Danske Bank t/a Trading as National Irish Bank v Beggan

• Jurisdiction: Ireland
• Judge: Mr. Justice David Keane
• Judgment Date: 16 November 2016
• Neutral Citation: [2016] IEHC 663
• Docket Number: [2011 No. 747 P]
• Court: High Court
• Date: 16 November 2016

[2016] IEHC 663

THE HIGH COURT

Keane J.

[2011 No. 747 P]

BETWEEN

DANSKE BANK A/S TRADING AS NATIONAL IRISH BANK

PLAINTIFF

AND

GEORGE BEGGAN

AND

MICHAEL KEAVENY

AND

JAMES WALSH

TRADING UNDER THE STYLE AND TITLE OF KEAVENY WALSH & CO

DEFENDANTS

Banking & Finance – Practice & Procedures – O. 28, r. 1 of the Rules of the Superior Courts (RSC) – Amendment of Pleadings – S.6 of the Statute of Limitations Act 1957 – Fair disposal of issue

Facts: The first named defendant sought an order for the amendment of his defence in the main proceedings initiated by the plaintiff for the recovery of monies due from the first named defendant on the foot of certain loan facilities. The first named defendant asserted that the amendment of pleadings was needed for the withdrawal of claim of conspiracy and filing of a counterclaim against the plaintiff. The plaintiff argued that the said amendments could not be allowed being statute barred. The plaintiff also submitted that by way of the proposed amendments, the first named defendant wanted to raise new facts and issues, which would alter the nature of the case.

Mr. Justice David Keane refused to grant an order for the amendment of defence. The Court, however, permitted the first named defendant to raise the subject matter of the counterclaim in a separate action. The Court held that under o.28, r.1 of the Rules of the Superior Courts, it had discretion to allow the amendments of the pleadings, which was essential for the determination of the issues between the parties and which caused no prejudice to the opposite party. The Court found that it could not grant leave to the first named defendant for the inclusion of counterclaim as the same was statute barred under s.6 of the Statute of Limitations Act 1957. The Court, however, observed that raising the issues by way of a separate action would be appropriate, notwithstanding the right of opposite party to raise the defence of limitation as the initiation of independent proceedings would be covered under o.28, r. 1 of the RSC.

JUDGMENT of Mr. Justice David Keane delivered on the 16th day of November 2016.

Introduction

1 The first named defendant in these proceedings (“Mr. Beggan”), a businessman, moves to amend his defence to include for the first time: a number of newly pleaded facts; the withdrawal of a claim of conspiracy and the introduction of a counterclaim against the plaintiff bank (“the bank”); the introduction of a counterclaim, or claim for indemnity or contribution, against the second and third named defendants, as the partners in a firm of solicitors that formerly represented him (together “Keaveny Walsh”); and the introduction of a counterclaim – amounting to the institution of proceedings - against certain other persons not at present parties to the action, namely, Philip Farrelly and Brendan Scully, the two partners in a firm of chartered accountants formerly retained by him, trading under the style and title Farrelly & Scully (together “Farrelly & Scully”), and a company named Philip Farrelly Financial Services Limited (“Farrelly Financial”).

2 Both the bank and the Keaveny Walsh defendants oppose Mr Beggan's application.

Procedural background

3 The bank's action commenced with the issue of a plenary summons on the 26th of January, 2011. It was followed by the delivery of a statement of claim on the 8th March. Mr Beggan delivered his defence on an unspecified date in June and the pleadings between those parties closed when the bank delivered a reply to that defence on the 12th July 2011.

4 The present application was brought by notice of motion dated the 5th May 2015, more than four years after the commencement of the action and almost four years after the pleadings closed. It was then heard over two days on the 8th and 19th May 2015.

The bank's principal claim

5 The primary case that the bank makes against Mr Beggan is a simple one of a type that, since the property collapse of 2008, has become, sadly, very common. The bank pleads that it made three separate loan facilities available to him. The first, in the sum of €750,000, was the subject of a facility letter dated the 10th January 2006. It was for a twenty year term and was to facilitate the development of a commercial site at Portarlington, County Laois. The second and last tranche of that loan was drawn down on the 31st January 2007. The second loan, in the sum of €3.1 million, was the subject of a facility letter dated the 14th December 2006. It was also for a twenty year term and was to assist in the purchase of certain commercial and office units at Summerhaven, Carrick on Shannon, County Leitrim (“the Carrick on Shannon property”). It was drawn down on or about the 16th February 2007. The third loan, an overdraft facility with a limit of €450,000, was the subject of a separate facility letter dated the 14th December 2006. It was repayable on demand and was to assist with the payment of the VAT liability arising on the purchase of the Carrick on Shannon property. It was drawn down on or about the 13th February 2007.

6 The bank contends that, in breach of contract, Mr Beggan defaulted in the repayment of those loans, with the result that the bank wrote to him on the 2nd November 2010 demanding payment of the sum of €4,227.835.71, which it asserts was then due and owing. The bank alleges that Mr Beggan failed to make the payment demanded, or any payment, and that, when the bank's statement of claim was delivered, he was then liable to it in the sum of €4,295,645.09. The bank seeks judgment against Mr Beggan in that amount.

The bank's ancillary claim

7 The bank also pleads that it was a condition of the first loan facility that it was to be secured by way of a first legal mortgage or charge over an investment property in Rathmines, Dublin 6, and that it was a condition of the second loan facility that it was to be secured by a first legal mortgage or charge over the Carrick on Shannon property, the Rathmines property and another investment property in Ranelagh, Dublin 6. The bank contends that, whether expressly or by implication, Mr Beggan represented himself as the sole legal and beneficial owner of the Rathmines and Ranelagh properties.

8 In this connection, the banks claims that, prior to permitting the drawdown of funds by Mr Beggan, it sought and obtained the necessary undertakings from the Keaveny Walsh defendants, as Mr Beggan's solicitors, that they would ensure that the bank obtained good title to the Rathmines and Ranelagh properties and a first legal charge or mortgage over each, and that they would hold the title and mortgage documents in respect of those properties in trust for the bank. The bank contends that, in breach of those undertakings, the Keaveny Walsh defendants only belatedly registered each of the relevant mortgage deeds as a charge on the properties on the 2nd July 2009. More fundamentally, the bank claims that the security they provide is defective because Mr Beggan's wife, Catherine Beggan, is registered as the co-owner of each of the properties. Thus, the bank alleges that Mr Beggan misrepresented himself as the sole legal and beneficial owner of the properties and that the Keaveny Walsh defendants breached their undertaking to ensure that the bank obtained good title to them.

9 Insofar as may be necessary, the bank claims the following alternative reliefs: specific performance of those undertakings by the Keaveny Walsh defendants; damages in lieu of, or in addition to, that specific performance; and damages for breach of contract, negligence, misrepresentation, breach of undertaking and breach of trust.

Compromise of bank's claim against the Keaveny Walsh defendants

10 It is common case that the bank's claim against the Keaveny Walsh defendants, as just described, was compromised between those parties on the 31st October 2014 on terms whereby the sum of €650,000 was lodged to the credit of Mr Beggan's account with the bank. As the bank acknowledges, this has had the effect of reducing Mr Beggan's alleged indebtedness to it by that amount.

Mr Beggan's defence and the bank's reply

11 The defence delivered on behalf of Mr Beggan on the 10th June 2011 is in large part a traverse, or denial, of every aspect of the bank's claim.

12 However, it also contains the following affirmative pleas. In 2006, when Mr Beggan consulted Farrelly & Scully for professional advice concerning his proposed acquisition of a particular property that would enable him to obtain income tax relief under s. 23 of the Taxes Consolidation Act 1997, he was advised by that firm to acquire the Carrick on Shannon property for that purpose instead. The Carrick on Shannon property was then owned by Philip Farrelly, a partner in that firm. The loan finance of €3.1 million that Mr Beggan used to acquire the property was arranged through Farrelly Financial, which was then managed by Philip Farrelly's nephew. At the time when the relevant loan agreement was entered into, the bank had obtained, and was in possession of, a recent auctioneer's report, attributing a market valuation of €2,348,000 to the property. Philip Farrelly persuaded Mr Beggan to draw down the loan and purchase the property by representing to him that, in view of the government decentralisation policy then in force, it was likely that a government department could be secured as a tenant for the property at an annual rent of no less than €90,000. Philip Farrelly also guaranteed Mr Beggan that he would secure a tenant for the property at an annual rent of €120,000 for the first five years of Mr Beggan's ownership of it. Mr Beggan purchased the property in reliance on that representation and that guarantee. The bank's initial loan offer to Mr Beggan to facilitate the acquisition of the property, set out in a facility letter dated the 13th January 2006, included, as one of a number of conditions...