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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Forshall v. Walsh [1998] IESC 67 (18 June 1998)
URL: http://www.bailii.org/ie/cases/IESC/1998/67.html
Cite as: [1998] IESC 67
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Barrington, J.
Lynch, J.
Barron, J.
240/97
Between:-
Plaintiffs/Respondents
Defendants
Defendants/Appellants
JUDGMENT of Barrington J. delivered on the 31st day of July, 1998 [Nem Diss.]
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 McSweeney.
BACKGROUND TO THE CASE.
It is proper to emphasise this because the background to the case is one of fraud.
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. The business of the Plaintiffs was to source investment opportunities, objets d'Art and - in the present case - classic cars for Japanese clients.
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 1st 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 McSweeney 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
cheque for £42,500 which Mr. Timothy McSweeney had previously demanded. She subsequently became suspicious, stopped this cheque and said she would not renew it unless she saw some documentary evidence concerning the Lamborghini cars. Such documentary evidence was eventually produced at a meeting at the Marriott Hotel in London on the 7th June, 1990 between Mrs. Forshall, her Japanese contact Mr. Kitoaki and Mr. Gerard Walsh. After the meeting Mrs. Forshall gave to Mr. Walsh a new cheque for £42,500 and received a receipt from Lambo for £62,500.
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 McSweeney 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.
1st May, 1990 - £20,000 sterling,
7th June, 1990 - £42,500 sterling,
29th June, 1990 - £50,000 sterling,
28th August, 1990 - $300,000 United States dollars
£104,131.00 sterling, 6th November, 1990 - £300,000 sterling.
TOTAL - £677,000 Sterling.
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:-
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
WHEREAS:-
(1) The Vendor has agreed to sell to the Purchaser the cars hereinafter referred to
(2) The price for each car is eighty seven thousand pounds sterling £87,000 hereinafter called 'the purchase price')
3) In addition to the purchase price the Purchaser has agreed to pay or has already paid premiums as follows:
(a) as to three of the said cars a premium of one hundred thousand pounds sterling (£100.00) each (namely cars 7, 8 and 9).
(b) as to six of the said cars the sum of one hundred thousand US dollars (US$100,000) each (namely cars 1, 2, 3, 4, 5 and 6).
(4) As at the date hereof the total payable by the Purchaser to the Vendor in respect of the said premiums is three hundred thousand pounds sterling (£300,000) ('the balance of the premiums')
NOW THEREFORE:-
1. The Vendor shall sell to the Purchaser the following left hand drive Lamborghini motor cars:-
Chassis number Colour
ZA 9000 5 AOKLA 12012 Black /Cream ('Car 1')
ZA 9000 5 AOKLA 12015 Black/Black ('Car 2')
ZA 9000 5 AOKLA 12020 Yellow/Black ('Car 3')
ZA 9000 5 AOKLA 12028 Red/Cream ('Car 4')
ZA 9000 5 AOKLA 12029 Red/Cream ('Car 5')
ZA 9000 5 AOKLA 12030 Red/Cream ('Car 6')
ZA 9000 5 AOKLA 12031 Red/Cream ('Car 7')
ZA 9000 5 AOKLA 12032 Red/Cream ('Car 8')
ZA 90005 AOKLA 12039 White/Blue ('Car 9')
2. The Purchaser shall pay the balance of the premiums on the 16th November 1990 by telegraphic transfer into the clients account of Mary O'Brien Daly Solicitors of Academy Street Cork Eire
3. The Vendor shall deliver cars 1, 2, and 3 on the 22nd November 1990.
4. The Vendor shall deliver car 4 on the 30th November 1990
5. The Vendor shall deliver cars 5, 6, 7, 8 and 9 on or before the 31st December 1990
6. The Purchaser shall pay the purchase price to the Vendor on production to the Purchaser of a faxed copy of a bill of lading and of
a faxed copy of a certificate of Insurance in respect thereof, the originals of such faxed copies to be posted to the Purchaser by first class post on the same day they have been faxed
7. IT IS HEREBY AGREED and DECLARED in respect of each car that if the Vendor has not delivered it or caused it to be delivered by the 28th February 1991 then the Purchaser shall be entitled to rescind this agreement in respect of such car and the Vendor shall refund to the Purchaser all sums paid in respect of such car together with interest at four per cent per annum above the base rate from time to time of Midland Bank PLC such interest to accrue from the due date of delivery
8. If the Purchaser fails to take delivery of any car and to pay the purchase price in accordance with its obligations under clause 6 hereof in respect of any car then the Vendor shall retain such car and shall within seven days of the Purchaser's failure as aforesaid refund to the Purchaser seventy per cent of the premium paid in respect of such car
9. This agreement is the sole agreement between the parties in respect of the said cars and shall be governed by English law and be subject to the exclusive jurisdiction of the English courts.
AS WITNESS the hands of the parties hereto the day and year first before written
SIGNED on behalf }
of the Vendor }
SIGNED on behalf }
of the Purchaser }
The agreement was signed by Tim McSweeney on behalf of the Vendor and by the first-named Plaintiff on behalf of the Purchaser.
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
there were any). Certainly the chassis numbers given in the agreement were all false. The Plaintiffs sued Lambo but the Company was and is insolvent and the Plaintiffs are at the loss of their £677,000 sterling.
In the High Court the Plaintiffs recovered damages for deceit and fraudulent misrepresentation against the Defendants Gerard Walsh and Timothy McSweeney.
There has been no appeal against these verdicts.
PLEADINGS
The Plaintiffs Plenary Summons in these proceedings issued on the 31st January, 1991. Among the named Defendants were Gerard Walsh, Timothy McSweeney, Michael McSweeney, William Hoogenbruggen and the Bank of Ireland. Among the reliefs claims were damages for fraud and damages for negligence including negligent mis-statement.
In their Statement of Claim, delivered on the 9th day of May, 1991, the Plaintiffs described Michael McSweeney as a "Bank Official" employed by the Bank of Ireland at its Bandon office. In the Statement of Claim Michael McSweeney is referred to as "Manager McSweeney" to distinguish him from his brother Timothy McSweeney who is referred to as "Director McSweeney".
Paragraph 30 of the Statement of Claim however pleads that "Manager McSweeney" 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.
At that stage the Plaintiffs were pleading that the representations made by Manager McSweeney were fraudulent as well as negligent.
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 McSweeney and the Bank but only on the basis that they dropped the plea of fraudulent misrepresentation against these Defendants.
On this basis the Plaintiffs then inserted a new paragraph (44a) in their Statement of Claim. This paragraph reads as follows:-
44(a) "Further and in addition to the foregoing manager McSweeney and the Bank its servants or agents negligently and in breach of duty advised and/or represented to the Plaintiffs:
I) that the Plaintiffs could and should conduct (and continue to conduct) business with Mr. Walsh, Lambo and Hoogen B:2) Mr. Walsh, Lambo and Hoogen B. were good and valued customers of the Bank and persons with whom the Plaintiffs could safely conduct business:
3) Mr. Walsh at all material times prior to October 1990 was owner of or alternatively a major shareholder in Lambo:
4) Lambo was at all material times a concessionaire of Lamborghini Motors Italy:
5) Monies paid to Mr. Walsh and/or Lambo would be secure:
6) Lambo was at all material times in a position to effect delivery of the said motor cars:
Particulars The advices/representations aforesaid were made by the Bank its servants or agents (including Manager McSweeney) on the diverse occasions including the following: -
-13- a) On or about the 6th April 1990 the Plaintiff was telephoned by Manager McSweeney subsequent to the initial meetings with Mr. Dunhill indicating he was aware that Plaintiffs were sourcing Lamborghini motor cars from the Irish concessionaires and that they were good and respected customers of the Bank and that his brother was the finance director of the Irish concessionaires. Manager McSweeney offered the Plaintiffs credit facilities to finance the proposed purchase.
b) By further telephone conversation at the end of April 1990 Manager McSweeney on his own behalf and on behalf of the Bank reiterated the status of Irish suppliers as being the Irish Lamborghini concessionaires and confirming that they were good customers of the Bank and that he understood that the Plaintiffs customers were of Japanese origin. He requested that the Plaintiffs' Japanese customers visit Ireland.
c) By further telephone call in or about the first week of May 1990 subsequent to a telephone call from Director McSweeney requesting monies Manager McSweeney contacted the Plaintiff assuring her of the bona fides of Lambo and its ability to access the vehicles. At that time he indicated that he knew that the
-14- 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.d) By telephone conversation dated 18th May 1990 Manager McSweeney contacted the Plaintiff indicated that he had been informed by Walsh of the proposed meeting between senior bank personnel and the Plaintiffs' Japanese clients and indicated that he was aware that the meeting had been arranged by Gerald Kean.
e) By further telephone conversation towards the end of May the first named Plaintiff contacted Manager McSweeney expressing concerns over the absence of documentation relating to the vehicles and in the course of the said conversation the said Manager McSweeney both expressly and impliedly represented and stated that everything was in order and that he looked forward to meeting the first named Plaintiff at the proposed meeting in Ballymaloe House. As a consequence of such representations and statements upon which the Plaintiff re1ied the aforesaid
-15- 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.f) On or about the 29th of May 1990 at a meeting at Ballymaloe House the Bank its servants or agents and in particular Brendan O'Callaghan expressly endorsed Lambo and confirmed that they held the Irish concession for Lamborghini and indicated that it was a good and well respected customer of the Bank's branch at Bandon and that furthermore Walsh was the owner of Lambo and was a good customer of the Bank 's branch and that furthermore he had been associated with and introduced to the Bank substantial and good projects. By making the said representations, relied upon by the Plaintiffs, the Plaintiffs felt assured that they could enter into agreements with the first, second, fourth and sixth named Defendants.
g) Further to the said meeting on the 29th may 1990 the Bank its servants or agents and in particular Lloyd Hutchinson an individual who represented that he was a manager of the International Division of the Bank further confirmed and endorsed both expressly and by implication the views of Brendan 0 'Callaghan in relation to Walsh and confirmed that
-16- he was a good and well respected customer of the Bank.h) Prior to the Ballymaloe meeting Manager McSweeney had a a number of conversations with Andrew Gunther reiterating and confirming that Lambo were the Irish concessionaires and that they were a reputable company with whom the Plaintiffs could transact business. At all material times Manager McSweeney knew that the Plaintiffs and in particular that the first named Plaintiff would be made aware of the said representations and would rely thereon.
i) In or about the month of August 1990 Manager McSweeney telephoned the first named Plaintiff to furnish details of the account into which the deposits for the extra five cars were to be paid. Initially Manager McSweeney simply identified the account holder but when pressed by the first named Plaintiff revealed that the account was in fact an account in the name of Walsh and explained that the payment to Walsh was by way of reimbursement for a loan made by Walsh to Lambo who had already received the monies from Walsh. In so representing both expressly and by way of implication Manager McSweeney confirmed that the said monies would be paid to Lambo and that pending such payment the monies would be secure in the
-17- aforementioned account of Mr. Walsh.j) By telephone conversation with the first named Plaintiff on the 8th day of October 1990 subsequent to a conversation with Director McSweeney, Manager McSweeney for the first time indicated that Walsh had nothing to do with Lambo but confirmed and assured the Plaintiffs that if the Plaintiffs were prepared to acquire an additional three vehicles making in total nine with a higher premium attaching to the three vehicles that Lambo would be in a position to effect delivery thereof Manager McSweeney advised that the proposals to purchase an additional three vehicles was a good compromise from the Plaintiffs point of view.
k) On or about 24th October 1990 the first named Plaintiff was told by Director McSweeney that a joint bank account had been opened by Manager McSweeney on behalf of Director McSweeney and the first named Plaintiff. At all material times the first named Plaintiff was unaware of the opening of the said account nor had consented to same and the purpose thereof was to allay any fears the Plaintiff may have had in respect of Lambo, Walsh or Director McSweeney and its further purpose was in order to induce the Plaintiffs to forward further funds. Upon realisation of the
-18- existence of the account the Plaintiffs refused to forward funds.l) On or about the 5th November 1990 Manager McSweeney contacted the Plaintiffs to request monies be forwarded to complete the transaction and indicated that all was in order and that the vehicles would be available and that in order to protect the monies pending delivery of the last three vehicles the best option would be to pay the, monies to MOBD solicitors which said exercise would protect the Plaintiffs funds. As a consequence of the said representations upon which the Plaintiffs relied the Plaintiffs furnished further funds in the amount of three hundred thousand pounds sterling (STG £300,000.00) as referred to in paragraph (i) above.
m) In or about the beginning of January 1991 Brendan O'Callaghan telephoned Tarka King then acting on behalf of the first Plaintiff indicating that the Bank's customer Lambo was in a position to deliver vehicles and that the Bank could make facilities available for the funding of the vehicles provided that the Bank obtained sufficient security by way of securing the advance against Mr. King's property at Glaslough, Co. Monaghan. The said representations allayed the Plaintiffs fears thereby permitting the Defendants to dissipate the assets further.
-19- 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 bona fides, 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 McSweeney 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 ".
THE TRIAL.
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
learned trial Judge had ample time to observe all the witnesses to see them cross-examined and to decide who was telling the truth and who was not or whose memory could be relied upon and whose could not. The latter factor may have been of some significance in some cases as, unfortunately, the case did not come to trial until more than six years after the events giving rise to it.
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:-
"I regard the evidence of Mrs. Forshall as both credible and truthful. I accept her evidence in its entirety and I reject the evidence which was given by Gerard Walsh, Timothy McSweeney and Michael McSweeney which I do not regard as either accurate or credible ".
Dealing with the minor witnesses he stated:-
"I also accept as accurate and credible the evidence of Mr. Kitaoki, Miss Archer Shee, Mr. Kraemer, Mr. Gunther, Mr. King, and Mr. Barnett. I also accept that the evidence given by Mr. Lloyd-Hutchinson and Mr. Brendan O'Callaghan of Bank of Ireland
is a truthful but not necessarily an accurate account of their role in these events ".
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.
THE LAW.
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:-
(1) "An appellate Court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial Judge who hears the substance of the evidence but also observes the manner in which it is given and demeanour of those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial.
(2) If the findings of fact made by the trial Judge are supported by credible evidence, this Court is bound by those findings, however voluminous and
apparently weighty the testimony against them. The truth is not the monopoly of any majority.
(3) Inferences of fact are drawn in most trials; it is said that an Appellate Court is in as good a position as the trial Judge to draw inferences of fact (see Judgment of Holmes L.J. in 'Gairloch' the S.S., Aberdeen Glenline Steamship Co. v. Macken cited by O'Higgins C.J, in The People (Director of Public Prosecutions) v. Madden [1977] IR 336 at P339) I do not accept that this is always necessarily so. 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"
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
the Plaintiffs evidence when compared to that of her witnesses and of the witnesses called by the Defendants reveals so many inconsistencies in her case that her testimony could not be regarded as credible. He relied in particular on certain documents which he suggested cast doubt on the Plaintiffs case.
DOCUMENTARY EVIDENCE:
(I) POLICE STATEMENT.
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:-
"On the 7th June, 1990 I met with Walsh at the Marriott Hotel, Grosvenor Square. He did not provide the paper work as promised
but merely showed me two letters referring to the sale of a Diablo to the Belgian he had mentioned on the telephone ".
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 Judgment (at P22) some of which (including the reference from the Bank for Mr. Hoogenbrugghen) were very significant.
It is proper however to refer to the fact that in this Statement she also said (at page 3):-
"On the 9th April I received an unsolicited telephone call from a man who introduced himself as Michael McSweeney, the branch Manager of the Bank of Ireland at Bandon, Co. Cork".
Later in the Statement (at page 29) she says:-
"I believe as a result of enquiries I have been able to make in Ireland and the UK. that I have been the victim of an organised team of fraudsmen. This team includes Walsh, Hoogenbrugghen, Timothy and Michael McSweeney and Hisa Seki ".
(II) THE ENGLISH AFFIDAVIT.
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.
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
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.
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.
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
does resolve are sufficient to support his conclusions. Indeed once a trial Judge has decided the principal issue between the parties it might appear otiose or even cruel to make unnecessary findings against peripheral witnesses.
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.
The learned trial Judge (at page 19 of his Judgment) summarised a portion of Mrs. Forshall's evidence as follows:-
"Mr. Walsh met Mrs. Forshall at the Marriott (Hotel) in the middle of May 1990. Mrs. Forshall was accompanied by a Mr. Seki and a Mr. Kitoaki. Mr. Walsh introduced himself as the owner of Lambo Motors of Ireland and the Japanese present indicated that they were interested in purchasing a second Lamborghini Diablo car. Mr. Seki and Kitoaki indicated with typical politeness that they would require to establish Mr. Walsh's ability to deliver the Lamborghini Diablo
cars and accordingly a further meeting was arranged for the Marriott Hotel some day later in May which was attended by Mr.Walsh, a Mr. Gerard Kean (his Solicitor), Mr. Seki, Mr. Kitoaki and Mrs. Foshall. Kean, who introduced himself as Mr. Walsh's Solicitor, reiterated that Mr. Walsh was indeed the owner of Lambo and that Lambo were concessionaires of Lamborghini of Italy ".
At page 30 of his Judgment the learned trial Judge summarises Mr. Kean's evidence as follows:-
"Gerard Kean said that he had been asked by Gerard Walsh to attend a meeting at Ballymaloe on the 29th May, 1990. He, Gerard Kean, had said he would bring along a Director of the Bank of Ireland to the meeting. He said that he was unable to attend the meeting due to adverse weather conditions. He had started the journey to Ballymaloe in a helicopter but was forced to return home because of the weather. Mr. Kean said that he later attended the meeting at the Marriott Hotel in London where he met Mrs. Forshall and three Japanese persons, he attended in the company of Mr. Gerard Walsh. He recalls the discussion as to various investment opportunities. He denies ever having said that Gerard Walsh was the owner of Lambo
or that Lambo were concessionaires for the Lamborghini Motor Company ".
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:-
82. Q. "Can I refer you to a couple of things Mrs. Forshall said for the purpose of seeing whether you agree with them or not. For the benefit of the Court and my colleagues I am referring to Thursday, 13th March am, I will call that 2a in the transcript. Pages 22 and 23. Mrs. Forshall described the meeting in the Marriott which she said was prior to Ballymaloe. She says this is the meeting you attended with Gerard Walsh and that Gerard Walsh described you as Gerard Walsh's Solicitor. Is that so
A. I have no idea why Mr. Walsh describes me as being his Solicitor but I can categorically say that I was not his Solicitor
Later (at page 18 of the transcript) the following passage occurs:-
86. Q. "It is then stated at Q.163 that you informed Mrs. Forshall that Gerard Walsh was the owner of a Company called Lambo Motors of Ireland, did you say that?
A. Absolutely totally incorrect.
87. Q. It is also said by her that you said Lambo Motors of Ireland was a concessionaire of Lamborghini of Italy?
A. Absolutely incorrect. I had no knowledge nor was in a position to pass any comment in relation to this Company ".
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.
At the end of his evidence the following passage took place between him and the Judge (see pp 24 and 25 of the transcript):-
132. Q. "Mr. Walsh (sic) you have told the Court your practice is to take notes of any meeting you attend.
A. Mr.Kean.
133. Q. Sorry Mr. Kean is that the position?
A. Yes, that would be normal.
134. Q. What do you do when you take notes, is it dictated in the first instance?
A. Not always, in other words my recollection is that I didn't return to the office on that day.
135. Q. Leave aside that I want to know your practice?
A. That would be my normal practice, yes, reasonably quickly after the meeting that is for sure.
136. Q. In this case you did follow that practice, did you?
A. My recollection is that I did.
137. Q. Why can't you be more specific?
A. Because I haven't had an opportunity of checking my file, it is so long since it was filed away.
138. Q. You haven't looked at the file for six years?
A. No, My Lord, no.
139. Q. When were you aware that Mr. Walsh said that you were his Solicitor?
A. I would have to check my diary, it was when I received a call in my office.
140. Q. About five weeks ago did you tell Mr. O'Neill?
A. That is correct, about five or six weeks ago.
141. Q. Is it your evidence that to this Court - sorry I ought to check – were you aware of the nature of the allegations being made in this Court against Mr. Walsh, mere allegations?
A. No.
142. Q. Allegations nonetheless of fraud?
A. No. I had heard that generally during conversations.
143. Q. You had heard that it was being suggested that you were his Solicitor?
A. I then immediately contacted Mr. Waters who is Mrs. Forshall's –
144. Q. Don't mind Mr. Waters, I am not interested in that. Is it your evidence to this Court notwithstanding you were aware someone accused of fraud was contending that you were his Solicitor five or six weeks ago, you never went to look at your notes that you had filed away some five or six years ago. Is that what you are inviting this Court to accept?
A. That is correct".
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.
MICHAEL McSWEENEY.
The evidence concerning Michael McSweeney is central to this Appeal.
Michael McSweeney 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 McSweeney the trial Judge made the following findings:-
"Michael McSweeney had at least twelve phone conversations with Amanda Forshall, a client of a customer of the Bank of Ireland between April 1990 and January 1991; of these twelve phone calls eight were calls made by Michael McSweeney and unsolicited. I have already set out in detail the evidence given by Mrs. Forshall and Mr. Michael McSweeney and I now want to set out hereunder a brief summary of those representations and assurances that were made by Michael McSweeney to Mrs. Forshall and Ors. in the period between April 1990 and January 1991. In April 1990 Mrs. Forshall recalls receiving an unsolicited telephone call from a person who said his name was Michael McSweeney and that he was the Manager of the Bank of Ireland in Bandon. There followed two further phone calls from Michael McSweeney in April and May 1990 in which he represented that Lambo were concessionaires of Lamborghini Motors and were well respected customers of the Bank of Ireland. In May 1990 Michael McSweeney assured Mrs. Forshall that she need not worry about the absence of documentation in relation to the
Lamborghini cars. He assured her again that Lambo were concessionaires of Lamborghini, that his brother was a Director of Lambo and that Lambo were good customers of the Bank. Indeed he added that Gerard Walsh's Uncle was a Director of Chrysler and that Gerard Walsh could, if he required, get a concession for Lamborghini Motor cars in Japan. In August 1990 Mr. McSweeney told Mrs. Forshall that Gerard Walsh had paid monies to secure Lamborghini cars and he gave her the number of Gerard Walsh's account so that she could send her money to that account. On the 8th October 1990 Michael McSweeney told Mrs. Forshall that he had been asked by the Directors of Lambo to call her and to tell her that Gerard Walsh had nothing got to do with the Company. He repeated to Amanda Forshall that Lambo were concessionaires and the compromise which she had entered into whereby she would purchase nine cars instead of six cars, was a sensible one in all the circumstances. On the 5th November 1990 Michael McSweeney told Amanda Forshall that putting monies into the Solicitor's account would be the best way of dealing with matters and he led her to believe that those monies would not be touched until the three cars arrived. He assured her that the cars would indeed arrive. As late as the 25th January, 1991 Amanda Forshall phoned Michael McSweeney who said that as the
cars were about to arrive they had to have the list price of the cars paid for and that the money should be paid into the Lambo account with the Bank of Ireland and he assured her that everything would be all right".
There is ample evidence to support all these findings from witnesses whom the trial Judge considered to be credible.
One should add that the trial Judge accepted that Michael McSweeney 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 McSweeney believed what he was being told by Gerard Walsh and Timothy McSweeney.
The trial Judge put the matter as follows:-
"It is of course, surprising to find an officer of the Bank making representations on behalf of its customer. However, the situation Michael McSweeney found himself in has to be understood. He knew Gerard Walsh well, and Timothy McSweeney was his brother. He was being told by Mr. Hoogenbrugghen and by Timothy McSweeney in some detail about the possibility of a Lamborghini agency. He clearly believed what he was being told".
BANK'S INTERNAL DOCUMENTS.
On the Plaintiff's 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.
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:-
"This is to certify that William Hoogenbrugghen is a respectable customer at this branch whose cheques have always been honoured".
The letter was signed by Michael McSweeney.
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 McSweeney.
The document was undated and therefore, unlimited in point of time.
Mr. McSweeney 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.
On this appeal the Appellants have argued that the Plaintiff must have known this because a list of interrogatories sent by the Plaintiff's Solicitors to the Defendants's Solicitors and dated the 6th December, 1996 contains, at no. 57, the following interrogatory:-
"By letter dated 17th January, 1990, Lambo Motors of Ireland Ltd. enclosed a copy reference from the Bank of Ireland in correspondence with Hotel Plaze de L 'Athenee to the effect that
William Hoogenbrugghen was at that time a respectable customer of the Bank of Ireland, Bandon branch, whose cheques had always been honoured; was the information contained in this reference correct?"
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.
It appears to me that the learned trial Judge was entitled to answer both these questions in the affirmative.
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 McSweeney 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
1991 at the earliest. At the same time it was clear from the Bank's internal memos that the Bank's officials did believe that Lambo would obtain some Lamborghini cars from Lamborghini Italy in 1990 or early in 1991.
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:-
"Regardless of the success or otherwise of that negotiation with Mercantile the Company continued to maintain close contact with Lamborghini and had had a verbal commitment that they would be able to buy at cost eight Diablos in the course of the next twelve months ".
In the course of a further Memorandum of the 24th August, 1990 sent to the same Department Mr. McSweeney states:-
"I received a phone call this morning the 24/8 from a firm of Solicitors in England who had previous dealings with the Company and always honoured them to the letter. They stated that their own Bank had confirmed to them that their agent in Japan had forwarded the sum of US$300,000 today for the credit of the Solicitor's account, he in turn holds authority to transfer US$300,000 on receipt to the
Company here. I would expect that this money will be lodged to the account next Tuesday, Monday being a bank holiday in England. This will amount to just over £170,000. This does not represent the sale of any of their own stock; it is just commission for the sale of three Diablos to take place in November 1990. Apparently there is a mechanism whereby Lamborghini Ltd. in Italy gave some kind of letter of comfort to any would be purchasers from Companies such as Lambo Motors Ltd. This, I understand, more or less guarantees deliveries to the would be purchasers ".
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 Plaintiff's allegations.
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 Plaintiff's Statement to the
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.
JUDGE'S CONCLUSION.
The learned trial Judge found that there was a most exceptional relationship between Michael McSweeney 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 McSweeney. That the relationship was exceptional is illustrated, first by the number of unsolicited phone calls made by Michael McSweeney to Amanda Forshall and, that, when in trouble, Mrs. Forshall phoned Michael McSweeney, not just at his office, but at his home, using a number which he himself had given to her ". 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 McSweeney. He held that Michael McSweeney fell short of the standard of care which he owed Mrs. Forshall in making these representations as a result of
which she and her Company lost the sum of £677,000 sterling. He accordingly held that Michael McSweeney and the Bank were liable to Mrs. Forshall and her Company in respect of that sum.
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 McSweeney that Lambo were well respected customers of the Bank and that they were concessionaires in Ireland for Lamborghini cars.
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 McSweeney advised her to pay the sum of £300,000 sterling but
to pay it to the Solicitor acting for Lambo. On this basis, on her evidence, he advised her that the £300,000 sterling would be safe pending the arrival of the cars. Again the trial Judge accepted this evidence. The advice however was totally wrong because the Solicitors to Lambo had no choice but to pay the £300,000 to Lambo or at their direction. As a result the sum of £300,000 was also lost to the Plaintiffs.
CONTRIBUTORY NEGLIGENCE.
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 McSweeney 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.
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
agents and discovered the chassis numbers were false. Mr. Barnett however, on his own evidence did not tell Mrs. Forshall of his discovery and Mr. Barnett was one of the minor witnesses in the case whose evidence the learned trial Judge accepted. But Mr. Barnett was in the motor trade and Mrs. Forshall was not.
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.
STATUTE OF LIMITATIONS.
By way of special defence the Appellants plead that the Plaintiff's 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.
The matters giving rise to the claim took place in 1990 and early 1991.
The Plaintiff's 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.
In their Statement of Claim, delivered on the 9th May, 1991 the Plaintiffs elaborated on their claims against Michael McSweeney and the Bank for fraud and negligence including negligent mis-statement.
When the case came on for hearing in March 1977 the Plaintiffs were allowed to amend their Statement of Claim to plead more fully the case of negligent mis-statement against Michael McSweeney 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.
This plea therefore fails.
AMOUNT OF PLAINTIFFS LOSS.
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
on the basis that most of the money paid by the Plaintiffs' to Mr. Walsh and Lambo was not their own money but was money advanced to them by their Japanese principals. The agreement of the 6th November, 1990 appears to speak for itself in this respect. It was a simple contract for the purchase and sale of the cars between Lambo as Vendors and Fine Arts and Collections Ltd. as Purchasers. When Messrs. Bignall & Co. Solicitors, gave an undertaking to Lambo in respect of the £300,000 sterling being "the balance of the premium" they made clear that they were doing so in consideration of Lambo "entering today into an agreement with their client 'Fine Arts and Collections Ltd. ".
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.
INTEREST.
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.
I would dismiss the appeal and confirm the Order of the learned High Court Judge.