Bourke v O'Donnell & Governor & Company of the Bank of Ireland

• Jurisdiction: Ireland
• Judge: Mr. Justice Hedigan
• Judgment Date: 05 October 2010
• Neutral Citation: [2010] IEHC 348
• Docket Number: [No. 4524 P/2009]
• Court: High Court
• Date: 05 October 2010

[2010] IEHC 348

THE HIGH COURT

[No. 4524 P/2009]

Bourke v O'Donnell & Governor & Company of the Bank of Ireland

BETWEEN

MARY BOURKE

PLAINTIFF

AND

GEORGE O'DONNELL, PAULINE O'DONNELL AND THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

DEFENDANTS

WARD v MCMASTER & ORS 1985 IR 29 1988 IR 337

R (PROCTOR) v HUTTON (DEPUTY REGISTRAR OF FRIENDLY SOCIETIES) (NO 2) 1978 NI 139

MCGONIGLE v BLACK UNREP BARR 14.11.1988 1988/9/2612

CARROLL v CARROLL 1999 4 IR 241 2000 1 ILRM 210 1999/4/699

FOLEY v HILL & ORS 9 ER 1002 1848 2 HL CAS 28 1843-60 AER REP 16

LIPKIN GORMAN (A FIRM) v KARPNALE LTD & ANOR 1989 1 WLR 1340 1992 4 AER 409 1989 BCLC 756

HAPGOOD & ORS PAGETS LAW OF BANKING 13ED 2007 202

HAPGOOD & ORS PAGETS LAW OF BANKING 13ED 2007 478

BANK OF IRELAND v HUSSEY 1965 IR 46

CONTRACT

Undue influence

Improvident transaction - Monetary gift - Negligence - Breach of contract - Fiduciary duty of bank - Presumption of undue influence - Plaintiff in poor health, vulnerable and elderly - Knowledge of incapacity - Independent legal advice - Whether plaintiff induced to make gift - Whether plaintiff of sound mind - Whether plaintiff had capacity to give instructions - Whether bank had knowledge of plaintiff's incapacity - Whether bank had duty to make inquiries - Whether mandate revoked - Whether transaction should be set aside - McGonigle v Black (Unrep, HC, Barr J, 14/11/1988); R (Proctor) v Hutton, re Founds Estate [1978] NI 139; Carroll v Carroll [2000] 1 ILRM 210; Foley v Hill [1848] 2 HL Cas 28; Lipkin Gorman v Karpnale Ltd [1989] 1 WLR 1340 and Bank of Ireland v Hussey [1965] IR 46 considered - Application granted (2009/4524P - Hedigan J - 5/10/2010) [2010] IEHC 348

Bourke v O'Donnell

Facts: The plaintiff was an elderly widow and claimed damages against the first and second named defendants in respect of an allegedly improvident transaction in which she was induced to make a gift to them for Eur 124,000, being the full amount of an insurance policy recently cashed in by her. The plaintiff claimed damages against the third named defendant bank for causing her negligence and breach of contract in causing or permitting her to enter the transaction. The plaintiff had known the defendants for many years and they were not related to her. She had been in poor health for many years. The bank manager had recommended that she seek independent legal advice. The plaintiff had given evidence that she never knew the insurance money amounted to Eur 124,000 and she could not recall the specific journey to the bank to obtain the monies. The question arose as to her state of mind, her confusion, the duty of care owed, if any, by the third named defendant to her and whether a presumption of undue influence arose and whether it had been rebutted.

Held by Hedigan J. that while the Court accepted that the bank had no duty to advise on the wisdom of carrying through what the customer wished and instructed, in the circumstances of the case that any fiduciary duty did not arise. When the bank had knowledge of incapacity, the mandate was revoked and until this point was operative. Where there were circumstances attendant upon a transaction that clearly raised substantial grounds, the bank had a duty to make an enquiry. The mere fact that the customer was elderly would not suffice to give rise to such a duty. The customer here had been in very frail health and sometimes confused. The requested transaction was a bizarre one as she had proposed to divest herself of everything for no consideration. There were substantial grounds arising from the situation to doubt the capacity of the plaintiff to give instructions. The bank here had breached the duty to enquire into the capacity of the customer where substantial grounds existed to doubt that capacity. There would be judgment in favour of the plaintiff against each of the defendants jointly and severally in the sum of Eur 124,000.

Reporter: E.F.

Mr. Justice Hedigan

1 The plaintiff is a widow and resides at Portumna Retirement Village in the County of Galway. She was born on the 22^nd May, 1930.

2 The first and second named defendants are husband and wife and reside at Shannon Park, Portumna in the County of Galway. The third named defendant is a publicly quoted company having their registered offices at Lower Baggot Street in the City of Dublin.

3 The plaintiff claims against the first and second defendants damages in respect of an alleged improvident transaction in which she was induced to make a gift to the first and second named defendants of €124,000 being the full amount of an insurance policy recently cashed by her. Against the third named defendant the plaintiff claims damages for negligence and breach of contract in causing or permitting the plaintiff to enter into such an improvident transaction.

2 4.1 The plaintiff at the time of this impugned transaction was 77 years old. Her family have been associated with Portumna Bridge for a number of generations. Her father in his time was the man who opened the bridge to allow boats pass through on the Shannon River either en route to Lough Derg and south or north to Banagher and beyond. She was married but had no children. When her husband died in 1994 she moved back to the Bridge where she lived with her brother who had succeeded his father on the Bridge. She herself operated the Bridge and was apparently well known to travellers on the river and locals as the woman who opened the Bridge. When her brother died eight years ago, she remained on in the Bridge House. She has no close family. Her only family with whom she has regular contact seems to be her nephew, Robert Butler. He lives in Birmingham where he works as a window fitter. He visited her four to five times a year.

3 4.2 The plaintiff knew the defendants for many years. The first defendant used to come to the house while her brother lived. He used to do messages for them and was paid therefor. The defendants helped to look after the plaintiff and she paid them. The first defendant had a key to the house. For at least some time the first defendant had possession of her Old Age Pension book. He returned it at some stage to her nephew at his request. Her OPW pension went to the Killimer Nursing Home.

4 4.3 The plaintiff has been in poor health for many years. In June 2007 she had a bad fall. She was suffering from several large lacerations and widespread skin infections. She was and had been for many years suffering from chronic lung disease. This resulted in lung infections during which she becomes a little confused according to her GP. She also suffered from cirrhosis of the liver. She was admitted to Portiuncula Hospital on the 6^th June, 2007. She was very ill. She remained there until 11^th June, 2007 when she was transferred to Killimer Nursing Home. She was confused and disoriented in time and place. She was considered dangerously ill. Over the following six weeks she improved but remained confused. She required re- admission to hospital for just over two weeks and returned to the nursing home on 24^th August, 2007. She was noted by the nursing home at that time as being confused at all times. Her GP, Dr. Murphy, agreed with that assessment. On further reports by the nursing home dated 28^th September, 2007 she was still confused at all times - her GP again agreed. On 18^th October, 2007 she was reported as intermittently confused - her GP agreed, explaining she was fine some days but confused others. On the 23^rd November, 2007 she was reported orientated at all times, was much better, was mainly good in conversation but sometimes confused. On the 3^rd December, 2007 she was transferred to Portumna Retirement Village and Nursing Home. She was brought there by her nephew, Richard Butler. On the 7^th December, 2007 her GP reported her as lucid. He did not ask her any searching questions as this was a routine visit. He recorded no comments. This was on the day following the events in question.

5 4.4 On the 4^th December, 2007 the plaintiff went to the bank (the third defendant) in company with her nephew. She lodged three cheques totalling €1,264.01 and withdrew €1,200. These related to overpayments to the nursing home. The money withdrawn was given by her nephew to Portumna Nursing Home. There is disagreement as to whether her nephew saw an account with a balance of €124,000. He stated in evidence he was given two statements of dormant accounts. It is clear from the evidence that at this time there was one account (No. 40905779) with a balance of €15,635.85. There was another account (No. 46405265) with a balance of €124,452.84. The vast bulk of this amount was the proceeds of an insurance policy cashed on the 15^th November, 2007.

6 4.5 On the 6^th December, 2007, the first and second defendants signed the plaintiff out of the nursing home and brought her to the bank. The plaintiff insisted throughout her evidence that she had no recollection whatever of the visit or the events that occurred at the bank. The party arrived at the bank and the plaintiff was noted by Ms. Marie Bourke to be in good form and using a walking stick. They asked to see the manager, Ciaran Ryan, and he did so. The manager had not met either the plaintiff or the defendants before. Ms. Bourke did know the plaintiff but not well. She described her as a very independent lady who did her business and left. When they settled into the office the plaintiff told the manager she wanted to give some money to her neighbours, the first and second defendants. The manager looked at her accounts and saw €16,000 in one and €124,000 in the other. The manager could see the €124,000 was largely composed of an insurance policy cashed recently. This was obvious from the code on the account entry. She said she wanted to give them €124,000. The manager asked the defendants to leave the...