Blue Diamond Sports Limited t/a Dundalk Bureau De Change and Blue Diamond Sports No.2 Ltd -v- The Governor and Company of The Bank of Ireland, [2018] IEHC 655 (2018)

Docket Number:2018 4981 P
Party Name:Blue Diamond Sports Limited t/a Dundalk Bureau De Change and Blue Diamond Sports No.2 Ltd, The Governor and Company of The Bank of Ireland
 
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THE HIGH COURT[2018 No. 4981 P.]

BETWEEN

BLUE DIAMOND SPORTS LIMITED T/A DUNDALK BUREAU DE CHANGE AND BLUE DIAMOND SPORTS No. 2 LTDPLAINTIFFSAND

THE GOVERNOR AND COMPANY OF THE BANK OF IRELANDDEFENDANT

JUDGMENT of Mr. Justice Allen delivered on the 23rd day of November, 2018

  1. This action was commenced by plenary summons issued on 31st May, 2018. The relief claimed in the general indorsement of claim and in the prayer to the statement of claim, which was delivered on the 17th October, 2018, is:

  2. A declaration that the first plaintiff, as agent for MoneyGram International Ltd, a payment institution within the meaning of the European Union (Payment Services) Regulations, 2018 (S.I. No. 6 of 2018) (“the Payment Services Regulations”) and/or Directive (EU) 2015/2366 on payment services in the internal market (“PSD2”) is entitled to rely on the provisions of Article 44 of the Payment Services Regulations and Article 36 of PSD2, however transposed, and

  3. A declaration that the defendant is obliged to permit the first plaintiff access to its payment accounts services on an objective non-discriminatory, and proportionate basis, and in an unhindered and efficient manner, and

  4. A declaration that the decision of the defendant communicated by letter of 5th April, 2018 to withdraw services from the first plaintiff and close (two accounts identified by number) is unlawful, and in breach of Article 44 of the Payment Services Regulations, and Article 36 PSD2, and that it is discriminatory and disproportionate,

  5. A declaration that the plaintiffs are payment service providers and/or payments services users within the meaning of Payment Services Regulations and PSD2 and as such entitled to rely on Article 43 of the Payment Services Regulations and Article 35 PSD2, however transposed,

  6. A declaration that the decisions of the defendant communicated by letter of 5th April, 2018 to withdraw services to the plaintiffs with effect from 5th June, 2018 and close three accounts (identified by number) are unlawful in that they have the effect of preventing the plaintiff’s (sic.) access to any payment system, in breach of Article 43 of the Payment Services Regulations, and Article 35 PSD2, and that they are discriminatory, and disproportionate,

  7. A declaration that to the extent that the defendant’s terms and conditions contravene or conflict with the provisions of the Payment Services Regulations, or PSD2, they are unlawful and have no effect,

  8. Further or in the alternative, a declaration that the defendant has not given the required contractual notice to the second plaintiff in respect of (one account identified by number),

  9. If necessary, orders preventing the defendant from withdrawing services to the plaintiffs, or closing (the three accounts identified by number),

  10. Damages for breach of contract and/or wrongful interference with the plaintiffs’ businesses,

  11. Further or other, including interlocutory relief,

  12. Interest,

  13. Costs.

  14. An order was made for short service of a motion for interlocutory relief which was originally returnable on 5th June, 2018 and was adjourned from time to time to allow an exchange of affidavits.

  15. The interlocutory relief claimed was:

  16. An order restraining the defendant from restricting in any way the first plaintiff’s access to the defendant’s payment accounts services pending the trial of the action,

  17. An order restraining the defendant from withdrawing its service to the first plaintiff pending the trial of the action,

  18. An order restraining the defendant from withdrawing its service to the second plaintiff otherwise than in accordance with its terms and conditions,

  19. Such further interlocutory order as seems meet to the court.

  20. On the opening of the application to the court, the application on behalf of the second plaintiff was abandoned and the application on behalf of the first plaintiff was modified so that the court was asked on behalf of the second defendant to make either an order in the terms of the notice of motion, or an order in such terms as seem appropriate in order to allow the first plaintiff, as agent of MoneyGram, to continue access to the payment account systems of the defendant.

  21. The plaintiffs are companies based in Dundalk, County Louth. The first plaintiff operates a bureau de change, money transmission, and money remittance business. The second plaintiff operates a gaming hall. For a number of years, the first plaintiff maintained two current accounts with the defendant and the second plaintiff maintained one current account.

  22. By letters dated 5th April, 2018 the defendant advised the plaintiffs that it was exercising its right to withdraw the service on each of the accounts within two months of the date of that letter. The plaintiffs were asked to arrange for the accounts to be closed on or before 5th June, 2018, failing which, it was said, the bank would take the necessary steps to close the account.

  23. By this action and by the motion before the court, the first plaintiff seeks to forestall the closure of its two accounts.

  24. The first plaintiff’s case is that its accounts with the defendant are essential for the conduct of its business and that without those accounts the plaintiffs will “effectively go out of business”. Following receipt of the defendant’s letters of 5th April, 2018 the plaintiffs attempted to obtain alternative banking facilities but failed.

  25. In the affidavit of Terence Boyle grounding the application it was said that the throughput in the first plaintiff’s accounts was in the region of €18 million or €19 million, giving rise to a turnover or commission of between €500,000 and €600,000 per annum. Mr. Boyle did not then give any breakdown of the first plaintiff’s earnings by reference to the several stands of its business, but it eventually emerged (in the third affidavit of Owen Kennedy sworn on 27th August, 2018) that the great bulk of the first plaintiff’s business comprises foreign exchange and that the MoneyGram business accounted for only about 10% or 11% of turnover.

  26. The thrust of the grounding affidavit of Mr. Boyle was that the defendant had withdrawn the plaintiffs’ banking facilities without giving any reasons. It was said that the first plaintiff was the authorised agent of MoneyGram, an authorised payment institution within the meaning of the Payment Services Directive, and as such, was entitled to payment services under Article 44 of the Payment Services Regulations. It was said that the threatened closure of the first plaintiff’s accounts amounted to a breach by the defendant of its obligations to provide services in an objective, non-discriminatory and proportionate way. It was suggested that the closure of the first plaintiff’s accounts would have a negative effect on competition in the north east of Ireland and (if only obliquely) that the defendant’s motivation in closing the accounts was to take over some or all of the first plaintiff’s bureau de change and money transmission businesses.

  27. On behalf of the defendant a replying affidavit was sworn on 27th June, 2018 by Mr. Owen Kennedy, Group Head of Anti Money-Laundering, Counter Terrorist-Financing and Sanctions and Group Money Laundering Reporting Officer.

  28. The defendant’s position was, and is, that it was entitled to give notice to close the accounts in accordance with the terms and conditions applicable to the accounts and that it had done so in circumstances where the defendant had reasonable grounds to regard certain activity on the accounts as being particularly likely to be related to money laundering. In support of the proposition that the defendant had reasonable grounds for its belief, Mr. Kennedy gave a number of examples but the primary stance of the defendant was and is that it was entitled to give two months’ notice to close the accounts without giving any reason and in particular without engaging with the plaintiffs as to why it was doing so or the basis for the belief which prompted the giving of notice.

  29. The examples relied on by Mr. Kennedy were challenged by Mr. Boyle and there was a protracted exchange of affidavits in which Mr. Kennedy stood over his belief that the material justified his suspicion and Mr. Boyle stood over his position that it could not.

  30. Mr. Kennedy pointed to the high volume and high value of the transactions with several of the first plaintiff’s customers who dealt with large amounts of cash, or who were working in industries which dealt in large amounts of cash. Having regard to the volume and value of the business, Mr. Kennedy thought it unusual that it would be conducted through a bureau de change.

  31. Mr. Kennedy pointed to what he said was a history of unusually large cash transactions on the first plaintiff’s account. Specifically, Mr. Kennedy pointed to cash lodgements of €575,618 over a 21-month period of which €300,000 was lodged in a two-week period by lodgements of €25,000 twice a day on most business days.

  32. Mr. Kennedy pointed to lodgements amounting in total to €4,756,660 in respect of MoneyGram transactions in a twelve-month period in which, he said, was unusually high for a business of the nature of that of the first plaintiff.

  33. Mr. Kennedy pointed to what he said appeared to him to be high level of payment card terminal transactions of €5,717,483 over a twelve-month period.

  34. As to the second plaintiff, Mr. Kennedy observed that all of the credit transactions on the second plaintiff’s account were lodgements from one or other of the first plaintiff’s accounts.

  35. ...

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