Northern Bank Finance v Charlton

• Jurisdiction: Ireland
• Judge: Mr. Justice Finlay
• Judgment Date: 18 June 1979
• Neutral Citation: 1983 WJSC-HC 1517
• Docket Number: No. 281P./1975
• Court: High Court
• Date: 18 June 1979

Northern Bank Finance v. Charlton

THE NORTHERN BANK FINANCE CORPORATION LIMITED

Plaintiffs

and

GERARD CHARLTON, HUGH CHARLTON AND GERARD SHEEHY

Defendants

1983 WJSC-HC 1517

No. 281P./1975

THE HIGH COURT

1 Judgment of Mr. Justice Finlay delivered the 18th day of June 1979Mary P. O'Donoghue

2 This matter came on for hearing before me pursuant to an order of the Supreme Court dated the 31st July 1978. That order was made on an appeal brought by the plaintiffs from orders made by me in this action on the 8th August 1977 and the 7th September 1977.

3 By those orders I had found that the servants or agents of the plaintiffs had been guilty of fraudulent misrepresentation in certain specific instances and accordingly dismissed the claim of the plaintiffs, On foot of the counterclaim of the defendants had granted to them an order for the rescission of certain transactions entered into between them and the plaintiffs; for the consequential return of monies by the plaintiffs to them and for the payment of interest as damages on such monies. The Supreme Court by its order affirmed the dismiss of the plaintiffs" claim and also affirmed the findings of fraudulent misrepresentation against the servants or agents of the plaintiffs but set aside the order for rescission and the consequential orders and remitted the matter to the High Court for the assessment of the damages, if any, which the defendants had suffered as a result of the tort of deceit committed by the plaintiffs" servants or agents.

4 That order though dated the 31st July 1978 was not perfected until in or about the 15th January 1979, the parties having, in the interval, spoken to the minutes of the order. By a letter which is undated but which was apparently delivered on the 22nd January 1979 the defendants, whom I will hereinafter refer to as "the promoters" served upon the plaintiffs, whom I will hereinafter refer to as "the bank", particulars of their claim for damages.

5 By order made by me on the 30th January 1979 I directed that the issue arising on the particulars enumerated at paragraphs 1, 3, 4 and 5 of that letter should first be tried and that the other claims enumerated in the letter should stand adjourned until after the trial of those issues. Those issues came on for trial before me on the 9th May 1979 and having heard evidence on them for a period of eleven days I reserved Judgment on them on the 25th May 1979.

6 The enumerated claims thus arising may be summarised as follows.

7 2 (1a) Claim for £47,000 call to which the promoters allege they are exposed arising out of the purchase of Pat Quinn's shares in Pat Quinn Holdings Limited.

8 3 (1b) Potential liability for £25,000 on foot of a promissory note given by the promoters to Mr. Pat Quinn on the 8th January 1974 in respect of the same purchase.

9 4 (3a) The sum of £200,000 invested in the take-over by Hugh Charlton and Gerard Sheehy in cash on the 27th September 1972 less the value, if any, of shares received.

10 5 (3b) Interest on that sum.

11 6 (3c) The sum of £100,000 invested by Hugh Charlton and Gerard Sheehy in cash on the 27th November 1972 less the value, if any, of shares received.

12 7 (3d) Interest on that sum.

13 8 (3e) The sum of £50,000 invested in the take-over by Gerard Charlton in cash on the 7th December 1972 less the value, if any, of shares received.

14 9 (3f) Interest on that

15 10 (4a) £67,134.33 monies expended by the promoters on the purchase of Mr. Pat Quinn's shares in Pat Quinn Holdings Limited less the value, if any, of shares received.

16 11 (4b) Interest on that sum

17 12 (5a) £300,000 monies expended by the promoters on the purchase of shares in Pat Quinn Holdings Limited less the value, if any, of shares received and,

18 13 (5b) Interest on that sum

Order of the Supreme Court

19 Since a question arose before me as to the interpretation of the order of the Supreme Court remitting the case for the assessment of damages it is necessary to set out the material portions of that order and parts of the judgments of the majority of the Supreme Court leading to the making of that order.

20 The material portions of the order dated the 31st July 1978 are as follows.

21 "And this Court did declare (in affirmation of the decision of the High Court) that the Defendants were induced to purchase shares in J.G. Mooney and Company Limited and to purchase Pat Quinn's shares in Pat Quinn Holdings Limited by the fraudulent misrepresentations of the Plaintiffs as found in the High Court

22 "And this Court did declare that the Defendants" remedy for the said fraudulent misrepresentation lies in damages for the tort of deceit and not in rescission of the purchases of shares thus induced

23 And IT WAS ORDERED that the case be remitted to the High Court for the assessment of the said damages"

24 The case was tried on appeal to the Supreme Court by a Court of five members. Four Judgments were delivered being the Judgments of the Chief Justice, Mr. Justice Henchy, Mr. Justice Griffin and Mr. Justice Parke and Mr. Justice Butler agreed with the Judgment of the Chief Justice.

25 The Court was unanimous in affirming the decision of the High Court consisting of the findings of fraudulent misrepresentation against the plaintiffs" servants or agents and by a majority consisting of Mr. Justice Henchy, Mr. Justice Griffin and Mr. Justice Parke decided to set aside the order for rescission and substitute therefor an order for the assessment of damages on the counterclaim. Commencing at page 26 of the Judgment of Mr. Justice Henchy he dealt with this question as follows:

26 "What the defendants in this case were induced by the deceit to purchase was shares, of which the defendants were not the owners. "It is well established by judicial authority that the correct measure of damages in such a case is the cost of acquiring the shares less their actual value at the time of acquisition. See Twicross .v. Grant, Peak .v. Derry, Broom .v. Speak and the cases referred to in "McGregor On Damages" 1972 13th Edition paragraphs 1363 to 4. The price paid for the shares is to be looked on only as evidence of their value not proof of it (per Lord Coleridge C.J. in Twicross .v. Grant) so it will be for the Court to make a true and fair valuation of the shares in question here as they stood when they were transferred to the defendants or their nominees. That is the crucial time for the assessment of their value and subsequent fluctuations in their value, from whatever cause, may be taken into reckoning for that purpose only to the extent that such movements in value may throw light on their real value at the time they were transferred to the defendants ............... Because the trial Judge considered that the defendants" remedy lay in rescission, the question of the measure of damages and of their assessment was not adjudicated on in the High Court. There is, therefore, no judicial determination of the correct attributable amount which each of the defendants may be said to have laid out in the purchase of the shares which were transferred to him or his nominee, nor is "there any judicial finding as to the true value of those shares at the time of such transfer. Because the measure of damages will be the difference between these two figures and because the defendants failed to adduce at the trial necessary evidential date to enable those figures to be computed, it is not possible for this Court to assess the damages. I would therefore remit the case to the High Court to have the defendants" damages assessed on the basis I have indicated."

27 At the conclusion of his Judgment Mr. Justice Henchy then set out the order by which he would dispose of the appeal. The material paragraphs of that are as follows:

28 2 "2 Declaring (in affirmation of the decision of the High Court) that the defendants" purchases of shares in J.G. Mooney and Company Limited and Pat Quinn's shares in Pat Quinn Holdings Limited were induced by the bank's fraudulent misrepresentations as found in the High Court:

29 3 Declaring that the defendants" remedy for the said fraudulent misrepresentation lies in damages for the tort of deceit and not in rescission of the purchase of shares thus induced;

30 4 Remitting the case to the High Court for the assessment of those damages".

31 Mr. Justice Griffin, in the course of his Judgment, having agreed with the reasoning of the Judgment of Mr. Justice Henchy in relation to the question of rescission said at the conclusion of his Judgment on page 22:

32 "In my opinion the case should be remitted to the High Court for the purpose of ascertainment by a Judge of the High Court what damages, if any, were suffered by the defendants as a result of the representations made by the bank's servants inducing the defendants to enter into the relevant transactions. The correct measure of damages is in my judgment that laid down by Cotton L.J. in Peak .v. Derryi.e. the difference between what the defendants paid for the shares in Mooney and the then value of the shares on the date on which they were acquired. I agree with the order proposed by Mr. Justice Henchy."

33 Mr. Justice Parke in the course of his Judgment stated his agreement on the question of rescission with the Judgments delivered by Mr. Justice Henchy and Mr. Justice Griffin and in relation to damages stated as follows:

34 "During the course of the hearing in the High Court the defendants offered no evidence of damage flowing directly or indirectly from the fraud because they presented their case as being "one for rescission and as the learned President accepted this submission he made no finding in relation to damages upon which this Court as an appellate Tribunal can adjudicate. Accordingly I am of opinion that the matter be remitted to the High Court to assess what damages, if any, can be recovered. I agree with the principles set out...