Small v The Governor and Company of The Bank of Ireland

• Jurisdiction: Ireland
• Judge: Ms. Justice Máire Whelan
• Judgment Date: 19 December 2018
• Neutral Citation: [2018] IECA 393
• Date: 19 December 2018
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2018] IECA 393 Record Number: 2016 321

[2018] IECA 393

THE COURT OF APPEAL

Whelan J.

Peart J.

Whelan J.

McGovern J.

Neutral Citation Number: [2018] IECA 393

Record Number: 2016 321

BETWEEN/

MARTIN SMALL

PLAINTIFF/APPELLANT

- AND -

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

FIRST NAMED DEFENDANT/RESPONDENT

AND

DERMOT FREHILL

SECOND NAMED DEFENDANT

AND

HELEN RAFTERY

THIRD NAMED DEFENDANT

AND

CONLETH HARLOW PRACTISING UNDER THE TITLE AND STYLE OF CONLETH HARLOW AND CO., SOLICITORS

FOURTH NAMED DEFENDANT/RESPONDENT

Abuse of process - Fraud - Motion to amend - Appellant seeking to appeal against High Court order - Whether the proceedings constituted an abuse of process

Facts: The appellant, Mr Small, issued plenary summons on 16th January 2014. He sought, inter alia, as against the first respondent, Bank of Ireland, to re-open three separate transactions which were the express subject matter of complaints against the bank and his deceased partner's legal personal representative in 2012 proceedings. There was a substantial reiteration of the claims and allegations contained in the 2012 proceedings. In particular, it was claimed that as a result of the manner in which part only of the proceeds of sale were applied towards reduction of the mortgage debt on the Golf Links Road property and the 60% share of the balance that was made available to his deceased partner, the appellant lost the opportunity to profit from the development of the said lands and was unable to repay his debt to the bank. The bank alleged a substantial overlap between the 2012 and 2014 pleadings as against it. On 30th June 2014 the bank issued a notice of motion seeking an order pursuant to Ord. 19, r. 27 of the Rules of the Superior Courts striking out the proceedings against it on the grounds that same were unnecessary or scandalous or tending to prejudice or embarrass the bank. In the alternative an order was sought pursuant to Ord. 19, r. 28 on the grounds that the statement of claim disclosed no reasonable cause of action against the bank and was frivolous and vexatious and bound to fail. Alternative relief was sought on the basis that the proceedings constituted an abuse of process and ought to be dismissed pursuant to the inherent jurisdiction of the court and further that dismissal was warranted in the interests of justice. On 2nd June 2016, the High Court (Mac Eochaidh J) ordered that the appellant's claim against the bank stand dismissed as an abuse of process on the basis of the rule in Henderson v Henderson (1843) 3 Hare 100. The appellant appealed to the Court of Appeal on the grounds that: (1) the judge erred in striking out the appellant's proceedings against the bank on the basis of the rule in Henderson v Henderson; and (2) the judge erred in striking out the proceedings on the ground that the appellant had settled a claim against the third respondent, Ms Raftery, instituted in 2012, in which a condition of the settlement involved an agreement on the part of both the appellant and Ms Raftery that neither would issue proceedings in respect of matters raised in the settled proceedings and were the within proceedings allowed to proceed, it was likely that Ms Raftery would become a party to the proceedings which would amount to a breach of a condition of the settlement agreement aforesaid.

Held by Whelan J that the 2014 proceedings prima facie constituted an abuse of process and that all new aspects including the claim in fraud could and should have been advanced in 2012 or prior to the compromise of the litigation in 2013 under the rule in Henderson v Henderson. Whelan J held that there were no special circumstances identified whereby the appellant could avoid the application of the rule. Whelan J dismissed the appeal and upheld the judgment of the court below.

Whelan J held that the motion to amend the statement of claim as against the bank fell to be struck out as no maintainable cause of action subsisted as against the bank in the manner framed in the proceedings.

Appeal dismissed.

JUDGMENT of Ms. Justice Máire Whelan delivered on the 19th day of December 2018

1 This is Mr. Small's appeal against orders made on 2nd June 2016 by Mr. Justice Mac Eochaidh in the High Court dismissing the proceedings on foot of a notice of motion dated 30th June 2014 brought on behalf of the Governor and Company of the Bank of Ireland (hereinafter 'the bank'). The motion was heard over three days in late May 2016. The judge delivered an ex tempore decision on 2nd June 2016 and ordered that the appellant's claim against the bank stand dismissed as an abuse of process on the basis of the rule in Henderson v. Henderson (1843) 3 Hare 100.

Background to litigation

2 The appellant is a businessman, builder and developer who in the years leading up to the economic crash operated two partnerships with one Fionan Raftery ('the deceased'). The partners were involved in the carrying out of a number of developments including at a 4 acre site acquired in about 2003 at Knockcroghery, Co. Roscommon ('Partnership 1'), which operated on a 50:50 basis. They later acquired 11.75 acres at Golf Links Road, Roscommon under a separate partnership agreement ('Partnership 2') on a 60:40 basis in favour of Fionan Raftery. The latter acquisition was financed with a loan of ?3,150,000 from the bank. Fionan Raftery was diagnosed with oesophageal cancer in about the month of August 2007. In December 2007 the appellant acquired 10% of the Golf Links Road partnership holding of Fionan Raftery to achieve equality of legal ownership between the partners. This was financed with the aid of a loan for ?500,000 from the bank. The loan documentation is dated 21st November 2007. The circumstances surrounding the advancing of the said loan by the bank to the partners is the subject of the current proceedings and the appellant has alleged impropriety including fraud against the bank. Fionan Raftery died on 18th April 2011.

2012 litigation

3 Less than a year following the death of his partner the appellant instituted proceedings on 27th February 2012 by way of plenary summons Record Number 2012/2023P ('the 2012 proceedings'). The defendants were Helen Raftery and the bank. Helen Raftery was sued in her capacity as the legal personal representative of the deceased.

4 Among the reliefs sought in the 2012 proceedings as against the bank were the following:

- damages for breach of trust, breach of contract, misrepresentation and breach of fiduciary duty,

- damages for negligence, breach of duty and for slander of title,

- a declaration that a purported loan agreement of 21st November 2007 between the appellant and the bank was null and void and of no legal effect,

- certain injunctions particularly in relation to a property known as Daltons Public House at Fuerty, Castlecoote, Co. Roscommon.

The said property had been held in the name of the deceased and his wife and following his death had been transferred into her sole name.

5 On 18th March 2012 the appellant issued a notice of motion seeking interlocutory orders as against Helen Raftery, in her capacity as legal personal representative, and the bank. In the notion of motion the appellant sought a number of injunctive reliefs including, inter alia:

(i) An injunction restraining the defendants and others from disposing of/dealing with the property known as Daltons Public House situate at Fuerty, Co. Roscommon,

(ii) An injunction restraining the defendants and others from carrying out any works on the said property,

(iii) An injunction restraining the defendants and others from taking any steps to sell or let the property in any manner,

(iv) An injunction restraining the defendants and others from slandering or continuing to slander the plaintiff's title to the said lands,

(v) A mandatory injunction compelling the delivery of the property fortwith to the plaintiff,

(vi) An order setting aside the purported transfer of the property to the plaintiff in his personal capacity,

(vii) In the alternative an order directing the first-named defendant's solicitors and others to take all necessary steps to deposit all proceeds of the sale of the property to the plaintiff and the first-named defendant.

Allegations against the bank in affidavit sworn 15th March 2012

6 The motion was grounded on an affidavit of 15th March 2012 sworn by the appellant where he outlined the background to his course of dealings with the deceased and deposed that between the years 2004 and 2011 they were parties to two property partnerships. He alleged that both the bank and the deceased had caused damage to him by acting unconscionably, were guilty of misrepresentation and that they had acted in concert to exert undue influence over him.

7 At para. 4 of the said affidavit he deposes as follows: 'The latter part of the action is included in these proceedings in an effort to reduce costs as between the parties and in circumstances where it is alleged, inter alia that both the bank and the Deceased caused damage to your deponent by acting unconscionably, were guilty of misrepresentation and that they acted in concert to exert undue influence over your deponent.'

8 He further deposed that Partnership 2 was formed with the deceased for the purpose of purchasing and developing an 11.75 acre site at Golf Links Road, Roscommon. The purchase price of the Golf Links Road site was ?3m. which was financed with a loan from the bank in the sum of ?3.15m. The said partnership was 60:40 in favour of the deceased. The appellant alleged that with the assistance of his accountant he had become aware that there was significant mismanagement of the partnership and misapplication of partnership funds. He alleged collusion between the bank and the deceased in respect of certain matters and that loan agreements he entered into were procured by undue influence and unconscionable conduct on the part of the deceased and servants or agents of the bank. He...