ACC Bank Plc v Fairlee Properties Ltd and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 04 February 2009
• Neutral Citation: [2009] IEHC 45
• Court: High Court
• Date: 04 February 2009

ACC Bank Plc v Fairlee Properties Ltd & Ors

COMMERCIAL COURT

BETWEEN

ACC BANK PLC.

PLAINTIFF

AND

FAIRLEE PROPERTIES LTD., JERRY BEADES AND NAIL RING

DEFENDANTS

[2009] IEHC 45

[No. 5373 P/2007]

[No. 123 COM/2007]

THE HIGH COURT

NEGLIGENCE

Duty

Mortgagee - Loss of title deeds - Reasonable care in storage of deeds - Quantification of claims - Whether reasonably foreseeable that careless storing of title deeds would be likely to cause injury - Reasonableness of imposition of duty of care - Whether causal link between negligence and loss - Whether plaintiff legally liable for losses - Whether losses suffered reasonably foreseeable - Whether fair and just to impose liability - Nature of damage claimed - Whether any duty in respect of loss suffered - Whether losses within scope of duty of care - Reduction in probable profits - Scope of duty of care - Set-off - Interest - Gilligan v National Bank Ltd [1901] 2 IR 513, Donoghue v Stevenson [1932] AC 562, Glencar Exploration plc v Mayo County Council (No 2) [2002] 1 IR 84, Heaven v Pender (1883) 11 QBD 503, Fletcher v Commissioners of Public Works [2003] 1 IR 465, Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, Breslin v Corcoran [2003] 2 IR 203, Burke v John Paul & Co Ltd [1967] IR 277, South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191 and Aneco Reinsurance Underwriting Ltd v Johnson & Higgins Ltd [2002] 1 Lloyd's Rep 157 considered - Conveyancing and Law of Property Act 1881 (44 & 45 Vict, c 41), s 16 - Damages awarded (2007/5373P - Finlay Geoghegan J - 4/2/2009) [2009] IEHC 45

ACC Bank v Fairlee Properties Ltd

GILLIGAN & NUGENT v NATIONAL BANK LTD 1901 2 IR 513

CONVEYANCING & LAW OF PROPERTY ACT 1881 S16 (UK)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S16(1) (UK)

DONOGHUE v STEVENSON 1932 AC 562 1932 SLT 317 1932 SC (HL) 31 1932 AER REP 1

GLENCAR EXPLORATION PLC & ANDAMAN RESOURCES PLC v MAYO CO COUNCIL 2002 1 IR 84 2002 1 ILRM 481 1998/20/7466

HEAVEN v PENDER (T/A WEST INDIA GRAVING DOCK CO) 1882-83 11 LR QBD 503

FLETCHER v CMRS OF PUBLIC WORKS 2003 1 IR 465 2003 2 ILRM 94 2003 ELR 117 2003/22/4936

ALLIED MAPLES GROUP LTD v SIMMONS & SIMMONS (A FIRM) 1995 1 WLR 1602 1996 CLC 153 1955-95 PNLR 701 1995 70 P & CR D14 1995 4 AER 907

BRESLIN v CORCORAN & MOTOR INSURERS BUREAU OF IRELAND 2003 2 IR 203 2003 2 ILRM 189 2003/6/1316

BURKE v JOHN PAUL & CO LTD 1967 IR 277

SOUTH AUSTRALIA ASSET MANAGEMENT CORP v YORK MONTAGUE LTD 1997 AC 191 1996 3 WLR 87 1996 3 AER 365 1996 CLC 1179 1996 PNLR 455

ANECO REINSURANCE UNDERWRITING LTD (IN LIQUIDATION) v JOHNSON & HIGGINS LTD 2001 AER (D) 256 2002 1 LLOYD'S 157 2002 CLC 181 2002 PNLR 8 2001 UKHL 51

1 1. The plaintiff's claim in these proceedings arises out of three facilities granted to the first named defendant, Fairlee Properties Ltd. ("Fairlee") which were guaranteed by the second named defendant ("Mr. Beades") and the third named defendant ("Mr. Ring"). The first two facilities were commercial facilities granted in normal course. The third facility was not a normal commercial facility and granted after events which gave rise to the counterclaim in the proceedings.

2 2. All three defendants counterclaim against the plaintiff by reason of alleged negligence, breach of duty and breach of contract of the plaintiff by its loss of title-deeds to properties at Richmond Road and Richmond Avenue, Dublin, and the plaintiff's failure to produce those deeds in June 2004.

3 3. The plaintiff's claim against Mr. Ring and his counterclaim against the plaintiff have been settled and this judgment does not concern the counterclaim.

4 4. At the outset of the hearing, it became apparent that there was substantial agreement in relation to the quantum of the plaintiff's claim against Fairlee and Mr. Beades and their liability on the claim, subject to a right of set off in respect of the damages claimed on the counterclaim. There were only two issues in dispute on the claim. The first was the entitlement of the plaintiff to charge interest on the three facilities from 1 ^st July, 2006, until 17 ^th July, 2007, being the date of commencement of proceedings. Having heard submissions and considered the agreed documentary evidence in relation to that issue, I gave a ruling on the third day of the trial in which I determined that the plaintiff was not so entitled to charge interest. The parties are in agreement that the amount of the plaintiff's claim in such circumstances is €6,278,355.24.

5 5. The second issue is the entitlement of the plaintiff to interest pursuant to the Courts Acts on such sum against the defendants from the date of commencement of the proceedings. I indicated that I would leave over determining that issue until after I determined the counterclaim of Fairlee and Mr. Beades.

Nature of counterclaim

6 6. I propose in this judgment referring to the first and second named defendants collectively as the defendants and insofar as is necessary to refer to them individually to do so as Fairlee and Mr. Beades.

7 7. In July 2000, the plaintiff made Facility 1 available to Fairlee. This was a sum in Irish Punts equivalent to approximately €2.6 million. The stated purpose was to enable Fairlee purchase a property at 158-163, Richmond Road, Dublin 1 ("the Richmond Road property"). The facility was secured inter alia by a first fixed mortgage/charge over the Richmond Road property and a guarantee and indemnity from Mr. Beades which in turn was supported by a first fixed charge over a site owned by him at 29-31, Richmond Avenue ("the Richmond Avenue property"). In June 2001, the plaintiff made available Facility 2 to Fairlee in a sum of approximately €330,000. Its stated purpose was to enable Fairlee purchase a property adjoining the Richmond Road property. The security included a first fixed mortgage/charge over that property and the securities already granted inter alia by Fairlee and Mr. Beades in relation to Facility 1. The plaintiff retained the title-deeds to the properties at Richmond Road and Richmond Avenue at all material times.

8 8. Facility 1 and Facility 2 were rolled over from time to time. However, the relationship between the plaintiff and Fairlee and Mr. Beades deteriorated. The plaintiff was not willing to make further facilities available. Fairlee sought finance elsewhere and, by November 2003, Mr. Beades had informed the plaintiff that he was seeking finance from Bank of Scotland (Ireland) Ltd. ("BOSI"). The facilities to be obtained from BOSI were to be sufficient to discharge the then liabilities of Fairlee to the plaintiff. Such facilities were approved by BOSI in February 2004.

9 9. In June 2004, the solicitors for the defendants requested from the plaintiff the title documents inter alia to the properties at Richmond Road and Richmond Avenue on accountable receipt for the purpose of preparing the security sought by BOSI in connection with the proposed facilities. The plaintiff was unable to locate the title documents and ultimately, in early July, informed the defendants that the title documents were mislaid.

10 10. The facilities from BOSI could not be drawn down in the absence of the title documents. The plaintiff commenced a process of reconstituting the title. In July 2005, the plaintiff provided an indemnity to BOSI who in turn granted some facilities to the defendants. In April 2006, following a visit by Mr. Beades to a senior official of Rabobank, the parent company of the plaintiff, in the Netherlands, an additional interest-free facility of €3 million was granted to Fairlee by the plaintiff. Later, in the month of April 2006, the plaintiff found the title-deeds.

11 11. The defendants counterclaim that the plaintiff was negligent in failing to produce the title documents to the properties at Richmond Road and Richmond Avenue when requested in June 2004. They make alternative claims, alleging breach of contract and breach of trust. They contend that each suffered significant loss and damage arising from the negligence, breach of duty, breach of contract and breach of trust of the plaintiff in failing to keep the title documents securely, and failing to produce them when requested in connection with the redemption of the relevant mortgages or charges given by the defendants to the plaintiff.

Issues

12 12. There are multiple facts in dispute between the plaintiff and the defendants. Many of the detailed disputes are not relevant to the issues which the Court now has to determine. The parties, with the assistance of their counsel and solicitors, during the course of the hearing reduced quite significantly the relevant issues in dispute. The issues remaining in dispute at the end of the hearing may, most conveniently, be resolved by a consideration of the following:

(i) The relevant findings of fact prior to June 2004;

(ii) The liability of the plaintiff for its admitted failure to produce the title documents in June 2004 in the context of the relevant findings of fact;

(iii) The findings of fact relevant to the defendants' counterclaims for damages and the quantification of those claims.

(iv) The liability of the plaintiff for the defendants' alleged losses.

Findings of fact to July 2004

13 13. The following are the findings of fact which appear relevant to the issue of the plaintiff's liability, if any, for its admitted failure to produce the title documents to the properties at Richmond Road and Richmond Avenue when requested in June 2004.

14 14. The title-deeds to Richmond Road and Richmond Avenue were given by the defendants to the plaintiff pursuant to the mortgage/charges granted as security for Facilities 1 and 2 and subsequently retained by the plaintiff as mortgagee or chargee of the properties.

15 15. Fairlee is a...