Westpac Banking Corporation v Dempsey

• Jurisdiction: Ireland
• Judge: Mr. Justice Morris
• Judgment Date: 01 January 1993
• Neutral Citation: 1993 WJSC-HC 1490
• Docket Number: RECORD NO. 5 F.J./1992,1992 No. 5 F.J.]
• Court: High Court
• Date: 01 January 1993

1993 WJSC-HC 1490

THE HIGH COURT

RECORD NO. 5 F.J./1992

WESTPAC BANKING CORPORATION v. DEMPSEY

IN THE MATTER OF SECTION 5 AND 11 (3) OF THE JURISDICTION OF

COURTS AND ENFORCEMENTS OF JUDGMENTS (EUROPEAN COMMUNITIES)

ACT 1988

THE HIGH COURT OF JUSTICE OF ENGLAND AND WALES, QUEEN'S BENCH

DIVISION

BETWEEN

WESTPAC BANKING CORPORATION

PLAINTIFFS

AND

ANTHONY MATTHEW DEMPSEY

DEFENDANT

Citations:

EXCHANGE CONTROL ACT 1954 S5

EXCHANGE CONTROL ACT 1954 S20

EXCHANGE CONTROL (SCHEDULED TERRITORIES) REG 1978 SI 350/1978

BOISSEVAIN V WEIL 1950 AC 327

DEFENCE FINANCE REGULATIONS (UK) 1939 REG 2

NAMLOOZE VENOOTSCHAP DE FAAM V DORSET MANUFACTURING CO LTD 1949 IR 203

FIVERTEX V BELEIR LTD 1955 89 ILTR 141

EMERGENCY POWERS (FINANCE) (NO 7) ORDER 1941 S3

J W TAYLOR & CO V LANDAUER & CO 1940 4 AER 335

SWISS BANK V LLOYDS BANK 1980 3 WLR 457

EXCHANGE CONTROL ACT 1947 S16(2)

MANN THE LEGAL ASPECTS OF MONEY 4ED 361

STOCKHOLMS ENSKILDA BANK AKTIEBOLAG V SCHERING LTD 1941 1 KB 424

BRETTON WOODS AGREEMENTS ACT 1957 V111 S2(b)

BRETTON WOODS AGREEMENTS ACT 1957 S3(8)(c)

DALTON V DALTON 1982 ILRM 418

JURISDICTION OF COURTS & ENFORCEMENT OF JUDGMENTS (EUROPEAN COMMUNITIES) ACT 1988 S1

JURISDICTION OF COURTS & ENFORCEMENT OF JUDGMENTS (EUROPEAN COMMUNITIES) ACT 1988 S5

JURISDICTION OF COURTS & ENFORCEMENT OF JUDGEMENTS (EUROPEAN COMMUNITIES) ACT 1988 S11(3)

BANK FUR GEMEINWIRTSCHAFT AKTIENGESELLSCHAFT V CITY OF LONDON GARAGES LTD 1971 1 WLR 149

ARCHBOLDS (FREIGHTAGE) LTD V SPANGLETT LTD 1961 1 QB 374

EMERGENCY POWERS (FINANCE)(NO 7) ORDER 1941

EXCHANGE CONTROL ORDER 1947 ART 3

EXCHANGE CONTROL ACT 1947

BRUSSELS CONVENTION ON RECOGNITION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 ART 27

BRUSSELS CONVENTION ON RECOGNITION & ENFORCEMENT OF JUDGMENTS IN CIVIL & COMMERCIAL MATTERS 1968 ART 29

Synopsis:

JUDGMENT

Enforcement

Foreign order - Debt - Liquidated sum - Action - Cause - Guarantee - Payment of borrower's debt to English lender guaranteed by defendant - Defendant resident in Ireland - Commitment of defend ant prohibited by Irish legislation - Public policy - Exchange control - Termination - Exchange Control Act, 1954, ss. 5, 20 - Jurisdiction of Courts and Enforcement of Judgments (European Communities) Act, 1988, ss. 2, 3; 1st schedule, articles 2, 26, 27, 29 - (1992/5 FJ - Morris J. - 19/11/92) - [1993] 3 I.R. 331

|Westpac Banking Corporation v. Dempsey|

1 Judgment of Mr. Justice Morris delivered the 19th day of November 1992.

2 This matter comes before me by way of an appeal from the Order of the Master made on the 25th of March 1992 whereby the Master being satisfied that the Plaintiffs did on the 9th of July 1991 obtain Judgment against the Defendant in the sum of £435,676.12 sterling and costs in the High Court of Justice Queen's Bench Division in England and being satisfied that the Judgment is still due and owing together with interest on the debt and costs at the rate of £15 sterling per cent per annum from the 9th of July 1991 ordered that the Judgment be enforced within the State and further restrained the Defendant from reducing his assets below the sum equivalent to £500,846 sterling pending satisfaction of the Judgment.

3 From this Order the Defendant has appealed. Counsel for the Defendant divided his argument into a number of propositions. However I propose to deal with them under two general headings...

4 (1) Counsel submits that the circumstances in which this claim arises are as follows. The Defendant was in 1989 in the process of carrying out development work and for that purpose approached the Plaintiffs and entered into an agreement whereby the Plaintiffs made payments to a company Noblechase Limited. As a condition of making the loan the Defendant was required and did enter into an arrangement whereby he guaranteed the due repayment of the sums together with interest thereon. This agreement was dated the 6th of February 1989. No issue arises on the foregoing facts. The Plaintiffs are a banking company who carry on business in the City of London. Counsel submits that this transaction was made in contravention of Section 5 of the Exchange Control Act 1954which provides

5 2 "5. Except with the permission of the Minister, a person shall not

6 (a) make, or commit himself to make, any payment to or by the order of or on behalf of any person resident outside the scheduled territories, or

7 (b) place, or promise to place, any sum to the credit of any person so resident."

8 Section 20 of the Act provides:-

9 2 "20 (1) Every person who contravenes (whether by act or omission) or attempts so to contravene any provision of, or any restriction or requirement imposed by or under, this Act shall be guilty of an offence under this section."

10 The section goes on to provide for penalties.

11 By virtue of Statutory Instrument 350 of 1978, which amends the definition of scheduled territories, the United Kingdom is deemed to be outside the scheduled territories and accordingly since the Defendant was at the relevant time resident within the State it is submitted by Counsel that the guarantee so given being a contravention of the Exchange Control Act was null and void and accordingly should not be enforced by this Court.

12 Counsel has drawn attention to Boissevain -v- Weil 1950 AC 327as an example of the approach which the Courts in England adopt towards contraventions of the corresponding regulations in England. That was a case in which a British subject involuntarily resident in what is described as "enemy occupied territory" in 1944 borrowed foreign currency from a Dutch subject likewise so resident, agreeing to repay it in England in sterling after the War as soon as English law permitted. It was held that the sum was irrecoverable as a debt, the transaction being a borrowing of foreign currency contrary to Regulation 2 of the Defence Finance Regulations 1939 to which no exception could be implied in the case of a British subject for the time being in enemy territory.

13 Counsel further points to two Irish cases in which he submits the Irish Courts have adopted a similar approach. These cases were Namlooze Venootschap de Faam -v- The Dorset Manufacturing Company Limited 1949 203 ("Namlooze case") which was a decision of Mr. Justice Dixon and Fibertex -v- Beleir Limited 1955 89 ILTR 141, a decision of the Supreme Court.

14 The basic proposition therefore of Counsel is that a contract made in contravention of the Exchange Control Act 1954is null and void.

15 In Namlooze case Mr. Justice Dixon declined to enforce a contract which contravened the Emergency Powers (Finance) (No. 7) Order 1941 not on the grounds that such a contract was void or illegal but on the grounds that to require the Defendant to make the payment on foot of the transaction would have meant requiring them to perform an act which was at the relevant time illegal by reason of currency control regulations. In the course of his judgment he says:-

"Whatever the terms of the Court's order, the legal effect of it would be to put the Plaintiff in a position to secure payment of the amount in question and it would be thus, even if indirectly, compelling the Defendants to do an act prohibited by law for the time being in force. Put thus I feel that on general principles it would be improper and contrary to public policy for the Court to give judgment for the Plaintiffs on their claim as now framed."

16 This approach found approval with the Supreme Court in Fibertex -v- Beleir Limited.

17 The provisions of the Emergency Powers (Finance) (No. 7) Order 1941, which the Courts were considering in those cases, can be summarised as follows. Section 3 of the Order precluded any person without the permission of the Minister from buying, selling, lending or borrowing gold or foreign exchange or exporting gold or foreign exchange outside of the State. It was, I am satisfied, conformable to the provisions of the 1954 Exchange Control Act and in that regard the approach of Mr. Justice Dixon and the Supreme Court to that legislation is of relevance in the consideration of whether the transaction in this case is void. In determining this matter Mr. Justice Dixon said:-

"The goods in this case were sold and delivered while the Emergencey Powers (Finance) (No. 7) Order 1941 was in force. I do not find that the contract or several contracts under which the goods were ordered, was or were thereby made either void or illegal. One reason is that the prohibition in Article 3 of the Order, although void, relates rather to what might be contemplated or possible sequel to the contract rather than the essential nature. Another, and perhaps stronger, reason is that I think the qualification in that Article enabling any of the...