Carney v Bank of Scotland Plc (Formerly Bank of Scotland (Ireland) Ltd)

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 24 October 2017
• Neutral Citation: [2017] IECA 295
• Date: 24 October 2017
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2017] IECA 295

BETWEEN

DOMINIC CARNEY

PLAINTIFF/APPELLANT

AND

BANK OF SCOTLAND PLC (FORMERLY BANK OF SCOTLAND (IRELAND) LIMITED)

DEFENDANT

AND

GEAROID COSTELLOE

DEFENDANT/RESPONDENT

[2017] IECA 295

Finlay Geoghegan J.

Ryan P.

Finlay Geoghegan J.

Whelan J.

Neutral Citation Number: [2017] IECA 295

Appeal Number 2016 99

THE COURT OF APPEAL

Banking – Receiver – Appointment of receiver by Bank – Appeal against dismissal of claim at first instance – Res judicata

Facts: The appellant had brought a claim against the 2nd defendant, who had been appointed as a receiver by the first defendant. The receiver was appointed under a deed of mortgage on property owned by a company. An application was made to dismiss the claim on the basis was res judicata, and in respect the rule in Henderson v Henderson [1843-60] All ER Rep 378. The application had been granted and the matter now came on appeal.

Held, by Ms Justice Finlay Geoghegan, that the appeal would be allowed in part. The Court reviewed the guidance domestically and in the UK in respect of the Henderson v Henderson rule, and stated that the dismissal of the claim was correct save for the personal property belonging to him and not the company or premises. On that basis only, the appeal would be allowed and the terms of the resulting order would be subject to consideration.

JUDGMENT (ex tempore) delivered on the 24th day of October 2017 by Ms. Justice Finlay Geoghegan

1 This is an appeal brought by Mr. Carney, who is the plaintiff, against an order made in the High Court by Binchy J. on 12th January, 2016 in which he dismissed Mr. Carney's claim against the second named defendant, Mr. Costelloe. Mr. Costelloe is a receiver who was appointed by Bank of Scotland in one of its guises. It is not relevant to the issues on this appeal to determine which precise company within the Bank of Scotland group appointed Mr. Costelloe. He was the receiver appointed over property which was owned by a company, Philisview Properties Limited, pursuant to a deed of mortgage and charge which had been granted. The basis of the application to the High Court to dismiss the claim was on the grounds that the plaintiff's cause of action in these proceedings against Mr. Costelloe was res judicata. I want to be very careful using terminology in this decision, and the term res judicata in particular, because it is used by the courts in a strict sense, and it is sometimes also used in a broader sense in a manner which I will explain in a moment. It appears that the basis of the application to the High Court was on the grounds that what had happened in certain Circuit Court proceedings, to which I will refer below, was such that the plaintiff's claim against Mr. Costelloe was res judicata in the strict sense, and also in the broader sense in accordance with what is normally termed 'the rule in Henderson v. Henderson'.

2 The High Court judge, Binchy J., acceded to the application, and in his ex tempore judgment he set out, at p. 43 of the transcript that we have been given, the essential reason for which he determined that when the Circuit Court made a decision to grant final orders in the Circuit Court proceedings, it rendered the matter res judicata. And he stated:

'The question here is a somewhat different question and it's whether or not the decision of the Circuit Court taken when granting the final orders renders the matter res judicata, and in that context in order to grant the relief sought by the receiver, which the Court did grant, the Court would have to have been satisfied that the mortgage and charge was valid, that the appointment of the receiver was valid and there was no other reason why the relief sought could not be granted, such as intervening leases. And I am quite satisfied that, having had the benefit of receiving very comprehensive submissions and evidence on affidavit in relation to these matters at interlocutory stage, the Circuit Court was well positioned to make a decision on those matters for the purpose of granting the orders that he did upon the hearing of the second motion for judgment. And so for that reason, therefore, I consider that the decision of Judge Riordan on the 19th of May 2015 has indeed rendered the issues raised by Mr Carney's proceedings of 4th July 2014 res judicata.'

3 Mr. Carney has appealed against that judgment to this Court today, and he has opened a number of authorities to us which demonstrate the strictness of approach taken by the courts to what I would call a determination that a matter is res judicata in the strict sense. For reasons that I will come to in a moment, it does not appear to me necessary to consider whether or not the trial judge was correct in determining that the judgment given in the Circuit Court on 19th May, 2015, on what was an application for judgment in default of defence, did mean that all the issues which Mr. Carney seeks to pursue by way of his claim in the High Court are res judicata. The reason for which I have considered it not necessary is because of the second ground upon which the order was sought in the High Court and was, as appears from the written submissions to this Court on behalf of Mr. Costelloe, also pursued before this Court. And that ground is that Mr. Carney is precluded by what is termed 'the rule in Henderson v Henderson' from now pursuing claims in the High Court against Mr. Costelloe which he could or should have pursued by way of a defence and counterclaim in the Circuit Court to the proceedings which Mr. Costelloe had brought against him in that court. The rule in Henderson v. Henderson was considered by this Court in a judgment which I gave, with which my colleagues agreed, in the case of Vico Limited & ors. v. The Bank of Ireland [2016] IECA 273. It is a judgment to which we have been referred in the written submissions of the respondents, and which is before the Court today. And there, at para. 25 of that judgment, I explained, by reference to prior decisions, the essence of the rule in Henderson v. Henderson,:

'25. The rule in Henderson v. Henderson, as it is commonly known deriving from the decision in Henderson v. Henderson (1843) 3 Hare 100 is a rule to prevent abuse of process. The underlying principle is similar to that in res judicata namely the public interest in those who resort to litigation obtaining a final and conclusive determination of their disputes.

26. I would adopt the explanation of the rule given by Cooke J in the High Court in Re: Vantive Holdings & Others and the Companies Acts 1963-2006 [2009] IEHC 408, para. 32-33. and cited on appeal by Murray C.J. in Re. Vantive Holdings [2010] 2 I.R. 118, at p. 124:-

"The rule in Henderson v. Henderson is to the effect that a party to litigation must make its whole case when the matter is before the court for adjudication and will not afterwards be permitted to reopen the matter to advance new grounds or new arguments which could have been advanced at the time. Save for special cases, the plea of res judicata applies not only to issues actually decided but to every point which might have been brought forward in the case. In its more recent application this rule is somewhat mitigated in order to avoid its rigidity by taking into consideration circumstances that might otherwise render its imposition excessive, unfair or disproportionate."'

4 That quotation, as I already indicated, appears to me to set out the essence of the rule which is, in a sense, a form of res judicata. In the Vico judgment, I also referred to the restatement of the abuse of process rule by Bingham L.J. in Johnson v. Gore Wood & Co. [2002] 2 AC 1 at p. 31 approved of in this jurisdiction by the Supreme Court in a number of cases including Re Vantive Holdings:

'... But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if...