Thomas Beausang and Another v Irish Life and Permanent Plc and Others
|Mr. Justice Hogan
|13 January 2014
| IEHC 1
|13 January 2014
 IEHC 1
THE HIGH COURT
Pr actice and procedure - Tort law - Vicarious liability - Striking out proceedings - Contract of sale - Deceit - Conspiracy - Whether claim for summary dismissal sustainable
Facts: The plaintiffs commenced proceedings contending that the first defendant was vicariously liable for the actions of the second and third defendants as their employer, who were sued for damages for deceit and conspiracy. It was alleged that the first plaintiff had been encouraged or facilitated to take out a new loan and did not disclose that the method devised to escape a particular obligation in the contract of sale had become a liability. The first three defendants sought orders to strike out the proceedings on the grounds that they were unsustainable in law and doomed to fail. The Court considered whether a sustainable case based on conspiracy and deceit was made out and whether the first defendant could be vicariously liable for the actions of its employees.
Held by Hogan J. that as the claims in deceit and conspiracy could not be said at this juncture to be unsustainable, the Court would accordingly refuse the application for the summary dismissal of the claims. While the claims for rescission would seem to be prima facie barred by lapse of time and acquiescence, this could change. The Court would refuse to strike out the claims of the plaintiffs in the manner sought.
1. By motion dated the 15 th April, 2013, the first three defendants invoke the inherent jurisdiction of this Court to seek orders striking out the present proceedings on the ground that they are unsustainable in law and are thereby doomed to fail. The first defendant ("ILP") is a credit institution and the employer of the second and third named defendants who are employed at its branch at Midleton, Co. Cork. The second defendant is the manager of that bank branch.
2. The plaintiffs have commenced proceedings contending that ILP is vicariously liable for the actions of the second and third defendants who are both sued in damages for the torts of deceit and conspiracy. Similar claims are made as against the fourth defendant solicitor who is also sued for damages for breach of contract and breach of fiduciary duty. The fourth defendant admittedly acted for the plaintiffs in the transactions I am about to describe, but he did not take part in this motion.
3. It is, of course, accepted that this power to strike out proceedings on this ground must be exercised sparingly. This means that the Court must, generally speaking, at least, proceed on the basis that the plaintiff will be able to prove the facts he alleges in his pleadings, while yet examining whether the case is legally sustainable. Purely for the purposes of this motion, therefore, I will accordingly assume that the facts as alleged by the plaintiffs will be established by them at the trial of the action. I am also acutely conscious, however, of the fact that the defendants have yet to file their defence and I could not sufficiently stress that I am assessing the sustainability of the claim purely by reference to the plaintiffs' allegations. The first three defendants simply say that even if the plaintiffs are correct in what they allege, they have nonetheless no sustainable cause of action against these defendants.
4. In 2007 the first plaintiff was engaged in the business of small residential property development in the general East Cork region. In the plaintiffs' statement of claim it is alleged that in February, 2007 a named official at ACC Bank plc, purchased a property comprising 2.7 acres at Shanagarry North, Midleton on behalf of Mr. Beausang. It is claimed that Mr. Beausang and the official had discussed the purchase of the site, but the former had not obtained loan approval from ACC in respect of the funding of the site and nor, indeed, had he instructed the official in respect of the price he would be prepared to pay for the site.
5. It is claimed that a letter of loan sanction nevertheless later issued from ACC Bank to Mr. Beausang's solicitors. One of the conditions of the offer of loan sanction was confirmation from the Bank's appointed solicitors, Messrs. Fitzgerald solicitors, that there were five irrevocable and unconditional sale contracts in place for quite separate properties at Ardnahinch Bay, Shanagarry for the sum of €2,422,000 to unconnected third parties. (These five properties had just been completed by the first named plaintiff). The first plaintiff then duly executed the loan offer.
6. The Bank's solicitors then contacted the fourth defendant, Mr. Kelly, on 13 th March, 2007, and Mr. Kelly then issued contracts for sale in respect of the dwelling houses at Nos. 2, 3,4 and 5 Ardnahinch Bay, Shanagarry to Mr. Sean O'Riordan of Fitzgerald solicitors who was acting as solicitor for the nominated purchasers of the said properties. Four contracts were returned in respect of these properties. It appears that the second and three defendants were the purchasers of two properties and the beneficial purchasers of two other properties were personnel employed by ACC Bank. The purchase price for each dwelling was €555,000.
7. The plaintiffs further allege that Mr. Kelly also executed a contract of sale for a fifth dwelling. Indeed, they further contend that Mr. Kelly has admitted that this contract was subsequently destroyed by him. At all events, on 27 th March, 2007, Mr. Kelly then wrote to Messrs. Fitzgerald solicitors advising them of the receipt of irrevocable contracts for the sale of all five properties.
8. At that point, the drawdown of the funds from ACC Bank was confirmed by a letter dated 29 th March, 2007, from Fitzgerald solicitors to the Mr. Kelly. The plaintiffs allege that while Mr. Kelly told Mr. Beausang that there were five contracts in existence, he nonetheless failed to advise him of (i) the identity of the purchasers; (ii) the payment of the deposits by the purchasers and (iii) that the contract for sale would become binding and enforceable as against the putative purchasers once the same were executed by Mr. Beausang and returned to the solicitors for the purchasers.
9. The plaintiffs then allege the following:
"Furthermore, the fourth named defendant failed and neglected to advise the first named plaintiff to execute the five contracts for sale which had been signed by the putative purchasers so that they could be returned to the solicitors for the putative purchasers or of the beneficial consequences that would accrue to the first named plaintiff by the execution and return of the said contracts for sale or of the ramifications and consequences that would arise in the event of the said contracts for sale not being executed and returned to the solicitors for the putative purchasers."
The purpose and intention of the fourth named defendant and of the putative purchasers was to provide each of them with the opportunity of 'flipping' the properties (i.e., of selling the properties on or of transferring the benefit of the contract, at a profit) without advising the plaintiff of the same and without risk to each of the putative purchasers. The actions of the first named defendant in failing and neglecting to have the contracts for sale executed and returned by the first named plaintiff are consistent with that purpose and intention and were motivated by the same."
10. It might seem curious that a professional builder such as Mr. Beausang would need to be advised by Mr. Kelly that all he needed to do in order to make the contracts enforceable was to sign them and return them to the purchaser's solicitors. This point is stressed by ILP who maintain that it was inconceivable that Mr. Beausang was not aware of the existence of binding contracts for sale.
11. At all events, the plaintiffs allege that as a result of the decline in the residential housing market, the second, third and fourth defendants (along with the two other putative purchasers) shortly thereafter realised that they would be unable to sell on the property at a profit. Indeed, it is said that the properties all diminished in value to a level which was significantly below the contract price specified in each contract for sale.
12. By early 2008 Mr. Beausang came under pressure to reduce his borrowings with ACC. The plaintiffs allege that Mr. Kelly and the putative purchasers then realised that ACC were likely to inquire as to the existence of these contracts. The existence of the five completed contracts had, after all, been a term of the loan agreement. It is then alleged that a scheme was devised so that an application would be made to ILP on the plaintiffs' behalf whereby that institution would provide loan finance to him. It is contended that the second defendant encouraged this loan application and did so without reference or disclosing his own potential liabilities under the contract for sale. The plaintiffs say that while this loan application was ostensibly made for the benefit of the first plaintiff, it was in reality designed to assist the various putative purchasers and Mr. Kelly to avoid their liabilities under these contracts for sale.
13. It is not in dispute but that such a loan application was made and was ultimately accepted in May, 2008. Nor is it disputed but that the contracts were never executed and the plaintiffs have maintained complete control over these properties in the meantime. The properties are currently let by the plaintiffs.
14. So far as this motion is concerned, two legal issues immediately arise. First, having regard to the matters...
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