences of the defect are immediately effective. In such circumstances there is no need for subsequent or later damage in order to complete the cause of action.
Accepting the principles stated by Judge Sir William Stabb and applying them to the facts of this case, I am unable to find that the defect in design can or should be treated as physical damage to the building. The drains, in the physical condition resulting from the defect in design, were not such as to produce at once their damaging effects. They were capable of functioning properly as drains and they did so for some twenty months. When they failed effectively to function as drains because of heavy rainfall in the area they did not merely function unsatisfactorily, e.g. by making noises or emitting smells, but were the cause of physical damage to other parts of the building. The defect in design in this case was, in my judgment, as latent, and as distinct from subsequent physical damage caused by it, as was the negligent incorporation of unsuitable material in Pirelli’s chimney.” (Emphasis added)
128. Later still, in commenting on proposed legislative changes to the limitation legislation, the learned judge stated that “the law, as I understand it to be, does postpone, in the ordinary case of negligent design and construction of a building, the accrual of the cause of action until the resulting physical damage comes into existence”.
129. The House of Lords reached a similar conclusion in Ketteman v. Hansel the next year. This case concerned defective foundations which later produced physical damage to five houses. The case gave rise to a “surprising mish-mash of legal issues” concerning the joinder of parties, the doctrine of relation back, and the amendment of pleadings. What is of concern for this judgment is Lord Keith of Kinkel’s rejection of the appellants’ “doomed from the start” argument, and his acceptance therein of the distinction between ‘defects’ and ‘damage’. Although Lord Keith found himself in a minority in that case as a result of his disposal of the “amendment” point, all of the members of the majority expressly agreed with him in relation to the “doomed from the start” point. At pp. 205-206, in referring to the appellants’ “doomed from the start” argument, he stated that:
“The appellants’ presentation of this argument involved two aspects. In the first place it was maintained that the houseowners’ respective causes of action accrued, not when the physical damage to their houses occurred, but when they became the owners of houses with defective foundations. It was argued that they then suffered economic loss because the houses were less valuable than they would have been if the foundations had been sound. The proposition that a cause of action in tort accrued out of negligence resulting in pure economic loss was sought to be vouched by reference to Junior Books Ltd. v. Veitchi Co. Ltd. [1983] 1 AC 520 That case was also cited in Pirelli in support of the argument that, since in that case there was economic loss when the chimney was built, the cause of action arose then. The argument was clearly rejected in the speech of Lord Fraser of Tullybelton concurred in by all the others of their Lordships who participated in the decision. At p. 16, he expressed the opinion that a latent defect in a building does not give rise to a cause of action until damage occurs. In the present case there can be no doubt that the defects in the houses were latent. No one knew of their existence until damage occurred in the summer of 1976. This branch of the argument for the architects is, in my opinion, inconsistent with the decision in the Pirelli case, and must be rejected.
In the second branch of the argument it was maintained that a distinction fell to be drawn between the case where the defect in a building was such that damage must inevitably eventuate at some time and the case of a defect such that damage might or might not eventuate. The former case was that of a building ‘doomed from the start’ such as was in the contemplation of Lord Fraser of Tullybelton when he made reference to that concept in his dicta in the Pirelli case, at p. 16. In the present case the houses were doomed from the start because the event showed that damage was bound to occur eventually. My Lords, whatever Lord Fraser may have had in mind in uttering the dicta in question, it cannot, in my opinion, have been a building with a latent defect which must inevitably result in damage at some stage. That is precisely the kind of building that the Pirelli case was concerned with, and in relation to which it was held that the cause of action accrued when the damage occurred. This case is indistinguishable from the Pirelli case and must be decided similarly. The second branch of the architects’ argument fails. I understand that all your Lordships agree.”
Lord Brandon of Oakbrook was of a similar view and stated that “the plaintiffs’ causes of action against the third defendants accrued at the dates on which the consequential structural damage to their houses first came into existence” (p. 208 of the report).
130. The principle expressed in these cases is the same as that recognised by the Court of Appeal in this case: the cause of action in negligence will not arise until physical damage has been caused to the buildings; the presence of an underlying latent defect is not enough. It is true, of course, that the reasoning in Pirelli has been subject to academic and judicial criticism, with other common law countries resiling from it and the Latent Damage Act 1986 reversing its harsh result.
131. Indeed, even subsequent decisions of the House of Lords and the Privy Council suggest an alternate approach to Pirelli. In Murphy v. Brentwood District Council [1991] 1 AC 398 and Invercargill City Council v. Hamlin [1996] AC 624, it was held that the better approach to a latent damage case such as this is to treat it as pure economic loss. If I may be forgiven for a long quotation from the judgment of the Privy Council (delivered by Lord Lloyd of Berwick) at pp. 646-649 of Invercargill, which explains this approach and reasons for it:
“Their Lordships refer to Pirelli as an unfortunate decision not only because that is how the House itself regarded the decision … but also because it has been subjected to a barrage of judicial and academic criticism ever since … Their Lordships do not find it necessary to review these criticisms in any detail, or to enter into the question what Lord Fraser of Tullybelton may have had in mind when he referred to buildings which are ‘doomed from the start:’ … Instead they will quote a passage from an article written shortly after the Pirelli case but before Murphy’s case [1991] 1 AC 398 , since it leads on directly to the ground on which the limitation point must now be decided:
‘There is undoubtedly a superficial attraction in the argument which found favour with all five Lords of Appeal in Pirelli’s case. If the nature of the damage suffered is regarded as a physical loss, it does indeed look as if the principle in Cartledge v. E. Jopling & Sons Ltd. should apply, on the basis that the damage is there but is unknown and, it may be, unknowable. But if the damage is recognised as economic the whole picture changes. It is thought that a failure to appreciate this point undermines the whole thrust of the argument in Pirelli’s case:’ Stephen Todd, ‘Latent Defects in Property and the Limitation Act: A Defence of the ‘Discoverability’ Test’ (1983) 10 N.Z.U.L.R. 311, 316.
This passage is a remarkable anticipation of the reasoning of the House of Lords in Murphy, where Lord Keith of Kinkel said [at p. 466]:
‘In my opinion it must now be recognised that, although the damage in Anns [1978] AC 728 was characterised as physical damage by Lord Wilberforce, it was purely economic loss.’
Lord Keith went on, at pp. 467-468, to quote with approval a lengthy passage from the judgment of Deane J. in Sutherland Shire Council v. Heyman (1985) 157 C.L.R. 424 , 503-505:
‘Nor is the respondents’ claim in the present case for ordinary physical damage to themselves or their property. Their claim, as now crystallised, is not in respect of damage to the fabric of the house or to other property caused by collapse or subsidence of the house as a result of the inadequate foundations. It is for the loss or damage represented by the actual inadequacy of the foundations, that is to say, it is for the cost of remedying a structural defect in their property which already existed at the time when they acquired it . . . It is arguable that any such loss or injury should be seen as being sustained at the time of acquisition when, because of ignorance of the inadequacy of the foundations, a higher price is paid (or a higher rent is agreed to be paid) than is warranted by the intrinsic worth of the freehold or leasehold estate that is being acquired. Militating against that approach is the consideration that, for so long as the inadequacy of the foundations is neither known nor manifest, no identifiable loss has come home: if the purchaser or tenant sells the freehold or leasehold estate within that time, he or she will sustain no loss by reason of the inadequacy of the foundations. The alternative, and in my view preferable, approach is that any loss or injury involved in the actual inadequacy of the foundations is sustained only at the time when that inadequacy is first known or manifest. It is only then that the actual diminution in the market value of the premises occurs. On either approach, however, any loss involved in the actual inadequacy of the foundations by a person who acquires an interest in the premises after the building has been completed is merely economic in its nature.’
Once it is appreciated that the loss in respect of which the plaintiff in the present case is suing is loss to his pocket, and not for physical damage to the house or foundations, then most, if not all the difficulties surrounding the limitation question fall away. The plaintiff’s loss occurs when the market value of the house is depreciated by reason of the defective foundations, and not before. If he resells the house at full value before the defect is discovered, he has suffered no loss. Thus in the common case the occurrence of the loss and the discovery of the loss will coincide.
But the plaintiff cannot postpone the start of the limitation period by shutting his eyes to the obvious. In Dennis v. Charnwood Borough Council [1983] Q.B. 409, 420, a case decided in the Court of Appeal before the Pirelli case reached the House of Lords, Templeman L.J. said that time would begin to run in favour of a local authority:
‘if the building suffers damage or an event occurs which reveals the breach of duty by the local authority or which would cause a prudent owner-occupier to make investigations which, if properly carried out, would reveal the breach of duty by that local authority.’
In other words, the cause of action accrues when the cracks become so bad, or the defects so obvious, that any reasonable homeowner would call in an expert. Since the defects would then be obvious to a potential buyer, or his expert, that marks the moment when the market value of the building is depreciated, and therefore the moment when the economic loss occurs. Their Lordships do not think it is possible to define the moment more accurately. The measure of the loss will then be the cost of repairs, if it is reasonable to repair, or the depreciation in the market value if it is not: see Ruxley Electronics and Construction Ltd. v. Forsyth [1996] 1 A.C. 344.
This approach avoids almost all the practical and theoretical difficulties to which the academic commentators have drawn attention, and which led to the rejection of Pirelli by the Supreme Court of Canada in the Kamloops case, 10 D.L.R. (4th) 641. The approach is consistent with the underlying principle that a cause of action accrues when, but not before, all the elements necessary to support the plaintiff’s claim are in existence. For in the case of a latent defect in a building the element of loss or damage which is necessary to support a claim for economic loss in tort does not exist so long as the market value of the house is unaffected. Whether or not it is right to describe an undiscoverable crack as damage, it clearly cannot affect the value of the building on the market. The existence of such a crack is thus irrelevant to the cause of action. It follows that the judge applied the right test in law.
Their Lordships repeat that their advice on the limitation point is confined to the problem created by latent defects in buildings. They abstain, as did Cooke P., from considering whether the ‘reasonable discoverability’ test should be of more general application in the law of tort.”
132. Murphy v. Brentwood DC and Invercargill v. Hamlin were decided before Irish Equine, which could explain why Geoghegan J. did not address the defect/damage distinction and instead approached the claim as one solely for pure economic loss, although the learned judge referred only to Pirelli and not these later cases. It would be interesting to know whether the same outcome would have been reached had he referred to those decisions.
133. Not alone has there been no legislative equivalent to the Latent Damage Act 1986 in this jurisdiction, but in fact Pirelli still seems to be regarded as good law. It certainly found favour with this Court in Hegarty, by which stage the criticism of the decision must have been well-known, and was expressly considered by Geoghegan J. in Irish Equine as representing Irish law in respect of the unavailability of a discoverability test, at least. Nonetheless, in normal circumstances I would be hesitant to follow a decision which has been so widely criticised and has largely been set to one side. For my part, however, I am not sure that all of the criticism of Pirelli is warranted, or that it truly gives rise to such conceptual difficulties and nuanced, unrealistic distinctions as has been alleged in some quarters, for if it did, it is highly unlikely that it would have received a series of continuous endorsements in this jurisdiction.
134. Be that as it may, it must be acknowledged that no point was taken on whether or not the approach adopted in Invercargill should commend itself to this Court. As previously stated, this case was argued in accordance with well-established principles concerning the accrual of a cause of action for physical damage to property. Thus, through that prism, the issue presenting in this case calls for a determination of when the cause of action accrued, and that in turn necessitates an analysis of the distinction between “defect” and “damage”. It is in accordance with that legal framework that I propose to decide the case. Accordingly, apart from acknowledging the decision, further analysis of Invercargill is not required.
135. In Pirelli, the use of incorrect lining in the chimney was akin to the use of wrong materials in the foundation in the within case. The actionable ‘damage’ in Pirelli did not occur as of the moment of the use of the incorrect lining; that was but a defect. The damage occurred later, when cracks became evident in the top of the chimney. This was the physical damage giving rise to the cause of action. In that case, owing to the location of the damage at the top of the chimney, it could not reasonably have been discovered within time, giving rise to the harsh result. The key point for present purposes, however, is that using incorrect materials gave rise only to a latent defect, and more – physical damage – was required before the clock began to run. Thus in such a case there is a wrongful act giving rise to a latent defect, but that is actionable only upon the manifestation of subsequent physical damage.
136. Applying that finding and those in London Congressional Union and Ketteman v. Hansel to the present case, it can be seen that the defective foundations did not produce their damaging effects at once. No cracks were reported in the walls of houses 2 and 3 until December, 2005. Only at that point did the latent defect in the foundations cause actual physical damage to the building, in the form of cracks. Accordingly, it was not until December, 2005 that ‘damage’ occurred, as that concept has been above described. It follows that it could not have been manifest before then; as it happens, on the facts, the occurrence of damage and its manifestation appear to have been simultaneous; both coincided and converged at the same time. It was therefore in December, 2005 that the Plaintiffs’ cause of action accrued, and not the date of the earlier pouring or certification of the defective foundations. It will be observed that, strictly speaking, whether time runs from when the damage occurred or when it was manifest is not central to the resolution of this appeal, as on either test the Plaintiffs/Respondents would prevail.
137. Finally, I will reiterate a point made earlier in this judgment. The aim of a comprehensive judgment such as this is to add clarity and certainty to a muddled area of the law. As the above discussion makes clear, however, this is far from an easy task. Litigants, practitioners and judges alike would benefit greatly from the introduction of a statutory discoverability test in cases such as this. It is to be hoped that such a call will be heeded.
Summary
138. To summarise, what follows is the position in respect of the running of the limitation clock in property damage claims founded in negligence:
The Options on the Spectrum
i. Five distinct potential start points emerge from the case law. They are a) when the wrongful act is committed; b) when the damage occurs, regardless of whether or not it is manifest; c) when the damage is manifest; d) when the damage is discoverable, by which I mean it could reasonably be discovered; and e) when the damage is discovered. Evidently the date first mentioned is invariably the earliest and thus the most favourable to the defendant seeking to rely on the Statute, with the other possibilities becoming increasingly preferable to the plaintiff as we move towards the date of actual discovery.
The Date of the Wrongful Act
ii. Although there was certainly a suggestion by McCarthy J. in Hegarty that time should run from the moment that the wrongful act is committed, this seems to be at odds with the general tenor of the rest of his judgment and I do not believe that it is what the learned judge intended. In any event such a start point is precluded by the very wording of section 11(2)(a) itself, which refers to the date of the accrual of the cause of action; clearly, that cannot be before any damage has occurred, the same being an essential element of the tort of negligence. Accordingly, the first mentioned start point can be ruled out.
The Date of Discoverability and the Date of Actual Discovery
iii. The date of discoverability refers to the date when damage could or ought with reasonable diligence to have been discovered. This is obviously distinct from the date of actual discovery, although those two dates may sometimes align (indeed is true that, pursuant to section 2 of the 1991 Act, there may be occasions on which the date of discoverability is in fact later than the date of actual discovery in personal injuries cases, insofar as the plaintiff would yet have to have knowledge of the identity of the defendant and their role in his injury, but it is accepted by all that neither this statutory form of discoverability, nor any other, has any bearing on the present case). The date of discoverability is also distinct from the date of manifestation of damage referred to in this judgment, in that the date of manifestation refers only to damage which is capable of discovery, whereas the date of discoverability as presently understood imports an element of the damage being objectively reasonably discoverable, even if it in fact went undiscovered.
iv. It seems clear from the case law that there is no element of discoverability in the test in property damage claims. This was expressly accepted by the Court of Appeal, as it had to, unless it disapplied Hegarty v. O’Loughran. It could only have done so if it saw a distinction in the accrual date between personal injury actions and the subject matter of the instant case. It saw none, a conclusion not seriously contested by the Respondents. Despite the harshness that this can give rise to, such is the law, and it is not open to this Court to read a discoverability test into section 11(2)(a) even if it was minded to.
v. Similarly, the cases establish clearly that the date of actual discovery is not the relevant one.
The fourth and fifth mentioned possibilities can therefore be disregarded. That leaves open either the date on which the damage occurred, or that on which it was manifest.
Date of Occurrence or Date of Manifestation of Damage
vi. Whilst the meaning of “occurred” is straightforward, it is not so easy to pin down precisely what is meant by “manifest”, and especially how one might differentiate it from the “discoverability test” as it appears in the cases. From a reading of the case law, I understand “manifest” to mean the date on which damage is capable of being discovered and proved by a plaintiff.
vii. I take Hegarty v. O’Loughran as having decided that the relevant start date in personal injuries cases is the date on which the personal injury was manifest. McCarthy J. would have pitched it from the date on which the damage occurred, but from a reading of the judgments of Finlay C.J. and Griffin J., who no doubt considered himself in complete agreement with the Chief Justice, I consider that the majority of the Court decided that time should run from when the personal injury was manifest. I am satisfied that this was the correct interpretation of the old section 11(2)(b).
viii. As mentioned, Hegarty was a personal injuries case. The question has since been posed, but never definitively decided by this Court, whether the “manifest damage” start point from Hegarty can be transposed to property damage claims. That some different considerations may arise in personal injuries cases vis-à-vis property damage claims is apparent from the intervention of the legislature in 1991 in respect of the former but not the latter. Hegarty was, however, decided before the 1991 Amendment Act was enacted. More pertinently, the relevant wording of section 11(2)(b) of the Act, with which that case was concerned, was precisely the same as the current wording of section 11(2)(a): “shall not be brought after the expiration of … years from the date on which the cause of action accrued.” I do not see any reason why the manifestation of the damage should not therefore also be the proper start point in property damage claims, particularly as it is well understood that the potential for injustice to a plaintiff is every bit as real in such cases as it is in personal injuries claims. Despite some hesitation in the case law about so declaring, to my mind there is no reason to treat the two differently for limitation purposes. I would, therefore, hold that time starts to run for limitation purposes in property damage claims from the date when the damage is manifest.
ix. I do not believe that this conclusion is inconsistent with subsequent Irish case law. In Irish Equine, Geoghegan J. read Hegarty as saying that time runs from the date of manifestation of damage; he did not have to offer a definitive view on whether this could be transposed to property damage claims, as even if it could he was of the view that the plaintiff was out of time. In Hegarty v. D&S Flanagan Bros., a property damage case, Birmingham J. offered the view that the time limit begins to accrue on the date on which the damage manifests itself. The position of Herbert J. in O’Donnell v Kilsaran Concrete, while somewhat uncertain, is not inconsistent with the approach herein outlined. The decision of Dunne J. in Murphy v. McInerney Construction is above discussed and explained. Finally, Gallagher v. ACC Bank is expressly stated to have been decided on the particular facts as pleaded by the plaintiff in that case.
x. As regards what constitutes damage, I accept that there is a definite distinction between a “defect” and the subsequent damage which it causes. Time runs from the manifestation of damage, rather than of the underlying defect. Thus it is not the latent defect which needs to be capable of discovery: it is the subsequent physical damage caused by that latent defect.
xi. To the extent that Irish Equine suggests that time runs from the date of the manifestation of the defect rather than of the damage, I believe this is attributable to the fact that Geoghegan J. approached the case as being one based on pure economic loss. On the pleadings in that case, the defect in design was itself the damage; this explains why time ran from 1987.
Conclusion
139. In applying the above principles to the instant case, one would normally begin by identifying the primary findings of fact as made by the trial judge, which, if supported by credible evidence, would of course have to be accepted by this Court. Unfortunately, no such findings were made in this case. In some, indeed perhaps in the majority of like situations, an appellate court would be minded to remit the matter so that such findings could be made, but none of the parties to the within appeal favours such an approach. That viewpoint is not determinative but might be of influence if the Court otherwise felt that the entire matter could be disposed of at this point, in proceedings which concern events which occurred 13 years ago. The Court of Appeal was likewise hampered by the absence of such findings, but from a consideration of the evidence it was able to satisfy itself as to when the damage constituting the tort occurred. That evidence has been extensively set out at paras. 13-17, supra.
140. Although recognising the unsatisfactory nature of this approach, I intend to adopt a similar course of action as on the critical points the evidence does not appear to diverge or be in conflict. It is clear from the uncontroverted testimony of Mr Brandley that the cracks constituting the damage to the house occurred in December, 2005. This is therefore one of those cases where the occurrence and manifestation of the damage happened on or about the same date. The other evidence, that of Mr Deane, was directed towards the laying of the foundations said to be defective from the start. As previously explained, without loss or damage attaching to such defects, no cause of action exists. That damage was completed in December, 2005. In coming to this conclusion, it is important to recall that the subject matter of the proceedings sought compensation for the damage caused to the Respondent’s property, that is, houses 2 and 3. Given this conclusion, it is immaterial whether different legal principles should apply to the case against Mr Deane as opposed to that against Mr Lohan.
141. Accordingly, I would dismiss the appeal.
Scanlon v. Ormonde Brick Ltd
, High Court, July 21, 2000
JUDGMENT of Mr. Justice Barr delivered the 21st day of July, 2000.
THE FACTS
1. The history of the relationship between the parties and the facts which have given rise to the dispute between them do not appear to be in significant controversy and are as follows:-
2. The plaintiff is a farmer and resides at Coolbawn, Castlecomer, Co. Kilkenny. For upwards of 100 years until quite recent times coal-mining was carried out in the Castlecomer area where there were several anthracite mines, including one on the plaintiff’s lands which was mined by his ancestors as an adjunct to their farming activities. Most of the mines were underground, including that on the plaintiff’s lands, and the method of extraction adopted was to remove the anthracite leaving pillars of coal at intervals to support the land above which included a covering of shale. In short, after anthracite mining was completed on
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the plaintiff’s lands three products remained which are relevant to this action i.e. the shale; fireclay which was beneath the coal seams and the supporting pillars of coal.
3. The defendant is a limited liability company which is engaged in the business of making bricks. Shale and fireclay are required in that connection. In or about 1989 the defendant was known as Irish Clay Industries Limited. It was then interested in acquiring the plaintiff’s extinct mine as a source of shale and fireclay. It had no interest in the pillars of coal. I accept the plaintiff’s evidence, which was not challenged, that in 1989 the defendant company was an independent commercial entity of modest proportions with limited financial resources. Negotiations took place which led to an agreement in writing between the parties made on 9th March, 1989 under which the plaintiff conveyed to the company the adjoining properties described in folio’s 993F and 5889 of the County Kilkenny Register comprising in all 46 acres or thereabouts which were referred to in the trial as Scanlon 1 and Scanlon 2. The purchase price was £73,000 and in the interest of reducing the cash price, the parties agreed that the plaintiff would reserve to himself any coal deposits, including the pillars exposed in course of the defendant’s shale and fireclay operations i.e. as part of the purchase price the plaintiff would have the benefit of coal (in particular the pillars) as it became available in course of the defendant’s operations. The special conditions which form part of the contract include the following:-
“7. The Purchaser shall fence the boundaries marked X-X: Y-Y and P-P on the map endorsed hereon to the Vendor’s satisfaction in four strands of heavy gauge barbed wire using concrete poles 4”x 4” x 5’ embedded in concrete at 10 feet intervals with appropriate straining posts. In addition along the boundary Y-Y the Purchaser shall provide a screen of trees to the Vendor’s
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satisfaction and a drain on the Purchaser’s side of the boundary properly excavated. The said screen of trees shall provide an adequate screen and shall be put in place within one year of works commencing.
8. The Vendor reserves out of the said lands any coal deposits, pillars or otherwise exposed in the course of the Purchaser’s works and shall have the right to mine and remove any such deposits….”
4. I am satisfied that condition number 7 was intended to provide certain demarcation boundary fencing and a particular screen of trees. It does not limit such obligations as the defendant may have had regarding the protection of the plaintiff’s coal on the site from unauthorised removal by third parties.
5. A pertinent historical note relating to coal-mining at Castlecomer is that over the years a custom developed whereby miners and their families regarded themselves as being entitled to enter the mining areas and remove coal for their own use. The unauthorised removal of anthracite by miners was in some cases more extensive and they engaged in the sale of coal thus obtained. It seems that traditionally the mine owners turned a blind eye to such activities which were never formally sanctioned but were not regarded as pilfering in the strict sense of the term.
6. Subsequent to the making of the foregoing contract the defendant changed it’s name to Ormonde Brick Limited. It also ceased to be an independent enterprise and became part of the Cement-Roadstone group of companies.
7. In or about May, 1990 contractors on behalf of the defendant commenced operations at Scanlon 1 and removed shale then covering approximately 2 acres of ground on the northern side of the land. It was duly taken to the defendant’s brick factory and in
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accordance with the contract pillars of coal were left on site undisturbed. The plaintiff was so advised on behalf of the defendant. In or about the last week of May, 1990 the plaintiff was told by the defendants that the extraction of shale in the area in question had been completed and that he was free to enter the lands and remove coal there in accordance with the contract. The plaintiff engaged a contractor for that purpose who entered the site and removed coal from the area where the shale had been extracted by the defendant. The removal of coal continued for a period of 4 days with the knowledge and approval of the defendant company. In course of that period a substantial amount of coal was removed and brought to the plaintiffs adjoining yard for preparation and bagging with a view to sale which commenced on 7th June, 1990. At that time it was also intimated to the plaintiff on behalf of the defendant that following the removal of shale by its contractors and coal by or on behalf of the plaintiff, it was intended that the defendant’s contractors would then remove fireclay which lay under the original seam of coal.
8. On the 4th day of the coal removal operation the plaintiff was informed by a senior official of the defendant company that no further coal was to be taken from the site. The plaintiff asked for an explanation and was told that the coal was not theirs to give him. Protracted negotiations then took place and it emerged that the root of the difficulty was that there was no statutory mining licence authorising removal of the coal by the plaintiff. Subsequently negotiations also involved the State Mining Board and continued for several years. It is unnecessary to examine the ramifications of that particular problem (which ultimately was resolved) because it is irrelevant to an assessment of the defendant’s obligations to the plaintiff in connection with protecting the coal on its lands in his interest. It does explain the reason for the moratorium on the further removal of coal by the plaintiff from the lands in question until in or about 1997. The practical difficulty which that delay
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brought about was pilfering of coal pillars in Scanlon 1 as they became accessible consequent upon removal by the defendant of shale and fireclay during that period. From commencement of operations by the defendant on the site its practice on completion of the removal of shale from a given area, was to leave a small covering of shale over the coal seam and pillars. This did not provide any significant protection against pilfering. I am satisfied that for years after the defendant excluded the plaintiff from the site and terminated its original authority to enter and remove coal in accordance with the foregoing contract, wholesale pilfering on a commercial scale occurred on Scanlon 1 and the plaintiff was thereby deprived of the practical benefits of the contract in terms of extraction of coal from that area which, in effect, was part of the purchase price of the conveyance of the lands by the plaintiff to the defendant.
9. The plaintiff was excluded from the lands by the defendant in or about the first week of June, 1990. Immediately thereafter trespass on the property commenced by local persons in search of coal. It has not been disputed that removal of coal in an organised commercial way commenced about a week later and was undertaken by teams of men working with tractors and trailers and the necessary equipment to remove coal and coal pillars from the location. Such activity was carried out at all times but particularly at night. The plaintiff complained about what was going on to senior officials in the defendant’s employment. He forwarded to them the names of the persons who were removing the coal but no action was taken to prevent such trespass. The plaintiff also reported the matter to the Garda Síochána but they were also disinclined to take any action in the matter in the light of the longstanding local custom of unofficial removal of coal from mines to which I have referred. The end result is that the plaintiff has suffered substantial financial loss through being deprived of coal which is his property and which is also a readily saleable commodity. It is also not in dispute that in the course of a State Mining Board hearing in 1992 the plaintiff
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complained that he had been prevented by the defendant from working coal on the lands pursuant to the terms of his contract with the company. In response the defendant’s legal advisor assured the Mining Board at the meeting that the defendant was prepared to honour that agreement.
THE ISSUES
10. The first issue I have to consider is the proper interpretation of special condition number 8 in the contract regarding the reservation by the plaintiff of coal deposits on the land. As already stated, the condition is as follows:-
“The Vendor reserves out of the said lands any coal deposits, pillars or otherwise exposed in the course of Purchaser’s works and shall have the right to mine and remove any such deposits.”
11. It has been argued on behalf of the defendant that no liability arises on foot of that condition because the coal pillars were not “exposed” by the defendant in the course of their work and, therefore, a condition precedent to any liability they might have has not arisen. I accept that from the beginning it was the practice of the defendant’s contractor, having removed shale or fireclay from a given area, to leave the coal pillars covered by a thin layer of shale. It seems that the pillars were not, therefore, exposed in the literal sense of that word. I have no doubt that “exposed” in the context of condition number 8 means “made available for removal” i.e. made readily accessible for that purpose. That is how the clause was interpreted and operated by both parties up to the time when the defendant terminated the
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plaintiff’s right of entry to the lands for the purpose of removing the coal because of a perceived difficulty as to it’s ownership and/or the need for a State mining lease/license.
12. I am satisfied that at all material times the plaintiff did in fact “own” the coal deposits in question pursuant to a permission from McGregor and Sons (Ireland) Limited which held a 35 year lease from Wandesford Estate Co. to carry on open cast mining operations in an area of land which included that which is the subject-matter of the plaintiffs contract with the defendant. It is also conceded in the report of the Mining Board dated 14th December, 1992 that the minerals in question were State minerals “privately owned by Wandesford Estate Co.” In the context of the relationship between the plaintiff and the defendant a practical difficulty was that when entering into the contract of 7th March, 1989 neither party adverted to the necessity for obtaining a mining lease/license from the Minister for Energy under the Mineral Developments Acts, 1940 and 1979. I accept the submission made on behalf of the plaintiff that under the Acts although the coal in question falls within the definition of “State Minerals”, it does not alter the ownership thereof. In the light of the foregoing it follows that after completion of the contract the defendant was in possession of the lands containing the coal which was an asset owned by the plaintiff and forming part of the consideration for the contract. In short, the defendants were in possession of property belonging to the plaintiff which he could not legally remove.
13. It seems to me that the relationship between the parties in this case is analogous to that of bailment which may exist independent of contract. What duty did the defendant as bailee owe to the plaintiff as bailor of the coal? It was held by Barron J. in Sheehy -v- Faughnan [1991] ILRM 719 that a bailee owes a duty to a bailor to take reasonable steps to prevent loss to the bailor, and where loss has occurred, the onus of proof is on the bailee to show that it did not occur through lack of reasonable care on his part. See
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also judgment of the Court of Appeal in Houghland -v- R.R. Low (Luxury Coaches) Limited [1962] 2 AER 159 .
14. Applying the judgment of Barron J. in Sheehy -v- Faughnan I am satisfied that in the instant case the defendant had a duty to take reasonable steps to prevent loss to the plaintiff through pilfering of his coal from the defendant’s lands. The coal was inaccessible until the top soil and shale were removed by the defendant pursuant to its operations on the land in connection with the extraction of shale and fireclay. Having removed the shale and top soil from a given area the underlying pillars of anthracite became readily accessible and vulnerable to unauthorised removal as was soon clearly established. I accept the plaintiff’s evidence that organised pilfering on a commercial scale was happening throughout the period of the defendant’s operations and perhaps thereafter in consequence of which Scanlon 1 was in effect stripped of coal and the plaintiff has thereby suffered substantial loss.
15. The fact that large scale pilfering over a protracted period of time without significant let or hindrance by the defendant was happening, even though from the beginning it was made aware of what was going on, itself indicates that reasonable efforts were not made by or on its behalf to protect the plaintiff’s coal. The line taken on behalf of the defendant (vide a letter from their solicitors dated 13th January, 1993) was that they denied having any liability to protect coal from being unlawfully taken by third parties from the lands. However they did not regard themselves as having any obligation to stop the pilferers. It was contended (as was the fact) that the defendant had complied with the fencing requirements set out in clause 7 of the special conditions of the contract and that that was all they were required to do. As already stated, I am satisfied that special condition 7 did not limit their liability in the matter of protecting the coal as contended by their solicitors. It is obvious that such fencing did not and would not protect the lands from coal pilfering and that
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substantially more was required to provide reasonable protection of the plaintiff’s interest. That obligation was all the more obvious and important bearing in mind that, as the defendant was aware, the value of the coal in question was in effect part of the agreed purchase price.
16. Unauthorised access to that part of the contract lands called Scanlon 1 appears to have been through either the adjacent Delaney gates or the defendant’s gates which are shown in the photographs introduced in evidence at the trial numbered 11 and 28 respectively. Although securing the Delaney gates by ensuring that they could not be lifted off their hinges was probably a relatively simple matter, it was not until the mid 1990’s that any steps were taken in that regard. It also emerged in evidence that no action was taken to increase the height of the main gate into Scanlon 1 until after the coal had been removed from that area. Mr. Eddie Power, who is responsible for the defendant’s security arrangements, conceded in evidence that the digging of a trench at the boundary of the Scanlon/Delaney lands would have prevented unauthorised tractors and trailers being brought onto Scanlon 1 which was fundamental to the illegal removal of coal on a commercial scale. The defendant had appropriate machinery on the site to carry out such works but failed to do so. In response to the plaintiff’s contention that an important security measure would have been the provision of such a trench, it was stated on behalf on the defendant that they required to bring a large bulldozer onto Scanlon 1 via the adjacent Delaney lands about six times a year. It seen-is to me that the plaintiff’s contention that a “tracked” vehicle such as the bulldozer could have negotiated the proposed trench is probably correct. Alternatively, the trench could have been filled for a short distance to allow access and then re-excavated or a temporary metal “bridge” could have been used. It also is of interest that there was a substantial disparity between security maintained by the defendant on the other part of the land known as Scanlon 2 about which no explanation was given. Another alternative which was open to the defendant was to
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negotiate with the plaintiff the purchase of his interest in the coal in question thus avoiding the risk of deterioration in their relations with the local wrongdoers. Whatever about financial difficulties which the defendant may have had when the contract was made in 1989, they ceased to apply soon afterwards when the defendant became part of the Cement Roadstone group of companies.
17. The onus is on the defendant to show that it took reasonable care to secure coal on its land at Scanlon 1 for the benefit of the plaintiff in accordance with the contract made on 9th March, 1989. The evidence establishes that in breach of contract and in breach of duty as bailee it failed to do so in consequence of which the plaintiff suffered substantial loss. This finding is borne out by the fact that although the identity of the primary culprits was known to the defendant from the beginning nothing of any significance was done to restrain the wrongdoers or to protect the plaintiff’s interest for several years when it was too late.
18. There is one other issue on liability raised in the defendant’s defence i.e. limitation of damages under the Statute of Limitations, 1957 section 1 l(l)(a) and 2(a) which limits the loss sustained by the plaintiff to that which occurred during the period of six years ending on the date of issue of the plenary summons in the action on 7th August, 1996. The plaintiff has conceded that soon after he was prohibited from continuing the removal of coal from Scanlon 1 in or about the first week of June, 1990 substantial pilfering of coal in commercial proportions commenced and it seems continued up to the crucial date from which damages may be claimed i.e. 7th August, 1990. There is no firm information as to the quantity of coal wrongfully removed during that period of approximately two months, but a significant reduction must be made in that regard from the total value of the plaintiff’s claim.
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DAMAGES
19. I have considered all of the expert evidence and reports regarding the probable residue of coal in Scanlon 1 which was lost through pilferage. I have also taken into account the report of the Department of Industry and Commerce prepared in July, 1964 which was introduced in evidence by the defendant and indicates a remaining residue of coal amounting to about 10% in the general vicinity of Scanlon 1. All in all, it seems to me that it is fair and reasonable to both parties that I should assess the percentage residue of coal in Scanlon 1 at the time when the contract was made in 1989 as being 10% i.e. 862 tonnes of anthracite. I also accept the assessment of the plaintiff’s chartered accountant, Mr. Richard Smyth, that overheads involved in extracting such coal would have been about 8% of gross value. Accordingly, as calculated by Mr. Williams, the plaintiff’s chartered minerals surveyor, the net value of the loss of coal from Scanlon 1 after deduction of 8% overheads is £95,164. I assess the value of pilfered coal at Scanlon 1 during the defendant’s operations there up to 7th August, 1990 at £10,000 – credit should be given also for £10,173 for coal extracted from Scanlon 1 by the plaintiff (see Richard Smyth’s report) – thus reducing the net value of his claim to £74,991. He is also entitled to interest at the court rate on that amount. I shall hear further argument as to the date from which interest should run.
Kearns v McCann Fitzgerald (formerly called McCann Fitzgerald Roche and Dudley)
[2008] I.E.H.C. 85
Judgement of Mr Justice Michael Peart delivered on the 2nd day of April 2008:
In these proceedings the plaintiffs sue as the three surviving beneficiaries of the last Will of Dr Daniel Kearns, their father, who died on the 12th December 1979, and as the beneficiaries of the estate of his widow, their mother, who in turn died on the 28th February 1990, and who was also a beneficiary under that Will. The plaintiffs are also the beneficiaries of their mother’s estate. For the purpose of this judgment, I shall refer to the plaintiffs’ late father as “the deceased”.
The defendants are the firm of solicitors engaged by the executors of their late father’ s Will for the purpose of extracting a Grant of Probate, and distributing the estate in accordance with the terms thereof.
The plaintiffs claim that as a result of negligence on the part of the defendants they have suffered a financial loss, and they seek damages as a result.
The plaintiffs’ claim arises from the fact that, while the defendants in the course of carrying out their instructions became aware that certain monies forming part of their late father’s estate were held on deposit as Allied Irish Banks, and included this sum in the Inland Revenue Affidavit which was sworn for the purposes of extracting that grant of probate, they failed, following in the issue of that Grant of Probate, to gather in that sum and distribute same to the beneficiaries entitled to it, being these plaintiffs and their late mother.
The Defence delivered by the defendants on the 29th July 2004 contains the usual traverse, but in addition, contains a plea that the plaintiffs’ claim is statute-barred by reason of the provisions of the Statute of Limitations in 1957 and/or the Statute of Limitations (Amendment) Act 1991.
At the hearing of this action before me, it was agreed by the parties that the Court should decide the issue in relation to the Statute of Limitations as a preliminary issue.
Background facts:
The deceased, as I have stated already, died on the 12th December 1979, leaving a Will dated the 14th January 1977 in which he, in effect, left all the rest and residue of his property both the real and personal as to one half thereof to his wife, and the remaining half to his three children [the plaintiffs].
Within less than one month from the date of death of the deceased, the defendants set about the task of establishing the assets comprising the deceased’s estate, and, in due course, ascertained that there were two sums on deposit with Allied Irish Banks at their branch at Lower O’Connell Street, Dublin, totalling at the sum of IR£3968 .99. Those sums are included, along with details of some other assets, in the Inland Revenue Affidavit sworn by the plaintiffs’ late mother in her capacity as one of the Executors named in the deceased’s Will, the second Executor having renounced his rights as executor.
Grant of Probate issued on the 16th July 1980. By letter dated 3rd February 1981 the defendants wrote to the third named plaintiff informing her that the administration of the deceased’s estate was almost complete, apart from the sale of some Australian company shares, and enclosed a cheque for £720.46 being the share of the estate due to her, a copy of the Executor’s cash account and, finally, their own bill of costs. The letter indicated that the bill of costs could be paid from the balance of money which they were holding in their client account. This letter concluded by stating that if she had any queries in relation to the matter, she should make contact with the author of that letter.
It can be inferred from this letter that the third named plaintiff was the point of contact with the defendants, otherwise one would have expected that letter to be addressed to the plaintiffs’ mother, who was the acting Executrix. The Court understands from what was stated in court that for some years prior to her death in 1990, the plaintiff’s mother was in poor health and was living with the first and third named plaintiffs.
The cash account referred to set out certain items of expenditure consisting of the solicitor’s costs and legacies paid out, as well as sums received. The sums of money held at Allied Irish Banks are not included among the “receipts”. It is accepted by the defendants that these monies were not gathered in from Allied Irish Banks following the issue of the Grant of Probate, and therefore were not distributed at that time during the course of the administration of the estate of the deceased by the defendants.
These sums remained on deposit at Allied Irish Banks. However, on the 24th June 2002 Allied Irish Banks wrote to the first named plaintiff informing her that they had received her name from the defendants, after they had written to them regarding the Dormant Accounts Act 2001 which, they stated, required them to identify all accounts which had been dormant for 15 years or more, and if these accounts were still dormant as at the 31st March 2003, the balances would be transferred to the National Treasury Management Agency. They advised the first named plaintiff that they still held an account in her late father’s name and requested her to contact them so that they could finalise matters. They informed her also that that they had written to her sister, the third named plaintiff, in similar terms.
By letter dated August 2002, Allied Irish Banks wrote to the first named plaintiff confirming that her late father’s accounts had been closed and that they had disbursed the funds in accordance with her instructions.
It is accepted by the defendants that the letter dated 24th June 2002 from Allied Irish Banks was the first occasion upon which the plaintiffs became aware that these monies existed, since they were not privy to the details contained in the Inland Revenue Affidavit. I have already referred to the fact that their mother, who had sworn the Inland Revenue Affidavit, had died on 28 February 1990.
The plaintiffs commenced the within proceedings by the issue of a Plenary Summons on the 26th February 2004, being well within a period of six years from the date of the said letter, but quite clearly well outside a period of six years from the 3rd February 1981, being the date of the letter from the defendants which enclosed the executor’s cash account.
Statutory provisions:
Section 11 (2) (a) of the Statute of Limitations Act, 1957, as amended by Section 3 (2) of the Statute of Limitations (Amendment) Act, 1991 provides:
” subject to paragraph (c) of this subsection and to section 3 (1) of the Statute of Limitations (Amendment) Act, 1991, an action founded on tort shall not be brought after the expiration of six years from the date on which the course of action accrued.”
Section 11, subsection (2) (c) is not relevant to the plaintiff’s claim. Neither is section 3 (1) of the 1991 Act relevant to the present claim since it is not a personal injuries action.
Since the plaintiffs rely upon the provisions of section 72 of the Act, I should set out in that provision which provides as follows:
“72. — — (1) where, in the case of any action for which a period of limitation is fixed by this Act, the action is for relief from the consequences of mistake, the period of limitation shall not begin to run until the plaintiff has discovered the mistake or could with reasonable diligence have discovered.” (my emphasis)
Reference has also been made to section 45 of the Act, and that section provides:
“45. — — (1) subject to section 46 of this Act, no action in respect of any claim to the personal estate of a deceased person or to any share or interest in such a state, whether under a will or on intestacy, shall be brought after the expiration of 12 years from the date when the right to receive the share or interest accrued.
(2) and subject to section 46 of this Act, no action to recover arrears of interest in respect of any legacy or damages in respect of such arrears shall be brought after the expiration of six years from the date on which the interest became due.”
However, this claim is not to a claim to a share in an estate of a deceased person. It is a claim in negligence, and s. 45 has no releance.
Submissions:
The plaintiffs contend in relation to the limitation period that time should run only from 24th June 2002, being the date on which they first became aware of the fact that these monies existed and had not been paid to the beneficiaries as part of the administration of the deceased’s estate. They submit that this is the date upon which this cause of action accrued for the purposes of section 11 (2) (a) of the Act.
The defendants on the other hand contend that the cause of action accrued on or about the 3rd February 1981, being the date on which they wrote to the third named plaintiff informing her that the Administration of the estate of her late father was almost complete and when they enclosed a copy of the Executor’s cash account. They submit that it was on that date that the fact that monies on deposit with Allied Irish Banks had not been gathered in and distributed should have been apparent to the Executrix, the plaintiffs’ mother, who had sworn the Inland Revenue Affidavit. In answer to that, the plaintiffs state on the other hand that their mother by then was aged and in failing health, and would not have been in a position to appreciate and understand the contents of the Executor’s cash account, even if she had seen it. As I have already stated it appears that at that stage the plaintiff’s mother was living with and being looked after by the first and third named plaintiffs.
In support of their submission that the period of limitation should be deemed to have commenced only from the date upon which they actually discovered the “mistake” by the
defendants in failing to gather in and disperse the AIB monies, the plaintiffs have referred to the court to the judgement of Pearson J. in Phillips-Higgins v. Harper [1954] All ER.116 where on the facts of that case, which are very different to the present case, a similar provision in the English Limitation Act, 1939 to section 72 of the Act here, was considered. Without going into the facts of that case, I am satisfied that it has no relevance to the present case, and, indeed, even in that case, the mistake upon which that plaintiff relied was found not to be the type of mistake intended to be covered by the section. Section 72 of the Act here is clearly intended to apply to a situation where a plaintiff seeks relief from the consequences of a mistake in the context for example of a contract entered into as a result of a mistake and where the action is seeking relief by way of rescission or rectification. The present action by the plaintiffs is an action for damages arising from an alleged negligent act by the defendants, and is clearly only an action in tort to which the case referred to has no relevance. The alleged error by the defendants cannot be equated with a mistake in the context of s. 72 of the Act.
The plaintiffs also submit that if their claim is held to be statute barred this would constitute a breach of their property rights guaranteed by Article 1 of the first protocol to the European Convention on Human Rights. In my view, this right under the Convention is not engaged in the present application, since what is at stake is not a right to property, but a right to claim damages for negligence. The fact is that the money in question has been paid to the plaintiffs, including deposit interest on that sum from the date on which it was placed on deposit. What the plaintiffs are seeking is damages on the basis that if they had received this money earlier, they would have been able to use it in a manner which would have benefited them more than the interest earned on that sum while it remained on deposit.
The plaintiffs’ right to litigate is not an absolute right. Certain statutory controls are in place by virtue of the Statute of Limitations Act 1957, as amended, as to the time within which a plaintiff must commence his/her action. The plaintiffs’ action must be considered by reference to the provisions of section 11 (2) (a) of the Act, as amended which is very specific. That section makes it absolutely clear that where the cause of action arises from a tort, and in this case negligence, the proceedings must be issued not later than six years from the date upon which the action accrued. There is no provision within that section, such as applies in the case of a personal injuries claim, where the date of the plaintiff’s knowledge is a relevant matter for consideration in relation to the time within which proceedings must be commenced. The fact that certain amendments in relation to personal injuries actions alone were incorporated in the amending legislation in 1991 is an important indication that in relation to other actions founded on tort, a plaintiff’s state of knowledge is not a relevant consideration.
It is relevant also that the constitutionality of section 11 of the 1957 Act, as amended, was upheld by the Supreme Court in Tuohy v. Courtney [1994] 3 IR. 1. In his judgement, at page 47, Finlay CJ stated:
“It cannot be disputed that a person whose right to seek a legal remedy for a wrong is barred by a statutory time limit before he, without fault or neglect on his part, becomes aware of the existence of that right, has suffered a severe apparent injustice and would be entitled reasonably to entertain a major sense of grievance.
So to state however does not of itself solve the question as to whether a statute which in a sense permits that to occur is by that fact inconsistent with the Constitution.”
From the plaintiff’s standpoint, it is understandable that they would feel a sense of grievance that they are barred from pursuing a claim in circumstances where they feel that they had no opportunity within the limitation period to realise that they had a cause of action against the defendants. They are however not in a unique position in that respect. There have been other plaintiffs in their situation who have been unable to pursue an action for damages in similar circumstances. A case in point is Irish Equine Foundation Ltd v. Robinson [1999] 2 ILRM 289. In that case, the plaintiff had engaged a firm of architects to design and supervise the construction of a premises. In 1986 a certificate of completion was signed. In 1991 there was an ingress of water through the ceiling of the premises causing damage. The plaintiffs commenced proceedings in January 1996, being within six years of the date of that ingress of water. The plaintiff contended that it was not until that damage was caused that it became aware of the alleged defects giving rise to the action in negligence. That claim was found to be statute barred on the basis that the alleged negligent design of the premises would have been discoverable upon an examination of the premises by an expert when the premises were completed. One can draw an analogy between the situation of that plaintiff and the plaintiffs in the present case, since the alleged error on the part of the defendants herein could have been discovered when the executor’ s cash account was enclosed with the defendant’s letter dated the 3rd February 1981.
While I have every sympathy for the plaintiffs’ predicament, in the circumstances where they themselves did not know that part of their late father’s estate comprised the monies on deposit in Allied Irish Banks until they heard about it in June 2002, there is no doubt in my mind that, given the provisions of section 11 to which I have referred, the cause of action accrued upon receipt of the letter from the defendants dated 3rd February 1981. In these circumstances, their claim is statute barred, and these proceedings must be dismissed.
Behan v McGinley
[2008] I.E.H.C. 18
Judgment of Ms. Justice Irvine delivered the 24th day of January, 2008
The plaintiff in this action at the time of the events which give rise to these proceedings, had been a customer of the Bank of Ireland for many years at its Carlow branch where he dealt regularly with Mr. Vincent Power, the branch Manager. The plaintiff owned a valuable farm of approximately 240 acres at Athy, Co. Kildare and found himself, like many other farmers in 1980 in significant difficulties, principally due to rising interest rates and falling land values.
The business dealings between the plaintiff and his bank have resulted in the institution by the plaintiff of a number of sets of legal proceedings to which I will refer later in this judgment.
The first action in the title hereto was commenced by plenary summons dated 19th July, 2002 (“the 2002 proceedings”). The defendant to the action is the party nominated to defend the interests of the late Noel Clancy, S.C. who represented the plaintiff in the course of his first action against the Bank of Ireland, which was heard in the High Court in the summer of 1997 and dealt with an appeal on the Supreme Court the following year.
There are a number of motions which are the subject matter of this judgment the first of which is dated the 27th April, 2006. In that motion the defendant asks the court to strike out the plaintiff’s pleadings pursuant to O. 19, r. 28 of the Rules of the Superior Courts on the basis that the same that the same are vexatious, frivolous and/or disclose no reasonable cause of action as against the defendant.
The plaintiff has instituted further proceedings in the High Court under Record No. 2005/2424P (“the 2005 Proceedings”) being the second action in the title hereto. The defendants in that action are the Governor and Company of the Bank of Ireland, Edward McGinley of Royal and Sun Alliance, Michael O’Kennedy and Charles Corcoran.
In the 2005 proceedings there are two motions before the Court. The first motion is that of the first named defendant, the Governor and Company of the Bank of Ireland, dated the 15th of January 2007 wherein the Court is asked to strike out the plaintiff’s pleadings pursuant to O. 19, r. 28 of the Rules of the Superior Courts on the basis that the pleadings disclose no reasonable cause of action. Alternatively, the Court is asked to direct that the proceedings be stayed or dismissed pursuant to O. 19, r. 28 on the grounds that the action is frivolous or vexatious. The court is further asked to exercise its inherent jurisdiction to stay or dismiss the action on the basis that the proceedings amount to an abuse of process. Finally, the court is requested to make an order prohibiting the plaintiff from issuing any further proceedings against the first named defendant without leave of the court.
The second notice of motion in the 2002 proceedings is one dated the 26th of January, 2007 and is brought on behalf of the second, third and fourth named defendants. In that notice of motion the court is asked to invoke its inherent jurisdiction and/or the provisions of O. 19, r. 28 of the Rules of the Superior Courts to strike out the plaintiff’s proceedings as being an abuse of process and/or on the basis that the proceedings are frivolous or vexatious. Alternatively, the court is asked to strike out the proceedings on the grounds that the allegations of fraud and/or collusion and/or conspiracy and/or deception are made without any or any sufficient evidence. Finally, the court is asked to dismiss the plaintiff’s claim for negligence on the basis that such a claim is statute barred.
The facts which underlie the within application, are set out in the pleadings and affidavits delivered in the actions to which the three motions relate. In essence, both actions relate to the dealings between the plaintiff and his bank over the period 1981 to 1985 and also his dealings with the lawyers who represented him in his litigation against his bank in the proceedings which are referred to below.
Background to earlier litigation
In proceedings bearing Record No. 1990/9665P (“The 1990 Proceedings”) the plaintiff sued the Governor and Company of the Bank of Ireland with a view to establishing a breach by his bank of a concluded enforceable agreement allegedly made at a meeting with his bank Manager, Mr. Vincent Power on the 18th May, 1981. The plaintiff contended that, notwithstanding his increasingly substantial liabilities, his bank agreed that it would continue to fund his farming activities so as to permit him to trade out of his financial indebtedness.
In the 1990 proceedings the plaintiff further asserted that he was given negligent advice by Mr. Power. He alleged that Mr. Power convinced him not to sell certain lands which he wished to sell to reduce his indebtness. The plaintiff claimed that but for the bank’s negligence in this respect he would have sold such lands, reduced his indebtness and ultimately avoided the losses occasioned to him when the bank called in all his outstanding liabilities in 1984. The plaintiff alleged that this negligence in addition to causing him financial loss caused him to sustain serious ill health. This claim for negligence and consequential personal injuries was held to be statute barred at a preliminary hearing in June 1997 at which time the court concluded that the plaintiff’s claim for breach of contract was not statute barred.
Finally, incorporated within the 1990 proceedings was a claim which was made by the plaintiff late in the day as a result of the emergence of evidence in the course of the trial before Morris J. The court permitted the plaintiff to amend his pleadings to maintain a claim against his bank arising from the manner in which he was treated in relation to a scheme introduced by the Government in 1982 to assist farmers who were in difficulties having regard to increased interest rates at that time. For the purposes of this judgment it is sufficient to state that the “Reduced Interest Scheme for farmers in severe financial distress” (“the Scheme”) was introduced by the Minister for Agriculture on the 1st April, 1982. The objective of the scheme was to provide relief from high interest rates for certain classes of farmers. The Scheme operated for three years from the 1st April, 1982 and provided for substantially reduced interest rates to those who qualified for admission into the Scheme. In turn the bank who provided the reduced interest rates received a corporation tax credit in respect of the reduced interest received by them from the farmers whom they admitted to the Scheme.
In the course of the evidence in the 1990 proceedings the court became appraised of the fact that after the bank had called in payment from the plaintiff of all sums outstanding and had reached a compromise with him regarding his indebtness, in the sum of £165,000 that it had thereafter credited his account with three sums totalling £18,455.18 so that it could offset such sums against its own corporation tax liabilities, something it was only entitled to do, if it had admitted the plaintiff to the Scheme. In this respect the judgment of Morris J. in the 1990 proceedings sets out all of the material facts referable to the banks management of the plaintiff’s application for entry into the scheme.
To qualify for entry into the Scheme the farmer was required to produce a report on the viability of their farm. In the instant case, the plaintiff produced a supportive report from ACOT on 28th July, 1983. On 17th January, 1984 the plaintiff’s bank in Carlow was given authority to admit the plaintiff to the Scheme, he having completed the necessary forms for admission thereto on the 28th May, 1982. Notwithstanding the authorisation to admit the plaintiff to the Scheme, the benefit of the Scheme had not been passed on to him at the time the Scheme was being wound up by the Government. Further, the reduced interest rates had not been passed on to the plaintiff at the time when the bank ultimately called in all sums due by the plaintiff, which then amounted to £213,891.43.
The judgment of Morris J. dated 15th August, 1997 in the 1990 proceedings recites that he determined the plaintiff’s claim, including his claim arising from any wrongdoing on the part of the bank in relation to the Scheme in the course of the hearing of the proceedings in July and August 1997. The plaintiff made the case at the trial that he had suffered consequential loss arising from the unreasonable and improper delay on the part of the bank in permitting him to benefit from the scheme.
The trial judge in his judgment expressed himself satisfied that the bank, whilst attempting to achieve benefits for itself deriving from the Scheme, had deprived the plaintiff of the benefit of the Scheme from January 1984 until the winding up of the Scheme and that the plaintiff had to be recompensed for such failure by reimbursement of the monies which would have been credited to his account had he been admitted to the Scheme.
In relation to the main issue in the proceedings, i.e. the breach of contract claim, Morris J. in his judgment dated the 19th of August 1997 held that:-
“Even accepting Mr. Behan’s evidence in its entirety I do not believe that anything that was said by Mr. Power on that occasion could constitute an enforceable contract by reason of the imprecise nature of the arrangement alleged. It is not suggested for how long the commitment was to have lasted, the rate of interest payable on any monies advanced on foot of the contract nor is it suggested that Mr. Behan ever indicated an acceptance of the alleged contract.”
I do not believe it is necessary to set out all of the findings of the trial judge in relation to the 1990 proceedings. For the purposes of this judgment it is sufficient to state that the learned trial judge held that there was no enforceable contract to extend borrowings to Mr. Behan on an indefinite basis and that all claims arising from this alleged contract had to fail. Consequentially, Morris J. held that the bank was entitled to call in Mr. Behan’s indebtness and dishonour cheques drawn by him on his account. In the course of his judgment, Morris J. noted that the plaintiff’s liabilities to the bank as of 22nd July, 1985 were £213,891.43 and that the bank had agreed to accept in lieu thereof a sum of £165,000 in staged payments. The bank had thus agreed to write off a sum of £48,891.43.
Morris J. rejected assertions made in the course of those 1990 proceedings that the bank had deliberately dishonoured cheques to ruin the plaintiff’s reputation and further concluded that the bank was entitled, in the absence of any concluded contract between the plaintiff and his bank, to refuse to honour cheques as there were simply no funds to meet them.
What is of significance to the present proceedings is the finding of the trial judge that no other losses accrued to the plaintiff by reason of the banks dealings with him referable to the Scheme, he having heard evidence regarding the extent of the plaintiff’s liabilities at the relevant period and considered the benefits which he would have received in terms of a reduction of interest had he been admitted to the Scheme.
The judgment of Morris J. in the 1990 proceedings makes it clear that it was his intention to ensure, at the conclusion of the proceedings, that the plaintiff would be reinstated financially into the position which he would have been in had he been admitted to the Scheme at the relevant time. Hence, the plaintiff was compensated by the court to the extent of the amount of interest levied on his account at a time when he should have been admitted to the scheme and this the trial judge held compensated him in respect of all financial loss arising to him deriving him from the failure of the bank to formally admit him to the Scheme. At p. 13 of his judgment the trial judge stated that he was satisfied that the failure on the part of the bank to admit the plaintiff to the Scheme had no overall effect on his ultimate financial outcome having regard to the extent of his liabilities at the time.
Because of the nature of the motions presently before the court it is relevant to set out the conclusions of the trial judge in the 1990 proceedings and also briefly refer to the evidence which was available to him in relation to each conclusion. Hence, form the documentation submitted on these motions, which documentation includes the pleadings, various transcripts, orders of the court, written submissions and the judgment of the trial judge it appears that the court in the 1990 proceedings concluded that:-
1. The claim by the plaintiff contending for a breach by his bank of a binding contract of indefinite duration entitling him to continued funding was not sustained. For the purposes of determining this issue the court heard extensive evidence from the plaintiff and his experts regarding the dealings between the plaintiff and his bank, the nature and profitability of his farming enterprise and the consequential losses to him of the banks’ failure to perform its obligations under the alleged contract. In particular the court heard evidence as to the cause of the plaintiff’s financial difficulties in the 1980s and heard substantial expert testimony from Dr. Beilinberg, supporting the plaintiff’s substantial claim for consequential loss.
2. Having regard to the absence of any binding agreement requiring the bank to continue to fund the plaintiff’s farming activities that the bank was entitled to dishonour cheques drawn by him and that in so doing it did not conspire with any of his competitors to procure his downfall. The transcript reveals that the bank’s entitlement to dishonour those cheques was challenged by the plaintiff’s counsel. Further, counsel pursued the consequences to the plaintiff of the dishonour of those cheques by the bank.
3. The bank acted arbitrarily in failing to admit the plaintiff to the Scheme. Insofar as the bank had obtained the benefit of a reduction in its corporation tax liabilities by virtue of credits made to the plaintiff’s account after its settlement with him, that the plaintiff was entitled to reimbursement of such monies together with interest as monies had and received to the plaintiff’s benefit.
The learned trial judge did say in the course of his judgment that no evidence had been offered to support a claim for consequential loss arising from the failure of the bank to admit the plaintiff to the Scheme. However, he then went on to conclude, that the amount of the plaintiff’s indebtedness at the relevant time was such that “the relief he would have obtained from immediate admission to the Scheme was of no overall consequence”.
Because of the issues arising in the within motions it is important to note that in the course of the 1990 proceedings the court heard evidence from some fourteen witnesses whose names are set out in the schedule to the order of the court dated 15th August, 1997. One such witness was Mr. Duffy of ACOT, who had prepared a report as to the viability of the plaintiff’s farming activities over the relevant period. The transcript exhibited in these motions demonstrates that counsel for the plaintiff used this report for the purposes of aggressively challenging the defendant’s agricultural expert, Mr. Lawrence Power whose evidence was to the effect that the plaintiff’s financial problems all stemmed from over expenditure. Further Mr. Power was cross-examined as to the financial consequences arising from the banks failure to admit the plaintiff to the Scheme.
Appeal from the High Court decision in the 1990 proceedings
It is common case from the affidavits filed on behalf of the defendants in these motions that the plaintiff was advised by his counsel not to appeal the decision of the High Court. Notwithstanding, this fact and in the face of an offer from the bank to settle the proceedings, the plaintiff pursued an appeal which was heard by the Supreme Court in 1998.
The Supreme Court in its judgment unanimously upheld the trial judge’s findings regarding his conclusion that there had been no concluded contract between the plaintiff and his bank which would have obliged the bank to allow him trade out of his financial difficulties. Further, Barron J. and O’Flaherty J. upheld the trial judge’s finding that the plaintiff was entitled to be reimbursed the £18,455.18 together with interest which the bank had claimed as a corporation tax credit based on the plaintiff’s entitlement to be admitted to the Scheme. The court also held that the plaintiff was entitled to know at the time he settled his liabilities with the bank, that the bank was intent on obtaining the fiscal advantage of these monies from the Revenue as a tax credit and that the bank in so doing was effectively acknowledging the right of the plaintiff to these monies and was consequently estopped from denying his entitlement to the benefit of the same.
The minority judgment of Keane J. on this issue concluded that there was nothing inappropriate with what he described as a “paper transaction” carried out by the bank after its settlement with the plaintiff. He held that, given the extent of the plaintiff’s indebtedness and the banks acceptance of a significantly lesser sum than it had been entitled to by way of settlement, the plaintiff was estopped from claiming any entitlement deriving from the banks actions.
By order dated 20th July, 1998 the Supreme Court affirmed the decision of the High Court on the main issue. The costs order was varied with the plaintiff obtaining an order for three days High Court costs and the defendant being granted an order for ten days costs. The court further directed that the plaintiff’s liability for costs be reduced by the sum he was entitled to receive from the defendant’s referable to their failure to admit him to the Scheme. The court made no order as to the costs of the Supreme Court hearing.
The next critical event in the historical chronology of the plaintiff’s litigation, is that by letter dated the 27th July, 1998 the plaintiff dismissed all counsel who acted for him in the 1990 proceedings namely Mr. Noel Clancy S.C., Mr. Michael O’Kennedy S.C. and Mr. Charles Corcoran B.L. Subsequently, the same counsel were asked once again to come back to act on the plaintiffs behalf in fresh proceedings by request made dated the 8th December, 2000. All counsel refused stating that their advice had been rejected in the course of the earlier proceedings and further referring to the fact that they had never received any payment for their earlier work. This work included representing the plaintiff in the course of the eighteen day High Court hearing, attending numerous consultations, the preparation of extensive pleadings and written submissions and the plaintiff’s further representation at the time of his appeal to the Supreme Court.
The 2001 proceedings
Further proceedings were instituted by the plaintiff in 2001 against the Governor and Company of the Bank of Ireland bearing Record No. 2001 No. 4815 P. In those proceedings the plaintiff contended that he had been defrauded of the interest subsidy which he was entitled to under the Scheme referred to earlier in this judgment. The plaintiff alleged that he was defrauded of this subsidy due to the negligence of his bank and claimed that he had sustained significant losses as a result of the conversion by his bank of his monies to its own use.
The particulars of special damages claimed in the 2001 proceedings are set out at p. 11 of the statement of claim. The heads of loss are the same as those referred to in the plaintiff’s 1990 proceedings.
The defendant to the 2001 proceedings brought a motion to the High Court to dismiss the proceedings on the basis that the issues were res judicata and further on the basis that the proceedings did not disclose any reasonable cause of action. The bank was unsuccessful in its application and the decision made in the High Court by Kinlen J. was appealed by the bank to the Supreme Court.
Denham J. at p. 4 of her judgment of 19th March, 2004, referred to the statement of claim which had been amended in the course of the 1990 proceedings to include the plaintiff’s assertion of wrongdoing on the part of the bank referable to its failure to benefit him under the Scheme. The learned Supreme Court judge, at p. 5 of her judgment also referred to the portion of the judgment of Morris J. of 15th August, 1997 where he dealt with all of the issues arising from the banks wrongdoing and also to the decision of the Supreme Court upholding the trial judge’s findings thereon.
At para. 13 of her judgment, Denham J. referred to the losses claimed in both sets of proceedings and concluded that the issues and losses the subject matter of the 2001 proceedings had already been litigated in the 1990 proceedings. The court concluded that the fact that the plaintiff wished to present further evidence which might not have been presented in the course of the first action did not mean that the matter could be re-opened and further determined in any event, that the consequences which flowed from any wrongdoing on the part of the bank in relation to those matters pleaded in the 2001 proceedings, had already been determined by Morris J. She concluded that the consequential loss to the plaintiff of not having been afforded the benefit of the Scheme was the same irrespective of whether or not such losses were categorised as having flowed from negligence or alternatively fraud on the part of the bank.
The 2002 proceedings
The first action set out in the title to this judgement was commenced on the 19th July, 2002. In this action the plaintiff alleges negligence against his senior counsel, the late Noel Clancy S.C., in relation to the management by him of his 1990 proceedings which were the subject matter of the judgment of Morris J. of 15th August, 1997. The major criticisms made by the plaintiff against his counsel are not at all clearly stated in either his statement of claim or in his replies to the defendant notice for particulars. Further, the affidavits filed on the plaintiff’s behalf in the present motions fail to set out the nature of the evidence which the plaintiff proposes to call in support of his latest claims. In addition, the affidavits filed in many instances inaccurately record the facts and the evidence referable to the earlier proceedings. These facts are more accurately captured by revisiting the earlier pleadings, judgments and transcripts.
Broadly speaking the plaintiff’s complaint in this his third set of proceedings is that his counsel failed to secure for him adequate pecuniary compensation in his 1990 proceedings as a result of his negligent management of his High Court action and his appeal to the Supreme Court. He contends that he ought to have recovered compensation for the loss of his lands and livelihood. These losses are set out in the particulars of special damage in the statement of claim. Once again these losses mirror the same heads of claim advanced by the plaintiff in his earlier two actions. Written submissions had been delivered by the plaintiff in his 1990 proceedings and an examination of Chapter 4 of those submissions demonstrates that the losses which the plaintiff now seeks to recover in these 2002 proceedings are the same losses as were already dealt with by the court in his earlier proceedings.
By notice of motion dated 17th April, 2007, the defendant, who is the party nominated to represent the interests of the late Noel Clancy, S.C. seeks to dismiss the plaintiff’s claim on the basis set out in the introduction to this judgement.
In the grounding affidavit to the aforementioned motion Ms. Melanie Holmes, Solicitor on behalf of the defendant, at para. 8 of her affidavit asserts that:-
“It is manifest that on the basis of the claim made by the plaintiff he has no cause of action against the defendant and in fact the plaintiff’s claim against the defendant is no more than a further attempt to re-visit his proceedings against the Bank of Ireland.”
The plaintiff’s replies to particulars when read in conjunction with the statement of claim shows that the plaintiff still harbours the belief that he can maintain an action for damages as a result of the failure on the part of his bank to notify him of his acceptance into the Scheme and/or for the banks failure to give him the benefit of the interest reduction which he would have been entitled to under that Scheme. Further, notwithstanding the outcome of his first two actions the plaintiff in this his third action also seeks to maintain an entitlement to claim that the bank was obliged to honour his cheques during the currency of the Scheme and to claim damages consequent upon the banks dishonour of those cheques.
I now propose to deal with the several areas of complaint made by the plaintiff against the late Mr. Clancy S.C. in these proceedings which he contends amounts to negligence and which he asserts permits him to maintain once again a claim for damages for the loss of his entire farming enterprise in 1984. Because of the case law to which I will refer later it is necessary in the course of this part of the judgment to refer briefly to some of the facts and evidence relevant to the allegations of negligence made by the plaintiff.
1. The plaintiff asserts that counsel did not present what he describes as “relevant and appropriate documents” to the court which he contends would have had the effect of altering the courts judgment.
From the affidavits in these motions the documents which the plaintiff asserts were not produced on his behalf were firstly the ACOT Report and secondly a bundle of cheques which the plaintiff alleges he physically handed to his counsel. The plaintiff contends that his counsel’s default in failing to produce these documents resulted in counsel failing to make appropriate submissions as to the damages which he was entitled to recover in those 1990 proceedings.
In this respect, insofar as the ACOT Report is concerned, that Report was clearly introduced into evidence as the author of such Report, Mr. Duffy, was called to give evidence on the plaintiff’s behalf in relation to its contents. The order of the court dated the 15th August 1997 recites that the court heard evidence from some fourteen witnesses, the names of whom are set out in the schedule to the said order. Included amongst them is Mr. Duffy. It is common case that this Report, asserting that the plaintiff’s farm would return to profitability in early course, was a condition precedent to the plaintiff’s application for admission into the Scheme. The Report was relied upon strongly by Mr. O’Kennedy S.C. when cross examining Mr. Laurence Power, the bank’s agricultural expert, regarding the profitability of the plaintiff’s business, its future viability and the reasons behind the plaintiff’s financial difficulties.
In relation to the cheques it is clear, contrary to what is contended for by the plaintiff, that counsel pursued the dishonour of the plaintiff’s cheques with the bank’s witnesses. However, even if he had not done so, it is difficult to see how these cheques could have formed the basis of any claim for damages unless the plaintiff was in a position to convince the court that there was an enforceable agreement that the bank would allow the plaintiff trade out of his difficulties and therefore would not have been entitled to dishonour the cheques. The transcript and submissions filed demonstrate that the making of such an agreement between the plaintiff and Mr. Power in May 1981 was aggressively pursued by counsel for Mr. Behan, but was rejected by the court and hence the dishonour of the cheques was the right of the bank, absent any such contract. Regarding such an agreement, Morris. J. stated that he could not possibly come to the conclusion that the bank had agreed to allow Mr. Behan trade through his financial difficulties. Hence, the entitlement of the bank to call in all outstanding liabilities and the ultimate loss by the plaintiff of his farm.
From the judgment of Morris J. it is apparent that not only did counsel produce the cheques handed to him by the plaintiff but the court went on to consider the banks actions in relation to the dishonour of the cheques against the backdrop of the failure on the part of the plaintiff to establish the concluded contract contended for. The court also considered the issue of the dishonour by the bank of the plaintiff’s cheques during the period when the plaintiff, in its opinion, should have had the benefit of the Reduced Interest Scheme. Implicit in the Court’s judgment was its conclusion that even had the plaintiff been afforded the benefit of the reduced interest rates under the Scheme prior to the bank seeking repayment of his liabilities that the benefit of the Scheme would have been so marginal in the overall context of the plaintiff’s liabilities that the bank would in any event have been entitled to dishonour those cheques.
In addition to the aforegoing the transcript shows that Mr. O’Kennedy S.C. pursued the issue of the dishonour of the cheques and the consequences to the plaintiff’s business and reputation flowing therefrom. This fact is borne out by the judgment of the court where it deals with the cheques in the context of the plaintiff’s assertion that the bank sought to ruin the plaintiff’s reputation and also sought to conspire with a fellow competitor so as to damage the plaintiff’s business.
At other portions of the transcript and in particular through the questions posed by Mr. O’Kennedy, S.C. commencing with question 340, Mr. Power was challenged on the consequences of the bank bouncing cheques of the plaintiff in December, 1983 and January, 1984.
The learned Trial Judge at page 10 of his judgment stated as follows:-
“Mr. Behan further complains that the bank improperly and indeed maliciously dishonoured cheques drawn by him. He suggested that the bank did so in order to ruin his reputation as a farmer and a businessman in the community and to denigrate him in the eyes of his workmen and business associates. No case has been made out to my satisfaction that any of these cheques were improperly dishonoured. At the time these cheques were drawn by Mr. Behan he neither had the authority of the bank to do so nor did he have funds or an accomplice to cover these cheques.”
The finding of the learned Trial Judge referred to above has a significant impact on this motion insofar as the net effect of the judgment was that the bank was entitled at the relevant time to dishonour certain cheques presented for payment by the Plaintiff and about which dishonour the Plaintiff can have no legitimate complaint. It is clear that the trial judge had the benefit of sustained and in-depth cross-examination on the issue of bounced cheques, the credit-worthiness of the plaintiff, the potential viability of his business and the effect, if any, that the plaintiff’s inclusion in the Scheme would have had upon him.
Prima facie therefore the plaintiff’s claim against his counsel in respect of both the ACOT Report and the relevant cheques appears to be without foundation. Further, all issues arising in respect of the dishonour by the bank of the plaintiff’s cheques during the relevant period are res judicata. In any event, in respect of the ACOT Report, the same was only of relevance to the plaintiff’s admission into the scheme and he was compensated for the failure on the part of the bank to treat him as a member of that Scheme in the 1990 proceedings.
2. The second major complaint made against Mr. Clancy S.C. is that when it came to the courts attention in the course of the hearing that the bank had sought to reduce its corporation tax liabilities as if they had admitted the plaintiff to the Scheme that counsel refused to plead fraud contrary to the plaintiff’s instructions. In addition, it is alleged that Mr. Clancy failed to argue for satisfactory damages arising from the bank’s failure to admit him to the Scheme when invited to do so in the Supreme Court.
In relation to this issue it appears to this court that whatever the instructions given to counsel might have been the plaintiff in this motion has not produced any evidence to the court to show how fraud would have been established had such a plea been made in the 1990 proceedings. Neither does the plaintiff demonstrate in the affidavits filed on his behalf how any such claim, if established, would have entitled him to damages over and above those which he obtained as monies had and received by the bank to his benefit.
The High Court heard the evidence as to what occurred in relation to the plaintiff’s treatment at the hands of the bank under the Scheme. The High Court categorised the bank’s actions as wrongful and decided that such wrongdoing entitled the plaintiff to the benefit of the monies which the bank should have credited him with, had he been admitted to the Scheme. The Supreme Court categorised the plaintiff’s rights to the same monies as arising by virtue by some type of estoppel. The minority judgment of the Supreme Court in relation to the 1990 proceedings determined that the bank did nothing wrong whatsoever in relation to how the plaintiff was treated under the Scheme. Finally, Denham J. in the second action instituted by the plaintiff stated that the damages would have been the same whether or not the claim was successful irrespective of whether it was categorised as fraud or negligence. Hence, even if the plaintiff could establish negligence against his counsel for not pleading fraud he has no claim for damages given that he has already been compensated for precisely the same loss in the course of his 1990 proceedings.
The plaintiff has produced no evidence to this court as to how the claim of fraud against the bank could have been supported by evidence had it been made in accordance with his alleged instructions in 1990. This being so, the court views the assertion made by Mr. Browne, a solicitor, who ought to be well familiar with the rules of evidence, as to Mr. Clancy’s negligence in this respect as being one which is irresponsible and gravely offensive and is an assertion of professional impropriety against a fellow professional which he must know to be without any legitimate foundation. If the plaintiff’s assertion is correct that Mr. Clancy, S.C. failed to plead fraud and he did so in the absence of any evidence to support such a plea, it is to his credit that he did not lend his name to such a plea and further was acting in accordance with his professional obligations.
From the affidavits filed, it seems that the plaintiff in these proceedings is trying to revisit his entitlement to be admitted to the Reduced Interest Scheme and the issue of losses arising therefrom through the guise of a negligence action against his counsel, when the court has already pronounced in his earlier proceedings that the issue of losses arising from not having been formally admitted to the Scheme are res judicata. Even if the plaintiff was correct that his counsel ought to have pleaded fraud and evidence was available to establish such a claim, it is difficult to see how the court could award damages to the plaintiff over and above those which were awarded to him in his first action. The effect of the bank’s failure to admit the plaintiff to the Scheme on his business was considered and adjudicated upon in the 1990 proceedings at which time the court clearly accepted Mr. Powers evidence that in the context of the year by year losses and the marginal reduction it would have made to Mr. Behans’s total liabilities that the overall outcome would have been much the same in any event. The fact that the court considered these issues in the earlier proceedings is demonstrated in Mr. Browne’s affidavit of 12th June, 2006 where at para. 10 he refers to the evidence given by the bank’s expert, Mr. Power which allegedly belittled the assertion of the plaintiff that the bank’s failure to afford him reduced interest rates caused him substantial loss.
3. The third major complaint made by the plaintiff in the affidavits filed on his behalf is that Senior Counsel was negligent in failing to aggressively challenge the evidence given by the bank’s agricultural expert Mr. Power. In particular it is asserted that counsel was negligent in failing to produce a report to rebut the evidence given by Mr. Power.
The court views the aforementioned assertion which is made by Mr. Browne, a solicitor, as one which lacks credibility. Any solicitor must know that, save in wholly exceptional circumstances, none of which are relevant to this case, the case ends after the conclusion of the defendant’s evidence and that it is simply not possible for a plaintiff to produce reports to rebut the evidence of a defendant’s expert witness after the conclusion of the defendant’s evidence. Neither does the plaintiff demonstrate to the court that such evidence was available nor how it could have altered the outcome. Once again it seems in this action that the plaintiff seeks another opportunity to challenge the evidence given by Mr. Lawrence Power. The transcript shows that the plaintiff set out through his own experts, namely Dr. Beilinberg and Mr. Duffy, to establish how his losses arose and the extent of those losses. These were all put to Mr. Power whose evidence was fully challenged, but ultimately accepted by the court.
4. The plaintiff asserts that Senior Counsel was negligent in failing to contend that the award of damages made by the High Court in respect of the failure on the part of the bank to admit him to the Scheme was inadequate.
Once again the plaintiff in his affidavit does not establish how Senior Counsel could have contended for any additional losses having regard to the findings of the High Court on the core issue i.e. that there was no concluded contract precluding them from calling in the plaintiff’s outstanding liabilities. The plaintiff does not put forward on affidavit the basis upon which he asserts that Mr. Clancy could have contended for damages over and above what were awarded without reversing the High Court’s decision on the existence of an enforceable contract to permit him to trade out of his financial difficulties. Senior Counsel simply had no evidence to support an argument for damages to be made beyond that which was awarded in the High Court.
5. The plaintiff alleges that Mr. Clancy S.C. failed to adequately challenge the testimony of Mr. Laurence Power, the defendant’s agricultural expert.
Not only does this assertion appear to be without foundation from the transcript of the evidence but the plaintiff has failed in his affidavits to point to the existence of any facts, which, if put to Mr. Power would have been likely to bring about an alternative outcome to that which occurred.
From the transcripts of the evidence produced on this motion it is clear that Mr. Laurence Power, in his direct evidence, advised the court that it was the management by the plaintiff of his farm, rather than interest rates, which was his major problem in the six years up to and including 1984. Mr. Power gave evidence that Mr. Behan’s fixed and overhead costs were underestimated as were his living expenses. This witness gave evidence that in each year following 1979 that the plaintiff’s liabilities were increasing. He gave evidence that any further monies that might have been advanced by the bank would simply have led to further losses.
A review of the transcript of the hearing identifies that a lengthy cross-examination of Mr. Power was carried out by Mr. O’Kennedy, S.C. and that cross-examination runs to some 30 pages of text. In the course of his cross examination Mr. O’Kennedy sought to challenge Mr. Power on many issues including the report from ACOT which set out a positive projection for Mr. Behan’s farming business over the relevant period. Mr. Power constantly recalled to the court that Mr. Behan’s track record was inconsistent with the projections being made for his farm in the ACOT plan and ultimately this evidence seems to have been accepted by the court. Further, when challenged about the bank’s failure to give the plaintiff the benefit of the farm rescue scheme in circumstances where he had been approved for entry into that Scheme, Mr. Power pointed out:-
“Now the farm rescue plan was actually a very limited plan, in that the most it could mean to a farmer in difficulty in any year was £8,750. That would be an awful lot of money to a very small farmer with a very small operation. To a very large farmer with very large indebtedness £8,750 was the maximum within the scheme. In Mr. Behan’s case, his maximum was about £6,000, £6,200.”
The details set out in relation to the five categories of complaint above are is not an effort on the part of this court to prejudge the outcome of these proceedings if they were to be permitted to run to trial. However, because of the law which is pertinent to an application to have an action dismissed as being vexatious and an abuse of process, is necessary for the court to seek to evaluate the viability of the claims made in the within proceedings when viewed in the context of the plaintiff earlier litigation.
The 2005 proceedings
The second of the actions referred to in the title to this judgment were instituted by the plaintiff in 2005 under Record No. 2005/2424P. In this action the Bank of Ireland is the first named defendant, the second named defendant is the representative of the late Mr. Noel Clancy, S.C., the third and fourth named defendant respectively are Senior and Junior Counsel who acted on his behalf in the 1990 action.
In this his fourth action the plaintiff claims that counsel deliberately mislead the court in the 1990 proceedings in order to deny him his legal entitlements. In addition the plaintiff asserts that his counsel deliberately mislead him and further alleges that his counsel colluded with the bank to deny him his legal rights.
I have carefully considered all of the affidavits filed by the parties in these motions and in particular the affidavits of Mr. Lavelle, solicitor for the Bank of Ireland, the affidavits of Mr. Corcoran Junior Counsel, Mr. O’Kennedy Senior Counsel, and Mr. McGinley on behalf of the late Mr. Noel Clancy, S.C. The court has also carefully considered the affidavit of Mr. Behan sworn on his own behalf on 26th January, 2007.
Once again the plaintiff in this action wishes to impugn the evidence given to the court by Mr. Lawrence Power, the agricultural expert called on behalf of the bank in the 1990 proceedings. In the earlier proceedings the plaintiff had complained that the court had accepted Mr. Power’s evidence due to incompetence on the part of his own counsel to adequately cross examine Mr. Power or adduce appropriate rebuttal evidence. In this action it is alleged that the bank conspired with its own expert witness to mislead the court and in addition that his own counsel conspired and colluded so as to allow the bank’s evidence go unchallenged.
Notwithstanding these most serious allegations there is simply no evidence produced by the plaintiff in support of these assertions of collusion and conspiracy. The court is asked to assume corruption and collusion. The assertions made are abusive, not supported by the evidence and indeed appear to be in the teeth of the challenges made to the evidence on the plaintiff’s behalf by his counsel and other expert witnesses. Once again the court has serious concerns that these allegations of the gravest type of deliberate professional misconduct have been made by Mr. Behan at a time when he is being advised by Mr. Browne, a practising solicitor, who has not only sworn affidavits himself in relation to the defendants motions but has written correspondence and overseen all of Mr. Behan’s submissions in the course of the three day hearing before this court. The fact that these serious allegations of professional misconduct are deposed to on oath without a scintilla of evidence against three members of the Bar is, to say the least, regrettable.
Once again, whilst new allegations of collusion and conspiracy are at the core of this action, the proceedings appear to be yet another effort on the part of the plaintiff to re-open the consequences to him of the bank’s failure to admit him to the Scheme for which he was fully compensated in the 1990 proceedings.
The Law
Order 19, r. 28 provides as follows:-
“The Court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgement to be entered accordingly, as may be just.”
Order 19, r. 5(2):-
“In all cases alleging misrepresentation, fraud, breach of trust, wilful default or undue influence and in all other cases in which particulars may be necessary, particulars (with dates and items if necessary) shall be set out in the pleadings.”
Whilst the court has the specific power referred to at O. 19, r. 28 above to order and action to be stayed or dismissed where the pleadings are defective within the manner specified in that Order, the court also has an inherent jurisdiction to strike out a claim so as to ensure that there is no abuse of the right of access to the courts.
The circumstances in which the courts inherent jurisdiction may be invoked was briefly stated by Costello J. in D.K. v. A.K. (High Court, 1990 No. 5306P, 2nd October, 1992) were he stated:-
“The principles on which the court will exercise its inherent jurisdiction to strike out a plaintiff’s action can be shortly stated. Basically the jurisdiction exists to ensure that an abuse of the courts process does not take place. If it is established by satisfactory evidence that the proceedings are frivolous or vexatious or if it is clear that the plaintiff’s claim must fail, then the court may stay the action. But it will only exercise this jurisdiction sparingly and in clear cases (Barry v. Buckley [1981] I.R. 306: Sun Fat Chan v. Osseous Limited [1992] 1 I.R. 425).”
The courts have further determined in Sun Fat Chan v. Osseous Limited that if a claim is capable of being rectified by amended pleadings then the court should not strike out proceedings exercising its inherent jurisdiction. Further, the decision of Costello J. in Barry v. Buckley makes it clear that for the purposes of an application where the court is asked to exercise its inherent jurisdiction to stay proceedings that the court is not limited to the pleadings of the parties but is free to hear evidence on affidavit relating to the issues in the case. In this regard the court has had regard to the extensive affidavits, exhibits, and transcripts produced to the court by the parties for the purposes of determining the outcome of the within motions.
For the purposes of the courts adjudication as to whether or not proceedings are vexatious within the meaning of O. 19, r. 28 or indeed for the purposes of the courts consideration as to whether it will exercise its inherent jurisdiction to stay or dismiss proceedings the court must consider whether the proceedings have been brought without any reasonable grounds. Ó Caoimh J. in Riordan v. Ireland [2001] I.R. Vol. 4, p 463, has referred to a helpful decision of the Ontario High Court in Re. Lang Michener v Fabian [1987] 37 D.L.R. (4th) 685 at p. 691, where the following matters were held to be indicators of proceedings which were potentially vexatious namely:-
“(a) the bringing of on one or more actions to determine an issue which has already been determined by a court of competent jurisdiction;
(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief;
(c) when the action is brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
(d) where issues tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;
(e) where the person instituting the proceedings has failed to pay the costs of unsuccessful proceedings;
(f) where the respondent persistently takes unsuccessful appeals from judicial decisions.”
It is clear that the court must be very cautious when deciding to exercise its jurisdiciton under O. 19, r. 28 or its inherent jurisdiction to stay or dismiss proceedings having regard to the fact that the Constitution expressly recognises the right of every citizen to have access to the courts to determine the existance or breach of a legal obligation owed to him by any potential defendants. However, as Murphy J. stated in E. O’K. v. D. K. (Witness: immunity) at p. 573:-
“On the other hand, the Constitution expressly recognises the need for finality in the judicial process. Moreover, it is recognised that justice is more likely to be achieved where persons participating in litigation whether as parties, witnesses, judges, jurors or lawyers can discharge their funciton without the fear of being held to account, at the suit of, perhaps, a disgruntled litigant for the manner in which he performs his role.”
For the purposes of dealing with the defendants motions in the present proceedings bearing Record No. 2002/10061P which is the negligence action against Edward McGinley as the nominated representative of the late Noel Clancy S.C. it is relevant briefly to look at whether or not in this jurisdiction a barrister, such as Mr. Clancy S.C., enjoys any immunity from suit which issue is clearly relevant as to whether or not the proceedings are vexatious or an abuse of process. The same issue is also relevant to the courts decision as to whether or not the proceedings instituted are bound to fail.
In relation to this particular issue the court is guided by the decision of the House of Lords in Arthur J.S. Hall and Company v. Simons [2000] Vol. 3 All E.R. p. 673. That decision relates to three separate cases wherein clients brought claims for negligence against their former solicitors. Having initially successfully relied upon the immunity of advocates from suits for negligence the Court of Appeal ultimately held that the claims fell outside the scope of the immunity. The House of Lords determined that it was no longer appropriate that barristers or solicitors should enjoy immunity from proceedings for negligence against them in respect of the manner in which they conducted proceedings in court. Lawyers will not be immune from suit if it is established that they acted negligently on behalf of their client, either in the preparation or in the conduct of legal proceedings. The court did nonetheless refer to the evidential difficulties which arise in trying to establish in the course of the negligence action what conclusion would have come about in the earlier proceedings if those proceedings had been conducted differently. Nonetheless, the court determined that the existence of such evidential difficulties for a plaintiff who has to prove that the lawyers negligence caused him loss is not a reason for continuing the immunity but might well become a reason for the court striking out such negligence proceedings on the basis that the potential action for negligence had become so weak due to the passage of time. Hoffman L.J. at p. 699 considered the difficulties for a court in such circumstances in the following manner:-
“(b) Invidious Judgments
Then it is said that while it is difficult enough to decide what would have happened at a trial which did not in fact take place, it may become positively invidious to decide how a judge who actually heard the case would have reacted if the advocate had advanced a different argument or called different evidence. Some judges are more receptive to certain kinds of points than others. I think this is an imaginary problem. Whatever may have been the foibles of the judge who heard the case, it cannot be assumed that he would have behaved irrationally. If he did, it would have been corrected on appeal. Obviously one has to take into account the findings that the judge made on the case as it was actually presented. For example, if he did not believe anything which the plaintiff said, it may be difficult to show that the different line of argument would have persuaded him to find in his favour. But I do not see how it is relevant for the purposes of the hypothetical exercise to have regard to the judge’s idiosyncrasies. It must be assumed that he would have behaved judicially.”
The court also in Arthur J.S. Hall v. Simons considered the problems of relitigating an action in the following manner:-
“The law discourages relitigation of the same issues except by means of an appeal. The Latin maxims often quoted are nemo debet bis vexari pro una et eadem causa and interest rei publicae ut finis sit litium. They are usually mentioned in tandem but it is important to notice that the policies they state are not quite the same. The first is concerned with the interests of the defendant: a person should not be troubled twice for the same reason. This policy has generated the rules which prevent relitigation when the parties are the same: autrefois acquit, res judicata and issue estoppel. The second policy is wider: it is concerned with the interests of the State. There is a general public interest in the same issue not being litigated over again. The second policy can be used to justify the extension of the rules of issue estoppel to cases in which the parties are not the same but the circumstances are such as to bring the case within the spirit of the rules.”
For the purposes of the within applications, notwithstanding the fact that there is no definitive approval of the decision of the House of Lord in Arthur J.S. Hall and Company v. Simons in this jurisdiction, the court for the purposes of this application will assume that barristers such as those implicated in the within proceedings do not enjoy a blanket immunity from suit and can be sued for negligence in relation to their management of litigation on behalf of their clients either in respect of their preparatory work or indeed in respect of their management of the trial itself.
There is one final matter which causes the court some concern in the context of the action for negligence against Edward McGinley as representative of the late Noel Clancy S.C. Many of the assertions made in these negligence proceedings pertain to the manner in which Mr. Lawrence Power, the bank’s expert agricultural witness was dealt with in the course of the trial. In particular there is a complaint that he was not examined sufficiently fulsomely by counsel on behalf of the plaintiff and it is alleged that this cross examination constituted negligence.
It is clear from the transcript that this cross examination was conducted by Mr. Michael O’Kennedy S.C. and this court doubts whether under any circumstances a fellow Senior Counsel could, on the basis of some type of collective responsibility, be held to be negligent in respect of any default on the part of his colleague in the conduct of a cross examination which it is alleged was not sufficiently aggressive. However, having regard to the conclusions that the court has reached in any event on the other issues this issue is not one which is troublesome in the context of the within application.
Conclusions
Having regard to the aforementioned legal position and the circumstances surrounding each of the Plaintiff’s actions which have been dealt with earlier in this judgment, the court concludes that the 2002 proceedings against Edward McGinley should be struck out as being vexatious and as proceedings which disclose no reasonable cause of action against the defendant.
Principally, the 2002 action is a claim for negligence and this court concludes that the action is one which is destined to fail. The facts relied upon by the plaintiff in support of his assertions of negligence are not borne out by the transcripts, pleadings and judgments of the court in the earlier proceedings. The assertion that the cross examination of Mr. Power was not aggressive in the sense required to establish negligence is highly unlikely to be sustained having regard to the transcript of the same which is available to this court. The issue regarding the dishonour of the plaintiff’s cheques was fully canvassed in the course of the 1990 proceedings and adjudicated upon by the court both in terms of the bank’s entitlement to dishonour the cheques and whether or not the same would have been dishonoured had the plaintiff been admitted to the Scheme. Insofar as the ACOT Report is concerned the same was clearly introduced into evidence by Mr. Behan’s legal team through the evidence of Mr. Duffy and the same became the plinth upon which Mr. O’Kennedy S.C. cross examined the defendant’s agricultural expert. The assertion that no rebuttal evidence was produced by the plaintiff’s Senior Counsel to counter the evidence of Mr. Lawrence Power is to misunderstand the procedural rights of the parties in relation to the production of evidence.
Even if the court is in error in terms of the plaintiff’s ability to prove the facts before mentioned, the plaintiff has indicated to the court that he will have no professional evidence to place before the court, should the matter be permitted to go to trial, to suggest that his counsel departed from an acceptable standard of practice in terms of his conduct of the action. The only evidence available, according to Mr. Behan will be his own evidence and that of Mr. Browne who was the solicitor who handled his 1990 action. Mr. Browne’s evidence is hardly likely to withstand significant cross examination regarding the negligence of counsel having regard to the fact that whilst he initially dismissed the plaintiff’s counsel following the decision of the Supreme Court given in 1998, he then sought to re-engage the very same counsel in December 2000 for the purposes of representing Mr. Behan in yet further proceedings.
In addition to the foregoing matters I believe that even if the plaintiff had a stateable case in negligence against his Senior Counsel in respect of the management of the 1990 proceedings he has failed to show that his losses arising from such wrongdoing are any different from the losses which were awarded to him by the High Court in the 1990 proceedings. The plaintiff has failed to demonstrate in his pleadings or affidavits how the management of the 1990 case could ever have led the court to conclude that he had a binding contract with the bank such as would have entitled him to recover the very significant claim for special damages which he contended for in that action. Any alleged negligence on the part of counsel has not been shown to have had any bearing whatsoever on the outcome of the only issue which would have entitled him to damages beyond those already awarded to him in that action. Applying the same reasoning as that of Denham J. in her judgment in relation to the 2001 proceedings, I conclude the issues which are the subject matter of the negligence action are in effect res judicata.
The court also is of the opinion that these proceedings are an abuse of process. In the 1990 proceedings, Mr. Behan claimed that he lost his business and the vast preponderance of his wealth because the bank were in breach of a contract made with him in May 1981 whereby he alleged the bank agreed to provide him with funding to trade out of his financial difficulties. The plaintiff failed to establish the existence of such a contract and all of the losses he claimed in those proceedings were therefore irrecoverable. In the course of those proceedings, both in the High Court and the Supreme Court, the courts considered whether or not the failure on the part of the Bank of Ireland to admit him to the Scheme in any way altered the plaintiff’s financial outcome. On both occasions the court held that the failure to admit the plaintiff to that Scheme merely meant that he had not been afforded credits amounting to a total sum of approximately £18,455.18 over the relevant period and that had such credits been afforded to him that the same would not have in any way materially altered the viability of his business. Notwithstanding the Court’s adjudication on those issues the plaintiff sought to revisit all of the losses which initially had been based on the breach of contract claim in his 2001 proceedings where he sought to attribute the same losses to fraud on the part of the bank in failing to admit him to the Scheme. The Supreme Court determined that those losses had already been the subject matter of his 1990 proceedings and determined that all of the issues therein raised were res judicata.
The within negligence action is a further effort to revisit the extensive losses claimed by the plaintiff in the 1990 proceedings as damages for breach of contract. All of the facts which form the foundation for the allegations of negligence in this claim have already been litigated in the 1990 proceedings and the proceedings are merely a further effort on the Plainitff’s part to use an alternative cause of action to revisit his initial claim. Further, the plaintiff’s affidavits fail to demonstrate how the alleged mismanagement by his counsel of his 1990 case resulted in his failure to establish a concluded contract with the bank whereby they were committed to permitting him to trade out of his financial difficulties. Only proof of such a contract would have entitled him to claim the significant special damages which were at the heart of his 1990 proceedings and indeed all subsequent actions. The within proceedings bear all of the hallmarks which Ó Caoimh J. in O’Riordan .v. Ireland warned were likely to be present in an action which was potentially vexatious and an abuse of process.
It seems to the Court that the Plaintiff continues to reject, either deliberately or otherwise, the findings of the High Court and Supreme Court in his 1990 proceedings to the effect that he lost the monies claimed in that action firstly, as a result of his own non profitable farming activities and secondly by reason of his failure to convince the court that the bank was not entitled to call in his indebtedness which action by the bank ultimately led to the end of his farming business. Ever since the plaintiff has sought to ascribe these losses to the fraud, negligence, collusion or conspiracy of those parties referred to earlier in this judgment.
The court has considered carefully the replying affidavits delivered by the plaintiff’s then counsel and by Mr. McGinley on behalf of Mr. Noel Clancy deceased. It could not be clearer to this court that the plaintiff was provided with what appears to have been competent and dedicated advice, none of which was ever paid for by the plaintiff.
For the reasons set out above the court concludes that the plaintiff’s continued right of access to the courts is being abused and this abuse is perhaps most clearly seen in the proceedings instituted by him in 2005 where he has sought to implicate the defendants in a conspiracy to cause him harm.
In relation to the motions brought by each of the defendants in the 2005 proceedings to dismiss the plaintiff’s claim the court firstly concludes that the plaintiff has not complied with the O. 19, r. 5(2) of the Rules of the Superior Courts insofar as he has failed to adequately particularise his claims in respect of conspiracy and/or collusion as is required when contending for fraud on the part of a defendant.
Secondly, the court has considered all of the affidavits that have been sworn on plaintiff’s behalf and concludes that the plaintiff has failed to demonstrate to the court that he has any evidence to offer to establish that there was any collusion between his counsel and the Bank of Ireland so as to cause him any loss or damage. The best that the plaintiff can do is ask the court to infer the existence of such collusion.
In the absence of any particulars of collusion or any evidence in the supporting affidavits filed on behalf of the plaintiff this court believes that the assertions by the plaintiff in these proceedings must be destined to fail. The court concludes that the pleadings offend O. 19, r. 28 and also O. 19, r. 5(2). Further given that the proceedings are destined to fail the court also concludes that it is entitled to exercise its inherent jurisdiction even if the pleadings themselves were not defective as found.
The final relief sought by the second, third and fourth named defendant in the 2005 proceedings is an order that the plaintiff’s proceedings for negligence against them is stature barred by reason of the provisions of the Statute of Limitations 1957, as amended. Section 11 which refers to actions of contract and tort and certain other actions provides a six year period of limitation for the institution of any such proceedings. In the instant case the plaintiff dismissed his counsel following the Supreme Court hearing in the 1990 proceedings by letter dated 27th July, 1998. This being so I conclude that at best the plaintiff had six years from 27th July, 1998 to issue a writ claiming negligence on the part of his counsel. Given that the 2005 proceedings were commenced by plenary summons dated 12th July, 2006 the court concludes that the negligence aspect of such proceedings are statute barred.
Finally the relief sought by the Governor and the Company of the Bank of Ireland in its notice of motion must for all of the reasons set out above also be granted.
For the aforementioned reasons the court will in the case of James Behan v. Edward McGinley bearing Record No. 2002/10061P make an order pursuant to O. 19, r. 28 of the Rules of the Superior Courts striking out the plaintiff’s proceedings on the basis that the same are vexatious, frivolous and disclose no reasonable cause of action.
In relation to the bank’s notice of motion in proceedings bearing Record No. 2424P/2005 which is a notice of motion dated 15th January, 2007 the court will grant to the first named defendant, the Governor and Company of the Bank of Ireland the reliefs set forth at paras 1 to 4 of their notice of motion. Further, in relation to the motion brought on behalf of the second, third and fourth named defendants in the action bearing Record No. 2424P/2005 being the notice of motion dated 26th January, 2007 the court will grant the reliefs set forth at paras. 1 to 4 of the said notice of motion.
As a consequence of the aforementioned reliefs the court does not have to consider the plaintiff’s motion for judgment in default of defence in the proceedings bearing Record No. 2424P/2005 and accordingly that motion will be struck out as the proceedings are now at an end.
Darby v Shanley
(practising as Olwen Shanley and Company Solicitors)
[2009] IEHC 459
JUDGMENT of Ms. Justice Irvine delivered on the 16th day of October, 2009
1. Factual Background
1.1 The proceedings named in the title hereto concern claims brought by each of the plaintiffs, who are brothers, arising from the alleged negligence on the part of the named defendants, a firm of solicitors, in relation to the professional advices and work carried out by them in respect of two particular transactions. The first of these related to the circumstances in which the last Will and Testament of the late Bridget Bird (“Bridie Bird”) was prepared on 27th February, 1997, and the second to the transfer by her of certain lands to the first named plaintiff, Patrick Darby, by deed of transfer dated 17th December, 1998.
1.2 The first named plaintiff is a married man and is an upholsterer by profession. He resides with is wife and two children at Deanhill, Hayestown, Navan, County Meath. The second named plaintiff is the brother of the first named plaintiff. He is a farmer and also resides at Deanhill, Hayestown, Navan, County Meath.
1.3 The late Bridie Bird lived with her husband, the late William Bird, in a house on a substantial holding of land, estimated to have been approximately 36 acres, at Hayestown, County Meath. This house and the adjacent lands were formerly owned by Bridie Bird’s family whose surname was Bowen. Bridie Bird and her husband had married late in life and had no children of their own. A close family relationship existed between the Bowen and Darby families and both of the plaintiffs had spent much of their young lives in the Bowen’s household.
1.4 Bridie Bird died on 24th October, 1999. She was survived by her husband. He, in turn, died on 31st December, 2000.
1.5 The two transactions the subject matter of these claims, were both carried out by the late Bridie Bird with the assistance of the defendant firm of solicitors who, at all relevant times, practiced in that capacity at Academy Street in Navan, County Meath. Those transactions can be described as follows:-
(i) Last Will and Testament of Bridie Bird dated 27th February, 1997.
By her last Will and Testament, the late Bridie Bird appointed Theresa Darby, the mother of both plaintiffs, as the executrix of her Will. The relevant portion of her Will, as far as these proceedings are concerned, provided as follows:-
“I GIVE, DEVISE AND BEQUEATH my house and the contents of the house and land at Hayes, Navan, County Meath, comprising approximately 35 acres, to my Husband, William Bird for his day and after his death to PATRICK DARBY AND DECLAN DARBY, sons of Thomas Darby and Theresa Darby of Hayes, Navan, County Meath, as tenants in common in equal shares.”
The plaintiffs were also named as residuary legatees of the estate.
(ii) Transfer dated 17th December, 1998.
By deed of transfer dated 17th December, 1998, (“the transfer”) the late Bridie Bird transferred to Patrick Darby, as a gift, a parcel of land described in the schedule thereto in the following terms, namely:-
“ALL THAT AND THOSE part of the lands of Carnuff Little, Hayestown in the Barony of Skryne and County of Meath, more particularly delineated on the map thereof attached hereto, being part of the property comprised in Folio 18111F of he Register, County Meath.”
1.6 The land the subject matter of the transfer comprised approximately 3.5 acres. As can be seen from the map attached thereto, the said land was approximately 1.5 acres away from Bridie Bird’s family home.
1.7 Shortly after the death of Bridie Bird on 4th October, 1999, her husband’s solicitors, Messrs. Christie and Gargan, wrote to Oliver Shanley and Company by letter dated 16th December, 1999, advising the executor that, pursuant to the provisions of s. 115 of the Succession Act 1965, William Bird was electing to take his one half share of his late wife’s estate in lieu of the life interest devised to him under the terms of her Will. By further letter dated 8th February, 2000, Messrs. Christie and Gargan wrote to the defendants raising concerns in relation to the validity of the transfer and the Will referred to above and indicating that it was their client’s intention to challenge the validity of both.
1.8 Subsequently, William Bird instituted High Court proceedings (“the probate proceedings”) under Record Number [2000 No. 4195 P] on 6th April, 2000. The defendants to those proceedings were Theresa Darby, the mother of the plaintiffs in these proceedings, who was the executrix of the estate of Bridie Bird and Patrick Darby to whom the lands contained in Folio 18111F of the Register of County Meath had been transferred.
1.9 In the probate proceedings, which were a hybrid type of action, William Bird sought to challenge both the validity of the last Will and Testament of Bridie Bird and also the transfer to Patrick Darby of the lands outlined in the Deed of Transfer dated 17th December, 1998. The following challenge was made to each of the aforementioned transactions. In relation to the last Will and Testament of Bridie Bird, it was alleged in the Statement of Claim:-
(a) That the testatrix did not have the relevant testamentary capacity to know and approve of the contents of her Will.
(b) That the last Will and Testament was not executed in accordance with the provisions of the Succession Act 1965.
(c) That the execution of the Will was procured by duress and/or undue influence exerted upon the deceased by the defendants, namely, Theresa Darby and Patrick Darby in the manner particularised at paragraphs 5(i) to (x) inclusive.
1.10 In relation to the Deed of Transfer, it was alleged as follows in the Statement of Claim:-
(a) That the presumption of undue influence arose against the defendants named in the proceedings and that the transfer was procured as a result of the actual undue influence of those defendants in the manner particularised at paragraphs 7(i) to (xi) inclusive.
(b) That the transfer was void in circumstances where the prior consent of William Bird, pursuant to the provisions of the Family Home Protection Act 1976, had not been obtained in advance of its execution.
(c) That the transfer amounted to an improvident and/or unconscionable transaction.
1.11 Amongst the reliefs sought by William Bird were orders declaring that Bridie Bird had died intestate, and that the lands the subject matter of the Deed of Transfer, were held by the second named defendant in trust and for the benefit of Bridie Bird’s estate.
1.12 For the purposes of the probate proceedings, the first named defendant, Theresa Darby, as executor of the estate of the late Bridie Bird, was represented by Oliver Shanley and Company Solicitors. Patrick Darby, who had initially been represented by a local solicitor, was ultimately represented by Duncan Grehan and Partners.
1.13 William Bird subsequently died on 31st December, 2000. By order of the High Court dated 25th June, 2001, it was directed that the aforementioned proceedings be carried on by Michael Kavanagh in his capacity as executor of the estate of the late William Bird.
1.14 The evidence to the Court on the hearing of this action, which was not disputed, was that the executrix, Theresa Darby, was anxious regarding the risks faced by the estate arising from the probate proceedings and their potential costs if the action was permitted to proceed to trial. In like manner, Patrick Darby was concerned about the significant risk that the transfer might be set aside, having regard to the fact that he had, since the transfer, built his family home on that site.
1.15 In the aforementioned circumstances, and based on the advices received, the defendants compromised the probate proceedings following negotiations which took place on 8th February, 2007. The settlement was received by the Court on 6th March, 2007. The terms of that settlement provided (inter alia):-
(a) That the lands of the late Bridie Bird (excluding those transferred to Patrick Darby) would be sold.
(b) That from the proceeds of sale, the legal costs of all of the parties to the probate proceedings would be discharged, namely, those of the plaintiff, Theresa Darby and Patrick Darby.
(c) That, thereafter, the remaining monies, subject to the specific bequests contained in the Will, would be paid as to 50% to Michael Kavanagh, as next-of-kin of the late William Bird, and the remaining 50% equally to Declan Darby and Patrick Darby.
(d) That Patrick Darby would forego €70,000 of his entitlement under the Will of Bridie Bird in favour of William Kavanagh. The said €70,000 was the sum agreed to represent 50% of the value of the lands transferred to him by Bridie Bird in 1998. Thus, William Kavanagh received a sum equivalent to that which William Bird would have received on exercising his legal right to a one half share of his late wife’s estate, had she not executed the transfer to Patrick Darby in 1998.
1.16 The within proceedings were instituted by Patrick Darby on 7th December, 2004. The statement of claim was delivered on 13th April, 2007, and the proceedings came on for hearing before this Court on 30th April, 2009. The claim of Declan Darby was instituted significantly later on 17th April, 2007, and was heard at the same time as his brother’s claim.
1.17 In the proceedings in which Patrick Darby is plaintiff, the more significant of the allegations made against the defendants are as follows:-
(a) An assertion that the defendants failed in their duty of care, not only to the late Bridie Bird, but also to the intended beneficiaries of her Will, when advising her and preparing her Will in the manner specified at paras. (a) to (i) inclusive of the statement of claim.
(b) That the defendants were negligent in their obligations to the plaintiff, who was their client for the purposes of the transfer, and also to Bridie Bird in relation to the manner in which they advised her in relation to the transfer, as particularised at paras. (a) to (k) inclusive of the statement of claim.
1.18 The defendants, in their defence to the claim of Patrick Darby, which was delivered on 5th October, 2007, denied that they owed the alleged or any duty of care to the testatrix and/or to the beneficiaries. They maintained that the last Will and Testament of Bridie Bird was drawn in accordance with her instructions, that it was clear, concise, and unambiguous, and in all respects complied with the provisions of the Succession Act 1965.
1.19 The defence further denied that the defendants acted for both Bridie Bird and the plaintiff in relation to the transfer. All particulars of negligence, breach of duty and breach of contract in relation to their professional involvement in the preparation of the Will and/or the transfer were fully traversed. Finally, the defendants denied all allegations of loss and damage. In an amended defence dated 23rd December, 2008, the defendants contended that the plaintiff’s claim, insofar as it related to the last Will and Testament of Bridie Bird, was statute barred and/or defeated by reason of delay and/or laches.
1.20 In the proceedings instituted by Declan Darby on 17th April, 2007, he maintained that the defendants owed a duty of care, not only to the late Bridie Bird, but also to the intended beneficiaries of her Will, to ensure that it was drafted in accordance with her instructions and in accordance with the provisions of the Succession Act 1965. He maintained that subsequent to her death, a challenge was made to the validity of Bridie Bird’s Will and that this was founded upon the provisions of s. 111 of the Succession Act 1965. Declan Darby contended that by reason of the defendants’ negligence in failing to ensure that the Will took into account her husband’s right to a one half share of her estate, that the Will would inevitably be challenged. He alleged that it was negligent on the part of the defendants to draw a Will in terms which were incapable of taking effect upon Bridie Bird’s death, without the necessity for legal proceedings, and that those proceedings, when instituted and subsequently settled, caused his financial entitlement under the Will to be significantly reduced.
1.21 The defendants, in their defence of 5th October, 2007, traversed the positive obligations pleaded by the plaintiff. They denied that they owed any duty of care to the plaintiff, as alleged. They denied the negligence pleaded and maintained that any loss or damage sustained by the plaintiff did not arise as a result of any negligence on their part. By amended defence delivered on the 23rd December, 2008, the defendants raised a defence based upon the provisions of s. 11 of the Succession Act 1957.
2. The Evidence
2.1 Given that no stenographer was engaged by the parties, the Court will briefly set out a summary of the evidence given by each of the witnesses in the proceedings.
Mr. Patrick Darby
2.2 Patrick Darby advised the Court that he grew up approximately 400 yards from the Bowen family home. Bridie Bird was one of the eleven Bowen children. She married William Bird when she was approximately fifty years of age. The couple had no children and they moved into the family home to live with Bridie Bird’s sister, Kathleen, who had inherited the old family home upon her parent’s death. When Kathleen died, she left her estate to Bridie Bird.
2.3 William Bird had worked as a part-time meter reader for the ESB. Bridie Bird and her husband were hugely dependent upon the Darby family for their day-to- day needs. Patrick Darby and Declan Darby were like sons to Bridie Bird. They looked after her banking business, collected her pension and did her shopping. They took Bridie and William Bird any place they needed to go. Whilst Bridie Bird was physically frail, she was mentally alert. He described her as being “razor sharp”. Bridie and William Bird appeared to enjoy a normal harmonious marital relationship. William Bird regularly accompanied Patrick Darby to local football games.
2.4 Patrick Darby told the Court that he had hoped to build his house on his own family’s land. However, he could not get planning permission due to problems with access to a site on that land. Accordingly, he investigated the possibility of obtaining planning permission for a site on Bridie and William Bird’s land. He had been told by them that he and his brother, Declan, were to be left their property after their death.
2.5 Having ascertained that there was a likelihood of getting planning permission on a site on Bridie Bird’s land, Patrick Darby approached Bridie Bird in the presence of her husband and asked her if there was any possibility of her giving him that site. Bridie Bird said that she was quite happy to give him the site as he was going to get it anyway after they died. Thereafter, he went to Paul Carroll, an architect, to have a map of the site drawn. He then went to the office of Mr. Shanley to have the transfer document prepared.
2.6 Patrick Darby told the court that he knew Mr. Shanley was Bridie Bird’s solicitor. He also knew that the firm carried out all of the legal work in relation to land dealings in the area on behalf of Smyth’s, the auctioneers who traded from the next door premises and, accordingly, felt that they would be suitable to carry out this work on his behalf.
2.7 Patrick Darby said that he did not meet Mr. Shanley himself. He dropped the map of the intended site in to Ms. Hayes, a solicitor in that office and with whom he had all his dealings. He recollected signing the transfer document. He remembered bringing Bridie Bird in to the defendant’s offices to allow her sign the transfer. He remembered being there at the time she signed it with Ms. Hayes.
2.8 In January 1999, Patrick Darby received a letter from the defendants enclosing a form pertaining to the Family Home Protection Act 1976. He was asked to get the form signed by Bridie and William Bird and thereafter to return it to their office. The letter also advised that he should tell the couple to send back a copy of their Marriage Certificate, signed on its reverse side. He complied with this letter without knowing its relevance.
2.9 Patrick Darby paid the defendants a sum of €683 in respect of their legal work in relation to the transfer. He confirmed that he received no legal advice from the defendants and that Bridie Bird was given no advice regarding the transfer when she attended to execute the deed.
2.10 Following the transfer, Patrick Darby obtained a mortgage of approximately £75,000. He got a small contractor to build his family home on the site. William Bird regularly engaged with him in relation to his house when it was in the course of construction.
2.11 Bridie Bird died, rather unexpectedly, from a heart condition in October, 1999. Within a week after her death, Patricia Boyle and Michael Kavanagh, relatives of William Bird, took him to reside at Bettystown and locked up the old family home.
2.12 Shortly after Bridie Bird’s death, Patrick Darby and his brother Declan Darby were called into Mr. Shanley’s office for the reading of her Will. Thereafter, his mother, Teresa Darby, received a letter stating that William Bird was not happy with the provisions of his late wife’s Will. When he was informed that he was being sued in legal proceedings, Patrick Darby sought advice from Pat O’Reilly, a local solicitor. Mr. O’Reilly felt that he might have a conflict of interest due to the fact that his colleague, Oliver Shanley, was involved in those proceedings. He accordingly advised Patrick Darby that he should find a Dublin solicitor to defend the proceedings on his behalf.
2.13 Patrick Darby had moved into his house in late 1999, and was residing there with his wife and two children, who were eight and five years of age respectively, at the time that William Bird’s proceedings were due to be heard. He was afraid of the risk to his house posed by those proceedings and he was advised by his lawyers that there was a risk that the transfer could be successfully challenged.
2.14 By the time the proceedings were ready for hearing, William Bird had died, and the proceedings were being continued by his nephew, William Kavanagh. Patrick Darby and his mother were anxious that the proceedings would be settled. In order to achieve a settlement, it was suggested that he should relinquish a sum of money equivalent to 50% of the value of the site which had been transferred to him in 1998. The plaintiffs suggested that the value of the site was something in the region of €140,000–€150,000. He felt the valuation was conservative and this fact influenced his decision to settle the case. He, accordingly, agreed to waive his right to €70,000 from the assets of the estate. Patrick Darby told the court that at the time of the settlement, he had already issued the within proceedings, and that his lawyers advised him that he could, as part of that claim, seek to recover the €70,000 he was foregoing from the estate in that action.
2.15 Under cross-examination, Patrick Darby denied the possibility that Bridie Bird had received legal advice when she was with Ms. Hayes on the date the transfer was executed. He agreed that Bridie Bird was mentally sharp, that she was on good terms with her husband, and that her husband was aware of the fact that he was building his house on the lands concerned.
Evidence of Mr. Duncan Grehan
2.16 Mr. Grehan told the court that he had been a practising solicitor since 1980, and was a partner in the firm of Duncan Grehan, Solicitors. He first became involved with Patrick Darby in late 2006. He had been recommended to Mr. Darby by another client of his. At that stage, the probate proceedings were at an advanced stage. It took some time for him to take up the file from the solicitors who had previously represented the interest of Patrick Darby. Thereafter, he requested the defendants to furnish to him all documents pertaining to the transfer. The court was given copies of this documentation. From what he received, Mr. Grehan concluded that Mr. Shanley had been retained by Patrick Darby as his solicitor in relation to the transfer, and that the transfer could be successfully challenged on the grounds of undue influence. The transfer had been conducted in a most informal manner. Patrick Darby was legitimately entitled to be worried about the potential outcome of the proceedings, particularly in circumstances where his family home had been built on the land transferred to him.
2.17 Mr .Grehan told the court that a settlement meeting was arranged for early February, 2007. He was certain that, notwithstanding the issues set forth in the Order of the Master of the High Court, the validity of the transfer of the land to his client was being contested. He doubted the likelihood of successfully defending such challenge. He believed that in the circumstances of the case, a presumption of undue influence existed which it would be hard to refute. He further believed that the estate was haemorrhaging money because of the continuance of the proceedings. Accordingly, he encouraged his client to agree to pay back to the estate half of the value of the lands transferred to him, which had notionally been agreed to have a total value of €140,000. He did not believe that his client had any choice. He advised his client that he could seek an indemnity in respect of that payment as an element of his claim in the present proceedings. He also concluded that the validity of the Will was at risk and hence, he advised that the proceedings be settled on terms which included in agreement that the estate would bear the legal costs of all parties.
2.18 Following the settlement, Mr. Grehan referred the court to a letter dated 13th December, 2007, from Oliver Shanley & Company, showing the distribution made to Patrick Darby and his brother Declan Darby out of the estate.
2.19 Mr. Grehan proceeded to advise the court on the duty of care owed by a solicitor to a client when preparing their Will, and/or preparing a Deed of Transfer in circumstances such as arose in the present case.
2.20 Mr. Grehan stated that when drawing a Will for a married person, a solicitor must make himself aware of the property which the testator/testatrix owns, and give them appropriate advice regarding the implications of s. 111 of the Succession Act 1965. The solicitor was obliged to explain how that provision would impinge upon any decision they made regarding their property. A testatrix, such as Bridie Bird, had to be advised of her husband’s legal right and also of the fact that if she decided to seek to limit that right, there could well be a challenge to the validity of the Will. If the client, notwithstanding such advice, still wished to have the Will drawn in that way, the testator/testatrix should be advised to consult their spouse with a view to obtaining a surrender by them of their legal right, although the spouse in such circumstances would clearly have to receive independent legal advice to render that surrender valid.
2.21 Mr. Grehan advised the court that, where a client wished to have a Will drawn to leave their spouse less than their legal right, that the solicitor could reduce the prospects of a challenge to the Will by requesting the client, if elderly, to obtain a certificate from a doctor as to their testamentary capacity. Also, the solicitor, in such circumstances, was mandated to seek to strengthen the Will by taking a detailed attendance, demonstrating that he had advised his client as to the legal right of their spouse under the provisions of the Succession Act 1965, and noting that the client had, nonetheless, given instructions regarding the preparation of the Will against the backdrop of that advice. No such attendance had been prepared by Mr. Shanley.
2.22 Mr. Grehan contended that there ought to have been a cooling-off period prior to the execution by Bridie Bird of her Will. During that period, she would have the opportunity to reflect on her instructions, having regard to the advices of her solicitor as to the consequence of drawing her Will in a manner which did not provide for a one-half share in her estate to be left to her husband. Further, after she executed her Will, the testatrix should have been sent a copy of her Will and requested to confirm that the same had been drawn in accordance with her instructions.
2.23 Finally, in relation to the Will, Mr. Grehan told the Court that, in his view, Patrick Darby’s interests would have been at risk if the probate litigation had been permitted to proceed. His instincts were in favour of a settlement because of the legal costs which were eroding the estate.
2.24 In relation to the transfer, Mr. Grehan advised the court that it was inappropriate for the defendants to have acted on behalf of both parties in respect of that transaction. He stated that, in the absence of the parties being represented by different solicitors, the presumption of undue influence would arise and that such presumption would be difficult to displace. Accordingly, the defendants had put the validity of the transfer at risk as the transferor could not be shown to have received independent legal advice.
2.25 The defendants’ failure to refer Patrick Darby to a separate solicitor exposed him to the risk of an allegation that he had procured the transfer through undue influence exerted over Bridie Bird. They were further negligent in failing to advise Patrick Darby that if he did not attend another solicitor that there was a risk that the validity of the transfer might be challenged at a later date.
2.26 Mr. Grehan told the court that a solicitor, when taking instructions from a transferor, ought to have kept an attendance of the instructions received from his client, and also a note of the advice that was given regarding the transfer, to ensure that any allegations subsequently made could be defended.
2.27 Mr. Grehan advised the court that if the intended transferor was married, a solicitor had to be concerned as to whether or not the designated property might be a family home. It was necessary to get the prior consent of the spouse by reason of the provisions of the Family Home Protection Act 1976. That declaration had to be made before a Commissioner for Oaths. He nonetheless agreed that the lands transferred could not have been considered to have been part of the family home of Bridie and William Bird. The definition of a family home was one which was confined to a house and its curtilege.
2.28 Mr. Grehan stated that, save for a voluntary transfer between husband and wife, there were really no circumstances in which independent legal advice was not obligatory. Referring to the Guidelines of the Incorporated Law Society, he stated that this was a case where the parties ought to have been separately represented, particularly in circumstances where Patrick Darby was known to be intent on building his family home upon the site to be transferred.
2.29 Regarding the Will, Mr. Grehan agreed that it was normally a potential beneficiary who would seek to challenge a Will. He said that Mr. Bird should have been contacted and asked to sign a disclaimer of his legal right share.
2.30 Under cross-examination, Mr. Grehan agreed that he had not spoken to Mr. Shanley as to what evidence he could have given in the probate proceedings if they had proceeded to trial. He confirmed that Patrick Darby’s evidence to the court in the present case was the same as the account that had been given to him prior to the settlement of the probate proceedings. He always understood that Patrick Darby was of the view that Bridie Bird knew what she was doing at the time she executed the transfer in his favour. The Bowen family and the Darby family had always been on good terms. He explained that he had not been in a position to deliver a statement of claim in the proceedings until the extent of Patrick Darby’s losses had been ascertained, and that this had only occurred when the probate proceedings were settled. Similarly, until the outcome of the probate proceedings, the losses, if any, of Declan Darby were unascertainable. Hence, the delay in the issue of his proceedings.
2.31 Mr. Grehan reiterated that a solicitor drawing a Will in circumstances such as occurred in this case was mandated to seek to involve Mr. Bird in the transaction and had to make it clear to his client that the Will was not safe otherwise.
Mr. Declan Darby
2.32 Mr. Darby told the court that he was present at the negotiations which led to the settlement of the probate action in 2007. He was in attendance with his mother and Oliver Shanley. He was aware that the payment of €70,000 had come up for discussion and that his brother had given his consent to handing up €70,000 so that the case could be settled.
2.33 Regarding his own case, he stated that he had not known the terms of Bridie Bird’s Will until he went into Mr. Shanley’s office for the reading of the Will. He said that his house was built on the same lane as Bridie Bird’s house, and that he became aware that William Bird was looking for half of her estate, either on the day that the Will was read or shortly thereafter. He knew his mother was being sued and that the validity of the Will was being challenged. He confirmed that he was not advised by Mr. Shanley at any time that he should get any advice regarding the probate proceedings, even though their outcome would clearly affect his distribution out of her estate. On the date of the settlement, Mr. Shanley told him it was best to get the proceedings over with. He confirmed that he ultimately received €111,662.86 from the estate, and that he first went to Mr. Grehan to take advice regarding his present claim in late 2007.
2.34 Under cross-examination, Declan Darby told the court that whilst he knew William Bird was claiming after his wife’s death, he had no idea of precisely how this could affect his situation. He was aware, however, that if William Bird got more, that he would get less. He instituted his proceedings in April 2007, against Mr. Shanley, claiming negligence.
Mr. Oliver Shanley
2.35 Mr. Shanley told the court that Bridie Bird was a long-standing client of his firm. She was mentally alert. He had dealt with her previously in her capacity as the executrix of one of her brother’s estates. She came in to his office to make her own Will in February, 1997.
2.36 The day Bridie Bird came in to make her Will, she was brought in by the plaintiff’s mother, Theresa Darby. She told him she wished to leave her property to her husband “for his day” and then to Mr. Declan and Mr. Patrick Darby “her two lads”. Mr. Shanley knew her husband was still alive. He told the court that it was his practice, where a wife would decide to leave her husband less than that to which he was entitled under the Succession Act, to inform her of his right to the appropriate share in her estate, and that ultimately, she could do nothing to stop him claiming that right after her death.
2.37 Mr. Shanley had no recollection of his actual meeting with Mrs. Bird when she came in to make her Will. Belatedly, in his evidence, Mr. Shanley stated that he had some notes regarding that meeting, but he did not refer to them in evidence. Instead, he advised the court as to his presumed dealings with Bridie Bird, based upon what was his standard practice at that time. Regarding his knowledge of William Bird, he stated that he had no reason to believe that he would not have gone along with Bridie Bird’s wishes in relation to any decision she made regarding her land.
2.38 Mr. Shanley told the court that he would never consider requesting a husband to come into his office where his wife had asked him to draw up a Will in a manner which did not provide for his legal right share of her estate under the Succession Act. He felt that to do so would be unprofessional. Such action would breach the confidence of the client. He further advised the court that, in any event, a spouse could not waive their legal right share in their partner’s estate prior to their death. He confirmed that he did not give Bridie Bird a copy of the Will which she executed on 27th February, 1997.
2.39 In relation to the transfer, Mr. Shanley told the court that he referred Bridie Bird to Ms. Hayes, his colleague. A number of weeks after Patrick Darby had left documents into the office, he recollected Ms. Hayes calling him up to her room to witness Bridie Bird execute the transfer. He had no concerns regarding the intended transaction nor any worries regarding Bridie Bird’s capacity. Bridie Bird was the client of his office and her relationship with the transferee, Patrick Darby, did not concern him. He saw no reason why she should have been separately advised. Mr. Shanley told the court that there was no purpose in sending Patrick Darby to get independent legal advice as the only issue which could be of concern to him was the potential for gift tax. There were no other onerous conditions for the transferee. Nothing imprudent was done. His firm did what their client wanted done. Further, the transfer was consistent with Bridie Bird’s earlier Will.
2.40 Mr. Shanley denied that there was any need to obtain from William Bird the relevant declaration pursuant to the Family Home Protection Act 1976, prior to the transfer. He stated that this was only required for the purposes of registering the transfer of the lands in the Land Registry.
2.41 Under cross-examination, Mr. Shanley stated that he could not have asked William Bird to renounce his legal right share of his wife’s estate at the time he prepared Bridie Bird’s Will. He did not know that this could be done under s. 113 of the Succession Act 1965, and therefore, he did not advise upon it.
2.42 Mr. Shanley agreed that the probate proceedings were based on an allegation that Bridie Bird had made her Will at a time when she was acting under actual undue influence of the Darby family and that she was susceptible to such influence by reason of two recent bereavements. Mr. Shanley did not accept that even though Theresa Darby brought Mrs. Bird in to make the Will, that her two sons were to be the major beneficiaries thereunder, and that her husband was to be effectively disinherited, that such circumstances mandated him to ask Mrs. Bird to attend a doctor so that he might certify her fit to make her Will. Mr. Shanley agreed that the Will was prepared in the space of half an hour and that no written advice was sent out to Bridie Bird afterwards.
2.43 Mr. Shanley advised the court that he believed his obligations were to carry out Bridie Bird’s instructions, and he was not concerned about any potential obligation to the intended beneficiaries. He did not anticipate a challenge to the Will, based upon an allegation of undue influence, and therefore did not consider putting in place any safeguards to protect against such a challenge. He did not ask Bridie Bird to provide a Medical Certificate. He did not think about providing a cooling-off period after he received instructions to prepare the Will, nor did he consider furnishing her with any written advice after the execution of the Will. Mr. Shanley was not sure who paid for the Will to be drawn, and he believed he may not have charged for it on the basis that his fees would be taken from her estate when she died. With the benefit of hindsight, he agreed that he should have kept a detailed attendance.
2.44 Regarding the settlement, Mr. Shanley told the court that Theresa Darby was anxious to settle the probate proceedings. At the time of the settlement, he believed that the transfer to Patrick Darby was valid. He could not see any reason why Ms. Hayes should have sent Patrick Darby to a different solicitor. He did not agree that he should have advised Patrick Darby that he was taking a chance in accepting the gift from Bridie Bird if both parties were represented by the same solicitor.
2.45 Regarding the presumption of undue influence referable to the transfer, Mr. Shanley agreed that it if the circumstances surrounding the transfer to Patrick Darby raised a presumption of undue influence, that it was necessary, for the purposes of rebutting such a presumption, to be in a position to demonstrate that the transferor had received independent legal advice. He accepted that, had William Bird agreed to the transfer to Patrick Darby, and that agreement noted by Mr. Shanley, it would have made the subsequent challenge to the validity of the transfer difficult to sustain.
Evidence of Ms. Jane Hayes
2.46 Ms. Hayes qualified as a solicitor in 1973. She had practiced in the firm of Oliver Shanley since 1991. Patrick Darby had dropped in to see her during the summer months of 1998. He gave her a map of the site which she was told Bridie Bird was going to give to him. He asked her to draw up the transfer. On the day of the transfer, Patrick Darby brought Bridie Bird to her office. She told the court that she asked Patrick Darby to go downstairs so that she could speak to Bridie Bird on her own. She discussed the size of the site with Bridie Bird as she was surprised at the extent of it. Bridie Bird told her that the Darby boys were getting the land anyway, so the size did not matter. Regarding the capacity of Bridie Bird, Ms. Hayes told the court she had no concerns in this regard. She signed the transfer, which was witnessed by Mr. Shanley, whom she asked to come upstairs to witness her signature.
2.47 Ms. Hayes told the court that she viewed Bridie Bird as her client. She did not accept that she was obliged to advise Patrick Darby to obtain separate legal advice. Mr. Darby was getting a gift and she could not see how he could be prejudiced such that he should have been told to obtain separate legal advice. Mr. Darby was to be responsible for any expenses that arose from the transfer, and she stated that there was nothing unusual about that. She met Bridie Bird on this one occasion only.
2.48 Under cross-examination, Ms. Hayes told the court that the first day she saw Bridie Bird was the day she came in to sign the transfer which had been prepared in advance. She confirmed that she had been given instructions by Mr. Shanley to prepare the transfer, and that these were given in June or July of 1998. She had no written memo regarding any instructions given to her by Bridie Bird or of her interview with her, other than the notes in the transfer file. These broadly related to tax matters.
2.49 Ms. Hayes stated that she knew that Bridie Bird was an elderly lady and that she was married. She knew of her land but not of any other assets. She agreed that she only met Bridie Bird once, but that she had met Patrick Darby a number of times. When asked as to whether or not the possibility of undue influence ever crossed her mind, she stated that she was happy with the mental capacity of Mrs. Bird at the time of the transfer. She acknowledged with the benefit of hindsight that there were steps she could have taken to avoid a possible claim that the transaction resulted from undue influence.
2.50 Ms. Hayes told the court that she was aware of the fact that Patrick Darby was intending to build his family home on the site. She did not, however, think it was necessary to warn Bridie Bird of the risk that the transfer could be set aside if challenged. She did not warn Patrick Darby either of any such potential risk. She could see no benefit to sending Mr. Darby to a separate solicitor. Ms. Hayes advised the court that it was not unusual to act for both parties to such a transaction in 1998. She agreed that this was something she would not do now, principally because people are more litigious. She agreed that she had kept no attendance of any advice given to either Bridie Bird or Patrick Darby at the time.
2.51 Ms. Hayes rejected the suggestion that she should have considered approaching William Bird to ascertain his attitude to the transfer. She was happy that the lands transferred were not a family home. She knew that they had previously been let by Bridie Bird. She agreed with counsel for the plaintiff that it was irregular to send the statutory Family Home Protection Act declaration to Patrick Darby so that he might have it signed by Bridie Bird and William Bird. She knew that it would not be signed before a Commissioner. However, she felt that these facts did not invalidate the transfer. Finally, Ms. Hayes told the court that she did not anticipate the possibility, given that Bridie Bird appeared to be physically old and frail at the time of the transaction, that her extended family might sue.
Evidence of Mr. Lysaght
2.52 Mr. Lysaght is a solicitor who qualified in 1975. He is a Lecturer in the Law School in Blackhall Place and is a Senior Partner in Malone and Martin Solicitors who practice in Trim. Mr. Lysaght was engaged by the defendants, after the evidence in the proceedings had commenced, for the purposes of providing independent professional evidence regarding the appropriateness of the professional conduct of the defendants complained of by the plaintiffs in this action. Unfortunately, Mr. Grehan had completed his evidence by the time the defendants engaged Mr Lysaght. Accordingly, the evidence in the case was somewhat less than satisfactory, given that certain aspects of Mr. Lysaght’s evidence were not put to Mr. Grehan in cross-examination.
2.53 In relation to the transfer, Mr. Lysaght told the court that in 1998, if a solicitor was dealing with an established client such as Bridie Bird who appeared to have her full faculties about her, and was intent on transferring a portion of land to an individual who was something akin to a son to her, then, in his opinion, it would not have been standard practice to advise that client or the intended transferee to obtain separate legal advice. It was not the function of the solicitor to challenge a client’s decision, but it was their duty to respect their wishes. There was no indication that Bridie Bird lacked the requisite capacity to make such a decision.
2.54 Mr. Lysaght advised the court that the guidance from the Incorporated Law Society in 1998, was there for the purpose of seeking to ensure that the transferor was not coerced by a third party. He understood that Ms. Hayes had satisfied herself that Bridie Bird was not being coerced by Patrick Darby at the time of the transfer. This knowledge, when taken together with the fact that the proposed transfer was consistent with the Will which the client had previously made, negated any need for either party to obtain independent legal advice.
2.55 Mr. Lysaght expressed no concern that the fees for the transfer had been paid by Patrick Darby. This, he indicated, was common practice and was often adopted as an economic strategy to avoid two solicitors being paid for a single job. He stated that since 2003, the advice of the Incorporated Law Society was that the parties should be attended by separate solicitors. This was honoured, however, more in the breach than in its keeping.
2.56 In relation to the manner in which the defendants acted at the time Bridie Bird’s Will was prepared, Mr. Lysaght indicated that with an elderly client, it would be common practice for the solicitor to conduct a discussion in the course of which the solicitor would seek to ascertain the competence of the client. If they gave coherent instructions, it would be extraordinary to proceed to ask the client to have a doctor certify their capacity. Mr. Lysaght advised that if a client gave instructions to exclude their spouse from a Will, or to give them less than they were entitled to as a statutory right, that it was incumbent upon the solicitor to advise the client that their spouse could always claim that right after their death, in any event.
2.57 Mr. Lysaght did not agree that when a solicitor drew a Will providing for a spouse to be excluded, or given less than their statutory right, any cooling-off period should be provided for, prior to permitting the testator/testatrix to sign the Will. Mr. Lysaght told the Court that once a solicitor received clear instructions, it was acceptable for that solicitor to prepare the Will and have the client execute it there and then. He agreed that it might have been prudent to have given Bridie Bird time to consider her proposed Will and the advices in relation to the statutory rights of her spouse. However, if the client insisted, you could not fault the solicitor for proceeding on the same day that the instructions had been taken. If he did not adopt such an approach and something happened to the testator/testatrix during the cooling-off period, then their wishes would have been frustrated.
2.58 In relation to s. 113 of the Succession Act 1965, Mr. Lysaght gave evidence that he had never come across the use of this section other than in the context of Family Law proceedings and separation agreements. He would have thought it inappropriate for a solicitor acting on behalf of Bridie Bird to contact her husband to ask him to revoke his legal right share to her estate in the event of her death. He stated that it was not unusual in a country practice for one spouse to leave the other spouse a life interest in property, particularly where the property concerned had previously belonged to the testators/testatrix’s family.
2.59 Under cross-examination, Mr. Lysaght stated that it was not always standard practice to take an attendance, noting the instructions given by a proposed testator. If a solicitor subsequently had to give evidence regarding the testator’s instructions, the Will itself, he believed, would be the primary evidence as to the instructions given by the client. He was not in a position to state, in relation to the probate case, what documents Mr. Shanley would have been in a position to rely upon in the context of an allegation of lack of capacity and/or undue influence being made. Mr. Lysaght expressed no view on counsel’s assertion that since 1984, a solicitor owed a duty to proposed beneficiaries under a Will, even though the solicitor was clearly not acting on their behalf at the time the Will was prepared.
2.60 Mr. Lysaght accepted that having regard to the fact that Bridie Bird was transferring a significant site to Patrick Darby that a solicitor handling that transaction should hasten slowly as the issue of undue influence could arise. He stated that he would have viewed Bridie Bird as the client of Oliver Shanley and Company. Patrick Darby would have been viewed by him as the proposed transferee and he was not, in his view, the client of Oliver Shanley and Company. Mr. Lysaght told the court that it would have been good practice for the attending solicitor to have taken a detailed attendance of the dealings with the client when preparing such a transfer. When asked about what steps he would have taken in similar circumstances to avoid a potential claim based upon undue influence, he stated that apart from taking a detailed note, it would have been appropriate for the solicitor to ask another solicitor from the same firm to attend upon the transferor at the time that legal advice was being given regarding the consequence of their intended action. He also advised that if the transferor was married, that the solicitor should ascertain if their spouse was in agreement with the proposed transfer and that he should keep a note of the client’s response.
2.61 In relation to the circumstances in which the Will was executed, Mr. Lysaght told the court that where a solicitor received instructions which involved either disinheriting or leaving a spouse less than their legal right share, that it would be normal practice for the solicitor to ask whether or not the spouse was aware of and had approved their intentions. If the solicitor got no information regarding the spouse’s approval, it would be his practice to tell his client to go home and talk to their spouse about their intentions. He felt that this was good legal practice and also good for harmonious relations between the parties.
2.62 Mr. Lysaght agreed that Mr. Shanley should have been live to the possibility that if Birdie Bird’s Will was prepared as she directed that it might potentially result in a claim being made that she executed that Will whilst under the undue influence of the beneficiaries. He stated that Mr. Shanley was obliged to interview Bridie Bird about her families’ circumstances. The fact that she was elderly would always give a solicitor cause for concern. Mr. Shanley would also have been expected to have had regard to any other dealings he might have had with Bridie Bird in the past. The taking of a detailed attendance would have been prudent but was not mandatory. Mr. Lysaght confirmed that he had not seen any attendance notes taken by Mr. Shanley recording her instructions, any queries made of her or details of advices given to her.
2.63 To avoid a potential claim in relation to a Will based upon an allegation of undue influence, Mr. Lysaght told the court that the counsel of perfection would be firstly, to take a detailed attendance of the client’s instructions. Thereafter, the testatrix would be advised of their spouse’s legal right. The solicitor would then ensure that the client was certain in her own mind as to how she wanted to proceed. The interview with the client would be critical in this regard. Mr. Lysaght did not believe that any recent bereavement in a family would necessarily impact on a testator’s testamentary capacity. In many cases, it was precisely such an event that precipitated the making of a Will. He did not agree that it was mandatory for a solicitor to write out to their client after the execution by them of their Will advising them of its contents. Many clients would not wish that type of post to arrive to their home. However, if they came back concerned, he would send it out to them later. He agreed that if the circumstances were such that a claim of undue influence might potentially arise by reason of the provisions of the Will, then a prudent solicitor would, after its execution, send to the client a copy of their Will asking them ensure that the Will had been drawn in accordance with their instructions. He would only do this if there was some part of the picture missing that would concern him. If, for example, he had no knowledge of the husband’s approach to the potential terms of the Will, then he would write out to the client asking them to insure that the Will was in accordance with their instructions.
2.64 He stated there was no obligation on Mr. Shanley to ask Bridie Bird to attend her General Practitioner to obtain a Certificate as to her mental competence. In any event, this was not a matter relevant to any potential claim based upon an allegation of undue influence.
2.65 Regarding the transfer, Mr. Lysaght told the Court that if Patrick Darby had been his client and he had brought Bridie Bird to him and asked him to prepare the transfer documentation that he would not, in 1998, have insisted that Bridie Bird obtain separate legal advice. He would have asked Bridie Bird if she had discussed the proposed transfer with her spouse and he would have been happy to prepare the transfer once her husband was happy with the same.
2.66 Mr. Lysaght confirmed that it would be normal to have more than one meeting with the transferor prior to the execution by them of the Deed of Transfer. The fact that the Deed was drawn up in the present case on Patrick Darby’s say-so, would not have concerned him once he was satisfied that the nature of the intended transfer had been properly explained to Bridie Bird before she executed it. Mr. Lysaght accepted that he had seen no documentation prepared by Ms. Hayes other than a memorandum which principally dealt with the tax implications of the proposed transfer. He had not seen any documentation which might back up her evidence in court if any claim was made that the transfer had been procured by undue influence.
2.67 Mr. Lysaght agreed that if William Bird had been consulted regarding the transfer and had agreed to the same, no undue influence claim could subsequently have been brought in relation to that transaction.
3. The Issues
3.1 The first issue that falls to be determined is whether the claim of either plaintiff, insofar as it relates to the advices given by the defendants to Bridie Bird in relation to the preparation and execution of her Will, are statute barred. If the claims are not statute barred, it must then be considered whether the defendants owed to the plaintiffs, as beneficiaries under Bridie Bird’s Will, a duty of care and if so, the nature and extent of that duty and whether it was breached in either case. The next issue to be decided is whether the defendants owed a duty of care to Patrick Darby at the time of the transfer, whether any such duty was breached, and if it was the nature of the loss arising therefrom.
4. The Statute of Limitations Issue
Counsels’ Submissions
4.1 Mr. Nesbitt S.C., for the defendants, submitted that the claims of both plaintiffs, insofar as they related to allegations of negligence made regarding the advices tendered to Bridie Bird by the defendants at the time she made her Will, were time barred by virtue of the provisions of s.11 of the Statute of Limitations 1957 (“the Act of 1957”). That section provides for a limitation period of six years for, inter alia, actions claiming damages for negligence or breach of duty. He relied on the case of Tuohy v. Courtney [1994] 3 I.R. 1 in this regard. He noted that Mrs. Bird’s Will was executed on 27th February, 1997, and that Patrick Darby did not issue proceedings until 7th December, 2004. In the course of the trial itself, Mr. Nesbitt contended that the limitation period of six years in respect of both claims commenced on the date upon which the defendants advised Bridie Bird in relation to her Will i.e. the date of its execution. In subsequent written submissions, in relation to Declan Darby’s claim, the defendants contended that the six-year period commenced on 8th December, 1999, at the latest, that being the date upon which Mr. Bird had claimed his legal right share to his wife’s estate.
4.2 Mr. Dwyer S.C., for the plaintiffs, submitted that the statutory period provided for by s. 11 of the Act of 1957, could not have commenced prior to the death of Bridie Bird on 24th October, 1999. It was only subsequent to that date that they became aware of the terms of her Will. The relevant date could not therefore have been the date upon which the Will was executed. Time could not be running against the plaintiffs without their knowledge. Mr. Dwyer maintained that both actions were brought within the six-year period provided for under the Act of 1957. The statutory period did not start to run against the interest of either plaintiff on the date of Bridie Bird’s death. Neither did it commence on the date upon which the plaintiffs were first notified that a challenge was to be made to the validity of her Will. The relevant date for the purposes of s. 11 was the date upon which the probate proceedings were settled, that being the date upon which the loss deriving from the defendant’s negligence had crystallized.
Decision
4.3 Section 11(2) of the Act of 1957, as amended by s.3 of the Statute of Limitations (Amendment) Act 1991, provides as follows:-
“Subject to paragraph (c) of this subsection, and to s. 3(1) of the Statute of Limitations (Amendment) Act 1991, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”
The claims of Patrick Darby and Declan Darby are claims brought in tort and are thereby governed by the limitation period set forth above. Accordingly, unless their claims were instituted within six years from the date upon which their respective causes of action accrued, their claims must fail. The claim of Patrick Darby was instituted on 7th December, 2004, whilst the claim of Declan Darby was commenced on 17th April, 2007.
4.4 In Hegarty v. O’Loughran [1990] 1 IR 148 Griffin J., in discussing the time at which a cause of action accrues, stated as follows at p.158:-
“The period of limitation therefore begins to run from the date on which the cause of action accrued, i.e. when a complete and available cause of action first comes into existence. When a wrongful act is actionable per se without proof of damage, as in, for example, libel, assault, or trespass to land or goods, the statute runs from the time at which the act was committed. However, when the wrong is not actionable without damage, as in a case of negligence, the cause of action is not complete and the period of limitation cannot begin to run until that damage happens or occurs.”
4.5 In the case of Patrick Darby, as already stated, he maintains two separate claims of negligence against the defendants. The first of these relates to the alleged negligence of the defendants whilst acting as solicitors for Bridie Bird at the time she prepared her Will in February 1997. The latter allegation of negligence relates to advices given by the defendants in and about December 1998, at which date Bridie Bird executed the transfer. The plea of the defendants, based upon the provisions of s. 11 of the Statute of Limitations 1957, relates solely to the negligence claimed in relation to the circumstances in which the defendants advised Bridie Bird regarding the preparation of her Will.
4.6 Whilst both plaintiffs might well have anticipated or feared a potential loss following the receipt by the defendants of the letter from Christie and Gargan Solicitors dated 8th February, 2000, which indicated that William Bird intended challenging the validity of both the Will and the transfer, or from the subsequent issue of the plenary summons maintaining those claims, the cause of action in neither case was yet complete. The cause of action for negligence in relation to the preparation of Bridie Bird’s Will was only complete upon the date on which the probate proceedings were settled, that being the date upon which it could be stated both plaintiffs had sustained a loss arising from the negligence alleged against the defendants. That loss was ascertainable from the terms of the settlement which, in providing that the costs of all parties would be paid out of the estate, significantly reduced the legacies received by Patrick and Declan Darby. Accordingly, the settlement having been agreed to on 8th February, 2007, the court concludes that Patrick Darby and Declan Darby had six years from that date to commence the present proceedings.
4.7 For the aforementioned reasons, the claims of Patrick Darby and Declan Darby contending for negligence on the part of the defendants in relation to their involvement in the preparation of the Will of Bridie Bird are not statute barred by reason of the provisions of s. 11(2) of the Act of 1957. I am satisfied that the case of Tuohy v. Courtney [1994] 3 I.R. 1, which upheld the constitutionality of s.11 of the Statute of Limitations, upon which the defendants relied, is not of assistance in circumstances where the proceedings were commenced prior to the expiration of the relevant statutory limitation period.
5. Duty of care regarding the Will
5.1 The court must now consider whether or not the defendants owed a duty of care to the plaintiffs, as beneficiaries at the time they were tendering advice to Bridie Bird in respect of the preparation of her Will.
Counsels’ Submissions
5.2 Mr. Dwyer made the case that the defendants, as solicitors preparing a Will, owed a duty of care to his clients, as potential beneficiaries under the Will. He relied on the decision of Barrington J. in Wall v. Hegarty and Anor. [1980] I.L.R.M. 124. He submitted that a solicitor, when preparing a Will, must not only have regard to the technical aspects of the Will (i.e. the execution of the Will and drafting the Will in accordance with the instructions given), but that he must also have regard to such external factors as are known to him which may adversely affect the Will.
5.3 Mr. Dwyer relied upon the fact that Mr. Shanley admitted that he had been unaware that Mr. Bird could be asked to renounce his legal right share in writing under s. 113 the Succession Act 1965, as evidence of negligence. He noted that no documentation had been produced to support the evidence of Mr. Shanley that he had advised Mrs. Bird regarding her husband’s legal right to a one half share in her estate on her death, irrespective of the content of her Will. He submitted that Mr. Shanley had been negligent, in that he had failed to advise Bridie Bird as to the possibility of a claim of undue influence arising after her death due to the contents of her Will and that he had not taken steps, other than his own discussions with Bridie Bird, to ascertain her mental capacity. He relied upon the evidence of Mr. Grehan and Mr. Lysaght to support his contention that Mr. Shanley was negligent in failing to have had regard to the possibility of a claim of undue influence after her death. He submitted, based on Mr. Lysaght’s evidence, that following the execution of the Will, Mr. Shanley should have written to Bridie Bird enclosing a copy of her Will, explaining its terms and asking her to confirm that the Will had been drawn in accordance with her instructions, given that he did not know whether or not William Bird had agreed with his wife that the Will should be drawn in those terms. In addition, he submitted that a prudent solicitor would have discovered whether or not Mr. Bird would have been prepared to execute a renunciation of his legal right share.
5.4 On behalf of the defendants, Mr. Nesbitt acknowledged that a solicitor, in drafting a Will, might owe a duty of care to a beneficiary, as recognised in Wall v. Hegarty and Anor. [1980] I.L.R.M. 124, but as the instant case did not concern the drafting of a Will, rather the alleged failure of the defendants to advise the testatrix as to her husband’s legal right share, that authority was not applicable in his submission. He referred to the decision of the House of Lords in White v. Jones [1995] 2 AC 207, and noted that although the majority of the House of Lords accepted that a duty did exist towards beneficiaries, that its scope was narrow, in that it only arose in circumstances where neither the testatrix nor her estate would have a remedy in respect of the negligence against the solicitor. The law in this jurisdiction, he submitted, was the same. He argued that an alternative cause of action by Mrs. Bird’s estate lay in the present case.
5.5 The applicable standard of care, should a duty of care be held to exist, Mr. Nesbitt submitted, was “the degree of care to be expected in the circumstances from a reasonably careful solicitor” as per Roche v. Peilow [1985] I.R. 252. He argued that the law, however, did not require a solicitor who drafted a Will for a client of full capacity to indemnify a legatee against the entire loss that he might incur in the event of a challenge by a third party to that Will, on the grounds of undue influence on the part of that legatee over that testator.
5.6 Mr. Nesbitt also contended that any loss arising to the plaintiffs was neither caused by the defendants’ negligence nor was it foreseeable. He stated that none of the matters determined at trial during the probate proceedings, and as addressed in the Order of the Master of 20th April, 2004, concerned the issue of Mr. Bird’s entitlement to his legal right share of the estate. He submitted that it was not reasonably foreseeable that the Will would be challenged by Mr. Bird and that this was clear from the evidence of the plaintiff.
5.7 Mr. Nesbitt noted that there had never been any suggestion that the Will of Mrs. Bird was executed other than in accordance with the provisions of the Succession Act 1965. There was no evidence to show, he submitted, that Bridie Bird did not know of or approve of the contents of her Will, and the evidence of the plaintiffs in this case, he argued, clearly demonstrated that Bridie Bird knew what she was doing. He further submitted that the probate proceedings were compromised in 2000, on the incorrect premise that any loss as a result of that compromise could be recovered from the defendants in these negligence proceedings. Mr. Nesbitt contended that no steps were taken prior to the settlement of the 2000 proceedings to ascertain what evidence was available on the defendant’s side to rebut the evidence that may have been given by the plaintiff, or any witness called on his behalf, in support of the claim for undue influence. In addition, in his submission, there was no witness available to William Kavanagh to controvert the evidence of Patrick Darby and Declan Darby on the issue of undue influence, and no regard had been given to the fact that William Bird, at the time of the settlement, was dead. He argued, therefore, that the plaintiff in the probate proceedings could not have successfully challenged the validity of the Will on the grounds of undue influence.
5.8 There appears to be a duty of care owed by solicitors, not only to testators and testatrixes, but to legatees in certain circumstances. This is apparent from the decision of this court (Barrington J.) in Wall v. Hegarty and Anor [1980] I.L.R.M. 124. In that case, the plaintiff executor sought to recover damages from the defendants, a firm of solicitors who were engaged by the testator to draw up his Will. It was accepted that the Will had been improperly attested and was, as a result, invalid. The plaintiff sought the value of the legacy of £15,000 he would have received, had the Will been valid, together with the expenses he had incurred in attempting to establish the Will. Barrington J. held that a solicitor owed a duty of care to a legatee to draft the Will with such reasonable care and skill as was required to ensure that the wishes of the testator would not be frustrated and the expectancy of the legatee thereby defeated. He held that the damages claimed by the plaintiff were recoverable. Barrington J. was of the view that the reasoning in the decision of the English High Court in Ross v. Caunters [1980] Ch. 297 (where a solicitor was found to owe a duty of care in drafting a Will to a proposed legatee) was “unanswerable”. He determined that the decision of the Supreme Court in Finlay v. Murtagh [1979] I.R. 249, which established that a solicitor owes a duty in tort to show reasonable professional skill in attending to his client’s affairs, was applicable. The following passage from the judgment of Barrington J. is noteworthy:-
“I fully accept the reasoning of Sir Robert Megarry [in Ross v. Caunters] that, in a case such as the present, there is a close degree of proximity between the plaintiff and the defendant. If a solicitor is retained by a testator to draft a will, and one of the purposes of the Will is to confer a benefit on a named legatee, the solicitor must know that if he fails in his professional duty properly to draft the Will, there is considerable risk the legatee will suffer damage. To use Sir Robert’s words, his contemplation of the plaintiff is ‘actual nominate and direct’.
Likewise, I accept Sir Robert’s reasoning that there can be no conflict of public policy in holding that a solicitor has a duty to take care in drafting a Will, not only to the testator but also to a named legatee in the Will. There is no possible inconsistency between the duty to the testator and the duty to a legatee. Recognising a duty to a legatee tends to strengthen the chances that the testator’s wishes will in fact be properly expressed in the Will. The two duties march together.
The authorities are, as I said, analysed by Sir Robert Megarry with consummate ability in his judgment in Ross v. Caunters, and it would be otiose for me to repeat here the exercise which he has carried out in his judgment. Suffice it to say that I am satisfied on the basis of the decision in Finlay v. Murtagh that a solicitor does owe a duty to a legatee named in a draft Will, to draft the Will with such reasonable care and skill as to ensure that the wishes of the testator are not frustrated and the expectancy of the legatee defeated through lack of considerable care and skill on the part of the solicitor.”
It appears from the above, that the precise duty owed to a legatee is to act prudently so as to ensure that the wishes of the testator or testatrix are not frustrated such that the legatee may be wrongfully deprived of their expectancy.
5.9 In White v. Jones [1995] 1 All ER 691, the testator had quarrelled with his two daughters, the plaintiffs, and executed a Will, cutting them out of his estate. Having later reconciled with them, he sent a letter to his solicitors indicating that he wished a new Will to be drawn up to include gifts of £9,000 to the plaintiffs. A month later, the solicitors’ managing clerk requested the firm’s Probate Department to draw up a Will or codicil as per the new instructions. Two weeks later, the clerk made arrangements to visit the testator. However, the testator died before the new dispositions were put into effect. The plaintiffs brought an action for damages against the solicitors for damages for negligence. The majority of the House of Lords held that where a solicitor accepted instructions to draw up a Will, and as a result of his negligence, an intended beneficiary under the Will was reasonably forseeably deprived of the legacy, the solicitor was liable for the loss of the legacy in circumstances in which there was no confidential or fiduciary relationship, and where neither the testator nor his estate had a remedy against the solicitor. If this were not to be the case, an injustice would occur because of a lacuna in the law and there would be no remedy for the loss caused by the solicitor’s negligence, unless the intended beneficiary could claim. Therefore, it appears that counsel for the defendants is correct in his submission that this case is authority for the view that a solicitor will only be liable for a loss if there is no alternative remedy available. On the facts of the instant case, it does not appear, however, that the estate would have had a remedy against the defendants.
5.10 If a solicitor, having drawn a Will in accordance with his client’s instructions, fails to have that Will properly attested, it is a straightforward exercise for a court to identify the negligence on the part of the solicitor and the foreseeability and quantum of the loss to the intended beneficiaries arising from that negligence. Similarly, if a client gives instructions to their solicitor to prepare a Will leaving a specific sum of money to a third party and the solicitor does nothing to implement those instructions and the client thereafter dies before the Will is executed, it is again easy to identify the negligence of the solicitor and the foreseeability and quantum of the loss to the intended legatee. However, the nature of the alleged negligence in the present case, and the foreseeability of the loss allegedly arising therefrom, is of much greater complexity. Because the authorities relied upon principally relate to delay on the part of a solicitor in implimenting a client’s instructions or a failure to have a Will properly executed, I believe the court must be careful as to the extent of any duty it might impose on solicitors in relation to their obligations to intended beneficiaries concerning matters unconnected with the proper and prompt execution by a teatator/testatrix of their Will.
5.11 The basis for the duty of care owed by a solicitor to a potential beneficiary is predicated upon the duty of the solicitor to ensure that his client’s wishes are not frustrated. It is important, in the context of this case, to note that the frustration of the wishes of the testatrix principally occurred by reason of the fact that, unrelated to any proceedings, Mr. Bird elected to seek his legal right share of his wife’s estate following her death. That election took place prior to the institution of the probate proceedings and any loss arising from such election cannot be attributed to any negligence on the part of the defendants. In this regard, the court accepts that the defendants followed Bridie Bird’s instructions, having advised her that her husband would be entitled, irrespective of the content of her Will, to claim his legal right share to a one half interest in her estate on her death.
5.12 What was at issue in the probate proceedings instituted on 6th April, 2000, was the validity of the Will itself i.e. whether Bridie Bird had the appropriate testamentary capacity to make that Will, whether it was executed in accordance with the Succession Act 1965, and whether it had been procured by reason of undue influence exerted upon the testatrix. It is the foreseeability of a challenge of this nature that must be considered against the backdrop of any negligence on the part of the defendants.
5.13 On the basis of the case law referred to earlier, the court must conclude that the defendants, in the present circumstances, did owe a duty of care, not only to the testatrix, but also to the intended beneficiaries named in her Will. They were obliged to act prudently to ensure that her wishes as expressed in her Will were not frustrated. To the forefront of those obligations, having regard to circumstances in which they were asked to prepare Bridie Bird’s Will, was a requirement that they would seek to satisfy themselves that her instructions had been given to them independently of any influence that might have been exerted upon her by those who were to be the beneficiaries under her intended Will.
5.14 Assuming that the defendants acted prudently so as to insure that their client’s instructions had not been procured as a result of any undue influence upon her by the intended beneficiaries, the defendants were under an obligation to seek to ensure that her wishes were not frustrated and that her Will was validly executed in accordance with the requirements of the Succession Act 1965.
5.15 In the present case, the duty of care owed to the testator and to the intended beneficiaries were different but nonetheless complimentary to each other.
5.16 The real question for the court in both of these cases, is whether there was a breach of the aforementioned duty and if there was whether the losses claimed by the plaintiffs were the foreseeable result of that breach.
Conclusions
5.17 The court received divergent advice from Mr. Grehan and Mr. Lysaght as to the duty of care owed by the defendants to the testatrix and/or the intended the legatees at the time they advised Bridie Bird in relation to the preparation of her Will. The more significant aspects of their evidence, is set out earlier in this judgment. Having considered all of the evidence, the legal authorities relied upon by the parties and the submissions of counsel, the court has reached the following conclusions, namely:-
(i) There was no obligation on the defendants to ask their client, merely because she was physically old and frail, to attend her doctor to certify her capacity, given that the evidence was that she appeared to all concerned to be “razor sharp” at the given time.
(ii) There was no obligation on the defendants to contact Mr. Bird, having received their client’s instructions, to request him to renounce his legal right share to the testatrix’s estate. The court accepts Mr. Lysaght’s evidence that s. 113 of the Succession Act is rarely used, save in the context of Family Law proceedings.
(iii) There is ordinarily no obligation on a solicitor to provide for a cooling-off period so that a client is given time to consider fully the import of the instructions given to their solicitor prior to executing their Will. In this regard, the court accepts the evidence of Mr. Lysaght that once a solicitor is satisfied that a client is competent to make their Will, and has fully understood the advices given, the Will should be executed with fairly immediate effect. To do otherwise, could permit the testatrix’s intentions to be frustrated due to death or ill-health occurring during the cooling-off period, as happened in the case of White v. Jones referred to earlier in this judgment.
(iv) Having regard to the circumstances in which Bridie Bird presented to make her Will, and the nature of the instructions given by her, and also having regard to the fact that she was to execute it on the same date as that upon which she gave her instructions, the defendants, as prudent solicitors, were obliged to:-
(a) seek to satisfy themselves, by making appropriate inquiries of their client, that she was not acting under the influence of the Darby family, and to keep a full note in relation to those inquiries lest the Will ultimately be challenged on the grounds that it was procured by undue influence;
(b) explain to their client that the life interest which she proposed providing for her husband in her Will was less than that to which he was entitled under the provisions of the Succession Act 1965, and that following her death he might elect to take his legal share in lieu of the interest bequeathed to him;
(c) keep a full note of the advices given to their client regarding her spouse’s legal right under the provisions of the Succession Act 1965, and of her instructions to them following receipt of that advice;
(d) explain to their client the possibility that, in drawing her Will in the manner in which she intended, the Will might ultimately be challenged on the grounds that it had been procured by reason of undue influence, unless her husband knew and approved of the contents thereof; and
(e) send to Bridie Bird a copy of her Will after its execution, enclosing an explanation as to its contents and asking her to revert if the Will did not reflect her intentions, having regard to the fact that they had no knowledge as to whether or not her spouse approved of the content of her Will. A prudent solicitor had to be mindful of the possibility of an ultimate challenge to a Will by a spouse who was going to receive less than the legal right share to which they were entitled under the Succession Act.
5.18 Assuming that the defendants were satisfied that Bridie Bird was not acting under the undue influence of the Darby family, they owed a duty of care to the testatrix to seek to ensure that her intentions, as expressed in her Will, were not frustrated. They also owed a duty of care to the intended beneficiaries who might foreseeably suffer the loss of their legacies in the event of being wrongly accused, after the testatrix’s death of having procured their legacy by exerting undue influence over her. That duty obliged the defendants to ensure:-
(a) That the Will was validly executed by the testatrix at a time when she had the appropriate capacity; and
(b) that they would not through any act or omission cause proceedings to be instituted challenging the validity of the Will on any ground including that of undue influence which would not, absent that negligence have been instituted.
Did the defendant’s negligence result in the institution of proceedings to challenge the validity of the Will which would not, absent that negligence, have been instituted?
5.19 Having heard the evidence, the court does not accept that Bridie Bird was a long standing client of the defendants’ office. Whilst her family may have had regular dealings with Mr. Shanley, she herself, had only once dealt previously with Mr. Shanley and that was in relation to the estate of one of her siblings. Her next dealings with Mr. Shanley were on the day she asked him to prepare her Will. Notwithstanding this fact, the court accepts Mr. Shanley’s evidence that at the time Bridie Bird gave him instructions in relation to her Will, she appeared entirely competent and capable of giving those instructions. The court is also satisfied that Mr. Shanley did advise Bridie Bird of the fact that her husband could, if he so wished after her death, claim a one-half share in her estate in lieu of the life interest which she had decided to leave to him in her Will.
5.20 The court, from the evidence, has concluded as a matter of law that the defendants complied with their duty of care to the testatrix in some respects, but not in others. In particular, the defendants failed in their obligations as set out at para. 5.17 (iv) (a), (c), (d) and (e). Notwithstanding this fact, the court is not satisfied that the plaintiffs have established, as a matter of probability, that the proceedings challenging the Will of Bridie Bird were instituted as a result of that negligence. The court concludes that those proceedings, on the balance of probabilities, would have been instituted, irrespective of any such breach of duty on the parts of the defendants. Further, any such breach of duty has not, in the opinion of this court, led to the loss and damage which the plaintiffs seek to recover in the present proceedings. Also, insofar as it may be relevant, the court concludes that the breaches of duty found could not have justified the compromise of the probate proceedings on the terms agreed.
5.21 It is common case that Mr. Shanley gave no consideration to the possibility that Bridie Bird could have been acting under the undue influence of the plaintiffs. He considered that she was completely in control of her faculties and that her intentions were entirely understandable. Her actions appeared to him to be consistent with what other clients of his had done in similar circumstances, particularly where the property concerned had belonged to the testator’s family. He, accordingly, was negligent in that he made no inquiries of Bridie Bird as to whether or not she was acting under the control of the Darby family. Neither did he give her any advice, assuming that he was satisfied that she was not acting under the influence of the Darby family, regarding the possibility that there might be a challenge to her Will on the grounds of undue influence after her death.
5.22 On the evidence, Mr. Shanley advised Bridie Bird as to her husband’s legal right to a half share in her estate on her death. Faced with Mr. Shanley’s advice, Bridie Bird, nonetheless, proceeded to leave her husband the life interest as per her original instructions, rather than the interest to which he was entitled under the Succession Act 1965. Accordingly, it seems probable that Bridie Bird, irrespective of the advices of her solicitor, seemed determined to try to ensure that the plaintiffs would succeed to the entirety of her estate following her husband’s death.
5.23 It is clear from the evidence that the defendants failed to explain to their client the possibility that, in drawing her Will in the manner in which she intended, the Will might ultimately be challenged on the grounds of undue influence unless her husband knew and approved of its contents. However, the court is not satisfied that even if the defendants had complied with their obligations in this regard, that Bridie Bird, on the balance of probabilities, would have altered her Will. In this respect, the court pays particular regard to the fact that Bridie Bird did not change her instructions to Mr. Shanley on being advised that her husband, following her death, might undermine her plans for the future of her estate by electing to take a one half share in her estate at that time. The probability is that she would have left her instructions as already indicated, thus leaving the risk of a challenge to the Will open to her husband and/or his family.
5.24 In coming to its conclusions that the probate proceedings were not, as a matter of probability, instituted as a result of any negligence on the part of the defendants, the court has taken into account that at the time William Bird instituted his proceedings challenging the Will, it would not have been known to his legal advisors the extent of any advice furnished by the defendants to his late wife, what investigations they carried out or what notes they retained in relation to either matter. Consequently, any negligence on the part of the defendants in failing to advise their client regarding the risk of a challenge to her Will on the grounds of undue influence, on the balance of probabilities, did not result in the frustration of the testatrix wishes by causing the defendants to institute to the probate proceedings.
5.25 In reaching this conclusion, the court pays significant regard to the booklet of pleadings in the probate proceedings. These pleadings demonstrate that William Bird, at the time he instituted the proceedings challenging the Will, had very limited knowledge of any facts or evidence which might have supported a challenge to the Will based upon an allegation of undue influence. He certainly did not know that the defendants had not investigated this issue with their client, and that they had no memorandum of their advices to the testatrix. In particular, the court has had regard to the following matters that appear from the pleadings, namely:-
(i) The reluctance on the part of William Bird’s solicitors to provide any particulars to back up the undue influence claimed in their replies to particulars delivered on 26th October, 2000 and 27th July, 2001.
(ii) By letter of 20th December, 2001, William Bird’s solicitors sought discovery of certain categories of documents. This tends to suggest that they had no knowledge as to whether or not any notes had been kept by the defendants as to the instructions given by the testatrix, or advices given to the testatrix prior to the preparation of her Will.
(iii) It was not until 20th December, 2001, that William Bird’s solicitors sought particulars of all work carried out by the defendants on behalf of the Darby family before the date upon which Bridie Bird executed her Will.
(iv) It was not until 2nd April, 2002, that Michael Kavanagh’s solicitors sought particulars of all legal transactions or business carried out on the instructions of Bridie Bird prior to the execution of her Will on 27th February, 1997.
5.26 From all of the above facts, it seems clear that the response of William Bird to his wife’s Will was to issue proceedings on the basis that he expected to be left the entirety of his late wife’s estate as per the statement of claim which stated as follows on his behalf:-
“(vii) The Deceased had no reason not to leave all of her Estate to her husband as one might expect her to do. There was no unhappy differences between the Deceased and her husband.”
For these reasons, the court cannot draw an nexus between any negligence found against the defendants in relation to the preparation of Bridie Bird’s Will and the institution by William Bird of his proceedings challenging that Will.
5.27 Whilst the court is satisfied that Mr. Shanley was negligent in failing to send to Bridie Bird a copy of her Will, after its execution with a letter asking her to confirm that its contents were in accordance with her instructions, once again, the court concludes that had the defendants complied with their obligations in this regard, the court simply cannot conclude that this would have prevented the institution of the probate proceedings. On receipt of such a letter, the testatrix might have altered her Will to her husband’s benefit, in which case, the plaintiffs in these proceedings, would not have received the legacy which they did actually receive under her Will. Alternatively, the testatrix would have left her Will in the format in which it had been executed. It is highly likely that William Bird, as the disquieted husband, would still have instituted the probate proceedings challenging the Will. The letter from Oliver Shanley and Company, in such circumstances, would not have effected the institution of those proceedings and would only have been of relevance in terms of strengthening any defence to a challenge based upon an allegation of undue influence.
5.28 The court is satisfied that the probate proceedings were issued on behalf of William Bird who was disgruntled with the content of his late wife’s Will. This occurred independently of any negligence on the part of the defendants. Accordingly, the wishes of Bridie Bird, in terms of the legacy she intended the plaintiffs to receive, was thwarted, not by any negligence on the part of the defendants, but rather, by her husband’s response to the content of her Will.
5.29 It is common case that those disappointed by the terms of a testator/testatrix’s Will, often institute proceedings seeking to challenge that Will on a variety of grounds, including, at times, an allegation of undue influence, even where there is insufficient evidence to support such a claim. In such circumstances, an estate may end up being depleted by the costs of successfully defending that action, should the costs not be recovered from the unsuccessful plaintiff. In other cases, even though it is believed that the disgruntled plaintiff’s action is unlikely to be successful, an executor and/or proposed beneficiary may agree that some payment should be made to the unmeritorious plaintiff to avoid any risk that their action might prove successful. Once again, the estate in these circumstances will be substantially diminished and the amount recovered by the beneficiaries under the relevant Will reduced. In neither circumstance would the beneficiary be entitled to look to the testator’s solicitors for an indemnity in respect of their loss.
5.30 It appears to be the case that the executrix, Theresa Darby, was anxious regarding the potential outcome of the probate proceedings. She did not wish to risk the possibility, albeit apparently slim, that the validity of the Will could successfully be challenged on the grounds of undue influence. She, accordingly, compromised those proceedings, as she was entitled to do, and she did so with the agreement of the plaintiffs. She agreed (inter alia) that the legal costs of all parties would be paid out of the estate, and thus the legacies of Declan and Patrick Darby were reduced by that sum. On that basis, William Kavanagh agreed to withdraw his opposition to proof of the last Will and Testament of the deceased, dated 27th February, 1997. The plaintiffs are misguided in their belief that they are entitled to recover any such reduction in their distribution from Oliver Shanley and Company. That agreement was made in respect of the risks which pertained to the proceedings challenging the validity of the Will, rather than the claim regarding the validity of the transfer. The latter claim was a separate claim pertaining solely to Patrick Darby. The executrix would have had no right to agree that Declan Darby’s benefit under the Will would be reduced due to any fear that the transfer to his brother Patrick Darby might be set aside.
5.31 At the time Theresa Darby settled the probate proceedings, there was no evidence that the Will, as alleged, had not been executed in accordance with the provisions of the Succession Act 1965. Further, having regard to the evidence in the present proceedings, there was simply no evidence that could have been put forward to show that the testatrix was not of sound disposing mind at the time she made her Will. Insofar as the final allegation of undue influence is concerned, the onus of proof would have been on William Kavanagh to establish that allegation, given that no presumption would have operated in his favour. It is difficult to see, William Bird being dead at the time the proceedings were settled, how such an allegation could have been established. What witnesses could have been called to establish that allegation? There is nothing in the booklet of pleadings, particulars or discovery which suggests that such evidence was available to the plaintiffs. Accordingly, the court concludes that any negligence on the part of the defendants did not cause the institution of the probate proceedings and neither did it give grounds to the testatrix to compromise those proceedings on the terms agreed.
5.32 To conclude, the court finds, as a matter of fact, that the claim challenging the validity of the Will would, as a matter of probability, have occurred irrespective of whether or not the defendants were negligent in the manner found by the court. Further, the court concludes that any negligence found against the defendants did not form any legitimate basis upon which the executrix was entitled to conclude that the proceedings required settlement in the manner agreed by her. The reduction in their distribution from the estate arising from this agreement has no connection with the negligence established by the defendants regarding the advices they gave to Bridie Bird at the time she drew her Will on 27th February, 1997.
6. Claim of Declan Darby
6.1 The claim of Declan Darby is pleaded slightly differently from that pleaded on behalf of Patrick Darby. The nature of the claim is set out at para. 1.20 of this judgment. Having regard to its findings in relation to the claim of Patrick Darby, it is clear that the claim of Declan Darby must also fail.
6.2 The court rejects, as a matter of law, the assertion pleaded on Declan Darby’s behalf that the provisions of the last Will of Bridie Bird were incapable of taking effect on her death without the necessity for legal proceedings. There was no need for any such proceedings in circumstances where William Bird was entitled to elect to take a one half share in his late wife’s estate following her death without the necessity for any legal proceedings. The legal proceedings were taken, not because the Will did not provide for William Bird’s legal right share, but due to the fact that he wished to challenge the validity of the Will.
6.3 The court has already concluded earlier in this judgment that those proceedings were, as a matter of probability, neither instituted nor settled because of the negligence found by the court in this judgment.
7. The Transfer
Counsels’ Submissions
7.1 Mr. Dwyer, for the plaintiffs, submitted that the defendant’s conduct fell far short of the standard of care they were required to exercise in respect of the transfer which, he submitted, was that as set out by Barron J. in Carroll v. Carroll [1999] 4 I.R. 241. He noted that it had long been accepted that a solicitor does not fulfil his obligations to his client by merely carrying out what he is instructed to do. In this regard, he relied on the dicta of Barron J. in McMullen v. Fowler [1993] 1 I.R. 123. In respect of elderly and infirm clients, he submitted that the solicitor was obliged to take particular care in ascertaining their client’s instructions, and he referred to an extract from O’Callaghan, ‘The Law of Solicitors in Ireland’ in support of this contention. He argued that by failing to adhere to this standard of care, his client, Mr. Patrick Darby, had been left without evidence which could be used to rebut the presumption of undue influence in the proceedings brought to challenge the validity of the transfer.
7.2 He contended that the nature of the transaction was always such that a presumption of undue influence would arise. Consequently, in the event of a challenge to the transfer, Patrick Darby needed to be in a position to prove that the transfer was a free and independent act of Bridie Bird. He set out the appropriate steps that should have been followed by Ms. Hayes. She should only have acted for one party; she should have made enquiries as to why the transaction was taking place; she should have had a long and detailed discussion with Bridie Bird as to the nature and effect of the transfer; there should have been an opportunity for Bridie Bird to consider any legal advice given to her in advance of the execution of the transfer; a proper and detailed memorandum of all discussions with Bridie Bird should have been kept; the Family Home Declaration should have been treated appropriately and William Bird’s attitude to the transfer ascertained; regard should have been had by her to the respective interests and circumstances of Bridie Bird and Patrick Darby. Further, Ms. Hayes was obliged to advise Patrick Darby to take advice from an independent solicitor regarding the proposed transfer and/or advise him that in default of so doing he would be at risk that a challenge might later be made to the transfer based on an allegation that Bridie Bird had acted under his undue influence.
7.3 Mr. Nesbitt, for the defendants, sought to distinguish the case of Carroll v. Carroll [1999] 4 I.R. 241. He contended that no presumption of undue influence arose in this case, or could have arisen. He noted that in that case, Mr. Carroll was in poor health and issues about his competence arose. Also, the relationship in question was that of father and son, and the asset transferred to the transferee was the transferor’s only asset. These facts were to be contrasted with those of the instant case, he submitted.
7.4 Mr. Nesbitt submitted that when the probate proceedings were settled, that the validity of the transfer was no longer in issue between the parties. In this regard, he relied upon the order of the Master of the High Court dated 20th April, 2004, which, when referring to the issues to be determined at the trial of the action, made no mention of the validity of the transfer.
Was the validity of the transfer in issue when the probate proceedings were settled?
7.5 Mr. Grehan told the court that notwithstanding the Order of the Master of the High Court dated 20th April, 2004, that the issue of the validity of the Deed of Transfer dated 17th December, 1998, was very much in issue when the proceedings were settled, and was one of the issues to be dealt with at the trial of the action. Further, Mr. Dwyer, who represented Patrick Darby in those proceedings, also informed the court that the issue of the validity of the transfer was, at all stages, maintained, up to and including the date of the settlement thereof.
7.6 Having regard to the evidence, the terms of the settlement and the representations made by counsel to the court, this court accepts, as a matter of fact, that when the action was settled, irrespective of any apparent limitation in the order of the Master of the High Court, that the issue of the validity of the transfer was still at issue between the parties. Firstly, the court heard Mr. Grehan’s evidence that the validity of the transfer was at issue in the proceedings when the same were settled. Mr. Shanley was not asked to give evidence on this issue and hence, Mr. Grehan’s evidence remained unchallenged. Further, that evidence was corroborated by the assurance of Senior Counsel who acted on behalf of Mr. Darby in those proceedings. In addition, the terms of the settlement, and in particular, Patrick Darby’s agreement to forego €70,000 from his entitlement under Bridie Bird’s Will, that sum representing approximately 50% of the value of the lands transferred, is only consistent with the validity of the transfer remaining in issue.
7.7 The court believes there is a simple explanation for why the order of the Master of the High Court does not, amongst the issues recited therein, refer to the validity of the transfer. By virtue of the provisions of O. 36, r. 4 of the Rules of the Superior Courts, the plaintiff in a probate action must bring a motion to seek to fix the time and mode of trial of those proceedings. It is common practice for the parties to agree what issues arise regarding the Will which is the subject matter of the challenge. However, as already stated in this judgment, the action maintained by William Bird was a hybrid action. The probate proceedings related to the validity of Bridie Bird’s Will. Allied to that action was the separate claim in relation to the validity of the transfer. That was not a claim governed by the provisions of O. 36 of the Rules of the Superior Courts requiring the court to direct the time and mode of trial of such claim. Understandably, therefore, the order of the Master of the High Court only identifies the issues to be determined in relation to the last Will and Testament of Bridie Bird. Accordingly, I reject the submission made on behalf of the defendants that the validity of the transfer to Patrick Darby was no longer an issue in the proceedings at the time they were settled.
The Court’s findings regarding the transfer
7.8 Having heard the evidence and considered the submissions made, the court concludes that not only did the defendants accept instructions from Bridie Bird, but that Patrick Darby was, for the purpose of the transfer, also a client of the defendants. It was he who gave the instructions to Oliver Shanley and Company. He did not go that office merely because of Mrs. Bird’s connection with the same, and his reasons for doing so are referred to earlier in this judgment. He brought the plans to Mr. Shanley’s office. He advised the defendants on the extent of the site required and the purpose for which the site was to be transferred, namely, so that he could build his family home upon it. He also paid for the entirety of the legal dealings.
7.9 Having regard to these findings, the defendants owed Patrick Darby a duty to act prudently and in his interest in relation to the said transaction. A prudent solicitor, acting with Patrick Darby’s interests in mind, ought to have been live to the possibility that the circumstances and backdrop to the transfer were such that a potential challenge to the validity of the transfer might arise. The facts that should have made a potential claim of undue influence foreseeable to a prudent solicitor in the present case were as follows:-
(a) The age of the transferor.
(b) The fact that Mr. Darby had the plans prepared and brought them into the offices of Mr. Shanley.
(c) The fact that the site was several acres large and much larger than was needed merely for the construction of a family home.
(d) The fact that Mr. Darby paid for all of the legal work.
(e) The fact that Mr. Darby brought Mrs. Bird in to execute the transfer.
(f) The fact that Mrs. Bird and her husband were wholly dependent upon the Darby family, almost to the point that without them, they could not have lived independently.
(g) The fact that Mrs. Bird came in alone to the office without her husband and in circumstances where they could not have known whether or not she had been taken advantage of by Mr. Darby to the point that she may not even have been able to discuss the transfer with her husband.
(h) They had no knowledge of Mr. Bird’s attitude to the intended transfer.
7.10 A potential claim of undue influence being foreseeable, the defendants owed Patrick Darby an obligation to advise him regarding the potential for such a claim and how he could protect himself from such a challenge. The defendants were mandated to advise Patrick Darby to attend an independent solicitor and to warn him that if he did not do so, that he would be exposing the transfer to a potential challenge on the grounds of undue influence. The defendants were mandated to explain to Patrick Darby that if they continued to act on his behalf, and a challenge was made to the validity of the transfer, that he would not be in a position to prove that the advice given to Bridie Bird at the time she executed the transfer was independent of his influence.
7.11 In relation to Bridie Bird, the defendants owed a duty to her to consider the possibility that she was transferring the lands whilst under the undue influence of the Darby family. They were obliged to make reasonable inquiries of Bridie Bird as to the reasons behind her decision to transfer this property to Patrick Darby. They were also obliged to ask Bridie Bird whether or not her husband William Bird was in agreement with the proposed transfer, given that any challenge to the transfer was likely to emanate from him. In the absence of knowledge of Mr. Bird’s agreement to the proposed transfer, they were mandated to advise Bridie Bird of the risk of a claim of undue influence being made at a later date, in which case, if Patrick Darby was not separately represented, it would be difficult to establish that she had acted independent of his influence. If such a challenge were made, then her wishes would be thwarted, with the property she intended to be given to Patrick Darby ending up in the hands of a third party.
7.12 The court concludes that the circumstances in which the defendants were asked to prepare the Deed of Transfer created an obligation on the defendants to advise both parties i.e. Bridie Bird and Patrick Darby of the risk of a potential claim for undue influence if they were not separately represented in the transaction, particularly in circumstances where Mr. Bird’s attitude to the transfer had not been ascertained, either directly or indirectly, at the time the transfer was executed.
7.13 Mr. Lysaght, in his evidence, made it clear that knowledge of Mr. Bird’s attitude to the intended transfer was a vital piece of information for the solicitor handling the transaction to be aware of. He confirmed that if Mr. Bird was known to have been in agreement with the proposed transfer, then no claim could later be made by him or his family challenging the validity of the transfer based upon an allegation of undue influence. The corollary of this evidence, however, is that without Mr. Bird’s prior consent, which, in any event, should have been obtained by reason of the provisions of the Family Home Protection Act 1976, that one could not rule out such a claim. For these reasons, the court concludes that the defendants, in circumstances where they were not aware as to whether or not William Bird was agreeable to the transfer, was mandated to protect the interests of the transferee by advising him that as a firm, they could not act on behalf of both himself and Bridie Bird. They were negligent in failing to advise Patrick Darby of the risk of a potential challenge to the transfer if he did not attend another solicitor so that they could independently advise Bridie Bird regarding the transfer, and in the course of so doing, investigate the circumstances in which she was seeking to effect the transfer.
7.14 The court accepts the evidence of Patrick Darby that had he been advised of the risk of a challenge to the transfer in the event of both parties being represented by one solicitor that he would have attended another solicitor so as to secure the validity of the outcome of the transfer. Had he been separately represented, he would then have been in a position to put forward a defence, not only based upon his own evidence, but based also upon the evidence of the solicitor who acted for Bridie Bird. That solicitor would have been in a position to give evidence as to the inquiries they made surrounding her decision to transfer the relevant lands to Patrick Darby and evidence to the effect that they were satisfied that she was not acting under the influence of Patrick Darby when she executed the deed.
7.15 The fact that the independent legal advice, which might have been received by Patrick Darby had he attended an alternative solicitor, might not have added anything further to his own knowledge regarding the transaction is irrelevant. It is the separation of advice to the parties that is important in the context of a potential claim of undue influence. Of prime importance is the actual and apparent independence of the decision made by the person divesting themselves of the relevant property, which, in this case, was Bridie Bird.
7.16 In reaching its conclusions, the court rejects Mr. Lysaght’s evidence that it was reasonable for the defendants to act for both parties, and rejects his evidence that it would have been sufficient for Ms. Hayes to have had a second solicitor within the same office witness the advice given to Mrs. Bird as to the nature of the intended transaction. In relation to this evidence, the court firstly notes that this did not occur as a matter of fact. Mr. Shanley came up to Ms. Hayes’s office, purely for the purposes of witnessing the transfer. Secondly, even if Mr. Shanley had been in attendance whilst Ms. Hayes gave the relevant advice to Bridie Bird, this would not have protected Patrick Darby from a claim that the transfer was procured by undue influence. He could well have orchestrated Bridie Bird’s attendance upon the defendant; he had had several prior dealings with the defendants himself; he had paid for the entire transaction, her husband’s response to the intended transaction was unknown and his agreement to the intended transfer had not been obtained. In relation to this matter, the court has had regard to the implications of Mr. Lysaght’s evidence to the effect that if Mr. Bird was known to have been in agreement with the proposed transfer, then one could fairly assume that no claim could be made by him or his family as to the validity of the transfer based upon an assertion of undue influence.
7.17 Regrettably, the court has had to conclude that in relation to the transfer, the standard of care provided for the parties to the transaction by the defendants fell well short of that which the parties were entitled to expect from a prudent solicitor.
7.18 In reaching its conclusions that the defendants failed in their obligations to both Bridie Bird and Patrick Darby, the court as a matter of fact, rejects Ms. Hayes’s evidence that she was live to the possibility that Bridie Bird might be transferring the land concerned to Patrick Darby whilst under his influence. Her actions are simply not consistent with her having given any consideration to this possibility. She made no note of any investigations or inquiries made of Bridie Bird in relation to the circumstances which had brought her to the point of agreeing to the transfer of the lands to Patrick Darby. Mr. Bird’s attitude to the intended transfer was never ascertained, directly or indirectly, and Ms. Hayes ignored obtaining the appropriate declaration from him pursuant to the Family Home Protection Act 1976. The defendant’s dealings with that declaration can only be described as quite extraordinary. In this regard, the court notes the acceptance by Mrs. Hayes that she sent this declaration form to Patrick Darby and not to Mr. Bird after the transfer had been executed. Mr. Darby was placed in the position of having it completed by Mrs. Bird and her husband. Further, Ms. Hayes told the Court that in these circumstances she was aware that the statutory declaration when completed was unlikely to be sworn, as required, before a Commissioner for Oaths. The document was, therefore, rendered entirely meaningless by the approach adopted by Mrs. Hayes. There was no control over the circumstances in which the consent of Mr. Bird was being sought and this was being left once again to the control of Patrick Darby. The entire approach of Ms. Hayes to the intended transaction manifestly fell short of the standard of care that might have been expected of a prudent solicitor concerned that their client might have been under the undue influence of the proposed transferee of the lands, the subject matter of the intended transaction. Further, Ms. Hayes did not act prudently with regard to the interests of Patrick Darby and by her want of care on his behalf exposed him to a challenge to the validity of the transfer which would not have been brought absent her negligence.
7.19 In the present case, not only did Ms. Hayes not send Mr. Patrick Darby to another solicitor, she did not even meet the required standard as given in evidence by Mr. Lysaght, which was to the effect that a second solicitor from the firm should have been in attendance at the time when the nature of the intended transaction was explained to Mrs. Bird and a note kept regarding the content of that advice.
7.20 On that point, it is to be observed that it is the transferee who stands to lose in the event of there being a challenge based upon undue influence. Hence, the court does not accept Mr. Lysaght’s evidence that it would have been sufficient for Ms. Hayes to have had a second solicitor within the same office advise Mrs. Bird as to the nature of the transaction into which she was entering. This would not have done anything to protect the rights of Mr. Patrick Darby, which were entirely ignored, notwithstanding the fact that he had had several dealings with the defendants, had approached them to act as his solicitors and had paid for the entire transaction.
7.21 In summary, the court finds that Mrs. Bird was not a regular client of the office of Oliver Shanley and Company. The firm kept no memo of the instructions they took from her regarding the proposed transfer and made no or insufficient inquiries of her as to why she was transferring this property to Patrick Darby. They did not get Mr. Bird to complete the declaration pursuant to the Family Home Protection Act 1976, and whilst this may not have been required for the transfer to be valid, its existence would have rendered it impossible for Mr. Bird to make a claim contesting the validity of the transfer. The firm failed to consider the possibility that a claim might be made challenging the transfer based upon an allegation of undue influence on the part of the Darby family. The firm did nothing to protect Mr. Darby from such an allegation and the presumption that would attach to that allegation should the challenge be made. He was not advised to attend a separate solicitor, and by acting for both parties, made it effectively impossible for Mr. Darby to rebut a presumption of undue influence. It would not have been possible for him to establish that Mrs. Bird obtained fully independent advice at the time she entered into the transaction.
Foreseeability
7.22 The court concludes, having regard to the above, that it was entirely foreseeable that a claim of undue influence might arise in relation to the transfer, having regard to the fact that Bridie Bird and Patrick Darby were not separately advised at the time the transfer was executed, particularly as the attitude of William Bird to the proposed transfer had not been ascertained. It was foreseeable, therefore, that proceedings might be instituted to challenge the transfer which, on the balance of probabilities, would not have been brought had the defendants complied with their obligations to the parties.
Whether a presumption of undue influence arose
7.23 In relation of the consequences of any breach of duty of care owed to Patrick Darby, the defendants make the argument that a presumption of undue influence would not have arisen in the case due to the decision in Carroll v. Carroll [1999] 4 I.R. 241, on the basis that the relationship between the parties in the present case is not sufficiently close to raise that presumption, and on the basis that the transaction in the present case was so insignificant that the court would not interfere with it in any event. This court is not convinced, however, that the transaction was a small one. The plaintiff stood to receive a substantial benefit, namely, a large site upon which to build his family home.
7.24 The court concludes that the circumstances surrounding the transfer were such that William Bird, in his proceedings instituted to challenge the validity of the transfer, was entitled to assert that a presumption of undue influence existed. The pleadings demonstrate that this was the position adopted by William Bird’s legal advisers.
7.25 Even if the court is incorrect in its view that the circumstances surrounding the transfer would have permitted William Bird to rely upon a presumption of undue influence, such a fact does not undermine the court’s judgment. Patrick Darby should not have been put in the position of being at risk of having to defend any proceedings based upon an allegation of undue influence, irrespective of whether or not William Bird was entitled to rely upon a presumption of undue influence. The nature of the duty of care owed by the defendants was to guard Patrick Darby against the risk of undue influence proceedings simplicitor being instituted. The fact that there was a possibility of a successful defence to those proceedings is irrelevant. Having been wrongfully put, in what the court believes was a position of significant risk in terms of his home and the potential costs of the action, he was entitled to settle the case. It was clearly foreseeable that if the same solicitors acted for both parties in this case, that a statable case could be made to invalidate the transfer, even if there was a possibility that it could have been successfully defended. Patrick Darby should never have been a defendant to any such proceedings and should not have had to carry any risk of the invalidation of the transfer and was justified in taking steps to buy off that risk.
The evidence of Mr. Grehan
7.26 In coming to its conclusions in relation to the transfer, the court has accepted much of the evidence tendered by Mr. Grehan. The court is mindful of the fact that Mr. Grehan, when giving his evidence, had, to a certain extent, a potential vested interest in the outcome of the within proceedings. It was he and his counsel who advised Patrick Darby to agree to forego €70,000 from the estate of Bridie Bird due to their belief that the validity of the transfer might be impugned in those proceedings. Accordingly, the claim of Patrick Darby for negligence on the part of the defendants in relation to the advices given at the time of the transfer, are, in effect an effort to seek an indemnity in respect of the aforementioned loss. In these circumstances, the court believes that the evidence as to the standard of care to be expected by a prudent solicitor should, in proceedings of this nature, be given by a solicitor who is entirely independent and removed from all of the events being scrutinised by the court. Notwithstanding these reservations, the court, nonetheless, has accepted Mr. Grehan’s evidence in preference to that of Mr. Lysaght as to the standard of care that ought to have been adopted by the defendants when advising Bridie Bird and/or Patrick Darby in relation to the transfer the subject matter of the present claim.
7.27 For the reasons set out above, the court is satisfied that the loss occasioned to Patrick Darby from the challenge to the transfer was a direct and foreseeable consequence of the defendants’ negligence.
‘Hara and Gallagher v ACC Bank Plc
[2011] IEHC 367
Judgment of Mr. Justice Charleton delivered on 7th day of October 2011
1. The plaintiff Joseph O’Hara is a solicitor and the plaintiff Patrick Gallagher is a restaurateur. In 2003 and 2004, the plaintiffs invested substantial sums of borrowed money in a financial product marketed by the defendant ACC Bank called the ‘Solid World Bond’. The defendant bank lent them the necessary funds. The bonds were to mature over of a period of five years and eleven months. Mr. O’Hara invested more than Mr. Gallagher. Both of them individually purchased a bond in the sum of €500,000 in October 2003 and this was called the ‘Solid World Bond 4’. The next year, in March 2004, Mr. O’Hara invested a further €250,000 in another offering from ACC Bank, which was called the ‘Solid World Bond 5’. Borrowing substantial sums over nearly six years resulted in a significant liability in interest payments against the plaintiffs. That has far outstripped any return on the bonds.
2. While the name on the bonds might imply that monies were being placed into securities or share funds which were unshakable, the intervening years have proved that the world financial system is far from solid.
3. This judgment is on a preliminary motion to dismiss the proceedings on two legal grounds. Consequently, I will not now recite the allegations and counter allegations that would be made at trial by the investors and the bank. It suffices to say that Mr. O’Hara and Mr. Gallagher both lost heavily. The investment did not perform as well as they had expected and as they claim that the bank represented it would. As I understand it, while the capital sum was secure on the investment and has been returned, much of this has been dissolved by liability to pay interest on the borrowing.
Issues
4. In the case of Mr. O’Hara, ACC Bank pleads that it has already been determined by the Financial Services Ombudsman that the circumstances of the investment do not give rise to any legal liability on the part of the bank. In the case of Mr. Gallagher, ACC Bank pleads that the commencement of the case is out of time. Mr. Gallagher issued a plenary summons on the 10th June, 2010. Mr. O’Hara issued a plenary summons on the 24th February, 2010. Proceedings were therefore issued in each case more than six years after purchasing the bonds. I will deal with issues as to prior determination and breach of the limitation period in turn.
5. As this is an application to dismiss proceedings on the basis of a preliminary motion, the facts must be approached by the court on the basis of each of the plaintiffs being able to prove their case as set out in the pleadings and the defendant bank being unable to establish an answer.
Prior Determination
6. The relief sought by ACC Bank against Mr. O’Hara is encapsulated in the first paragraph of the notice of motion before the Court. The defendant bank claims:-
“An order dismissing, striking out and/or staying these proceedings on the basis that having regard to the determination of the Financial Services Ombudsman dated 30th November 2009 in respect of a complaint brought by the plaintiff against the defendant, the proceedings cannot properly be pursued”.
7. An issue was first formally raised by Mr. O’Hara with ACC Bank as to his dissatisfaction with his purchase of the bonds through a letter of complaint from O’Donnell Waters Solicitors, dated the 20th February, 2009. That firm wrote to ACC Bank seeking the return of all the interest paid by Mr. O’Hara. The letter claims misconduct by misrepresentation and breach of contract against ACC Bank. The letter asserts that the bank advised Mr. O’Hara that the investment would be made only in what are referred to as ‘blue chip’ companies. Thus, the solicitors claim that there was an express or implied representation that he would not lose any money. The letter complains that a ten day cooling-off period was provided for in the loan facility which funded Mr. O’Hara’s investments. This, however, was not operated because, as it is alleged in the letter, the investor was pressurized into making the borrowing through a representation that the monies had to be drawn down immediately. These assertions made in respect of the ‘Solid World Bond 4’ are repeated, as to the investment the next year in ‘Solid World Bond 5’. The letter complains that neither investment was safe. It claims that the bank had a significant conflict of interest in granting both the loan facility and encouraging the investment. The solicitors claim that Mr. O’Hara was assured by the bank that he would not lose on this investment. Having purchased the bonds, the letter asserts that he was not kept appraised as to where the monies were invested, nor was he given any ongoing information as to the rate of return. The letter proceeds to complain that due to the misinformation given by the bank, the investments were made not in a series of ‘blue chip’ companies, but in a financial derivative type of product which yielded, in consequence, no accumulation of dividend income. Within the context of a plea of conflict of interest, it is alleged in the letter that no information was furnished to Mr. O’Hara, as investor, as to what commissions, if any, the branch manager and the higher officers within the bank received. The letter then states:-
“It is now… abundantly clear, that the bank were in breach of duty and acted in a careless, reckless and wanton manner in advancing to our client, facilities to purchase bonds within their own bank. Indeed, it would appear that the only persons who are not going to suffer any loss now is the bank itself. Hence, there is, and always was, a direct conflict of interest in such an investment and our client should have been given all the necessary information regarding the investment, and been afforded an adequate opportunity to take independent investment advice.”
8. By letter dated the 10th June, 2009, the bank replied. The bank asserts that all appropriate warnings of risk were given to Mr. O’Hara and acknowledged by him. The letter says that it is regrettable that market conditions had deteriorated since the time of the investment but that this does not establish any form of exposure by the bank to liability. Mr. O’Hara, the bank rejoins, was not pressurized into making an investment and indeed completed the necessary waivers as to time. The product brochure for each of the bonds, the bank claims, was given to Mr. O’Hara and this explained the mechanics of how each bond would work. As to the nature of the investment and reports thereon, the bank asserts that progress on the individual shares could be found in the financial pages of a leading daily newspaper. Further, they write that Mr. O’Hara was advised that there were risks associated with the purchase of these bonds and that he was thus enabled to make an informed decision as to whether he wished to proceed or not. It was his choice, the bank states in the letter, to borrow money in order to make this investment. There were risk warnings pertaining to each bond and these were furnished, the bank replies.
9. Under ordinary circumstances, any lawyer reading these letters would regard them as being preliminary to the issue of High Court proceedings. The letter from ACC bank, however, ends by stating the following:-
“I trust that the foregoing satisfactorily explains the position. However, if your client remains dissatisfied, he has the option of referring his complaint to the Financial Services Ombudsman. If so required, this letter may be treated as a final response for this purpose and the matter can be referred to the Financial Services Ombudsman’s Bureau for investigation within fifteen working days from the date of this letter”.
10. The letter then gives detailed instructions as to how to call by telephone, write to, email and make web enquiries about the Financial Services Ombudsman. The letter also says: “a copy of this letter and enclosures has been forwarded to the Financial Services Ombudsman, for his records”.
11. The Financial Services Ombudsman does not have a jurisdiction to receive records. The National Archives may receive records which are of national interest under the National Archives Act 1986, as amended. The Financial Services Ombudsman may perform only those functions conferred by statute. This does not include archiving records of disputes not before it.
12. Instead of commencing litigation before the courts, Mr. O’Hara progressed his issues with the bank by obtaining and filling out a form making a complaint to the Financial Services Ombudsman. It is a very sparsely detailed form as originally furnished. He filled out the required details. His letter of complaint to the bank was also appended to that document. In effect, this is the complaint made. The matter was investigated by the Deputy Financial Services Ombudsman. That investigation has the appearance of being competent. Whether the result of it was correct or not has nothing to do with these proceedings, which are separate and not an appeal from the ruling. The adjudication of the Financial Services Ombudsman was made on the basis of the quoted letters, which were supplemented by an exchange of information whereby questions were asked of each side and responded to. Mr. O’Hara’s response was made by his solicitors. ACC Bank’s response was made by their “Ombudsman Liaison Officer”. On the 30th November, 2009, the acting Deputy Financial Services Ombudsman made a written ruling. This sets out the background to the complaint, and the case made by each side. It concludes with the following finding:-
“This case concerns whether the complainant was mis-sold and/or aggressively sold, the Solid World Bonds in October 2003 and March 2004. The centre of the complainant’s case is that it was represented to him that the bonds would be invested directly in blue chip companies and that he would benefit from any dividends as declared by these companies. I have reviewed the evidence before me and in particular I have looked at the brochures provided for each of the bonds. I am satisfied that it was clearly set out in the brochures that the nature of the bond was a tracker bond investment. I am also satisfied that the complainant was aware, or at least should have been aware, from the documents that he signed that the bank did not either directly invest in the shares or the bond did not benefit directly from dividends paid by those companies. Therefore I find that there is no evidence that the products were mis-sold or that there was misrepresentation made in respect of the nature of these products.
In respect of whether the complainant was subjected to unfair sales techniques by pressurising him to draw down the loan, I find that there is not enough evidence to support this. It is clear from the documentation that the complainant, a solicitor, waived his right to a cooling off period on the loan. It was not a pre-requisite to investing in the bonds that a loan should be obtained from the bank. Rather, this is the option that was utilised by the complainant to avail of the investment opportunity. Furthermore I believe the fact that the short time frame in drawing down the loan and investing in a bond was repeated in 2004 after the experience of 2003 is corroborative that the complainant was not concerned about the selling techniques or the pressure put on him. It is only now, six years after the event, that the issue of mis-selling has been raised by the complainant. The bonds have not performed as the complainant would have liked but he cannot have recourse to the bank for the costs of his investment.”
13. This adjudication was legally binding on the parties subject only to an appeal to the High Court within twenty-one calendar days under O.84 C of the Rules of the Superior Courts (Statutory Applications and Appeals) 2007. The appeal involved is not by way of re-hearing, where the parties are heard afresh in oral testimony and are free to call new or different evidence. This is what happens, for instance, in civil appeals from the Circuit Court to the High Court or from the District Court to the Circuit Court. In contrast, under the relevant legislation, the position of the parties is frozen with the record of the proceedings before the Financial Services Ombudsman. Any appeal by either party is by way of originating notice of motion whereby the High Court is invited by the appellant to re-examine the papers and whatever record there may be of proceedings before the Financial Services Ombudsman. The papers are proved by affidavit evidence and any defect in the adjudication is alleged by way of affidavit also. An appellant is not limited to the scheme for judicial review of administrative and judicial decisions under O.84 of the Rules of the Superior Courts. The appeal is somewhat broader. Before the High Court, the appellant must establish as a probability that, taking the adjudicative process as whole, the decision reached was vitiated by a serious and significant error or a series of errors; see p. 9 of the judgment of Finnegan P. in Ulster Bank Investment Funds Limited v. McCarren [2006] IEHC 323, (Unreported, High Court, Finnegan P., 1st November, 2006). The nature of the powers and responsibilities of the Financial Services Ombudsman requires closer analysis in the context of the claim that his adjudication bars proceedings before the High Court on the same subject.
The Financial Services Ombudsman
14. The function and powers of the Financial Services Ombudsman were usefully set out by McMahon J. in Square Capital Limited v. Financial Services Ombudsman [2010] 2 IR 514 at paras. 8 to 18. Since that analysis is both comprehensive in what it deals with and is significant for what follows, I now quote it extensively:-
“Section 57BB of the Act of 1942 [Central Bank Act 1942], as inserted by s. 16 of the Act of 2004 [Central Bank and Financial Services Authority of Ireland Act 2004] sets up the Financial Services Ombudsman as an independent officer:-
“(a)(i) to investigate, mediate and adjudicate complaints made in accordance with this Part [of the Act] about the conduct of regulated financial service providers involving the provision of a financial service, an offer to provide such a service or a failure or refusal to provide such a service…(c) to enable such complaints to be dealt with in an informal and expeditious manner…”
Section 57BK, states that the principal function of the Financial Services Ombudsman is to deal with complaints by mediation and, where necessary, by investigation and adjudication. Subsection 4 of the same section states that the Ombudsman “when dealing with a particular complaint, is required to act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without regard to technicality or legal form.”
Section 57BX makes provision for a complaint:-
“(1) An eligible consumer may complain to the Financial Services Ombudsman about the conduct of a regulated financial service provider involving –
(a) the provision of a financial service by the financial service provider, or
(b) an offer by the financial service provider to provide such a service, or
(c) a failure by the financial service provider to provide a particular financial service that has been requested.
(2) Except in the case of a complaint that may be within the jurisdiction of the Pensions Ombudsman, the Financial Services Ombudsman has sole responsibility for deciding whether or not a complaint is within that Ombudsman’s jurisdiction.”
Once the Financial Services Ombudsman is satisfied that the complaint is within his jurisdiction, he is obliged to investigate the complaint.
With regard to the adjudication of complaints and the remedies available to the Ombudsman, s. 57CI is the relevant provision and I reproduce the relevant portion here:-
“(1) On completing an investigation of a complaint that has not been settled or withdrawn, the Financial Services Ombudsman shall make a finding in writing that the complaint –
(a) is substantiated, or
(b) is not substantiated, or
(c) is partly substantiated in one or more specified respects but not in others.
(2) A complaint may be found to be substantiated or partly substantiated only on one or more of the following grounds:
(a) the conduct complained of was contrary to law;
(b) the conduct complained of was unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;
(c) although the conduct complained of was in accordance with a law or an established practice or regulatory standard, the law, practice or standard is, or may be, unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;
(d) the conduct complained of was based wholly or partly on an improper motive, an irrelevant ground or an irrelevant consideration;
(e) the conduct complained of was based wholly or partly on a mistake of law or fact;
(f) an explanation for the conduct complained of was not given when it should have been given;
(g) the conduct complained of was otherwise improper.
(3) The Financial Services Ombudsman shall include in a finding—
(a) reasons for the finding, and
(b) any direction given under subsection (4) as a result of the finding.
(4) If a complaint is found to be wholly or partly substantiated, the Financial Services Ombudsman may direct the financial service provider to do one or more of the following:
(a) to review, rectify, mitigate or change the conduct complained of or its consequences;
(b) to provide reasons or explanations for that conduct;
(c) to change a practice relating to that conduct;
(d) to pay an amount of compensation to the complainant for any loss, expense or inconvenience sustained by the complainant as a result of the conduct complained of;
(e) to take any other lawful action.”
It is clear from the above that the functions of the Ombudsman are different from that of the ordinary courts of the land in that, not only is he able to investigate and adjudicate, but he has also power to mediate. Moreover, complaints have to be dealt with in an informal and expeditious manner and to this end he “is required to act in an informal manner and according to equity, good conscious and the substantial merits of the complaint without regard to technicality or legal form”.
Moreover, a complaint may be upheld even if the conduct complained of was in accordance with a law or an established practice, if it is unreasonable and unjust or oppressive; or if an explanation for the conduct complained of was not given when it should have been given; or where the conduct complained of was otherwise improper. Finally, by way of remedy, the Ombudsman may, in appropriate circumstances, direct the financial service provider to review, rectify, mitigate or change the conduct complained of or change a practice relating to that conduct, etc. These are remedies which might not always be available to a court of law.
From reading these statutory provisions and from a consideration of the functions, powers and flexible procedures mandated by the Act of 2004, it is obvious that the office of Ombudsman is different from an ordinary court discharging its lawful functions. In this connection, I agree with the views advanced by MacMenamin J. in Hayes v. Financial Services Ombudsman (Unreported, High Court, MacMenamin J., 3rd November, 2008) where he described the Ombudsman’s office in the following language at p. 14, para. 33:-
“What has been established, therefore, is an informal, expeditious and independent mechanism for the resolution of complaints. The respondent seeks to resolve issues affecting consumers. He is not engaged in resolving a contract law dispute in the manner in which a court would engage with the issue.
The function performed by the respondent is, therefore, different to that performed by the courts. He is enjoined not to have regard to technicality or legal form. He resolves disputes using criteria which would not usually be used by the courts, such as whether the conduct complained of was unreasonable simpliciter; or whether an explanation for the conduct was not given when it should have been; or whether, although the conduct was in accordance with a law, it is unreasonable, or is otherwise improper (see s. 57CI(2)). He can also make orders of a type that a court would not normally be able to make, such as directing a financial services provider to change its practices in the future. Thus, he possesses a type of supervisory jurisdiction not normally vested in court. These observations are to be borne in mind when considering whether the decision made by the respondent was validly made within jurisdiction.”
The informal procedures of the Ombudsman were also noted by Kelly J. in Murray v. Trustees and Administrators of the Irish Airlines (General Employees) Superannuation Scheme [2007] IEHC 27, (Unreported, High Court, Kelly J., 25th January, 2007), where he observed at p. 21 that:-
“…the procedures of the Ombudsman are undoubtedly less formal than those of a court…”
The Concise Oxford Dictionary (11th ed., 2006) at p. 729 defines “informal” as “relaxed and unofficial”.
For these reasons it is important to fully appreciate the role of the Ombudsman when a court such as this is considering an appeal from his decision. Clearly, an appeal to this Court from the Ombudsman’s decision is not a full rehearing of the case where the court looks afresh at all material and comes to its own conclusion as to what it would have done in the circumstances. The appeal here, while having some of the characteristics of the traditional judicial review, including some deferential recognition for the expertise of the Ombudsman, will also have to bear in mind the nature and the functions of the Financial Services Ombudsman as laid down by the Oireachtas.”
15. It is also to be noted that the jurisdiction of the Financial Services Ombudsman extends to matters of dispute in contract and tort that touch on the provision of financial services to consumers. As well as having a jurisdiction to find that a complaint is substantiated by reason of any conduct complained of being contrary to law, as a breach of contract or as a tort such as misrepresentation, a much wider jurisdiction exists whereby a remedy may be given. That jurisdiction extends far beyond that exercised by a court of law. It extends to matters which are not civil wrongs, save within the terms of the statute and which are the subject of a remedy only under the statutory jurisdiction exercise by the Financial Services Ombudsman. As will have been noted from the passage quoted, remedies in compensation, rectification, the changing of a practice, or the providing of reasons or explanations for behaviour by a financial service provider, may be founded, in addition to what is unlawful in contract or tort, on such matters as the breach of an established practice, on discrimination, on conduct based on an improper motive, on conduct based on a mistake of law, on a failure to explain, or on conduct that is improper. It may be that the various remedies available under the Central Bank Act 1942 as so amended are not universally applicable to each of the wrongs set out. It would be difficult, for instance, to imagine an amount of compensation being awarded for improper conduct where there is no financial loss. It would equally be hard to imagine that a requirement to change a practice always necessitates compensation. On the other hand, the rectification of a financial transaction through the parties being put back into the position which they were in immediately prior to that transaction, could involve a finding that there was an established practice that had not been followed in that instance, or that conduct was otherwise improper. This might result, in many complaints, in a substantial payment back to an investor of what he or she had paid in the context of what the Act declares to be a remedy for what is called improper conduct. It follows, therefore, that whereas the courts established under the Constitution exercise a jurisdiction in law that is limited to remedies based on actions at common law and under statute, those complaining to the Financial Services Ombudsman have not only the benefit of those remedies, but also a legal jurisdiction exercisable only within the context of a complaint to the Financial Services Ombudsman for listed wrongs which can be the subject of the same remedies as a court and, in some instances, wider than those exercisable by a court. Those remedies, outside traditional legal remedies justiciable before a court, are only available through an application to the Financial Services Ombudsman. Apart from an appeal to the High Court from a finding of the Financial Services Ombudsman, the new jurisdiction created by the Act, and confined to the Financial Services Ombudsman, is not exercisable by a court. Instead, claims of improper conduct, discrimination and the like are capable of determination and remedy only in the context of a complaint made to the Financial Services Ombudsman. The statutory scheme is not to be construed as defining new legal wrongs that are capable of being pleaded before a court of law since the wrongs and the remedy in respect of them is created for adjudication only by that specialised statutory body; Doherty v. South Dublin County Council (No. 2) [2007] 2 IR 696.
16. Under s. 57BX(3)(a) of the Central Bank Act 1942, as inserted by s. 16 of the Central Bank and Financial Services Authority of Ireland Act 2004:-
“A consumer is not entitled to make a complaint [to the Financial Services Ombudsman] if the conduct complained of (a) is, or has been, the subject of legal proceedings…”
Under subs. (3) A an exception is made to this general rule that a consumer who has issued legal proceedings is barred from making a compliant to the Financial Services Ombudsman. Where, however, that consumer is a defendant in legal proceedings taken by a financial service provider, and has perhaps made a counterclaim or intends to counterclaim, then the Financial Services Ombudsman may still accept a complaint provided that the proceedings were commenced in order to prevent the making of the compliant, or to frustrate or delay its investigation. In hearing any complaint, the Financial Services Ombudsman is conferred by s. 57CE with, in essence, the same powers as a judge of the High Court hearing civil proceedings. Whereas the power to compel the production of documents is directed under that section only against the financial service provider, any complainant who would fail to comply with a request to produce documents would be unwise in terms of the enhancement of their credibility. Under s. 57CI(9), as already noted, a finding made on a complaint to the Financial Services Ombudsman is binding on both parties. Under s. 57CL, such a finding may be appealed to the High Court, the relevant rule of the Rules of the Superior Courts, as I have stated, providing for a twenty-one day period. If during the course of adjudication on a compliant a question of law arises, then, under s. 57CK of the Act, this may be referred by the Financial Services Ombudsman to the High Court. As the Financial Services Ombudsman has repeatedly emphasised in litigation, investigations are conducted informally; and this is what the statutory scheme aims for. Oral hearings are rarely held and, even more rarely, has the cross-examination of any person asserting any fact been permitted. The Financial Services Ombudsman, it thus appears, has jurisdiction to investigate and determine in an informal and expeditious manner any complaint ranging from rudeness by a bank official in the cashing of a cheque, causing no loss to the payee, to large commercial transactions between an investor and a financial service provider involving millions of euros. This is the scheme that has been set up by the Oireachtas. Once a determination is made by the Financial Services Ombudsman, as has been noted, any appeal is very limited. ACC Bank argues that once a consumer complains of a breach by a financial service provider of good conduct, as defined under the Act, the result is binding. If a complainant has commenced legal proceedings, they may not seek a remedy from the Financial Services Ombudsman. If a financial services provider has commenced what might be termed as vexatious proceedings against a complainant, then these may be overstepped by the Financial Services Ombudsman. Fundamentally, the argument is that once a complainant initiates the process of investigation and adjudication before the Financial Services Ombudsman, such complainant is thereafter locked out of any legal remedy before the courts on the same subject matter. The Financial Services Ombudsman is not empowered to decline jurisdiction except where there are existing legal proceedings. There is no entitlement under the Act for the Financial Services Ombudsman to say: this is more suitable for the High Court.
17. Mr. O’Hara asserts that, notwithstanding the fact that he did not take an appeal from the decision of the Financial Services Ombudsman, he is not bound by that finding. This is because, it is argued, the Financial Services Ombudsman does not constitute a judicial tribunal. He asserts, in addition, that if the determination against him was made by a judicial tribunal that it does not give rise to issue estoppel; and that issue estoppel can only arise in the context of an abuse of process which, it is claimed, is not embraced by the nature of these legal proceedings.
The Pleadings
18. My analysis of the pleadings in this action can be concise. I have read the statement of claim and defence and I have listened to oral submissions. The essence of the claim being made in this case before the High Court is the same as that made before the Financial Services Ombudsman. Possibly an additional claim might be made in the context of a breach of fiduciary duty as against the bank. That issue in the pleadings, it seems to me, is already encapsulated within the facts asserted against the bank in the complaint to the Financial Services Ombudsman. Any enhancement of the complaint made is entirely subsidiary to the foundation of wrongs alleged before the Financial Services Ombudsman. The real differences between the complaint to the Financial Services Ombudsman and this legal proceeding, should it be allowed to continue, are that expert evidence will be called in support of the plaintiff’s claim, together with the oral evidence of Mr. O’Hara and any other relevant witness who will seek to establish the misrepresentations which he claims were made to him and that this entire process may be subject to contradictory evidence from the bank of the same kind. In other words, there will be a court case on the subject matter of the complaint to the Financial Services Ombudsman and not just the informal adjudication conducted by that statutory body.
Issue Estoppel
19. Issue estoppel derives from the principle that the courts should regulate their own process by preventing the abuse of litigation. An issue finally determined by a judicial tribunal cannot be re-litigated by the parties to an action. With the introduction into common law systems of quasi-judicial tribunals, that rule has been extended outside the ambit of a decision made by a judge and into decisions in the context of complaints before bodies which have a special jurisdiction conferred by statute. Having read the relevant case law, I am satisfied that the trend of decisions in this jurisdiction, and in the neighbouring kingdom, is in favour of applying the rules of issue estoppel to quasi-judicial tribunals, even though the jurisdiction which they exercise may be specific to them and not necessarily exercisable by a court, save in the context of any mechanism of an appeal specifically conferred by statute. In Murray v. The Trustees and Administrators of the Irish Airlines, (General Employees) Superannuation Scheme [2007] IEHC 27, (Unreported, High Court, Kelly J., 25th January, 2007), the plaintiff had made a complaint before the Pensions Ombudsman as to the final amount that was properly to be determined as his pension. The Pensions Ombudsman held against him. Before stating that process before the Pensions Ombudsman, the options open to the plaintiff, on believing that the pension awarded to him on retirement from his job was lower than it should have been, were to accept what he was given, to issue court proceedings for a declaration as to the true amount, or to complain to the Pensions Ombudsman under Part XI of the Pensions Act 1990, as inserted by s. 5 of the Pensions (Amendment) Act 2002. He made a complaint to the Pensions Ombudsman and the ruling went against him. He then appealed that ruling to the High Court. The statutory scheme for appeal encompasses the same limitation of review on appeal as with appeals from the Financial Services Ombudsman. In appealing he also sought on his notice of appeal a declaration from the High Court as to his pension entitlement. The effect of this would be to litigate the issue on the appeal by way of oral evidence instead of confining the appeal to a review on the papers before the Pensions Ombudsman. Kelly J. held that, having made a complaint to the Pensions Ombudsman and having lost, a complainant could appeal on the basis that the determination was vitiated by a serious error or series of errors, the ordinary test for such a statutory appeal, but that he could not issue an appeal seeking declaratory relief equivalent to the issue of a plenary summons apparently entitling him to reopen the matter and call evidence. Instead, his appeal would be limited to an analysis of any wrong alleged in the adjudication of his complaint. Kelly J. was satisfied that the Pensions Act 1990 had created a specific jurisdiction for the determination of issues on pension entitlements. This finding was significant because there was nothing within the provisions of the legislation from which it could be inferred that the legislature intended to exclude the principles of res judicata in respect of such determinations. Kelly J. stated at p. 16:-
“In my view it would be contrary to the policy of the legislature as gleaned from the relevant statutory provisions that it should be open to a party to avail himself of the statutory machinery but when dissatisfied with the result seek, not merely to exercise the statutory right of appeal, but also to commence in this court proceedings of a substantive nature which seek to, in effect, setaside the determination of the Ombudsman.
A party, such as Mr. Murray, who is aggrieved with the determination of the trustees’ may, at his option, avail himself of the services of the Ombudsman or bring proceedings in an appropriate court for declaratory or other relief. He may not do the latter when in receipt of an adverse determination from the Ombudsman. That is because the determination of the Ombudsman is res judicata of the dispute in question, subject only to the right of appeal”.
20. The plaintiff claims that the prior adjudication by the Financial Services Ombudsman does not bar him from legal proceedings because the claim that he seeks to bring before the High Court in separate proceedings is different. It is contended, on behalf of the plaintiff, that some of the pleas made in these proceedings exceed in scope what was put before the Financial Services Ombudsman. It seems to me that even if this contention were correct, it is not necessarily always an answer to the plea of issue estoppel. The subject matter of the claim in these proceedings, misrepresentation leading to the purchase of bonds from a bank that also supplied the finance, is in essence the same. Additional claims founded in that subject could and should have been included in the complaint to the Financial Services Ombudsman. The principle of issue estoppel through abuse of process embraces not only issues previously tried by a judicial or quasi-judicial tribunal but issues which could and should have been included for adjudication in the earlier determination. In Carroll v. Ryan [2003] 1 IR 309, the Supreme Court was concerned with a series of judicial review challenges to decisions of the Law Society Disciplinary Committee. A multiplicity of proceedings led, eventually, to a plea in new proceedings which could have been raised earlier. Hardiman J. at p. 317 extensively analysed the rule in the context of current and traditional authority and I quote the relevant paragraphs:-
“28. There is a well established rule of law whereby a litigant may not make the same contention, in legal proceedings, which might have been but was not brought forward in previous litigation. This rule is often traced to the judgment of Wigram V.C. in Henderson v. Henderson [1843] 3 Hare 100. The learned Vice-Chancellor spoke as follows at pp. 114 and 115:-
“…I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward, as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties exercising reasonable diligence might have brought forward at the time”.
29. A number of decisions affirming this approach were opened to us. Two of these were Irish cases. In Russell v. Waterford and Limerick Railway Company [1885] 16 L.R. I.R. 314, Dowse B. said that:-
“Where the cause of action is the same, and the plaintiff had an opportunity in the former suit of recovering that which he seeks to recover in the second, the former recovery is a bar to the latter action”.
30. Similarly in Cox v. Dublin City Distillery (No. 2) [1915] 1 I.R. 345, Palles C.B. held at p. 372, that a party to a previous litigation was bound “not only (by) any defences which they did raise in that suit, but also any defence which they might have raised, but did not raise therein”. In the judgment of Kelly J. in this case, he also referred to Barrow v. Bankside [1996] 1 W.L.R. 257 and to Johnson v. Gore Wood & Co. [2002] 2 AC 1. The first of these cases speaks in terms of issues that might “sensibly” have been brought forward in previous litigation and also suggests that the rule of what is sometimes referred to as “estoppel by omission” is not in fact based on res judicata in the strict sense but it is an independent rule of public policy. Lord Bingham held that the court must take the need for efficiency in the conduct of litigation into account.
31. In Woodhouse v. Consigna [2002] 1 WLR 2558, Brooke L.J. referred to this public interest and continued at p. 2575:-
“But at least as important is the general need, in the interests of justice, to protect the respondents to successive applications in such circumstances from oppression. The rationale for the rule in Henderson v. Henderson (1843) 3 Hare 100 that, in the absence of special circumstances, parties should bring their whole case before the court so that all aspects of it may be decided (subject to appeal) once and for all is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever, and that a defendant should not be oppressed by successive suits where one would do….”
32. This seems quite consistent with what Lord Bingham said in Johnson v. Gore Wood & Co. [2002] 2 AC 1, at p. 31 when he urged that the court should arrive at:-
“…a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all of the facts of the case, focussing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue that could have been raised before”.”
21. Issue estoppel, as the basis for the rule that a court may stop an abuse of proceedings before it, prevents the raising of new issues that could and should have been pleaded and determined in earlier proceedings. It is not, however, to be blindly applied. The rule proceeds from the protection by the courts of the integrity of court proceedings and, in consequence, depends upon a finding of abuse. This does not necessarily mean malicious conduct, but extends to conduct which is misinformed or incorrect, but which has the effect of creating a multiplicity of court proceedings over the same issue to the detriment of the proper disposal of litigation. The absence of an excuse for not raising an issue in earlier proceedings, in this context, may be important. On the one hand, it is to be noted that, for whatever reason, ACC Bank decided to provoke a complaint to the Financial Services Ombudsman, as opposed to awaiting, as would be the usual course, the issue of a plenary summons. Balanced against that, on the other hand, is the fact that Mr. O’Hara is a distinguished solicitor. In discussing the application of the rule, Hardiman J. referred to repeated actions concerning the same subject matter as potentially arising whether or not an earlier set of proceedings was pursued to judgment or settlement; see p. 319. The analysis of the discretionary nature of the applicability of the rule encompasses a need to take into account the public and private interests involved within the context of the assertion of wrongs in any later cases; thus analysing whether a party, through the issue of later proceedings raising an issue which could have been determined in earlier proceedings, is misusing the process of litigation before the courts.
22. Hardiman J. ruled that issues, which properly belong to earlier litigation, and which might sensibly have been brought forward there, can bar their later prosecution. This was again emphasised by the Supreme Court in A.A. v. Medical Council [2003] 4 IR 302. In that case a doctor had been accused of inappropriate gynaecologic examinations of female medical patients who were awaiting minor procedures that were unrelated to any reproductive function. An enquiry was ordered before the fitness to practice committee under the Medical Practitioners Act 1978, as amended. In addition, the doctor was charged with sexual assault before the criminal courts. He initiated a judicial review before the High Court seeking to prohibit the enquiry on the ground of double jeopardy. When this failed, some years later he initiated a new judicial review claiming a new point; that the unavailability of legal aid before the fitness to practice committee of the Medical Council should restrain the holding of an enquiry. The Supreme Court disagreed with this course of the use of access to the courts. Hardiman J. emphasised that the new claim properly belonged to the earlier litigation and that parties, exercising reasonable diligence, which could sensibly bring such claims forward in earlier litigation, ought to do so.
23. In Arklow Holidays Limited v. An Bord Pleanála [2011] IESC 29, (Unreported, Supreme Court, 21st July, 2011) the applicability of the rule was considered in the context of a multiplicity of judicial reviews from the decision of An Bord Pleanála where earlier proceedings might have raised same point. The decision emphasises that estoppel by representation cannot confer jurisdiction on a planning authority outside the terms of the borders set on its function through legislation. The remarks made on issue estoppel, however, are of wider application and require reference in this context. At pp. 27 to 30 Finnegan P. stated:-
“In this jurisdiction Henderson v. Henderson has been applied in the public law area. It is understandable that it should be. It is not just individuals who must be protected from a multiplicity of suits: why not public bodies, local authorities and Ministers of State all of whom are funded by the taxpayer? The three elements of the rationale for the rule apply equally to public law litigation. Henderson v. Henderson estoppel in Australia (there called Anshun estoppel: Port of Melbourne Authority v. Anshun Pty Ltd [1981] 147 C.L.R. 589) applies in the public law area. In Stewart v. Sanderson & Another [2000] 175 A.L.R. 681 the applicant sought to extend the principle that estoppel by representation does not apply to administrative decisions by analogy to Anshun estoppel. The court relying on the different origins of estoppel by representation and Anshun estoppel refused to extend the principle. In the course of its judgment the court said:-
“The applicant thus sought to extend to the doctrine of Anshun estoppel, by analogy, the well established principle that estoppel by representation does not apply to administrative decisions. Formosa v. Secretary, Department of Social Security [1988] 46 F.C.R. 117 at 135 81 A.L.R. 687, and Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic [1990] 21 F.C.R. 193 -92 A.L.R. 93 were relied upon. However as appears from the discussion below the basis of the Anshun principle is quite different from the foundation of estoppel by representation, which lies in equitable principle. One obvious difference for example is that estoppel by representation seeks to provide justice between the parties whereas the justification for Anshun estoppel, as discussed above is broader. No principle or authority was cited to indicate that the capacity of a court to prevent an abuse of its processes and to safeguard the orderly administration of justice ought to be blunted merely because the supposed right which is sought to be vindicated before the court is derived from statute rather than the common law.”
There are public policy considerations for the application of the rule in Henderson v. Henderson in the area of public law which I have already identified. The protection not just of individuals but also public bodies from a vexatious multiplication of suits and the desirability that there should be finality to litigation are two. Efficient and economic use of court time is a third. Relevant in the present case, however, is that it has long been a concern of the legislature that infrastructural projects can be greatly delayed by the planning and related processes and litigation arising therefrom. This has resulted in legislative attempts to ensure that challenges to such projects are dealt with promptly by the courts: see Planning and Development Act 2000 section 50 as amended by the Acts of 2002, 2006 and 2010. The policy of the legislature would be undermined if issues which could be raised at the first stage of the two-stage process were not in fact raised but were litigated piecemeal thereafter. Thus the possibility exists in a two-stage process of a challenge by way of judicial review to the decision at the end of the first stage being followed by appeal to the Supreme Court: this in turn if unsuccessful may be followed by the ordinary planning appeal process with further challenges in the High Court and the Supreme Court to the same. In A.A. v. The Medical Council Hardiman J. at p.318 said of the Medical Council:-
“The respondent is discharging a public function in the hearing and determination of allegations of professional misconduct as well as observing the profession’s interest in promoting high professional standards and public confidence. The allegations in question here relate to a time some six and a half years ago and it is manifestly in the interest of the applicant, the respondent, the profession, the complainants and the public generally that these be resolved as soon as possible and without unnecessary or unreasonable delay.””
Result on the Prior Determination Motion
24. I can find no special circumstances whereby the application of estoppel through an abuse of process of the courts in raising the same subject matter in a complaint to a statutory body and in separate proceedings should not apply in this instance. To all intents and purposes, it is clear that the allegations made in the complaint before the Financial Services Ombudsman are the same as those which are sought to be litigated in these proceedings. The nature of the jurisdiction conferred on the Financial Services Ombudsman by the Oireachtas cannot be ignored. It would be contrary to the statutory scheme and it would also be unfair for parties to a complaint before the Financial Services Ombudsman to be later subjected to very similar litigation. The legislation has made any determination by the Financial Services Ombudsman subject only to an appeal. Absent a special reason of sufficient impact to nullify any potential abuse of process, it would be wrong for this Court to say that complaint could be re-litigated all over again. Such a finding would undermine the will of the Oireachtas. No court is entitled to so decide, save in circumstances of unconstitutionality. It matters that Mr. O’Hara is a solicitor. Even, however, were he not, it is very hard to see how this Court could exercise any discretion it has against making a finding of abuse through multiple proceedings. Even a straightforward reading of the terms of the Act would indicate that the jurisdiction of the courts established under the Constitution becomes circumscribed once a complaint is made to the Financial Services Ombudsman; just as the prior initiation of court proceedings by a financial service provider will, save in the most exceptional circumstances, remove the jurisdiction of the Financial Services Ombudsman. Even had Mr. O’Hara not been a solicitor I would find it hard to escape these conclusions. The only countervailing factor is the apparent enthusiasm with which the jurisdiction of the Financial Services Ombudsman was dangled before Mr. O’Hara in correspondence. This is not now the place to plumb the motives behind that action. Even inferring that this reference was an inducement, Mr. O’Hara could have conferred with his legal advisors, or could have read the Act himself, and made a completely informed decision as to whether a complaint before the Financial Services Ombudsman or the initiation of proceedings by way of a plenary summons would best suit the merits of the grievance he felt. He cannot in law do both. Nonetheless, that issue may impact on the costs of this motion, as may the general lack of prudence by banks at that time. I am therefore obliged to find in favour of ACC Bank on the issue of prior adjudication.
Limitation of Action
25. As noted above, both plaintiffs initiated proceedings against ACC Bank more than six years after they had entered into the initial investment by the purchase in October 2003 of the ‘Solid World Bond 4’. ACC Bank seeks a declaration that the proceedings of Mr Gallagher are statute-barred by virtue of the Statute of Limitations 1957, as amended. In each set of proceedings the claim made by the plaintiff against the bank is in contract and in tort: in essence, a breach of contract based on various alleged acts of mis-performance or non-performance; and a claim in tort based on misrepresentation or negligent advice. In contract, the limitation period is six years under s. 11(1)(a) of the Statute of Limitations 1957. A cause of action in contract accrues upon the breach of the agreement in question and is not dependent upon the occurrence of damage. Negligent misrepresentation may found an action in contract but, independently, it is also a tort. An action in tort depends upon damage resulting except when a tort actionable without proof of damage; the old distinction between actions in trespass and actions on the case. Ordinarily, on the plaintiff suffering damage, a cause of action in tort accrues. This may be much later than the tortious wrong out of which that damage sprang. The limitation period for torts under s. 11(2)(a) for the Statute of Limitations is also six years. In the very helpful textbook by Canny, Limitation of Actions (Roundhall: Dublin, 2010), the learned author groups the different types of tort into three categories by reference to the time at which these accrue as a cause of action. I quote para. 7-01:-
“(i) Torts actionable per se (such as defamation, false imprisonment and trespass): the cause of action accrues upon the commission of the wrong;
(ii) Continuing torts (such as a continuing trespass to land or continuing breach of statutory duty): a fresh cause of action accrues every day, but the right of action is restricted to that part of the wrong committed in the past six years; and
(iii) Single torts requiring proof of damage (such as negligence, nuisance or misfeasance in public office): the cause of action accrues upon the plaintiff suffering damage.”
26. I accept this analysis. This claim fits within the third category. The traditional definition of the accrual of a cause of action was given by Lord Esher M.R. in Read v. Brown (1889) 22 Q.B.D. 128 at 131 in which he describes it as the occurrence of:-
“…every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.”
27. To establish his claim as a plaintiff, Mr Gallagher must prove the tort of negligent misrepresentation and the occurrence of damage as a result. The argument of ACC Bank is that every investor who bought the ‘Solid World Bond 4’ or ‘5’ suffered damage immediately upon and by reason of the misrepresentation inducing them to make that purchase. Since this negligent misstatement occurred six years prior to the issue of these plenary proceedings, the bank contends that the claim is statute-barred.
28. Putting a legal limitation on when an action may be commenced introduces certainty into the management of human affairs. People know thereby when an event is put behind them, when they are too late to sue and when they may let lapse any insurance cover they may have. Any time period that is set, however well balanced it may be, will always leave the potential that an apparently valid claim may be barred by the passing of time. In the final analysis, any limitation on the commencement of a cause of action is arbitrary. Instances will inevitably occur where apparently good reasons will seem to militate against the plaintiff commencing an action with the limitation period. A plaintiff may be unaware that damage has occurred, may believe that the damage is due to a different cause than the tort later complained of, or may merely suspect, without truly realising, the origin of the problem. Since the Supreme Court decision in Hegarty v. O’Loughran [1990] 1 IR 148, it is clear that the accrual of a cause of action in tort does not occur from the date when the plaintiff discovers that he or she has been damaged. Accrual is complete from the date when the damage occurred. All actions in tort, causing damage to the human body by way of personal injury and damage to property and damage occasioning economic loss, used to be subject to the same strict rule as to limitation. In what has often later been argued as an apparent mitigation of the rigidity of that rule, Finlay C.J. at p. 156 described the limitation period as commencing when provable personal injury, the subject of the claim in that case, capable of attracting monetary compensation, occurred. Griffin J. described the occurrence of damage as the date at which the plaintiff was capable of establishing that damage in evidence, even if unaware at that time. McCarthy J. noted at p. 161 that there may be a difference between the time when damage occurs and when it manifests itself. Subsequent cases have made it clear that a cause of action in tort accrues when the damage resulting from the wrong became manifest; Irish Equine Foundation Ltd. v. Robinson [1999] 2 IR 442. When damage is manifest can often be an earlier date to when damage is discovered. The manifestation of damage test does not imply that the plaintiff must necessarily have known about it. That rule can cause hardship in some cases. The legislature, it seems, thought that prospect particularly strong in instances where a person is made ill by a tortious action but where the reaction of human physiology has delayed the signs for several years. Consequently, a discoverability test has been introduced to mitigate the potential harshness of the six year limitation period in personal injury actions. This rule, applicable only to personal injury cases, requires a separate analysis as to when the damage occurred and as to when the plaintiff realised that there had been damage, as opposed to that damage being merely manifest; see M. v. The Health Service Executive, [2011] IEHC 339, (Unreported, High Court, Charleton J., 20th July, 2011), at paras. 31 to 40. Discoverability is not the rule for torts causing physical damage or economic loss as there has been no legislative intervention in this area. Once the damage is manifest the cause of action accrues. The expression in case law of the rule in those terms, of when damage is manifest, is not to be contorted into a discoverability test; Murphy v. McInerney Construction Limited [2008] IEHC 323, (Unreported, High Court, Dunne J., 22nd October, 2008).
29. Where wrongs lead to a physical manifestation of damage, as with cracking in a building, the scope for argument as to the date on which this occurred will be limited. Where, as in this case, the loss resulting from the tortious action is economic, the scope for debate as to when this was manifest is considerably widened. The resolution of when an action in tort accrues on the manifestation of damage, as between an immediate and a contingent loss, is often difficult, as can be seen in the case law from the neighbouring kingdom. Reading that case law the principles are illuminated, but a universally applicable set of tests remains elusive. Each case is to be judged on the facts as to when the tort occurred, and whether damage resulted at that time or whether the wrong initiated a course of action that later resulted in a loss. The keenest problems in analysis arise when what the plaintiff obtains as a result of a tort such as misrepresentation is a financial product that may involve greater risk than was sought but which may turn out for better or worse; or where a tort opens the door to a potential liability which may or may not be later called up by a third party. In such cases, damage may readily be argued to have occurred when the plaintiff failed to obtain that which was sought, or was saddled with that which negligent advice delivered but, on the other hand, it may also be attractive to argue that the assessment of damages as of the date of the wrong is impossible because it cannot be ascertained how matters will probably turn out and that therefore accrual of a cause of action only can occur when that damage comes to pass. It may be that the wait and see approach may be more apposite when the potential for damage is contingent on the making of a third party claim or on market forces, whereas the actual occurrence of real loss as of the date of the transaction brings the date of accrual back to the date of the wrong alleged. Whatever the approach, debate will remain as to what is or is not, in terms of damage, a manifestation of damage and as to when that occurred.
30. In D.W. Moore and Co. Ltd. v. Ferrier [1988] 1 W.L.R. 267 a solicitor was tasked with drafting a restraint of trade contract on any director leaving the plaintiff firm. The contract was drafted negligently with the result that any former director could not join a firm competing with his former employer, but could bypass that prohibition by establishing his own business in competition. The Court of Appeal held that there was no presumption that, on a solicitor’s negligent advice, damage occurred immediately. Rather, it was question of fact as to when the occurrence of damage was established. At the time of executing the agreement, the Court of Appeal reasoned that instead of receiving a valuable contract protecting their business against competition, the plaintiff firm had, instead, received a worthless piece of paper. The damage had therefore occurred at that point. Since the action was commenced only after the former director had begun a competing business, and this was outside the limitation period, the claim was statute barred. The judgment of Bingham L.J. makes it clear that, even though the quantification of damage may be difficult at an earlier point in time which is within the limitation period, as for instance when the former director, Mr. Fenton, on leaving employment agreed to enter into the worthless covenant, this difficulty did not extend the limitation period. At p. 279 to 280 he said:-
“If the quantification of the plaintiffs’ damage had fallen to be considered shortly after the execution of either agreement, problems of assessment would undoubtedly have arisen. It might have appeared that Mr. Fenton was unlikely to leave, taking much of the first plaintiff’s business with him, to establish a competing business. If so, the plaintiffs’ damage would have been assessed at a modest figure. But the risk of his doing so could not have been eliminated altogether, and so long as there was any risk that one of the first plaintiff’s two directors might leave, taking much of the first plaintiff’s business with him, to establish a competing business, there must necessarily have been a depressive effect on the value of the first plaintiff’s business and on that of the second and third plaintiffs’ derivative interests. In making his assessment the judge would have had to attach a money value to a possible future contingency; but judges do this every day in awarding claimants damages for the risk of epilepsy, the risk of osteoarthritis, the risk of possible future operations, the risk of losing a job and so on. The valuation exercise is, of course, different, but the difference is one of subject matter, not of kind.”
31. In apparent contrast is the case of Midland Bank Trust Co. Ltd. v. Hett Stubbs & Kemp (A firm) [1979] Ch. 384 where it was held that the cause of action for failure to register an interest in land accrued only on the date when it became too late to effect registration. This may have been a case of a fresh cause of action accruing each day because of a continuing breach of duty, in other words a continuing tort; as in the second classification made by Canny noted at paragraph 25 above. In Forster v. Outred & Co. [1982] 1 W.L.R. 86 the plaintiff executed a mortgage over her freehold property as security for a loan made to her son. This was done on the advice of her solicitor which led her wrongly to believe that the security was to be effected only in respect of a temporary bridging loan for the purchase by him of some property. She brought an action only some time later when the nature of the transaction became apparent to her. The Court of Appeal held that the case was statute barred, the reasoning being that the damage had occurred when the charge was put on the property. At p. 98, Stephenson L.J. stated:-
“I would accept … and would conclude that, on the facts of this case, the plaintiff has suffered actual damage through the negligence of her solicitors by entering into the mortgage deed, the effect of which has been to encumber her interest in her freehold estate with this legal charge and subject her to a liability which may, according to matters completely outside her control, mature into financial loss – as indeed it did. It seems to me that the plaintiff did suffer actual damage in those ways; and subject to that liability and with that encumbrance on the mortgage property was then entitled to claim damages, not, I would think an indemnity and probably not a declaration, for the alleged negligence of her solicitor which she alleges caused her that damage. In those circumstances her cause of action was complete on February 8, 1973, and the writ which she issued on March 25, 1980, was issued too late to come within the six years’ period of limitation.”
32. The reasoning of the Court of Appeal is that the damage had occurred when the equity of redemption to the plaintiff’s property was reduced. However, the case might have been analysed otherwise. It is arguable that the cause of action accrued only when the plaintiff’s son defaulted on his loan; thereby that debt became charged on her property. Some might argue that this was the accrual of the cause of action in tort as this was the point at which the damage occurred.
33. Where, on the other hand, negligent advice leads to a purely contingent liability, a cause of action will not accrue until damage results upon the crystallisation of that contingency. In Darby v. Shanley t/a Oliver Shanley & Co. Solicitors [2009] IEHC 459 (Unreported, High Court, Irvine J., October 16th, 2009), the defendant firm of solicitors advised a lady called Bridie Bird on drafting her will and on transferring land to the plaintiff. When she died, her widower brought proceedings challenging the will and the transfer. These were ultimately compromised on terms requiring the payment of damages by the plaintiff to the widower. Proceedings were then instituted, six years after the relevant advice. Irvine J. analysed the claim on the basis that the cause of action of the plaintiffs was complete only upon the settlement of the litigation. The judgment, as now quoted, provides the only relevant analysis thus far in this jurisdiction:-
“4.3 Section 11(2) of the Act of 1957, as amended by s.3 of the Statute of Limitations (Amendment) Act 1991, provides as follows:-
“Subject to paragraph (c) of this subsection, and to s. 3(1) of the Statute of Limitations (Amendment) Act 1991, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.”
The claims of Patrick Darby and Declan Darby are claims brought in tort and are thereby governed by the limitation period set forth above. Accordingly, unless their claims were instituted within six years from the date upon which their respective causes of action accrued, their claims must fail. The claim of Patrick Darby was instituted on 7th December, 2004, whilst the claim of Declan Darby was commenced on 17th April, 2007.
4.4 In Hegarty v. O’Loughran [1990] 1 IR 148 Griffin J., in discussing the time at which a cause of action accrues, stated as follows at p.158:-
“The period of limitation therefore begins to run from the date on which the cause of action accrued, i.e. when a complete and available cause of action first comes into existence. When a wrongful act is actionable per se without proof of damage, as in, for example, libel, assault, or trespass to land or goods, the statute runs from the time at which the act was committed. However, when the wrong is not actionable without damage, as in a case of negligence, the cause of action is not complete and the period of limitation cannot begin to run until that damage happens or occurs.”
4.5 In the case of Patrick Darby, as already stated, he maintains two separate claims of negligence against the defendants. The first of these relates to the alleged negligence of the defendants whilst acting as solicitors for Bridie Bird at the time she prepared her Will in February 1997. The latter allegation of negligence relates to advices given by the defendants in and about December 1998, at which date Bridie Bird executed the transfer. The plea of the defendants based upon the provisions of s. 11 of the Statute of Limitations 1957, relates solely to the negligence claimed in relation to the circumstances in which the defendants advised Bridie Bird regarding the preparation of her Will.
4.6 Whilst both plaintiffs might well have anticipated or feared a potential loss following the receipt by the defendants of the letter from Christie and Gargan Solicitors dated 8th February, 2000, which indicated that William Bird intended challenging the validity of both the Will and the transfer, or from the subsequent issue of the plenary summons maintaining those claims, the cause of action in neither case was yet complete. The cause of action for negligence in relation to the preparation of Bridie Bird’s Will was only complete upon the date on which the probate proceedings were settled, that being the date upon which it could be stated both plaintiffs had sustained a loss arising from the negligence alleged against the defendants. That loss was ascertainable from the terms of the settlement which, in providing that the costs of all parties would be paid out of the estate, significantly reduced the legacies received by Patrick and Declan Darby. Accordingly, the settlement having been agreed to on 8th February, 2007, the Court concludes that Patrick Darby and Declan Darby had six years from that date to commence the present proceedings.
4.7 For the aforementioned reasons the claims of Patrick Darby and Declan Darby contending for negligence on the part of the defendants in relation to their involvement in the preparation of the Will of Bridie Bird are not statute barred by reason of the provisions of s. 11(2) of the Act of 1957. I am satisfied that the case of Tuohy v. Courtney [1994] 3 I.R. 1, which upheld the constitutionality of s.11 of the Statute of Limitations, upon which the defendants relied, is not of assistance in circumstances where the proceedings were commenced prior to the expiration of the relevant statutory limitation period.”
34. It is readily understandable that damage is to be regarded as having been suffered straight away when a plaintiff enters into a transaction with the result that he or she immediately has, in terms of legal rights, much less than was represented than they would have. Examples of this to which I have already referred are Forster v. Outred [1982] 1 W.L.R. 86, and Moore v. Ferrier [1988] 1 W.L.R. 267. The most acute difficulty arises in the context of the purchase of apparent financial benefits which may, or may not, depending on market conditions, turn out to be more or less advantageous than what was apparently bargained for. Since the most valuable judgments on the issue of accrual emphasise an analysis of the facts, in that context it may be helpful to suggest that a judge might ask two questions:
1) Firstly, would a claim initiated immediately upon the acquisition of the instrument, or supposed financial benefit, in question then succeed? In some of the cases it is emphasised, as has been seen, that although the valuation of damages may be difficult because it depends upon an event which may or may or not occur, that if the essence of the claim is the assumption of an unwanted risk, then the nature of that risk can be quantified, albeit with difficulty, in damages.
2) The second question is more problematic. It seems to me that a judge might, secondly, ask whether a plaintiff suffered any immediate loss on entering into the transaction in question. In some of the cases, the answer may be that, yes, the transaction at the point at which it was first entered into is less valuable than what was expected, or misrepresented leading to that expectation, but that market conditions may render it more or less valuable over the passage of time in which case the accrual of a cause of action through the occurrence of damage can be regarded as contingent upon an event which may or may not happen in the future. This may be regarded as a delay and find out approach and it must be observed that it does not necessarily provide a complete answer. On the one hand, it may be argued that an analysis of fact should be limited to the question as to what it was represented to the plaintiff that he or she was to get at that first point in time. If this is different to what the plaintiff in fact received, then it may be contended that damages occur at that point. If, on the other hand, that difference gives rise to a situation which is fluid in financial terms, and which may result in a benefit or which may result in a liability, depending upon unbargained for contingent factors, then it may more reasonably be said that the tort is only complete with the occurrence of that financial damage; perhaps at a much later date than the wrong in suit.
35. Consistency of analysis can be difficult to achieve in circumstances where both the nature of the transaction that was entered into and the outcome of that transaction are both under consideration. In Shore v. Sedgwick Financial Services Limited [2009] Bus LR 42, the plaintiff worked for a company which was taken over by another undertaking. He had, earlier to this event, consulted the defendant about pension planning on retirement. The advice given, and later claimed to be negligent, involved him switching from his existing occupational pension and into a pension fund which turned out to more risky, and ultimately, as it turned out, less advantageous than if he had left his pension where it was, or had then purchased an annuity. The Court of Appeal held that the plaintiff had suffered damage at the time at which he entered into the less advantageous scheme, which date was outside the limitation period. The judgments regarded the case as being equivalent to Moore v. Feerier [1988] 1 W.L.R. 267, already mentioned, and to the case of Bell v. Peter Browne & Co. [1990] 2 Q.B. 495, which was a case of a mis-drafted trust deed upon the break up of a marriage which left the plaintiff with no interest in his former family home which was much later sold by his wife. Dyson L.J. stated at p. 53:-
“It is Mr. Shore’s case (assumed for present purposes to be established) that the P.F.W. scheme was inferior to the Avesta scheme because it was riskier. It was inferior because Mr. Shore wanted a secure scheme: he did not want to take risk. In other words, for Mr. Shore’s point of view, it was less advantageous and caused him detriment. If he had wanted a more insecure income, than that provided by the Avesta scheme, then he would have got what he wanted and would have suffered no detriment. In the event, however, he made a risky investment with an uncertain income stream instead of a safe investment with a fixed and certain income stream which was what he wanted.
The analogy with the investor who is negligently advised to buy shares rather than government bonds does not assist [the plaintiff]. In my judgment, an investor who wishes to place £100 in a secure risk-free investment and, in reliance on negligent advice, purchases shares does suffer financial detriment on the acquisition of the shares despite the fact that he pays the market price for the shares. It is no answer to this investor’s complaint that he has been induced to buy a risky investment when he wanted a safe one to say that the risky investment was worth what he paid for it in the market. His compliant is that he did not want a risky investment. A claim for damages immediately upon the acquisition of the shares would succeed. The investor would at least be entitled to the difference between the cost of buying the government bonds and the cost of buying and selling the shares.”
36. One wonders, however, at the reaction of any court faced with a plaintiff who is financially buoyant in consequence of what is claimed to be negligent advice when a risky investment turns out to be financially viable. Such a situation would be an example of one side of a contingency capable of turning out negatively, in terms of financial result, as well as positively. In those circumstances, a judge might dismiss any case brought immediately upon entering into the transaction on the basis that no damage has been suffered. It may reasonably be argued in these kinds of cases that advice will turn out to be negligent only where a plaintiff is worse off. One wonders, in such actions, how a plaintiff can be worse off until the time when he or she has suffered loss. A tort action based on a contention that a plaintiff may gain, in consequence of negligent advice, more than he was expecting, as well as receiving less than he was promised, is not one in which it is immediately apparent that the cause of action has accrued. In cases where a specific benefit was sought, but not delivered, as with the mis-drafting of a contract, the mis-drafting of a deed of trust and the failure to protect the interests of a person entering into a financial transaction, the damage may perhaps be more readily said to have occurred there and then. It may be contended, in such a case, that some event in the future will bring about a particular level of financial adjustment up or down but, notwithstanding that this event may or may or not occur, there is there and then a less valuable transaction than the one which the plaintiff wished to engage in. If, however, the contingency depends upon an investment or transaction being floated on a more volatile financial sea than the one which the investor wished to embark upon, then, it seems to me, the damage occurs when the plaintiff’s boat founders in rough waters. I therefore find it difficult to be completely convinced by the reasoning in Shore v. Sedgwick Financial Services Limited [2009] Bus LR 42.
37. Wardley Australia Limited v. State of Western Australia (1992) 175 C.L.R. 514 is a case where the High Court of Australia adopted a clear distinction between an immediate and a contingent liability. The State of Western Australia had been induced by misrepresentation by Wardley Australia Limited about a bank called Rothwells Limited to grant to that bank an indemnity. But for the misrepresentation, the contention was that the indemnity would not otherwise have been granted. When the bank suffered loss and made a claim on the indemnity, the State of Western Australia had to make a substantial settlement. The issue in the case was whether the State of Western Australia’s cause of action accrued when the indemnity was granted or when that indemnity was activated. The reasoning of the High Court was that the indemnity had generated a contingent liability and that the State, therefore, did not suffer any loss until that contingency was fulfilled. Time therefore began to run only from the occurrence of that event. It could be argued, and indeed was argued in that case, that the damage had occurred once the indemnity was granted because the State of Western Australia had then been locked into a damaging situation. That situation, however, only resulted in loss upon a contingency. Some might urge that an assessment of the loss resulting from being locked into that situation should be approached as of that event in the same way as a risk of arthritis resulting from an injury is quantified by a judge in personal injury cases. I am not attracted by that approach: how can it be ascertained when the loss will happen, if ever, and what it will be? That kind of analysis must be done on a probability basis in some personal injury cases, but that is because the damage is already suffered and further consequences of it may arise in the future. I see that as entirely different to a plaintiff being caught up in an unbargained for or unwanted situation which may or may not result in a loss. The analysis of the High Court of Australia was that the contingency of loss was fulfilled when the bank’s loss was ascertained and quantified, subject to the making of a claim for payment by the bank. Mason C.J. for the majority stated at paras. 24-26:-
24. “It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry into an agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is a loss upon a contingency. For our part, we doubt that the decisions travel so far. Rather, it seems to us, the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date ((36) Forster v. Outred and Co. and D.W. Moore and Co. v. Ferrier illustrate the point.).
25. In Islander Trucking Ltd. v. Hogg Robinson Ltd., Evans J. observed ((37) (1990) 1 All ER, at p 831), with reference to the cases in which solicitors have brought into existence defective documents:
“The decision that damages are suffered at the time when the defective document is executed may, it appears, be put on one or both of two bases. The first is because the chose in action which the client acquires, or parts with, as a result of executing the document is regarded as a form of property which is held or acquired by the plaintiff and which is found to be devalued, that is to say worth either nothing or less then it would be worth if it was free from the defect which has resulted from the solicitor’s negligence. The second possible basis is perhaps this: in the case of a claim against a solicitor, unlike a claim for damages in the building cases, the plaintiff is entitled to recover for economic loss, as distinct from any injury to person or property…The law is clear in relation to solicitors and has been authoritatively stated in these (cases). Where, in my respectful view, it might be said to depart from earlier common law rules is by reason of the fact that it apparently contemplates, as a common law rule, that a cause of action may arise at a time when its existence is unknown and could not reasonably be known by the injured plaintiff.”
His Lordship went on to say ((38) ibid., at p 832) that, in D.W. Moore and Co., the contractual chose in action could be equated to an interest in property. In that case, the defendant solicitors negligently prepared and advised the execution of an agreement containing an unenforceable covenant against competition. Notwithstanding that the damage actually complained of was not suffered until much later and was dependent on two contingencies, the Court of Appeal held that there was a cause of action for some measurable loss which occurred when the defective contract containing the unenforceable covenant was executed.
26. If, contrary to the view which we have just expressed, the English decisions properly understood support the proposition that where, as a result of the defendant’s negligent misrepresentation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability, the plaintiff first suffers loss or damage on entry into the contract, we do not agree with them. In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred. A deferred liability may stand in a different position but there is no occasion here to discuss that matter.”
38. I find that reasoning convincing. The reasoning of House of Lords in Law Society v. Sephton and Co. and Others [2006] 2 AC 543 also accords with what I regard as the desirable drawing of a clear distinction between an actual and a contingent financial liability. When a client of a firm of solicitors was defrauded by that firm, the Law Society could under the relevant legislation, at its discretion, pay out a sum in compensation. The statutory scheme, however, provided that “no person has a right to a grant enforceable at law”. Rather, it proclaimed that the intention of those administering the scheme of grants to those loosing out in consequence of the misconduct of solicitors was to “seek to administer the fund in an even-handed and consistent manner”. What happened in that case was that over many years the accounts of a solicitor called Andrew Payne had been audited by the defendant firm of chartered accountants Sephton and Co. They did not notice when they should have, or deliberately did not report, serious irregularities in the books of the solicitor, as they were obliged to do. A substantial sum of over £1 million had been misappropriated by the solicitor. It was argued that the statute of limitations barred the Law Society from suing the accountants. The case had been commenced once the fund had been contacted by disappointed clients, a time considerably later than the negligent auditing and outside the relevant limitation period. The argument for dismissing the case was that the damage had occurred at much earlier dates, those dates being when the negligently prepared accounts had been lodged with the Law Society. The reasoning of the House of Lords was that the eventuality whereby a former client of the solicitor’s firm contacted the compensation fund and sought reimbursement was the date on which damage occurred, the cause of action then accruing. After a lucid discussion of the decided cases, at paras. 30 and 31, Lord Hoffman held with the Law Society:-
“30. In my opinion, therefore, the question must be decided on principle. A contingent liability is not as such damage until the contingency occurs. The existence of a contingent liability may depress the value of other property, as in Forster v Outred & Co [1982] 1 W.L.R. 86, or it may mean that a party to a bilateral transaction has received less than he should have done, or is worse off than if he had not entered into the transaction (according to which is the appropriate measure of damages in the circumstances). But, standing alone as in this case, the contingency is not damage.
31. The majority of the Court of Appeal appear to have decided the case on the basis that the Law Society did not enter into any transaction giving rise to the contingent liability. It did nothing and the contingent liability was created by the misappropriations and the previous existence of the compensation fund and the rules which governed its administration. No doubt in most cases in which a party incurs a contingent liability as a result of entering into a transaction, that liability will result in damage for the reasons already discussed in relation to bilateral transactions. But I would prefer to put my decision on the simple basis that the possibility of an obligation to pay money in the future is not in itself damage.”
39. Lord Walker of Gestingthorpe distinguished earlier cases finding an accrual of the cause of action as of the date of the wrong on a basis which I find convincing. At para. 48 he stated:-
“In all these cases the claimant has as a result of professional negligence suffered a diminution (sometimes immediately quantifiable, often not yet quantifiable) in the value of an existing asset of his, or has been disappointed (as against what he was entitled to expect) in an asset which he acquires, whether it is a house, a business arrangement, an insurance policy, or a claim for damages. Your Lordships have not, I think, been shown any case in which the imposition on a claimant of a purely personal and wholly contingent liability, unsecured by a charge on any of the claimant’s assets, has been treated as actual loss. That would have been the position if the claimant in the Forster case [1982] 1 WLR 86 had given a personal covenant guaranteeing her son’s debts (which she seems not to have done—she paid them simply to prevent enforcement of the security on her farm) and if she had not given any security over any of her own assets”.
40. Lord Manche, in his opinion, affirmed that where there were differences in the limitation period as between contract and tort or, as in this case, differences as to how those limitations periods would work out in practice, a plaintiff was entitled to choose the most advantageous cause of action
Result on the Limitation Motion
41. I return to what seems to me to be the two most relevant questions in differentiating an immediate from a contingent liability in the occurrence of damage in tort actions; para. 34 above. Were this case brought by Mr. Gallagher against ACC Bank in for instance 2004, he having purchased the bonds in October 2003, I have no doubt that the bank would plead that there was no cause of action because a tort had not been committed. The defendant bank would rightly argue that notwithstanding its negligence, no damage had occurred. A judge, hearing the case, would analyse the nature of the transaction entered into by Mr. Gallagher on the basis that he was now in a more volatile financial situation than otherwise he would have been had the misrepresentation not occurred. That could result, however, in a gain or in a loss. In two or three years the financial markets might decline or might strengthen. A judge would therefore not be in a position to say that damage had occurred. Were Mr. Gallagher to then argue that what he had bought was different to what had been misrepresented to him, the bank would immediately argue that it might turn out to be better. That argument would, in that context, dispose of the case by showing that no damage had yet occurred and thus that there was no accrual of a cause of action. Turning to the second question, as to whether the plaintiff, on buying this ‘Solid World Bond 4’or ‘5’ had suffered any immediate loss, it seemed to me that this would, again, have been contingent on the performance of the market. There might be a loss in the future, but equally there might be a gain; the vessel of financial promise might founder on turbulent financial seas and it might enter a port of plenty. An immediate loss might be said to be suffered had the result been that Mr. Gallagher had something that was immediately worthless, or unambiguously worth less than that which had been held out to him, in consequences of the misrepresentation. That would be the case had a solicitor not carried out instructions whereby a transaction was safeguarded with a trust deed, or carried out instructions negligently whereby a liability that had not been contemplated was then immediate, in which case damages might be difficult to assess but there would, in reality, be damage to assess at that point. The wrong would be complete.
42. Manifestly, the transaction in purchasing the bonds entered the holders of the investment into a situation of market return that during the currency of the plaintiff holding the bond could turn out for better or for worse. On the purchase of the bond, therefore, the holders did not suffer an immediate loss but were left facing a contingent loss. The quantification of damages in such a case was not simply difficult, but it was impossible because no loss had then occurred and a buoyant performance over the lifetime of the bonds was possible. After all, it should be remembered that such an attractive prospect is why the plaintiff purchased the bonds and it is the basis, as well, on which the bank claims to have sold this ultimately disappointing financial product. Thus, if there was misrepresentation, the tort only became complete when a financial loss crystallised.
Order
43. My understanding is that this judgment has been agreed by a number of other plaintiffs before the Commercial Court to be determinative of their actions. Three other plaintiffs, I am told, made a complaint to the Financial Services Ombudsman. Several more plaintiffs await this decision on the effect of the Statute of Limitations. In this case, ACC Bank succeeds in preventing Mr. O’Hara’s action proceeding because it has in substance already been determined by the Financial Services Ombudsman; and Mr. Gallagher is entitled to proceed with his case because it is not statute barred.
Haughey v J & E Davy, t/a Davy
[2014] IEHC 206
Judgment of Mr Justice Peter Charleton delivered on the 10th of April 2014
1. James Haughey, the plaintiff, was born on the 5th July, 1985 and is now 28 years of age. Both his parents are dead; his mother since 1998 and his father since 2002. He has no brothers or sisters. Nor does he have either close relations or committed friends to look out for his interests. When he was aged 8 he had a stroke. Two years later he suffered a more serious stroke. He was badly afflicted, losing mobility and impairing swallow. His late father, a medical doctor, gave up work and committed himself to his rehabilitation as did his late mother. Considerable progress was made. The family moved from Ulster to Dublin and James Haughey attended, first of all, Saint Michael’s College on Aylesbury Road and then his father sent him to Clongowes Wood College in County Kildare as a boarder. While at this school, his father died. Considerable friendship was shown to him by his classmates; although much of it transpires to have been formal and to have been directed by the Jesuit priests running the school. These priests also determined to look after his interests and to ensure that on leaving school he had some achievement to his name. He was therefore named head of the debating society, a similar position to that held by him, for whatever cause, in his prior school. He went to University College Galway and struggled to graduate in law.
2. The defendant J&E Davy is firm of stockbrokers. Their documents are quoted as they were written. The firm professes considerable expertise in stocks and shares. It advises clients as to the appropriate form of investment for them once the representatives of the firm get to know the prospective client and what their aims are and financial resources and acumen are. Davy can be used simply as an agency for the purchase and sale of stocks and derivatives, bearing no responsibility as such because all decisions are those of the client with no input from the firm. Davy can also take over a sum of money or a set of investments from a client and can use its undoubted expertise to invest in financial instruments at its own discretion. Between these two extremes is the advisory account, where Davy advises clients as to the appropriate course but where the client is free to accept or reject that advice. That is the kind of account that James Haughey had with Davy from the 25th August, 2005, a month after his 20th birthday. By signing up to such account, James Haughey also agreed to pay the fees appropriate to that service to Davy.
3. There has been considerable debate over the course of the very long and many days of this trial as to the capacity, intelligence and shrewdness of James Haughey and as to how he would appear to those advising him. There has been no debate as to the capacity of Davy. It is accepted by all that the firm is distinguished and able. The kind of investment into which, in heavily disputed circumstances, James Haughey engaged with Davy was contracts for difference. This is not just the simple buying and selling of stocks and shares. Using round figures for the moment, on this, James Haughey would say that under the tutelage of Davy, he gained €2 million and lost €3.5 million, paying the firm for its services commission and charges close to €400,000 in the process. Damages are claimed in the sum of around €2 million. In that regard, he claims that Davy were negligent and in breach of contract. Davy reply that any bad decisions were those of the plaintiff James Haughey and that as regards its statutory, contractual and advisory duty, it was careful and prudent and dispensed its expertise appropriately. Succinctly put in closing submissions, the plaintiff was foolish. In addition, the approach of Davy to investment was said to be above criticism as were the checks and balances inherent in its organisation of clients in their relationship with stock dealers. Paradoxically, the most serious criticism of the structures of Davy, as to its checks and balances, came most tellingly from the senior portfolio manager of Davy closest to these events.
4. Since this case is almost entirely fact-dependant and since the bulk of this difficult trial has been taken up with a minute and repetitive analysis of the character and attributes of James Haughey, it is as well to recall the function of a court in matters of fact. A court is to hear everything relevant, to compare testimony and documents with all of the evidence, to approach an adjudication of all issues on the basis of shrewdness and common sense and to carefully look and listen to every witness while bearing in mind that the burden of proof rests with the plaintiff. The ultimate issue is what he court accepts and the liability that may arise from facts proven as a probability. In this case, while recalling the warning that “there’s no art to find the mind’s construction in the face”, demeanour and attitude has proven of assistance in determining where the probability of the truth lies. The Court has watched everything and ignored distractions. Whereas Dr. Damien Mohan, assessing James Haughey for Davy, has, in his capacity as a psychiatrist, characterised this case as one of investor regret, there are others who might feel, or it is argued for the plaintiff ought to feel, regret in a case such as this: stockbrokers. None of these financial dealers were subjected to the rigorous testing which the plaintiff James Haughey had to go through. The Court has also seriously borne in mind any untruths that have been alleged against James Haughey and that exaggeration and more has been shown to attend his testimony when his interests might be advanced and that diversion towards others as to responsibility has on occasion been the answer when he has been challenged on issues. But, it must be noted, the plaintiff is not the only witness in respect of whom considerable care needed to be exercised. There was as much to doubt and more about the defence testimony as well.
5. As stated, James Haughey is central to this case. This action was about him and not about anyone else who may have lost on financial products with this or any other financial service provider. The Court’s findings of fact as to the capacity of James Haughey therefore follow.
James Haughey
6. James Haughey is not as Davy have chosen characterise him during this hearing, but nor is he a person in the full of his intellectual, physical and mental health. Furthermore, that situation is obvious to anyone interacting with him over anything but the briefest encounters. His manner of speaking, his choice of words and the way in which he physically holds himself would put any observer of average perception on warning that his condition was seriously different to that of an average man of his age. He has a perceptible speech impediment; he talks in a very unusual and high pitched nasal tone of voice; he uses his hands when speaking in an unnatural way; his choice of words is sometimes inappropriate; his reasoning can be circular; his knowledge of financial products, particularly contracts for difference is, even now, seriously defective; and he reacts emotionally to matters that affect him much more than with the large majority of witnesses. It would be clear to any objective observer that he has been physically stricken in some serious respect. Any ordinary observer would be put on enquiry. He is also deeply resentful of Davy. All the findings of fact in this case about him and about other witnesses are made despite his having turned to that firm seeking a job in late 2010 to early 2011.
7. In this case, there has been an unusual amount of parsing of expert reports and analysis of expert testimony. The Court has heard all of this and has read the relevant documentation. Witnesses for Davy have raised evidence that the plaintiff while being examined from a psychiatric and psychological viewpoint was malingering and that results in tests were structured so that James Haughey would appear to be worse than in fact he is. The Court takes all of that into consideration. During one examination, a Mass card and four boxes of matches were taken out of James Haughey’s pockets for no apparent reason. He was cross-examined on this issue with a view to determining that he wished to present himself as a very vulnerable person. The relevant memorial card was for his late mother and is an intensely personal item; something of the kind that perhaps many people carry in a less obvious form. The boxes of matches were a springboard for questioning which resulted in a statement in the witness box that he intended to take his life into its own hands should he lose the case. The Court can have no regard to this. His despair, however, is real. Dr. Damien Mohan, consultant forensic psychiatrist, saw his vulnerability as genuine and advanced the view that he was likely to accept advice from a professional person in consequence. He regarded suicide is a very real risk. This evidence is accepted. Of all the witnesses, Dr. Mohan was most explicit in describing some of the answering of James Haughey during interview as being deliberately approximate for secondary gain. Apparently, this is something called Ganser’s syndrome but, whatever it is, it is at least as familiar to judges as to psychiatrists. Into the mix of opinions given on the issue of malingering, non-cooperation and the deceit of testing psychiatrists and psychologists must be put the obvious resentment towards Davy and every emanation of Davy which was apparent in the evidence of James Haughey. There is no simple answer as to why certain tests did not marry well with others but simple deceit as a facile explanation is not one which the Court is prepared to accept.
8. Many of the tests showed alarming degrees of impairment. Dr. Simone Carton spent five hours with James Haughey on 22nd January, 2014. Her assessment was both thorough and compassionate. In common with the opinion of other experts, she found good verbal skills and good verbal conceptual reasoning; though these scores were lower than what might be expected of someone with his ostensible qualification of a law degree. Probably, as one expert said, this verbal ability carried him through his time as a student. She found him engaging with her and appropriate in giving a lot of information, though exhibiting more than expected emotion on some issues. Considerable empathy was apparent from her approach and it was likely to yield reliable results. She described him as having the cognitive capacity for financial transactions and described the written application to join Davy on a graduate program as comprehensive, selective, elaborate, detailed and competent. Cognitive capacity for financial transactions may be likened to a very high mountain, however, covering everything from simple purchases at the foothills to more hazardous and demanding things the higher up you go. On many of the tests, however, James Haughey was well below low average ability, including on new learning ability, executive functioning, verbal fluency and effort. These results are not inconsistent with those of Dr. Niall Pender who found him of low average on many tests and on short story recollection but well below average on complex visual design. He described him as having difficulty with coming up with information quickly and with strategic problem solving. The more the load, he said, the tighter the timeframe and the more complex the task, the worse James Haughey performed. This is a reasonable and probable opinion. Professor Peter Kelly, an expert on stroke medicine, described James Haughey as having very mild dysarthria and very mild arm function interference. He saw his gait as having appropriate symmetry and he saw no evidence in the limitation of independent decision-making. He declined to express any view on the issue of complex decision-making. The Court is satisfied that decisions on contracts for difference involve a high level of intellectual functioning and require complex decision-making which are well beyond the intellectual capacity of James Haughey. The few light moments in this case came around when medical experts of high intelligence and qualification were read passages from Davy documents and expert reports describing how these instruments work and how the financial consequences may play out. It is clear that all of them who were asked these questions were completely at sea without navigation aids. It was said by the financial expert called on behalf of Davy, Paul Keenan, that it is possible to explain these instruments and the consequences of investing in them comfortably within the space of an hour. Nothing in the course of the case suggests that that this could even possibly be true when dealing with a person of average to high intelligence, never mind a person who is impaired. That opinion is not accepted.
9. There are two results in this case with which no one can quarrel. When, in late 2010, James Haughey decided to seek employment in Davy through a graduate program that would have seen him enter more fully into the world of stockbroking for a fixed period, he was required to take two tests. There had been considerable vagueness by Davy as to the nature of these tests and it took persistence before any information as to what they were supposed to indicate emerged. As it turns out, these are general intelligence assessment tests which can be applied to any group in the population with a view to testing their overall abilities in questions of mental agility. There can be no doubt that James Haughey wanted to get a job. There can also be no doubt that, for whatever reason, he saw Davy as a place where he might work. He overestimated his abilities. On each of the tests, in terms of the general population in Ireland, he came below the 13th percentile. Dr. Mohan, who was strong on the malingering explanation for the presentation of James Haughey, was asked to estimate from his meeting with him as to where he might come under tests such as this. Dr. Mohan estimated that he would come in or around the 50th percentile. Insofar as some distinguished medical people have said that the disability of James Haughey was mild or was not easy to discern, this clashes with the finding of the Court. It is partly explicable, however, on the basis that while the medical witnesses were correct in describing James Haughey as recovering well from a serious stroke, they are much more used to dealing with persons who were very seriously impaired and with whom they were perhaps favourably comparing him. That viewpoint does not apply to stockbrokers or to anyone else engaging with James Haughey. There the comparison is of an ordinary person of business and on this James Haughey demonstrably does not measure up.
10. In terms of education, the results can be plainly stated. James Haughey categorised himself as having done a “mediocre Leaving Certificate”. He had extra time for public exams and dictated his exam answers. In applying to join Davy, he misstated his results to make them better. Similarly, he achieved entry into University College Galway on the basis not of results but of a laudable access program for persons with a disability. His academic transcript is alarming, with several failed exams and repeated exams and exams which seem to have been excused or put off. There are no brilliant results which could leaven this with any sign of real comprehension of particular aspects of law. He ended up with a third class honours degree. While in Galway on the access program, he was given a scribe who transcribed his lectures and emailed him the typed notes. This is because his fine hand movement cannot cope with swift writing: even his signature on superficial examination would make one wonder. His time in university was far from easy. He was, and is, in many respects an outsider and must have found the social superficialities of student life a trial. A priest of the Roman Catholic faith helped and supported him through his time in university. However, perhaps following the tragic death of a friend who seems to have been a very decent individual, and certainly as a result of the strains of college life and of managing property, he ended up in the psychiatric unit of Galway University Hospital from the 2nd the 6th May, 2007. There he was treated for depression. Like a lot of people, he did not follow-up properly with outpatient treatment. This date is important, as is this event. Also important is the fact that James Haughey shows no sign of holding back on personal details when talking to people.
11. Apart from finding university a strain, in addition to that, having inherited property from his parents, he found travelling around to manage these properties and to deal with tenants severely discommoding. In his application to Davy, there is a description of the merits of the candidate, namely him, which is fluent and appropriate. It is highly probable that his late friend helped him with a general template for job applications and it is more probable that the exaggeration of his university and school results arose more naturally from his desire to achieve at least an interview than from whatever mild prompting as to the value of exaggeration he was given by any employee of Davy. It is also probable that there was such prompting.
Contracts for difference
12. A simple explanation of how contracts for difference work occurs in a passage in the evidence of Joe Motley, the financial expert from Clarus called on behalf of James Haughey. Financial people call these CFDs, though it might be noted that the Bank of Ireland recorded them in one inadmissible document as “CDFs”. The Court has no regard to this. As Joe Motley’s analysis was put to a number of witnesses, including medical experts, it is now quoted:
CFDs are, very simply, a form of margin investing. When acquiring a position in a share declined is required to contribute only a portion of the underlying position value in cash. The proportion varies typically from 10% (four large-cap liquid shares) to 20%. That cash (the “margin”) is deposited with the CFD broker… and the client receives a small rate of interest on it. The client is exposed to the full fluctuation in value of the underlying position, and if the position value falls he may be required to contribute further cash margin. The full acquisition coursed of the underlying position is financed by the CFD broker, and the client pays a financing rate on that amount which is set at the CFD broker’s cost of financing plus a fixed margin. The client also pays dealing commission on the trade, which is determined by reference to the size of the underlying position rather than the size of the margin. CFDs may also be used to take a ‘short’ position in the stock (which is otherwise difficult for a private client to do). In that case the client is still required to put up margin in the 10%-20% area, but he now receives the financing rate on the position value. However in this case the fixed margin is deducted from the financing rate. When ‘long’ stock via CFDs, any dividend income is credited to the client, but when ‘short’ it is deducted from the value of his position. CFDs offer three attractions for clients who are interested in speculative short-term trading: they provide leverage for the client who wishes to take more risk with a given amount of cash than would be possible through direct purchases of shares; they facilitate ‘short’ positions; stamp duty on purchases (1.0% on Irish shares and 0.5% in the UK) is a significant transaction coursed for active traders in the cash market, and CFDs provide a way to avoid it.… The client’s risk level in a CFD position is determined by the size of the underlying position. Furthermore, it must be noted that short positions are inherently more risky than long. On an un-geared basis along position cannot lose more than 100% of it opening value, whereas there is no theoretical limit to how much can be lost on a short position.
13. Whereas CFDs are represented by firms dealing in them as perfectly respectable, some examples might suggest to reasonable people that they are seriously risky. One does not buy anything tangible and, furthermore, by staking a small percentage of a cost, one borrows to embrace the apparent totality of an instrument. To take the short position question briefly touched on by Joe Motley in the above quote, but much more fully explained in evidence: a client can decide to go short for 10,000 positions in Ryanair shares at €6 of which you will pay 10% of the €60,000 value at a cost of €6000. Where someone is taking a position short on a CFD they are, according to the elaborate explanations before the Court, looking for the shares to fall. Were the price of Ryanair to travel to €18, the client would lose €174,000 for a €6000 stake. This is said by Davy in testimony to be highly unlikely as are the other extreme fluctuations which can be calculated in respect of both short and long positions through a CFD purchase. This is taken into account. But, in reality, CFDs fluctuate over a very wide band and one that is exaggerated by the lack of a concrete position, namely owning the share, and by borrowing to purchase the shadow image of a position on its price. The financial analysis so carefully done by John Harding ACA shows very serious fluctuations towards the end of the approximately two and a half year cycle of CFD dealing that is in issue in this case. The Court is grateful for this objective analysis. It was most helpful. This kind of derivative instrument is suitable for those who are prepared to risk the investment of their money speculatively and have the wealth to do so. By spending only 10% of the share price, a client obtains a position on a share but never buys the share itself. If things go wrong in terms of what way the CFD is called, long or short, the client has nothing to sell. All the client has is leverage, of which some portion, a tenth or a fifth, has been paid already. The CFD provider must purchase the shares or must be in a position where books are balanced by an equal number of speculators going long and short on a similar number of interests in the shares. On going long for 10%, a fluctuation of 10% means that the entirety of that stake is lost. Over time, money can be lost on shares and money can come in on the ownership of shares but over a much shorter period of time the entire stake in a CFD can be lost. Of course, over a short period of time an enormous gain can also be achieved by a speculator investing in these instruments because the amount staked is multiplied by 10 in terms of the result achieved through share fluctuations once a long or short position is correctly prophesied and where the position is encashed at the optimum time. Some tax is also avoided.
14. In a long position, the loss of 10% has been attributed by Paul Keenan, the expert in this case for Davy, as being equivalent to a wake-up call to the investor. If one has several positions in several different shares, or even only a few, or if one has one position which is long and a number of positions which are short, shrewd attention to detail is called for if these alarm bells are to be correctly interpreted. But there is another and even more serious disadvantage to trading in CFD positions. Everyone knows that shares may go up and down. Every graph of financial markets, except in extraordinary times, will show a trend either upwards or downwards but one which is characterised by peaks and troughs in the wave that represents the share price. If a 10% position falls by 10%, the stake is entirely lost and the upward bounce, as apparently it is called, for a long position, or the downward fall for a short position, is a considerable temptation for the investor. This is because once the stake is exhausted by the movement in the share price there is nothing to hold onto in order to wait for the expected opposite movement. In order to do that, for the position to be held, another stake must be proffered in cash. A series of cash calls can be answered from an investor with yet more money in order to hold a position that may be hopeless but which may be perceived to be profitable in the longer term. In contrast, in the long term, on actually buying a share, an investor holds a share in a firm. If the share price goes up or down 10%, the investor holds the price of a saleable commodity to 90% or up to 110%, but it is still a saleable commodity. In reality, a person entering into a CFD, while holding a 10% stake is, in fact, borrowing the entire of the money required by the provider to purchase the shares, namely the other 90%. People have a natural reluctance to borrow money, but this is essential to commerce. In taking a CFD position, it is not obvious and needs to be carefully explained that large sums are being borrowed for the stake: 90% in the case of a 10% payment. It needs to be spelt out to anyone who buys a CFD that whereas they are staking 10% of the price, they are paying for the interest on borrowing the remaining 90% of the price. That borrowing is part of the way that the provider finances its position on the shares; that is by charging a rate of interest which is above the London Interbank Offered Rate, commonly abbreviated to “LIBOR”. What did not emerge until later in this case, was what was certainly unknown to James Haughey, namely that some percentage of that profit due to borrowing being charged to the client by the provider is returned by the provider to the broker, in this case Davy, through whatever private arrangement is set up as a matter of contract whereby the broker chooses a particular provider. The rate of return was apparently not known to the portfolio managers who gave evidence in this case— at least that is what they claim — and is only known, the Court is expected to accept, at a high level in broker and provider undertakings. When staking 10% or 20% of the price a return in interest is made on that small sum of money to the client by the provider through the broker but this is at a much lower rate than the rate for borrowing and hardly offsets the cost of holding in a CFD position at all. This was unknown to James Haughey.
15. Davy claims to have provided high levels of explanation to James Haughey before he entered into any contract for difference. Among the documents used was one of 25th August, 2005 which showed examples of paired trades, ratios of trades and the profit resulting from a short position. It might be noted that there is no example of the loss resulting from a short position. The document purports to explain what a CFD is, describing it as “a product traded on margin which, allows a client to trade long or short of stock to mirror the performance of the underlying share.” Then the document lists the following as the characteristic aspects of a contract for difference:
Trade Short as well as Long: Trading a CFD is a convenient and cost-effective way of mirroring the potential fall in the underlying share. A short position in the physical equity could be opened with a stockbroker; however, the cost of rolling this position at the end of every settlement period would prove highly expensive.
Cost Effective: No Stamp Duty is incurred when trading a CFD as the client is not physically buying the shares. This means, however, that the CFD holder is not normally entitled to any voting rights or perks.
Gearing: Holders of a long or short CFD position are required to deposit margin as collateral rather than pay the full underlying value of the stock. Margin requirement will typically be 20% of the full contract value. CFD’s are available on Technology and other volatile stocks but may attract a higher deposit margin.
Hedge Risk: A client might also be able to take advantage of the opportunity to sell a CFD short if he is the holder of the physical underlying stock. He may believe that the stock is due for a short-term correction on the downside, and would therefore sell the CFD short to protect his profits and potentially control the timing of any UK Capital Gains or avoid the cost of selling and buying back of a share.
Expiry: Hold your long or short position for as long as you like. A CFD has no settlement date. It is an open-ended contract. We also offer a CFD future with fixed maturities – see page 12 for details. [There is no page 12]
Dividends: A holder of a CFD is entitled to 80% of the net dividend. However, a client who is short would be liable for 100% of the gross dividend.
Corporate Actions: As the holder of a derivative position, you do not have the same rights as the holder of the underlying. However, Cantor CFDs will, in so far as this is possible, allow you to participate in any corporate actions which might arise.
Financing: A client holding a long CFD position will be liable to overnight financing charges. Cantor CFDs has financed the value of this trade and charges are spread over LIBOR for this service. With Cantor CFDs on a short CFD position the client will be entitled to a daily rebate.
Execution: CFDs are available on the FTSE-350 stocks, UK stocks of smaller capitalisation as well as on any US and European shares. Approval for a very low capitalisation stocks will need to be sought prior to trading. Trading a CFD is exactly like trading the traditional stock market and confirmation is either immediate or on completion of the order.
Commission: A small commission charges made each time a contract is opened or closed.
Taxation: Any profit on CFDs may be subject to CGT (Capital Gains Tax), but losses may also be offset against CGT.
16. None of this is easy to understand. Certainly, it is difficult without a serious analysis of the nature of contracts for difference, together with appropriate explanations and perhaps with appropriate checks during the learning process as to whether a client of even lively intelligence has absorbed the information prior to making a decision to move away from trading in actual shares, or shares purchased for cash, as opposed to staking 10% or 20% of the value of stock on a contract for difference in the hope of leverage upwards or downwards on the margin giving a return as if a 100% position were taken. A CFD position can, in general, according to the testimony in court, be gotten into or gotten out of very quickly. So, it is to be wondered as to what explanation was ever given to James Haughey by Davy as regards the nature of these instruments and how a loss of high magnitude can be very quickly made on them either by taking a short position or by taking a long position and then being tempted by adverse circumstances into keeping the position open to answering further cash calls.
First contact
17. James Haughey did not initially go to Davy with a view to entering into any contract for difference in shares. The Court accepts that whereas he may have heard of a CFD he did not know what that was. He had done some dealing in stocks and shares before, but only of the ordinary kind. Davy present this as evidence of expertise and also of long dealing, but James Haughey was then barely two years past his 18th birthday. As to what happened, there is a stark conflict of evidence. At least the beginning of the crucial day of 25th August, 2005 is undisputed.
18. Among the properties which James Haughey had inherited were two rented houses in Drumcondra. He had to manage these properties himself and he did not have a property manager or agency. On that day, he collected rent and then went into Bank of Ireland in Drumcondra because an idea had occurred to him. Recollecting family meals in Jurys, happy occasions when he stayed there with his mother and father, he decided to buy into that hotel group in the form of Jurys Doyle as traded on the Irish Stock Exchange. Davy present this as a shrewd financial choice. The Court does not accept that. The amount which he had to spend was up to €200,000 and while there was a share trading desk in some banks, this was beyond their limit. He was therefore put into a taxi by Bank of Ireland and sent to Davy, a firm with which he had no previous contact. He indicated the nature of his business and met Niall Kelly. They waited together for about 10 minutes until Anthony Moyles became free. This is where the conflict in evidence begins.
19. Anthony Moyles describes his recollection of James Haughey at this first meeting as being small in stature. He claims that they spent “well over an hour” on different topics, and over that time he noted his form of speech to be deliberate and with an unusual accent but not as manifesting any impediment. The form of speech was described as being similar to that over the six days of the cross-examination of James Haughey before this Court. A clear impediment was manifested in the speech of James Haughey during this hearing. To fail to have noticed it and to fail to have been put on warning of potentially serious underlying problems is highly improbable. Anthony Moyles said that a stroke was mentioned but that James Haughey made light of it, describing it has not affecting him. He said he had €5 million plus to invest in a share portfolio and that he had finished first year law and English in UCG. He never got the sense that James Haughey did not know what they were discussing and or had any problem in understanding anything. On the plaintiff’s age Anthony Moyles said: “okay, he was 20, but we get all kinds in Davy.” James Haughey was described as being determined in his view, the implication being that he was unbiddable (something that this Court does not accept). James Haughey was described as being a person who manifested serious knowledgeable in shares, mentioning values and particular stocks such as Zara, Indetex, European Aerospace; and as a person who had familiarity with financial markets, read the newspapers’ financial pages and financial magazines. It was very late in the hearing before ‘The New Yorker’ was curiously identified as one of these. Anthony Moyles would rate James Haughey on the basis of that meeting, where 10 is an experienced investor’s knowledge of stocks in the financial markets, as ranking around 6 to 7. He explained to him that Davy offered discretionary, execution only and advisory accounts and that to trade in CFDs a customer would have to open an advisory account. He says that he explained by reason of examples how CFDs have multiples in terms of profit and loss and how these would result from engagement with these financial instruments. This was clearly explained, he asserted, as was the difference between buying shares in the hotel group and engaging in positions on contracts for difference on that stock. The relevant leverage was 20% for Jurys Doyle. The margin call was explained as being a risk control. He assessed James Haughey from the point of view of the four key components of stockbroker-client interrelationship, namely wherewithal, knowledge, risk appetite and objective. He explained that there would be an interest charge on the full position. Forms were produced to James Haughey explaining the nature of the risk, the nature of the relationship and the nature of the product and it is asserted that these were gone to through carefully. These were signed in front of him. On the face of at least one of these explanatory forms, if the wording is correct, it was designed to be taken home and studied and then signed. While the meeting lasted over an hour in fact, it would have needed less than an hour the Court was told. The forms were then completed by being signed. These were not filled out because Anthony Moyles had a full picture of what James Haughey was like. That is Davy’s case. Or, it was said, if the forms were not to have been filled out properly it was the job of the document section within Davy to bar him from acting. That document section never came back to stop him. That was a serious failure by Davy in appropriate controls. Anthony Moyles, he said, was impressed by James Haughey, a person who at 20 was managing property and doing a law degree. He did not know that James Haughey had gained a place in university on an access program for persons with disabilities who use a scribe. He saw him as engaging in speculation and noted him as being well aware of the risks involved in CFDs. Part of the reason that he saw him as engaging in speculation was that anyone who is prepared to put the amount eventually used that day, being €175,000, on a single stock fitted within that category. There was also limited evidence from Niall Kelly. He said he had no clear recollection of the meeting but did not notice anything unusual about this client. He did not recall what was said in relation to the nature of any talk about CFDs. It is possible that his recollection is a blur.
20. James Haughey described the meeting in a radically different way. He had gone in to purchase shares with a sum of in or around €175,000 but came out of the stockbroking firm with a long position in contracts for difference on that stock and a liability five times higher, potentially, than he had wanted. This was a reference to a 20% stake. He did not understand what he was doing. He described Anthony Moyles as saying that he could buy shares in the normal way or that we could enter into these instruments. Lots of terms were used like leverage, margin calls, limits, et cetera which he claims he did not understand. He was told that engaging in CFDs was normal and that 40% of share trading was done in this way on a particular Irish index. “Highfalutin terms” were used so much so that at times it was as if Anthony Moyles was talking in Latin. The choice presented was one of either making modest returns in share dealing or of joining “the big boys” in what was presented as the CFD club. The prospect of making 10 times the relevant profit was put forward as a typical possibility, though here the leverage was 20%. Standard forms were put in front of him to sign. These were not explained. There were flashed in front of him by Anthony Moyles for signature and not read out. They were put in a file. They shook hands. Anthony Moyles said that he would be in contact. Thus it was that this unfortunate series of events began according to James Haughey.
21. What has been lost sight of in the Davy presentation of events is how serious this meeting was and how it laid the foundation for a set of transactions generating fees spanning two and a half years. This, while profitable at times, ended up with a serious loss for this plaintiff. It was perhaps too easy for anyone to fall for the attractions of the apparent wealth of James Haughey: in an ancestral adage déanann ciste cairdeas. Whether folk wisdom is appropriate now or not, there is a serious legal duty on any stockbroking firm selling financial products which may or may not be suitable for particular client to find out who that client actually is. The Court accepts that James Haughey was encouraged towards investing in contracts for difference by Davy. This was inappropriate to him. Further, every system dealing with money must have checks and balances. It is improbable that any stockbroking firm would attempt to stand over a process which involves the careful filling in of forms as being adequately transacted when the relevant forms were not filled in at all. Regrettably, that has been the position adopted in this case by Davy. Whereas James Haughey in the course of the hearing walked himself into a situation of alleging that forms were filled out in blank and then filled in later by Davy and whereas this has been criticised, the actual situation is not impressive. After James Haughey had signed the application form to join Davy as a client, he was given a client number on the form in his absence; this is ordinary administration and above criticism. In his absence, as well however, he was ranked as a “gold” client and someone with an “aggressive” disposition towards investing. The reference to the precious metal, the Court was expected to believe, and sees no reason to accept, was something to do with the number of forms that might to be sent to him over a year or perhaps something to do with his financial wherewithal or perhaps not. As to an aggressive approach to the stock market, with any degree of care being exercised this would be something that might responsibly be teased out over weeks or months. Exercising any kind of even minimal duty of care, the result of an ill-considered approach can be financial ruin. Does the client really want that? This is the kind of question that a stockbroker should ask. On the form James Haughey signed on foot of a declaration as follows:
I hereby declare that the information given on this form is correct and if any of this information changes materially, I undertake to inform you in writing without delay. James Haughey. 25/08/05.
22. Any such declaration is very serious as it is key to the service being paid for. Absurdities have been talked over days about this form. Reality must be faced. It is a blank form. There is no information given. The document contains serious queries about the particulars of the information sought which would be necessary for any stockbroker to offer any kind of an appropriate service to the client. Even the contact details were left blank. On one other form an address was given for James Haughey as being care of a particular street in Ranelagh where hundreds of people live in scores of different but similar terraced houses. The result is that there is uncertainty and more as to what this particular client received by post. That is just not careful work. Various addresses were used for communication.
23. In the form, the client is asked to rank his attitude to risk as between 10, speculative, and 1, conservative. This is blank. The client is asked to describe his investment knowledge and experience as between limited, at 1, and extensive, at 10. This is blank. The client is asked to indicate the approximate value of investment holdings as between a range such as deposits, An Post savings accounts, unit trusts, shares, options, unquoted shares, property apart from the home and other. This is blank. The client is expected to indicate the source of his income from employment, from rental and from other. This is blank. The client is asked what his current pension arrangements are and this is blank. The client is asked for any further information that he may feel is relevant. This is blank. The client is asked as to his initial investment amount. This is blank. The client is asked about his investment objective, whether it is growth, income, guaranteed growth or income and growth. Another very good question, except there is no answer. The client is asked what income he expects from his investment but this is blank. The client is asked what time horizon would be appropriate for his investment from up to two years to over five years and this is not filled in either.
24. Davy makes the case that seeks to justify this on the basis of a pen picture taken down by Anthony Moyles. Hours were spent on this pen picture and the bits that were right and on the bits that were wrong. Every attempt to justify this pen picture was futile. Here is the pen picture:
Personal Information
James Haughey. 5/7/85 single. Both of James parents are deceased.
His father died about 10 years ago and his mother died last year. He suffered a mild stroke himself in 2004 but he is in great health and does not seem to be suffering from it.
He is a resident in Ireland and enjoys watching all sports.
Intro Source:
Niall Kelly of the execution desk got a call and introduced him to me.
Investment Objective
James wants to buy one specific stock for the time being. He has been buying shares for over two years and his approach is that when he thinks the shares cheap he goes for it. He does not want to build a portfolio as yet but instead buys certain equities and reduce the downside risk by placing limits.
He will eventually look to diversify out of his large property portfolio. He has properties in the North of Ireland and in Dublin. He has already begun to divest and move into equities and he will be accelerating this process over the next 6-12 months.
Investment Knowledge
He has excellent knowledge of the market. He does a lot of his own research. He reads all the financial press and is well up on the working of the markets. He has just completed his first year in Law and English in NUIG.
Risk Attitude
James will take a loss of risk. He is willing to open a CFD product and to leverage up to purchase his specific stocks. He has again limited his downside with the use of stop limits, and he is well aware of the risks involved with the CFD’s.
Business Info
James is a student.
Source Money
James inherited over €5 million worth of property and cash deposits from his Mother and Father. He has most of the properties rented out at present and currently lives off the rental income. I have talked to him about diversifying his portfolio and possibly looking at sheltering his rental income. James has expressed an interest in meeting me again in a few weeks after this initial deal.
Ethical Preferences
James has no ethical preferences.
Correspondence
James would like all correspondence to go to his solicitor.
James Haughey, c/o 18 Upper Beechwood Avenue, Ranelagh, Dublin 6.
25. Apparently, there was another short meeting between Anthony Moyles and James Haughey in June, 2006 when the CFD provider’s account moved from Cantor FitzGerald to IG Markets. The result is even worse. The Court was told that there was no discussion of the parents of James Haughey at the initial meeting, or none to speak of, and yet the parents are on both of these forms, his father having died about 10 years ago and his mother the previous year. He is described as being someone who enjoys “watching all sports.” In the form from June, 2006, James Haughey is described for some intensely obscure reason as being a client to whom the designation “silver” should be applied, as opposed to “gold” a year earlier and in fact is called “Jim Doherty”. He is described in both forms as having an excellent knowledge of the market and wanting to take on a lot of risk. A quote may be appropriate:
Personal Information
James Haughey born 5/7/85 and is single. Both of James parents are deceased. His father died about 10 years ago and his mother died last year. He suffered a mild stroke himself in 2004 but he is in great health and does not seem to be suffering from it. He is a resident in Ireland and enjoys watching all sports.
Intro Source:
Niall Kelly of the execution desk got a call and introduced him to me.
Investment Objective
Jim’s objective is to grow his investment song. I showed him our CFD product and he agreed that in order for him to get a level of return that he was happy with for the year that we would invest the €50,000 into a CFD a/c and leverage it up five times. We would look to invest in good quality companies that we felt offered value.
Investment Knowledge
He has excellent knowledge of the market. He does a lot of his own research. He reads all the financial press and is well up on the working of the markets. He has just completed his first year in Law and English in NUIG.
Risk Attitude
James will take on a loss of risk. He is willing to open a CFD product and to leverage up to purchase his specific stocks. He has again limited his downside with the use of stop limits, and he is well aware of the risks involved in CFD’s.
Business Info
James is a student.
Source Money
James inherited over €5 million worth of property and cash deposits from his Mother and Father. He has most of the properties rented out at present and currently he lives off the rental income. I have talked to him about diversifying his portfolio and possibly looking at sheltering his rental income. James has expressed an interest in meeting me again in a few weeks after this initial deal.
Ethical Preferences
James has no ethical preferences.
Correspondence
Regular meetings and telephone calls.
James would like all his correspondence to go to his solicitor James Haughey, c/o 18 Upper Beechwood Avenue, Ranelagh, Dublin 6.
26. As regards other documentation, the Court has taken all of this into account. As regards documentation showing that James Haughey had not made a final will and testament, this is unlikely to have resulted from him as with his medical condition he is aware that the chances of further strokes are higher than with the general population. It is clear from his testimony that he worries seriously about his health. The attempt by Davy to justify this manifest lack of care has completely undermined the credibility of Anthony Moyles and any other witness from Davy. It is also fair to record that Anthony Moyles in criticising the document section of Davy must be regarded as correct. In any organisation with a functioning set of checks and balances any forms submitted in the name of James Haughey would be analysed one against the other for consistency and any form that had anything material missing should have resulted in a stop being put on any form of trading. Furthermore, the fact that such a situation could pass is negligence. It should have resulted as a matter of ordinary care in enquiries being made at a higher in different level as to what the nature of the situation at stockbroker to client level was. The more the issue of the forms is gone into, the more extraordinary the situation is that emerges. There was no clear idea as to what address the forms were to go to, accepting that James Haughey had a number of addresses. This latter factor should have made the address issue a priority for any administration. This meeting in June, 2006 was not characterised by either side in this case as having added to the sum of knowledge on the part of client or firm. By 2006, apparently, Davy had introduced, perhaps prompted by the move to IG Markets as provider, requirements that a senior manager should authorise the client as being suitable for CFD trading. Did the senior manager read any of this and did he look at the wealth situation, considering was it stagnant or not, after a year of trading with Davy as manifested by these forms? There is no evidence that any degree of care was exercised. Even so, on 12th June, 2006, an apparently senior individual who is described on the form as a “member of the CFD Authorised List” certified that James Haughey was suitable to open a CFD account through Davy, that a total exposure had been agreed with the client and the portfolio manager, that controls were in place within the team to ensure that the portfolio manager maintained that exposure under that particular limit. In fact, there was no limit. The form goes on:
I have reviewed the above named client’s suitability to trade in CFDs. I met with the portfolio manager who will be responsible for managing the client’s CFD account; together we evaluated the client’s financial position and assessed his/her attitude to risk, based on the documentation completed and forwarded by the client and the portfolio manager. I have carefully weighted and considered the appropriateness of this product to the client’s circumstances. I am happy that there is sufficient documentary evidence that the portfolio manager has taken time to discuss with the client the risks, relating to this product, as listed in the Davy CFD risk-warning letter. I am satisfied that the client fully understands these risks.
27. The Court is satisfied that this did not happen and that this form was filled in as a matter of paper covering. These forms were designed for careful execution. In the way they were treated the diligence expected of a stockbroker engaging with a client was rendered meaningless.
28. Many forms were discussed in the course of the hearing and the Court is mindful of them all. What needs to be most concentrated on is whether there was any change from the lack of care manifest in August, 2005 to the taking of care at any time within the limitation period. The Court is satisfied that this never occurred. Particular emphasis has been placed on the terms and conditions of the advisory service. The reality is that this is a contract whereby Davy agreed to advise the client in accordance with the aims of the client and in a way that Davy considers to be suitable for the client. This never happened. The terms and conditions of the advisory service limit liability to deliberate neglect. The initial meeting of August, 2005 demonstrates deliberate neglect. The change and lack of consideration of June, 2006 manifest deliberate neglect. The exaggerations in the job application form of December, 2010 have previously been referenced. In addition, James Haughey filled out a similar form in June, 2006. In this instance, the relevant fields are filled in. The account given by James Haughey, in this regard, is of obtaining that form and having been worried because of a recollection, either from school or university or talk with friends in university, of the obligation of utmost good faith in filling out insurance contract forms, he rang Anthony Moyles. In consequence of this phone call, and while a phone call was going on, the form was filled out in an exaggerated fashion in consequence of the urgings of Anthony Moyles.
29. It is been said in argument that the evidence of James Haughey is utterly improbable and especial emphasis is put on this conflict. That argument by Davy is not accepted. The form is filled out in such a way as to establish a wealth base at least three times higher than the form that was not filled out, but in respect of which the so-called pen picture exists, a year previously. It contradicts this wealth declaration: it is set at “over €5 million” and that is very far from €17.6 million. This should have been queried by the document section of Davy and it should have been queried by Anthony Moyles and it should have been queried and more by the senior manager authorising that James Haughey was suitable for CFD trading. There was a systems failure and a failure in responsibility by higher management. The question is asked on the form as to approximately “how much of these funds are available for your trading with CFDs with Davy?” The answer put in is “no limit”. That makes no sense. It was negligence in high degree to have accepted that form. The ranking given mentally by Anthony Moyles to the financial expertise in terms of investment knowledge and experience of James Haughey had, the previous year, been a 6 to 7. In the form completed by James Haughey in June 2006 his investment knowledge and experience is filled in as 5, which is a “good” level of understanding according to the scale provided. As to experience of trading margined or geared products, James Haughey answered in the negative: that he had none. It is further evidence that he did not understand what was going on. This should have been queried at stockbroker level and, more importantly, at senior manager level. That did not happen. The account of James Haughey on this most contested of all the forms is not improbable. It is probable that there was some input by Davy into the answer is to be given in filling out the forms in June, 2006. A form for an online service by IG Markets is dated 2nd June, 2006 with a view to linking into dealing software featuring live prices direct but this was not completed. This form is only a matter of information; but in the context of this kind of fast moving situation in financial instruments there is nothing more important than information.
30. The question emerges as to whether in August, 2005, June, 2006 and through to February, 2008, Davy, through the persons dealing with James Haughey, were aware of his limitations or at least put on notice that these limitations existed. It is probable in a high degree the Davy were so aware. It is even more evident that Davy as a firm was put on notice of the limitations and that negligently no enquiry was made when manifestly it was called for. Insofar as it may be argued that this was merely notice, the legal duty on Davy was to know the client and what is suitable for the client. The limitations of James Haughey were manifest to the Court during the hearing and it is apparent, as well, but this is not taken into account in the final assessment, that these limitations were obvious to those Davy witnesses who listened to James Haughey giving his testimony. Where someone is put on notice of a limitation, even to the extent of noting that someone has had a stroke, and the notice here was considerably more serious than that, steps should have been taken pursuant to the duty of care of a stockbroker towards his client to investigate what kind of investment might be suitable. Not everybody is the same and it is no shame to say the James Haughey was and is different to the ordinary investor in stocks and shares and in other financial instruments of a more complex variety. The denials by Davy cannot be accepted as probable. It is to be noted that in late 2010 and early 2011, when James Haughey had finally persuaded Davy to give him an interview, an email was sent from Anthony Moyles to another employee of Davy stating: “… go easy on him.” Taken in isolation this might mean nothing, but in the context of everything that has been seen and heard during the course of this hearing this is an expression of shared awareness by the defendant of the nature of the client.
Duty of care
31. Davy owed a duty of care towards James Haughey. This does not require any deep legal analysis. James Haughey was paying Davy to exercise that care. The duty of care owed arose from the contract but was independently manifested in tort. Davy owed to James Haughey the duty of care that is appropriate to an experienced stockbroker towards the particular client when, pursuant that duty of care, the stockbroker has taken appropriate steps to get to know the client and as to what his or her aims are, what his or her means of knowledge are, what his or her financial circumstances are, what the attitude of the client is to risk and, importantly, judged objectively, whether that level of risk is appropriate to that client. If it is not the client should be advised against and in some circumstances more than that.
32. The general duty of care owed may be compared to that which is required of a solicitor to a client. The comparison is appropriate since it is part of the job of the lawyer to ask reasonable questions with a view to ascertaining the true position of the client for the purpose of tailoring the advice accordingly. Here, Davy have continually made the hollow argument that merely taking a pen picture was enough to get to know a client. The implication of the lack of intervention by senior management in authorising James Haughey to trade in CFDs and the failure of the document section to put a stop on the account is that a practice of a sufficient kind was being followed. That is not a discharge of the relevant duty. The matter was put as follows by Henchy J. in Roach v. Peilow [1985] I.R. 232 at 254:
The general duty by a solicitor to his client is to show him the degree of care to be expected in the circumstances from a reasonably careful and skilful solicitor. Usually the solicitor would be held to have discharged that duty if he follows a practice common among the members of the profession… Conformity with the widely accepted practice of his colleagues will normally rebut an allegation of negligence against a professional man, for the degree of care which the law expects of him is no higher than that to be expected from an ordinary reasonable member of the profession or of the speciality in question. But there is an important exception to that rule of conduct… [T]he duty imposed by the law rests on the standards to be expected from a reasonably careful member of the profession, and a person cannot be said to be acting reasonably if he automatically and mindlessly follows the practice of others when by taking thought he would have realised that the practice in question was fraught with peril for his client and was readily avoidable or remediable. The professional man is, of course, not to be judged with the benefit of hindsight, but if it can be said that if at the time, on giving the matter due consideration, he would have realised that the impugned practice was in the circumstances incompatible with his client’s interests, and if an alternative and safe course of conduct was reasonably open to him, he will be held to have been negligent.
33. Share transactions invariably involve risk. It does not necessarily absolve a stockbroker of liability that a client agreed to risk without the needs, background and knowledge of that client being first properly probed and the advice tailored appropriately. As Clarke J. stated on the matter in ACC Bank plc v. Johnston [2010] 4 IR 605 at 639:-
While the duty of care of a professional person is often described by reference to the standards that would normally be applied by a professional of equivalent experience, it is clear from Roche v. Peilow that the mere fact that a practice is universal does not, of itself, immunise the professional concerned from potential liability, if it is a practice which, on reasonable consideration, the professional concerned ought to have identified as giving rise to a significant risk. In that context, it is apposite to note the reference of Walsh J. to a “stock” risk. There is risk in everything. Professionals cannot remove risk from the equation. However, professionals are normally employed to minimise risk or advise clients on relevant risks. Professionals should not expose their clients to unnecessary risk without, at a minimum, advising their clients of the risk involved and inviting their clients’ instructions. The mere fact that there may be a common practice to expose clients to a particular type of risk will not necessarily provide a defence. The ordinary duty of care, therefore, extends not merely to ensuring that the relevant professional person carries out his or her duties in the way in which other suitably qualified members of the relevant profession do, but also extends to considering whether common practices may so obviously involve unnecessary risks which can be eliminated that such practices should not be engaged in. It might be said that such practices are more honoured in the breach than in the observance in the proper sense of that quote.
Against that background, it seems to me appropriate to ask what the point of employing an independent solicitor might be if it is not to reduce the risk that might otherwise lie on the financial institution. As pointed out earlier, a financial institution, by instructing the purchaser’s solicitor to act on its behalf takes a risk. For the reasons which I have set out it would appear to be a risk which, at least in smaller transactions, financial institutions are willing to take in order to save costs. Where, however, the transaction is bigger and the financial institution chooses to reduce its risk by employing its own solicitor, then it does not seem to me to be appropriate for that solicitor to take it on him or herself to expose the financial institution concerned to the very risks which it has sought to avoid by employing him in the first place.
34. Central to any view that might reasonably be held as to the nature of the stockbrokers duty towards his client is that clients are different and before a client can be advised reasonable efforts must be made to get to know a client. There is a binding obligation under the rules of the Irish Stock Exchange 1997 which were in force on 25th August. 2005. Counsel are agreed that these rules govern the relationship up to November 2007. The relevant rule in that regard is encapsulated in rule 4.5.3:
Before a member firm enters into a relationship with a private client, other than an execution only client, it must take reasonable steps to obtain information in writing from that client, details of his:
(a) personal financial situation,
(b) investment objectives,
(c) attitude to risk,
(d) investment experience,
(e) investment restrictions, and
(f) any other facts about his position which the member firm reasonably believes it needs to know, or which it ought reasonably be expected to attempt to find out.
The firm may in capturing a client’s investment objectives and attitude to risk provide the client with a number of standard investment objectives in its client documentation. For each investment objective and risk option listed, the firm shall ensure that it provides sufficient guidance to enable the client to make an informed decision.
35. It was key to the relationship of stockbroker and client that the client paid for these services. The basis on which the client paid was that appropriate investigation should be carried out and the service tailored accordingly. Investors can be different. The fees of Davy were paid for discharging duties particular to the specific client. In this respect Davy failed to meet that standard. Counsel for Davy has rightly accepted that this was the standard that applied. Other duties arise as well which apart from this duty are not essential to the decision in the case. Insofar as Davy have pleaded that risk warnings were given, and that that was in compliance with section 4.2.4 of the same rules, this is not accepted. The additional requirements set out in section 4.2.2 in relation to advisory clients were not, on the evidence in this case, fulfilled. In addition, it is not probable that section 4.1.1 was complied with. There was a duty of care but even if the duty of care is cast on the basis of a contractual duty of deliberate neglect, such neglect was the situation here. When the regulations were changed in November 2007, this led to no discernable change in the practice of Davy as regards this client. Actually, there has been much concentration in this case on the European Communities (Markets in Financial Instruments) (Amendment) Regulations (No. 2) 2007 (S.I. No. 773 of 2007) but on analysis of the terms, these continued but added nothing to what the obligations were already that are essential to this decision. Some specific terms were referenced, some not pleaded, and this is not appropriate to the orderly disposal of a case.
36. The duty of Davy to James Haughey duty existed concurrently in contract and in tort. James Haughey was paying for advice. He had contracted for fees to receive advice based on an appropriate analysis of who he was and what his objectives were. As was stated by Lord Goff in Henderson v. Merrett Syndicates Ltd. [1995] 2 AC 145 at 193-4:
[T]he common law is not antipathetic to concurrent liability and [..] there is no sound basis for a rule which automatically restricts the claimant to either a tortious or a contractual remedy. The result may be untidy; but given that the tortious duty is imposed by the general law, and the contractual duty is attributable to the will of the parties, I do not find it objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him, subject only to ascertaining whether the tortious duty is so inconsistent with the applicable contract that, in accordance with ordinary principle, the parties may be taken to have agreed that the tortious remedy is to be limited or excluded
Expert opinion
37. Two expert witnesses gave opposing evidence on the key question of the discharge of the duty of care. Both were genuine experts and the court has benefited greatly from the debate between them. Paul Keenan for Davy sought to justify the pen picture as being sufficient in the context of the “know your client” exercise. Paul Keenan in his professional life has otherwise sought to generally warn financial service providers of the necessity to ensure compliance at a higher level than that of traders. This is an important thing to do from the point of view of the public. In this, he is completely correct. Writing about what may be described generally as a lack of management scrutiny he said:
Internal audit has a role to play, but their role is always behind the times, runs to a known schedule, and trusts the systems that the traders are able to manipulate. It requires expensive forensic training and major changes to be effective. Compliance officers, these days, are usually on the trading floor and have daily contact with traders, they understand SYSC, and so, if given the tools and the access, will understand how to monitor for SYSC compliance. Compliance monitoring already has a strong presence in banks, and is easily extended to incorporate SYSC.
38. Paul Keenan is involved in serious and important work and is entitled to the respect of everyone in that regard. He said the above quote referenced another service. At the very least, the quote declares a reasonable statement of principle which the Court accepts. The Court cannot accept, however, that a pen picture that was never sent to James Haughey for his approval can be regarded as equivalent to a client profile. This was part of the service being paid for. Nor can it be accepted that any aspect of the plaintiff James Haughey talking in court about contracts for difference could be described as “quite impressive”. That is not so. It cannot be reasonably said that an execution only account might have been suitable for James Haughey to trade in contracts for difference because he would have been under the “watchful eye” of Anthony Moyles. Nor can it be accepted that even an average person could over the course of an hour read through the documents presented on 25th August, 2005 and see the warnings even more swiftly. That is unrealistic and as a matter of fact in this case cannot be accepted as probable. These, and other considerations, lead to Court to the conclusion that, while there is much benefit from debating the contrary view, the expert evidence proffered on behalf of the plaintiff James Haughey by Joe Motley is strongly to be preferred.
39. His view was that even if the plaintiff was demanding greater risk, there was a duty under the Irish Stock Exchange Rules to take all reasonable steps to ensure that the advice from Davy did not encourage unsuitable activity. His view was that Davy was under a responsibility to advise James Haughey away from extensively risky positions at a much earlier stage. Further, if Davy believed that there was a persistent pattern of James Haughey choosing to undertake trades which did not meet their suitability criteria, it was open to them, and they should have, requested him to change the status of his account to an execution only account. In that case the stockbroker under the relevant rules would not be providing any advice in relation to the client transactions and would not be obliged to verify their suitability for the client. This was a series of transactions which, at their height, exposed James Haughey to risks in excess of €30 million. This was against a background where his ostensible value in the initial pen picture was perhaps €5 million and where that included, it would seem, his residence, something which should not be taken into account. No one should be in a position to invest, he said, unless they mean to take the risk of loss in value of 50%. The language in the warnings was dense and was not easily taken up. Once the account was changed from Cantor FitzGerald to IG Markets as provider in June, 2006 the level of risk was ramped up. The Court would find it important to note the total failure to conduct a further face to face meeting beyond a brief chat and yet more empty document signing. That level of risk, according to Joe Motley, was too high and it was too concentrated, essentially on two or three companies and exclusively on one kind of investment. That exclusivity was not appropriate. To accept an answer in the June, 2006 from James Haughey in relation to the level of commitment of assets as being “no limit” was nonsensical, he said. The client has to be looked at in terms of what the client is, according to Joe Motley, and if someone has an inheritance then that person may not be shrewd, not a person who has earned their money and worked their way into a level of wealth. Furthermore, if someone has an inheritance and is merely a student, that person cannot be expected to turn to the employment market readily. That is right. Building a career takes years. If someone is to depend on an inheritance, then the money must be structured through their broker so as to have a reasonable chance of lasting over decades. If a broker feels a client is taking too much risk, the right thing to do is to change to execution only and this should have been done in respect of the disputed transactions from May, 2007. This evidence of Joe Motley is accepted. It is objective, it is clear, he did not shy away from answering difficult questions and he was of real assistance.
40. Another aspect of Joe Motley’s statement of evidence is accepted, though this is not essential to the decision in the case. This reads:
I was unable to find any evidence in the documentation of Davy having given its terms of business to the plaintiff before any dealing commenced (as required under rule 4.2.1 of the rules of the Irish Stock Exchange) and there is no record of any disclosure anywhere else of what commission rates, financing rates and other charges would be applied to his account.
41. The Court would also note that the rate of return in terms of the interest charged on the full amount of taking a position on shares as between the stockbroker and the provider was kept out of evidence. As to how and in what circumstances a stockbroker is entitled to a bonus and on what basis it is calculated was fogged in the evidence so that no meaningful information came across. As to what a “silver” client or a “gold” client may be was deliberately obfuscated in the evidence. References to the number of brochures that might be sent to a particular kind of metal-designated client as opposed to another, gold being approximately 100 times more expensive as bullion than silver, was explained in a silly way. None of this is important. And none of this is taken into account in making any decision in this case. It regrettably, however, does show a lack of trust for the independent and completely transparent public forum of justice that the High Court represents.
42. Whether there are experts or not, it is the responsibility of the Court to form a view The Court is charged with that responsibility and unlike either expert has a complete view of live evidence and relevant documentation.
Borrowing
43. There has been some dispute between the parties, in addition, over borrowing by James Haughey to fund these contracts for difference. This is not essential to this decision. In terms of fact, it seems that a Bank of Ireland loan was taken out on the equity of some of his property on 21st April, 2006 for €1.64 million. The loan cheque issued on 31st May, 2006 and went to a solicitor with whom James is friendly on 4th July of that year. Then, €650,000 was lodged to the CFD account of James Haughey. On 14th March, 2007, a Bank of Ireland loan was raised on the equity of property in the sum of €1.2 million. The cheque was made payable to James Haughey on 11th June, 2007 and €1.1 million was put into the CFD account. So, €2.84 million was raised by James Haughey out of his inheritance in property and, of this, about €1.75 million was put into his CFD account. Money was put into that account and money was taken out of that account to buy property, to pay capital gains tax and for other reasons. This movement in money is supposed to be significant, according to the argument advanced by Davy. That is not accepted. In reality, €1.09 million went elsewhere from these loans. Having carefully considered the contradictory evidence, the Court accepts that Davy encouraged these loans. That huge amount of finance was raised against property that was the inheritance of James Haughey from his late parents. This was not an appropriate way to deal with this client and Davy would not have dealt with this client in this way had a proper “know your client” exercise been conducted from the outset in August, 2005, or in June, 2006, or in June, 2007 or at any time up to the disastrous losses which manifested in January, 2008.
Summary
44. The Court is bound as a matter of law to accept, and further accepts as a matter of expert opinion, that the correct way to have dealt with James Haughey would have been for Davy, firstly, to get to know him properly. In that context, secondly, if there was a manifest desire coupled with appropriate knowledge to engage in some form of trading in contracts for difference, someone with his background and vulnerability in terms of not having a job and only having inherited wealth should strongly have been advised in writing against any trading in contracts for differences. The correct approach, thirdly, for any investment for this particular client with his particular needs and his special disabilities would be to structure a share portfolio that was spread over time and over investments that would minimise risk; thus providing a reasonable prospect of a steady but conservative return. Had Joe Motley been receiving fees from this client that is indeed what would have happened. It did not happen. That failure represents negligence and manifest breach of contract through deliberate neglect over the relevant period of the relationship.
45. In summary, Davy manifested an insufficient level of care throughout the entirety of the relationship with James Haughey. Davy failed to provide the service paid for throughout the entirety of the relationship. This was equivalent to, or amounted to, deliberate neglect. This particular client should never have been allowed at any stage of this relationship to engage in contracts for difference either at all or at the level involved. Nor did James Haughey know what he was doing to the degree that he ought to have known prior to being introduced to and while being allowed to speculate with these products. The Court is satisfied that the concept and the ramifications of contracts for difference were never properly explained to James Haughey by Davy. The Court is further satisfied that he remained genuinely mystified in giving evidence as to the full implications and ramifications of these instruments.
Limitation of action
46. There was a complete failure to get to know James Haughey for what he was. There was a complete failure in that fundamental obligation under the rules of the Irish Stock Exchange. That obligation is not one which arises at one point in time only and is then completed; it is a continuing obligation. In this case, at no stage was that obligation met. While it may be met by a thorough introduction and analysis that maintains a profile over years or decades, failure to engage in that analysis means that there is an unfulfilled obligation throughout the entire of the relationship. That is why this case has nothing to do with the Statute of Limitations.
Civil Liability Act
47. Another point pleaded by Davy was that section 17 of the Civil Liability Act 1961 did not entitled James Haughey to recover damages. That section reads:
(1) The release of, or accord with, one concurrent wrongdoer shall discharge the others if such release or accord indicates an intention that the others are to be discharged.
(2) If no such intention is indicated by such release or accord, the other wrongdoers shall not be discharged but the injured person shall be identified with the person with whom the release or accord is made in any action against the other wrongdoers in accordance with paragraph (h) of subsection (1) of section 35; and in any such action the claim against the other wrongdoers shall be reduced in the amount of the consideration paid for the release or accord, or in any amount by which the release or accord provides that the total claim shall be reduced, or to the extent that the wrongdoer with whom the release or accord was made would have been liable to contribute if the plaintiff’s total claim had been paid by the other wrongdoers, whichever of these three amount is the greatest.
(3) For the purpose of this Part, the taking of money out of court that has been paid in by a defendant shall be deemed to be in accord and satisfaction with him.
There are a number of problems with the argument advanced by Davy. It is certainly the case that the statement of claim, in common with almost every pleading before the High Court contains many claims that were not pursued. One of these was conspiracy and another was negligence alleged against both defendants. The first day of this case was taken up with waiting for the parties to negotiate. No court takes an interest in that and will deliberately remove from the process. The result was that the case against Bank of Ireland was discontinued and judgment for that bank in excess of €3 million was entered as against the plaintiff. That was in respect of loans and the usual interest, apparently. The Court in no way enquired into that and was not asked to. There were vague references to the pleadings. But where is the concurrency of liability to James Haughey? How in those circumstances can it be said that the Bank of Ireland was a concurrent wrongdoer with Davy since no liability was ever established against that bank and, on the contrary, a substantial judgement was entered by the supposedly concurrent wrongdoer against the plaintiff? This is supposed to be because the bank and Davy are pleaded as being in a conspiracy, in other words an agreement to commit an unlawful act, as against the plaintiff. Where is the evidence for that conspiracy? How can the court possibly come to the conclusion that an unrepresented party, who has left court because the case involving that party has been settled, is a wrongdoer? Furthermore, where is the “consideration paid for the release or accord”? The section is an entirely sensible means of ensuring that compensation on the double is not paid where the case is settled as against one wrongdoer but the defendant is either kept in the dark or is deprived of the benefit of the appropriate measure of damage. As a matter of contract, that measure is the damage which flows naturally from the breach. This is to be judged according to the nature of the contract and what could have been contemplated by the parties as a consequence of a breach. In tort, the measure of damages requires compensation to put the plaintiff back into the position where the wrong is substituted by an appropriate monetary award: thus, in theory, as if the wrong had never been committed. But, where is the wrongdoer that accord has been achieved with? Is it supposed to be Bank of Ireland? If so, the terms of the settlement contradict any such assertion. On the contrary, the plaintiff paid money. In law no one pays money to a wrongdoer. What is missing from this argument is a demonstration of what wrong has been committed by Bank of Ireland and what compensation has been paid by that bank to the plaintiff so that it can be said that the injured person is to be identified with the bank because of the release or accord.
Knowledge of losses and warnings
48. The Court accepts that James Haughey is likely to accept warnings and to act on them. The Court accepts his often repeated statement in evidence that having hired an expert he is likely to have followed that expert’s advice. Whether or not the nature of his personality is such as to make him vulnerable to the advice of those he looks up to, a common enough human failing in any event, is not part of the matrix of fact that makes up the decision in this case. The Court is not at all content to rely on written accounts of advice given to James Haughey by Davy. The failure to properly record the crucial aspects of the relationship from the start, and all the way through this relationship to consider its elements, indicate that the records of Davy are unreliable. Even were the records of advice given to be reliable, the nature of what the plaintiff was in terms of what he was and what his needs were should have been, and was not ever, taken into account in giving that advice.
49. The disastrous positions on Ryanair shares were initiated and partially entered into while James Haughey was being treated as an inpatient in the psychiatric unit of Galway University Hospital. The Court considers that it is highly probable that conversations took place at that time between James Haughey and Anthony Moyles as to where he was, how he was doing, what exams he had passed or failed or had had deferred or as to any major event in his life, including the loss of his close friend. It is less than probable that Anthony Moyles advised against taking up any position in Ryanair. The evidence has been carefully listened to and the stark contradiction between advice recorded in a telephone conversation of 24th April, 2008 and a statement in evidence that airline shares in general were somehow generally to be distrusted because of the risk of a crash is noted. Ryanair is regulated by the Irish Aviation Authority in its operations and this opinion is, in consequence, surprising. It is likely that positions in Ryanair were taken and were maintained in consequence of advice to James Haughey from Davy. In that regard, the Court notes that while some of the positions were being built Anthony Moyles was training in sport abroad. In terms of the probability as to what happened, however, on the state of the evidence, May, 2007 was a time to cut completely any relationship by Davy with James Haughey and contracts for difference. To fail to have done that, in the context in which it occurred, was a failure to respond to the developing nature of the relationship which has to be based on knowledge by a stockbroker of his client.
50. On 25th July, 2006 a note appears on the file:
Both myself (Daniel Molloy) and [Anthony Moyles] advised client [James Haughey] that it would be very risky to go short on Greencore shares at this point in time. We highlighted the risk […] Our advice was that he should not short the stock at this point in time. Client proceeded regardless, requested to go short on 2,000,000 shares at €4.20.
51. In fact, the position was not taken up by James Haughey and the Court can be satisfied that Davy were capable of giving advice and the James Haughey was capable of acting on it.
52. Then on 31st July, 2007 a note was dictated by Anthony Moyles to John Clohisey, who was then his assistant. There is a problem in relation to phone calls in this regard since John Clohisey’s phone call was not recorded until a later time on that day. Part of the suspicion raised in this case as to phone calls was that many took place outside the internal records of Davy on mobile devices owned by the brokers. That is probable. The note reads:
We reviewed the CFD portfolio with James on 31st July, 2007. We explained the recent volatility in the markets and pointed out that there could be further downside from here in the short term. He is happy with the current positions and will send in more money if required.
53. John Clohisey gave evidence. There was a strong sense in his testimony as to how far he would go. His evidence is taken into account in so far as it is probable and in so far as portions of it may be accepted. Such portions do not help the defendant’s case.
54. On Wednesday 1st August, 2007 another note was dictated by Anthony Moyles to John Clohisey:
We spoke with James on 1st August 2007. We discussed the idea of putting a short position in place to hedge his current long positions in the market. We warned him about his large exposure to Ryanair and Inditex and the risks surrounding this in the current market. James advised that we will consider putting the short in place and that he would revert if he wishes to hedge his portfolios.
55. The problem with this advice is that short positions were soon after put in place and that Inditex was eventually sold. The short positions were on stable shares that were not likely to balance the wild fluctuations that eventually came to characterise the Ryanair position. These short positions did not at all solve the serious problem and yet they were advised by Davy as part of the solution.
56. On Wednesday 29th August, 2007 there is another file note at a time when John Clohisey was on holidays:
I spoke to James on 29th August 2007. I explained the situation to him that we coming into a very turbulent time in the markets over the next 6-12 months. I explained to him that if the market lost on average 20% he would have a margin call of close to [€]5 million based on his current holdings in Inditex and Ryanair. He said that he understood and would bear it in mind. He did not want to reduce any of his holdings at present.
57. Shortly thereafter, the Ryanair position was reduced somewhat, by about a third. Inditex was sold leaving only Ryanair, but including short positions on a range of other shares bundled. The last trade in Inditex seems to have been 21st September. 2007. The short positions, which were commenced in August, 2006, continued until 27th December. 2007 and at one point, on 30th October, 2007, these short positions reached €5.844 million. Earlier shorts are not relevant to any outcome. In the context of all that has occurred in this case as regards note keeping and record checking, these Davy notes cannot be relied on as a probable account of the advice given to James Haughey. Furthermore, an alarmingly self-serving note was penned to the file that was dictated by Anthony Moyles to John Clohisey as of Saturday, 27th October, 2007. The circumstances described in court of dictating this note are improbable. The note reads:
We call James on a daily basis to review all holding in James’s CFD account. James has a good understanding of the financial markets. He has his own ideas on companies. He regularly researches specific companies and reads the financial press. He understands leverage and has used this tool in his own property transactions. Anthony has explained how leverage works with CFD instruments and the risks involved. James has been supplied will all the relevant documents on CFD and his happy with the risks involved. James relies on Davy for investment ideas, but also makes his own calls with regard to buying certain stocks and with regard to selling out of positions. James confirmed that he was happy with the recent sale of Inditex (September 2007) and Independent News and Media (April 2007). James confirmed he was happy to hold all stocks currently in the portfolio including long positions in: Ryanair and short positions on the FTSE 100, EADS.
58. This note does not record the nature of the relationship as it appears to be probable to this Court. Davy as a firm was aware that James Haughey had difficulties. The responsibility of Davy in that regard was to terminate any involvement by James Haughey in contracts for difference. That relationship should never have been entered into in the first instance. It should have been reviewed properly. Several opportunities arose for appropriate review during the course of this relationship by Davy. The episode of strain was one obvious one. The positions could have been terminated on the changeover from Cantor FitzGerald to IG Markets but this did not happen in June, 2006. When the levels of stress that were apparent to Davy resulted in James Haughey ending up in hospital, whether he said psychiatric or not to anyone in Davy, the relationship should have been again reviewed in May, 2007. Instead, this disastrous series of events continued. In so far as it is alleged that any warnings were given, the Court could only be in a position to accept that of 25th July, 2006 as probable. That is because of the source of the note is not shown to be inaccurate. Any other notes are likely to be garbled and any testimony with regard to these warnings came across as unlikely. Any advice given to counter the long positions in Ryanair with short positions on a range of shares was insufficient advice. But it was advice that, on the documentation, was probably taken by James Haughey. Clear and unambiguous advice to move out of contracts for difference would have been given by any competent and careful firm of stockbrokers on the review date of June, 2006 and what should have been a review date of May, 2007. In what Davy choose for him, James Haughey was totally and completely at sea and out of his depth. A review by the documents section was absent as a check and higher management did not conduct any necessary review even in signing off their client as suitable for contracts for difference speculation.
59. One of the aspects of the law of negligence is predictability. No reasonable stockbroker would have allowed James Haughey into this kind of trading because no reasonable stockbroker could reasonably have predicted a good outcome over time for him as a client. In terms of time, a reasonable stockbroker would have looked at where James Haughey was at financially and in terms of employment and in terms of source of income and in terms of whether assets needed to be fostered as opposed to speculated and would have asked how long the money he had was to last. All such questions on the evidence in this case would have indicated the same result. Even had warnings been given, they did not override the situation into which Davy had put James Haughey both as a matter of fact and as a matter of law.
Information
60. It has been proven that statements from IG Markets were emailed to an email address for James Haughey at University College Galway. Davy had two different email addresses for James Haughey, both very similar. This lack of attention to detail is not impressive. In the end, it is likely that emails went regularly directly from IG Markets to James Haughey at his university email address. The Court does not accept that he understood these or how to read these properly. James Haughey has no recollection of the emails in question. That evidence came across as reliable. The data manager from the university was called. All emails have by now been deleted. IG Markets have indicated that no emails were replied to. It is hard to conclude what happened. One possibility is that the emails were treated as spam and were accepted but put into a spam folder in his inbox where they were left unread in consequence of university protocols. This is unclear. It seems less likely that they bounced back as this would leave a trace, in other words IG Markets would know of it through their technology branch. Another possibility is blocking because of the size of the attachment but there is no information as to the university protocols at the time. Another possibility is that James Haughey ignored everything and relied on Davy to keep him informed. What is clear is that he did not fill out the form for access to IG Markets computer information on a specialised website. This has been mentioned earlier in the context of forms. He says that he complained to Davy that he needed paper information and he asserts a suspicion that Davy stopped such records because of a dishonest act. The Court accepts that nothing done by Davy as a firm was dishonest in their dealings with James Haughey. There was negligence and that amounts to deliberate neglect. That is all. The Court accepts that a request for paper information was made, perhaps not made too assertively, and that the IG Markets records were an insufficient substitute. James Haughey seemed to have been genuinely puzzled when the IG Markets email attachments were drawn to his attention. It is probable that the emails did not reach him. Even if these did get to him, more than that was required for him as a client to show how the accounts were working out. As he complained, one position may be clear but the overall result was what needed to be shown. Again, this finding is personal to this plaintiff. But again, the “know your client” exercise requires reasonable levels of scrutiny as to what each client needs. The Court is not satisfied that the case made by Davy as to the appropriate delivery of email and any other written documentation is made out as a probability.
Damages
61. Both John Harding and Andrew Brown are exceptionally able accounting experts. They met and agreed a joint report. On one issue they are divided and that is the result of awarding damages. The logic inherent in the evidence of John Harding makes his viewpoint preferable though the debate with Andrew Brown was of considerable benefit in the clarification of the issues.
62. The Court has a fundamental view. This trading in contracts for difference would never have taken place if the stockbroking firm had gotten to know James Haughey. It would have been stopped, and replaced by conservative trading of the Joe Motley variety, had such knowledge been acted upon by Davy. The approach of the Court on damages is to removing those trades and to putting the plaintiff back in the position he would have been in had no trades taken place. The Court does not accept that losses would probably have been made in alternative investments. The Court considers it probable that investment in a range of good stocks through cash ownership would place a foundation of wealth diversification on a firm footing. It is not likely that the money would have been lost or diminished or thrown away. Nothing as to the alternatives as produced by Davy would convince the Court that anything other than maintenance of funds with some small growth would have been achieved had there been sensible advice of the kind that would have emanated from Joe Motley.
63. On the key issue of the carry forward of capital gains: the Court considers that the precipitation of James Haughey into these products was wrong and that maintaining him in that sector of speculation was wrong on every day that it occurred. The measure of damages is as to removing that wrong and returning the plaintiff to a situation as if these regrettable excursions into leveraged products had never occurred. Commenting on his interactions with Andrew Brown, and reasoning through his position, John Harding said as follows:
We agreed that the capital gains tax paid was heading that needs to be taken into account, primarily because notwithstanding that losses were occurred in the 2008 CGT losses, or losses for capital gains tax purposes, these losses cannot be set back against the capital gains tax paid into thousand and seven and in earlier years. In other words, once you paid tax on previous gains that taxes settled and can’t be offset. So, in terms of assessing the amount of money that would be required to put the plaintiff into the position that he would have been in had there been no CFD trading, the objective is to say: “look, if there had been no CFD trading he wouldn’t have made the profits in earlier years which we have taken into account and netted off in arriving at the €1.5 million but neither would he have had to pay the capital gains tax, the irrecoverable capital gains tax that was paid on these”, so that becomes a valid heading of claim… Arising from the CGT legislation as it’s currently structured, the losses that were incurred in January 2008 cannot be set backwards but can be carried forward in terms of an ongoing situation. In that situation the carried forward CGT losses would be available to use against any future capital gains that the plaintiff might make… Where there is disagreement is that in the context of this case, in the context of the plaintiff receiving compensation in this case in the amounts claimed… I see that at a superficial level it looks like we have €3.7 million of losses to carry forward and that we are receiving compensation, or would, in that situation, receive compensation of €2 million. So in such a situation, at face value, it looks like there would be residual losses that the plaintiff could carry forward and that might be available to him subject to the legislation not changing and subject to him earning profits at some point in the future and that is the position. I believe… that cannot sustain examination. I believe that in the context of the settlement of this case, for example, in the context of an award of damages of the €2 million that that award of damages fully compensates the plaintiff for the €3.7 million of losses that were incurred in 2008.… or allowing a credit for the after-tax income that he earned in previous years, implicit in these net figures. So when you decide the figure, you discover that he is receiving in for the losses that were realised in 2008 and he’s handing back the after-tax profits that he made and in such a situation the capital gains tax losses will not be available to him if he’s awarded damages in the amounts claimed.
64. The Court fully accepts the logic of this position. It is also improbable that gains will be made by the plaintiff. It was argued that since receivers were appointed by Bank of Ireland over his properties that gains will probably be made on the sale of these and that losses carried forward must be available as a matter of law to write off against these profits. There is no evidence that these profits will be forthcoming, apart from speculation based vaguely on the prices of properties, again in a state of flux in Ireland. Nor is there any information as to when a receiver might be likely to sell properties. Even were such information to be forthcoming, the logic of the position as explained by John Harding is regarded as compelling.
65. The Court accepts the John Harding figures. Consequently, the net losses incurred on the relevant figures, for the CFD trading accounts was €1,250,475, to which must be added the non-recoverable capital gains tax and this amounts to €487,066, to which must be added the interest cost of funds invested in CFD trading up to 31st October, 2013 at €350,960, and finally the interest cost of funds invested from November, 2013 to the end of February, 2014 at €11,120. Total recoverable damages are therefore €2,099,621.
Result
66. There will be a decree for the plaintiff in the sum of €2,099,621.
Ó hAonghusa v DCC plc
[2011] IEHC 300
Neutral Citation Number: [2011] IEHC 300
THE HIGH COURT
2008 5631 P
BETWEEN
LIAM O hAONGHUSA
PLAINTIFF
AND
DCC PLC, DAYS MEDICAL AIDS LIMITED, MURRAY SURGICAL LIMITED AND
DAYS HEALTHCARE LIMITED
DEFENDANTS
JUDGMENT of Mr. Justice Hogan delivered on July 19th, 2011
1. The net issue before me is whether the plaintiff’s action for damages for personal injuries against the first, third and fourth defendants (“the relevant defendants”) is statute-barred. As we shall now see, the issue divides into two parts. While it is plain that the plaintiff’s negligence action is statute-barred, the question of whether a claim under the Liability for Defective Products Act 1991, is also statute-barred is by no means straightforward and gives to difficult questions of statutory interpretation.
2. The issue arises in the following way. The plaintiff, Mr. O hAonghusa, alleges in his pleadings that in September, 2004 he was travelling in his motorised wheelchair on Milltown Bridge, Clonskeagh, Dublin 14 when the tube in the front right tyre gave out. This caused the wheelchair to topple over and it is contended that as a consequence he suffered severe personal injuries. The wheelchair had been either purchased from or supplied or manufactured by the relevant defendants. I will return presently to the precise date of the accident and the date on which the plaintiff sought medical advice in relation thereto.
3. In September, 2007 Mr. O hAonghusa made an application to the Personal Injuries Assessment Board (“PIAB”) for compensation in respect of these injuries. An authorisation was issued by PIAB on 28th January, 2008, and the present proceedings were commenced on 11th July, 2008. As provided by s. 50 of the Personal Injuries Assessment Board Act 2003, this period of time is to be disregarded for the purposes of the application of the Statute of Limitations 1957 (“the 1957 Act”).
4. It is probably fair to say that the plaintiff’s principal claim as pleaded is for negligence and breach of duty. The endorsement of claim on the personal injuries summons also contends that the relevant defendants were in breach of statutory duty and one of the particulars pleaded is that these defendants were “in breach of the Products Liability Act”.
Whether the negligence action is statute-barred?
5. Section 7 of the Civil Liability and Courts Act 2004 (“the 2004 Act”) effected a dramatic change to limitations law in that the limitation period for actions for personal injuries was reduced from three years to two years. Section 7(d) provided for the insertion of a new s. 5A to the 1957 Act as follows:-
“5A.—(1) Where the relevant date in respect of a cause of action falls before the commencement of section 7 of the Civil Liability and Courts Act 2004, an action (being an action to which section 3(1), 4(1), 5(1) or 6(1) of this Act applies) in respect of that cause of action shall not be brought after the expiration of—
(a) 2 years from the said commencement, or
(b) 3 years from the relevant date,
whichever occurs first.
(2) In this section ‘relevant date’ means the date of accrual of the cause of action or the date of knowledge of the person concerned as respects that cause of action whichever occurs later.”
6. Section 7 of the 2004 Act was commenced on 31st March, 2005: see Article 3(1) of the Civil Liability and Courts Act 2004 (Commencement) Order 2004 (SI No. 544 of 2004). As the plaintiff’s cause of action arose prior to the commencement of s. 7 of the 2004 Act, this meant that the applicable limitation period was two years from that date of commencement: see s. 5A(1)(a) of the 1957 Act (as inserted by s.7 of the 2004 Act). This in turn meant that the plaintiff’s action in negligence was statute-barred after 30th March, 2007.
7. While the plaintiff’s application to PIAB in September, 2007 would have had the effect of “stopping” time for limitation purposes, by this stage it was already far too late, since the plaintiff’s action had become statute-barred some five months previously.
Conclusions on the negligence plea
8. It follows, therefore, that the plaintiff’s action in negligence (and all related claims) are plainly statute-barred. While it is true that the invocation of the limitation period is merely a matter of defence and does not go to the jurisdiction of the court, the fact remains that this defence is pleaded by the relevant defendants. In these circumstances, as it is plain that the plaintiff’s claim under this heading cannot succeed at hearing, it is appropriate that this claim be struck out at this stage and that it must be dismissed accordingly.
The claim under the Liability for Defective Products Act 1991
9. There remains for consideration a potential liability under the Liability for Defective Products Act 1991 (“the 1991 Act”). While it may be that the claim has been but sparsely pleaded in the endorsement of claim, I consider that the plaintiff has nonetheless sought to rely on the 1991 Act. It follows, therefore, that I must examine the question of whether this claim is statute-barred.
10. The limitation period governing claims of this kind is contained in s. 7 of the 1991 Act which provides:
“(1) An action for the recovery of damages under this Act shall not be brought after the expiration of three years from the date on which the cause of action accrued or the date (if later) on which the plaintiff became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer.
(2) (a) A right of action under this Act shall be extinguished upon the expiration of the period of ten years from the date on which the producer put into circulation the actual product which caused the damage unless the injured person has in the meantime instituted proceedings against the producer.
(b) Paragraph (a) of this subsection shall have effect whether or not the right of action accrued or time began to run during the period referred to in subsection (1) of this section.
…………
(4) The Statutes of Limitation, 1957 and 1991, shall apply to an action under this Act subject to the provisions of this section.
(5) For the purposes of subsection (4)—
(a) subsection (1) of this section shall be deemed to be a provision of the Statute of Limitations (Amendment) Act, 1991, of the kind referred to in section 2 (1) of that Act,
(b) “injury” where it occurs in that Act except in section 2 (1) ( b ) thereof includes damage to property, and “person injured” and “injured” shall be construed accordingly, and
(c) the reference in subsection (1) of this section to the date when the plaintiff became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer shall be construed in accordance with section 2 of that Act, but nothing in this paragraph shall prejudice the application of section 1 (3) of this Act.”
11. On the face of it, the limitation period for such actions by virtue of s. 7(1) is three years. The relevant defendants argue, however, that the effect of s.7(5)(a) is to deem s. 7(1) to be a provision of the Statute of Limitations, so that three year limitation period contained in that sub-section must be deemed also to have been amended by virtue of the amendment of that latter provision. It is contended, in other words, that the principal limitation period for actions arising under the 1991 Act has also been reduced to two years. Of course, if that argument is correct, then this part of the plaintiff’s action would also be statute-barred.
12. The first thing to note, however, is that s. 7(5)(a) does not deem s. 7(1) to be a provision of the Statute of Limitations for all purposes. It rather deems it “to be a provision of the Statute of Limitations (Amendment) Act 1991 of the kind referred to in s. 2(1) of that Act.”
13. This is of some importance, because as Barron J. pointed out for the Supreme Court in Erin Executor and Trustee Co. Ltd. v. Revenue Commissioners [1998] 2 I.R. 287 at 302-303 the critical question which arises in the case of a deeming provision of this kind is the extent of that provision:-
“When something is deemed by a statutory provision to be so, it becomes a matter of construction of that provision to determine to what extent it is deemed to be so. Is it deemed to be so for all purposes or only for some purposes? In the present case s. 4(4) [of the Value Added Tax 1972] clearly says that it is to be so deemed for the purposes of s. 3(1)(f). In other words it is deemed to have been supplied so that tax becomes payable in respect of it. It is not deemed to have been supplied for any other purpose. This is in accord with the principle of the strict construction of taxing statutes. If the legislature had intended the result contended for by the respondents, it would have said so in clear terms.”
14. Here, then, is the net question of statutory interpretation. Is the deeming provision expressed to be for all purposes or is it rather more confined in its application? It must be borne in mind that such deeming provisions are not some form of legal legerdemain, but represent simply an established drafting technique.
15. As we have just seen, the deeming technique employed here is not expressed to be general and all encompassing. It is rather more specific in its purpose and range. Section 7(1) of the 1991 Act is deemed to be a provision of the Statute of Limitations (Amendment) Act 1991 (“the 1991 Amendment Act”) “of the kind referred to in s. 2(1)” of that Act. Section 2(1) of the 1991 Amendment Act provides:-
“For the purposes of any provision of this Act whereby the time within which an action in respect of an injury may be brought depends on a person’s date of knowledge (whether he is the person injured or a personal representative or dependant of the person injured) references to that person’s date of knowledge are references to the date on which he first had knowledge of the following facts:
(a) that the person alleged to have been injured had been injured,
(b) that the injury in question was significant,
(c) that the injury was attributable in whole or in part to the act or omission which is alleged to constitute negligence, nuisance or breach of duty,
(d) the identity of the defendant, and
(e) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant;
and knowledge that any acts or omissions did or did not, as a matter of law, involve negligence, nuisance or breach of duty is irrelevant.”
16. In effect, therefore, s. 2(1) of the 1991 Amendment Act is a form of lex specialis operating within the Statutes of Limitations dealing with the specific question of the running of time and the plaintiff’s knowledge of the date the plaintiff became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer. As we have seen, s. 7(1) of the 1991 Act provides for a limitation period of three years from the date of damage or, subject to a 10 years extinguishment provisions, the “date (if later) on which the plaintiff became aware, or should reasonably have become aware, of the damage, the defect and the identity of the producer”.
17. It is thus the date of knowledge provisions of s. 7(1) which are deemed by s. 7(5)(a) to be a relevant provision of the Statute of Limitations, precisely because it is these provisions which are the date of knowledge provisions “of the kind referred” to in s. 2(1) of the 1991 Amendment Act. It amounts to saying that the specialised rules as to the date of knowledge and running of time now applied generally to the Statute of Limitations Acts by s. 2(1) of the 1991 Amendment Act are also deemed to apply to the date of knowledge and the running of time rules contained in s. 7(1) of the 1991 Act, a point which is, in any event, underscored by s. 7(5)(c).
18. The deeming provision goes no further than this. It does not deem s. 7(1) of the 1991 Act to be a provision of the Statute of Limitations for all purposes. It follows that the principal limitation period remains that of three years. Any other conclusion would mean that the limitation period contained in one statute (i.e., the 1991 Act) might be taken to have been obliquely and indirectly amended by the amendments effected in respect of another statute (i.e., the Statutes of Limitation Acts), in the absence of a general collective interpretation clause such that deemed the 1991 Act to be part of the Statute of Limitations for all purposes. There is, of course, a presumption against unclear changes in the law (see, e.g., the comments of Henchy J. in Minister for Industry and Commerce and Hales [1967] I.R. 65) and it would indeed be surprising if the Oireachtas could have intended that a legal rule as fundamental as a primary limitation period rule could have been amended in this quite oblique fashion.
Conclusions
19. The conclusion that the applicable limitation period for the purposes of the 1991 Act is that contained in s. 7(1) and that this provision remains unaffected by the subsequent amendment of the Statutes of Limitation does not mean that the plaintiff is not statute-barred. More detailed evidence would be required at the hearing as to when the accident occurred and, in the event that the three years had expired, whether the plaintiff can invoke the date of knowledge provisions. Here it may be noted that in an affidavit filed in these proceedings Mr. O hAonghusa says that the injuries were received by him “in and around August 2004 and first identified by Dr. Jennings on or about the 7th day of September, 2004.” The plaintiff had previously pleaded that the accident occurred in September, 2004.
20. This is a disputed issue of fact on which oral evidence will be required at trial. There is, accordingly, an antecedent factual issue requiring oral evidence which would required to be resolved at trial before any final conclusion could be reached on the question of whether the plaintiff’s claim under the 1991 Act is, in fact, statute-barred as the relevant defendants claim. It is sufficient for present purposes merely to rule that the limitation period contained in s. 7(1) of the 1991 Act has not been amended by virtue of the fact that the limitation period for personal injuries simpliciter was amended by the provisions of s. 7 of the 2004 Act.
21. I will accordingly permit the plaintiff’s claim under the 1991 Act to proceed to hearing. This does not mean that the relevant defendants cannot successfully invoke the limitation defence at the hearing, as all that I have decided is that these defendants are not entitled to the equivalent of summary judgment striking out this claim.
Brian Morgan v Park Developments Ltd
1980 No. 4381P
High Court
2 February 1983
[1983] I.L.R.M. 156
(Carroll J)
CARROLL J
delivered her judgment on 2 February 1983 saying: The plaintiff’s claim is based on the tort of negligence and on breach of a building contract in respect of damage caused to his house which was erected by the defendants. The plaintiff established a prima facie case that the corner of the house was built on unsuitable foundations as a result of which the house developed a structural fault. The corner of the house cracked and remedial work which necessitated under-pinning the foundations had to be carried out.
The building contract provided in clause 4 thereof:
If any dispute shall arise as to any matter in relation to the completion of the said work, the same may be referred by either party hereto (with notice in writing to the other) to builders’ architect, whose decision thereon, shall subject as hereinafter provided, be final and binding on all parties PROVIDED ALWAYS AND IT IS HEREBY *158 AGREED AND DECLARED that when the employer takes possession of the said dwellinghouse all the said work mentioned in clause I hereof shall be deemed to have been completed to the satisfaction of the employer and subject to clause 8 hereof the employer shall not thereafter have any claim against the builders in respect of the said dwellinghouse and out-houses or any materials or workmanship therein and whether any defect or alleged defect be patent or otherwise.
Clause 8 provides:
The builders undertake that they will at any time within 12 months ensuing from the date of the completion of the said house at their own cost and expense repair, keep, and put in proper order and condition all and every structural defect which shall have been caused through defective construction of the said house.
The defendants claim that the plaintiff’s action is Statute barred.
It is provided in the Statute of Limitations 1957 (‘the 1957 Act’) as follows:
S. 11
(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued —
(a) actions founded on simple contract;
(b) etc….
S. 11
(2)(a) Subject to paragraphs (b) and (c) of this subsection, an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.
Paragraphs (b) and (c) are not relevant.
S. 71
(1) Where in the case of an action for which a period of limitation is fixed by this Act, either —
(a) the action is based on the fraud of the defendant or his agent or of any person through whom he claims or his agent, or
(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.
The relevant dates are as follows:
The building contract was signed on 30 September 1962. The premises were demised to the plaintiff by the defendants by lease executed 12 February 1963. The plaintiff went into occupation on 23 June 1963. The defendants were notified in or about November/December 1963 of defects, including the crack which ultimately turned out to be a serious structural fault. The defendants effected repairs to the crack on two occasions in 1964 and in 1965. The evidence of the plaintiff’s wife was that in 1965 the defendant’s foreman, Mr O’Sullivan, told her the crack was a settlement crack; that settlement cracks appeared in all houses and that it might take years for the cracks to stop. The plaintiff did nothing further and the crack got worse. In 1975 the plaintiff had an extension built and his builder (not the defendants) did repairs to the crack. The crack reappeared. In 1979 the plaintiff consulted an architect who immediately knew the damage was serious. The proceedings were issued on 16 May 1980.
At the conclusion of the plaintiff’s case Mr Fitzsimons for the defendants applied for a non-suit. He said the appropriate date for the accrual of a right of action was when the damage occurred and when the breach of contract was committed. Mr Budd for the plaintiff said the date of accrual was when the damage was discoverable and this was postponed by reason of representations made by the defendant’s agent which lulled the plaintiff into a false sense of security.
The first question to be decided is whether the accrual of the right of action in negligence involving the building of a house should be the date of discoverability or some earlier date. The English Courts have been dealing with the question over a number of years, notably in Sparham-Souter v Town and Country Developments (Essex) Ltd and Another [1976] 2 WLR 493 and Anns and others v Merton London Borough Council [1977] 2 WLR 1024 culminating in the decision of the House of Lords in Pirelli General Cable Works Ltd v Oscar Faber and Partners [1983] 2 WLR 6. In the Pirelli case the House of Lords held (applying Cartledge v E. Joplin and Sons Ltd [1963] AC 758) that the accrual of a right of action in actions for negligence in the construction or design of a building, was the date the damage came into existence and not the date when the damage was discovered or should with reasonable diligence have been discovered.
It was a relevant consideration in that case that the English legislature had amended the Limitation Act 1939 by a Statute of 1963 following the decision of the House of Lords in Cartledge v E. Joplin and Sons Ltd which held that s. 26 of the Limitation Act 1939 (similar to 71 of the 1957 Act) made it impossible to hold that a cause of action ought not to accrue until the injury is discovered. That case concerned a personal injury. As a result of this decision Parliament extended the time limits where material facts of a decisive character were outside the knowledge of the plaintiff until after the action would normally have been time-barred but it applied only to actions for damages for personal injuries. As Lord Fraser stated, it therefore had to be taken that Parliament deliberately left the law unchanged so far as actions for damages of other sorts were concerned.
Such consideration does not apply here. There has been no amending legislation similar to the 1963 Act in England. Therefore, it cannot be said that the legislature here had deliberately extended the accrual of a right of action for personal injuries in certain circumstances and left the accrual of other actions for damages unaltered.
It was acknowledged by Lord Reid in Cartledge v E. Joplin and Sons Ltd (which was the decision applied in the Pirelli case) that it was unreasonable and unjustifiable in principle that a cause of action should be held to accrue before it is possible to discover any injury. But he felt constrained by the Statute to reach a decision which was wholly unreasonable.
It was acknowledged by Lord Scarman in the Pirelli case that he agreed with Lord Reid’s comments and also with Lord Pierce’s comment in the Cartledge case that a law which produced such a result was harsh and absurd. But nevertheless he felt constrained to come to the same decision.
The 1957 Act is a post 1937 Statute and has the benefit of the presumption of constitutionality. If there are two interpretations, one of which is unconstitutional and one of which is constitutional, it must be presumed that the Oireachtas intended the interpretation which was constitutional.
The English Parliament do not operate within the confines of a written constitution whereas in this country the Oireachtas can only pass laws which are compatible with the Constitution. It seems to me that no law which could be described as ‘harsh and absurd’ or which the courts could say was unreasonable and unjustifiable in principle (as did the English Courts) could also be constitutional.
Mr Fitzsimons took issue with the word ‘absurd’. He said that harshness is not the test. The result may be harsh but it is necessary. He said there is nothing unconstitutional per se in a harsh interpretation.
If I interpret accrual as denoting the date of the negligent act, It may have the effect of depriving an injured party of a right of action before he knows he had one. If I interpret accrual as denoting the date of discoverability, it may operate with hardship to a defendant in that action may not be brought for many years afterwards.
This was a consideration which was an important factor in the Supreme Court decision in Moynihan v Greensmyth [1977] IR 55. In the Sparham-Souter case one of the principles applied was that the Statute of Limitations cannot begin to run unless two things are present, a party capable of suing and a party liable to be sued.
There cannot be a party capable of suing unless he knows or should know that he has suffered damage.
The original House of Lords decision in Cartledge v E Joplin & Sons Ltd is based on the reasoning that because the Limitation Act 1939 made special provision for fraud or mistake, this necessarily implied that if fraud or mistake were not involved, time must begin to run whether or not the damage could be discovered.
However, it seems to me that the provisions regarding fraud or mistake do not preclude the interpretation which takes the date of discoverability as the date of accrual. In my opinion the provisions of s. 71 can co-exist with that interpretation. Therefore of the two possible interpretations I prefer the one adopted in the Sparham-Souter case which has the date of discoverability as the date of accrual. Whatever hardship there may be to a defendant in dealing with a claim years afterwards, it must be less than the hardship to a plaintiff whose action is barred before he knows he has one. The latter interpretation appears to me indefensible in the light of the Constitution.
Accordingly I hold that the date of accrual in an action for negligence in the building of a house is the date of discoverability, meaning the date the defect either was discovered or should reasonably have been discovered.
In relation to contract, the date of accrual of the right of action for breach of the building contract in my opinion must depend on the wording of the contract. In this case the plaintiff contracted with the defendants that after he took possession of the house he would not, subject to clause 8, have any claim against the defendants in respect thereof or any materials or workmanship therein and whether any defect or alleged defect was patent or otherwise. The defendants were in breach of the provisions of clause 8 when their second attempt at remedial work in 1965 failed to put the structural defect into proper order or condition. The plaintiff had fulfilled his obligations under clause 8 by requesting the defendants to do the work within twelve months from the date of completion of the house. The accrual of the right of action for breach of contract in my opinion was the date in 1965 when the defendants finished the remedial work.
In order to ascertain the date of accrual of the right of action based on negligence, it would be reasonable to extend the date of discoverability to a date after the last remedial works were carried out by the defendants. The choice of dates would appear to lie between the date when the crack first appeared again (which was by 1966) and when it was obvious that the crack had become appreciably larger (certainly by 1979). Even taking the date most favourable to the plaintiff, (without so holding) this still does not bring the date of discoverability within six years before action brought.
Therefore, the plaintiff’s claim must depend on the argument that by reason of the foreman’s statement made in 1965, the date of accrual is further extended on the grounds of equitable estoppel or on the grounds of fraudulent concealment under the provisions of s. 71(1)(b).
Mr Budd for the plaintiff submitted that the effect of the representation made to the plaintiff’s wife was that they believed that the crack was normal and nothing to worry about. They were lulled into a false sense of security and it would be unconscionable to allow the defendants to plead the Statute in the circumstances. In the case of King v Victor Parsons and Co. [1973] 1 WLR 29, s. 26(b) of the Limitations Act 1939, which is the equivalent section to s. 71 of the 1957 Act, was construed.
Lord Denning, MR says at page 33, concerning the meaning of the word ‘fraud’, in s. 26(b) of the 1939 Act:
The word ‘fraud’ here is not used in the common law sense. It is used in the equitable sense to denote conduct by the defendant or his agent such that it would be ‘against conscience’ for him to avail himself of the lapse of time. The causes show that if a man knowingly commits a wrong (such as digging underground another man’s coal); or a breach of contract (such as putting in bad foundations to a house), in such circumstances that it is unlikely to be found out for many a long day, he cannot rely on the Statute of Limitations as a bar to the claim. In order to show that he ‘concealed’ the right of action ‘by fraud’ it is not necessary to show that he took active steps to conceal his wrongdoing or breach of contract. It is sufficient that he knowingly committed it and did not tell the owner anything about it. He did the wrong or committed the breach secretly. By saying nothing he keeps it secret. He conceals the right of action. He conceals it by ‘fraud’ as those words have been interpreted in the cases. (at 33)
And later (at page 34):
If the defendant was however quite unaware that he was committing a wrong or a breach of contract it would be different. So if by an honest blunder he unwittingly commits a wrong (by digging another man’s coal) or a breach of contract (by putting in insufficient foundations) then he could avail himself of the Statute of Limitation. (at 34)
The same section was also relevant in the case of Kitchen v Royal Air Force Association and others [1958] 1 WLR 563. Lord Evershed, MR:
But it is now clear that the word ‘fraud’ in the section which I have read, is by no means limited to common law fraud or deceit. Equally, it is clear, having regard to the decision in Beaman v ARTS Ltd that no degree of moral turpitude is necessary to establish fraud within the section. What is covered by equitable fraud is a matter which Lord Hardwicke did not attempt to define 200 years ago, and I certainly shall not attempt to do so now, but it is, I think, clear that the phrase covers conduct which, having regard to some special relationship between the two parties concerned, is an unconscionable thing for the one to do to the other. (at 572)
In that case it was held that the solicitor for the plaintiff had concealed facts from her concerning a right of action which she had and this was held to be a concealment by fraud so as to deprive the solicitor of the right to set up against her the Statute of Limitations.
I do not think the plaintiff has made out a prima facie case of fraudulent concealment. There is no evidence that the defendant knowingly concealed anything from the plaintiff. The statement by the defendant’s agent as to the nature of the crack cannot be put any further than a statement of opinion. No special relationship (such as that of solicitor and client) existed between the parties. Therefore I am of opinion that the statements made by the defendant’s agent cannot be considered as fraudulent concealment within the meaning of s. 71(b).
With regard to estoppel the relevant case would appear to be Doran v Thomas Thompson and Sons Ltd [1978] IR 223 where the plaintiff also claimed that the defendants were estopped by representations from pleading the Statute of Limitations 1957. Henchy J, says:
Where in a claim for damages such as this a defendant has engaged in words or conduct from which it was reasonable to infer, and from which it was in fact inferred, that liability would be admitted, and on foot of that representation the plaintiff has refrained from instituting proceedings within the period prescribed by the statute, the defendant will be held estopped from escaping liability by pleading the statute. The reason is that it would be dishonest or unconscionable for the defendant, having misled the plaintiff into a feeling of security on the issue of liability and thereby into a justifiable belief that the statute would not be issued to defeat his claim, to escape liability by pleading the statute. (at 225)
If the principles contained in that paragraph are applied to the present case I am satisfied that the plaintiff inferred from the representations made to his wife that the structural crack was normal and on foot of that representation he refrained from getting professional advice when the crack re-opened and as a consequence, refrained from instituting proceedings within the statutory period. However, I am not satisfied that it was reasonable for the plaintiff to hold on to the belief that the crack was normal until after 17 May 1974. Whatever may have been the effect of Mr O’Sullivan’s words in allaying the fears of the plaintiff and his wife in 1965, it does not seem reasonable to me for the plaintiff to have relied on that statement while the house was creaking and cracking around him and the fracture was getting larger. I am of opinion that at some stage considerably before 17 May 1974 the plaintiff should have had second thoughts about Mr O’Sullivan’s words and have got professional advice. He should have taken into account the fact that Mr O’Sullivan was a foreman only and therefore to infer that his advice was good for years, despite what was happening, was not a reasonable inference.
Therefore, in my opinion, the plaintiff has not established a prima facie case that the action was commenced within six years from the date of accrual of the right of action and accordingly the defendants are entitled to a non-suit.
Komady Ltd v Ulster Bank Ltd
[2014] IEHC 325
Judgment of Mr Justice Michael Peart delivered on the 26th day of June 2014:
1. Before the Court is a question which Mr Justice Cooke ordered should be decided as a preliminary issue in advance of the main action. In his order dated 15th October 2013, he set forth a two-fold question in the following terms:
“Upon the basis that the facts alleged by the plaintiffs in the statement of claim and in the reply to the defence as further particularised in replies dated the 22nd April, 3rd May and 6th June, 2013 to requests for particulars, are treated as having been established and correct, the Court directs the determination of the following issues of law:
(a) Have the rights of action asserted by the plaintiffs in this proceeding been brought outside the limitation period applicable to them under the Statute of Limitations 1957 (as amended) by virtue of the fact that they were brought with effect from 23rd November 2012?
(b) If the answer to the above question is in the affirmative, are the acts and omissions alleged against the defendant capable of constituting concealment by fraud on the part of the defendant of the plaintiff’s rights of action in the sense of S. 71 (1) (b) of the Statute?”
2. At paragraph 22 of his judgment delivered on 8th October 2013 on foot of the defendants motion seeking the trial of a preliminary issue, Cooke J. stated the following in relation to the basis upon which this Court should now determine these questions:
“22. The Bank has however, for the purposes of this application, undertaken that it will treat as correct the facts relied upon by the plaintiffs, both in relation to the circumstances surrounding their entry into the swap contracts in July 2006, including, accordingly, the fact that the pleaded inducements, representations and warranties were made or given; that the Code of Conduct for Investment Business had not been complied with and that the swap contracts were not in fact suitable for the plaintiffs or consistent with their financial objectives); and also in relation to the plea of fraudulent concealment for the purposes of paragraph (b) of s.70 (1) including the fact that the Bank did not, at or after the commencement on the 1st November 2007 of the MiFID Regulations reclassify the plaintiffs as retail clients or give any advice or information to the plaintiffs as to the applicability, effect or advantage of those Regulations or as to the duties of the defendant under them. This also, in the view of the Court, necessarily involves accepting that the relationship between the Bank and the plaintiffs at the material times was a fiduciary relationship as pleaded.” [emphasis added]
3. The parties are agreed that the above represents the basis upon which this Court shall determine the issue directed.
4. On 14th July 2006 the parties entered into two contracts referred to as ‘Swap Agreements’ which are a form of derivative financial instrument by which a borrower can obtain interest rate hedging based on a cumulated notional liability to a Bank. It is unnecessary to dwell upon the precise nature and detail of these Swaps and how exactly they operate, save perhaps to say that in the case of these two Swaps if interest rates rose above 3.9% the plaintiffs would be “in the money” meaning that the Bank would have to make a payment to the plaintiffs, whereas by contrast if interest rates fell below 3.9% the plaintiffs would be “out of the money” and liable to make a payment to the Bank. Since neither party will be able to forecast with certainty whether interest rates will rise or fall above or below 3.9% during any particular quarter, and since the duration of the Swaps was five years, either party could win or lose, so to speak, over the term of the Swaps, and to that extent each party to the Swap takes a chance that by entering into the agreement there will over the term of the agreement be a benefit. Whether one party or the other has gained or lost under the Swaps is not something which can be finally ascertained until the term of the agreement has expired, since rates may unpredictably vary up or down in any particular quarter.
5. A feature of the background to this case is that prior to entering into these Swaps with Ulster Bank, the plaintiffs had existing borrowings with Anglo Irish Bank, and they had entered into what is referred to as an Interest Cap Agreement with Anglo, which is another form of derivative instrument whereby for a single premium of €400,000 paid up front, they were protected against any increase in the interest rate above 5% on those borrowings. That agreement was novated when the plaintiffs became borrowers with Ulster Bank, and the Anglo borrowings were repaid. The Cap Agreement remained for the plaintiffs’ ongoing benefit and protection in relation to their new borrowings with Ulster Bank, but they would gain no actual benefit until interest rates actually rose above that rate, apart from the reassurance of knowing that they were protected from any rise in interest rates above 5%. The new Swaps therefore would benefit the plaintiffs in any particular quarter when interest rates rose to levels above 3.9% and up to 5%, in the sense that they would receive a payment from the bank. Conversely, where rates fell below 3.9% the plaintiffs would have to pay a sum to the bank. I am sure there are nuances to these instruments that are not covered by this necessarily simple and brief explanation of the instruments in question, but it suffices I think for present purposes. The precise nature of the instruments is not particularly material to the issue now for determination.
6. The effective date for the commencement of each Swap agreement in these proceedings is agreed to be the 18th July 2006. The plaintiffs claim that the Swaps were mis-sold to them by the defendant bank. However, they did not commence these proceedings until the 23rd November 2012. In such circumstances the defendant submits that they have been commenced outside the period of six years provided for commencement of claims for breach of contract and for claims arising from a tort (excluding in relation to a claim for personal injuries). The deus ex machina by which the plaintiff seek to escape the rigour of the Statute is section 71(1)(b) thereof which provides:
“71. – (1) Where, in the case of an action for which a period of limitation is fixed by this Act, either
(a) ……… or
(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.”
7. The plaintiffs say that the fiduciary nature of the relationship affects the date from which the Statute started to run against them. On the other hand, the defendant submits that any fiduciary relationship adds nothing since whether it was or was not a fiduciary relationship does not alter the fact that either way these parties entered into the Swap agreements on the 14th July 2006, and therefore time must have commenced against the plaintiffs from that date. The defendant does not accept that time did not start to run until the date in 2012 when the plaintiffs say they were first advised that the Swaps were not consistent with their financial planning objectives as explained to the bank in July 2006. That is the date when the plaintiffs say they first learned that these Swaps were not suitable, and therefore that they had been mis-sold to them.
8. The plaintiffs seek to avail of section 71(1)(b) of the Statute of Limitations using the same argument in effect. They argue that the misrepresentation to them as to the suitability of the Swaps – or mis-selling thereof – amounts to a ‘concealment by fraud’ of the fact that they were unsuitable. In other words, they say that the failure by the bank to advise them that these Swaps were unsuitable for their stated objectives, or misrepresenting the suitability of the Swaps, amounts to concealment by fraud thereby depriving them of a fact vital to their ability to know that they had a cause of action against the bank. They say that in such circumstances section 71(1)(b) of the Act can come to their rescue.
9. Precisely what is meant by the words “concealed by the fraud of any such person” in section 71(1)(b) of the Act is something which I will come to in due course. It is not to be confused or elided with “fraud” in the conventional or ordinary sense – which itself is provided for in section 71(1)(a) of the Act, and the plaintiffs have made it clear to the defendant that it is not alleging that there was “fraud” in that conventional/ordinary sense, and do not seek to rely on sub-section (1)(a).
10. The bank on the other hand submits that the plaintiffs cannot point to any fact that was revealed to them after July 2006, or which they became aware of which was material to their ability to be aware of the existence of a cause of action as of the 18th July 2006. They say that the plaintiffs are in effect attempting to apply a discoverability test – something which is not permitted except in relation to a personal injury action by virtue of section 3 of the Statute of Limitations (Amendment) Act, 1991, as later amended by section 7 of the Civil Liability and Courts Act, 2004, where a discovery test is included for such actions. It submits that the plaintiffs, as pleaded by them in their Statement of Claim, knew or ought to have known in July 2006 everything they needed to know in order to decide or be advised that they had a cause of action, and that the fact that they waited until 2012 to seek advice in relation to the Swaps they had entered into in 2006 is not sufficient to postpone the operation of the Statute.
11. I should set forth what are the facts pleaded by the plaintiffs, and which are assumed to be established for the purpose of determining this preliminary issue. Those can be gleaned from the pleadings including, to a limited further extent, from replies to particulars. For this purpose I make no distinction between the two separate plaintiffs. In so far as there are some distinctions on the facts, they are not material to the issue, and accordingly I shall simply refer to “the plaintiffs”.
12. The Belgard Retail Development (“the development”) was an important element in the plaintiffs’ wealth. The plaintiffs did not wish to put the development at risk by getting into “high risk, unstable or complex financial products”. The plaintiffs wished to ensure this by only entering into conservative financing arrangements and measures which were in their best interests. Specifically, the financial objectives identified by the plaintiffs to the bank were to minimise any future harm that might be caused by rising interest rates. They notified these financial objectives to the Bank, both orally at meetings and by email, in 2005. The plaintiffs relied upon the advice of the bank in relation to the Swap Agreements.
13. Having entered into the new 2006 loan agreements with the defendant bank, the bank advised the plaintiffs to enter into the two Swap Agreements, and represented to the plaintiffs that these Swaps were consistent with their financial objectives. The plaintiffs relied upon these advices.
14. The bank induced, represented and warranted to the plaintiffs in July 2006 that these Swaps were both necessary and appropriate financial instruments for the plaintiffs, and were required to be entered into by the plaintiffs as a condition of the 2006 loan agreements.
15. The Code of Conduct for Investment Business required by section 117 (1) of the Central Bank Act 1989 applies to the Swaps. According to the Code, the plaintiffs ought to have been treated by the bank as “private clients” and not as “professional clients”. The bank failed to comply with its obligations to the plaintiffs under the Code, and failed to take all necessary steps to obtain details from the plaintiffs of their financial objectives, investment experience, and other facts which the bank knew it needed to know or should have sought. The bank failed to adhere to its Code obligations in that:
(i) it failed to act honestly and fairly in the best interests of the plaintiffs.
(ii) it failed to act with due skill, care and diligence in the best interests of its clients;
(iii) it failed to seek from the plaintiffs information regarding their financial situations, investment experience and objectives;
(iv) it failed to make adequate disclosure of material information;
(v) it failed to comply with all applicable regulatory requirements so as to promote the plaintiffs’ best interests.
16. The Code was not adhered to in relation to the Swaps or in the advice given by the bank, particularly given the existence of the Cap Agreement already referred to, and which provided a sufficient hedging/protection against interest rates rising above 5%.
17. The Code, while not actionable per se, nevertheless informs the standard of behaviour expected of the bank in relation to the plaintiffs.
18. The Swaps entered into in July 2006 were not consistent with the plaintiffs’ financial objectives, were not properly explained to the plaintiffs by the bank, including the adverse effects of the Swaps. Neither was it explained by the bank to the plaintiffs the calamitous effect of breaking out of these Swaps or indeed that break benefits would accrue in certain circumstances.
19. Having knowledge of the plaintiffs’ financial objectives, the bank failed to advise the plaintiffs consistently with the same, and therefore a cause of action arises for the plaintiffs based upon breach of duty, breach of contract and negligent mis-statement.
20. The plaintiffs thought that the Swaps were nothing more than fixed rates, and that they were effectively a component of the loans.
21. It was only in late 2011 – early 2012 when the relationship between the bank and the plaintiffs had deteriorated, and after the plaintiffs had initiated a full review of the Belgard loan agreements and the Swaps, and had received the result of that review in the summer of 2012 that they then examined the losses which they had suffered on foot of the Swaps and, inter alia, discovered that the losses were very significant, and that they could have ameliorated those losses by paying down the liabilities.
22. The true nature of the Swaps only became apparent to the plaintiffs when they retained legal and financial advisers, as well as the extent of the funds needed to finance the Swaps.
23. There was a fiduciary relationship between the bank and the plaintiffs.
24. Within the pleadings, generally speaking, the particulars of this fiduciary relationship and the alleged breaches of same, are the same as, or very similar to, those already set forth except that it is specifically stated that the bank failed to disclose the nature and extent of the commission earned by the bank on the sale to the plaintiffs of these Swaps – namely a commission in the order of €100,000. This is said to be a material non-disclosure and a concealment of a material fact for the purpose of section 71(1)(b) of the Act. Equally, the particulars of misrepresentation, negligence, negligent misstatement, breach of duty in respect of the mis-selling of these Swaps are set forth in similar manner.
25. The above seem to me to emerge as the assumed facts upon which the first issue must be determined – in other words whether these proceedings were commenced outside the period of six years from the date on which the right of action first accrued.
26. The second limb of the issue for determination is whether, if the answer to the first limb is answered in the affirmative, the plaintiffs’ proceedings are saved by section 71(1)(b) of the Act. It seems to me that the facts to be assumed for that purpose, as appearing from the pleadings and replies to particulars, and assuming also the existence of a fiduciary relationship, are the following.
27. The fiduciary relationship between the plaintiffs and the bank is a continuing one. The Bank knew at all times that the plaintiffs had no separate advice in relation to the Swaps. The bank knew that it had never explained the true nature and vital elements of the Swaps to the plaintiffs. By non-disclosure of vital elements of the Swaps and by false misrepresentations of fact intended to induce the plaintiffs to enter into the Swaps, facts were concealed from the plaintiff that would have enabled them to know that they had a right of action against the bank. The vital elements not explained or disclosed either at the date the Swaps were entered into in July 2006 or at any time during the 5 year life of the Swaps, are the nature of the transactions, the manner in which they operated, their effect and risk level, the break costs associated with the transactions, the effects of the break-costs and any positive effects from breaking the transactions. In addition, the absence of any advice as to any alternative type of instrument that might have been suitable to the plaintiffs’ circumstances and objectives, as well as the representation that the Swaps were suitable for and/or consistent with the plaintiffs’ financial objectives are said to be facts supporting the ‘concealment by fraud’ for the purpose of section 71(1)(b) of the Act.
28. A further fact to be assumed is the breach by the bank of its obligations under the Market in Financial Instruments Directive (“MiFID”). One of those obligations after 1st November 2007 required the bank to reclassify the plaintiffs, and to communicate with them in that regard. The plaintiffs assert that the bank should have reclassified them from that date as either professional or retail customers, failed to do so, and if it had done so this MiFID would have come to the notice of the plaintiffs, and they would have become aware of the bank’s obligations under it. The plaintiffs say that this failure to reclassify them and notify them in this regard amounts to a concealment of the existence of the MiFID, and therefore the application, effect and advantages to the plaintiffs under it. They say that had they been informed about the MiFID, and had the bank complied with its obligations under it, they would have been put in a position to know that the Swaps were not suitable for their stated purposes and financial objectives.
29. The above comprises a sufficient summary of the assumed facts against which the parties’ legal submissions must be considered.
30. Paul Gallagher SC has appeared for the defendant and moving party on the preliminary issue. He accepts that for the purpose of this preliminary issue the defendant must accept the facts as pleaded and particularised by the plaintiffs are established, including that there was at all times a fiduciary relationship between the parties, though he submits that the latter does not alter or add anything to the situation from the plaintiffs’ point of view.
31. Mr Gallagher considers that this case is similar to that which existed in Gallagher v. ACC Bank plc [2012] 2 I.R. 620. That was a case where the plaintiff invested €500,000 in an investment bond provided by the defendant bank, where the return of the principal sum invested was guaranteed, as well as 80% of any net increase in the value of certain specified shares which the bond would passively track. However, the plaintiff had also borrowed from the defendant bank the amount to be invested, and therefore the bond would have needed to grow sufficiently to offset also the interest payable on that loan over the 5 year 11 month term of the bond – something which was never likely to occur. The plaintiff sued after it became evident at the end of that term that the performance of the shares being tracked was insufficient to offset the loan interest payments made by the plaintiff. The plaintiff’s claim as set forth in his Statement of Claim was basically that the bank had mis-sold to the plaintiff a product that was unsuitable to him given that he was borrowing the amount to be invested.
32. The defendant sought a preliminary determination as to whether the plaintiff’s claim in tort was statute-barred. The Supreme Court determined that it was statute-barred, as time started to run against the plaintiff on the date on which the investment was made, and not at the end of the term of the investment, by which time the plaintiff had become aware of the extent of his losses. In arriving at such a conclusion, Fennelly J. posited three possible approaches to the date of accrual of the plaintiff’s cause of action. He stated at para. 117 et seq.:
“[117] There are three possible approaches to the accrual of the cause of action: firstly, it could accrue when the plaintiff entered into the transaction by borrowing the money and purchasing the bond; secondly, it might accrue at some intermediate date when the plaintiff could prove that he was at a loss in terms of a calculation of his liability for interest against movements in the value of the shares; thirdly, it could accrue at the end of the period of the investment.
[118] It is to my mind inescapable that the plaintiff’s claim as pleaded is that he suffered damage by the very fact of entering the transaction and purchasing the bond. The cause of action then accrued. That was also the date when he entered into the contractual relationship with the defendant.
[119] In logic, if the plaintiff’s loss was too uncertain at the start of the period, the same would be true to a greater or lesser extent at every point during the currency of the bond. No loss could be established during the term, since the plaintiff could not withdraw from the bond. If the plaintiff could not sue at the beginning, because of the need to await the development of the value of the bond, equally it is unlikely that he could sue on any intermediate date. The plaintiff stated in his written submissions that there was no evidence whatever of any damage being suffered by him prior to the maturity of the investment.
[120] The only possible alternative date of accrual would be at the end of the period of five year eleven months when it could be seen whether the plaintiff suffered loss by measuring any gains in the shares against the interest paid on the loan. That alternative view would apply no matter what the length of the bond, which would mean that, in the case of a bond for ten, fifteen or even thirty years, the defendant could say that no damage has been caused ……… . On the pleaded facts of the present case, as set out in para. 10 of this judgment, the damage accrued on the entry into the bond, when the plaintiff was sold a bond which was ‘wholly unsuitable’ for him”.
[121] This case, therefore, is, on its own particular pleaded facts, a clear one. The cause of action accrued when the plaintiff purchased the bond. Since that was more than six years before he commenced the proceedings, his claim is statute barred. ……… “.
33. I have set forth already what I take to be the assumed facts as pleaded and particularised by the plaintiffs. Put more briefly, the plaintiffs claim that in July 2006 they were negligently advised and induced to enter into financial instruments which were unsuitable for the conservative financial objectives which the plaintiffs had indicated to the bank. Everything pleaded and particularised in that regard relates to July 2006. In other words, the plaintiffs are saying that what was done by the bank was done in July 2006. That was the date they say that these products were mis-sold to them.
34. Michael Howard SC for the plaintiff has attempted to counter the argument that time must be considered to have run against the plaintiffs from July 2006 by saying that where a tort is alleged to have been committed there must be not only a wrongful act but damage/loss resulting from it, and until there is actual loss which has occurred the tort is not completed, and the action has therefore not accrued. In the present case he submits that it was not until such time in 2012 that the plaintiffs sought and were given advice from legal and financial experts that their damage became manifest or apparent, and that time ran only from that time. The difficulty with that argument for the plaintiffs is that it is in effect contending for a discoverability test, and that is something which has not been provided for by the Oireachtas in any amendment to the Act of 1957, except in relation to personal injury actions. In my view, as was the case in Gallagher v. ACC, the plaintiffs suffered their loss when in July 2006 they entered into the Swaps which were negligently mis-sold to them according to the assumed facts in that regard. As Fennelly J. stated: “It is to my mind inescapable that the plaintiff’s claim as pleaded is that that he suffered damage by the very fact of entering the transaction and purchasing the bond. The cause of action then accrued.”
35. However, another attempt to escape the rigours of section 11(2)(a) of the Act of 1957 has been by way of reliance upon the existence of a fiduciary relationship. By virtue of the existence of that relationship, the plaintiffs submit that their claim may be seen as one more akin to a fraudulent breach of trust, and as such a claim for which no period of limitation is provided in the Act of 1957. Mr Howard has referred to the provisions of section 44(a) of that Act which provides:
“44.- No period of limitation fixed by this Act shall apply to an action against a trustee or any person claiming through him where –
(a) the claim is founded on any fraud or fraudulent breach of trust to which the trustee was privy …”.
Mr Howard has referred also to Canny: Limitation of Actions where at para 13-20 the author states:
“The Statute of Limitations 1957 contains no reference to actions for breach of fiduciary duty. A breach of fiduciary duty is a cause of action in equity rather than an equitable relief, but as the reliefs sought in action for breach of fiduciary duty will be equitable reliefs, s. 11(9) of the Act of 1957 will still apply. This has the result that no limitation period will apply to an action for breach of fiduciary duty unless the courts would have applied a limitation period by analogy prior to the passing of the 1957 Act.”
36. In my view, the facts of the present case, as assumed, are just the sort of facts where a court would and should apply the limitation period by analogy, as it would have prior to the 1957 Act. In Knox v. Gye [1872] 5 App. Cas. 656, which was a case concerning the taking of an account, and which is referred to by Canny in his work [supra] Lord Westbury stated:
“The general principle is that where a Court of Equity assumes a concurrent jurisdiction with Courts of Law no account will be given after the legal limit of six years, if the statute is pleaded. If it could be doubted whether the executor of a deceased partner can, at Common Law, have an action of account against the surviving partner, the result will still be the same, because a Court of Equity, in affording such a remedy and giving such an account would act by analogy to the Statute of Limitations. For where the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute, and imposes on the remedy it affords the same limitation. This is the meaning of the common phrase that a Court of Equity acts by analogy to the Statute of Limitations, the meaning being that where the suit in Equity corresponds with an action at Law which is included in the words of the statute, a Court of Equity adopts the enactment of the statute as its own rule or procedure. But if any proceeding in equity be included within the words of the statute, there a Court of Equity, like a Court of Law, acts in obedience to the statute.”
37. There is nothing in the facts of the present case to take it outside what is stated by Lord Westbury. The facts giving rise to the equitable claim by virtue of any fiduciary relationship are co-terminus with the facts giving rise to the claim in tort, even if fiduciary obligations are of an ongoing nature during the relationship. That relationship does not alter the fact that the plaintiffs are able to plead, as they have done, that in July 2006 they were negligently and in breach of duty (presumably including a breach of fiduciary duty) induced by the bank to enter into the Swaps.
38. Neither do I accept that the claim comes within section 44. For the plaintiffs to assert that the claims are in the nature of a claim for fraudulent breach of trust, they would have to be able to rely also upon the provisions of section 71(1)(a) of the Act of 1957 where fraud is claimed as opposed to fraudulent concealment under (b) thereof, and the plaintiffs have stated unequivocally that they are not relying on fraud per se.
39. In my view, the plaintiffs have not commenced these proceedings within six years from the date on which their cause of action accrued, which was the 18th July 2006. They are therefore, even on the facts as pleaded by them, outside the period prescribed by section 11 of the Act of 1957 for such actions in tort. Even if one was to say that the date of accrual was the date on which the plaintiffs were first ‘out of the money’ and had to make a payment to the bank under the Swaps rather than ‘in the money’ and in receipt of a payment from the bank, that date was October 2006, and the plaintiffs did not commence their proceedings until 23rd November 2012. But I hold in any event that the date of accrual was the date on which they entered into these Swaps. That is the date on which they were mis-sold the Swaps and the date therefore on which they suffered damage.
40. It remains to consider the question as to fraudulent concealment, and whether section 71(1)(b) of the Act can serve as a deus ex machina to rescue the plaintiffs from the fatal effects of the six year limitation period.
41. I have set out the provisions of section 71(1)(b) earlier, but for convenience will do so again:
“71. – (1) Where, in the case of an action for which a period of limitation is fixed by this Act, either
(a) ……… or
(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.” (emphasis added)
42. The plaintiffs pleaded in their Reply that the defendant concealed information from them that would have enabled them to know that they had a cause of action against the bank, or at least would have put them on inquiry. They say that the bank knew that the plaintiffs had no separate legal advice and that it, being in a fiduciary relationship, concealed the true nature of the Swaps. They say that there was further concealment for the purpose of section 71(1)(b) because the bank did not comply with the MiFID as they failed to reclassify the plaintiffs as retail clients and comply with that Directive after it came into force on the 1st November 2007.
43. The bank sought further particulars of the claims being made in respect of concealment, and say that they had difficulty getting replies to those requests. Replies were furnished on a number of occasions in response to requests for further and better particulars in respect of the basis upon which section 71(1) was being relied. In replies dated the 22nd April 2013 the plaintiffs stated that “fraud and concealment” arose from “the non-disclosure of vital elements of the nature of the Derivative Agreements and from representations of fact intended to induce the plaintiff[s] to enter into the transactions which were false and which did induce the plaintiffs to enter into transactions to their detriment and loss”. In addition, non-compliance with the MiFID is relied upon regarding the failure to re-classify the plaintiffs after 1st November 2007, as well as non-compliance with the Code of Conduct. They say also that “the true nature” of the transactions was concealed from them prior to entering into the agreements, and that it was not until the 2012 review of the transactions by experts that the true nature thereof became apparent..
44. Those replies begot a further request for better particulars so that the defendant might ascertain precisely what case it had to meet in relation to section 71(1) of the Act. The bank asked what right of action was alleged to have been concealed by the defendant and what were the circumstances alleged to have given rise to concealment, and asked that they be given full and detailed particulars of any such “false representation” being relied upon, as well as details of which “vital elements of the transactions” were concealed. Those requests are made by reference to several sub-paragraphs. In addition, further particulars were sought in relation to the circumstances in which the 2012 review of the transactions was undertaken by the plaintiffs.
45. In further replies the plaintiffs clarified that it is pleaded that “all of the causes of action pursued through the Statement of Claim were concealed by the defendant”. They stated also that they had already fully particularised the alleged false representations relied upon in relation to the vital elements of the transactions, but stated that it related to the nature of the transactions, the manner in which they operated, their effect and risk level, the break costs associated with the transactions, the effect of the break costs and any positive effects from breaking the transactions. In relation to the circumstances in which the 2012 review was undertaken, the plaintiffs stated that they did not understand how this could have any bearing on the plea of fraudulent concealment, but that the circumstances in which the review had taken place had already been sufficiently particularised in earlier Replies, and in an affidavit previously filed.
46. Yet further Replies to Particulars were furnished on the 6th June 2013,intended to expand further upon relies already given. It is a lengthy document. No new basis for reliance upon fraudulent concealment emerges from these Replies, but it expands upon the matters already stated as forming the basis for that claim, such as non-compliance with the Code of Conduct when these transactions were entered into, the MiFID from 1st November 2007, and the assertions by the bank that these instruments were consistent with the plaintiffs’ financial objectives. The plaintiffs go on to state therein that “the concealment and non-disclosure has its roots in the actions of the defendant at the time of the entry into of the Swaps in July 2006”, and they say that were it not for that concealment of the defendant’s obligations under the Code, the plaintiffs “would have understood and realised that the Cap entered into in October 2004, and which was novated to the defendant, would have provided sufficient cover and protection against interest rate fluctuations”. As I have said, it is a very lengthy document intended, no doubt, to stave off any further request for better particulars, but I will not attempt any further summary thereof.
47. Mr Gallagher for the bank submits that even on the assumed facts gleaned from the Statement of Claim and Replies to Notices for Particulars there is no fact relied upon as concealing a cause of action from the plaintiffs which was not known to them or which ought to have been known by them after 18th July 2006. He points to the fact that on their own case the allegation is that the bank in July 2006 failed to apprise the plaintiffs of the true nature of these Swaps. But he goes on to submit that this cannot amount to concealment for the purpose of section 71(1)(b) of the Act because if it could, then any plaintiff who brings a claim on the basis of a failure to advise would in effect face no limitation period under the Statute, and that it would amount to a so-called discovery test – in other words that the statute would not begin to run until the plaintiff later discovered that he/she had not been properly advised. He submits that this could not be correct. He points to the fact that on the plaintiffs’ own case, because this is what they have pleaded, they knew everything they needed to know in July 2006, and that if in July 2006 or at any time within 6 years of that date they had sought legal advice, appropriate advice could have been given, just as it was in August 2012 when eventually the plaintiffs decided to undertake a review of the agreements. He submits that in July 2006 they knew everything they needed to know in order to know or be advised that they had a cause of action against the bank in respect of a failure to properly advise them as to the true nature and effect of the Swaps, and that they could at any time after July 2006 have been advised at that time that these Swaps did not match their financial objectives as stated in July 2006 to the Bank.
48. Mr Gallagher submits that the coming into effect of the MiFID in November 2007 is not something that suddenly stopped the clock running on any claim the plaintiffs might bring, or indeed rewound it so that the six years re-commenced from that date. In so far as the bank might be in breach of any obligation to the plaintiffs arising under the MiFID it is submitted that it does not alter the fact that after July 2006 the plaintiffs knew or could have known that they had a cause of action. He submits that any failure of obligation under MiFID might assist the plaintiffs in any action which they commenced after July 2006 but that it does not assist them in relation to section 71(1)(b) of the Act.
49. He submits further that the claim of concealment being put forward is not that a cause of action as such was concealed, but rather that the bank failed to disclose information or properly explain the nature of the Swaps before they entered into them in July 2006, and that this caused the plaintiffs to enter into the Swaps, and that this in turn caused damage and loss. It is submitted therefore that this failure to disclose information and explain the Swaps cannot be characterised as a concealment of a cause of action.
50. Mr Gallagher has referred to the plaintiffs’ replies to a question asked in Notice for Particulars dated 22nd April 2013 at paragraph 1(v) thereof. They had been asked to specify what aspect or feature of the nature of the transactions was discovered for the first time during the review process undertaken in August 2012 that was not disclosed to them by the bank in July 2006, or even during the life of the Swaps themselves. In answer they stated:
“It is asserted and pleaded that prior to the time of the instigation of a Financial Review in April 2012 together with receiving proper legal advice that the true nature of the lack of utility of the Swaps in question were not known to the plaintiffs. The advice received from Mr Downes on the basis of a Financial Analysis undertaken a few months previously in around April 2012 when this concluded in September and October this provided the backdrop for the plaintiffs to finally realise the true extent of the concealment by the defendant of its duties and responsibilities under the Code and MiFID and also the non-disclosure of the plaintiff’s rights and entitlements under the Code and under MiFID. This extraordinary concealment and non-disclosure was only brought to the attention of the plaintiffs when they retained Mr Downes in September/October 2012 after having knowledge of a series of mis-selling cases against the defendant in this jurisdiction in July 2012 from media reports.
…
What was discovered at the time of the Review in question was:
1. The misrepresentation that the plaintiffs were execution only clients as included in the letter of 25 April 2006. It was only at this time when the plaintiff is understood that full rights and entitlements under the Code and MiFID that the incorrectness and inappropriateness of this classification became clear to the plaintiffs.
2. The other aspects which became clear were the consistent concealment by the defendant of their duties and responsibilities under the Code and MiFID and also the defendant’s consistent non-disclosure of the plaintiffs’ rights and obligations under the Code and MiFID right up to the time that this was discovered by the plaintiffs.”
51. I should add that another concealment relied upon is that the bank never disclosed to the plaintiffs before they entered into the Swaps that the bank would earn a substantial commission in the order of €100,000 from these Swaps.
52. Mr Gallagher submits that there can be no doubt that the advice sought in April-August 2012 could as easily have been sought and obtained at any time after July 2006, and that every fact that the plaintiffs needed to know as to a cause of action against the bank for mis-selling of the Swaps was available to them from that time, and that there has been no new fact that came to light later, and which was withheld or concealed by the bank, either knowingly or otherwise, that gave rise to any cause of action that did not exist from July 2006. In so far as the MiFID is relied upon in this regard, the defendant says that it is not pleaded in the Statement of Claim or elsewhere that any loss arose by reason of any failure to re-classify the plaintiffs as retail customers.
53. Michael Howard SC for the plaintiffs submits that the facts asserted against the bank in the Statement of Claim and the further particulars bring the plaintiffs within the provisions of section 71(1)(b) of the Act.
54. It is agreed by all sides that the ordinary concept of criminal fraud is not a necessary ingredient for the purpose of section 71(1)(b) of the Act, as otherwise section 71(1)(a) would be superfluous. The correct meaning for the purpose of sub-section (1)(b) has been expressed in different ways on different occasions both here and in the United Kingdom, but it certainly means, in the light of the authorities opened that where the facts necessary to found a cause of action have been concealed from a plaintiff by the defendant so that it would be unfair for that plaintiff to be held to have had knowledge of them, or to be expected to have made inquiry in that regard, and where it would be unconscionable for the defendant to be permitted to rely upon the plaintiff’s delay in discovering those necessary facts, time will not be considered to have commenced for the purpose of the Statute until the facts became known. It is clear also that no moral turpitude is required on the part of the defendant. But, as Lord Denning stated in Kitchen v. Royal Air Force Association [1958] 1 WLR 563 it is “clear that the phrase covers conduct which, having regard to some special relationship between the parties concerned, is an unconscionable thing for the one to do towards the other”. Mr Howard points to the assumed fact in the present case that there was a fiduciary relationship between the parties, and that the bank accordingly has a special responsibility to ensure, before these Swaps were entered into, that the plaintiffs, who had no separate advice available to them at the time, fully understood the nature of the intended Swaps, and were advised accordingly that they may not be suitable for the financial objectives. As set forth already, the allegation is that this advice was withheld from them and therefore that there was concealment of such advice.
55. Much reliance is placed by the plaintiffs on the existence of the fiduciary relationship between the parties at the time these Swaps were entered into. I can agree that such a relationship could impose a greater obligation of disclosure upon the bank. But in my view, even given that relationship for the purpose of this preliminary issue, the fact remains that everything that the plaintiffs needed to know in order to get any advice on these Swaps was known to them by the 18th July 2006. They had the Swap agreements they entered into. They knew what their conservative financial objectives were and that they had explained them to the bank. They knew also that the bank had not explained these Swaps to them. They knew that they thought that they were some sort of fixed rate interest agreement. By October 2006, if not sooner, they certainly knew that it was possible that they would have to pay money to the bank in circumstances where they were ‘out of the money’. In my view if they had gone to a solicitor at any time after July 2006, and sought advice as to whether these Swaps met their conservative financial objectives, they would have been in a position to provide all the necessary information in order to get such advice, and to decide if the Swaps had been mis-sold. Instead, they did nothing until they ran into financial difficulties in 2012 whereupon a financial review was undertaken and they received advice to the effect that these Swaps had not been suitable for the purposes in July 2006. The fiduciary relationship does not add anything to those facts. The coming into force of the MiFID in November 2007 adds nothing of relevance to those facts. It did not suddenly reveal to the plaintiffs some vital fact that was not available to them from July 2006 and which was essential to their knowledge that they had a cause of action.
56. The plaintiffs in my view are confusing the emergence of further facts during the course of an action, with facts sufficient for the accrual of a cause of action. They had ample facts at their disposal in order to commence an action for negligence/negligence mis-representation in relation to these Swaps. A process of discovery might in due course have strengthened their hand in terms of their ultimate success at trial – or indeed might have weakened their case. But it is not necessary that every fact be known in order to commence proceedings. Sufficient facts are necessary in order to know that a cause of action has accrued. In the present case more than sufficient was known in the immediate aftermath of July 2006, or at any time before the Swaps came to an end some five and a half years later. The plaintiffs did not have to wait until April – August 2012 before seeking and receiving advice in relation to their suitability. As I have said already, section 71(1)(b) of the Act must not be equated with some sort of discovery test. That is not the intention of the section. No such provision as has been made in relation to discoverability in the context of personal injuries, has been made in respect of other types of tort.
57. The weakness of the plaintiffs’ arguments in this regard is in my view demonstrated by reference to the difference in facts between Gallagher v. ACC Bank already referred to, and those in Behan v. Bank of Ireland [1998] 2 ILRM 507, the latter being a case relied upon by the plaintiffs. I have already set forth the facts and conclusions in the former case. In Behan, the facts are quite involved, but it suffices to say that a sum of £18,455 (being a refund due to the plaintiff under a farm rescue package) which had been received by the bank, was, unknown to the plaintiff, credited to his bank account so that the bank could claim it as a credit against its own corporation tax liability. This was considered by the Court to be an acknowledgement by the bank of the plaintiff’s entitlement to it, and accordingly that it would be inequitable for the bank to be entitled to rely upon the plaintiff’s delay in order to disbar him from claiming the sum, in circumstances where the plaintiff was not made aware by the bank that the sum had been credited to his account. Clearly the fact that the plaintiff was not told by the bank that the sum had been lodged to his account, and that the plaintiff only discovered the fact during the course of an action he brought against the bank for negligence in relation to other advices the bank had given, was something which was concealed from the plaintiff within the meaning of section 71(1)(b) of the Act, until it was discovered by him during the course of the trial process. That is a very different situation from where one receives certain financial advice in 2006 and it is not until you seek legal advice over six years later that you are told that the advice was bad advice, and decide to commence proceedings. If the advice was bad advice in August 2012, it was bad in July 2006. That fact is not dependent upon any new fact later discovered and that was concealed by the defendant. That is wholly different from the fact discovered in Behan. Again, I add that the existence of a fiduciary relationship does not in my view add anything in the plaintiffs’ favour. In so far as there is a claim based on breach of any fiduciary duty, that claim relies upon the same facts as for the other claims, and no special rule of limitation applies. It is still six years. In so far as some reliance is placed upon the fact that the bank received an undisclosed commission when these Swaps were entered into, it does not in my view serve to delay the accrual of a cause of action on the part of the plaintiffs. Even if they had been told about this in July 2006 it would not have added anything to the facts necessary to found a cause of action at that time, no matter how the plaintiffs might have reacted to the news, and no matter how they might have deployed that fact whenever the action might have come to trial.
58. Having concluded already that the action was commenced by the plaintiff outside the six years from date of accrual provided by section 11 of the Act of 1957 for such actions in tort, I now conclude that acts and omissions alleged against the defendant are not capable of constituting concealment by fraud on the part of the defendant of the plaintiffs’ right of action in the sense of section 71(1)(b) of the Act.
59. I accept that a Court should be slow to determine as a preliminary issue that a claim is statute barred where essential facts are in dispute and should await a trial for their resolution. But in the present case the facts being relied upon are those asserted by the plaintiffs and which are assumed to be correct and established for the purpose of the issue. In that way, there is no prejudice to the plaintiffs, and there is a desirable saving both in terms of costs to the parties, and in terms of court time and resources by having this determinitive issue decided now.
60. There will accordingly be an order dismissing the plaintiffs’ proceedings.