McMahon v Ireland

• Jurisdiction: Ireland
• Judge: Mr. Justice Blayney
• Judgment Date: 01 January 1988
• Neutral Citation: 1987 WJSC-HC 1953
• Court: High Court
• Docket Number: 1987/191 S.S.
• Date: 01 January 1988

MCMAHON v. IRELAND & AG

THE SUMMARY JURISDICTION ACT, 1857 (19 and 20 Vic. c. 43) AS EXTENDED BY SECTION 51 OF THE COURTS (SUPPLEMENTAL PROVISIONS) ACT, 1961 (NO. 39 of 1961)

BETWEEN

MONICA McMAHON, OTHERWISE PASCHAL McMAHON

PLAINTIFF

AND

IRELAND, THE ATTORNEY GENERAL AND THE REGISTRAR OF FRIENDLY SOCIETIES

DEFENDANTS

1987 WJSC-HC 1953

1987/191 S.S.

THE HIGH COURT

Synopsis:

ACTION

Cause

Existence - Statute - Duty - Negligence - Protection of public - Failure - Damages claimed by member of the public - Plaintiff citizen claimed damages from Minister of State and a statutory official for their negligence in failing to prevent the circumstances which caused the plaintiff loss when she deposited a sum of money with an industrial and provident society which failed - The plaintiff deposited the money with an industrial and provident society (the Society) on 19/10/83 but on 19/12/83 the High Court ordered that the Society be wound up, and ultimately the plaintiff received on distribution less than half of her deposit - The plaintiff claimed that her loss was caused by the negligence of the Minister for Finance, the Minister for Industry and the registrar of friendly societies - Section 7, sub-s.4, of the Act of 1971 had exempted industrial and provident societies from the prohibition in sub-s.1 against a person carrying on a banking business unless he held a licence - In 1976 and 1978 reports of the Central Bank showed that many such societies were undercapitalised and had very low liquidity levels, and expressed doubts about the Society's solvency - A full-time registrar of such societies was not appointed by the Minister for Industry until 1980 - The power of such societies to accept deposits was either abolished or curtailed by the Act of 1978 - Held that the plaintiff had failed to establish negligence by either of the Ministers - The Act of 1978 conferred on the registrar powers to regulate the conduct of the businesses of such societies, to obtain from them returns and information, to obtain reports on their affairs, to appoint a person to be a member of the committee of management of a society, and to direct a society to suspend for two months the acceptance of deposits - Held that, in the circumstances, the relationship between the registrar and the plaintiff, as a member of the public, was not so close and direct as to impose on the registrar a duty of care towards the plaintiff - ~Donoghue v. Stevenson~ [1932] A.C. 562; ~Everett v. Griffiths~ [1921] 1 A.C. 631; ~Dorset Yacht Co. v. The Home Office~ [1970] A.C. 1004 and ~Yuen Kun Yeu v. Attorney General of Hong Kong~ [1987] 3 W.L.R. 776 considered - Case stated by District Justice - Central Bank Act, 1971, s.7 - Industrial and Provident Societies (Amendment) Act, 1978, ss.5, 10–18 - (1987/191 SS - Blayney J. - 4/11/87)

|McMahon v. Ireland|

MINISTER OF STATE

Negligence

Statute - Duty - Protection of public - Failure - Money deposited with friendly society - Loss incurred by depositer - Negligence not proved - ~See~ Action, cause - (1987/191 SS - Blayney J. - 4/11/87)

|McMahon v. Ireland|

NEGLIGENCE

Official

Statute - Duty - Protection of public - Failure - Registrar of friendly societies - Loss incurred by depositor - No duty of care owed by registrar - ~See~ Action, cause - (1987/191 SS - Blayney J. - 4/11/87)

|McMahon v. Ireland|

Citations:

SUMMARY JURISDICTION ACT 1857

PINE VALLEY DEVELOPMENTS LTD V MIN ENVIRONMENT 1987 ILRM 753

CENTRAL BANK ACT 1971 S7(4)

CENTRAL BANK ACT 1971 S7(1)

YUEN KUN YEU V AG OF HONG KONG 1987 3 WLR 776, 1987 2 AER 705, 1988 AC 175

DONOGHUE V STEVENSON 1932 AC 562

INDUSTRIAL & PROVIDENT SOCIETIES (AMDT) ACT 1978 PART II

INDUSTRIAL & PROVIDENT SOCIETIES (AMDT) ACT 1978 S10

DORSET YACHT CO LTD V HOME OFFICE 1970 AC 1004

EVERETT V GRIFFITHS 1921 AC 631

INSURANCE (NO 2) ACT 1983

COURTS (SUPPLEMENTAL PROVISIONS) ACT 1961 S51

INDUSTRIAL AND PROVIDENT SOCIETIES (AMDT) ACT 1978 S16

1 Judgment of Mr. Justice Blayney delivered the 4th day of November 1987.

2 The facts of this appeal by way of Case Stated are as follows.

3 The Plaintiff, who is a member of a religious order, on the 19th October 1983, deposited with the Private Motorists Protection Society (hereinafter referred to as (P.M.P.S.) the sum of £400, the proceeds of a bring-and-buy sale organised to raise money for the charitable work of her order.

4 On the same day, the 19th October 1983, the Insurance (No. 2) Act 1983was passed, under which an Administrator was appointed to manage the Private Motorists Protection Association Insurance Company Limited. The Plaintiff sought to withdraw the £400 from the P.M.P.S. on the following day but her request was refused. Part of the £400 lodged had been in the form of a cheque for £100; the Plaintiff was able to have this cheque stopped, thus reducing the amount deposited to £300. The P.M.P.S. was put into liquidation on the 19th December 1983 and the Defendant received a dividend of £92.88 in the winding up so the actual amount she lost as a result of making the deposit was £207.12. On the 27th January 1986 she instituted these proceedings against the Defendants claiming damages for negligence, breach of duty and breach of statutory duty.

5 The action was four days at hearing and judgment was reserved. In a very careful and thorough judgment delivered on the 8th October 1986 the Learned District Justice dismissed the claim but on the application of the Plaintiff stated a case for the opinion of this Court.

6 Four separate questions are set out at the end of the case:

7 (a) Was I correct in dismissing the action on the grounds set out in the said judgment?

8 (b) Was I correct in holding that there was no mandatory duty imposed on the Minister for Industry and Commerce to appoint a full-time Registrar of Friendly Societies following the passing of the Industrial and Provident Societies (Amendment) Act 1978?

9 (c) Was I correct in holding that there was insufficient proximity of relationship between the Plaintiff and the Minister for Industry and Commerce for a duty of care and negligence to arise?

10 (d) Was I correct in dismissing the said proceedings notwithstanding the circumstances of the Plaintiff as a member of the general public who would not have the commercial awareness of banking institutions in relation to making deposits?

11 The last three questions raise issues which are subsidiary to the main issue which was contained in the first question, and I propose initially to confine my attention to that.

12 Two separate causes of action were relied upon before the Learned District Justice - negligence and breach of statutory duty - but the latter was abandoned in the argument before me. Mr. O'Reilly, appearing for the Plaintiff, conceded that he could not rely on it in view of the decision of the Supreme Court in Pine Valley Developments Limited .v. The Minister for the Environment (Supreme Court unreported 30th July 1986). The only case I have to consider accordingly is whether the Learned District Justice was correct in dismissing the Plaintiff's claim insofar as it was based on negligence.

13 The first and second Defendants, Ireland and the Attorney General, are sued as being the parties responsible for the acts of the Minister for Industry, Trade, Commerce and Tourism and the Minister for Finance who are the real Defendants. I shall refer to the former as "The Minister", and the latter by his full title "The Minister for Finance".

14 Mr. O'Reilly's submissions on his case against the two Ministers might be summarized as follows. Section 7, subsection (4) of the Central Bank Act 1971exempted industrial and provident societies from the prohibition in subsection (1) of the same section against carrying on banking business without holding a banking licence. This exemption enabled industrial and provident societies to take deposits and so in effect to carry on a banking business without being under the control of the Central Bank. The P.M.P.S. took advantage of this exemption and became one of the largest of the industrial provident societies carrying on this type of business, holding approximately fifty per cent of all the moneys then on deposit with such societies. Reports prepared by the Central Bank at the request of the Department of Industry and Commerce, in August 1976 and April and May 1978, showed that these societies were not carrying on their business in accordance with good banking practice. They were undercapitalized, had very low liquidity levels and their profitability was poor. There was also a doubt about the solvency of the P.M.P.S. as, while it appeared from its balance sheet to be solvent, little or no allowance was made by way of provision for bad debts. The Minister for Finance had a duty to remedy this situation. It was his delay in taking any action which was the cause of the Plaintiff's loss. And it was the...