Dormer v Allied Irish Bank Plc

• Jurisdiction: Ireland
• Judge: the President
• Judgment Date: 06 July 2017
• Neutral Citation: [2017] IECA 199
• Date: 06 July 2017
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2017] IECA 199 [2016 No.79]

[2017] IECA 199

THE COURT OF APPEAL

Ryan P.

The President

Hogan J.

Hanna J.

Neutral Citation Number: [2017] IECA 199

[2016 No.79]

BETWEEN

PAUL DORMER

AND

GERARD DORMER

APPELLANTS

AND

ALLIED IRISH BANK PLC

RESPONDENT

Statement of claim – Amendment – Abuse of process – Appellants seeking to amend statement of claim– Whether prejudice was established

Facts: The appellants, Mr P Dormer and Mr G Dormer, appealed to the Court of Appeal against two orders made on 5th February 2016, whereby the High Court refused their application to amend their statement of claim and also struck out their proceedings on the ground that they were an abuse of process. The case arose out of the settlement of summary summons proceedings brought by the respondent, Allied Irish Bank plc (AIB), in December 2013. The Dormers claimed to have discovered material to establish that the bank had not complied with the terms on which the claim was compromised and they sued in respect of the alleged breaches of that settlement agreement. In their original proceedings and in the written and oral submissions made to the court at the hearing of the interlocutory injunction application, the Dormers did not allege fraud against the bank and the other defendants. Their application sought to add a new claim for rescission of the settlement agreement in its entirety and/or damages for deceit alleging that AIB was guilty of fraudulent misrepresentation. The High Court held that AIB would be severely prejudiced if the amendment were granted because they would have to defend a wholly different case than was originally made.

Held by Ryan P that while it was true that the claim of fraud was new, the facts on which it was based were the same as those relied upon to establish misrepresentation and breach of contract. Ryan P did not think that it could be said as a matter of principle that prejudice follows. Ryan P noted that no actual prejudice had been established. Without a specific case of prejudice made by the bank, Ryan P did not think that this was a ground on which the Dormers should be excluded from advancing.

Ryan P held that the appeal should be allowed in respect of the refusal of the Dormers' application for amendment and as to the striking out of the action.

Appeal allowed.

JUDGMENT of the President delivered on 6th July 2017

1 This is an appeal by the Dormers against two orders made on 5th February 2016, whereby the High Court refused their application to amend the statement of claim in this action and also struck out the proceedings on the ground that they were an abuse of process.

2 The case arose out of the settlement of summary summons proceedings brought by AIB in December 2013. The Dormers claimed to have discovered material to establish that the bank had not complied with the terms on which the claim was compromised and they sued in respect of the alleged breaches of that settlement agreement.

3 The background is that the Dormers had very substantial borrowings from AIB and Bank of Scotland Ireland at the time of a transaction on 8th October 2013. On that date, AIB wrote to the Dormers' financial adviser enclosing a document entitled 'Term Sheet' which the letter said contained 'Heads of Terms in relation to the refinance of Bank of Scotland Ireland facilities and restructuring of existing AIB debt.' The intention was that the Dormers would be able to discharge their liability to Bank of Scotland on the basis of a written down debt which AIB would finance. This was subject to terms and conditions precedent and subsequent.

4 On 6th December 2013, AIB wrote to each of the Dormers calling in the facilities provided to them pursuant to letter of sanction dated 1st October 2012, which it said were payable on demand and which then amounted in total to some €17.6 million odd. The letter referred to the terms of 8th October 2013, claiming that a special condition as to written confirmation from Bank of Scotland had not been forthcoming. When the money demanded was not paid in the time specified, the bank proceeded by Summary Summons which was admitted to the Commercial List of the High Court in due course.

5 The bank's proceedings came for hearing on 30th January 2014, but following negotiations the parties reached a settlement. The agreement provided that if certain events had not happened by 5 p.m. on 3rd March 2014, the Dormers would consent to judgment for the full amount of the bank's claim plus interest accrued and costs. One of the terms was that a deed of settlement with Bank of Scotland was to be effective by the deadline. The agreement was dependent on AIB's providing the funds necessary for implementation. Another term provided that the officials in AIB dealing with the Dormers' accounts would apply to its credit committee for approval, as appears from the material part of Clause 5 (3): –

'Eamonn Conneely, Sarah Bowen and Michael Morris will ... recommend to the Area Credit Committee of the Plaintiff a proposal for credit facilities on the terms of the Heads of Terms as issued on 8th October, 2013, as may require to be varied or amended on such terms as Mr Conneely, Ms Bowen and Mr Morris believe to be necessary insofar as is required to take account of valuations received by the Plaintiff pursuant to Special Condition 1 of the Heads of Terms ...'

6 The officials submitted a proposal in intended or purported compliance with this provision but the Area Credit Committee declined the proposal and the bank's solicitor wrote to the Dormers' solicitor on 12th February 2014, reporting the decision. It followed that the Dormers were unable to comply with the terms of the agreement applying to them. When the matter came back before the High Court on 4th March 2014, the bank sought and obtained judgment in accordance with the agreement, following argument on behalf of the Dormers about the extent of compliance by the bank with its part. They sought unsuccessfully to have the proceedings adjourned so that they could put forward a defence along those lines.

7 The Dormers instituted proceedings against AIB and two receivers appointed by the bank by plenary summons dated 3rd December 2014, claiming, inter alia, various declarations that the bank was obliged to advance funds to them, that the bank misrepresented the terms of the settlement agreement and employed irrelevant or extraneous information in making its decision to refuse funds. The reliefs sought included an order that the judgment be vacated, an injunction restraining enforcement and damages under various heads. In their statement of claim delivered on 7th January 2015, the Dormers alleged that the bank did not comply with its part of the settlement agreement in that the approach to the credit committee 'was manifestly and clearly different from the October Heads of Terms.' By contrast, it is claimed that the Dormers complied with their part of the bargain. It is stated that the pleaded wrongdoing of the bank was subsequently discovered under a Data Protection request.

8 On the institution of the proceedings, the Dormers obtained an interim injunction and the application for an interlocutory order was admitted to the Commercial List and was heard in February 2015. McGovern J. refused the relief sought and vacated the interim injunction. He held that the Dormers had not shown that there was a fair case to be tried and they also failed on the other grounds they put forward. In his judgment, the judge noted that the Dormers had expressly stated that they were not relying on fraud and he held that the judgment in issue was not obtained on consent. Hr said that the law was clear in the circumstances as he set out as follows and he concluded as a result that the Dormers could not have the judgment given on 4th March 2014 set aside or vacated.

9 The order of 4th March 2014 is a final order. It was perfected on 14th March 2014, and no appeal was taken against it. There can be no doubt that these proceedings are designed to achieve the setting aside of that judgment. But the law is clear that nothing short of fraud, pleaded with sufficient particularity and established on the balance of probabilities would constitute sufficient grounds for upsetting a previous decision given by the court and which has not been appealed: see Tassan Din v. Banco Ambrossiano S.P.A [1991] 1 I.R. 569, 578, where Murphy J. said:

'It seems to me, therefore, that all that can be said is that at one time a court might have set aside a judgment of a court of co-ordinate jurisdiction not merely for the grounds of fraud but also on the basis of the discovery of new evidence. The law, as I understand it, in this country is that (in the absence of fraud) "new evidence" can be availed of as part of the appeal process or not at all....'

10 This view of the law was endorsed by the Supreme Court in Kenny v. Trinity College [2008] IESC 18.

11 McGovern J. then turned to the question for the Dormers of res judicata. Having considered the transcript of exchanges between counsel and Kelly J at the hearing on 4th March 2014, he concluded as follows:

'Now that is exactly the same case that the plaintiffs make in these proceedings. So where does that leave the plaintiffs? They say they are not making out any case in fraud. They claim that they were induced to enter into a settlement with the bank on the basis of a misrepresentation, namely, that the three named representatives of the bank would make a recommendation to the Area Credit Committee whereas, in fact, the 'recommendation' actually made was nothing of the sort. But that issue has already been canvassed before Kelly J. on 4th March, 2014 and he decided against the Dormers and gave judgment to the bank. The order of Kelly J. has been perfected and not appealed. The issues raised in the present case were canvassed before Kelly J. and he has decided upon those...