Mercantile Credit Company of Ireland Ltd v Heelan

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 24 February 1994
• Neutral Citation: 1994 WJSC-HC 1428
• Court: High Court
• Docket Number: [1990 No. 10579P],90/10579 P
• Date: 24 February 1994

MERCANTILE CREDIT CO (IRL) LTD v. HEELAN

BETWEEN

MERCANTILE CREDIT CO. OF IRELAND LTD. AND ANOTHER

-v-

JAMES HEELAN AND OTHERS

1994 WJSC-HC 1428

90/10579 P

THE HIGH COURT

Synopsis:

PRACTICE

Interrogatories

Procedure - Scope - Information - Admissions - Connection with issues in action - Plaintiff's claim to damages for fraud - Rules of the Superior Courts, 1986, order 31, r. 11 - (1990/1057 P - Costello J. - 24/2/94) - [1994] 2 I.R. 105 - [1994] 1 ILRM 406

|Mercantile Credit Co. of Ireland Ltd. v. Heelan|

Citations:

RSC O.31 r2

RSC O.31 r9

RSC O.31 r24

RSC O.1 r2

AG V GASKILL (1882) 20 CH D 519

MARRIOTT V CHAMBERLAIN 17 QBD 154

NASH V LAYTON (1911) 2 CH 71

MONEYLENDERS ACT 1900

RSC O.31

RSC O.31 r1

1 Judgment of Mr. Justice Costello Delivered 24 February, 1994.

2 The first-named plaintiff ("Mercantile Credit") is a banking company. The second-named plaintiff ("Highland Finance"), is a finance company and is a subsidiary of Mercantile Credit. Mr. John Heelan (the first-named defendant) was General Manager of Highland Finance from the 22 July 1983 to 28 February 1989. In March 1989 he became a director of Mercantile Credit and November 1989 its managing director, a post he retained until he was suspended on 7 June 1990. Mr. Joseph Kenny is a business man with whom both Mercantile Credit and Highland Finance had extensive dealings. He and his wife own a company called Portico Ltd (the fourth-named defendant) to which Mercantile Credit and Highland Finance lent considerable sums in the period relevant to these proceedings. Mr. James O'Higgins (the third named defendant) is a solicitor. He acted as solicitor for Mr. Kenny and for Portico Ltd in the transactions which have given rise to these proceedings.

3 The plaintiffs claim very substantial damages against the defendants under a number of different headings. It is claimed that they conspired to defraud the plaintiffs (paragraph 7 of the amended Statement of Claim), that the plaintiffs were induced to make loans specified in the pleadings on the faith of fraudulent representations made by the defendants (paragraph 10), that there is a balance due on loans which with interest amounting to £9.4m approximately up to May 1991, that Mr. Heelan and Mr. O'Higgins were guilty of breach of a fiduciary duty which they owed the plaintiffs.

4 More specifically the claim against Mr. O'Higgins (the party in the motion for interrogatories which I am now considering) is that as solicitor for Mr. Kenny and Portico Ltd he gave letters and undertakings in writing to the plaintiffs which were part of the conspiracy to defraud them, that he knew or ought to have known that the undertakings could not be complied with, that he falsely represented to the plaintiffs that there were independent funds or securities available which were under his control and which would be adequate security for the loans granted to Mr. Kenny and his company. In two Schedules to a Reply to a Notice for Particulars (dated 17 October 1991) the plaintiffs give particulars of the loans made to Mr. Kenny and his company and the dates of the undertakings given by Mr. O'Higgins and also of loans made to Mr. O'Higgins personally. It is part of the plaintiffs case that these loans were obtained by Mr. O'Higgins on behalf of his client Mr. Kenny. Of course, not all the loans were left unpaid, but the plaintiffs case is that each was part of the fraudulent conspiracy alleged against the defendants.

5 The pleadings have been closed. Mr. O'Higgins is strongly contesting the claims against him. On the 22 September 1993 the plaintiffs furnished interrogatories for answer by him. On his refusal the present motion has been brought under Order 31. The interrogatories relate to 33 loan transactions which took place in the period between the months of May 1988 and June 1990. Extensive discovery has been made and the plaintiffs have identified a number of documents, including copies of cheques, journal entries, bank drafts, letters which they claim relate to each of the transactions they have identified and in respect of which they wish to interrogate Mr. O'Higgins. The interrogatories fall into a number of categories;

6 (a) they ask Mr. O'Higgins to identify the documents and to confirm that the entries to which reference is made relate to the particular loan transaction to which the interrogatory relate (the purpose being to establish what happened to the money the subject of the loan;

7 (b) they ask Mr. O'Higgins to establish certain facts about the security relating to the loan transaction;

8 (c) they ask Mr. O'Higgins for information concerning:-

9 (i) the instructions he received about the loan and/or

10 (ii) his client, and Mr. Kenny's knowledge concerning the loan transaction;

11 (d) they seek information concerning the securities given in respect of certain of the loans;

12 (e) they seek information concerning the movement of the sums represented by the loans.

13 Mr. O'Higgins contests the right of the plaintiffs to deliver any of the interrogatories, on a number of grounds. He points out that the plaintiffs have complained to the garda authorities about the matters in suit and he expresses the belief that they may wish to have him prosecuted in the criminal courts, and claims in these circumstances that he has a right to claim privilege in respect of the queries he is asked to answer. He also says that the interrogatories are oppressive as what the plaintiffs are proposing is to reverse the ordinary conduct of a civil trial which would oblige them to tender their own evidence and establish a prima facie case before the defendant would be required to give any evidence. In addition it is said that the plaintiffs had organised their affairs in a highly negligent manner, that the delivery of interrogatories would deprive him of the opportunity to adduce evidence by means of cross-examination of one of the plaintiffs witnesses and so establish one of his defences to the claim namely that the plaintiffs losses were occassioned through their own default. On the first point Counsel accepts that these objections should rightly be taken after the interrogatories are delivered, should the Court so order.

LEGAL PRINCIPLES

Order 31

14 Order 31 makes provision for the delivery of interrogatories. Parties may deliver interrogatories but only interrogatories "which relate to any matters in question in the cause or matter" (Rule 1). Where leave of the court is required such leave is given to deliver "such only of the interrogatories as shall be considered necessary either for disposing fairly of the cause or matter or for saving costs" (Rule 2). Interrogatories are replied to by affidavit (Rule 9) and at the trial any party may use in evidence any one or more of the replies (Rule 24).

15 Some general observations on these rules are called for. Firstly, interrogatories must relate to "any matter in question" in the action. Whilst at first sight this might seem to permit a party to interrogate an oponent on every issue that might arise in the action and so permit evidence on oath on every issue to be used at the trial as the interrogator may consider useful to his case, this is not so. Leave to deliver interrogatories will only be given when they are necessary for "disposing fairly" of the cause or matter, or for saving costs. In considering the fair disposal of an action commenced by plenary summons the Court must bear in mind that such actions are in principle to be heard on oral evidence (Order 1 rule 2) and that the use of evidence on affidavit given in reply to interrogatories is an exception which must be justified by some special exigency in the case which, in the interest of doing justice, requires the exception to be allowed. This point can be illustrated by a common example. In a road traffic accident an injured plaintiff has to establish his claim by oral evidence and will not normally be allowed to deliver interrogatories for this purpose. But if the injuries have caused a loss of memory so that a plaintiff cannot recall the accident and there are no witnesses interrogatories will be allowed and affidavit evidence permitted relating to the issue of negligence and for damages so that justice may be done.

16 Secondly, interrogatories may be delivered for two distinct purposes, (a) to obtain information from the interrogated party about the issues that arise in the action and (b) to obtain admissions from the party interrogated. This was established long ago in A. G. -v- Gaskill (1882) 20 Ch.D. 519. This was a case in which the Attorney General instituted...