THE COURT OF APPEAL
Neutral Citation Number: [2017] IECA 24
Appeal No: 2015 No. 225
FINLAY GEOGHEGAN J.
PEART J.
BINCHY J.
BETWEEN/BANK OF SCOTLAND PLC.
PLAINTIFF/RESPONDENT
RESPONDENT/APPELLANT
Appeal No. 2015 No. 226
BETWEEN:PATRICK O’CONNOR
PLAINTIFF/APPELLANT
AND
BANK OF SCOTLAND PLC., MICHAEL COTTER, AND LUKE CHARLTON, TRADING AS ERNST & YOUNG, MICHAEL COTTER TRADING AS ERNST & YOUNG, JAMES RIORDAN AND DARREN O’KEEFFE TRADING AS JAMES RIORDAN & PARTNERS, AND JAMES RIORDAN AND DARREN O’KEEFFE TRADING AS M.J.HORGAN & SONS
JUDGMENT OF THE COURT DELIVERED BY MR JUSTICE MICHAEL PEART ON THE 10th DAY OF FEBRUARY 2017
1. This is a judgment to which all members of the Court have contributed. The appellant’s first appeal (2015/225) is against an order dated 6th March 2015 (Cregan J.) in which judgment was given against him in the sum of €7,683,999.96 in proceedings brought by Bank of Scotland Plc (‘BOSI’). In the High Court he had sought to resist judgment on the basis of claims made in other proceedings which he commenced against BOSI and the other named defendants. Both proceedings were heard together. By a separate order of the same date, the reliefs sought in those proceedings were refused, and a lis pendens which he had registered against certain lands (‘Lindville’) which were mortgaged to BOSI by way of security for borrowings was vacated. The second appeal (2015/216) is against those orders.
2. This judgment will address the issues raised in the appellant’s proceedings since it is accepted that if he fails in his second appeal (2015/216) the appeal against the judgment in favour of BOSI fails and that judgment will stand.
Some background
3. Mr. O’Connor is an experienced property developer. The lands at Lindville were lands on which he sought to construct 8 houses for which planning permission had been granted. Initially he sought to develop these lands through a partnership with a Mr. O’Donovan. However, it appears that following differences between them the partnership was dissolved by agreement in late 2000. Thereafter, Mr. O’Connor sought to ‘go it alone’ in relation to the development of the Lindville sites, but he needed funding to do so - hence the BOSI borrowings which are the basis for the judgment granted against the appellant in the High Court.
4. The Lindville lands were purchased by Mr. O’Connor and Mr. O’Donovan with the assistance of a loan from Ulster Bank, who took a first charge on the entire of the Lindville lands. A map attached to that charge outlined the secured lands in red. That map is of some relevance on this appeal as we shall see in due course.
5. The Court notes that at this time Mr. O’Connor was also planning to develop two other sites at Rochestown Road, Cork, one being Ashley, and the other being Five Firs immediately adjacent to Ashley. The development at Ashley is of some relevance to two of the issues in the case, namely whether:-
6. Upon the dissolution of the partnership, Mr. O’Connor was anxious to obtain additional finance in order to discharge an agreed sum to Mr. O’Donovan on foot of the dissolution of the partnership, to pay off certain sums owed to Bank of Ireland, and to fund the ongoing development of the 8 houses at Lindville. The first BOSI loan facility letter in respect of a loan to Mr. O’Connor of the sum of €820,000 is dated 25th September 2002. It was accepted by Mr. O’Connor and in accordance with the conditions for the loan he, inter alia, executed a mortgage in favour of BOSI over eight sites at Lindville as security for those borrowings. It was a condition also that upon the sale of each site a sum of €150,000 would be repaid to BOSI and the solicitor then acting for him, Mr. Cuthbert of Martin Sheehan & Co, solicitors gave an undertaking in that regard to BOSI. In fact, prior to the drawdown of this facility Mr. O’Connor had already entered into an agreement for the sale of one of the eight Lindville sites (No.59), and Mr. Cuthbert gave an undertaking to pay over a sum of €150,000 upon the completion of that sale. Thus, the security for the loan was a charge over seven sites and an undertaking by Mr. Cuthbert to pay over €150,000 to BOSI upon the completion of the sale of each of the remaining seven sites.
7. As noted by the trial judge at para. 3 of his judgment “the plaintiff and the defendants all agreed, at the end of the trial, that there were seven major issues which needed to be considered by the Court”. He set them forth as follows:
(1) The issue of whether the common areas of “Lindville” were intended to be included in the security granted by the plaintiff to the Bank in 2002;
(2) The issue of whether, if a mistake was made in 2002, the defendant solicitors were negligent and/or in breach of duty in failing to notice that the common areas had been included in the plaintiff’s security granted to the Bank in 2002 when they were reviewing the security for the plaintiff for the 2007 loan in 2007;
(3) The issue of whether the Bank made a representation to the plaintiff on or about 12th March, 2010 that the Bank would fund the plaintiff’s developments through to completion;
(4) The issue of whether the amalgamation of further loans advanced by the respondent to the appellant in 2007 and 2008 loans by means of another loan in 2010 was unlawful and was procured by the Bank by deceit or fraud or undue influence or was in any other respect unlawful;
(5) The issue of whether the Bank represented to the plaintiff that he could spend €100,000 to complete one of the houses in Ashley to show- house standard and that the Bank would provide funds for same;
(6) The allegations against the receivers that the receivers had a conflict of interest, that the receivers had failed to carry out their duties properly and that the receivers had failed to preserve the assets.
(7) The issue of whether the defendant solicitors failed to properly advise the plaintiff in respect of the 2007, 2008 or 2010 loan offers;
First Issue - the common areas at Lindville site
8. Central to the issues raised by Mr. O’Connor in the High Court and on this appeal is that the 2002 BOSI facility letter described the security for the loan as consisting of, inter alia, a “first specific charge over the freehold land of the borrower consisting of eight sites at Blackrock Road, Cork”. There is no dispute that these are the Lindville lands, but Mr. O’Connor asserts that this charge was intended to cover only the sites themselves, and that it was never intended that the bank’s security would include what has been described as the common areas. He says that this is corroborated by the fact that BOSI’s solicitor’s letter to Mr. Cuthbert dated 2nd October 2002 enclosing the mortgage and charge and draft certificate of title is headed “Mortgage of eight sites at Blackrock Road, Cork”. In addition he relies on the fact that on page 1 of the Solicitor’s Report and Certificate of Title the security property is described as “sites 27, 28, 29, 30, 53 and 57 at Lindville, Blackrock Road, Cork”. Mr. O’Connor relies on the fact that in all these descriptions there is no reference to the common areas as forming part of the bank’s security.
9. However, as noted by the trial judge at para. 30 of his judgment, the body of the Solicitor’s Report and Certificate of Title states: “I/we have investigated the title to the property described in Part One of the Schedule hereto (hereinafter called “the property”), the tenure of which is stated therein”. The trial judge stated that it was clear therefore that the actual property over which security was being provided is that which is described in that Schedule which was in the following terms:-
“All that and those part of the lands of Lindville, Blackrock Road, Cork as more particularly delineated on the map or plan attached hereto and thereon outlined in red held firstly for the residue of a term of 500 years demised by indenture of lease 28th March, 1854 and subject to the yearly rent therein reserved, and secondly in fee simple.” [trial judge’s emphasis]
10. The schedule to the deed of mortgage and charge dated 29th October 2002 that was executed by Mr. O’Connor in favour of BOSI refers to the Lindville lands as being “as is more particularly delineated on the map and next hereto and they are on outlined in red”.
11. The reason why the appellant says that it was never intended that the common areas be included as part of the bank’s security is that there is, he maintains, within the ground comprising the common area sufficient land upon which to construct two further houses. He was permitted to call an independent expert witness, Mr. Glen Barry, in that regard, even though his report was produced only after the commencement of the hearing. The defendant’s expert, Mr. Crean, had opined that it was extremely unlikely that a planning permission for two additional houses could ever be obtained, firstly, because following some public protests the council had already taken the common areas in charge; secondly, the appellant had failed in his judicial review challenge to the council’s decision in that regard; and thirdly, because two applications by the appellant for such a planning permission had already been refused. Nonetheless, this was why the appellant was seeking to establish that the common areas were never intended to be included in the bank’s security. That evidence would be relevant to the question of damages if the trial judge had been satisfied that the appellant was correct that those areas were not intended to be included in the bank’s security, but in circumstances where he decided otherwise for the reasons he gave, any conclusion on the competing evidence of Mr. Barry and Mr. Crean was unnecessary.
12. Before reaching any conclusions on this issue, the trial judge had noted that even though this error as to the inclusion of the common areas in the security given to BOSI is said to have occurred in 2002, while Mr. Cuthbert was acting for Mr. O’Connor, he never brought proceedings against either Mr. Cuthbert or the firm of Martin Sheehan & Company. Rather, he has sued the solicitors who were acting for him in 2007, when a new facility issued which required a continuation of the 2002 facility, and on the basis that those solicitors had failed to properly protect him by permitting that extension of the 2002 facility which had included the common areas, and which, he says, should not have been included.
13. Having referred to the matters to which I have referred in paras. 6, 7 and 8 above, the trial judge went on to arrive at his conclusion on this issue in the light of evidence adduced. It is convenient to set forth his conclusions on this issue by setting forth what he has stated from paras 30.5 to 32 of his judgment as follows:
“(5.) Mr. Cuthbert gave evidence on behalf of the plaintiff. Mr. Cuthbert was the plaintiff’s solicitor at the time of the 2002 loan facility and 2002 mortgage and charge over Lindville. He was a frank and honest witness. Mr. Cuthbert’s evidence was that he would never have allowed a client to sign a mortgage or charge (where that mortgage or charge referred to a map) without reviewing the map carefully with the client. His evidence was that (although he had no distinct recollection of the transaction twelve years ago) he was of the view that he would have followed his normal procedure with Mr. O’Connor in relation to the signing of the mortgage and charge in 2002. If that were the case, then clearly Mr. O’Connor would have seen the map and would have known that the mortgage and charge were created over the sites and the common areas at Lindville.
(6.) Mr. Cuthbert also gave evidence that if he did not follow his normal procedure in 2002 that was simply because Mr. O’Connor had such an intimate knowledge of the Lindville site because of his experience in purchasing the site, developing the site, financing the site and because of his involvement in agreeing the map with his partner Mr. O’Donovan some time previously. He also said that, even if he did not specifically get Mr. O’Connor to review the map before he signed the mortgage, he had no doubt whatsoever that Mr. O’Connor was intimately familiar with the map. Given that this evidence was from a witness on behalf of the plaintiff, and was the plaintiff’s solicitor at the time of this transaction, I am of the view that it is clear beyond doubt that Mr. O’Connor was fully aware that the common areas were included in the mortgage in 2002
(7.) It is also important that Ulster Bank originally had a charge over all the common areas and sites at Lindville. That is agreed by all parties. The refinancing which Mr. O’Connor was seeking to obtain was refinancing from BOSI to pay off Ulster Bank, (and also to pay off other debts he owed to Bank of Ireland and Mr. O’Donovan). Therefore it makes sense that BOSI would have obtained the same security as Ulster Bank. As Ulster Bank had security over all the common areas and all the sites, it makes sense that BOSI was also obtaining security over all the common areas and all the sites (with the exclusion of a number of sites which had been sold by that time).
(8.) When questioned as to whether Mr. O’Connor intended at any time to give security to BOSI which was a lesser security than that offered to Ulster Bank, Mr. O’Connor’s evidence was uncertain. In my view it was not clear that he intended to offer BOSI less security than he had granted to Ulster Bank.
(9.) Moreover, when asked whether, in effect, by granting the Bank security over the sites only, BOSI would have been landlocked by virtue of the fact that they had no access to the common areas and no rights of way, Mr. O’Connor indicated that they could have been included in an extra conveyancing document but were not. However there was no evidence of any discussion at the time of BOSI or the plaintiff discussing rights of way or other conveyancing documents.
(10.) When asked did he intend to frustrate the security he offered to BOSI his reply was an emphatic no - that he did not mean to do so.
(11.) I am not convinced that Mr. O’Connor intended to grant less security to Bank of Scotland (Ireland) than had been granted to Ulster Bank. Indeed the entire tenor of his evidence was that this was a very fraught time and he was focused on obtaining the finance to pay off his former partner and to pay off Ulster Bank. Thus there was no particular reason as to why he would have contested the transfer of the common areas.
(12.) Likewise his evidence is that he did not wish to frustrate BOSI’s security. If that be so, then it follows - given that there was no additional wayleave agreement - that the parties must have intended to include all the common areas, roads and services as part of the agreement. If that were not so then BOSI’s sites would have been landlocked and Mr. O’Connor would have had an advantage which was not agreed or intended between the parties.
(13.) It is also of some significance that this schedule of the property is in fact on the page immediately before the signature page. The signature page therefore follows immediately after Mr. O’Connor assigned the mortgage and charge and this signature has been witnessed by his solicitor Mr. Cuthbert. A copy of the map was produced in court and the map is then attached as a following page. The map clearly includes, within the red interlining, the common areas of Lindville.
(14.) Another reason, in my view, why the map included the common areas and was always intended by all parties to include the common areas was that Mr. O’Connor gave evidence to the court that the map drawing up these sites and these common areas was drawn up by Mr. O’Donovan’s solicitor and interlined in red at the time of the partnership dissolution agreement.
(15.) This map appears to have formed the basis for the map attached to the mortgage and charge dated September 2002. There is however a difference between the two maps in that the map drawn up for the dissolution of the partnership agreement included extra sites whereas the map attached to the mortgage in charge has been interlined in red to exclude a number of sites, (which had been sold). Mr. Murphy SC for the Bank, submitted to the court - and it seems a reasonable inference - that what in fact happened was that the map drawn up for the dissolution of the partnership agreement was photocopied and then re-interlined in red marker by some person so that it would properly reflect the provisions of the mortgage with BOSI. This appears to be the case because there is a stamp on the dissolution of partnership agreement which is a taxing/revenue stamp and which is peculiar to each document. It appears that exactly the same stamp appears on the document attached to the deed of mortgage and charge in 2002. (That seems a likely explanation as to what happened but it is by no means hugely important to the matters which I have to decide).
(16.) It is surprising that Mr. O’Connor could have signed a document such as a mortgage document which on the previous page refers to a map but which Mr. O’Connor now says he has no recollection of seeing and is of the view that it was not there. I do not accept this evidence. In my view, given that the solicitors report and certificate of title refer to a map, and, given that the mortgage of 29th October, 2002 also refers to a map, it is highly likely that this map was drawn up at that time and appended to the agreement.
(17.) Moreover Mr. O’Connor has not put forward a scintilla of evidence - beyond his bare assertion - that it was not intended that the common areas would be transferred to BOSI in February 2002. He seeks to rely on his contemporaneous notes of the time which on occasion refer to the transfer of eight sites. Insofar as Mr. O’Connor put forward any evidence that he did not intend to transfer the common areas to BOSI I do not accept his evidence. I have no doubt that Mr. O’Connor knew full well at the time what he was conveying to BOSI - which was the eight sites plus all the common areas.
(31.) I believe that what Mr O’ Connor has sought to do in this case is to exploit a certain looseness of language in certain parts of the documents (for example in the solicitors correspondence and in the solicitors certificate and report of title) - which refer to eight sites but which do not refer to the common areas - to seek to argue that therefore there was no intention to convey the common areas but only an intention to convey the sites. In my view his evidence on this is non- existent and his case is untenable.
Conclusion on the first issue
(32.) Having heard evidence on this issue from the plaintiff, the plaintiff’s solicitor and the Bank’s solicitor, I therefore find as a fact that it was at all times the plaintiff’s - and the Bank’s - intention to mortgage and charge the common areas to BOSI and that the plaintiff at all times actually knew that he was in fact mortgaging and charging the common areas of Lindville and the relevant sites to BOSI in September 2002. I therefore conclude that the Plaintiff’s case on the first issue is unfounded.”
14. In his notice of appeal the appellant states a ground of appeal (ground B) which was not part of the grounds which he relied upon in the High Court - namely the doctrine of Non Est Factum. In other words, in his notice of appeal he states for the first time that mortgage document dated 2002, on which the bank relies “is not the document that [the] Appellant signed on 4th October 2002”. He gives three reasons for his reliance on that ground of appeal, two of which are dealt with later in this judgment. The third reason is one which he seeks raise for the first time on this appeal, not having done so in the High Court, namely that the document upon which the bank relies is not the document which he signed on 4th October 2002. Given that it was not raised in the High Court, this Court does not propose to address it as it is clear that it is not one upon which the appellant is now entitled to rely. In an effort to identify the issues that required to be determined the trial judge on Day 10 of the hearing identified seven precise issues that seemed to him to arise for determination. The appellant agreed that these were the issues in the case. Non Est Factum is not one of the issues identified. Appropriate allowance will be made to self-representing plaintiffs and defendants, and some latitude will be permitted in the application of strict rules that will otherwise apply. At the commencement of his judgment the trial judge refers to this latitude, indeed assistance, that was provided to the appellant. But a self- representing party cannot be permitted to depart completely from the rules that apply, and in particular cannot be permitted to argue on appeal an issue to which evidence would be relevant, which was not raised at first instance. Non Est Factum is not therefore a ground for determination on this appeal.
15. At a directions hearing in relation to this appeal, the respondents were directed to provide to the appellant a written submission outlining the principles in Hay v. O’Grady [1992] 1 I.R. 217, as applied in Northern Bank Finance Limited v. Charlton [1979] I.R. 149. They did so. That submission identified for the appellant the difficult task which he faced in seeking to overturn the very clearly stated findings of fact made by the trial judge in relation to the common areas issue in this case. Without stating these well-known principles in full detail, it can be briefly stated that in general the appellate court should not interfere with findings of fact made in the court below where there was credible evidence to support those findings which the trial judge accepted. The appellant submits that this Court can reach its own conclusions of fact because even under Hay v. O’Grady principles the evidence upon which the court relies must be credible evidence and he submits that it is not, and also in so far as the judge drew inferences in order to support his conclusions, such inferences were not reasonably drawn and can be revisited by this Court. While the appellant is correct in this regard as a general statement on Hay v. O’Grady, the Court is satisfied that he has failed to establish any lack of credibility in relation to the evidence upon which the trial judge founded his conclusions, either in relation to facts or inferences.
16. In the present case the plaintiff gave evidence that the common areas were not intended to be included as part of the BOSI loan security in 2002, and by extension as security for the later loans in 2007, 2008 and 2010. The trial judge explicitly stated that he did not accept that evidence. The trial judge heard all the evidence and observed all the witnesses who gave it. He was entitled to form his clear view of that evidence and prefer the evidence of other witnesses to the evidence given by the plaintiff himself. Indeed, part of the evidence upon which he has stated that he relied for his conclusion, and was clearly entitled to accept, was evidence given by the appellant’s own solicitor, Mr. Cuthbert. His conclusions on the common areas issue is firmly based upon evidence given to him and which he was entitled to accept, and in my view the appellant has failed to overcome the obstacle presented to him by Hay v. O’Grady. This Court should not interfere with his findings of fact on this issue.
17. The respondents have pointed out that on this appeal the appellant has sought to take issue with some of the evidence given in the High Court but to which he voiced no objection in the High Court, and submit that this is not permitted on appeal. This Court agrees. Where evidence given by a witness at first instance is not challenged, it can be presumed to be not disputed, and the judge is entitled to accept it. Objection to it cannot be voiced for the first time on appeal. Similarly, it is clearly the case that he may not on appeal raise issue for the first time that he never raised in the court below. In so far as such issues have been raised for the first time on appeal, the Court does not propose to address them.
18. The rejection of the appellant’s appeal on the common areas issue has a cascading or domino effect into some of the other issues in the case.
Second issue - Negligence against the solicitor defendants in 2007
19. By 2007 the appellant had obtained two further loan facilities from BOSI. The 2003 loan facility was for two years in the sum of €750,000. Its purpose was to restructure the existing 2002 loan, and to fund the construction of two detached houses at Lindville. The security was stated to be an extension of the bank’s first specific charge over the “freehold land incorporating five sites in Lindville …”. The bank was also to receive a payment of €150,000 from the proceeds of sale of each of the two houses to be constructed. The reference to five sites clearly references that two sites had been disposed of by 2003. By this time Mr. Cuthbert of Sheehan & Co was for some reason no longer acting for Mr. O’Connor. His solicitor at that date, according to his own evidence was Mr. James Riordan of Messrs. M.J. Horgan & Sons.
20. In June 2004 the appellant signed and accepted a further loan facility letter from BOSI - this time in the sum of €900,000 to enable him to complete the construction of four houses at Lindville. The facility was for 2 years, and the security to be provided was “an extension of [the BOSI] first specific charge over the freehold land and premises of the borrower consisting of one completed house and four sites at Lindville”. His acceptance of this facility was signed by James Riordan, solicitor. Repayment was intended from the sale of the houses specified, but in any event by the 16th June 2006, as noted by the trial judge.
21. Later in 2006 the appellant was interested in purchasing the lands at Ashley for development purposes. The trial judge sets out his summary of the events leading up to the purchase of these lands, and in particular the appellant’s evidence that he contacted Michael Cotter of Ernst & Young in relation to financing the purchase through BOSI. The trial judge notes that Mr. Cotter made contact with a Mr. Roy Barry in BOSI. A meeting was arranged with BOSI which the appellant and Mr. Cotter attended when details of the purchase and development costs were discussed. The appellant stated that ahead of the auction that was to take place on the 12th December 2006 he was assured by BOSI that the funding would be made available, and even though he had not received the facility letter itself by the date of the auction he was assured that the funding would be provided. On that basis he purchased the Ashley lands at auction for the sum of €1.51 million, and paid a deposit of 10% from his own funds.
22. Some weeks after the auction BOSI issued a facility letter dated 5th February 2007 indicating the approval of a loan facility in the sum of €4.34 million. The loan term was again 2 years, and its purpose was to:-
(a) the purchase the Ashley land,
(b) to cover the cost of constructing the houses at Ashley,
(c) to cover rolled-up interest, and
(d) to refinance the previous BOSI facility. The security was a first charge on the Ashley land, as well as an extension of BOSI’s existing charge on the land at Lindville which by then consisted of three completed houses. Mr. O’Riordan was named as the appellant’s solicitor. In fact, according to the trial judge, Mr. O’Riordan’s partner, Mr. Darren O’Keeffe, also acted in the matter.
23. The appellant has sued these solicitors in negligence in relation to their advice and handling of the 2007 loan facility and security in that they are said to have failed to notice that an error had been made back in 2002 by the previous solicitors acting for the appellant, in that the security provided in 2002 included the common areas, as already described above, and accordingly that they acted negligently by including those common areas in the security being provided for the 2007 facility by way of extension of the 2002 BOSI charge. It is alleged that the firm was negligent in failing to advise him of the error in the 2002 security documentation. He has also sued them on the basis that they had a conflict of interest in that they also acted from time to time on behalf of BOSI in relation to other matters, but also in relation to putting in place the BOSI security for the 2002 and 2004 loans. That separate conflict of interest issue will be considered in due course.
24. On the negligence issue, however, the trial judge concluded as follows at para. 50 of his judgment:
“However, in my view, the plaintiff’s allegations in this regard are also completely unfounded. His allegations against the defendant’s solicitors in relation to the 2007 mortgage rest crucially on the assumption that the 2002 mortgage wrongly included the common areas of the Lindville Development. However, for the reasons set out earlier in my judgment, I have concluded that the common areas were indeed included - and properly included - in the 2002 mortgage. That being so, the defendant’s solicitors could not be found liable for any wrongdoing or negligence in respect of the 2007 mortgage when it was clear that all parties intended the existing security to continue and to be extended to cover additional loans. Of necessity, this included the common areas. I would therefore dismiss the plaintiff’s second allegation.”
25. This Court is satisfied that in order to successfully challenge the trial judge’s conclusions in relation to negligence on the part of the solicitor defendants, he would have to have succeeded in overturning the trial judge’s conclusions in relation to the common areas. Not having done so, the appeal on the negligence issue must inevitably fail.
Third issue - BOSI’s alleged representation on 12th March 2010 that it would fund the Ashley development to completion
26. By April 2008 the appellant wanted to purchase additional land for development which was immediately adjacent to the Ashley site. This site is referred to as the Five Firs site. He wanted to build two more houses on this site and sought funding from BOSI both for the purchase cost and the cost of construction, rolled up interest and stamp duty. Having applied for a facility he received a facility letter dated 3rd April 2008. This loan was stated to be for a period of three years and in the amount of €1.88 million. The specified security was a first charge over the Five Firs land, an extension of the BOSI charge over the adjoining Ashley land, as well as an extension of the BOSI mortgage and charge over the Lindville lands which still comprised three completed houses.
27. The trial judge noted in particular a condition precedent to drawdown which was contained in this 2008 facility letter as follows:-
“Before release of funds in respect of the construction finance the Bank to be in receipt of confirmation from the borrower’s solicitors that a minimum of two houses of the four in phase one at [Ashley] have contracted sales in place.”
Having drawn attention to this clause, the trial judge went on to state that “the plaintiff at all times has accepted that no contracted sales in Ashley were ever put in place.”
28. The trial judge noted that this facility letter was to be accepted by the appellant not later than the 3rd May 2008 but that it was not signed until 17th November 2008. The letter specified that these funds had to be drawn down by the 3rd April 2009. While at this time it was anticipated that the Five Firs purchase would take place shortly after the 3rd April 2008, in fact that did not occur until November 2008. The appellant sought to lay emphasis on these facts, according to the trial judge, in order to show that there was some flexibility on the part of BOSI in relation to financing. In that regard, as stated, this facility letter was not signed by the appellant until November 2008 even though it had specified that it must be accepted by 3rd April 2008. He says that he was advised by Mr. Daly of BOSI that when it was signed in November 2008 instead of April 2008 “all dates would go forward” and that he should have “no concerns about the drawdown date for the loan”. The trial judge noted that there was no dispute about that, since the bank had later written to the plaintiff stating that the new latest date for drawdown would be 20th November 2011, which was in fact two years from acceptance of the loan. Nevertheless, as noted also by the trial judge, the condition precedent to drawdown, namely that his solicitor must provide “confirmation from the borrower’s solicitors that a minimum of two houses of the four in phase 1 at [Ashley] have contracted sales in place” still had to be complied with.
29. In 2009 the appellant made a further application to BOSI for funding. This was turned down because there was still a requirement that two pre-sales be confirmed as set forth above before the funding for the completion of the development could be drawn down. The trial judge noted that BOSI had gone on to state that it would reconsider the proposal “in the light of any potential sales of property - specifically the sale of the Lindville houses which would reduce the BOSI debt”. This letter also confirmed that the drawdown, subject to the two pre-sales, was valid until 20th November 2011. The trial judge stated that this pre-sale requirement before any further funding could be drawn down in order to complete the Ashley development was still in place, and that this was an important fact given the appellant’s contention in the proceedings that BOSI, (through Mr Aidan McCarthy) had made an express representation to him on the 12th March 2010 “that BOSI would fund the project through to completion” (i.e. irrespective of completed sales).
The meeting on 12th March 2010:
30. By this time the financial crisis was well underway, and like many other developers of property the appellant found himself in some financial difficulty since there was little or no demand for the houses that he had built and wanted to build. He and the bank discussed these issues and his financial needs. In fact the bank appointed new personnel to deal with developers in this sort of difficulty, including the plaintiff.
31. The appellant made the case in the High Court that the bank breached a representation made to him, upon which he relied and was entitled to rely, on the 12th March 2010 as he and Aidan McCarthy of BOSI were walking the Ashley site. The trial judge notes that this representation was that BOSI would finance the houses and sites at Ashley to completion if the appellant gave BOSI additional security over two unencumbered houses that he owned in Douglas, which had a combined value of €500,000. Before setting out his conclusions in relation to this alleged representation the trial judge discussed the context in which the meeting on the 12th March 2010 took place, and he reviewed the evidence that the appellant had given, and also that given by Aidan McCarthy of the bank. He first of all referred to the 2007 loan in the sum of €4.34 million which had been due for repayment by March 2009, but which had been extended by 12 months to March 2010. There was also the 2008 loan in the sum of €1.8 million which included the purchase monies for the Five Firs land. Even though the appellant had been granted planning permission for two houses on the Five Firs land, these had not been built. This loan included funds for the construction of those two houses, and these had to be drawn down not later than 20th November 2011, but that drawdown, as has already been referred to, was at all times subject to the pre-condition of his solicitor’s confirmation of contracts in existence for two pre-sales on the Ashley site.
32. In the light of these circumstances, the trial judge was satisfied that the appellant’s financial position was “extremely fragile” by the time he met with Aidan McCarthy on the 12th March 2010, exacerbated by the state of the country’s economy, and the fact that while he had spent some €1.4 million on the partial construction of the houses on the Ashley site, none was completed and they remained unsold. The site in its unfinished state was unsightly for any persons who might be interested in buying a house at Ashley. He could not satisfy the pre-sale pre-condition for drawdown. The trial judge noted also that one particular possible purchaser wanted confirmation that funding was in place for the build out the remaining houses on the Ashley site to completion, and that in response to that concern, Aidan McCarthy had written a letter dated 17th February 2010 to Savills, the selling agents, in the following terms:
“Dear Catherine,
As discussed, Pat O’Connor has advised the Bank that you currently have a live prospect for number six Ashley which is presently under construction.
I confirm that the Bank, subject to a satisfactory contract of sale being achieved, and the Bank being satisfied with same, we would support the completion of number six to the showhouse standard including relevant landscaping, site access, tarring, lighting and footpaths would be completed for the developed area of the site.
Yours sincerely,
Aidan McCarthy, BOSI.” [emphasis added]
33. Insofar as the appellant was seeking to characterise this letter as one where the bank stated that it would support the completion of number 6 to showhouse standard, the trial judge said that such an interpretation was not open in the light of the full text of the letter. By that he meant that the bank had indicated its support for the completion of number six, “but only subject to a satisfactory contracted sale being achieved” and that “the plaintiff appeared to read in the letter only of what he wanted to read”. The trial judge concluded that this letter was consistent with the earlier BOSI position that it would provide financing only upon confirmation of concluded contracts for two houses, albeit that in relation to number six it was relaxing this requirement in the event that it received a single concluded contract in relation to that particular house. He went on to state:-
“However, it is clear that BOSI was not offering to provide financing for the completion of the site in any way which would lead the plaintiff to believe that BOSI was waving its condition precedent about completed sales”.
34. In relation to the meeting which took place on 12 March 2010 on the Ashley site and upon which the appellant relies for his representation argument the trial judge thought it appropriate to set out the plaintiff’s evidence from Day 2, page 127 of the transcript as follows:
35. The trial judge then described this evidence as being the height of the plaintiff’s evidence in respect of his case against the bank that Aidan McCarthy had made a representation to them upon which he relied. He stated that, according to the plaintiff, the nature of that representation was that if he gave the additional security of two houses to the bank, it would in return provide full funding for the completion of the estate.
36. Having so stated, the trial judge then considered the evidence that had been given by Mr. McCarthy. He summarises that evidence between paras. 76 and 84 of his judgment. Mr. McCarthy had referred to an earlier meeting with Mr. O’Connor on the Ashley site in February 2010 on which occasion it was clear that the development was only partially completed, that the access to the showhouse was unfinished, and that the common areas were unsightly and unfinished. He had gone on to state that by 12th March 2010 no sales had materialised and he had sought a further meeting. He had also earlier given evidence that the 2007 loan agreement had been fully drawn down since 20th September 2009, that direct debits in respect of interest had been rejected and had not been discharged and that the account was overdrawn in the sum of €62,815.48 sent and was therefore in default.
37. Mr. McCarthy stated in his evidence that at this meeting Mr. O’Connor had told him that the overall appearance of the site was contributing to the lack of offers and that he wanted to develop the site, but needed further finance in order to do so, and in particular to complete the common areas which, he believed, was putting off potential buyers.
38. Mr. McCarthy stated in his evidence, according to the trial judge, that he told Mr. O’Connor that given the specific precondition contained in the 2008 loan facility letter that the bank would advance further funds only if contracted sales were in place, the bank would require an additional security over the plaintiff’s unencumbered investment properties. According to Mr. McCarthy, he also told Mr. O’Connor that even though his statement of means had referred to his principal private residence as being unencumbered and having a value of €1,150,000, this would not be sought as additional security for the proposed construction finance. He also told Mr. O’Connor at the meeting that since Mr. O’Connor was continuing to devote his time and energy into upgrading the Ashley site in order to secure a sale, the bank would not require him to commit his rental income from his investment properties to the bank, and that, instead, Mr. O’Connor could use that rental income in order to finance his living expenses.
39. According to the trial judge, Mr. McCarthy went on to state in his evidence that in accordance with BOSI policy, it would have to retain a quantity surveyor in relation to the actual amount of finance that would be required to complete the common areas or to complete the property itself, and accordingly that any further application for funding by Mr. O’Connor would have to be accompanied by such a report from a quantity surveyor.
40. In relation to whether Mr. McCarthy did or did not make a representation as alleged by Mr. O’Connor at that meeting, the trial judge stated that his evidence was “clear and unambiguous”, and was stated in the following terms by reference to the transcript:-
“Your honour and I hope I am as clear as I possibly can [be] on this. I agreed nothing with Mr. O’Connor on that site. What I agreed to do was make a proposal to the Bank. I outlined that proposal to Mr. O’Connor and that proposal was part of the meeting that we had and the strategy discussed.”
41. The trial judge went on to note that Mr. McCarthy had categorically stated that under no circumstances would he have made any representation to Mr. O’Connor that the bank would have provided finance to complete the development at Ashley without any preconditions. He said that he was an experienced banker and would never make any representation of that nature, and moreover, that he did not have the power to make any such representation because any such loan could only be approved by the credit committee, and only after all the relevant documentation had been obtained. He characterised the discussion on 12th March 2010 as being simply a discussion in general terms about how the bank and Mr. O’Connor might move forward together in an effort to ensure the best outcome for him and the bank by permitting further finance to complete the common areas so that potential purchasers would be encouraged to buy so that some profits would be generated in order to reduce the banks loan exposure and/or to complete another house which in turn could be sold.
42. The bank obtained a quantity surveyor report from Mr. Eoin Stack, and he gave evidence by reference to his witness statement which was accepted in full. As noted by the trial judge, his report suggested that the outstanding work at Ashley would have to be carried out in three phases. Phase 1 comprised the works required to complete units one, two and four externally and to complete the common areas including roads, parks etc in order to facilitate the proposed sale of the completed showhouse on the site. Phase 2 comprised the works required to complete units one, two and four internally, but with only unit two having the fit out completed to showhouse standard, and the works required construction finished units five and six externally. Phase 3 then comprised the works necessary to complete the internal fit out of units one and 4 to showhouse standard, and to complete units five and six internally to showhouse standard.
43. At para. 86 of his judgment, the trial judge notes that the bank approved another facility in May 2010 on foot of which a sum of €225,000 was released to the appellant to enable him to complete the common areas at Ashley, and to complete phase 1 of the works set out in Mr. Stack’s report. The May 2010 facility letter indicated approval for total borrowings of €5.4 million. Apart from the sum of €225,000 which was drawn down in order to complete those works, this facility was for the purposes also of refinancing the 2007 and 2008 borrowings in respect of which a sum of €5.1 million was owing, and to cover rolled up interest of €80,000. That loan agreement was accepted by the plaintiff on 9th June 2010 after he had received legal advice. His signature on the acceptance form was witnessed by his solicitor, Mr. O’Keeffe.
44. That 2010 facility letter gives rise to the appellant’s fourth issue in these proceedings, which will be dealt with shortly, and which is an allegation of deceit and undue influence in relation to the amalgamation of the 2007 and 2008 facilities with the 2010 facility. For the moment, however, it is necessary to set out the trial judge’s conclusions in relation to the appellant’s allegation that Mr. McCarthy made a representation at the meeting which took place on 12th March 2010, that BOSI would fund the Ashley development to completion.
45. The trial judge’s conclusions on the third issue regarding the representation contained at paras 90-92 of his judgment. Rather than summarise these conclusions, it is convenient to set out them in full:
“90. It may well be that the plaintiff left that meeting of 12th March 2010 in the full knowledge - as he believed - that he had full funding to complete the Ashley and Five Firs development in total. However, there was absolutely no foundation for the plaintiff’s belief or knowledge in that regard. Indeed it is absolutely fanciful for the plaintiff to suggest otherwise. The plaintiff is an experienced property developer. He had been negotiating loan facilities and loan agreements with BOSI for over eight years at this period in time. He had at this stage, no less than five facility agreements concluded with BOSI. He was developing properties in three separate sites - Lindville, Ashley and Five Firs. He was an experienced negotiator who was at all times legally advised as to the full effect of loan agreements and contractual obligations. Throughout his evidence, he seemed quite clear about various legal obligations. Indeed, when the contractual obligations were in his favour, he seemed particularly attuned and to legal niceties. It was only when legal obligations were sought to be construed against him that he sought to contend that they had no application or that they could be explained away on the basis of some vague representations made by some bank official on some unknown date. It is quite clear from the evidence that there was no such representation made by Aidan McCarthy that BOSI would finance the development through to completion. It is also quite clear from the evidence that there was absolutely no agreement between BOSI and Mr. O’Connor that BOSI would complete the developments through to completion. The only agreement which BOSI maintained at all times both before and after 12th March 2010 was that BOSI was prepared to honour its loan facility agreement provided that the condition precedents were met (i.e. that there would be a minimum of two contracted sales in Ashley before construction finance for the two houses in Five Firs was advanced.
91. Moreover the plaintiff elsewhere in his evidence sought to argue that by virtue of the fact that BOSI had sought to rely on Mr. Stack’s QS report that that showed an indication that BOSI was prepared to agree to finance the development to completion. It shows nothing of the sort. The only reason Mr. Stack was retained was because BOSI was of the view that perhaps the full €750,000 did not need to be drawn down to construct both houses because there had been a drop in construction costs for the construction of houses between 2008 and 2010 given the conditions in the market.
92. The only witnesses to the alleged representation made on 12th March 2010 by Mr. McCarthy, on behalf of BOSI, where Mr. O’Connor and Mr. McCarthy. Having heard the evidence of both witnesses in great detail on this point, I am quite satisfied that Mr. McCarthy made no representation of any kind to Mr. O’Connor that if he granted extra security, BOSI would fund the development through to completion and I make a finding of fact in that regard. Mr. O’Connor either misheard or misunderstood what was said by Mr. McCarthy.”
46. The trial judge has clearly stated that he has made a finding of fact in this regard. Accordingly, the appellant faces the same uphill battle which he faced in relation to the earlier common areas issue by reference to the principles in Hay v. O’Grady. He must satisfy this court on appeal that there was no credible evidential basis for his conclusion as to fact.
47. The appellant’s written submissions and indeed his notice of appeal are extensive, running to many pages even on this single issue. He sets out at great length the many ways in which he considers that the trial judge erred in his consideration of the competing versions of what occurred both at the meeting on the 12th March 2010, and both before and after it. But what he has failed to do is establish any basis for deciding that there was no evidence given by the bank upon which the trial judge could properly rely as the basis for his conclusions regarding the alleged misrepresentation. Clearly the evidence given by Mr. McCarthy was evidence which he was entitled to prefer over other evidence given by Mr. O’Connor. Where there is evidence given by one side, and very different evidence given by the other, the trial judge must consider each, but eventually decide on the basis of all the evidence which he has heard, and by reference to any available documentary evidence, and all the surrounding facts and circumstances of which he has been apprised during the hearing, which evidence he considers to be more probably descriptive of the correct state of affairs, and which evidence to reject. His conclusions are reached on the balance of probabilities. In this case that is what the trial judge did. In his judgment he has made it abundantly clear that he has preferred the evidence of Mr. McCarthy to that of Mr. O’Connor. He has identified the evidence which he relies upon for his overall conclusion that the bank did not represent that it would provide full funding for the completion of Ashley in the way contended for by Mr. O’Connor. His reasoning is clear. In this Court’s view there was evidence which he was entitled to accept which supports the conclusion that he reached. Even though there was contrary evidence given by Mr. O’Connor, this Court may not interfere with the trial judge’s findings of fact on this issue.
48. The Court wishes to make it clear to Mr. O’Connor that even though the Court’s conclusions are stated relatively briefly, regard has been had to his very extensive written submissions, his oral submissions, as well as the contents of his notice of appeal.
Fourth issue - the amalgamation of the 2007 and 2008 loans
49. The appellant has sought to characterise the calling of the meeting for the 12th March 2010 as a strategy whereby it sought to induce him into providing the bank with further security even though it knew that he was not a suitable client for further borrowings, in breach of good banking practice. He considers that he was deceived by Mr. McCarthy as to the true nature of the funding being provided on the basis of Mr. Stack’s report, and that at the 12th March 2010 meeting he was duped into providing additional security to the bank on a false promise that full funding would be provided in order to complete the development at Ashley. In his written submissions he has alleged undue influence and “economic duress” against the bank. He considers that the bank in all the circumstances known to it at the time took unfair advantage of him, knowing the difficult financial position that he was in at this time, and in effect tricked him into giving the bank additional security.
50. As seen above, this meeting resulted in a new loan facility in May 2010 (the 2010 facility). It was in the sum of €5.4 million, of which €225,000 was released to facilitate the completion of the common areas of the Ashley in order to help the sale of the houses there, and €5.1 million was allocated to clear what was already owed on the 2007 and 2008 facilities which were in default. The balance represented rolled-up interest. The trial judge noted that the appellant had signed his acceptance of this 2010 loan facility letter on the 9th June 2010 and that his signature was witnessed by his solicitor.
51. The appellant has submitted that the trial judge failed to take proper account of the all the relevant facts relating to the amalgamation of the 2007 and 2008 loans, and that this was not discussed by the bank with him at the time. He says that at a meeting with Mr. McCarthy in May 2010 he was told by him that this amalgamation was solely for accounting purposes, so that there would be just one loan account instead of two or three. He says that he was never told that “the 2008 facility was being withdrawn and / or cancelled, either by Mr. McCarthy or by his own solicitors.
52. The trial judge found as a fact that he was so aware by the 8th June 2010. The appellant submits that the judge erred in this conclusion because he failed to have regard to the fact that Mr. O’Keeffe’s notes to which he referred in his evidence were not contemporaneous notes, but rather were constructed in 2011 after the appellant had spoken to Mr. O’Keeffe’s partner, Mr Riordan. The appellant has stated his view that Mr. O’Keeffe gave false evidence before the trial judge and that this is not referred to in his judgment.
53. The appellant has stated that by the date of the May 2010 loan facility, there was still life left in the 2008 facility since drawdown had to be completed by November 2011, and there was still a sum of €750,000 available to be drawn down on it. He says that by the amalgamation of that loan with the 2010 loan he lost the benefit of that facility, and that this was never explained to him. However, he overlooks the fact that the pre-sales condition to further drawdown was still in place, and for the reasons already stated, there were no such pre-sales in place, partly because the common areas were incomplete making the entire site unsightly for prospective purchasers. There was evidence given, as already set forth, that the partial drawdown of €225,000 from the 2010 facility was to enable the common areas to be finished out in order to better attract potential purchasers.
54. The trial judge set out the competing arguments in relation to this issue. He noted the appellant’s allegation of fraud and deceit on the part of the bank in relation to the amalgamation of the 2007/2008 loans. He noted the bank’s evidence that the appellant was fully informed about that amalgamation with the May 2010 facility, and that additional funds were being advanced with the provision of additional security by him. The bank’s evidence was that this was all clear from the facility letter itself, and in addition that Mr. McCarthy had told the appellant about it when he collected the facility letter from Mr. McCarthy, and further that the appellant had received his own independent advice on the matter as evidenced by the fact that his acceptance of the facility was witnessed by his own solicitor.
55. The appellant gave evidence in the High Court that when he collected the 2010 facility letter from Mr. McCarthy he saw that it was not in compliance with what he thought was agreed with Mr. McCarthy at the 12th March 2010 meeting, and he says that he went to see his solicitor. The trial judge stated at para. 100 of his judgment that this non-compliance was “because the development finance in the loan agreement was limited to €225,000 and also because it was due to be repaid in six months, i.e. in December 2010 and not in November 2011 as his 2008 loan advised”.
56. The trial judge has set out an account of evidence given at trial in relation to this matter both by the appellant and by Mr. McCarthy. During his cross-examination of Mr. McCarthy, the appellant had asked why “any man in his right mind would give up the April 2008 loan because it permitted construction finance of €750,000 until November 2011 and it was impossible to obtain finance from any other bank at that time”. The trial judge notes Mr. McCarthy’s reply which he says was “clear”, which was:
“The plaintiff had simply run out of money and run out of options. The February 2007 loan had been drawn down in full; the funds available under the April 2008 loan could not be drawn down until the plaintiff had obtained pre-sales. He could not obtain pre-sales because of the unfinished condition of the estate. He desperately needed finance to complete the common areas in Ashley which might then, with a fair wind, permit to sell the showhouse. If he sold the showhouse he then might be able to sell another house. If he achieved these two pre-sales then he might obtain further construction costs to finish out the other houses.”
57. The trial judge stated that Mr. McCarthy’s evidence was credible and showed clearly the commercial imperatives which compelled the appellant at that time to refinance his 2007 and 2008 loans into the May 2010 facility. He stated that there was a clear commercial logic for the bank, but that it also had a clear commercial logic for the appellant, despite the fact that the plaintiff was now trying to portray it differently. The trial judge set out at some length the reasoning behind the May 2010 facility, according to the evidence given by Mr. McCarthy, what he also referred to, but the appellant complained about, in relation to the 2008 loan facility being taken away from him by the 2010 facility, and that this deprived him of the ability to drawdown the remaining €750,000 for the construction of Ashley by November 2011. In that regard, the trial judge stated the following:
“However, what Mr. O’Connor conveniently ignores at each and every occasion was that he could not draw down this construction finance at his own discretion. It was subject to a condition precedent which required a contractual pre-sale of one of the houses at Ashley. He never fulfilled this condition precedent. Even up to the date of the receivership there were no pre-sales at Ashley. Thus he never could have drawn down these funds, even if the May 2010 loan agreement had not been put in place.”
58. The trial judge went on to consider the evidence in relation to the legal advice which the appellant had available to him before he signed his acceptance of the 2010 loan facility, his signature being witnessed by Mr. O’Keeffe, his solicitor. The trial judge refers to what he describes as Mr. O’Keeffe’s contemporaneous note of a meeting with the appellant on 8th June 2010. He sets out the contents of this note. Having done so, he expresses following conclusions:
“113. What is of importance in the above contemporaneous note, is that it is noted that the existing loan offer (i.e. the April 2008 loan offer) is now “off the table”. It is clear therefore that the plaintiff was absolutely aware from his meeting with his solicitor that the April 2008 loan was “off the table”. It is not only clear that he was aware of it and that his solicitor was aware of it but that his solicitor advised him on this very point. Despite this, Mr. O’Connor sought to portray himself in court as a man who was oblivious of the fact that the April 2008 loan was no longer in existence, or that it was amalgamated into the May 2010 loan agreement, that he had been deceived into giving up this April 2008 loan, and that BOSI fraudulently misrepresented the position to. It is clear that the plaintiff is wholly misguided in relation to this issue and that he was fully aware of it.
114. I therefore find as a fact based on the evidence of the plaintiff, Mr. O’Keeffe and Aidan McCarthy that the plaintiff was fully aware as at 8th June. 2010 before he entered into the May/June 2010 loan agreement that the April 2008 loan was being withdrawn and being reissued/amalgamated in the May/June 2010 loan agreement and that he entered the loan agreement in 2010 on that basis.”
59. Having expressed these conclusions, the trial judge went on to refer to a telephone conversation which the appellant had with Aidan McCarthy on 8th June 2010 at about 6015 p.m. The plaintiff apparently kept a contemporaneous note of this telephone conversation. The contents of that note are set out in the trial judge’s judgment. He also refers to a letter which the appellant then wrote to Mr. McCarthy which is dated 10th June 2010, and again the entire contents of that letter set forth in the trial judge’s judgment. He refers to the fact that the appellant had sought to contend that this letter formed part of his acceptance of the loan offer letter dated 24th of May 2010, and to the fact that Mr. McCarthy on behalf of the bank did not accept that it formed part of the loan offer obligations. The trial judge concludes that “In my view it is clear that there was no agreement on the part of the Bank that the plaintiff’s letter dated 10th of June 2010 was incorporated by an agreement into the loan agreement of 24th May/9thJune 2010”.
60. Trial judge went on to set out what Mr. O’Keeffe (solicitor) had said in his contemporaneous note of a telephone conversation he had with the appellant on the 9th June 2010, part of which, as noted by the trial judge, states “knows giving security now for small money but keeps it going - not getting anything in writing because needs a price for sale of first one to set a floor”. The judge stated:
“… it is clear from this note that Mr. O’Connor knew full well that he was giving extra security for ‘small money’. But of course Mr. O’Connor was giving extra security to BOSI in order to ensure that the February 2007 loan which was in arrears and in default would not be called in. It would instead be refinanced. Thus the extra security which the plaintiff gave in terms of its houses was not only for the development finance to complete the common areas of €225,000, but also as extra security to refinance [the] February 2007 loan which was in default.”
61. At paras. 120-122 of his judgment, the trial judge concludes as follows on this issue:
“120. It is common case that there were no contracted sales at Ashley before the loan facility of 2010. Indeed, it is common case that there were no contracted sales at Ashley before 20 November 2011 (i.e. the date of the expiry of the drawdown). That being so, and given that the condition precedent had not been fulfilled, it clearly follows that BOSI was under no contractual obligation to advance the money under the terms of the April 2008 loan offer to the plaintiff. Thus, even taking the plaintiff’s case at its height, it is abundantly clear, that even if the April 2008 loan facility letter had continued and being until 20th November 2011 there would have been no contractual obligations on BOSI to advance the €750,000 construction costs for Five Firs.
121. This is important because the plaintiff’s case is that the 2010 facility (which refinanced the 2007 and 2008 facility) put a new timeline in place which made it more difficult for him. However, even if he is correct in that submission (and in my view he is not), even if the 2008 loan facility had continued in being, the plaintiff was unable to satisfy the conditions precedent. There were no contracted sales before November 2011 and therefore the plaintiff himself was unable to comply with the terms of the facility letter of April 2008 from BOSI. Indeed I am absolutely at a loss to understand why the plaintiff believes he has any case in this regard.”
62. The appellant, despite the length of his written submissions and despite his oral submissions, has not persuaded this Court that there was no evidence which the trial could have accepted as a basis for his conclusions. Again, the Hay v O’Grady principles present a difficulty for the appellant. The trial judge has reached very clear conclusions of fact and he has made clear the evidence on which he has based these conclusions. The Court appreciates that the appellant has given other evidence. But as already stated, the trial judge is in a position to assess the evidence adduced by each party, and must reach a conclusion as to which evidence is to be preferred where it is conflicting evidence. This is what the trial judge has done on this issue, and in the Court’s view he was entitled on the evidence to reach those conclusions and there is not a basis on which this Court should interfere with same.
The fifth issue - whether the bank breached a promise that it would provide €100,000 to complete the Ashley showhouse
63. The appellant gave evidence that Savills had advised him that in order to assist with sales of the Ashley houses, a house should be finished out to a high standard as a show house. He gave evidence that on 24th February 2009 he had telephoned Mr. Daly of BOSI and had requested further funding of €100,000 for that purpose. It will be recalled BOSI had issued a loan approval letter dated 5th February 2007 in the sum of €4.34 million to enable the appellant, inter alia, to purchase the Ashley site and the cost of constructing the proposed houses at Ashley.
64. The appellant’s case is that when during a telephone call to Mr. Daly on the 24th February 2009 he sought this funding for the showhouse, and Mr. Daly agreed to it, it was intended by both to be an additional sum of €100,000 and not as part of the 2007 sanction. However, as the trial judge noted at para. 143 of his judgment, Mr. Daly had a different version of events as contained in his witness statement (which was used as his direct evidence and on which he was cross-examined). That evidence is set forth from paras. 25 and 35 of his witness statement, as follows:
“25. In respect of the showhouse funding, Mr. O’Connor sought approval to use €100,000 of funds towards the completion of a showhouse. Given that these funds were intended for the completion of construction works, the Bank’s opinion was that use of these funds for showhouse renovations constituted an amendment from the purpose of the original offer letter. I recall seeking credit approval to allow funds be diverted towards the completion of a showhouse which was refused by the Bank. I have no recollection of apologising to Mr. O’Connor for delays in the process.”
35. I can categorically confirm that I never advised either Mr. O’Connor or Corbel Developments Limited to proceed with the fit out of the showhouse. I consider this comment to be entirely untrue. I do not recall advising Mr. O’Connor that the proposal could not be made due to issues with the Bank. If the Bank had no appetite to provide additional funding to Mr. O’Connor Ashley, this message was conveyed to Mr. O’Connor professionally and in a factual manner. I do not recall instructing Mr. O’Connor to advise Mr Cathal O’Connor to proceed with the fit out of the showhouse.”
65. The trial judge noted in his judgment that Mr. Daly’s evidence was that he did in fact seek credit approval for this €100,000 but he was told that it was going to be declined. The trial judge also stated Mr. Daly’s recollection that he remembered asking whether the funds in the February 2007 loan could be diverted towards completing a showhouse and that this also was declined. On this issue, trial judge concluded as follows:
“146. Having considered and assessed the evidence on this matter I am of the view that no representation was made by Mr. Daly to the plaintiff that BOSI would definitely advance a sum of €100,000 to the plaintiff to complete the showhouse. It may well be that Mr. Daly indicated to Mr. O’Connor that he would seek BOSI approval for this request. It may also be that Mr. O’Connor heard what he wanted to hear and took that as BOSI approval of his request. However, in the event, BOSI approval was not forthcoming and the €100,000 was not advanced for the expenditure of the showhouse. If Mr. O’Connor spent €100,000 on completing the showhouse, he did so based on a misunderstanding and not based on any representation made by BOSI or based on any agreement with BOSI.”
66. The appellant submits that the trial judge erred by not having regard to his contemporaneous note of his conversation with Mr. Daly of BOSI on the 24th February 2009, as this was the only contemporaneous note of what was said in that call. In that regard he drew attention to the fact that Mr. Daly when being cross-examined on his witness statement had stated that he had no recollection of the telephone call on the 24th February 2009. However, the trial judge clearly did have regard to this note because he actually sets out its contents in his judgment as follows:
“24/2/09. 12.45pm. Gavin Daly of BOSI rang to go ahead with showhouse, 100k BOSI will treat it as part of Ashley 104”.
It was immediately after he had set forth the contents of the appellant’s contemporaneous note that the trial judge went on to state, as noted above, that Mr. Daly had a different version of events and then referred to what he had stated in his witness statement at paras. 25 and 35 as quoted above. In this Court’s view it was certainly open to the trial judge to prefer the evidence of Mr. Daly as he gave it in his witness statement, and as he spoke to that evidence when asked about it by the appellant during his cross-examination, over the evidence contained in the brief contemporaneous note of the telephone call on the 24th February 2009 even where that note is accepted as being contemporaneous and the only such note of the conversation, over the appellant’s own evidence. The note is very brief, and the trial judge was entitled to conclude that it did not support a representation by Mr. Daly such as the appellant asserts, namely that an additional sum of €100,000 would be made available for the completion of the showhouse. He was entitled to accept Mr. Daly’s evidence of seeking an approval for that additional sum and that it was declined.
67. The appellant complains also that the trial judge failed to properly consider Cathal O’Connor’s evidence regarding proceeding with the showhouse fit-out works after what he describes as the promise by Mr. Daly on that date. It is true that this evidence is not referred to. But on the other hand, any evidence of what Cathal O’Connor did after that conversation that his father had with Mr. Daly cannot assist in determining what exactly was said between them, and therefore could not assist the trial judge in determining whether what was said amounted to a representation to the appellant that additional funding would be provided for the showhouse. Accordingly the Court also dismisses the appeal on this issue.
Sixth issue - Joint Receivers
68. The appellant challenged the validity of the appointment of the receivers; but in the course of the hearing (Day 4) he confirmed to the trial judge that such challenge related only to his contention in relation to the common areas. As appears, that no longer subsists. He also claimed damages against the receivers. The trial judge identified just three issues that remained in relation to the receivers, namely:-
(i) Conflict of interest:
69. The appellant’s case in relation to conflict of interest is simply that Mr. Cotter ought not to have accepted an appointment as receiver over his assets because in 2007 and again in 2010 he had assisted the appellant in relation to his funding applications to BOSI. Mr. O’Connor’s evidence is summarised in the judgment of the trial judge. He apparently had not billed the appellant for any work he did for him in 2006/2007 because it was not significant. The work appears to have consisted of making a few telephone calls by way of introducing the appellant. Mr. Cotter also saw his involvement as a favour to the appellant whose brother in law was a colleague of his since the 1980s. He was able to confirm that the appellant was not set up as a client on the Ernst & Young system. The trial judge considered Mr. Cotter to be a reliable and trustworthy witness. The trial judge then set out a history of Mr. Cotter’s involvement from 2000- 2006. Mr. Cotter’s evidence was that the appellant had not consulted him in relation to the 2007 loan facility and that apart from perhaps meeting him on the street or at a social function he had no further contact with the appellant until after his appointment as joint receiver.
70. Mr. Cotter gave evidence of what checks he carried out within his firm to establish that no conflict arose. Firstly the firm would have done a conflicts check, and no conflict was identified. Secondly, as a member of the Chartered Accountants of Ireland he was subject to its Code of Ethics, and would have to consider whether any relationship he had with the appellant would breach that code if he accepted the bank’s appointment of receiver. Having considered the nature of the relationship, the size of the fees paid, if any, and how recent any relationship was (2007 being the last occasion on which he gave any assistance to the appellant), he was satisfied that there was no material relationship and that no conflict arose.
71. The trial judge was satisfied that no conflict of interest existed between the appellant and Mr. Cotter, and he set out five reasons for arriving at that conclusion:
(i) he had not acted for the appellant for at least five years,
(ii) the nature of the involvement in late 2006 which involved introducing the appellant to Mr. Barry in BOSI, rather than giving advice as such;
(iii) the appellant conducted all his own negotiations with BOSI,
(iv) the receivership arose out of the 2010 loan facility and not the 2007 facility, and
(v) the appellant gave no evidence of having made any payment to Ernst & Young for any assistance given by Mr. Cotter, and the last payment of any fees to that firm had been back in 2002/2003.
72. The trial judge concluded that the appellant’s allegation of a conflict of interest such that he should not have taken the appointment as receiver was “utterly without merit”.
73. Once again, the appellant is confronted by the principles in Hay v. O’Grady. The trial judge made a finding of fact that there was no conflict of interest arising on the evidence which he was satisfied to accept. The appellant submits that the trial judge erred by failing to consider whether the appointment as receiver was invalid by reason of Mr. Cotter failing to enquire of the bank if there were any misrepresentations by the bank or other breaches by the bank, prior to accepting his appointment. That is a ground contained in the appellant’s notice of appeal. But given the trial judge’s conclusions on the question of misrepresentation, and this Court’s conclusion in that regard on this appeal, there can be no merit in that point.
74. There are many other grounds of appeal under this heading but for the most part they seek to attack the validity of the receivers’ appointment by reason of alleged flaws in the deed of appointment, and in the mortgage documentation. In the High Court the appellant had attempted to argue that there were defects e.g. by the absence of any seal on the deed of appointment. The trial judge engaged with the appellant on that issue but ruled that it was not pleaded and was not in the case. The appellant agreed not to pursue the point, but now on this appeal sought to agitate it afresh on the basis that he had misunderstood what he was being asked to do by the trial judge. This Court is satisfied that the appellant clearly agreed not to pursue the point regarding the sealing of the documents, and that it would not therefore be appropriate to permit him to advance arguments in relation to it on this appeal.
75. In this Court’s view the trial judge was entitled to conclude on this issue as he did, on the basis of the evidence which was given.
(ii) Failure to maintain the assets and maximise the rental value:
76. The appellant had alleged that the receivers had failed to properly take care of and secure the property at Ashley from vandalism, and that they were now in disrepair. He also alleged that certain materials such as scaffolding and hoardings had been removed. In relation to the latter, however, it was clear that such property did not in fact belong to the appellant, but to the Corbel Developments Limited which is not a party to the proceedings. The trial judge noted in his judgment that the appellant accepted that point when it was raised against him in the High Court.
77. In relation to the failure to protect the houses themselves from acts of vandalism, Mr. Cotter gave evidence and the trial judge refers to that evidence. Mr. Cotter felt that the receivers had taken reasonable steps to protect the properties but accepted that there had been two minor acts of vandalism when some teenagers got into one of the properties. Thereafter some repairs had been carried out, and a security firm had been engaged to carry out daily visits.
78. There were also incidents of windows being broken. These were fixed, and thereafter the windows and doors were boarded up. A security person was engaged to make a daily visit. He went on to state, according to the judgment, that as soon as the houses could be sold the boarding would be removed, but that this could not be done at the moment as the appellant’s lis pendens remained on the property. Neither could the properties be rented out because they were unfinished. It appears that just one of the houses is rented out. This was the showhouse.
79. Mr. Cotter gave evidence of other work and repairs carried out on various dates as the judgment records, including the cutting of grass and general tidying.
80. The trial judge was satisfied by the evidence given that the receivers had taken reasonable steps to maintain the property, and to protect it from being vandalised. He concluded that the appellant’s claims in this regard were without any foundation. On the evidence before him that was a conclusion that the trial judge was entitled to reach and the appellant has not satisfied this Court of any error by the trial judge in his approach to this issue..
(iii) allowing the Five Firs planning permission for two houses to lapse:
81. The trial judge noted that this allegation had not been pleaded in any way in the proceedings, and nor had it been referred to in the appellant’s lengthy witness statement, nor during his six days of evidence during the hearing. The trial judge noted that it was raised for the very first time at the conclusion of the appellant’s son’s evidence (Cathal O’Connor). When objection was raised about it being raised in this way for the first time, it appears that the appellant was insistent upon being permitted to argue it, and stated that it had only just come to his attention. The trial judge notes in his judgment that the respondents “quite generously” consented to the amendment of the pleadings in this regard.
82. It should be clarified that the Five Firs site on which it was proposed to build two houses was immediately adjacent to the Ashley site, and later became part of an enlarged Ashley site. There was a planning permission for the construction of two houses on the Five Firs site.
83. The trial judge heard evidence from Ms. Stokes from Lisney estate agents who prepared a report for the receivers in 2012. This report had identified two problems with the development. Firstly the garden for no. 4 Ashley was very small and required more space, and secondly that the development as a whole had very little parking space. The report recommended that one of the sites be given over to providing more such space, and that another of the sites should be developed in a smaller way. For these reasons the existing planning permission was allowed to lapse, as they wished to carry out the recommendations and apply for a new permission for these revisions.
84. The Lisney report apparently went on to state that if these modifications to the development were carried out, the value of the other houses on the site would increase, and maximise the return on any sales. These advices had been accepted. Mr. Cotter gave evidence in that regard.
85. The trial judge concluded that the receivers had sought professional advice and had followed that advice in the interests of maximising the value of the property as a whole. He concluded that in such circumstances it was reasonable that the existing planning permission should be allowed to lapse, and that the allegation against that the receivers were in breach of their professional duty as receivers was unfounded.
86. The appellant has failed to identify any basis on which this Court could interfere with the trial judge’s conclusion on this issue.
Seventh issue - claims against solicitors
87. The appellant makes claims that his former solicitors were negligent and acted in breach of contract in the provision of services to him, and that they had a conflict of interest when retained by him.
Conflict of Interest:
88. The appellant alleges that his former solicitors, Mr. Riordan and Mr. O’Keeffe, had a conflict of interest in acting both on his behalf and on behalf of BOSI in relation to the 2007 loan, 2008 Loan and the 2010 loan, as a result of which he claims he suffered loss and damage. His claim is entirely grounded on his own evidence whereas the respondents, Mr. Riordan and Mr. O’Keeffe, gave evidence on their own behalf, but also called an expert witness namely, Mr. Michael Carrigan, solicitor, a consultant in the firm of Eugene F. Collins Solicitors.
89. It should be explained at this juncture that the appellant was from time to time represented by two solicitors, James Riordan and Darren O’Keeffe, who, when he initially attended with them, were partners in M.J. Hogan & Sons, and were subsequently partners in the firm of James Riordan & Partners. BOSI was represented by other solicitors in those firms. It appears that the appellant first attended with Mr. Riordan not so much looking for legal services, but for the purpose of obtaining an introduction to BOSI because he was aware that Mr. Riordan acted on behalf of BOSI.
90. The appellant relies upon the Solicitors (Professional Practice, Conduct and Discipline - Commercial Property Transactions) Regulations 2010 (S.I. 366/2010) (the “2010 regulations”). These regulations prohibit a solicitor from acting on behalf of both a borrower and a lender in the same commercial property transaction. While acknowledging that these regulations did not come into operation until 1st December, 2010, and therefore post-dated all of the transactions the subject of these proceedings, the appellant contends that at the time of the 2010 loan, the possibility of the introduction of these regulations was under discussion and well known in the solicitors’ profession. On this basis he contends that the solicitors should not have acted both on his behalf and on behalf of BOSI in the 2010 loan transaction.
91. However, there can be no question of the retrospective application of these regulations, regardless as to whether or not Mr. Riordan and / or Mr. O’Keeffe were aware or should have been aware that consideration was being given to their introduction.
92. Of much more relevance to this issue is the guide to good professional conduct of solicitors in Ireland that applied at the time the solicitors provided services to the plaintiff. That was the second edition of that publication, which was published in 2002 (“the 2002 Guide”). Mr. Carrigan deals with the recommendations of that Guide insofar as relevant to these proceedings in his evidence. The relevant provisions of the 2002 Guide may be summarised as follows:-
(1) A solicitor acting for a client in relation to any particular transaction is obliged to take all reasonable steps to ensure that his client’s interests are fully protected;
(2) The relationship of solicitor and client is a fiduciary relationship;
(3) A solicitor, or a firm of solicitors, should not act for both vendor and purchaser in a transfer of property for value at arms length;
(Mr. Carrigan was of the opinion that (3) would apply equally to acting on behalf of a borrower and lending institution in the same transaction.)
93. The evidence established that both parties were aware that the same firm of solicitors was acting on behalf of each party. Indeed, Mr. O’Connor specifically went to Mr. Riordan in the first place because he knew his firm acted on behalf of BOSI. However, it appears the solicitors did not advise the parties of the desirability of obtaining independent legal representation. While this is unfortunate, and is prohibited under the 2010 regulations, and subsequently, the Solicitors (Professional Practice, Conduct and Discipline-Convincing Conflict of Interest) Regulations 2012, it does not follow that the solicitors have a liability to the appellant merely because they were not acting in compliance with the 2002 guidelines. It is true that by acting on behalf of both parties to each of the loan transactions, they placed themselves in a situation where a conflict of interest could arise. However, this does not, of itself, give rise to a liability in damages. For a liability in damages to arise, an actual conflict of interest must arise, not just the potential for it, and there must be some causal link between a loss claimed and the alleged conflict. It is necessary therefore to consider:-
(1) The services provided by the solicitors to the appellant;
(2) The duties owed by the solicitors to the appellant in the provision of those services;
(3) The manner in which the services were provided and in particular whether or not the duties owed to the appellant were fulfilled; and
(4) The losses which the appellant claims to have suffered by reason of the solicitors acting whilst having a conflict of interest and without having advised him to take independent advice.
94. Before conducting this analysis, it should be noted that the appellant is relying on a decision in Murray and Whelan v O’Donnell, Dalton, Hogan, unreported, High Court 7th October 2004, in which Quirke J. stated the following in relation to solicitors acting for both a vendor and a purchaser in conveyancing transactions:
“Conflicting interests are bound to arise in such circumstances and I have no doubt whatsoever that the duty upon a solicitor who is acting on behalf of both parties in the circumstances which have arisen in this case is particularly onerous, such a solicitor is under an obligation to explain carefully and in the greatest possible detail to both the vendor and purchaser what is involved in the transaction and in particular he is under a duty to identify with precision the property to be transferred and the title of that property together with any limitations upon that title and any risks attendant upon the transfer and upon the transaction generally.”
In that case, Quirke J found that what he described as a virtual litany of acts and omissions of serious negligence on the part of the defendants and concluded that these had caused the plaintiffs loss and damage.
The Services provided:
95. At the outset, it should be observed that Mr. Carrigan gave evidence that, as a general rule, a solicitor is not responsible for the commercial decisions of his client, although he considered that a solicitor should raise with his client the wisdom of any decision if it appears to the solicitor that the decision being made by the client is not, or may not be, in the best interest of the client. He stated that the extent to which a solicitor ought to do this must be assessed by reference to the experience or vulnerability of the client concerned. The more experienced the client is in a given field the more knowledge he may be assumed to have, although this does not relieve the solicitor from his/her general duty to ensure his/her client’s interests are at all times fully protected.
96. In this case, the evidence established that the appellant was an experienced property developer with prior experience of dealing with financial institutions in connection with the provision of funding for such developments. This was the background to the retainer by him of the solicitors. He had received a loan facility in 2002, having a value of €820,000 already referred to above in respect of which the solicitors had no involvement. He received another loan from the respondent in 2003, in the sum of €750,000 the purposes of which were to restructure the 2002 loan and to fund the construction of two houses at Lindville. This loan was also secured over the sites at Lindville, but was repaid in full by 21st April 2005. He received a further loan in 2004, in the sum of €900,000 to fund the construction of four more houses in Lindville, also secured by the same property. This loan was repaid in full by 20thApril 2007, but out of the proceeds of the 2007 loan.The solicitors did not act on his behalf in respect of either of the 2003 or 2004 loans.
97. Subsequently, however, the solicitors acted on his behalf in connection with the 2007 loan, the 2008 loan and the 2010 loan. In providing services in connection at the 2007 loan, the solicitors were not consulted by him in relation to the terms of the letter of loan offer. Accordingly their instructions were to implement the loan on his behalf in accordance with the terms of the letter of offer. This required them to ensure that he provided BOSI with whatever security he had agreed to provide as a condition precedent to the drawdown of the loan, to ensure that the security provided did not extend to other property or assets not required by the letter of offer, to register the deed of mortgage and charge in the Land Registry and to furnish a certificate of title to BOSI’s solicitors at the conclusion of the transaction. The same services were required by the appellant of the solicitors in connection with the 2008 and 2010 loans, but in those transactions the solicitors did provide advice in relation to the letters of offer.
Duties owed by solicitors in the provision of services:
98. In his expert opinion to the court, Mr. Carrigan states that:-
“While the borrower’s solicitor should be satisfied that his client fully understands the consequences of default pursuant to the terms of security documentation the only issue for him generally will be to ensure that the security document accurately reflects what is set out in the letter of loan offer issued to the borrower and that the property to be secured is limited to that specified in the letter of loan offer and does not extend to other property or assets of the borrower.”
Manner in which services were provided:
99. Firstly, it should be observed that the appellant makes no complaint that any of the security documentation which he completed for the purposes of the 2007, 2008, and 2010 loans was otherwise than in accordance with his instructions. Having heard the evidence of the parties, and having considered the expert opinion of Mr. Carrigan, and having considered all of the plaintiff’s submissions in this regard, the trial judge concluded that:
“there is no evidence that the solicitor defendants failed to protect Mr. O’Connor’s interests in any way in respect of the three relevant transactions - the 2007 Loan, the 2008 Loan and the 2010 Loan.”
100. In addition to providing the necessary services to the appellant in connection with the granting of security to the bank for the purpose of drawing down each of the loans, Mr. O’Keeffe also advised the appellant in relation to the letters of offer issued by BOSI in relation to the 2008 and 2010 loans. He makes no complaint about the advice given in relation to the 2008 loan. He does make a complaint however in relation to the advice he received as regards the 2010 loan.
The complaint arising out of conflict of interest allegation:
101. It is very difficult to identify precisely what the appellant claims that he has lost by reason of the solicitors' alleged conflict of interest. However, an analysis of the pleadings and the evidence that Mr. O’Connor gave in the High Court, as well as his submissions before this Court, suggests that he makes the following complaints as to the prejudice he suffered by reason of the same:-
(1) Firstly, in this Court he submitted that if Mr. O’Keeffe had declared his conflict of interest as required by the 2002 Guide, he (Mr. O’Connor) would have gone to another solicitor and that such other solicitor would have examined the 2002 security at the time of acting on behalf of the appellant in connection with the 2007 loan. He argues that such an examination would have disclosed that BOSI had more security than that to which it was entitled over the lands at Lindville and that this could have been corrected at that time, and that as a consequence he has suffered a loss.
(2) Alternatively, in relation to this same heading of loss, his evidence at trial was to the effect that the solicitors failed to examine the extent of the security that he provided in 2002 when acting on his behalf in connection with the 2007 loan, by reason of their conflicting obligations to BOSI, and that had they done BOSI would have been provided with security over just one house in Lindville, and the security would not have extended to the common areas, on which he claims there was scope to carry out some development at a profit.
(3) The appellant also said in evidence that if Mr. O'Keeffe had informed him that there was no security in place for the 2003 loan and the 2004 loan and if Mr. O'Keeffe had advised that, as a result, the 2004 mortgage (over Lindville) was no longer valid, he would have been entitled to ownership of unencumbered properties at Lindville. By this he presumably means that since the 2003 and 2004 loans had been repaid, he could have asked BOSI to release Lindville from its security, but of course it continued to be part of the security required by BOSI for the 2007 loan, which was in the sum of €4.34m.
(4) The appellant further contended that, Mr. O'Keefe did not declare this conflict of interest to him because of the fee income his firm was receiving from BOSI, and that, as a result, he suffered an interference with his "economic and contractual relations". He alleges that Mr. O'Keefe failed to act independently in a non-conflicted manner and that as a result Mr. O’Keeffe failed to advise him properly in relation to the 2010 loan facility letter. At the trial of the proceedings, the appellant claimed that Mr. O’Keeffe advised him to write to BOSI himself about the terms of the 2010 loan facility letter, though Mr. O’Keeffe denied doing so.
(5) At the hearing of this appeal he argued that if he had had independent representation in 2010, his solicitors would have sent the letter that he himself sent on 10th June 2010 in relation to the terms of the 2010 loan facility letter, instead of advising the plaintiff to do so. He argued that a letter from a firm of solicitors of standing would have carried more weight in this regard than his own letter.
102. The arguments made by the appellant on this appeal in relation to the 2002 security, including those referred to at sub paras (1) and (2) above, appear to be a way of trying to get around the findings of fact of the trial judge that:
“it was at all times the plaintiff’s - and the Bank’s - intention to mortgage and charge the common areas to BOSI and that the plaintiff at all times actually knew that he was in fact mortgaging the common areas of Lindville and the relevant sites to BOSI in September 2002.”
103. Apart from this, the trial judge also heard evidence that it was extremely unlikely the common areas had any value at all. The appellant claimed that there was some possibility of developing what he regarded as an excess of lands within the common areas, but the respondents called expert evidence to the effect that it was highly unlikely that any planning permission for such development would ever be granted for a variety of reasons, not least of which was that the local authority had taken the common areas in charge (under pressure from residents) and also that the plaintiff had already made two planning applications in respect of the lands that he considered were surplus to the requirements of the common areas, and these had been refused.
104. The trial judge also noted, at para. 198 of his judgment that:-
“Mr. Carrigan gave evidence that where a loan, offered by a lending institution, involved the extension of an existing charge, it would not be normal for either the borrower’s solicitor or the lending institution’s solicitor to review the terms of an existing charge unless they were specifically requested to do so, either by the borrower or the lending institution or unless the particular facts of the case called for such a review. Thus, in his expert opinion, the defendant solicitors were not required to review the extent of the 2002 mortgage on behalf of the plaintiff or to otherwise advise the plaintiff in relation to the 2002 Lindville charge whether at the time of the 2007 transaction, the 2008 transaction or the 2010 transaction. In addition, and looking at the transaction as a whole, Mr. Carrigan was of the view that the defendant solicitors had discharged their duty of care to the plaintiff.”
105. The appellant’s claim that Lindville could have been released from the 2002 mortgage following repayment of the 2003 and 2004 loans is manifestly unsustainable , as that security was required in connection with all subsequent loans, including the 2007 loan, part of which was used to repay the 2004 loan.
106. As to the appellant’s argument. that the letter he himself wrote to BOSI on 10th June 2010 would have carried more weight coming from a firm of solicitors, and would have been sent by any other firm acting on his behalf (who would not had a conflict of interest), and that by implication he thereby suffered damage, this complaint cannot be sustained in the light of the finding of the trial judge that even if he was correct in his submission that the 2010 loan facility put a new timeline in place (and the trial judge stated that he did not consider the appellant to be correct in that regard) and the 2008 loan facility had continued in being, he remained unable to satisfy the conditions precedent to that facility. In other words, even if the appellant’s letter of 10th June 2010 was accepted by BOSI as forming part of the revised facility, he could never have availed of the facility because he did not achieve the sales required to access funds. Hence the failure of such a letter to have been sent on his behalf by a solicitor cannot on the facts as found and upheld have caused the appellant loss or damage.
107. Aside altogether from that, it is difficult to see any substance in the point the appellant makes in this regard. The letter which he sent to BOSI when returning acceptance of the 2010 Facility was essentially an attempt to alter the commercial terms of the agreement offered by the bank. While solicitors may from time to time assist clients with such communications, whether the solicitor does so or the client does so directly is unlikely to have any influence on the outcome of what is essentially a commercial negotiation. There was certainly no evidence that any such effect was likely.
108. While the solicitors were, throughout their dealings with the plaintiff, in a situation that had the potential to give rise to a conflict of interest, no such conflict actually materialised. Moreover, this was a state of affairs with which the appellant, an experienced businessman, was fully acquainted from the outset. While the solicitors should have complied with the 2002 Guidelines and advised him of the desirability of obtaining independent advice, their failure to do so did not result in any negligence on their part in the handling of his affairs, and nor did it cause him any loss or damage. It is clear to us that the solicitors discharged their duties to him in a satisfactory and professional manner. He has failed to establish that he has suffered any loss by reason of the fact that the solicitors acted for both him and for BOSI, and did so without complying with the 2002 guidelines.
109. This Court is satisfied that the conclusions made by the trial judge are correct both as regards the claim of negligence made against the solicitors and as to conflict of interest. No conflict of interest actually arose, despite the potential for such a conflict. The Court is also satisfied that no case of negligence has been made out as alleged and that the trial judge was correct in this respect.
Consumer Credit Act, 1995:
110. Finally, and briefly, it is necessary to deal with the appellant’s appeal against the conclusion by the trial judge that the appellant was not a consumer for the purposes of the 1995 Act, and the Consumer Protection Code 2006. The trial judge referred to the definition of “consumer” in s. 2 of the Act of 1995, being:
111. Having considered the evidence which he had heard over some three weeks of hearing, the trial judge expressed himself as being satisfied, and found as a fact, that:
“Mr. O’Connor was engaged in the business of property development and that all of his actions in relation to any Bank loans which he took out from the defendant Bank were loans taken out in the course of his business” and that “in those circumstances Mr. O’Connor is clearly not a consumer within the meaning of the Consumer Credit Act 1995.”
Indeed, by signing the loan documentation the appellant himself acknowledged that he was not a consumer within the meaning of the 1995 Act.
112. It is clear, however, that while there was reference to the 1995 Act and the definition of “consumer” therein, the appellant was making the case that the 2010 loan in the circumstances in which that loan arose constituted a breach by BOSI of the Consumer Protection Code 2006. He submitted that the 2010 loan facility was an unsolicited pre-approved loan for which he had not made application, and referred to the fact that the bank itself had called the meeting, and had then made an offer of this additional finance and sought additional security.
113. The Consumer Protection Code 2006 contains a definition for “consumer” that very much mirrors that contained in s. 2 of the 1995 Act. The appellant does not come within that definition in either the Code or the Act. The Act contains no definition of “a customer”. However, the Code contains such a definition, and states that Chapter 1 of the Code applies in respect of customers as defined, whereas the remainder of the Code applies in respect of “consumers”.
114. Accordingly it is only Chapter 1 of the Code upon which the appellant could place any reliance. A “customer” is defined as meaning “any person to whom a regulated entity provides or offers a service the subject of this Code, and any person who requests such a service”. The appellant is clearly within that definition. Chapter 1 contains a list of 12 ‘General Principles’ in accordance with which a regulated entity must conduct its business with its customers. The appellant has not sought to rely upon any of these general principles. Rather, he sought to rely upon the obligation not to offer unsolicited pre-approved credit facilities. That is the first regulation contained in Chapter 4 of the Code. It applies only in respect of such loans to a “consumer”. It does not apply in respect of someone who is not a consumer, such as the appellant.
115. Even though the trial judge did not address that particular submission by the appellant by reference to the Code, the appellant made submissions in that regard before this Court, However, for the reasons just stated, the Code does not assist the appellant.
116. For all these reasons, the Court considers that the appeal should be dismissed.
117. It follows that the appeal (2015/225) against the High Court judgment in favour of the bank must also be dismissed, and that any lis pendens that remains registered against any of the lands forming the bank’s security should be vacated.
