High Court of Ireland Decisions

1. In my view the pleadings in this case do not clearly identify the issues that have been raised between the parties in this case. This is not intended as a criticism of the Draftsman of the pleadings. These issues emerged only during the course of the evidence, both in direct and in cross-examination. These issues have been met head-on by the parties during the hearing of this case which has lasted 18 days and I believe the correct manner in which to approach the case in giving judgment is to determine these issues which have been addressed by the parties during the evidence and submission irrespective of the clarity with which these issues have been identified in the pleadings.

2. The Plaintiff in the case was, in 1981, a substantial farmer and owned approximately 240 acres of prime land and was the owner of a magnificent period house. In addition he rented other land in the area as the occasion arose. He was a progressive farmer and was involved in farming groups and he held positions on Committees and was President of one such group. He banked in the Bank of Ireland at his potato market branch in Carlow where he was personal friends with Mr. Vincent Power, the Manager. A practice grew up whereby at intervals of not less than twice yearly, Mr. Behan called to Mr. Power to arrange banking facilities and to arrange for the provision of capital for, for example, the purchase of winter stock. Mr. Behan would make known to Mr. Power his requirements. Mr. Power would pass on a statement of these requirements to Head Office for sanction and approval or otherwise and Mr. Behan would be informed in due course of the decision of Head Office. Thus he was able to carry on his farming business.

3. The events which gave rise to the disputes between the parties occurred in early 1981.

4. In the late 1970's the farming community had enjoyed a boom period shortly after Ireland joining the European Community. However, in 1980 interest rates started to rise and land values started to fall and Mr. Behan became concerned at the amount of interest he was required to pay to the bank on his loan facilities. His evidence is that prior to his bi-annual meeting with Mr. Power which, he says, occurred on the 18th May, 1981, he instructed his Auctioneer, Mr. Ken Crowe, to offer part of his lands for sale. He intended to sell either 40 acres or 70 acres depending on the offers which he received. He said that on the sale of the land he would have been able to reduce or alternatively remove entirely his indebtedness to the bank and so reduce or eliminate his interest payments. His evidence is that at the meeting of the 18th May, 1981, Mr. Power referred to his proposal to sell part of his lands - even though Mr. Behan had not told him of this proposal - and advised and urged him not to sell his land. In the course of doing so he told Mr. Behan that he, Mr. Behan, was being "down-beat" in his approach to his problems. He said that the present problems which confronted farmers would pass and that land prices would increase dramatically by the end of the decade. He told Mr. Behan that the bank had a very high regard for him as a farmer and that he should "farm his way out of his problems". In this way he coaxed Mr. Behan to reverse his decision to sell the lands. Mr. Behan says that in order to enforce his argument, Mr. Power produced and handed to him a Farm Loan Analysis Form which he had prepared for his loan application. This form included a section in which the bank made an assessment of the farming ability of the farmer concerned and Mr. Behan says that on this form he had been given a very high ranking or score. Mr. Behan says that he received an assurance from Mr. Power that the bank would provide him with whatever finances he required in order to overcome the present crisis and to enable him to farm his way out of his problems. He says that Mr. Behan said that they would continue to support him and provide him with the facilities even if his requirements went over £200,000. He was told that demands of this amount "would not matter".

5. Mr. Behan says that as a result of what was said to him and in particular as a result of the high regard which the bank had for him as demonstrated on the Farm Loan Analysis which he was given at the meeting and having regard to the promise which the bank made, that they would provide him with all his financial requirements, he took Mr. Power's advice and instructed Mr. Crowe to remove his land from his books and he proceeded to attempt to farm his way out of the problems. His case is, in the first instance, that the advice given to him by Mr. Power was bad advice and that no reasonable Bank Manager knowing that it was likely to be acted upon, would have given such advice in the circumstances and accordingly Mr. Power, and therefore his employers, the Bank of Ireland, were guilty of negligence.

6. His second claim is that the bank were in breach of their agreement with him to provide him with funds so as to enable him to "farm his way out of his problems" and he accordingly suffered loss and damage.

7. Mr. Power in his evidence disputes that the meeting took place on the 18th May but agrees that a meeting did take place some days earlier. He categorically denies that he gave the advice alleged, to Mr. Behan and specifically denies that he gave Mr. Behan the Farm Loan Analysis Form as alleged. He further denies that he ever gave Mr. Behan an assurance that the bank would provide him with his financial requirements as Mr. Behan alleges.

8. During the early days of this hearing it became apparent that the issue the Statute of Limitations, pleaded in the defence, might well be of importance and I accordingly suggested to the parties that it might be appropriate to determine this issue at an early stage thereby possibly saving costs. The parties accordingly applied to me to adopt this course and having tried the issue, I determined that insofar as Mr. Behan's claim for damages for either financial loss or personal injuries arising from the alleged negligent advice given by Mr. Power was concerned these claims were statute barred as the proceedings were not commenced within the limitation period. However, insofar as his claim for damages arising out of breach of the alleged agreement which he says he had at the bank, namely, that in consideration of his agreeing not to sell the lands that the bank would provide him with all his financial requirements, that this claim only arose when the bank broke the alleged agreement and the claim was not accordingly statute barred.

9. Notwithstanding the fact that the negligence action is statute barred, for the purposes of dealing with the issues which arise in Mr. Behan's claim based upon the bank's alleged agreement to provide him with finances, it is necessary to make findings of fact which would be relevant also to the negligence action and to consider in some detail the meeting which was alleged to have occurred on the 18th May, 1981.

10. I accept, as a fact, that in 1981 it was the policy of many lending institutions and in particular of the Bank of Ireland, to make finances readily available to members of the farming community. Moreover, I accept that Mr. Behan was a prized client with the Bank of Ireland owning, as he did, a large farm which would provide ample security for any loan. Moreover, he was a long term client with the bank as were his family before him. I accept that any manager would have been slow, at this time, to see such a client wipe out his indebtedness with the bank and I would have no hesitation in accepting that if Mr. Power was informed by Mr. Behan that he intended to rid himself of his indebtedness to the bank by the sale of his lands, Mr. Power would probably have wished to dissuade him from doing so. Mr. Power denies that he did any such thing, however, one must bear in mind that Mr. Power is now retired from the bank and has been unwell. He readily admits that in attempting to recall this meeting, and indeed the numerous meetings that he had with Mr. Behan at and around that time, he relies heavily and indeed almost exclusively upon the notes which he made at and subsequent to the meeting and also on the contemporaneous correspondence.

11. On the other hand, so far as Mr. Behan is concerned, he suffered from nervous exhaustion shortly prior to the meeting in May of 1981 and he required hospitalisation in St. Edmundsbury Hospital in February of 1981 and indeed was only back at work for a short time prior to the meeting. In addition, in the winter of 1981 Mr. Behan became so upset that he resorted to the over consumption of alcohol and required two periods of hospitalisation during that time for that condition.

12. Neither of these witnesses could, in my view, be regarded as entirely reliable when they gave evidence of what occurred at this meeting and for that reason the Farm Loan Analysis document is, in my view, critical.

13. Mr. Behan says that it was given to him at this meeting. Mr. Power says positively that it was not and could not have been.

14. I am satisfied that a system existed whereby when Mr. Behan called to Mr. Power, at one of these periodic meetings, to arrange for his financial requirements for the next half year, Mr. Power would, with the use of a checklist, confirm the amount of machinery on Mr. Behan's farm. He would then collect the data which went to make up the Farm Loan Analysis document. Mr. Power says that the information which he had got for the Farm Loan Analysis document would, at the relevant time, be provided to his secretary and she would type up the finished document which would then be placed on file for submission possibly to Head Office. Accordingly, it is Mr. Power's case that the document, a copy of which Mr. Behan produced to the Court, did not exist at the time of the meeting. He believes that in fact the meeting occurred some days earlier than the 18th May, 1981, that being the date on which document it was typed. Mr. Behan is adamant that this document was handed to him at the meeting on the 18th May, 1981 and is adamant that he relied on the contents of this document in reaching his decision.

15. I have examined the document and I accept the submission of Counsel for the Defendants that it is clear that at the time when it was photocopied it was punched with a hole on the top left-hand corner for filing. I also accept the submission that when the document was photocopied, the next document on the file underneath this document showed through. I believe that this is the ACOT plan prepared for Mr. Behan as a condition precedent to his entering the Government Farm Interest Rescue Plan (to which I will refer further at a later stage). This plan came into existence on or about the 28th July, 1983. Accordingly, if it is indeed this document which shows through in Mr. Behan's copy, it follows that this document cannot have been given to him at the meeting in May 1981.

16. Having regard to the foregoing and since I accept the evidence that the typed up document was not available at the meeting between Mr. Power and Mr. Behan in May 1981, I am left with considerable doubt about the accuracy of the evidence given by Mr. Behan in relation to the meeting generally but in particular his evidence relating to the bank's willingness to provide him with finances into the future. I do, however, accept as probable that Mr. Power did urge Mr. Behan to persevere and not to give up and sell the land. I believe that, given that Mr. Behan had just come out of hospital, he, Mr. Power, would have encouraged him and indeed I am prepared to accept that as part of this encouragement Mr. Power pointed out to Mr. Behan that he was the sort of client who had collateral security that he could provide in the form of his lands which would indicate that demands for future finances would not present any problem. I do not accept, however, that anything that was said at this meeting was intended by Mr. Power or accepted by Mr. Behan as forming a binding indication or agreement to provide such security. In reaching this conclusion I note the fact that throughout their many years of business, Mr. Power transmitted to Head Office a statement of Mr. Behan's current financial requirements.

17. Even accepting Mr. Behan's evidence in its entirety I do not believe that anything that was said by Mr. Power on that occasion could constitute an enforceable contract by reason of the imprecise nature of the arrangement alleged. It is not suggested for how long the commitment was to have lasted, the rate of interest payable on any monies advanced on foot of the contract nor is it suggested that Mr. Behan ever indicated an acceptance of the alleged contract.

18. There are, moreover, a number of other factors in the case that, to my mind, support my findings.

19. The suggestion that Mr. Power did more than merely encourage Mr. Behan and in fact actually persuaded him not to sell the land is in my view contradicted by an examination of how Mr. Power acted subsequently. On the 24th February, 1982, Mr. and Mrs. Behan had a meeting with Mr. Power and Mr. Behan told Mr. Power that for reasons, which are not material to these proceedings, it was his intention to sell the entire of their lands and move elsewhere. Not only did Mr. Power on that occasion not try to dissuade them from doing so, but on the contrary he assisted them in their choice of auctioneer and made arrangements with them for the examination of the lands by the auctioneer.

20. Then there is the evidence of Mr. Behan when he says that in winter of 1981, some 5 to 7 months after the meeting in May, he realised that the advice that he had got from Mr. Power not to sell the lands was bad advice and that he had made a mistake in accepting it. It is true that by then land values had fallen and that the price that he would have got for his 40 or 70 acres was reduced. However, I believe that if Mr. Behan had truly made up his mind in April to sell part of his lands and wipe out or reduce his bank indebtedness, he would have gone ahead at that stage with this plan. I accept, of course, that soon afterwards Mrs. Behan consulted Mr. Devlin, an Accountant, who advised that Phase 1 of the Realisation of Assets should take place and that this did not yet envisage sale of land. Nevertheless, I am unable to account for two aspects of Mr. Behan's conduct at or around this time. The first is that he never contacted Mr. Power subsequent to the May meeting to tell him that he was accepting his advice and that he had withdrawn the land from sale. Secondly, he never contacted Mr. Power to complain in the winter of 1981 that he had provided him with bad advice which, in my view, would have been normal in all the circumstances.

21. Of far more importance is that when in November of 1982 the bank Head Office declined an application for accommodation which totalled £205,498 and thereafter Mr. Behan was so informed in the following terms, "the bank feels that due to the deteriorating situation it would find it difficult to consider granting additional facilities at that time", he raised no protest nor complaint that this was a departure from the agreement that Mr. Power and he had made in May of 1981.

22. For these, among other reasons, I have reached the view that at no stage did Mr. Power enter into any binding arrangement with Mr. Behan whereby the bank was committing itself to provide Mr. Behan with financial facilities.

23. Considerable time has been spent during the hearing of this case in attempting to demonstrate to the Court that the bank was justified in behaving in the way that it did and that the loss of confidence which they had in Mr. Behan was reasonable and that they behaved appropriately in calling in outstanding loans. The manner in which the bank conducts it business with a client is of concern to the Court only when its legal obligations and duties to the client are breached. Apart from the points dealt with above, nothing has been advanced by way of argument or submission or evidence to suggest that the bank acted otherwise than in accordance with law. (I come to deal with the Farm Interest Rescue Plan at a later stage). I believe that it is clear beyond doubt that Mr. Behan and his wife and their witnesses sincerely believed that the bank behaved harshly and unreasonably and indeed oppressive in the manner in which they behaved. For their part, the bank feels that they behaved leniently in foregoing a substantial part of Mr. Behan's outstanding debt. It is proper to record that at the date of settlement, the 22nd July, 1985, Mr. Behan's account with the bank stood at £213,891.43. The bank agreed to accept £165,000 in full settlement of his liabilities, payment to be made in staged payments as in the agreement of the 22nd July, 1985, set out. The Court is not concerned with the way in which the parties conducted their affairs no more than it is concerned with the way in which Mr. Behan's debts were restructured from time to time since the terms of these arrangements, however harsh or lenient, were known to him and available for him to accept or reject.

24. Accordingly, I do not accept that Mr. Behan has any complaint at law arising from his dealings with the bank arising from his meeting in May of 1981.

25. Complaints have been made by and on behalf of Mr. Behan relating to the manner in which the bank managed his accounts during the relevant time. These complaints include a complaint made by Mr. Behan that the bank actually conspired with one of his competitors so as to enable the competitor to succeed to Mr. Behan's detriment. Apart from making this complaint, no evidence whatever has been offered to support the complaint nor is it alleged that any specific damages flowed from the complaint. I accordingly disregard this complaint.

26. Mr. Behan further complains that the bank improperly and indeed maliciously dishonoured cheques drawn by him. He suggests that the bank did so in order to ruin his reputation as a farmer and a businessman in the community and to denigrate him in the eyes of his workmen and business associates. No case has been made out to my satisfaction that any of these cheques were improperly dishonoured. At the time when these cheques were drawn by Mr. Behan he neither had the authority of the bank to do so nor did he have funds or an accommodation to cover these cheques. Evidence has been given by Mr. Behan of a special arrangement which he made with Mr. Power in June of 1984 whereby a small loan of approximately £4,000 would be made available to him to discharge his immediate debts. There is an issue between the parties as to whether this arrangement was ever reached. I do not find it necessary to determine this issue as any cause of action which arose as a result of the bank refusing to honour the cheques in June of 1984 is statute barred since the summons herein was issued on the 5th July, 1990.

27. A further complaint is made on Mr. Behan's behalf relating to the restructuring of his accounts from time to time. This complaint centres around the fact that the bank insisted on many occasions when Mr. Behan sought further or additional facilities, that his account be restructured into, for instance, a term loan, and this would attract a higher rate of interest than it might otherwise have attracted. The fundamental point is that whether these transactions were advantageous or otherwise to Mr. Behan, these were the grounds upon which the bank was offering him a facility. At all stages it was open to Mr. Behan to accept or reject these offers. Throughout the period he accepted the bank's offers and having done so, in my view, cannot now complain about the perceived onerous rate of interest at which the bank offered the facilities.

28. It remains now to consider the claim that arises under the introduction of the "Reduced Interest Scheme for Farmers in Severe Financial Distress", (referred to as "the scheme").

29. This scheme was introduced by the Minister for Agriculture on the 1st April, 1982. The scheme had as its objective the provision of some relief from high interest rates for certain classes of farmers. It is, in my view, unnecessary to set out in detail the conditions of the scheme. All that is required is that it be understood that the scheme provided that a beneficial rate of interest would be enjoyed by certain types of farmers on certain bank borrowings. The interest rate on the relevant loans was reduced by 8¾% providing that in no circumstances would the rate to a farmer go below 10½%. The scheme operated for 3 years from the 1st April, 1982. The scheme was operated by banking institutions and the ACC. Mr. Behan completed the appropriate forms for inclusion in the scheme on the 28th May, 1982. However, the admission into the scheme depended, inter alia, upon obtaining a Farm Viability Plan which Mr. Behan obtained from ACOT on the 28th July, 1983. On the 17th January, 1984 authority was given by the Bank of Ireland to the Carlow Branch to "draw down" on Mr. Behan's account.

30. The case is made on Mr. Behan's behalf that there was unreasonable and improper delay on the part of the bank in permitting Mr. Behan to enter and enjoy the benefits of the scheme.

31. In my view, entry into the scheme was not available to Mr. Behan until he had obtained the Farm Viability Plan and it appears to me that the matter was processed with all due diligence up to the 17th January, 1984. However, thereafter I am of the view that the bank acted in an arbitrary and improper manner. I am satisfied from the evidence that one had the position that on the one hand the bank were adopting the attitude towards Mr. Behan which deprived him of further finances with which to run his farming business and yet on the other hand were critical of him when he devised alternative methods of obtaining finance as, for instance, by opening an account with the AIB. The bank were using Mr. Behan's lack of resources as a reason for depriving him of the benefits of inclusion in the scheme. I am satisfied that the bank were attempting to achieve benefits for themselves by depriving or withholding Mr. Behan's entry into the scheme. From a practical point of view, Mr. Behan was never entered into the scheme in the sense that he never received the benefit of the favourable interest rates. On the 30th September, 1985 the outstanding elements of the scheme were being wound-up. What occurred at this stage was that the bank, notwithstanding that Mr. Behan had entered into an agreement on the 22nd July, 1985 whereby he agreed to pay and the bank agreed to accept £165,000 in full and final settlement, entered the three credits to which he was entitled under the scheme, namely, £6,466.35, £6,023.85 and £5,965.68 as credits on his account and on the closure of the account on the 1st April, 1986 applied these amounts towards a reduction of his indebtedness to the Bank. It is clear that having made the agreement to accept the reduced amount, the bank were not entitled to apply these monies in the manner in which they did. Moreover on the winding up of the scheme the bank would have been credited by the Revenue Commissioners with an equivalent amount against its corporation tax liabilities.

32. I am of the view that Mr. Behan is entitled to receive these amounts as money had and received to his use. They total, on my calculation, £18,455.18.

33. The question arises as to whether Mr. Behan suffered any consequential loss as a result of the bank's failure to include him in the scheme. No evidence has been offered to me to support any such claim and I accept the evidence of Mr. Laurence Power that given the amount of Mr. Behan's indebtedness at the relevant time the relief which he would have obtained from immediate admission into the scheme was of no overall consequence.

34. He is, in addition to the foregoing sum, entitled to interest thereon. In this regard I accept Mr. Devlin's evidence that the amount of interest of which he was deprived was £2,437, making a total claim of £20,892.18.

35. During the course of Mr. Devlin's evidence he referred to the fact that he was unable to identify the rate of interest at which the bank were making their calculations and he concluded that two different rates of interest were necessary if the figures were to be found correct. I do not think that this gives rise to any element of claim.

36. Accordingly, there will be Judgment for the Plaintiff in the above amount and I will hear Counsel as to the question of costs.