THE COURT OF APPEAL
CIVIL
Neutral Citation Number: [2019] IECA 185
Record No. 2017/15
McGovern J.
Baker J.
McCarthy J.
BETWEEN/
- AND-
IRISH BANK RESOLUTION CORPORATION LIMITED (IN SPECIAL LIQUIDATION)
IN THE MATTER OF AN INTENDED ACTION
BETWEEN/
- AND-
DEUTSCHE BANK A.G., IRISH BANK RESOLUTION LIMITED CORPORATION LIMITED (IN SPECIAL LIQUIDATION) AND MAINLINE VENTURE CORPORATION
JUDGMENT of Mr. Justice McGovern delivered on the 4th day July of 2019
1. This is an appeal against a judgment of Murphy J. delivered on the 16th day of November, 2016 ([2016] IEHC 66) in which she refused to grant leave to the appellant to institute the intended proceedings. The application was brought on foot of s.6(2)(b) of the Irish Bank Resolution Corporation Act 2013 ("the 2013 Act") for leave to bring the intended proceedings in which the appellant seeks an order of specific performance of an agreement which purports to settle previous proceedings and disputes arising between the various parties to the intended proceedings.
2. Section 4 of the 2013 Act provides for the making of a "special liquidation order" in respect of IBRC for the purpose of winding up the company. The effect of the special liquidation order is set out in s.6 of the Act. Section 6(2)(b) provides "no further actions or proceedings can be issued against IBRC without the consent of the Court" after the making of the special liquidation order.
3. The recitals in the 2013 Act invoke the public interest as a basis for the special liquidation of IBRC and also provide that "in the achievement of the winding up of IBRC the common good may require permanent or temporary interference with the rights, including property rights, of persons." Such a property right would include a chose in action.
4. In considering the issues that arise on this appeal, the Court should have regard to the purpose of the 2013 Act and whether public resources should be used to defend the intended proceedings which the respondent contends are doomed to fail.
5. In Wright Morris v. IBRC [2013] IEHC 385 Laffoy J. stated at para 22:-
"Although the wording of s. 6(2)(b) of the Act of 2013 is somewhat different to the wording of s. 222 of the [Companies] Act of 1963, and s. 6(2)(b) was specifically enacted as a substitute for s. 222, I consider that the Court's discretion in relation to each provision should be exercised in the same way. Accordingly, the criterion which the Court should apply is whether it is right and fair in the circumstances for the Court to give consent to the proposed proceedings."
6. Having quoted from Delaney and McGrath on Civil Procedure in the Superior Courts (3rd Ed.) at para 6-69 she stated at para 23: "In an appropriate case, I think it is likely that a court would refuse to give consent to proceedings under s. 6(2)(b) of the Act of 2013, if it was satisfied that the cause of action against IBRC it was proposed to litigate was "clearly" statute-barred, which would probably be a relatively easy task if the court was applying Irish law."
By analogy one could apply those comments to a case which is bound to fail.
See also McGuinness v. Kenmare Property Company Limited [2015] IECA 299 at paras. 21-23 per Kelly J.
7. The respondent's claim in these proceedings is for specific performance of a settlement agreement as described in paras 12, 13 and 14 of the Statement of Claim. As required under s.6(2)(b) of the 2013 Act the appellant sought the consent of the Court to join IBRC in the proceedings. The respondent opposed the application on the ground that it was never a party to any settlement agreement as contended for in the proceedings. The appellant was substantially indebted to the respondent and on the 22nd July, 2013 the respondent issued summary proceedings in the High Court against the appellant claiming the sum of €7,730,102.18. The proceedings were entitled Irish Bank Resolution Corporation (in special liquidation) v Gerard McCaughey 2013/2346S. On the 28th March, 2014 Deutsche Bank A.G. purchased the appellant's loan from the respondent. Deutsche Bank was substituted for the respondent in the proceedings by order of the High Court on the 18th November, 2014. In an affidavit sworn on the 2nd July, 2015 for the purpose of seeking entry of these proceedings into the Commercial Court, Ms. Sharon Devereux, a solicitor in M.W. Keller & Sons who act for the appellant, set out in paras 13-14 details of the alleged settlement agreement reached on the 28th April, 2015 by a number of parties including the appellant. In the alternative she stated that the appellant was seeking damages against Deutsche Bank A.G. for breach of warranty of authority, misrepresentation and/or negligent misstatement. In a replying affidavit sworn on the 20th July, 2015 Mr. Kieran Wallace, one of the joint special liquidators of the respondent stated in terms that no representative of the respondent had concluded any negotiations with the appellant or his representatives, nor had the respondent entered into any settlement agreement with the appellant.
8. The application for leave to issue the proceedings against the respondent was grounded on foot of a supplemental affidavit of Ms. Devereux sworn on the 22nd July, 2015. In that affidavit she described a meeting that occurred between Fitzwilliam Loan Management, which was acting on behalf of Deutsche Bank A.G. and the appellant's legal advisors on the 10th March, 2015. At para 5(c) she stated:-
"During that meeting, it was stated by Brian Linnane and Gary Conway acting on behalf of Fitzwilliam Loan Management/Deutsche Bank A.G. that the settlement negotiations should continue on the basis that Deutsche Bank A.G. could deal with all matters relating to the plaintiff. On this basis, the plaintiff correctly proceeded to deal with Deutsche (sic) A.G. relating to all matters as between himself and Deutsche Bank A.G. and between himself and I.B.R.C."
9. Later in the same affidavit she refers to a discussion with Mr. Conway on the 28th April, 2015 in relation to a proposal and says that her firm wrote to A & L Goodbody "…acting on behalf of both Deutsche Bank A.G. and IBRC by letter dated 28th April, 2015 informing them of the settlement…". A further reference to A & L Goodbody acting for both Deutsche Bank A.G. and the respondent appears later in the affidavit. At para 6(b) Ms. Devereux stated "at all material times, the firm of A & L Goodbody were representing both A.G. and IBRC".
10. This averment is flatly denied by Mr. Wallace in a further affidavit sworn on the 27th July, 2015 in which he exhibits a chain of correspondence which, he claims, established beyond doubt that well before the 28th April, 2015 it was very clear to Ms. Devereux that the firm of solicitors representing the respondent was Ronan Daily Jermyn and not A & L Goodbody. For example, on the 26th November, 2014 Ronan Daily Jermyn wrote to MW Keller & Son confirming that they acted for IBRC. That letter quoted the reference of Ms. Sharon Devereux. On the 2nd January, 2015 A&L Goodbody wrote to MW Keller & Son, again quoting the reference of Ms. Devereux, referring to the appellant's application for discovery and said "in addition please note that we have been in contact with the solicitors for Irish Bank Resolution Corporation Limited (in special liquidation), Messrs Ronan Daily Jermyn…". On the 13th January, 2015 Ms. Devereux wrote to Ronan Daily Jermyn in terms where the heading to the letter stated inter alia "our client: Gerard McCaughey", "your client: Irish Bank Resolution Corporation (in special liquidation)" and Ronan Daily Jermyn replied on the 13th February, 2015 describing their client as Irish Bank Resolution Corporation (in special liquidation) and referred to previous correspondence and stated "not being a party to the proceedings, our client will require an order of the court in order to make discovery of any documents within its possession".
11. It is difficult to understand how it could have been made any clearer that Ronan Daily Jermyn were acting for the respondent prior to the 28th April, 2015 when the alleged settlement agreement was reached.
12. At the hearing of this appeal the appellant conceded that he will not be able to establish a case of actual authority on the part of Mr. Brian Linnane and Mr. Gary Conway to bind the respondent. However, he argued that they had ostensible authority.
13. Ostensible authority is defined as:
"a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has the authority to enter on behalf of the principal into a contract of a kind within the scope of the "apparent" authority, so as to render the principal liable to perform any obligations imposed upon him by such contract…it is irrelevant whether the agent had actual authority to enter into the contract."[emphasis added]. (see Freeman & Lockyer v. Backhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503 per Diplock L.J.)
14. A representation may be implied from a course of dealing or it may be made by permitting the agent to act in some way in the conduct of the principal's business with other persons. The representation must be sufficient to warrant reliance. Any representation grounding the agent's apparent authority must derive from the principal and cannot emanate from a self-purported agent. See Armagas Limited v. Mundogas S.A. [1986] AC 717.
15. In this case there is simply no evidence to show that the respondent made any representation of the kind required to establish ostensible authority.
16. At the hearing of the appeal a great deal of time was taken up by the appellant in arguing that there was a distinction between a prima facia case and a stateable case although this point was not raised in either the notice of appeal or the written legal submissions. Counsel for the appellant claimed that the High Court judge had applied the wrong test notwithstanding the fact that in paras. 6 and 7 of the written submissions the appellant accepted that the judge applied the correct test but complained that the judge erred in finding that the threshold for establishing a case against IBRC had not been met.
17. In this case, the issue is whether the appellant had a stateable case against IBRC and it is clear from paras. 46 and 47 of the High Court judgment that the judge did apply the correct test in approaching that question.
18. On the basis of the evidence before the judge, the case against IBRC based on specific performance was bound to fail because IBRC was not a party to any settlement negotiations and the evidence of Mr. Kieran Wallace confirming this to be the position was not challenged. Furthermore, the assertion that A & L Goodbody represented IBRC at the time of the alleged negotiations flies in the face of the correspondence between the appellant's solicitors on the one hand and A & L Goodbody and Ronan Daily Jermyn on the other hand.
19. The High Court judge made serious criticism of the appellant's solicitor and concluded that on the evidence she knew that her repeated averments of joint representation were not true. There can be no doubt but that the affidavits sworn by the appellant's solicitor were inaccurate in a number of material respects. But I would respectfully disagree with the trial judge's conclusion that she knew that her averments of joint representation were untrue. In my view there was insufficient evidence to prove she intentionally misled the court. Having said that, as a solicitor and officer of the court she should have been more careful about checking the facts as they emerge from her own correspondence before making averments of material facts which are demonstrably inaccurate. The courts have a right to expect that solicitors, when swearing affidavits in support of a claim, properly check the facts so as not to create a misleading impression on something which is material to the issue before the Court.
20. I find no error in the judgment of the High Court judge on the substance of the application and in circumstances where there was no credible evidence to support an allegation that IBRC were a party to the alleged settlement, I am satisfied that the decision of the High Court judge was correct.
21. I would dismiss the appeal.
