Joseph Delaney v Allied Irish Banks Plc and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Cregan
• Judgment Date: 13 January 2015
• Neutral Citation: [2015] IEHC 52
• Judgment citation (vLex): [2015] 1 JIC 1306
• Court: High Court
• Date: 13 January 2015

[2015] IEHC 52

THE HIGH COURT

[No. 13289 P/2013]

Delaney v Allied Irish Banks PLC & Ors

BETWEEN

JOSEPH DELANEY

PLAINTIFF

AND

ALLIED IRISH BANKS PLC AND DECLAN TAITE AND SHARON BARRETT

DEFENDANTS

FENNELL v N17 ELECTRICS LTD 2012 4 IR 634 2012/15/4218 2012 IEHC 228

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BARRY v BUCKLEY 1981 IR 306

SUN FAT CHAN v OSSEOUS LTD 1992 1 IR 425 1991/10/2412

LAC MINERALS LTD v CHEVERON MINERALS CORPORATION OF IRL 1995 1 ILRM 161 1994 11 3344

SUPERMACS (IRL) LTD & MCDONAGH v KATESAN (NAAS) LTD & SWEENEY 2000 4 IR 273 2001 1 ILRM 401 2000/17/6423

MCCOURT v TIERNAN UNREP CLARKE 29.7.2005 2005/41/8601 2005 IEHC 268

SALTHILL PROPERTIES LTD & CUNNINGHAM v ROYAL BANK OF SCOTLAND PLC & ORS UNREP CLARKE 30.4.2009 2009 IEHC 207

HEWETSON & ELLIOT BANKING LITIGATION 3ED 2011 PARA 2.005

NATIONAL COMMERCIAL BANK (JAMAICA) LTD v HEW 2003 UKPC 51

LLOYDS BANK PLC v COBB 12 LDAB 210

TOURNIER v NATIONAL PROVINCIAL AND UNION BANK OF ENGLAND 1923 AER REP 550 1924 1 KB 461

DATA PROTECTION ACT 1988

DATA PROTECTION (AMENDMENT) ACT 2003

NATIONAL ASSET MANAGEMENT AGENCY ACT 2009 S7(2)

NATIONAL ASSET MANAGEMENT AGENCY ACT 2009 S7(4)

NATIONAL ASSET MANAGEMENT AGENCY ACT 2009 S82(1)

COMPAGNIE COMMERCIALE ANDRE SA v ARTIBELL SHIPPING CO LTD 2001 SC 653

CONVEYANCING ACT 1881

FORSHALL & FINE ARTS & COLLECTIONS LTD v WALSH & ORS UNREP SHANLEY 18.6.1997 1998/6/1685

Financial affairs – Banking – Loans – Customers of same branch of bank – Financial position – Whether duty to disclose poor financial position – Duty of confidentiality – Negligence – Whether duty of care owed – Whether breach of duty – Loss and damage – Lease of premises as security – Interlocutory injunction

Facts Mr Delaney emigrated from Ireland in 1975 and worked in the construction industry in the UK for 23 years. He returned home in 1998. Mr Delaney had a deposit account in AIB in Edenderry, County Offaly, with his then wife, Marian Delaney. He had almost €430,000 in the account in 2007. Around that time the couple closed the account and Mr Delaney transferred the monies into a single account in his then wife"s name. Although the account was solely in the name of Mrs Delaney, she was effectively holding the money in trust for her husband or else in trust for both of them. When Mr Delaney returned from the UK, he operated a small plant hire business and, in order to comply with his tax obligations, he employed Gerard Killaly as his accountant. Mr Killaly was a customer of AIB in Edenderry also. Mr Killaly was having financial problems. Mr Delaney agreed to help him. He provided him with a sum of money. Mrs Marian Delaney, at the request of her husband, withdrew €100,000 from the plaintiff"s account in the form of a bank draft made payable to Mr Gerard Killaly. Further withdrawals were made, ultimately reaching a total sum of €346,000. A lease was signed on the property 82 JKL Street, Edenderry, County Offaly as security for the loan. Enquiries were made by bank personnel regarding the transfers and the bank manager, Mr Gillen, personally contacted the plaintiff in relation to the leased property. In July 2009, AIB bank secured judgment in the sum of €15.5m against Gerard Killaly. In addition NAMA appointed receivers (second and third defendants) over the premises at 82 JKL Street, Edenderry. Gerard Killaly and his wife were adjudicated bankrupt on 27th July 2009.

Mr Delaney issued a plenary summons claiming a right over the property. He also claimed damages due to loss of use of the premises, damages for stress due to the conduct of the defendants in their duty of care to him in relation to Gerard Killaly and the conduct of their affairs with him. The plaintiff sought an interlocutory injunction restraining the defendants from transferring/ trespassing/ attempting to sell the property to any other persons. AIB"s position was that the lease was granted in breach of an express covenant of the mortgage and that the plaintiff therefore held no enforceable property rights against either the bank or the receiver. The plaintiff claimed the bank knew or ought to have known the financial position of Mr Killaly as he held an account at the same AIB branch; and that it ought to have informed Mr Delaney of his financial position as it was aware he was advancing substantial amounts of money to him. In essence, the plaintiff said AIB owed him a duty of care as a customer; that it breached said duty; and that as a result, the plaintiff suffered loss and damage.

Held The judge referred to the appalling way Mr Delaney had been treated and the unfortunate position he found himself in. The plaintiff advanced substantial sums of money to Mr Killaly, none of which were ever repaid. Mr Killaly, now bankrupt, leaves the plaintiff with no form of redress against him. However, the judge said one cannot remedy the injustice done to Mr Delaney by Mr Killaly by imposing an injustice on AIB or the receivers; to do so would be wrong in principle and in law. The judge said it would be an injustice to the defendants to force them to defend actions which were bound to fail. To do so would be to force the defendants to engage in a costly defence of legal proceedings when there would be little or no prospect of recovery of their costs against the plaintiff. The judge stated to embark on costly and lengthy legal proceedings would be to compound the suffering of the plaintiff; as such proceedings would have no prospect of success and could result in him suffering even more ruinous financial loss than he has suffered already.

-The judge dismissed the pleas of the plaintiff in his various statements of claim

Introduction

1 1. In this application the first, second and third defendants are seeking to have the plaintiff's action against them struck out on the grounds that it discloses no reasonable cause of action and/or on the grounds that the plaintiff's claim is frivolous and/or vexatious and/or is bound to fail.

Background to the present application

2 2. The plaintiff's story which leads to these proceedings is very unfortunate. The plaintiff, in an affidavit dated 2 ^nd December, 2013 set out the background to these proceedings. Mr. Delaney emigrated from Edenderry, County Offaly in 1975 and worked in the construction industry in the United Kingdom for 23 years. He returned home to Ireland in 1998 when, as he put it, he had "sufficient financial well- being to do so". Mr. Delaney had a deposit account in AIB in Edenderry with his then wife Marian Delaney. He had a sum of almost €430,000 in the account in 2007. On or about that time Mr. and Mrs. Delaney closed that account and Mr. Delaney transferred the monies that were in it into a single account into his then wife's name. Thus the new account was in the sole name of his former wife Marian Delaney. Mr. Delaney's evidence on affidavit was that he left all bank procedures to his wife as he did not have the literacy skills required to do normal banking business.

3 3. When Mr. Delaney returned from the UK he operated a small plant hire business and in order to comply with his tax obligations he employed the services of Gerard Killaly as his accountant. Mr. Killaly did his accounts and kept Mr. Delaney's tax affairs in order.

4 4. However Mr. Delaney's problems started in August 2008 when his accountant Mr. Gerard Killaly approached him for financial help. Mr. Killaly informed Mr. Delaney that he was having temporary cash flow problems with his auctioneering and property business. Mr. Delaney's evidence was that "having known him for a long time as a professional accountant I agreed to assist him. I consented to provide monies to him and made it a condition of the loan that he would secure my money if there was any delay in repayments or if difficulties were to arise. Mr. Killaly agreed to my terms".

5 5. Subsequently Mr. Delaney asked his former wife Mrs. Marian Delaney, with whom he appears to be on good terms, to carry out the necessary withdrawals from AIB in Edenderry in County Offaly in order to enable Mr. Delaney to pay certain sums to Mr. Killaly by way of loans.

6 6. On 20 ^th August, 2008 Mrs. Marian Delaney withdrew €100,000 from the plaintiff's account. This money was withdrawn in the form of a bank draft made payable to Mr. Gerard Killaly and Mr. Richard O'Connor. The request to carry out this withdrawal came from Mr. Joseph Delaney.

7 7. On 21 ^st August, 2008, Mr. Delaney instructed his wife to withdraw a further sum of €50,000. This also was withdrawn in the form of a bank draft made payable to Gerard Killaly.

8 8. On 8 ^th September, 2008, Mr. Joseph Delaney instructed his wife to withdraw a further sum of €66,500. This again was withdrawn in the form of a bank draft made payable to Gerard Killaly.

9 9. Again on the 8 ^th September, 2008, Mr. Delaney instructed his wife to withdraw a further bank draft in the sum of €30,000 made payable to Gerard Killaly and Mr. Richard O'Connor.

10 10. On 15 ^th September, 2008, the plaintiff instructed his wife to withdraw two further bank drafts in the sum of €20,000 and €30,000 and both of these drafts were also made payable to Gerard Killaly.

11 11. It is important to emphasise that all of these withdrawals were done by Mrs. Marian Delaney on the specific instruction of Mr. Joseph Delaney and with his full knowledge and consent. Indeed it appears that although the account was solely in the name of Mrs. Marian Delaney, she was effectively holding this money in trust for her husband Joseph Delaney or else in trust for both of them. In any event Mr. Delaney has accepted at all times that his wife was acting with his full knowledge and consent in carrying out these withdrawals and also in making the bankers drafts payable to Gerard Killaly and/or Richard O'Connor.

12 12. It appears from an affidavit sworn by Marian Delaney on the 4 ^th...