Gaeilge

Title:	Healy -v- Ulster Bank Ireland Limited
Neutral Citation:	[2015] IESC 106
Supreme Court Record Number:	337/09
High Court Record Number:	2008 8389 P
Date of Delivery:	12/21/2015
Court:	Supreme Court
Composition of Court:	Clarke J., Laffoy J., Hardiman J.
Judgment by:	Hardiman J.
Status:	Unapproved
Result:	Appeal allowed and Set aside
Details:	NOTE: The judgment of Judge Hardiman is unapproved not having been approved by Mr Justice Hardiman prior to his untimely death.
Judgments by Link to Judgment Concurring Hardiman J. Link Clarke J., Laffoy J.

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Hardiman J.
Clarke J.
Laffoy J.

Between/

Judgment of Mr. Justice Hardiman delivered the 21st day of December, 2015.

1. The Plaintiff/Appellant is a registered medical practitioner and conducts a general practice in Mullingar Co. Westmeath. The defendant/respondent is a Bank. At all material times it maintained an office in Mullingar.

2. In August, 2008 the plaintiff had a sum of US$ 993,983.03 standing to his credit in his deposit account with the defendants as Bankers at their branch in Mullingar. On the 14th August, 2008 the Bank appropriated this sum by way of set off against a debit balance allegedly outstanding in respect of a facility extended to Coole Property Holdings Ltd., in respect of which, the Bank said, Dr. Healy was a guarantor. There was also an alleged personal liability.

3. The plaintiff was outraged at the appropriation of the money standing to his credit in his account in respect of the alleged liabilities mentioned. He instituted proceedings against the defendant Bank in which he claimed that in appropriating the said monies the defendant Bank was guilty of unlawfully converting these sums to its own use, breach of contract, negligence and deceit. His claim was dismissed by the High Court (McGovern J.) on 17 July 2009. This is his appeal.

The Plaintiff’s case.
4. The plaintiff said that the sums on deposit which were appropriated by way of set off were the balance of an initial lodgement of €2,213,607. This deposit was made on the 1st August, 2007. The plaintiff says that, subsequently, on the advice of the defendant Bank, some of the money was used in a series of currency trades by the defendant Bank acting as adviser and broker to the plaintiff.

5. The plaintiff further says that the initial deposit represented a sum derived from the sale by the plaintiff of his interest in Coole Property Holdings Ltd. and the sale, at the same time, of his interest in a partnership in a medical practice, between the plaintiff and another doctor. This other doctor, in addition to being the plaintiff’s partner in general practice was also engaged with him, through the medium of the Company mentioned, in the development of a very elaborate general practice building and ancillary para-medical and housing development on the grounds of a former hospital in Coole, Co. Westmeath.

6. Unfortunate differences arose between the plaintiff and his former partner, and this led to a very serious deterioration in their personal relationship. It became clear that they could no longer practice medicine in partnership or advance their joint commercial interests together. In relation to the latter, the plaintiff was keen to sell the development in which they were engaged and the development lands, whereas his partner wished to retain them. In July 2007 the plaintiff and the other doctor reached an agreement as a result of which, in effect, the plaintiff was “bought out” by his former partner. The former partner paid to the plaintiff’s Solicitor the consideration for this buy out. On the 31st July 2007 the plaintiff obtained a cheque representing these proceeds from his Solicitor.

7. On the following day, 1st August 2007, the plaintiff attended a meeting in the Mullingar branch of the Ulster Bank. He had an appointment to meet Mr. Alan Leech of Ulster Bank there. He was accompanied by his mother, Mrs. Maria Healy who had worked with him in his development venture and was familiar with it.

8. The plaintiff says that he told Mr. Leech at the meeting that the “deal” in relation to the sale to the former partner of the plaintiff’s interest in the property company and in the medical partnership had been agreed the previous day and that he had secured payment of the sale’s proceeds from the purchaser. It appears from documents subsequently obtained on discovery that the Bank had known of the discussions between the two doctors but was unpleasantly surprised that the transaction had closed and that the plaintiff had “got his hands on” the proceeds (the Bank’s phrase) without the Bank being involved.

9. According to the evidence of the plaintiff’s mother, at the meeting of 1 August 2007:

“Mr. Leech said to Neil ‘Now that you have the money, you will be looking after us. We looked after you’. And Neil said ‘Well that’s why I came in here to talk about this but before that happens ‘there are two issues which have to be resolved’. Number one:- (as far as I know some Bank had been ringing Neil up, I think it may have been AIB giving him interest rates and that kind of thing). Neil and Alan spoke about these for awhile and Alan said that he could match these, he could match these rates. So then Neil said ‘Well the second and most important item is that I need assurances from you that I am in the clear with Ulster Bank’, and Alan Leech told him that he was in the clear with Ulster Bank”. (Emphasis added)

10. In giving that evidence, Mrs. Maria Healy was confirming the evidence of her son to the same effect. Moreover, the son said that after this large deposit was made he became a client of Ulster Bank’s Wealth Management Service as a result of which the Bank advised him on various strategies to do with his deposit monies and transacted certain of them for him. The legal effect of the arrangement between the parties was pleaded as follows at para. 5 of the plaintiff statement of claim:

“5. Prior to the commencement of the above described commercial relationship and prior to the plaintiff agreeing to place any funds in the charge of the defendant, its servants or agents, the defendant, its servants or agents specifically represented to the plaintiff that he had no pre-existing liability and/or exposure to it on foot of a guarantee furnished by the plaintiff to facilitate repayment on demand to the defendant of a sum not to exceed €3,485,000 extended as finance to Coole Park Property Holdings Ltd. in respect of a commercial development undertaken by that Company. The said guarantee was dated 9 August 2006”.

Dr. Healy took the view that, having been bought out of the property company its liabilities were no longer his concern. He said that Mr. Leech promised him that this was so and that he would not, naturally, have made the deposit if Mr. Leech had not done so. When Discovery of the Bank’s documents was made, it showed Mr. Leech endeavouring to put an end to Dr. Healy’s liability: as the learned trial judge held, at p.29 of the judgment:

“It is clear that Mr. Leech was proposing that the plaintiff be cleared of the loan and the facilities which were granted, and that these be put in the name of [the other doctor]. He made this request on the 3rd September 2007”.

The learned trial judge continued by quoting a memorandum from Mr. Long, an in-house solicitor in Ulster Bank to the following effect:

“Healy effectively no longer has any liability to us and as I say he has signed contracts signing over any interest he had in all lands and property at Coole to [the other doctor]. I have amended this on the security screen now. This can be changed back if not correct”.

But on the same day there is a memorandum from another banker, Mr. Coyle stating that it was necessary to retain Dr. Healy’s name on the loan.

Accordingly, the learned trial judge held at para. 30 that the internal Bank documents “do no more than show that the Bank was considering a request by Mr. Leech to have the plaintiff cleared of any liability to the Bank, but the Bank was not prepared to do so”. The learned trial judge regarded this as supporting Mr. Leech’s evidence that he had no authority to give any such assurance as was claimed to the plaintiff. It might, also, be regarded as consistent with Mr. Leech having given the plaintiff an assurance such as the latter claimed, presumably in the interest of securing a very large deposit for the Bank. This would require him to secure “that the plaintiff be cleared of the loan”.

11. In cross-examination of Mrs. Maria Healy on behalf of the Bank, after she had given the evidence summarised above, it was put to her that on the day of the meeting:

“You [Mrs. Healy] certainly had lunch with Mr. Leech in Conn’s Restaurant across from the Bank, isn’t that right?”.

Mrs. Healy agreed that this was so and described how the lunch was arranged:

“Mr. Leech shook hands with Neil, congratulated him and he invited us over to Conn’s for a celebratory lunch…”.

This version does not appear to have been challenged. No alternative reason for a “celebratory lunch” was suggested, than that Dr. Healy had been bought out by his partner and had deposited the proceeds with the Bank on the terms mentioned, so that (for a brief period at least) everyone was happy.Another significance of this passage of transcript is that the Bank in cross-examination of Dr. Healy suggested to him that his mother was not present at the meeting in the Bank at all. In the course of cross-examination of Mrs. Healy she became upset at a certain juncture and the learned trial judge explained the line of cross-examination being adopted saying:

“You don’t have to worry about that, Mrs. Healy. Mr. O’Neill is doing his job. There is a conflict of evidence on this. Apparently Mr. Leech is going to tell me that I should believe him, that you weren’t at the meeting, and I have to resolve this difference”. (Emphasis added)

12. In evidence, however, Mr. Leech did not put this matter further than saying “I don’t recall Mrs. Maria Healy being there”. [Book 4, p.99]. This is, obviously, quite different from a positive assertion that she was not present.

The issue.
13. The substantive issue in the case was whether or not Mr. Leech had given Dr. Healy assurances of the sort outlined in the plaintiff’s pleadings and evidence. Dr. Healy was adamant that he had done so, and stood over this allegation in evidence and in cross-examination. As we have seen Mrs. Maria Healy gave evidence to the same effect. Mr. Alan Leech, the only other person present at the meeting, said he had only a vague recollection of it and did not recollect the words alleged by the plaintiff being used. He said he would have no authority to give assurances to that effect. Dr. Healy and Mrs. Healy were however adamant that Mr. Leech had used precisely those words, presumably with a view to securing the deposit for Ulster Bank. It will be recalled that the Bank conducted various transaction on behalf of Dr. Healy with the deposit money prior to the set off, which occurred just over a year after it was lodged.

14. The case, therefore, hinges on what if anything was said to induce Dr. Healy to make a deposit of the funds at his disposal into an account in Ulster Bank, Mullingar, on the 1st August 2007. There was not, in any literal sense, a conflict of evidence about this issue in the sense of witnesses for the respective parties swearing to two conflicting accounts. There was the clear evidence of the Healys in support of the assurances which they claim to have been given and, more vaguely, there was Mr. Leech’s evidence to the effect that he did not recollect the conversation, that he was vague about it, that he did not recall Mrs. Healy being present and that it would not have been within his authority, and would not have been his custom or practice, to give assurances of the kind alleged.

15. The cross-examination of Mrs. Healy on behalf of the Bank was curious in certain respects. Their first line of attack, summarised by the judge in the passage quoted above, was that she wasn’t there at all. But this was not expressly put to her at any stage. The cross-examination of Mrs. Healy by Mr. Desmond O’Neill S.C. is in large measure consistent with the Bank taking that view that she had not been there. He asked the sort of questions one might ask if there was going to be a denial that the witness had been present at all. Thus, she was asked where in the premises the meeting took place, upstairs or downstairs in the Bank building; what was the exact location of the room in which the meeting took place; whether the room was cluttered or tidy; and whether she or her son were offered any refreshments at the meeting. Remarkably, she was only expressly contradicted on the last matter: she said she had had a coffee and Mr. O’ Neill put her to that Mr. Leech’s practice was never to offer refreshments at such a meeting. It was not expressly put to her, importantly, that, as a matter of fact, she had never been at the meeting at all. This was presumably because cross-examining counsel was by then aware that Mr. Leech’s evidence would not go further than saying that he could not recollect her being at the meeting. But the Bank’s initial stance had been as the judge summarised it: she wasn’t there at all.

16. But, as we have seen, it was expressly put to Mrs. Healy on behalf of the Bank that she had been at lunch in “Conn’s restaurant across from the Bank”. She said that she and her son had gone to lunch there at the invitation of Mr. Leech who had shaken hands with Dr. Healy, congratulated him, and invited him and his mother to lunch. The description of this lunch by Mrs. Healy as “a celebratory lunch” was not challenged by the Bank.

No case was made by the Bank, or put to Mrs. Healy, as to how she could come to be present at the lunch with Mr. Leech if she had not been at the meeting in the Bank immediately prior to the lunch. Since it was agreed that she was at the lunch, she must have either come from the Bank with the two men, or met them later. There was no account of any arrangement to meet her there, any telephone call making such arrangement or of any entirely coincidental meeting in the restaurant or on the street. There are no other possibilities.

17. The entire case turned on the meeting in Ulster Bank which was said to have started at about 12.20pm on the 1st August, 2007. The action was heard just under two years later, in May 2009 and judgment was delivered in July of that year. The judge summarised a state of the evidence in this matter as follows at para. 16 of his judgment:

“Mr. Leech was quite clear in his evidence to the Court that he would not have given a release to the plaintiff and that he had no authority to do so. He continued to assert this, although he accepted he could not remember precisely what he said. Counsel for the plaintiff laid significant emphasis on the fact that the plaintiff, for his part, was quite clear as to the assurances which were given on 1st August, 2007, whereas Mr. Leech had no recollection of what was said. If the plaintiff’s evidence is reliable on this detail then, clearly, he is in a strong position, because while Mr. Leech may not have actual authority to give him a release, he may have had ostensible authority to do so. The credibility of the plaintiff is obviously crucial to the determination of the issue of fact as to whether or not the words contended for by the plaintiff was said by Mr. Leech”. (Emphasis added)

At para. 20 of the judgment the learned trial judge found as follows:

“The plaintiff’s mother accompanied the plaintiff to the Bank for the meeting with Mr. Leech on 1st August, 2007. Although Mr. Leech did not recall her being present in the room when he was receiving the cheque from the plaintiff, I accept her evidence that she was there at the time. She said she heard Mr. Leech telling the plaintiff that he was ‘… in the clear with Ulster Bank’. But when she was asked whether there was any detailed discussion on the issue as to whether her son had a liability under a guarantee, she could not remember any such discussion”. (Emphasis added)

18. The learned trial judge went on to dismiss Dr. Healy’s claim substantially on the grounds of his lack of credibility. The reasons for this are fully set out in the latter portion of the judgment. This leads to the conclusion that “I reject the plaintiff’s account of the meeting”. It is clear from the preceding portions of the judgment and especially from paragraphs 32 and 33 that the learned trial judge found that the plaintiff was wholly lacking in credibility.

19. The puzzling aspect of the judgment is that, having expressly found that Mrs. Healy Senior was indeed at the meeting in the Bank on the 1st August, 2007, the learned trial judge makes no finding at all about her evidence that Mr. Leech assured Dr. Neil Healy that he was “in the clear with Ulster Bank”.

20. On the hearing of this appeal Mr. Denis McDonald S.C. for the Bank was absolutely clear that his reliance was on the learned trial judge’s factual findings. He did not dilute the strength of this submission by making any alternative or subsidiary point. He frankly conceded that there was on the transcript of the evidence certain material which supported Dr. Healy’s point of view but he simply said that the learned trial judge had found against him and that was that. He said that this Court was not entitled to engage in speculation outside the findings of the trial court, on such issues as to why a professional man such as Dr. Healy would have made the lodgement without any assurance that it wouldn’t be appropriated, as it indeed was about a year later, by set off.

Hay v. O’Grady and subsequent cases.
21. As we have seen, the thrust of the defendant’s case was that this Court could not interfere with the determination of the learned trial judge. Mr. McDonald relied very heavily on Hay v. O’Grady [1992] 210. He relies in particular on the passage from the judgment of McCarthy J. (with whom Finlay C.J., Hederman J., O’Flaherty J. and Egan J. agreed) under the heading “Appeal from a judge alone”, at p.215ff. This very well known passage refers to the established jurisprudence in appeals from jury verdicts in civil matters:

“… a verdict of a jury as to issue of facts and the inferences to be drawn from the facts as found will not be disturbed by this Court if there is evidence to support such findings and inferences. This is so even if this Court would itself have drawn inferences from those drawn by the jury”.

Mr. Justice McCarthy went on to refer to the constitutional underpinnings of the right of appeal to the Supreme Court. He then went on to summarise the legal position relating to appeals of this sort, from a judge sitting alone, in five numbered paragraphs as follows:

“1. An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge who hears the substance of the evidence but, also, observes the manner in which it is given and the demeanour of those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial.

2. If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those finding, however voluminous and, apparently, weighty the testimony against them. The truth is not the monopoly of any majority.

3. Inferences of fact are drawn in most trials; it is said that an appellate court is in as good a position as the trial judge to draw inferences of fact. (See the judgment of Holmes L.J. in “The Gairloch,” The S.S. Aberdeen Glenline Steamship Co. v. Macken [1899] 2 I.R. 1, cited by O’Higgins C.J. in The People (Director of Public Prosecutions) v. Madden [1977] I.R. 336 at p.339). I do not accept that this is always necessarily so. It may be that the demeanour of a witness in giving evidence will, itself, lead to an appropriate inference which an appellate court would not draw. In my judgment, an appellate court should be slow to substitute its own inference of fact where such depends upon oral evidence or recollection of fact and a different inference has been drawn by the trial judge. In the drawing of inferences from circumstantial evidence, an appellate tribunal is in as good a position as the trial judge.

4. A further issue arises as to the conclusion of law to be drawn from the combination of primary fact and proper inference – in a case of this kind, was there negligence? I leave aside the question of any special circumstance applying as a test of negligence in the particular case. If, on the facts found and either on the inferences drawn by the trial judge or on the inferences drawn by the appellate court in accordance with the principles set out above, it is established to the satisfaction of the appellate court that the conclusion of the trial judge as to whether or not there was negligence on the part of the individual charged was erroneous, the order will be varied accordingly.

5. These views emphasise the importance of a clear statement, as we made in this case, by the trial judge of his findings of primary fact, the inferences to be drawn, and the conclusion that follows.

22. Hay and O’Grady is perhaps the single case most frequently referred to in appeals to this Court. In this particular case it is apt to emphasise the final point, as to the “importance of a clear statement… by the trial judge as to his findings of primary fact, the inferences to be drawn and the conclusion that follows”.

23. The Courts are required to make findings of fact across an enormous range of human activity. Sometimes the process of finding fact can be very complicated indeed as for example in a case where there is no doubt that the plaintiff has suffered injury, but the injury itself can only be explained in one of a number of ways each of which, considered in itself and the abstract, is extremely improbable. This was the situation confronting the High Court and this Court on appeal in Wright and Anor. v. AIB Finance and Leasing Ltd. and Gearys Garage Ltd. Defendants/Respondents and John Deere Ltd. Third Party/Appellant [2013] IESC 55. There, there was no doubt that an accident had occurred causing serious injury to a man who was an employee of the plaintiffs, Thomas and William Wright. The Wrights had to settle their employees claim for personal injuries for a very large sum. They then brought proceedings against the First Defendant, who were the lessors of a combine harvester machine which had injured the employee. The second-named Defendant was the supplier of the machine. The supplier added John Deere Ltd. (the manufacturer of the harvester) as a third party. The trial of liability between the Wrights and Gearys Garage and between Gearys Garage and John Deere were conducted together in the High Court. The Wrights were successful in these proceedings and the two original defendants, now plaintiffs, were found entitled to be fully indemnified by John Deere. The latter party appealed to this Court. The key issue was a complex one, and there had been strong expert (engineering and medical) evidence on both sides. It was this: did the movement of the “paddles” of the combine harvester, which caused injury to the plaintiff, take place because the engine of the machine was engaged, thereby causing the movement, or did the paddles somehow move without the engine being engaged. The learned trial judge came to a conclusion on this issue which this Court did not disturb. However, in the course of the judgment the application of Hay v. O’Grady was discussed under the heading “The trial judge’s conclusions”. At para. 7.10 the Court, per Clarke J., found as follows:

“That the trial judge was placed in a difficult position because of the unsatisfactory way in which the expert engineering evidence was presented cannot be doubted. However the findings of fact of the trial judge can, in accordance with Hay v. O’Grady only be disturbed if there was no evidential basis for them or if the reasoning of the trial judge in reaching those conclusions of fact does not stand up. It is important to recall that Hay and O’Grady is concerned specifically with the assessment of the facts by a trial judge where the trial judge is required to weigh conflicting evidence or assess the credibility or reliability of testimony. It is also clear that the findings of fact can be disturbed where there is a material and significant error in the assessment of the evidence or a failure to engage with a significant element of the evidence put forward (see for example Doyle v. Banville [2012] IESC 25)”. (Emphasis added)

The underlined phrase precisely expresses what happened in the present case: there was, for whatever reason, a “failure to engage” with the evidence of Mrs. Healy.

In Doyle v. Banville, there was a situation which two witnesses differed on a point “that was of some significant moment in the case” but the learned trial judge accepted the evidence of both in full. Clarke J. held, at para. 2.7:

“It is also important to note that part of the function of an appellate court is to ascertain whether there may have been significant and material error(s) in the way in which the trial judge reached a conclusion as to the facts. It is important to distinguish between a case where there is such an error on the one hand and a case where the trial judge simply was called upon to prefer one piece of evidence to another and does so for a stated and credible reason. In the latter case it is no function of this Court to second guess the trial judge’s view”. (Emphasis added)

Referring to the trial judge’s action in that case, in accepting in full two pieces of evidence which were in fact conflicting this Court held:

“For the reasons which I have already analysed that was not a mere tangental error but one which related to a point of some significance in the case… where there is a clear error in respect of an important fact which has the potential to materially affect the result of the case, this Court can and should intervene”.

24. If the evidence of Dr. Healy stood alone against that of Mr. Leech, then the defendant/respondent Bank would be in a very strong position in its reliance on Hay v. O’Grady. In my view the evidence of Mrs. Healy was clearly a “material and significant” element of the evidence put forward on behalf of the plaintiff. Its relevance became still more obvious when the learned trial judge found as a fact that Mrs. Healy had been present at the vital meeting contrary to the Bank’s initial stance. To find this, then to make no finding whatever as to the veracity or reliability of her evidence, seems an undoubted error, a “failure to engage”, as opposed to “a mere tangental error”. It was “one which related to a point of some significance in the case”. There was an obligation to address her testimony.

Conclusion.
25. In those circumstances, since this Court cannot substitute its view of Mrs. Healy’s evidence in circumstances where the learned trial judge has simply made no finding on the issue of its veracity and reliability, it seems appropriate to remit the matter to the High Court for a retrial.

In light of the view the learned trial judge took on the question of the assurance said to have been given by Mr. Leech to Dr. Healy, certain other issues did not arise for consideration and determination by him.

The sums claimed by the Bank against Dr. Healy, and which were the subject of a counterclaim, were partly claimed on the basis of an alleged personal liability, and partly on foot of a guarantee of the liabilities of the property company mentioned. If any assurance was found to have been given, there would be a question as to whether its terms extended to both sorts of liability, or to one only, or to neither.

Furthermore, if a different view of the alleged assurance had been taken by the learned trial judge, issues might have arisen as to whether any assurance which was offered was within the ostensible authority of Mr. Leech.

On the hearing of this appeal the grounds of appeal were amended to address the fact that, since the High Court hearing Ulster Bank had sold the debt alleged to be owing from Dr. Healy to a third party. In light of the view taken on the principal issue in the appeal, it has not been necessary to address this matter in this judgment. Since the case will now be remitted for rehearing any question of the constitution of the action, or of the pleadings, will fall within the remit of that Court.

26. I would allow the appeal, set aside the order of the High Court and remit the matter for rehearing.