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Cite as: [1998] IESC 28

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Hyland v. Ireland [1998] IESC 28 (22nd October, 1998)

THE SUPREME COURT

Record No. 326/98

Hamilton C.J.,

O’Flaherty J.

Lynch J.

Between/:

BARBARA HYLAND

Plaintiff/Appellant

and

IRELAND, THE ATTORNEY GENERAL, MICHAEL J.

LUCAS, PAUL BUTLER and BRENDAN HYLAND.

Defendant/Respondents

JUDGMENT DELIVERED THE 22 ^nd DAY OF OCTOBER, 1998 BY LYNCH J [HAMILTON CJ AND O’FLAHERTY J CONCURRING] .

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1. This is an appeal by the Plaintiff Mrs. Barbara Hyland against an Order of the High Court (Barrington, J.) of the 2nd August, 1988 dismissing the Appellant’s claim against the Defendants/Respondents Michael J. Lucas, Paul Butler and Brendan Hyland for damages for alleged breach of contract, breach of trust, negligence, misconduct and misrepresentation. The Appellant’s claim against Ireland and The Attorney General had previously been struck out on the basis that the pleadings disclosed no cause of action against those parties by Order of the High Court of the 29th February, 1987 affirmed by Order of the Supreme Court of the 22nd April, 1988.

THE FACTUAL BACKGROUND.

2. The Appellant is the widow of Thomas Hyland who died on the 7 ^th March, 1977. 9th September, 1962. There was one child of their marriage namely Siobhan born the Unhappy differences had arisen between the Appellant and the said Thomas Hyland prior to his death and they had separated. By his Will dated the 17th December, 1975 the said Thomas Hyland appointed the Respondents Paul Butler and Brendan Hyland to be sole executors and devised and bequeathed to them all his property on trust for his daughter Siobhan. The Appellant claimed her one-third legal right share which after an initial dispute was conceded by the Respondents. The Appellant brought proceedings in 1978 to have the estate administered by the High Court and an Order for certain

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accounts and enquiries was made by the High Court on the 23rd October, 1978. These accounts and enquiries were completed and a final Order was made in due course in that suit. This appeal does not relate to those administration proceedings but to separate proceedings as described above which nevertheless arise out of the administration of the deceased’s estate.

3. The action for damages for alleged breach of contract, breach of trust, negligence, misconduct and misrepresentation which is the subject of this Appeal was commenced by a Plenary Summons issued by the Appellant on the 25th September, 1987. The Statement of Claim was delivered on the 15th

4. October, 1987 and defences were delivered on the 11th November, 1987. The

matter came for trial before the learned High Court Judge in July, 1988 and after a five day hearing during which the oral evidence of 21 witnesses including the Appellant was heard, the learned trial Judge reserved his Judgment which he thereafter delivered on the 2nd August, 1988 and he dismissed the Appellant’s claims.

THE APPEAL.

5. The Appellant served Notice of Appeal dated 28th September, 1988 which sets out the following grounds of appeal:

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1. “That the Defendants are in breach of Sections 50, 55, 56, 60, 62,

99, 111, 115, 117 and 120 of the Succession Act 1965.

2. The Defendants are in breach of36 of the Companies Act, 1963 and misused the corporate personality of Bardiknit Limited

3. That the Defendants failed to identify and preserve the assets of the testator.

4. That the Defendants (Executors) failed to have any adequate regard for the beneficiaries rights and interests.

5. That the Defendants wasted the assets of the estate and the assets of Bardiknit Limited.

6. That the trial was unsatisfactory having regard to the failure of the Defendant to produce documents under an Order to produce.

7. That the Defendants have failed to transfer shares held by the testator to the beneficiaries and have failed to assign a property to the beneficiaries without the burden of a Civil Bill served on the Defendants (Executors) and Nancy Hyland as landlords by James M Malone as tenant on the 12th day of May, 1987.

8. That the Defendants failed to see that the beneficiaries rights and interests were vindicated in accordance with the Constitution and Statutes

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6. The appeal was advanced in the Supreme Court list by the service of a Motion dated 5th June, 1998 by the Appellant to admit further evidence. The Appellant filed in the Supreme Court Office in September 1998 submissions in support of her application to have further evidence admitted and also submissions in support of her appeal to the Supreme Court. In the course of the hearing before this Court the Appellant clarified that she was moving both the application to admit fresh evidence and her substantive appeal and no objection was taken to this course. The Court has in its consideration of the Appellant’s substantive appeal taken into account the documents and matters referred to in the application to have further evidence admitted. In effect therefore the Court has acceded to that application and it is not necessary to deal further with it. What follows accordingly relates to the Appellant’s substantive appeal from the Judgment and Order of the High Court of the 2nd August, 1988.

7. The Appellant’s written submissions in support of her appeal to this Court run to 25 typescript pages. There are many points of detail relating more to the conduct of the administration suit and the conclusions and orders made therein than the present action which I repeat is based on allegations of breach of contract, breach of trust, negligence, misconduct and misrepresentation on the part of the Respondents. What is clear however and what became still

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more clear in the course of the Appellant’s oral submissions to the Court on Friday 9th October, 1998 is that the most substantial issue relied on by the Appellant relates to the ownership of the premises in which the Company called Bardiknit Limited carried on business at Sidenham Lane, Bray, Co. Wicklow. This was a Company in which the Appellant and the deceased were shareholders and Directors. The Appellant says that she was the founder of the business carried on by this Company and she obviously resents very much the manner in which that business was lost both to her and to the deceased’s estate.

8. There is no doubt but that the premises in which the Company carried on business were purchased by the deceased personally in the year 1963 for £1,700.00. However on the 4th April, 1967 the deceased agreed to sell the said premises to the Company for the same price namely £1,700.00. There is an acknowledgement of receipt of the said sum endorsed on the said contract but not signed by the deceased. On the other hand this contract was executed nine years and eleven months before the death of the deceased and the lapse of time and the absence of any attempt by the deceased to repudiate the contract in the meantime must give rise to a presumption that the beneficial interest in the premises vested in the Company in the absence of any evidence of objection by the deceased and more especially in view of the fact that the deceased joined with the Company in a mortgage of the premises to the Hibernian Bank Ltd. on

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the 23rd November, 1967 to secure advances to the Company by the Bank. The Appellant raises a number of points as to the internal management of the Company in that she alleges that she was a Director and never joined in any resolutions to purchase the premises and that a Mr. Finn who purports on the documentation to be a third Director was never qualified to be such. However it is clear from the case of Ulster Investment Bank Ltd v. Euro Estates Ltd. and Drumkill Ltd (1982) ILRM 57 that so far as the Hibernian Bank is concerned it would have obtained a good title pursuant to the mortgage irrespective of any internal technical deficiencies assuming that the contentions of the Appellant are correct.

9. What follows from all the foregoing is that the Respondents were quite correct in not including the factory premises at Sidenham Lane, Bray in which the Company carried on business as belonging to the deceased’s estate in the Schedule of his assets. The learned trial Judge at page 7 and 8 of the transcript of his Judgment stated as follows:

“One of the major items of dispute in the case before me related to the ownership of the property at Sidmonton Road (in error for Sidenham Lane) in which the Company carried on business. By an agreement there is no doubt that this property was originally the property of the deceased By an agreement dated the 4th April, 1967 the deceased agreed to sell the property to the Company for the sum of £1,700.00. No conveyance was ever executed by the deceased to the Company but he

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did sign the agreement There was a receipt clause for the purchase money at the end of the agreement but in the receipt clause at least in the copy of the agreement shown to me does not appear to have been executed. Nevertheless, the deceased in his capacity as a Director of the Company did execute the agreement More important is that the deceased at a later stage joined with the Company in a mortgage of the property to the Hibernian Bank on the 27th November, 1967 to secure the debts of the Company inter alia. Under these circumstances it appears to me to be an unstatable proposition that this property was part of the deceased’s estate at the time of his death. It was clearly the property of the Company and mortgaged by the Company as the security of the Company ‘s liabilities to the Bank. The arrangement whereby the agreement was not followed by a conveyance was a well known conveyancer‘s device and it appears to me that by far the most probable explanation of what happened was that the deceased deliberately declined to execute a conveyance in order to avoid having to pay stamp duty but at a later stage co-operated with the Company to mortgage the property to the Bank to secure liabilities

Nothing in the further evidence submitted by the Appellant would alter the position as found by the learned trial Judge above and accordingly there can

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be no question of this Court interfering with those findings of the learned trial Judge. The deceased had parted with the beneficial interest in the premises at Sidenham Lane some ten years before his death and at most only a bare legal estate may have remained vested in him: hence his joining in the mortgage to the Hibernian Bank which he also did as a guarantor.

It appears that for some years before his death the deceased ran the business of the Company as though he was a sole trader and without any consultation with the Appellant but with a Mr. Finn as a third Director. The Appellant contends that Mr. Finn was never a shareholder and as the qualification for directorship was the holding of at least one share and as she as a lawful Director never assented to Mr. Finn’s appointment as a Director he was never a Director of the Company any more than a shareholder. The Appellant exhibits a letter dated the 20th May, 1983 from Mr. Finn to the Company’s Office stating that he ceased to be a Director on the death of the deceased but of course this letter is mere hearsay and mis-states the date of death as 1974. Whatever may be the technical position the reality is that the Appellant appears to have acquiesced in the running of the Company by the deceased for some years and perhaps more than ten years before his death as though he was a sole trader and she informed the Court that she spent the last eleven months in Canada before the sudden death of the deceased. On his

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death it was found that the Company was in a parlous financial state and eventually the Executors closed down the business and they appear to have negotiated satisfactory terms with the Bank in relation to the Company’s debts guaranteed by the deceased.

The learned trial Judge found at page 7 of the transcript of his Judgment as follows:

“The Plaintiff had started the business and had run it very well and naturally felt deeply and emotionally about it but I find it hard to follow the logic of her complaint where, initially, she raised the possibility that the business should be run as a going concern and she then blamed the Executors for running it as a going concern and for paying the Manager, who was the only person who could run it for them and when ultimately the deal with Mr. Jordan went sour on the Executors who felt they had to close down the business she blamed them for closing down the business also. It is clear that as a result of the failure of the business the Company remained insolvent and the Banks suffered fairly significant losses, but the estate, strangely enough, emerged without the total liabilities that it might have been expected to incur “.

10. And then continuing at page 8:-

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“The reason why the estate emerges comparatively unscathed from the clams of the deal with Mr Jordan was that the Bank released its guarantee. Whether it did that because of representations made to it personally by the Plaint if as she maintained, or whether it was done as a result of representations made by the various Solicitors to the Bank, or whether it was simply a policy decision by the Bank is of little materiality. The point is that as long as the Bank ‘s claim for £7, 000 against the estate, on foot of the guarantee, existed the money which had been collected for the estate and which had been lodged in the High Court were kept in reserve to meet the Bank ‘s potential claim. When the Bank released its guarantee, it enabled these monies to be paid and it enabled distribution to be made to the Plaint if and to her daughter This whole story has been a comparatively sorry one, but in my view what happened is not in any way the fault of the Executors. It arose partly from the dispute that had existed between the deceased and his wife, the Plaint if which set the background against which the estate had to be administered It arose partly from the sudden death of the deceased with his affairs not in a proper state of order. It arose partly from the unorthodox method the deceased clearly had of doing business but none of these matters were the fault of the Executors, although it perhaps left them with a certain wariness towards the Plaint if and a

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mutual suspicion between the Plaint if and the Executors which complicated the administration of the estate “.

11. And finally at page 9 of the transcript of his Judgment the learned trial Judge concluded:

“The story is a sad story. I am satisfied that the Plaint if is a lady of very considerable ability and she has taken endless pains in preparing this case and presenting it before the Court, but she in many respects is out of her depth dealing with legal problems and has put on many innocent transactions a totally false and suspicious interpretation. I am satisfied that there is no substance in her complaints and that the Executors did the best they could honestly do to administer this estate in difficult circumstances. I think the charges which have been made against them are totally unjust fled”.

12. Nothing in the further evidence submitted by the Appellant alters the foregoing position as found by the learned trial Judge and it would be quite wrong for this Court in those circumstances to interfere with such findings.

13. The Appellant makes various allegations of wrongdoing on the part of the Respondents which she suggests diminished the value of the deceased’s

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estate. Undoubtedly the action brought by the Appellant to have the estate administered by the High Court diminished the value of the estate as such proceedings are costly. The costs of that suit were dealt with by the Judge of the High Court dealing with it and no review of that matter can be sought on this appeal. The learned trial Judge in this case found that the Respondents acted in all respects honestly and properly in dealing with an estate which was in a confused and difficult state following the sudden and unexpected death of the deceased.

14. Nevertheless the Appellant alleges that monies in Bank accounts came to hand after the administration suit was completed and that these monies have not been accounted for. The Respondents refute these allegations saying that any such monies were credited against accounts due to such Banks. The reality of the situation can be gauged by examining Schedule Al in an Affidavit sworn by the Appellant on the 10th December 1997 in a Probate Application to remove the Respondents as Executors and grant administration instead to the Appellant and her daughter. In substance that application was by and large an attempt to relitigate on Affidavit issues which had been fully heard and determined on oral evidence over five days by the High Court in 1988. In any event looking at the matter in a broad common sense way, the Appellant’s Schedule Al in her Affidavit of the 10th December, 1997 which takes into

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account all monies she alleges came to hands after the administration proceedings shows assets of the deceased in a sum of £61,789.00: liabilities of the deceased in a sum of £15,217.00: and consequently net estate at the date of death of the deceased in a sum of £46,571.00. The Schedule to the Appellant’s Affidavit further states that the net personal estate shown in the Probate Affidavit filed on behalf of the Respondents for the purposes of obtaining probate of the Will was £21,005.00 which is £25,566.00 less than the Appellant’s up-to-date calculations.

15. This discrepancy is almost entirely explained by the inclusion by the Appellant of the factory premises at Sidenham Lane as an asset of the deceased with the value of £24,000. As I have already pointed out this is wrong. At the date of his death the deceased at most had a bare legal estate in the premises of no value: the beneficial estate, being the only interest in the premises of any value, having been agreed to be sold by the deceased to the Company some ten years before his death and mortgaged by the deceased and the Company to the Hibernian Bank some nine years before his death.

16. The learned trial Judge delivered a careful reserved Judgment on the 2 ^nd August, 1988. He dealt in detail with the issues debated in oral evidence subject to examination and cross-examination over five days. He arrived at

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conclusions that are not in any way shaken by the further evidence adduced before this Court by the Appellant. It follows therefore that the Appellant’s appeal fails and must be dismissed.