Roche & Saltee Hotel (Wexford) Ltd v Investec Bank Plc (Formerly Known as Investec Bank UK) Ltd & O'Riordan
| Jurisdiction | Ireland |
| Judge | Ms. Justice Kennedy |
| Judgment Date | 12 June 2015 |
| Neutral Citation | [2015] IEHC 367 |
| Court | High Court |
| Date | 12 June 2015 |
[2015] IEHC 367
THE HIGH COURT
BETWEEN
AND
Breach of contract – Misrepresentation – Fraud – O. 19, r. 5 (2) of the Rules of the Superior Courts – Onus of proof
Facts: The first named plaintiff sought an order for breach of contract, misrepresentation and deceit among other grounds arising out of a series of financial transactions between the first named plaintiff and the first defendant. The first named plaintiff alleged fraud and misrepresentation by the second named defendant being an employee of the first named defendant on the ground of wrongful enticement for moving the business of the first named plaintiff to the first named defendant.
Ms Justice Kennedy refused to grant any relief to the first named plaintiff. The Court held that in order to plead the allegations of fraud, misrepresentation, breach of trust, wilful or undue influence, the full particulars of the case along with dates and evidence, if any, must be set out. The Court found that since the first named plaintiff had omitted to set out any averments regarding fraud, it would not be permissible to do it now. The Court held that misrepresentation as alleged must be made by words or conduct knowing it to be untrue and the plaintiff must have acted upon such false assurances. The Court, however, recognised an exception that if the plaintiff despite being given false information acted uninfluenced by such representation, the defendant would not be held liable. The Court held that the statement by the second named defendant to the first named plaintiff regarding unenforceability of the securities would not amount to misrepresentation as it conflicted terms of facility letters and security documents which were signed by the first named plaintiff after seeking appropriate legal advice.
JUDGMENT of Ms. Justice Kennedy delivered on 12th day of June, 2015
1. These proceedings arise out of a series of financial transactions between the first plaintiff, Mr Roche and the first defendant; Investec Bank. Mr. Roche was a successful property developer with lands in and about Kilmore Quay, Co. Wexford. The second plaintiff is a hotel company located at Kilmore Quay, Co. Wexford. The first defendant, Investec Bank Plc., was formally known as Investec Bank (UK) Ltd. and the second named defendant, Mr. O'Riordan was an employee of the Bank at the relevant time. He had previously been employed by First Active Plc. and had moved to Investec Bank as senior lending manager in or about May, 2004. A number of other employees of First Active Plc. moved with the second defendant to Investec Bank, including Mr. Shane Mallon and Mr. Noel Ross. Mr. O'Riordan was employed at Investec Bank for some five and half years until his departure from the bank in 2010. The plaintiffs contend that Mr. O'Riordan enticed Mr. Roche to move his business to Investec Bank shortly after he himself moved to the bank.
2. The first plaintiff owned, inter alia, two substantial plots of land in the Kilmore area, known as 'the Beak' (72 acres) and 'Gentstown' (98 acres). It was while employed at First Active Plc. that the banking relationship began between Mr. Roche and Mr. O'Riordan. Mr. Roche had availed of a number of lending facilities with First Active Plc. and subsequently with Investec Bank for development purposes. One of the initial developments was in respect of a site in Co. Wexford-with Glynn Properties Ltd. being the vehicle for this project-which was very successful. Mr. Roche then engaged in a further development through his company, Eastland Properties Ltd., in 2004 for the purpose of a development in Co. Wexford. This was initially through a facility provided by First Active Plc. to Eastland Properties Ltd. which was later replaced by facilities with Investec Bank. The loan facility from the Bank was secured by the plaintiff's inherited 'Beak lands'. It is not disputed that from 2005 onwards his lands located at the Beak and Gentstown were lodged as security with the bank.
3. Mr. Roche became involved in a number of property transactions, financed by the bank and adopted special purpose vehicles (SPVs) to this end. The plaintiffs contended that the loans advanced by the bank were not affected in accordance with a conventional banking relationship but were affected on the basis of a partnership and/or profit-sharing arrangements.
4. It was alleged by the plaintiffs that from mid-2004 to mid-2006, the defendants constructed a scheme to develop 495 acres at Kilmore Quay, Co. Wexford. It is alleged that the defendants sought to treat Mr. Roche's lands as their own and to incorporate his lands into their development plan. It was contended that this was based upon profit share agreements between the first named plaintiff and the defendants.
5. In 2004, Mr. Roche and other individuals, formed a special purpose vehicle company called "Seashore Leisure Ltd" (hereinafter "Seashore"). It is not in dispute that Mr. Roche was both a shareholder and a director of Seashore. Messrs. Karl Murphy, Ian Murphy, John Hynes and Links Resorts Ltd. (hereinafter "Links") were also shareholders of this company. Mr. James Murphy, father of Ian and Karl Murphy, was also a significant participant in the venture.
6. On the 13 th October, 2004, Mr. Roche established an agreement with Seashore (the option agreement) which afforded an option to Seashore to purchase the 72 acres of land which were owned by him for the sum of €9 million. This portion of land was referred to throughout the proceedings as the 'Beak lands'. The agreement provided that any increase in profit above €9 million was to be divided between Mr. Roche and Seashore.
7. On the 1 st August 2006, the bank issued a facility letter to the directors of Seashore Leisure Ltd. The purpose of the facility was to "partially assist with the discharge of the planning application and professional fees in respect of 495 acres of land at Kilmore, Co. Wexford". The facility was for an amount not exceeding €2,000,000, including an interest roll up. There were thirteen conditions precedent to the drawdown of the facility, one of which was "satisfaction with independent planning report confirming the likelihood of planning permission being granted on the subject site for the scheme proposed". The security required included:-
a a. "Assignment over various options to acquire 495 acres of land at Kilmore, Co. Wexford;
b b. a profit share agreement to be entered into between the borrower and the bank in accordance with clause 11 hereof; and
c c. several personal guarantees from Robert Roche and James Murphy each in the amount of €310,000 in respect of all the obligations from time to time of the borrower to the bank."
This loan facility was not drawn down.
8. The plaintiffs claimed, inter alia, that:-
a a. The defendants devised a scheme to develop some 495 acres of land in Kilmore Quay, Co. Wexford which would include the construction of a marina, a five star hotel, a leisure centre, an equestrian centre, hundreds of residential units and a golf course. These lands at Kilmore Quay comprised 400 acres of optioned land which Mr. Roche had negotiated with a number of local landowners;
b b. the defendants directed Mr. Roche to purchase the Saltee hotel which was located proximate to the proposed development and that such direction was issued for the sole purpose of removing any perspective local hotel objectors. This direction was said to have issued to Mr. Roche at a meeting in the Radisson Hotel, Stillorgan Road in or about February 2005;
c c. the defendants entered into a partnership with Mr. Roche;
d d. the defendants required exclusivity for the bank through the use of penal clauses; including exit fees, arrangement fees, abort fees and profit shares;
e e. that Mr. O'Riordan entered, through his company, Orac Ltd., into a consultancy agreement with Seashore which entitled him to an additional 10% profit outcome;
f f. that Mr. Roche or any other shareholders were not furnished with copies of the June 2006 consultancy agreement;
g g. that the defendants encouraged Mr. Roche to purchase 154 units in a development in Poznan, Poland where he only wished to purchase 24, and that as a result he lost the opportunity to purchase the original 24 units;
h h. that in June 2007, an anonymous bid was made for the purchase of the Beak lands for €12,000,000 which bid was 'blocked' and/or impeded by Mr. O'Riordan. This was effected by Mr. O'Riordan threatening Mr. James Murphy that the bank would 'pull the plug on him' and that he would forfeit 50% of his shareholding in Seashore pursuant to the terms of the consultancy agreement;
i i. that the bank wrongfully, dishonestly and fraudulently concealed the wrongful, dishonest and unlawful conduct on its part and/or Mr. O'Riordan;
j j. that by reason of the alleged wrongs, Mr. Roche was prevented from redemption of the securities provided by him to the bank. Mr. Roche claimed that if he had been permitted to so redeem, he would not have been obliged to sell his lands at Gentstown;
k k. that, as a consequence, the purported appointment of a receiver by the bank to the second plaintiff is invalid. It is claimed that the bank, its servants or agents, have thus diminished the value of the plaintiffs' assets; and
l l. the plaintiffs seek rescission of the facility agreements and securities; damages for breach of contract, misrepresentation,...
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