High Court of Ireland Decisions

The High Court

Between

Michael F. Towey

Plaintiff

V

The Ulster Bank Ltd

Defendant

1981 No.6902 P [22 March 1986].

Status: Reported at [1987] ILRM 142

O'HANLON J

This is an action which arises out of the collapse towards the end of the year 1980 of the meat and cattle business of Andrew J. Towey whose company, Towey Meats Limited, had a meat factory at Ballaghaderreen, Co. Roscommon, and who also conducted a large-scale cattle export business between Ireland and England in his personal capacity, trading as A. J. Towey & Co. (Exports).

The plaintiff, Michael Towey, is a first cousin of Andrew J. Towey, and had a number of bank accounts with the Ulster Bank Limited at its branch in Castlerea, Co. Roscommon. He had extensive dealings with Andrew J. Towey throughout the years 1979 and 1980, selling cattle direct to the factory in Ballaghaderreen; buying cattle on a commission basis for the factory for Andrew J. Towey, and again being remunerated by payment of commission.

The Towey family had been well-known and well-respected in cattle-dealing circles in the west of Ireland for generations — none more so than Michael Towey, senior, father of Andrew J. Towey, who became a dominant figure in the export of cattle to England in the 1960s and 1970s. He acquired land at Silloth near Carlisle in the north-east of England in the course of time Andrew J. Towey moved to England to look after the sale of cattle exported to England by his father.

The plaintiff's father was in business with his brother, Michael Towey senior, for many years, but eventually withdrew from the partnership, and when he did, the plaintiff continued to work for his uncle, Michael senior, on a commission basis, purchasing cattle and sending them to the North Wall for shipment to Silloth. He was paid by cheque drawn on Michael Towey's account with the Ulster Bank, O'Connell Street, until the link with sterling was severed, and thereafter he was paid by cheques drawn on an Irish pound account maintained by Michael Towey senior, and later by Andrew J. Towey, with the National Westminister Bank, Silloth.

Michael Towey senior died in or about the month of July 1979; his son, Andrew J. Towey, continued the family business, and the plaintiff continued trading with him in the same manner as he had done previously with his father, Michael Towey senior. In or about the month of October 1979, Andrew J. Towey acquired a meat factory in Ballaghaderreen, and from that time forward exports of live meat went down and supplies of cattle were sought principally for the purpose of supplying the week-to-week requirements of the factory. Its peak period for business was September/October/November, and then with supplies dwindling the output of the factory slackened off until in or about the month of July in the following year, when it would commence to build up again in the latter half of the year.

With regard to the plaintiff's banking arrangements, he appears to have authority to draw on the partnership account in the 1960s and 1970s, but following upon his father's withdrawal from the business a family settlement was concluded and the plaintiff operated a personal account with the Ulster Bank at Castlerea in his own sole name from 1974 onwards. He was initially allowed overdraft facilities up to a figure of £25,000 but this figure was increased to £65,0OO within a short time, and remained at that limit until 1980.

Andrew J. Towey's proposal to pay his suppliers by cheques drawn on an Irish pound account in a bank in England was an unusual one, and one which was not universally acceptable — some refused point blank to do business on this basis. For those who went along with this arrangement —among them the plaintiff — the drawbacks soon became apparent. The cheques had to be sent for collection to the National Westminister Bank in England and the payee's account was not credited with the amount due until payment had been made by the paying bank. Quite remarkable and inexplicable delays were experienced from the outset in the collection of the amounts due. As far as the plaintiff is concerned, the saga commences with a series of letters in the month of August, 1979, when a delay of 32 days was experienced. Patrick Bredin, who had become manager of the Castlerea Branch of the Ulster Bank wrote to the plaintiff to inform him that the bank's regional office had agreed to allow the plaintiff a concession of 18 days interest out of 32, in respect of the overdraft interest the plaintiff would otherwise have incurred, and in that letter, dated 16 August 1979, he concluded by saying: 'The overseas department are hopeful of being able to credit a customer's account within 10 days of receipt of cheque in future.'

Following upon this episode, Mr. Bredin was able to report to his regional office that he had received payment on the 23 August 1979, of a cheque sent for collection on the 14 august 1979, and on the 5 October 1979, he wrote as follows to the Regional Advances Controller:

From a perusal of our file I notice that on two occasions our Overseas Department were able to have funds credited to an account here within nine days of holder depositing the cheque at this office. If our Overseas Department were able to maintain this level of efficiency on all occasions, few, if any, excesses would occur.

The hierarchy, for reporting purposes, within the Ulster Bank appears to have been as follows. Mr. Bredin, in his capacity as bank manager of the Castlerea branch, reported to the Southern Regional Office there was a regional advances controller and an area regional manager at the head office in Belfast there is a chief advances controller to supervise operations in all four regions. The regional advances controller was responsible to the chief advances controller. The bank maintained an overseas department in Dublin to service the international requirements of the bank, and British business moved from the domestic to the international section of the bank in March 1979, when the break with sterling occurred.

The procedure as regards obtaining payment on cheques on the Silloth Irish pound account drawn by Andrew J. Towey in favour of the plaintiff involved the following steps. The plaintiff lodged the cheques at the Castlerea branch of the Ulster Bank for collection, the proceeds to be credited to his account when collected. The cheques were forwarded by the Castlerea branch to the overseas department in Dublin by courier, and would he sent by express post from the bank's central mailing area in College Green, on the same day, if possible. Initially the cheques were presented through the National Westminster Bank's overseas branch in Threadneedle Street, London, in accordance with the direction printed on the face of the cheques, but early in the year 1980 sanction was obtained for sending them direct to Silloth in an effort to minimise delays in transit. There had been a postal strike in Ireland from February to July 1979 which must have caused a build-up of a considerable back-log of correspondence for the bank, but it was not suggested that this problem, or any problems occasioned by the breaking of the link with sterling, remained unresolved beyond the closing months of the year 1979. There was evidence to the contrary. Mr. Bredin wrote to the plaintiff on 14 August 1979, saying, (in relation to the delay in payment of one particular cheque): 'Overseas are presently in consultation with National Westminster Bank Limited in an effort to reduce the delay to a maximum of one week', and on the 23 August 1979, he wrote to him again about a collection which had been made within nine days, saying, 'we are hopeful of cutting this further in future'.

Accompanying the cheques sent for collection to Silloth by the Ulster Bank overseas department in Dublin was a special instruction: 'Please authorise us by tested telex to debit your London Office Irish Pounds Account. If unpaid upon receipt please advise by telex.' They were sent by express mail from Dublin. There was no suggestion in the course of the present case that postal delays were a problem at any relevant period, and Mr. Bredin in writing to his overseas department on the 27 August 1980, commented that he had received mail from Silloth Nat West two days after it was mailed.

Notwithstanding these various measures which were taken to expedite the collection and payment of the cheques, and notwithstanding the apparently normal working of the postal system, the delays involved in collecting the sums due and crediting them to the plaintiff's account continued to give rise to persistent complaints throughout the remainder of the year 1979 and on a regular basis during the year 1980. The plaintiff said that he had a disagreement with his cousin, Andrew J. Towey, as a result of which he ceased to buy on commission for him from February to June 1980, but for the remainder of that year he was trading with him on a huge scale and in the process of doing so he was overdrawing his account with the Ulster Bank for beyond the permitted limit of £65,000.

The following table shows the numbers of payments received by the plaintiff on a monthly basis during the year 1980, and the number of days which had elapsed between delivering the cheque for collection to his bank and the crediting of his account with the proceeds of same:

Month in which payment	delay (number of days)
received (1980)	Presentation of cheque to Ulster Bank, Castlerea, and payment
January	13, 14, 20, 29 29
February	11, 12, 13
March	9, 12, 12, 12, 13, 20
April	11, 13
May	20, 21
June	26
July	17, 10
August	25, 22, 22, 22, 22, 23
September	22, 22, 22, 20, 21, 20, 20, 2,
	19, 19, 19, 19, 19, 19, 19, 21
October	25, 25, 20, 26, 20, 20, 20, 20, 2
	28, 28, 28, 28
November	30, 33, 31, 31, 31, 31, 31, 31
December	10 Payments made on 8 December all involving delay of 40 days, and one on 11 December delay of 43 days.

Six cheques which were later dishonoured were presented for collection to the Ulster bank as follows:

1 on 10 Nov. 1980, for £38,912

3 on 24 Nov. 1980, for £13 1,506 (total)

1 on 2 Dec. 1980~ for £42,246

1 on 10 Dec. 1980, for £39,590

Another customer of the Castlerea branch of the Ulster Bank which had extensive dealings with Andrew J. Towey in 1979 and 1980 was Tulsk Co-Operative Livestock Mart Limited. They experienced similar delays in receiving payment on cheques. Four cheques lodged by them for collection in January 1980 were paid within eight days, but thereafter delays of about 21 days were experienced until November, when the period of delay rose to 29 days and two cheques which were paid on 17 November 1980 had been out for collection for 41 days before payment was received. Later cheques were dishonoured.

Kilfenora Farmers Mart Limited, who were also receiving cheques from Andrew J. Towey drawn on his Silloth account, presented them for collection through the Ennis branch of Ulster Bank Limited from 11 September 1980 to 10 December 1980. The delays in their case between lodgment and collection were as follows: 21 days, 12, 20, 15, 15, 16. A cheque lodged on the 26 November, 1980, and one lodged on the 10 December 1980 were subsequently dishonoured.

In the case of the plaintiff, he has never recovered payment in respect of any of the six cheques which were dishonoured, totalling in all a sum of £252,254. He testified that he made further deliveries of cattle to the factory on 1 and 5 December 1980 for which he was not given cheques, and for which he did not receive any payment, and this involved him in further loss in the sum of £51,167, which when added to the value of the dishonoured cheques, gives an over-all figure of £303,421. He took whatever steps were open to him to recover payment from Andrew J. Towey, and obtained judgment against him for a sum of £318,189.88, but that judgment has proved worthless.

The plaintiff claims in these proceedings that he should be recouped by Ulster Bank Limited for whatever losses he has incurred by reason of the collapse of Andrew J. Towey's business enterprises and the default in payments to the plaintiff which flowed from that collapse. He claims this relief in the form of damages for breach of contract and or damages for negligence. Summarising the plaintiff's claim, he says that the bank owed him a duty to exercise diligence in collecting payment on foot of the cheques lodged with them for collection, and that they failed to do so; that he looked for advice from the bank as to the reliability of Andrew J. Towey and as to his prospects of getting payment on cheques accepted by him to be accepted by him from Andrew J. Towey, and that the bank negligently led him to believe that he had nothing to fear in this regard, when they knew or should have known that the contrary was true. As a result, he says that he was induced to continue doing business with Andrew J. Towey and to continue taking his cheques in payment for large consignments of live-stock until eventually Andrew J. Towey was no longer able to meet his liabilities.

Accordingly, it becomes necessary to determine what duty or duties the defendant owed to the plaintiff in the circumstances of the present case, and whether it has been shown to have been in breach of any of such duties.

The position of a banker who is asked to advise on the financial standing or reliability of a customer was considered in the leading case of Hedley Byrne and Co. Ltd v Heller and Partners Ltd, [1963] 3 WLR 10; [1963] ALL ER 575; [1964] AC 465; 1963] 1 Llyod's Rep. 485, where a bank acting on behalf of the plaintiff addressed an enquiry to the defendant regarding the financial position of a customer for whom the defendant was banker. The plaintiff claimed that the reply which was furnished induced it to enter into business arrangements which resulted in very substantial losses when the defendant's customer went into liquidation.

Lord Reid (at p. 583 of the report) has this to say about the banker to whom such an inquiry is addressed:

A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without the reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification. If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require.

In Hedley Byrne, of course, the House of Lords was considering a situation which arose when one banker went to another looking for information in confidence about a customer, and with no pre-existing contractual relationship between the two bankers. In the case of a banker who is asked by his own customer to advise him on a matter concerning the customer's business relations with another party, and in circumstances where the banker may be expected to be in a position to give worthwhile advice, he is not quite as free to wash his hands of the whole affair as the hypothetical reasonable man in Lord Reid's example, and his duty of care may be somewhat more clearly defined than that of the banker who is merely doing an obligement for a fellow-banker. I would certainly rate his obligation as being more onerous than the duty merely to give an honest answer, which Lord Morris spoke about in the same case

Mr. Bredin, however denied that any enquiry was addressed to him at any time by the plaintiff concerning the financial standing of Andrew J. Towey, or his ability to meet his commitments, so that issue of fact arises for determination as well as the issues of law concerning the duty owed by the defendant to the plaintiff and whether the evidence discloses any breach of such duty.

As a second string to his bow the plaintiff relies upon the obligations undertaken by the defendant when accepting cheques from him for collection over a period of about 18 months while he was trading with Andrew J Towey as successor to his father's business.

The duty of a collecting banker is stated in general terms in Halsbury's Laws of England, 4th edn. Vol. 3, Par. 100, as follows:

In collecting cheques and other instruments for a customer a banker acts basically as a mere agent or conduit pipe to receive payment of the cheques from the banker on whom they are drawn and to hold the proceeds at the disposal of the customer … As agent for collection he is bound to exercise diligence in the presentation of the cheque for payment. He fulfils his duty if, when the cheque is drawn on a bank ... in another place, he either presents it or forwards it on the day following receipt. The forwarding may be to another branch or to an agent of the bank … Presentment by post is sufficient, and it would appear that when a bank forwards a cheque by post to the bank on which it is drawn the latter receives it as agent for presentment to itself, and in that capacity can hold it till the day after receipt ... If a banker fails to present a cheque within a reasonable time after it reaches him, he is liable to his customer for loss arising from the delay.

The judgment of Lavery J in Royal Rank of Ireland Ltd v O'Rourke, [1962] IR 159; 97 ILTR 112, suggested that in certain circumstances a collecting bank might have to regard itself as something more than a mere conduit pipe in relation to the transaction. He said (at p. 178 of the report):

It is, of course the duty of the paving bank to whom a bill has been presented for payment to deal with it forthwith, understanding by that word not "on the spot", but within such time as is reasonable. In determining what is a reasonable time we have no doubt that, though not so provided specifically by the Act, regard should he had to the nature of the bill, the usage of trade with regard to similar bills and the facts of the particular case.

Delay in dealing with a bill duly presented is the responsibility of the paying bank, though I would have no doubt that a collecting bank, or a bank presenting as holder, might incur a responsibility if it failed to use diligence in requiring the paying bank to deal with a bill presented and failed to treat a bill as dishonoured if there was undue delay, on the ground that payment could not he obtained.

In that case the court was dealing with a claim by a defendant who contended that the bank had not presented a cheque promptly and had not given her notice of dishonour promptly, so the issue the court had to determine was whether the bank had acted with due diligence within the domestic banking system.

In Dublin Port and Docks Board v Bank of Ireland, [1976] IR 118, the plaintiff, as payee of a cheque, claimed that the paying bank had acted irregularly in deciding which cheques should be met and which dishonoured, when the funds of the customer were insufficient to meet all cheques drawn on the account. It was held by the Supreme Court that the paying bank owed no contractual duty to a payee who happened to be a customer in another branch of the same bank. The plaintiff claimed that the paying bank should also be regarded as the collecting bank in certain circumstances. Kenny J at p. 142 of the report, said:

The duties of a collecting banker are to present cheques drawn upon another branch or on another bank for payment as promptly as possible and to credit the person who has lodged the cheque with the proceeds when they are received.

The obligations of the collecting banker were again considered recently in the case of Barclay's Bank v Bank of England, [1985] 1 All ER 385 in which Bingham J acted in the capacity of judge-arbitrator in an inter-bank dispute. That case, in common with most of the other reported cases on the subject, was concerned with the procedure to be followed when cheques were presented for payment through the interbank system for clearing cheques, which is not the situation obtaining in the present case.

Bingham J held that in the circumstances of the case he was dealing with, that of a bank receiving a cheque from a customer for collection through the interbank clearing system, the presenting bank's responsibility to its customer in respect of the collection of the cheque is discharged only when the cheque is physically delivered to that branch of the paying bank on which it is drawn, for a decision whether it should be paid or not.

The following passage appears at p.390f of the report:

The respondent contended that 'the duty of a banker entrusted with a cheque for collection is to take reasonable steps to obtain payment of the cheque and credit the proceeds to the customer's account or notify the customer that payment has been refused'. This formulation is in my judgment correct but must be read subject to the overriding statutory rule that the appropriate way to obtain payment under the cheque is (subject to an relevant statutory exception) to present it for payment as prescribed by s. 45 of the 1882 Act.

Coming closer to home, I have also had the benefit of two decisions — one by Gannon J and one by Murphy J — in other cases where cheques were dishonoured following upon the collapse of Andrew J. Towey's business, and where it was sought to impose liability on the banks which had been entrusted with the task of collecting payment on the cheques in question.

In Tulsk Co-Operative Livestock Mart Ltd v Ulster Bank Ltd High Court 1981 No. 3555 P (Gannon J) 13 May 1983, the following passage appears at p. 42 of the unreported judgment of Gannon J:

From these I infer that the mart sought and obtained from the bank the service presenting for payment to the bank upon which were drawn cheques payable to the mart and of obtaining such payment with a promptitude suited to the nature of the business being carried on by the mart as known to the bank. This is a type of service special to the banking service but which in the circumstances of this case required more diligence and care then mere routine banking procedures. In my opinion whether the length of delay in clearing a cheque is reasonable or not must be measured by the nature and requirements of the business in which the cheque is used to effect payment as known or made known to the banker and not merely by the conveniences of the Bank's staff or banking practices which are related primarily to the administration of the business of the bankers. For a business involving buying and selling cattle with a through-put of approximately four hundred beasts per week and an annual turnover in value in excess of £2,000,000.00, a delay of three weeks to clear an 'income' cheque on a sale to meet 'expense' payments on purchases could not be reasonable. The Mart was entirely dependent on the Bank in relation to the obtaining of payment on the £IR cheques drawn by A.J. Towey on the Silloth account. The bank in my view failed in the duty to the Mart which the Circumstances created of obtaining prompt payment on the seven cheques which were dishonoured and on the cheques for the immediately preceding months.

The nature of the relationship between the Bank and the Mart, the nature of the business of the Mart and its dependence on the services of the Bank, the nature of the financial commitments and the decisions in relation thereto of the Mart, the nature of the Bank's knowledge of and involvement with the Mart's financial commitments and decisions, all of which are disclosed by the evidence I have outlined, imposed on the Bank a duty of care to the Mart beyond that of a simple banker and customer relationship. The fact that there was the contractual relationship between the Mart and the Bank of customer and banker does not limit the duty owed to the Mart by the Bank if there are, as in this case manifestly there were, in the general relationship many other factors from which the law will impute a duty of care to avoid harm on what has come to be called 'the neighbour principle.

Murphy J, in Brennan v Bank of Ireland High Court 1981 No. 3556, (Murphy J) 23 May 1985 while deciding in favour of the defendant bank on the facts of that particular case, reached a similar conclusion to that adopted by Gannon J in relation to the obligations of the collecting banker as a matter of law. The relevant passage is found at pp. 11-13 of the unreported judgment and reads (in part as follows):

What the plaintiff says, however, is that the duty of the collecting Bank does not stop on presentation of the item entrusted for collection. The collecting Bank must exercise reasonable care to secure payment on foot of the document or alternatively procure and transmit without delay notice of dishonour.

It seems to me that in general the legal proposition for which the plaintiff contends is supported by the proposition taken from Harte's Law of Banking, 4th Edition, page 532, in the following terms:

'As his customer's agent in the matter, the Banker is bound to use reasonable skill, care and diligence in presenting and securing payment of the drafts entrusted to him for collection and in placing the proceeds to his customer's account or in taking such other steps as may be proper to secure his customer's interests'

He goes on to refer to the passage from the judgment of Lavery J in Royal Bank of Ireland Ltd v O'Rourke, already referred to in this judgment, and while recognising that it may be regarded as an obiter dictum in the context of a case concerning a collection on foot of a cheque presented through the Irish clearing-house system, he concludes, nevertheless:

…in substance I reject the proposition that the duty of collecting Bank ends with the presentation of the bill or other instrument entrusted to it for collection. Even when that has been done it seems to me that there is still a duty imposed on it - in the words taken from Harte's Law of Banking aforesaid, 'to take such other steps as may be proper to secure the customer's interests.' (at p. 13)

From this recital of legal principle I deduce that in the circumstances of the present case the obligations of the defendant towards the plaintiff, in its capacity as collecting banker, did not end with the due presentation in good time of the cheques for payment at Silloth, but involved a further obligation to take reasonable steps to safeguard their customer's interests in the matter of collecting payment on the cheques and crediting their customer's account with the proceeds of same. Secondly, I deduce that if the evidence establishes to my satisfaction that the plaintiff consulted the defendant by making enquires directed by a customer to his banker, as to the creditworthiness of Andrew J. Towey-and the advisability of continuing to supply large consignments of cattle against cheques drawn on the Silloth account, there was a duty on the hank manager in giving a reply, not to be negligent, in other words, a duty to use all care and skill that could reasonably be expected of him in the circumstances of the particular case

I propose to consider first the steps taken by the bank in relation to the cheques given to the plaintiff by Andrew Towey or his agents, and lodged with the defendant for collection.

From the facts already recited in an earlier part of the present judgment it is apparent that at times, during the years 1979 and 1980, it was possible to collect payment on such cheques with a period of only eight or nine days elapsing between the handing in of the cheques to the Castlerea branch of the Ulster Bank Limited and the crediting of the customer's account with the proceeds. The evidence satisfied me that there was no delay in getting the cheques from Castlerea to the overseas department in Dublin or from there to Silloth (once it had been agreed that presentation to the National Westminster Bank in Threadneedle Street, London, could he by-passed). The cheques must have been reaching Silloth within three or four days of lodgment for collection with the Castlerea branch of the Ulster Bank. The procedure then was that Silloth (if the account were in funds or if the drawer of the cheque had made the necessary arrangements with his bank to ensure that the cheque would be met on presentation) was to notify the Head Office of the National Westminster Bank in London and they in turn were to notify the Ulster Bank in Dublin to debit the account in £IR held by the National Westminster with the Ulster Bank in Dublin.

Accompanying each cheque was a message requiring the National Westminister to communicate the decision regarding the 'fate' of the cheque by tested telex was the cheque unpaid upon receipt, or was their account in Dublin to be debited with the amount of same?

Having regard to the means adopted by the Ulster Bank for presentation of the cheques to the National Westminster, (a bank within the same group as the Ulster Bank), even a delay of eight or nine days was hard to justify, and both the plaintiff and the defendant were very concerned about the delays in payment which occurred throughout the latter half of 1979 and the whole of 1980, particularly as the delays became more serious with the passage of time. There were repeated communications on the topic between Mr. Bredin, the manager in Castlerea, and the plaintiff; between Mr. Bredin 'and the Southern Regional Office; between Mr. Bredin arid the overseas department of the Ulster Bank in Dublin; between Mr. Bredin and his regional advances controller; and between the regional advances controller and the chief advances controller at the head office of the bank in Belfast.

A curious feature of all this documentation, taken in conjunction with the oral evidence given in the case, is that it failed to answer the question which was uppermost in everyone's mind — what in fact was happening when a period for 20 or 30 days went by between the presentation of the cheque and the crediting of the proceeds to the account of the customer? It is fairly clear that at the end of the day the cheques were being let lie in the Silloth Branch while Andrew J. Towey hunted around for money to meet them but it is a matter for speculation as to whether the reason for the delays was the same throughout the entire 18 month period.

From time to time various explanations were canvassed — the postal strike in Ireland (which ended in July 1979); the fact that the cheques had to go through London on their way to Silloth (while this system was in operation). Later when the manager at Silloth was brought into the debate, he explained at different times that Silloth was quite a small branch, with no telex and no foreign exchange department; that he was short-staffed; that his assistant manager had fallen out of an apple tree and injured himself; and that large cheques were put by for the manager to deal with himself, personally.

The plaintiff was advised from time to time to persuade Andrew J. Towey to adopt some other method of payment which would solve the problem of the delays. It was suggested that he should open an account in Ireland and make payments out of that account; that payment should be remitted by telegraphic transfer from Silloth; that agreement should he sought from National Westminster to the system of 'negotiation with recourse', whereby the plaintiff would be credited with payment as soon as he presented the cheque for collection in Castlerea and the Ulster Bank should have authority to debit the National Westminster account in Dublin immediately; or even that the plaintiff should seek payment in sterling cheques instead of accepting cheques drawn on an Irish £ account in England.

The plaintiff was quite co-operative in seeking the agreement of Andrew J. Towey to these arrangements but met with stalling tactics or blank refusal whenever he sought a change from the existing arrangements. There were vague suggestions that Andrew J. Towey was in the process of selling out his properties in England and intended to return to live in Ireland and would then open a new account in Ireland from which all further payments would be made.

In the meantime, delays in payment continued, and the plaintiff's account in Castlerea was not credited with payment until payment was actually received through the National Westminster Bank. This resulted in the plaintiff's account in Castlerea being overdrawn regularly to an extent which went far beyond the permitted limit of £65,000, and overdraft interest at an enhanced rate built up to alarming proportions — the figure to the end of 1980 coming to a sum in the region of £10,000—£12,000. As it was agreed between the plaintiff and his cousin that the entire amount of overdraft interest incurred by the plaintiff was attributable to moneys expended by him on behalf of Andrew J. Towey, the latter agreed to be responsible for payment of this interest, but in the events which happened he never lived up to his promise in this regard.

One of the results of the delays in payment was that the plaintiff while awaiting payment on cheques already sent for collection frequently found himself in the position of making further deliveries to the Ballaghaderreen factory and receiving further cheques which also went off for collection, overlapping with those which already been dispatched. For example, the plaintiff lodged cheques totalling almost £30,000 for collection on 31 December 1979 but did not receive payment until 29 January 1980. In the meantime he had made further deliveries and received further cheques on different dates during the month of January 1980 for a total amount exceeding £40,000. He was not in a position where he could await a decision on the fate of the first cheque before deciding whether to accept another in payment.

Andrew J. Towey was a customer of the Ulster Bank as well as the National Westminster Bank, and both banks had a good deal of information about his position in business throughout 1979 and 1980. His principal account, with the National Westminster Bank, had overdraft facilities up to £lm,, which, as of January, 1980, were being 'fully utilised' — I take this as meaning in banking parlance that he was regularly overdrawn up to the limit. As security the bank had legal charges on 607 acres of land in the United Kingdom and on two lots of land in the Dublin area, totalling 141 acres (which formed part of his father's estate).

Towards the end of 1979 he purchased a slaughterhouse and factory at Ballaghaderreen for £600,000, paving a deposit of £80,000, with a commitment to pay the balance in November, 1980. It appears that he intended to sell off his properties in the United Kingdom, pay off his liabilities to the National Westminster Bank, and return to Ireland to devote himself to the dead meat trade in Ballaghaderreen. With this in view he applied to the Ulster Bank for finance totalling £1.45m., in January 1980, to be divided as follows: £lm. in favour of Towey and Co. Ltd and a £350,000 facility in favour of Andrew J. Towey himself. The bank were unwilling to grant the facilities requested and referred the application on for consideration by the Ulster Investment Bank, who also refused. The UIB were prepared to finance the live cattle export trade in Andrew J. Towey's sole name to the extent of £280,000, if suitably secured by charges on assets in Ireland, but this proposal was never taken up.

It is useful to consider the picture built up of Andrew J. Towey by reference to internal Bank communications during the relevant period.

In the latter half of 1979 various suggestions were put to him on the advice of the bank as to methods of payment which would have relieved the plaintiff from the delays he was experiencing, but none of these was acceptable to Andrew J. Towey although there was no obvious reason why he should have rejected them.

On 5 November 1979 Mr. Bredin wrote to his Regional Advances Controller with the news that the plaintiff informed him that Andrew would soon be taking up residence in Ireland, and future payments would be made in cheques drawn on an Irish bank. The message concluded: 'We are still awaiting proceeds of IR£42,417 cheque sent for collection on October, 30". (A delay of only seven days provoked this comment, although at the time the plaintiff's account was within the permitted limit).

On 10 January 1980 Mr. Bredin wrote as follows to the Regional Advances Controller:

Andrew Towey's sister was arranging that all funds due to holder would in future be routed direct by Telegraphic Transfer from National Westminster Bank limited, Silloth. Unfortunately this system has not been utilised and the previous delays with clearance of IR£ cheques arc still being experienced. Incidentally, Andrew Towey telephoned me some time ago and he promised to call to this office in the near future with a view to transferring his account from Nat West, Silloth, to a bank in Ireland

Presumably as a result of this information the Ulster Bank asked the manager at Silloth for a report on Andrew and elicited a reply dated 25 January 1980 a copy of which was sent to Mr. Bredin in Castlerea. The manager at Silloth commenced by saying: 'As you will recall, Andrew is most secretive by nature and therefore he would not by choice want me to disclose any information despite our group connection …' He continued by giving information about the 'fully utilised' £1m. facility at Silloth, and the purchase of the slaughterhouse at Ballaghaderreen, and concluded: 'I trust this will give you the background to what is a complex operation. You will appreciate by the size of the facilities afforded to him, that Andrew has built up an excellent reputation with us.'

There followed the unsuccessful application to the Ulster Bank and to the Ulster Investment Bank for facilities which would, perhaps, have enabled Andrew J. Towey to extricate himself from his commitments to Silloth and the year 1980 went by without him ever having lived up to his stated intention to dispose of his lands in the United Kingdom, or to open an account with an Irish bank for the purpose of paying for supplies to the meat factory, or to make any of the other arrangements which would have enabled the cheques drawn on the Silloth account to be met immediately.

What made the situation more explicable was the fact that Andrew bought a residence in Ireland to which he appears to have moved by the end of 1979 (see letter of 9 November, 1979, Mr. Bredin to Regional Advances Controller), and apart from the account with the Ulster Bank in Castlerea from which the factory wages were paid he was also maintaining accounts with the Ulster Bank in O'Connell Street, Dublin, into which all of the massive payments for meat sold into intervention were going. Yet, for some reason known only to himself, but which can be guessed at with a good deal of confidence, he insisted on by-passing both of these accounts in making payments for cattle supplied to the factory, and continued to pay from an Irish £ account in an English bank, with all the difficulties and delays that flowed from that course.

Having turned down Andrew J Towey's application for £1.35m. facilities in the period from January to March, 1980, a report went from the Ulster Bank Southern Regional Office to the Head Office in Belfast on 26 March, 1980. It referred to a press cutting in the Farmers' Journal which said that a number of readers had been in touch with them complaining about the delays in having Towey Meats' cheques cleared. The press report continued: 'It seems odd that Andrew Towey, when he bought the Ballaghaderreen plant from the Cunniffe family did not arrange adequate bridging facilities here pending realisation and transfer of funds from the U.K. However, according to a company spokesman, formal banking arrangements are currently being finalised with an Irish Bank, so suppliers will be able to cash their cheques immediately.' The internal bank report, emanating from R.W. Geelan, regional advances controller, having dealt with the history of Andrew J. Towey's application for facilities to the Ulster Bank, concluded as follows:

Additional factors which go to further strengthen our view that we should not become involved with the meat plant are that Mr. Towey is known to us for a long time through dealings at O'Connell Street Branch and is known as a difficult character to handle. He has no experience of running a meat plant and information given to us some months ago was that financial control in the plant consisted of twice weekly visits by a representative of a firm of Auditors based in Sligo. Taking all the foregoing factors into consideration we do not, therefore, propose pursuing the matter further.

Another press cutting circulated within the bank at the same time referred to Towey Meats as one of the creditors affected by the collapse of the T.G. Hawker meat company 'leaving banks and creditors to write off £4.4 million between them.'

The supply of cattle to the factory would have been at a low ebb during the first half of 1980, resuming around July and gathering momentum from that time until the end of the year. The plaintiff said he resumed dealing with Andrew in the June/July period but before doing so he was concerned about a report circulating in the area that Andrew was being sued by a haulage contactor called O'Connor, who could not get paid, and the plaintiff checked with Mr. Bredin about this report. On the 8 July 1980 (whether inspired by an approach from the plaintiff or otherwise) Mr. Bredin again sought a status report from Silloth concerning Andrew J. Towey. In doing so he wrote as follows:

You will be aware that Mr. Towey approached us for facilities totalling £1.35m. but we declined on the grounds that he was already committed to you and we were awaiting until his UK assets had been sold. Recent reports circulating among farmers and cattle dealers would suggest that Mr. Towey is under some financial pressure. In fact one of our customers, a haulage contractor, has issued legal proceedings for recovery of £50,000 due to him. Given the doubts surrounding Mr. Towey's business methods lately, it would be greatly appreciated if you would bring us up to date regarding his present borrowings with you and the progress achieved in disposing his assets. Did you dishonour any of his cheques in recent months?

The reply from Silloth, dated 16 July, 1980, was in the following terms:

With reference to your letter dated 8 July, I would confirm that the facility at this Branch remains at £1 million but that negotiations are presently taking place on Mr. Towey's application for increased facilities.

I would like to dispel any rumour that we have ever dishonoured any of his cheques as this is quite untrue. I am sorry to hear that one of your customers is sueing him for £50,000. I knew nothing of this and perhaps there could be a dispute. But there is no doubt that at the present time he is short of working capital which is the reason he is asking for more.

He has just put the larger of his two Scottish farms on the market and this unit of some 340 acres is expected to sell for a minimum £500,000. He also has a local private house for sale for which he is asking over £60,000. So you can see that early sale of the farm would make such a difference to the present situation.

On 27 August 1980 Mr. Bredin wrote to the regional advances controller saying that he was awaiting proceeds of £85,914 cheques drawn in favour of the plaintiff, some of which had been forwarded on 5 August. He continued:

We were able to obtain clearance on these cheques within ten days last Autumn. Nat West, Silloth, confirm that Mr. Towey is still a satisfactory customer but from reports circulating in this area he seems to be adopting a cavalier attitude when the subject of payment for cattle is broached.

More correspondence ensued, and on 1 September 1980 Mr. Geelan, regional advances controller, wrote as follows to the chief advances controller at head office:

Holder (i.e. Michael Towey) was quite agreeable to the suggestion of making payment by telegraphic transfer, however Andrew J. Towey has insisted on paying all bills by cheque in order to call an additional period of credit in England while the cheques are being cleared.

On 16 September 1980 Mr. Hannon, manager of the overseas department wrote to the regional advances controller about the delays they were experiencing in collecting payment on cheques of Andrew J. Towey sent to Silloth. He said that he had telephoned Silloth two weeks previously.

I learned from the Branch that A.J. Towey was experiencing grave difficulties in funding the account, something which National Westminster Bank Ltd's letter would appear to substantiate, and that this situation contributed in the main to the delays experienced. It was outlined to me at that time that an improvement was expected in A.J. Towey's financial affairs and that as a result of this we could look forward to receiving proceeds much more swiftly.

I would be inclined to believe National Westminster Bank Ltd, Silloth's reason for the delay in remitting proceeds and not until Mr. Towey's financial situation is improved shall we enjoy any great improvement in the situation.

This information was passed on to Mr. Bredin by the southern regional office by letter dated 30 September 1980.

On 8 October 1980 Mr. Bredin wrote to the southern regional office about the plaintiff's overdraft which was then standing at £134,522 and said that he was awaiting payment of £143,576 on cheques forwarded to Silloth. He continued:

Since it takes three weeks on average to obtain 'clearance' on these cheques, excesses of this nature are likely to be a feature over the winter months. Holder purchases cattle on a commission basis for his cousin Andrew J. Towey and since there is resistance locally among farmers towards supplying Mr. Towey's factory direct with cattle he relies heavily on our customer to maintain supply levels.

On 3 October 1980 Mr. Bredin had taken the initiative again, and had applied to Silloth for a report as to whether Andrew J. Towey might be regarded as 'good' for £500,000 on an unsecured basis, adding 'at any given time customers of this office could be owed this amount by Mr. Towey.'

The reply, dated 15 October 19S0, is obviously an important document in the context of the present case. It reads as follows:

On the financial information presently before us, customer continues to be good for his normal trade debts which would include your figures as in relation to high turnover on the account, they are reasonable. However we would always advise caution when looking at such large unsecured figures as there is no doubt that a trade risk is always present especially in the present economic climate. Your customer must take this into account. So we do advise caution. Finally, it will be helpful to point out that within one month we expect this connection to be strengthened as we are expecting to receive conclusive evidence that a limited company has been formed. This would have the effect of introducing Directors of substantial means.

Concurrently with this exchange of communications, Mr. Bredin was writing to Silloth on 16 October, 1980, complaining about the delays in dealing with cheques drawn on Andrew Towey's account, and sent for collection. He said (inter alia):

This operation last year took an average of 10 days but of late, it is taking IN EXCESS OF THREE WEEKS to receive payment.

Naturally, I am worried by this development and trust that Mr. Towey's financial standing with you has not deteriorated in recent months.

Since this Branch is awaiting 'Clearance' of funds in excess of £200,000 at the moment, you can well appreciate my anxiety.

A reply was received, dated 24 October 1980, referring to the reply already sent to the banker's enquiry and continuing:

Over the past month more and mote Irish Banks have been short-circuiting our established system which calls for presentation of Currency Cheques to our London Overseas Branch who are equipped to deal with them. More and more cheques have been arriving direct to our Branch and as we do not have a Foreign Department and, indeed as I have been without my Under-Manager for one month following an unfortunate accident, we have struggled to effect as rapid a turnover as we would wish but we are now more on top of the situation though I will be without my Under-Manager for at least one more month. The turn-around now is between 5 and 10 working days depending on the size of the bills as over a certain figure they require my personal sanction and have to take their turn. I note that your next Collection yet unpaid is one received 13th instant totalling £38,161.57 and I expect this payment to be on its way early next week.

If you so decide, you may ask your Overseas Branch to follow the instructions on the cheques and present through our Overseas Branch in London. Please note also that we cannot follow your Overseas Branch instructions to pass charges for account of Drawer neither can we give advice by telex as we do not have this Service, They would need to deal with London if this Service is required.

This correspondence was passed on by Mr. Bredin to the regional advances controller, southern regional office, enclosed in a letter dated 30 October, 1980, in the course of which he said:

… we have now reached the stage where delays of almost one month are being experienced. (He then refers to the explanation given by Silloth and continues) This hardly explains the 'additional' 15 or 20 days extra compared with similar collections last year.

If there is a funding problem at Nat West's end and if our customer is in any way at risk, I would expect us to receive due warning. You might consider it advisable to liaise with Nat West Regional Office on this matter.

Mr. Geelan, the regional advances controller, wrote in turn to the chief advances controller at head office, referring to the plaintiff's overdraft, then standing at £171,176, as against the permitted limit of £65,000, and enclosing correspondence about the delays in payment and the Status Inquiry on Andrew J. Towey and Company. He concluded with the following observation:

It would appear that Andrew J. Towey is experiencing difficulty in funding the account and this is the main reason for the long delay in receiving payment, we will report further in ten days.

Head office replied to Mr. Geelan on November 1980 referring to the plaintiff's overdrawn account and saying:

In view of the guarded nature of the National Westminster Bank report on A.J. Towey & Company (Exports) we should exercise extreme caution before paying cheques, which will increase the borrowing substantially in excess of the current limit, in expectation of receiving lodgments from the uncleared cheques. There are obvious dangers in allowing the balance to increase in this manner and while we appreciate the problem is not of the customer's making they should be made fully aware of the difficulty and of our attempts to find a solution. It would seem that until the administrative problems are resolved at Silloth Branch of National Westminster Bank there will be little improvement in the situation …

This was passed on by Mr. Geelan to Mr. Bredin on 13 November 1980. On 3 December 1980, Mr. Bredin again wrote to Silloth about the delays in clearing cheques. He said;

You will know from your own records that cheques sent by us to you for collection are taking more than ONE MONTH to 'clear' and this development has led to a certain unease among local cattle dealers and Marts who deal on a very extensive scale with Mr. Towey.

In my letter of 8 July I specifically asked if you had occasion to dishonour any of Mr. Towey's cheques and I was reassured to hear from your letter of 16 July that such an allegation was 'quite untrue'.

Being a member of the Nat West Group, we are naturally anxious to ensure that no customer of the Ulster Bank is at risk by dealing with our client.

You will readily appreciate my concern in this regard as the amounts involved over a period of one month or more are quite substantial. One customer alone is presently awaiting receipt of proceeds in excess of £300,000 ... Should you detect any deterioration in Mr. Towey's financial situation, I would be much obliged if you could acquaint either Mr. Leaden, Director, or myself of the situation.

Another internal bank document dated 8 December 1980, this time from southern regional office to chief advances controller, head office, dealt at some length with the plaintiff's overdrawn account and refers to explanations coming from Silloth for delays in clearance of cheques — referring to staff shortage, '… as well as which the Manager there has on occasion intimated that he has had no authority from the customer to pay the cheques, or alternatively has been advised by the customer not to pay. It is really difficult to understand how either of the latter two explanations are particularly relevant.'

On the same date, Southern Regional Office wrote to Mr. Bredin:

We are quite astonished to see the level of excess on this account and the reasons which have been put forward. It is scarcely credible that delays of up to six weeks are being incurred in what should be a relatively simple procedure of cheque collection. The matter has been taken up at higher levels and you will be advised of the outcome

Head office group advances department wrote on 9 December, 1980, to southern regional advances controller:

As you know we take a serious view of the unauthorised excesses which have been permitted at Branch and we have been in touch with National Westminster Bank Limited, Northern Regional Office who are conducting an investigation into the circumstances which delay payment of the cheques sent for collection,

We are seriously concerned about the danger that some of the cheques may not be paid and in the circumstances we ask you to keep us closely advised of developments and we note the instructions which you have given to the Branch …

In a report of the same date to the director of branch banking from the group advances department, reference was made to 'Andrew J. Towey … whose business is short of working capital' and to the fact that 'some £317,000 worth of A.J. Towey's cheques payable to Michael F. Towey have been sent on a collection basis to National Westminster Bank . Normally it takes approximately ten days to receive the proceeds of cheques sent for collection on this basis but in the present case some cheques are outstanding since 29 October 1980.'

The report then continues:

On receipt of the information about the debit balance on the Castlerea branch account we telephoned Northern Regional Office at National Westminster Bank, Manchester. As a result of their preliminary enquiries a full scale investigation is now under way. We are not at all sure that payment of the cheques sent for collection will definitely be forthcoming.

Mr. Bredin wrote to the plaintiff on 9 December 1980, retailing to him the southern regional office's concern about the level of his overdraft and— yet again—suggesting that he should contact Andrew J Towey 'in an effort to streamline the present system of payment'. He also warned the plaintiff of the danger that the bank might find themselves obliged to return cheques of the plaintiff with the answer—'Effects Not Cleared'.

On receiving this letter the plaintiff called to see Mr. Bredin on 11 December, 1980. He said that Mr. Bredin told him that a meeting was taking place between Andrew J. Towey and National Westminster Bank about the delays on the cheques. 'I thought that was good news, and he promised to keep me informed. At last I thought something was being done.'

He was called in to see Mr. Bredin again on 15 December 1980, and was told that 'there was something the matter across the water, and the feed-back from Nat West was not good ... he would keep me informed.' The plaintiff said that that was the first time he had serious doubts about the cheques. On 17 December his wife told him that Mr. Bredin had telephoned to say that the cheques were being returned unpaid. There followed a period of intense activity on the part of the plaintiff, representatives of Tulsk Mart Ltd and other creditors of Andrew J. Towey, as a result of which Tulsk Mart Ltd were paid a sum of £100,511.15 of the amount due to them, on 5 January, 1981, but the plaintiff in the present proceedings recovered nothing.

Turning to the oral evidence in the case, the plaintiff said that from the time he commenced doing business with Andrew J. Towey after the death of Andrew's father in July 1979, there were problems about delays in payment coming through on the cheques drawn on the Silloth account. Initially the defendant bank waived a claim to interest in respect of part of the delay period; at a later stage Andrew J. Towey agreed to take responsibility for any overdraft interest he might incur, as overdrawings on the plaintiff's account were attributed to dealings on Andrew's behalf. A similar arrangement had previously been accepted by Andrew's father, Michael, while the plaintiff was working for him. However, this did not satisfy either the plaintiff or his Bank as there was always some pressure on the plaintiff about the extent of his overdrawings, and various solutions to the problem were suggested by the defendant and passed on to Andrew by the plaintiff. Andrew would not agree to any method of payment other than payment by cheque drawn on his Irish pound account in Silloth.

From February to July 1980, the Plaintiff said that he did very little business with Andrew because of a falling-out. When he was asked to resume buying for him in June 1980, he claims that he consulted Mr. Bredin and asked his advice as to whether he should go back to work for Andrew —'was he as sound as before?' This inquiry, he said, was inspired by rumours circulating about Andrew—apparently with particular reference to the claim by the haulage contractor who had to sue for money due to him.

In reply—'Mr. Bredin assured me that there was no problem with A.J. He was as good to work for as anyone else. A person suitable to do business with. He knew about the volume of the business. I can't say if delays in collecting on the cheques was mentioned.'

The plaintiff says that in reliance on this advice he went back to work for Andrew on the same basis as before. In fact he made him a personal unsecured loan of £56,000 at the end of June 1980 because he said he needed Irish pounds—this was repaid by 12 July 1980.

From that time on the plaintiff said that he continued to work for Andrew J. Towey, but had repeated contact with Mr. Bredin as his overdraft interest kept rising. 'Every time I met Mr. Bredin we talked about the deal. I asked him about the cheques—I didn't understand. I asked were they limited company cheques. Mr. Bredin said, no—they were personal cheques and had the backing of A.J.'s vast assets, which we went through together—600a. in Scotland; a residence in Silloth and land nearby; 150a. in Co. Meath; 35a. at Ashtown—very valuable; a family residence near Dalkey valued at about £750,000; a house in Dalkey purchased in 1980, cost about £81,000; a site at Boyle; the meat factory at Ballaghaderreen; a lot of equipment and lorries.'

He said that while Mr. Bredin told him Andrew Towey was being sued by another man for £50,000, he did not tell him at any time that he owed the Bank in Silloth £1m., or that he had sought and been refused facilities for £1.3m. on application to the Ulster Bank and Ulster Investment Bank, or that he had great difficulty in funding the account in Silloth.

In September/October 1980 Mr. Bredin gave as a reason for the delays in payment of the cheques, the shortage of staff at Silloth. 'He didn't say he did not accept this as a reason. I assumed he accepted it. He never advised me I should exercise extreme caution in my dealings with Andrew Towey or not to allow my account to be overdrawn on that basis.'

The plaintiff then referred in detail to a meeting with Mr. Bredin which he said took place on 20 November 1980. He said that Mr. Bredin told him he was more than £200,000 overdrawn. 'No way you would be let up there only for those cheques of A.J. which have gone for collection. We went over the procedure about collection, notice by telex, and A.J.'s assets as before. He said he had letters from Silloth reassuring him. I asked could I see them. He said, 'no', they were confidential bank documents. He took down the file and quoted from it the reasons why the cheques were not being paid more quickly: (1) shortage of staff in Silloth; (2) under-manager out, due to accident; (3) cheques—some for very large amounts and had to get the Manager's personal attention. He reassured me that everything was O.K. I was not told anything about the date of these letters or about A.J.'s ability to meet his liabilities to the bank. I left the office reassured the cheques would be met (including the first cheque in this claim). "If unpaid within a week notify by mail or telex"—with every cheque. I took it that if the cheque was gone 6/7 days, no way could it come back unpaid.'

The plaintiff said he had a similar conversation when he visited the bank on 2 December 1980. They discussed Andrew's financial position and he was told—'Everything alright—no need to worry—cheques slow but sure'—the last expression being one which he said Mr. Bredin used on many occasions. He had further meetings with Mr. Bredin (as already referred to) on 11, 15 and 17 December 1980.

Douglas Smith, a banking expert called on behalf of the plaintiff, had been 43 years in the employment of Lloyd's Bank in England and had several years experience as branch inspector, and as manager in a number of London branches of the bank. He stressed that a bank, whether dealing with a collection through the clearing-house system or a special collection of a cheque coming from overseas, was not entitled to take instructions from its customer to delay payment. Furthermore, it should comply with instructions accompanying the cheque, otherwise it would be guilty of dereliction of duty.

Asked about the circumstances of the present case he said the manager in Silloth should have returned the cheques, either paid or unpaid.

He considered that the question of the delays in payment should have been taken up at a higher level in the National Westminster Bank by the Ulster Bank, at a much earlier stage than they did. 'It is not enough to write continually to the same branch' ... 'I would have told my customer to exercise caution ... Overseas should have contacted Nat West in Threadneedle Street, and kept going up ... The delays in payment should have put the Ulster Bank on the alert. They knew he was also dealing with other customers who were having difficulties (in getting payment). They should have put great pressure on him. I would not have been willing to pay cheques in reliance on uncleared effects of this magnitude. (The plaintiff) should not have been allowed to overdraw beyond the limit.'

In cross-examination he said that in the circumstances of this case he would expect payment back in 8/10 days. He would send only one reminder or 'tracer', then expect payment or return of cheque. If no response he might then phone the Agent; then go to a Senior Officer, then to Chief Inspector. 'I must know the "fate" of the cheque at the earliest date so that he (my customer) can stop trading if not paid.'

He described holding a cheque without paying or returning as a 'cardinal sin' in banking. He would interpret the phrase, 'Grave difficulty in funding the account' as meaning that the customer had not enough money to meet these cheques. He regarded the reply to the Status Inquiry in October 1980. as unsatisfactory—'he is really saying "I can't tell you"—looking for a reason not to answer.'

Mr. Bredin, who was the manager at Castlerea at all material times, gave evidence for the defendant. To a very considerable extent his evidence was in line with that given by the plaintiff, but he flatly denied that the plaintiff had ever consulted him about the credit-worthiness of Andrew Towey, and in particular he denied that any inquiry of this kind was made to him in the month of June 1980, when the plaintiff claims to have resumed business with Andrew after their falling out the previous February, or on 20 November 1980, or 2 December 1980.

He accepted, however that the plaintiff was in constant communication with him throughout much of the years 1979 and 1980 about the delays in getting payment on Andrew Towey's cheque and was very concerned about this at all times—to such an extent that the plaintiff volunteered to go to Dublin and take the matter up with a member of the Government. He saw the plaintiff once or twice a week all through 1980, in his office, and they discussed the plaintiff's account, the delays in getting payment on the cheques, and the nature and extent of Andrew Towey's assets. He said that he felt reassured by what he was told by Silloth on any occasion that an inquiry was addressed to them about Andrew Towey's standing with them.

While insisting that the plaintiff had never addressed a specific inquiry to him about Andrew Towey's credit-worthiness, Mr. Bredin conceded nevertheless that if there was a risk, he had a duty to his customer to warn him. 'He would be entitled to expect such warning. If Andrew Towey's bank had told me there was a difficulty about payment, I would have told the plaintiff.'

He considered, however, that it was vital that such information should come from an authenticated source. 'It must of necessity come from his bank, from whom I had ongoing information. The report of his bankers would be authenticated information. I could not rely on hearsay.'

Asked whether it was now apparent that Silloth were putting cheques aside and not dealing with them, he replied: 'It would appear so. They were holding onto them for a long time and I would not condone it. In retrospect, you cannot do business with a bank which does business that way.'

He said he was on to Silloth from late 1979 and to Overseas about twice a week if the proceeds were not back after two weeks. He was never told that payment was being held. Asked was there something wrong along the line, he answered: 'Yes. I traced it back. The delay was caused by National Westminster, Silloth not getting it out as fast as they should. Our overseas department knew precisely where the blame lay, and knew something was wrong in Silloth.'

When asked why he did not go higher in National Westminster he replied that it would not be his function. 'I would have to get some higher authority to do it. I suggested in October 1980, that they should do so.' He said that he also raised it at an executive staff meeting in Galway in September 1980, saying that it was a bone of contention with his branch.

He said further: 'If I knew Andrew J. Towey was risky, I accept I would have had a duty to tell Michael Towey even if he asked me or not.' His good opinion of Andrew was based on reports received on 25 January 1980; 8 July 1980; 3 October 1980 and 24 October 1980, and constant contact by telephone with National Westminster, Silloth, who never suggested that Andrew was other than financially credit-worthy.

He was asked about the communication from Mr. Geelan on 30 September 1980, stating that Andrew Towey was experiencing great difficulty in funding his account and this was the main reason for the delays experienced in receiving payment'—was this not concrete evidence that he was in trouble? He replied: 'That is correct. I wrote to National Westminster on receiving this report. This was completely at variance with what I have been told by Nat West. I didn't believe it'. He said that he did not get onto Mr. Geelan. 'Nat West denied that statement. The information was supposed to come from Silloth. There was no directive with Mr. Geelan's letter. He didn't say he had concrete information. I took it on my own initiative to check with Nat West and they seemed to back up what they had always told me.'

As regards Mr. Geelan's letter of 13 November 1980, saying 'He (Michael Towey) should be made fully aware of the difficulties', Mr. Bredin said he interpreted that as referring only to the difficulties which had always been encountered in getting the money back to the plaintiff's account from Silloth.

Giving his over-all impression of what had happened, he said: 'The only regret I have is that Regional Office Nat West didn't get onto us earlier and tell us the real reason for the delay ... Regional Office Nat West should have been alerted and could have saved a lot of money for Irish customers. Our Head Office should have alerted them.' 'You did suggest to your Regional Office (30 October 1980) that they should have done so?' Answer 'I thought it was a prudent step at the time.'

Again, in retrospect, he expressed the view that the Ulster Bank should not have accepted the Silloth assurances and should have contacted regional office (Nat West) earlier.

Joyce Irwin, manager of the defendant's overseas department, had been assistant manager in the 1979/80 period. She was unable to say why the cheques were not paid within two weeks. She herself telephoned Silloth on a number of occassions in August 1980, and on a few occasions could only get the sub-manager. He would say they were dealing with it. Mr. Hannon, her manager, telephoned Silloth at her request in September 1980 and again, could only get the sub-manager. She said she was first told about difficulty in funding the Silloth account at the beginning of September 1980. She was referred to a letter dated 16 September 1980, from Mr. Hannon, Manager, overseas department, to the southern regional advances controller in which Mr. Hannon stated:

… in an effort to ascertain the reason for these delays I contacted National Westminster Bank Limited, Silloth, by telephone two weeks ago.

I learned from the Branch that A.J. Towey was experiencing grave difficulties in funding the account, something which National Westminster Bank Ltd's letter would appear to substantiate, and that this situation contributed in the main to the delays experienced

Asked had she passed on this information to Mr. Bredin, she was unable to say whether she had or not. In response to a further question she said:'I wouldn't have thought it necessary to pass on this information.' She agreed that her department never took the matter up at a high level with National Westminster during 1980.

Anthony Brown, Foreign Trade Manager, International Division, Williams and Glynn's Bank, England, called as a banking expert on behalf of the defendant, said that in dealing with cheques coming from Ireland for collection the lapse of time between presentation and payment would be 7/8 days at best, 18 days at worst. He said that if a batch of cheques were outstanding for a long period from the same person for substantial sums, he would not think it appropriate just to send a second 'tracer'. 'We would be contacting the Branch. If getting answers which were not satisfactory, we would refer to the other International Division of the drawer bank. If that did not work, we would refer it to my senior who would contact his opposite number in the other bank.'

Asked how it would affect his decision if he had information in the International Department that the drawer was having great difficulty in funding his account, he replied: 'I would make my customer aware of that. I would take care.'

If he found on enquiry that a cheque had arrived and had not been dealt with, he said: 'I would refer to my senior manager. I would tell my branch, 'I am having difficulty in getting payment and expect branch would tell the customer.'

He was then asked, on re-examination: 'If you knew of a pattern (of delays) for six months, but always getting paid, would it affect your decision'? A. 'As collecting manager, my job is to get proceeds. Delays would be the problem of the Branch Manager.'

Barry Lane, who was attached to the O'Connell Street branch of the Ulster Bank in 1979/80, gave evidence of the operation of Andrew J. Towey's accounts with the branch from August to December 1980, showing that a No.1 account was receiving MCA payments from the Paymaster-General for the export of cattle to the United Kingdom, and a No.2 account was receiving Meat Intervention Payments, with a mandate to transfer the funds to a current account of Andrew J. Towey in the Threadneedle Street Branch of National Westminster. Funds transferred in this manner from August to December 1980 totalled close on two million pounds, in respect of which he gave the monthly figures.

I can deal at this stage with the disputed issue of fact as to whether the plaintiff ever consulted his bank about the credit worthiness of Andrew Towey and asked for its advice as to whether he should continue to do business with his cousin and take his cheques in payment.

Mr. Bredin is adamant that no such specific inquiry was ever put to him by the plaintiff, while the plaintiff is equally adamant that he did seek such advice.

The first time the plaintiff claims he consulted Mr. Bredin in this manner, by way of express inquiry directed to the financial standing and stability of Andrew Towey, was in the month of June 1980, when he was invited to resume his work as buying agent for Andrew. If such an interview took place, one would expect it to be in the forefront of the plaintiff's claim, yet there is no mention of it in the Statement of Claim and this must cast a considerable doubt over the plaintiff's version of what took place at that particular time.

I think, however, that this contest between the parties may not be so important when it is seen what measure of agreement exists between them about their contacts with each other. Both agree that in 1979 and 1980 the plaintiff was calling on Mr. Bredin on a very regular basis—once or twice a week. Throughout the whole period they had really only one topic of conversation—the state of the plaintiff's bank account; the business he was doing with Andrew Towey, and the cheques that were outstanding for the time being; what was to be said about Andrew himself, his assets in England and Ireland, and his course of business.

In view of the fact that the plaintiff was being offered full indemnity by Andrew against all liability for overdraft interest, I can find no other reason for this weekly or twice-weekly session than the fact that the plaintiff was seeking reassurance from his bank manager that all would be well, and that Mr. Bredin was giving him such reassurance. I am satisfied that both parties had this in the back of their minds—and at times in the forefront of their minds—and that Mr. Bredin knew or should have recognised that this was the purpose of their conversations. To reinforce this view, there is the additional factor that during much of the relevant period other customers were voicing the same kind of apprehension to him—Mr. O'Connor, the haulage contractor, about the £50,000 which was left unpaid, and representatives of Tulsk Mart addressing specific enquiries to him about the ability of Andrew Towey to meet his commitments.

Consequently I feel I must approach this case on the basis that the plaintiff did contact his bank from time to time during the year 1980 on a fairly regular basis for confirmation that he was safe in continuing to do business with Andrew Towey and accept his cheques, notwithstanding the fact that there were frequently long delays in receiving payment on foot of the cheques, and that no one seemed to he able to give an explanation for these delays.

It is also clear from the evidence that the message coming through from Mr. Bredin at all stages until the point of no return was reached, was that Andrew Towey was a man of vast wealth; that his personal cheques were to be preferred to cheques from a limited company; that the message which accompanied cheques sent for collection could be taken as some kind of guarantee that when the cheques were gone for a week or more it could be taken for granted that they would be met; that the delays in payment had been accounted for by the Silloth branch as having nothing to do with any difficulties in meeting the cheques.

Secondly, with regard to the claim made by the plaintiff that the defendant was in breach of its duty as collecting banker, it appears to me that in the circumstances of this particular case, covering transactions which went on over the space of 18 months or thereabouts, with irregularities in the collecting procedures cropping up on a continuous basis, the obligations of the defendant towards its customer extended well beyond the conventional duty of merely presenting the cheques for payment with promptitude. Something was clearly wrong, and if the customer was to continue to accept these cheques, his interests could only be properly safeguarded by investigating the delays which were occurring and getting to the bottom of the matter as quickly as was reasonably possible.

Consequently, in my opinion, the two duties—that of collecting banker towards the customer, and that of advising banker towards the customer— tended to merge into one in the present case. The bank found themselves in a position where a very considerable body of evidence had built up over a lengthy period which cast doubt on the reliability of Andrew J. Towey; the bank were in possession of this information, coming to them from a variety of sources; they knew that the plaintiff, another of their customers, was regularly staking what could have been his entire fortune on transactions confined to this single, suspect individual, and they allowed him to overdraw up to four or five times his permitted limit for the purpose, without doing anything to protect him from the dangers inherent in this course. If anything, they must be regarded as having encouraged him to persist in his dealings with Andrew Towey.

I am of opinion that the defendant has been shown by the evidence in this case to have been in breach of the duty it owed the plaintiff under both of the headings mentioned. It failed to advise him in a careful manner when consulted from time to time about his business dealings with Andrew Towey, and it failed in its capacity as collecting banker to take the steps which were necessary to protect the interests of the customer.

I am satisfied that from the month of September 1980, onwards, if not before that date, the defendant, not merely at the level of branch manager, but at all levels, was becoming distinctly uneasy about the transactions involving Andrew Towey and was in possession of information which should have made it uneasy. It was quite clear, on information emanating from Silloth, that the real reason for the delays which had been experienced in clearing the cheques was traceable to difficulties on Andrew Towey's part in funding the account. That meant that he was having continuing problems in getting enough funds into the account to meet the cheques he was drawing upon it, and that his credit standing with National Westminster Bank was not high enough for him to be able to make the necessary arrangements with them to meet the cheques immediately they were presented for payment. If National Westminster were not willing to take that risk, why did the Ulster Bank allow their customer to take it?

What should the defendant have done, which he failed to do? In the first place, I would agree with the view expressed by Mr. Douglas Smith, formerly of Lloyd's Bank, that it was a futile exercise to keep going back to the branch at Silloth with complaints about the delays when this was producing no improvement in the situation, and that the Ulster Bank should very quickly have gone above branch level and taken the matter up at whatever level was necessary in the National Westminster Bank, to get at the root of the trouble. There is a good deal of support for this view even in some of the evidence given by witnesses called on behalf of the defendant.

Secondly, the branch manager should, in my opinion, have brought in the plaintiff and had a very serious discussion with him, giving him much more information than was given to the plaintiff at any stage before mid-December 1980. He should have been told very clearly about the risks involved in continuing to do business with Andrew Towey on the basis required by the latter, so that he could make a fully-informed decision whether the business was so important to him that he was willing to take these risks, or whether, on the contrary, he should not cut his losses and extricate himself from the situation as quickly as he could.

I would also fault the defendant for the failure to galvanise the plaintiff into action at the beginning of December 1980, when all kinds of danger signals became apparent—cheques stopped without explanation; cheques left unpaid for longer than ever before; a shut-down in communications from Silloth, and so forth. If the plaintiff had been put in the picture, even at that late stage, it is possible that he might have cut his losses to a very considerable extent, just as Tulsk Mart did several weeks later, but instead the policy was adopted of continuing to reassure him that all would be well, until the matter went beyond recall.

I have a strong impression from the evidence, and from the documents put in evidence, that the defendant was very much alive to the dangers inherent in the situation over quite a long period, but kept hoping that things would right themselves by the end of the year when the big cattle trade would die down again for another six months. In the meantime there was a general reluctance to apply too much pressure to a big business tycoon who was believed to be in the process of moving all his interests from England to Ireland and who represented an important and long-standing family account which the bank were anxious to retain.

The plaintiff, in my view, has made out a case for damages for negligence against the defendant, and it becomes necessary to consider the measure of damages.

The plaintiff has three accounts with the defendant bank at their Castlerea Branch, each of them being substantially overdrawn as at the date of hearing of these proceedings. The figures (inclusive of interest) up to 23 April 1985, were as follows:

No.1 account o/d £14,720.87

No.2 account o/d £563,318.36

No.3 account o/d £37,245.75

Mr. Bredin said that the amounts outstanding in No.1 and No.2 accounts would be referable to the A.J. Towey 'crash'; No.3 account he described as a working account for the plaintiff's day-to-day business. Five years have now elapsed since the plaintiff's cheques were returned dishonoured, and he failed to receive any payment for two large consignments of cattle delivered in December 1980. Interest has continued to accumulate on his overdrafts with the defendant, but he has also continued to carry on his normal farming activities and has been financed for this purpose by the bank. On the evidence in the case I am not prepared to make a finding of contributory negligence against the plaintiff.

It was brought out on a number of occasions in the course of the evidence, both oral and documentary, that if Andrew Towey's liabilities to the plaintiff were discharged in full during the period while he was doing business with the plaintiff, this would have been enough to clear off the plaintiff's entire overdraft for the time being. I propose to measure the damages to which the plaintiff is entitled by reference to the overdraft as it stood when the Andrew Towey business had collapsed, together with such interest as has accrued thereon from that time forward, which should have the effect of discharging the plaintiff from all liability on foot of his No.1 and No.2 accounts up to the present, with the intention that they should now he closed so that no further interest would accrue thereon against the plaintiff.

The defendant should be entitled to judgment against the plaintiff for the amount outstanding on all three accounts, but the amount due on the No.1 and No.2 accounts would be extinguished by the judgment in favour of the plaintiff on his own claim by way of set-off, leaving a net balance due to the defendant on the amount due on the No.3 account. My intention in relation to costs would be to give the plaintiff judgment for the sum referable to the combined totals of his No.1 and No.2 account overdraft with costs, and to give the defendant judgment for the combined total of the plaintiff's No.1, No.2 and No.3 account overdrafts with no order as to the costs of the counterclaim, as I take the view that the real issue in the case was the question whether the plaintiff or the bank should have to incur the loss of the moneys representing the plaintiff's overdraft at the end of 1980, with interest accruing thereon pending the determination of this action.

I propose to give the parties a further opportunity of considering the appropriate figures for damages for the plaintiff and for the defendants counterclaim, should they wish to do so, bearing in mind the conclusion's I have reached as to how the sums should be determined, and therefore I will direct that the case should be listed for mention on some date which is suitable for both parties.