Supreme Court of Ireland Decisions

1. This is the Appeal of the above-named Defendants/Appellants against the Judgment and Order of Shanley, J. delivered and made herein on the 18th day of June, 1997 whereby he held the above-named Defendants/Appellants guilty of negligent mis-statement and negligent misrepresentation and awarded damages against them of £677,000 sterling and costs. It is proper to emphasise that the liability of the Bank was found to be purely vicarious arising out of the alleged negligence of its official Michael Mc Sweeney.

2. It is proper to emphasise this because the background to the case is one of fraud.

3. The first-named Plaintiff is the beneficial owner of the second-named Plaintiff which is a private limited liability Company which the first-named Plaintiff caused to be incorporated in the British Virgin Islands.

4. The business of the Plaintiffs was to source investment opportunities, objets d’Art and - in the present case - classic cars for Japanese clients.

5. The first-named Plaintiff caused the second-named Plaintiff to be incorporated in January 1990. In the same month she first met the Defendant Gerard Walsh in Ireland. In March 1990 she brought two Japanese associates to the showrooms of C & J Dunhill in London. They were interested in Lamborghini cars which Mr. Dunhill said he could supply. In particular he said he might be in a position to supply Lamborghini Diablo cars in the last quarter of 1990. He indicated that there would be a premium of $100,000 for delivery at that time together with the list price payment which was likely to be £87,000 sterling. The Japanese were interested and on the 1 st May, 1990 Mrs. Forshall paid C & J Dunhill a deposit of £20,000 sterling as a deposit on the first Lamborghini car. She later received a telephone call from the Defendant Timothy Mc Sweeney who introduced himself as the Financial Director of Lambo Motors of Ireland Ltd. (hereinafter referred to as Lambo) who he said were the concessionaires of Lamborghini in Ireland. He indicated that there was a strong demand for Lamborghini cars and that she would need to produce another £42,500 if she wanted to secure her purchase. Some time in May, 1990 Messrs. C & J Dunhill backed out of the deal and in or about the same time the Plaintiff met the Defendant Gerard Walsh who claimed that he was the owner of Lambo and that Lambo had the concession for Lamborghini cars in Ireland. Mr. Walsh informed Mrs. Forshall that Lambo would give her credit for the £20,000 she had already paid to Messrs. Dunhill and she gave him a

6. In fact it is not clear what connection, if any, Mr. Walsh had with Lambo. His name did not appear on the note paper of Lambo as being a Director. Mr. William Hoogenbrugghen however did appear on the note paper as being a Director and he was probably the principal person in Lambo. He however is resident abroad and, while named as a Defendant in these proceedings, did not enter an appearance. Mrs. Forshall however alleged that Mr. Walsh, Mr. Timothy Mc Sweeney and Mr. Hoogenbrugghen all represented to her they were Director/Shareholders and/or entitled to the beneficial ownership of Lambo and that she and her Company were gradually sucked into the purchase of more Lamborghini cars each transaction appearing necessary to ensure the conclusion of earlier ones. In all the Plaintiffs made the following payments.

7. On the 6th November, 1990 Lambo entered into an agreement with Fine Arts and Collections Ltd. for the sale and purchase of nine Lamborghini cars in the following terms:-

8. THIS AGREEMENT is made the 6th day of November 1990 BETWEEN LAMBO MOTORS OF IRELAND LIMITED whose registered office is at The Bowl Road, Macroom, County Cork, Eire (hereinafter called ‘the vendor’) of the one part and FINE ARTS AND COLLECTIONS LIMITED whose registered office is at .0. Box 3136 road town, Tortola, British Virgin Islands (hereinafter called the ‘the Purchaser’) of the other part

9. AS WITNESS the hands of the parties hereto the day and year first before written

10. The agreement was signed by Tim Mc Sweeney on behalf of the Vendor and by the first-named Plaintiff on behalf of the Purchaser.

11. In fact it does not appear that the final payment of £300,000 sterling (referred to in the agreement as ‘the balance of the premium’ had been paid at the time the agreement was executed but on the 6th November the Plaintiffs Solicitors Messrs. Anthony Bignall and Co. gave an undertaking to Lambo “In consideration of you entering today into an agreement with my client Fine Arts and Collections Ltd” to send by telegraphic transfer to the clients account of Messrs. O’Brien Daly Solicitors for Lambo the sum of £300,000 sterling. This was duly done. But the Plaintiff Company received no Lamborghini cars (if

12. In the High Court the Plaintiffs recovered damages for deceit and fraudulent misrepresentation against the Defendants Gerard Walsh and Timothy Mc Sweeney.

13. There has been no appeal against these verdicts.

14. The Plaintiffs Plenary Summons in these proceedings issued on the 31 ^st January, 1991. Among the named Defendants were Gerard Walsh, Timothy Mc Sweeney, Michael Mc Sweeney, William Hoogenbruggen and the Bank of Ireland. Among the reliefs claims were damages for fraud and damages for negligence including negligent mis-statement.

15. In their Statement of Claim, delivered on the 9th day of May, 1991, the Plaintiffs described Michael Mc Sweeney as a “Bank Official” employed by the Bank of Ireland at its Bandon office. In the Statement of Claim Michael Mc Sweeney is referred to as “Manager Mc Sweeney” to distinguish him from his brother Timothy Mc Sweeney who is referred to as “Director Mc Sweeney “.

16. Paragraph 30 of the Statement of Claim however pleads that “Manager Mc Sweeney” contacted the Plaintiffs and informed the first-named Plaintiff on a date between October and November and prior to the 6th November, 1990 that the affairs of Lambo were in order and that he was familiar with the affairs of the Company, inter alia, in his capacity as Manager of the Bank of Ireland branch at Bandon, Co. Cork.

17. At that stage the Plaintiffs were pleading that the representations made by Manager Mc Sweeney were fraudulent as well as negligent.

18. However, before the case came for hearing in March, 1997 the Plaintiffs were allowed to amend their Statement of Claim to plead more fully the case of negligent mis-statement against Michael Mc Sweeney and the Bank but only on the basis that they dropped the plea of fraudulent misrepresentation against these Defendants.

19. On this basis the Plaintiffs then inserted a new paragraph (44a) in their Statement of Claim. This paragraph reads as follows:-

20. The advices/representations aforesaid were made by the Bank its servants or agents (including Manager Mc Sweeney) on the diverse occasions including the following: -

21. Plaintiffs were being requested to furnish funds to Lambo and that he was in a position to offer the Plaintiffs financial assistance for the purposes of making the said payments. By so doing the said Defendants and each of them represented Lambo as being a company with which the Plaintiffs could do business and was of commercial worth.

22. Defendants and each of them allayed the fears of the Plaintiff in relation to entering into and continuing the business relationship with the first, second, fourth and sixth named Defendants.

23. At all material times the said Defendants in making the said representations and statements knew that the Plaintiffs would rely thereon and would rely upon their accuracy and truth. The Plaintiffs in so relying upon the aforesaid Defendants representations as to the bonafides, good character, credit worthiness, trustworthiness and business standing of first, second, fourth and sixth named Defendants entered into agreements and contracts therewith and forwarded monies to the approximate total of six hundred and fifty seven thousand pounds (STG £657,000.00). The representations and statements aforesaid were false and inaccurate and were made by these Defendants negligently and in breach of the duty of care owed by these Defendants to the Plaintiffs. But for the said representations the Plaintiffs would not have forwarded the monies. Had the Plaintiffs been alerted to the true difficulties of Lambo and Walsh and Director Mc Sweeney in sufficient time the Plaintiffs would not have forwarded any monies and in particular would not have forwarded any monies after the initial twenty thousand pounds sterling (STG £20,000.00) and would have taken appropriate steps to recover the initial amount “.

24. The case was at hearing before the learned trial Judge for a period of some twenty-two days. The evidence revealed major conflicts of fact. The

25. The learned trial Judge, having summarised the evidence of the various witnesses came to a very firm conclusion which is set out at page 48 of his Judgment and which deals with the credibility of the various witnesses. Dealing with the principal witnesses he stated:-

26. Dealing with the minor witnesses he stated:-

27. There can be little doubt that there was evidence which, if credible, supports all the conclusions of the learned trial Judge. The Appellants principal attack upon the Judgment is that the learned trial Judge’s assessment of the various witnesses, and in particular of Mrs. Forshall was wrong. They say, in effect that had he analysed her evidence more closely he would have arrived at a different conclusion concerning her credibility.

28. The classic statement of the law on this subject in the modern Supreme Court is set out in the Judgment of McCarthy, J. in Hay v. O’Grady (1992) 1 IR P210 at P217 :-

29. It may be that the demeanour of a witness in giving evidence will, itself lead to an appropriate inference which an appellate Court would not draw. In my Judgment, an appellate Court should be slow to substitute its own inference of fact where such depends upon oral evidence or recollection of fact and a different inference has been drawn by the trial Judge. In the drawing of inferences from circumstantial evidence, an appellate tribunal is in as good a position as the trial Judge “.

30. Counsel for the Plaintiffs/Respondents submitted that the finding by a trial Judge that a particular witness was “credible” was itself a primary finding of fact which an Appeal Court could not interfere with. He was able to point to passages in the transcript which supported each of the Judge’s findings. Counsel for the Appellants however submitted that an analysis of the whole of

31. One of the matters which Counsel suggested casts doubt on Mrs. Forshall’s testimony in this action was a thirty page statement which she made to the British Police on the 16th August, 1991. The statement clearly refers to the fraud the subject matter of these proceedings. The emphasis on certain points in it may be different but it is clear that the statement relates to the same fraud and it would certainly have been open to the learned trial Judge to take the view that the matters referred to in the statement reflected the interest of the British Police Officer who was investigating the fraud. There is however one significant difference between her police statement and her evidence in Court. Referring to the meeting with Mr. Walsh in the Marriott Hotel on the 7th June, 1990 she said:-

32. In her evidence she stated that Mr. Kitoaki was also at this meeting and she says that Mr. Walsh produced to Mr. Kitoaki the eight documents set out in the trial Judge’s Judgement (at P22) some of which (including the reference from the Bank for Mr. Hoogenbrugghen) were very significant.

33. It is proper however to refer to the fact that in this Statement she also said (at page 3):-

34. Later in the Statement (at page 29) she says:-

35. Again Counsel for the Defendants/Appellants have submitted that the draft of an Affidavit apparently sworn by Mrs. Forshall in proceedings in the Queen’s Bench Division in England between her Japanese contact client or principal Le Vert Company Ltd., as Plaintiffs, and Fine Arts and Collections Ltd., and Amanda Stephanie Forshall and Anthony Peter Robin Bignall Defendants. That draft Affidavit was apparently prepared for use in a Motion to set aside a Judgment which had been obtained by Le Vert Company against her by default of defence in the English proceedings. This Action had been brought because of the failure of her Company and herself to supply the Lamborghini cars referred to in the present proceedings. Le Vert Ltd. were apparently suing Mrs. Forshall and Fine Arts and Collections Ltd. for fraud arising out of their failure to supply.

36. It would appear from Mrs. Forshall’s draft Affidavit that she had got herself into an embarrassing position not only because Judgment had been obtained against her in default of defence but because of an Affidavit which she had sworn in the present Irish proceedings. In the Irish proceedings she had sworn that she was a Director of Fine Arts and Collections Ltd. This was not strictly speaking correct, and, it would appear, this had been used against her in the English proceedings. Mrs. Forshall had in fact caused Fine Arts and

37. Collections Ltd. to be incorporated in the Virgin Islands. It was, in the layman’s sense, “her” Company. But the Bank which had incorporated the Company for her had appointed the Directors of whom she was not one. The purpose of the draft Affidavit appears to have been to explain away this error to the English Court while at the same time making clear that she and the Company had each a good defence to the claims being made by Le Vert Ltd. and at the same time denying that she was liable for the debts of Fine Arts and Collections Ltd. and claiming the benefits of limited liability.

38. Mr. Charleton on behalf of the Defendants/Appellants submitted that what Mrs. Forshall was doing was attempting to distance herself from the Company in the English proceedings while identifying herself with the Company in the Irish proceedings. It appears to me that the trial Judge was entitled to hold that the matter was capable of a much more innocent explanation and that there is nothing in this point which discredits Mrs. Forshall or would oblige the trial Judge to reject her evidence.

39. Another major criticism made of the Judgment is that it does not resolve all the conflicts of fact which arose between the various witnesses in a bitterly fought case. I doubt if it is necessary for a trial Judge to resolve all the conflicts of fact which emerge in a case provided the conflicts of fact which he

40. Mr. Charleton attached great significance to the failure of the trial Judge to resolve an apparent conflict of evidence between Mr. Gerard Kean Solicitor and some of the Plaintiffs witnesses. Mr. Kean was clearly a peripheral witness in this case but Mr. Charleton submits that the failure of the learned trial Judge to resolve the conflict between his testimony and that of the Plaintiff and some of her witnesses were such as to undermine the validity of the trial Judge’s findings.

41. The learned trial Judge (at page 19 of his Judgment) summarised a portion of Mrs. Forshall’s evidence as follows:-

42. At page 30 of his Judgment the learned trial Judge summarises Mr. Kean’ s evidence as follows:-

43. In fact Mr. Kean had given very clear evidence on two salient points. On Tuesday 29th April, 1997 (transcript Book 15 question 82) Mr. Kean denied being Mr. Walsh’s Solicitor. The relevant passage reads as follows:-

44. Later (at page 18 of the transcript) the following passage occurs:-

45. A. Absolutely totally incorrect.

46. Mr. Kean however suffered from the disability that he was a Solicitor giving evidence about matters alleged to have occurred some six years earlier and had omitted to bring his file to Court or to refresh his mind from his file before giving evidence.

47. At the end of his evidence the following passage took place between him and the Judge (see pp 24 and 25 of the transcript):-

48. Mr. Charleton is correct in his submission that there appears to be a direct conflict between the evidence of Mrs. Forshall and the evidence of Mr. Kean. In the event the learned trial Judge made an express finding in relation to Mrs. Forshall evidence but made no finding in relation to Mr. Kean’s evidence. But it does not follow from this that the conflict has not been resolved.

49. The evidence concerning Michael Mc Sweeney is central to this Appeal.

50. Michael Mc Sweeney was, at the relevant time, an “officer” of the Bank of Ireland. This position is between that of Bank Official and the higher position of Assistant Manager of a branch. In relation to Michael Mc Sweeney the trial Judge made the following findings:-

51. There is ample evidence to support all these findings from witnesses whom the trial Judge considered to be credible.

52. One should add that the trial Judge accepted that Michael Mc Sweeney described himself as “Manager” of the Bank not for the purpose of defrauding anyone but as a simple, if inaccurate, way of describing his position. He also accepted that Michael Mc Sweeney believed what he was being told by Gerard Walsh and Timothy Mc Sweeney.

53. The trial Judge put the matter as follows:-

54. On the Plaintiffs case she was, in an earlier part of the negotiations, constantly pressing Mr. Walsh for documentary evidence concerning the position of Lambo. A meeting took place at the Marriott Hotel in London on the 7th June, 1990. At the meeting were Mrs. Forshall, Mr. Kitoaki and Mr. Gerard Walsh. At this meeting the Plaintiff says that Mr. Walsh produced certain documents to Mr. Kitoaki. Mr. Kitoaki gave the documents to his compatriot Mr. Seki for the information of their Japanese clients. According to the Plaintiff among the documents produced was a letter from Lamborghini saying that Lambo were one of its concessionaires signed by a Mr. Sgarzi. If Lambo had been appointed concessionaires for Lamborghini in Ireland Mr. Sgarzi would have been the appropriate officer in Lamborghini to have signed such a letter. But as Lambo were never appointed concessionaires it is extremely unlikely that the letter, if produced, was genuine.

55. However the Plaintiff swore that Mr. Walsh also produced a reference from the Bank of Ireland in relation to Mr. Hoogenbrugghen. This reference was on Bank of Ireland notepaper, was addressed to “To whom it may concern re: William Hoogenbrugghen, Inchigeela, Co. Cork” and read as follows:-

56. The letter was signed by Michael Mc Sweeney.

57. No copy of any such letter was found in the Bank’s records at Bandon. Mr. O’Callaghan the Manager of the Bandon branch, said that the letter was not an appropriate document “. Nevertheless such document was issued and signed by Michael Mc Sweeney.

58. The document was undated and therefore, unlimited in point of time.

59. Mr. Mc Sweeney says that the document was issued by him to Mr. Hoogenbrugghen for use for a specific purpose to wit to establish Mr. Hoogenbrugghen’s credit at a hotel at which he was staying on the continent.

60. On this appeal the Appellants have argued that the Plaintiff must have known this because a list of interrogatories sent by the Plaintiffs Solicitors to the Defendants’s Solicitors and dated the 6th December, 1996 contains, at no. 57, the following interrogatory:-

61. It may well be that the purpose of this letter was merely to establish Mr. Hoogenbrugghen’s credit at his hotel but the real issues are was a copy of this letter produced by Mr. Walsh at the meeting at the Marriott Hotel and if so did it help to reassure the Plaintiff that Mr. Hoogenbrugghen and his Company Lambo were parties with whom she could safely deal.

62. It appears to me that the learned trial Judge was entitled to answer both these questions in the affirmative.

63. The Appellants suggest that the learned trial Judge was in error in finding in the internal documents of the Bank support for the proposition that Michael Mc Sweeney and Others. made representations to the Plaintiff that the Lambo was a concessionaire of Lamborghini of Italy. We now know that Lambo was not in fact at any time such a concessionaire. We also know from the Bank’s documents that the goal of the Company was to obtain the exclusive Lamborghini franchise and that negotiations with Lamborghini in this regard were ongoing and that it was not expected that there would be an outcome until

64. For instance in the course of a credit application from the Bandon branch to the Bank’s Credit Department Areas South dated the 21st February, 1990 it is stated:-

65. In the course of a further Memorandum of the 24th August, 1990 sent to the same Department Mr. Mc Sweeney states:-

66. All these Memoranda were presumably drafted with care but it appears to me that a Bank Official holding the views therein described as to the capacity of Lambo to supply Lamborghini cars in 1990 or early 1991 could easily, in verbal communication, give the impression that Lambo was in fact in a position to supply Lamborghini cars or was a concessionaire. It therefore appears to me that the learned trial Judge was entitled to regard these Memoranda as tending to support rather than to contradict the Plaintiffs allegations.

67. It appears to me that it would not be safe for this Court on the basis of these internal Memoranda or on the basis of the Plaintiffs Statement to the

68. British Police or of her Affidavit sworn in the English proceedings, individually or collectively, to conclude that the trial Judge had believed the wrong witnesses and that his Judgment ought to be be reversed or set aside.

69. The learned trial Judge found that there was a most exceptional relationship between Michael Mc Sweeney and Amanda Forshall. “It started” he said “with the fact that she was doing business with a customer of the Bank It was compounded by the fact that the Managing Director of the Customer of the Bank was a brother of Michael Mc Sweeney. That the relationship was exceptional is illustrated, first by the number of unsolicited phone calls made by Michael Mc Sweeney to Amanda Forshall and, that, when in trouble, Mrs. Forshall phoned Michael Mc Sweeney, not just at his office, but at his home, using a number which he himself had given to he". There is no doubt therefore that Mrs. Forshall fell within the “proximity” or “neighbourhood” principle as described in the cases of Ward v. McMaster (1989) ILRM P400 and Caparo Industries plc v. Dickman (1990) B.C.L.C. 273 . The learned trial Judge held that Mrs. Forshall would not have advanced monies to Mr. Walsh or to Lambo but for the various representations made to her by Michael Mc Sweeney. He held that Michael Mc Sweeney fell short of the standard of care which he owed Mrs. Forshall in making these representations as a result of

70. The Appellants challenged in particular their liability in respect of two items in the total sum of £677,000 sterling. The first was the item of £20,000 which Mrs. Forshall paid to Messrs. Dunhill on the 1st May, 1990. She did not reclaim the sum from Messrs. Dunhill but, instead, accepted credit of £20,000 which Mr. Walsh offered her in respect of it on behalf of Lambo. But the Plaintiffs’ case is that they would not have had dealings with Mr. Walsh, or accepted the purported credit of £20,000 sterling from Lambo, or abandoned their claim against Messrs. Dunhill but for the representations made by Michael Mc Sweeney that Lambo were well respected customers of the Bank and that they were concessionaires in Ireland for Lamborghini cars.

71. Again the Appellants challenged their liability in respect of the final payment of £300,000 sterling paid after the execution of the contract between Fine Arts and Collections Ltd. and Lambo. Again the trial Judge accepted Mrs. Forshall’s evidence that she was reluctant to make this payment until she received the first consignment of the Lamborghini cars. Her evidence was that Mr. Michael Mc Sweeney advised her to pay the sum of £300,000 sterling but

72. The Appellants submitted that, on the facts as found, the learned trial Judge ought to have made a finding of contributory negligence against the Plaintiffs. The Appellants submitted that Mrs. Forshall should not have accepted that the chassis numbers given in the Agreement of the 6th November, 1990 were genuine when she could have found out the true position by checking with Messrs. Lamborghini of Italy. Again they submitted that Mrs. Forshall should not have accepted the advice of Michael Mc Sweeney about the safety of monies paid to a Solicitor on behalf of his/her client particularly when she had a Solicitor of her own to advise her.

73. Mr. Barnett, one of the witness who was in the motor trade, in fact checked the chassis numbers of the motor cars mentioned in the agreement of 6th November, 1990 with Messrs. Lamborghini of Italy and their London

74. In any event the learned trial Judge did not make any finding of contributory negligence against the Plaintiffs. He did not give any reason for this and it is extremely doubtful if in the circumstances of this case, he was obliged to do so.

75. By way of special defence the Appellants plead that the Plaintiffs claim, as set out in their amended Statement of Claim, was statute-barred and that the learned trial Judge should have dismissed it on that basis.

76. The matters giving rise to the claim took place in 1990 and early 1991.

77. The Plaintiffs Plenary Summons was issued on the 31st January, 1991. Among the reliefs claimed were damages for fraud and damages for negligence including negligent mis-statement.

78. In their Statement of Claim, delivered on the 9th May, 1991 the Plaintiffs elaborated on their claims against Michael Mc Sweeney and the Bank for fraud and negligence including negligent mis-statement.

79. When the case came on for hearing in March 1997 the Plaintiffs were allowed to amend their Statement of Claim to plead more fully the case of negligent mis-statement against Michael Mc Sweeney and the Bank but only on the basis that they dropped the plea of fraudulent misrepresentation against these Defendants. The result was paragraph 44a of the amended Statement of Claim which is set out in full earlier in this Judgment. It appears to me that this amendment is an amendment within the parameters of the cause of action pleaded in the Plenary Summons. It cannot therefore be said to be a new cause of action. It appears to me that this is merely an elaboration of the cause of action pleaded in the Plenary Summons which was served well within the statutory period of limitations.

80. This plea therefore fails.

81. The Plaintiffs plead that the Defendants did not suffer a loss of £677,000 sterling or alternatively that they did not lose all of that money. They plead this

82. The Bank of course was not a party to the agreement. But it would seem strange if a party who, by his negligence, had caused another party to lose money would be allowed to say to him “it wasn‘t your own money anyway “. It is probably true to say that the exact relationship between Mrs. Forshall and her Company on the one hand and her Japanese contacts or principals was not clear even to the parties themselves but the litigation in England between Le Vert on the one hand and Mrs. Forshall and her Company on the other hand was settled and, in these proceedings Mrs. Forshall has sworn that under the terms of the settlement she and her Company were left to handle all matters concerned with the attempted purchase of Lamborghini cars in Ireland. Under these circumstances I would reject the Appellants’ submission on this point.

83. The Appellants’ have also submitted that the learned High Court Judge should not have awarded interest on the amount recovered but it would appear to me that it was a matter within the discretion of the learned High Court Judge and that this Court would not be justified in interfering with this discretion in the circumstances of this case.

84. I would dismiss the appeal and confirm the Order of the learned High Court Judge.