Contribution & Recoupment
Cases
Iarnrod Eireall v Ireland
[1996] 3 IR 321
O’FLAHERTY J (Hamilton CJ, Blayney, Denham and Barrington JJ concurring) delivered his judgment on 16 July 1996 saying: This is an appeal brought by the appellants from the judgment and order of the High Court (Keane J) of 28 April 1995, refusing a declaration that the provisions of s. 12 and s. 14 of the Civil Liability Act 1961 were invalid having regard to the provisions of the Constitution.
At the conclusion of the argument, the court indicated that the appeal would be dismissed and would give its reasons later. However, as then intimated, the court declines to enter on a consideration of the locus standi issue having regard to the conclusion it had reached on the substantive issue and the importance of resolving that issue with due expedition for the guidance of litigants in general and, in particular, those involved either directly or in a secondary manner in the cases which await the result of the instant litigation.
There follow the reasons for the court’s decision upholding the judgment and order of the High Court.
Background facts
The background facts are set out in the judgment of the trial judge as well as in the decision of this Court in the action brought by Mr Gaspari arising out of the train crash in which an Iarnród Éireann train collided with a herd of cattle, belonging to Mr Patrick Diskin, at an accommodation crossing in Co. Mayo on 24 September 1989 (judgment delivered 15 December 1993, unreported). Proportions of fault were fixed at 30% against Iarnród Éireann and 70% against Mr Diskin by the trial judge in that case (Johnson J) and his judgment was affirmed in this, as well as all other respects, on appeal to this Court.
It is agreed on all sides that Mr Diskin was not, and will not, be able to make any significant monetary contribution either in respect of Mr Gaspari’s award of damages or the many other claims (which it is said are likely to amount to about IR £4m) and which are awaiting disposal.
Essential point on appeal
While a case with many facets asserting unconstitutionality of the impugned sections was presented to the trial judge, the essential thrust of the appellants’ attack on the legislation in this Court was a submission that in order for a legislative provision to accord with the Constitution it must be rationally connected to the objective sought to be achieved and not be arbitrary, unfair or based on irrational considerations; it must impair any protected right as little as possible and must be such that its effects on rights are proportionate to the objectives that the legislation seeks to achieve: it is said that the impugned sections fail to meet these criteria. In this regard, counsel for the appellants advanced an argument based on a comparison of the provisions of s. 12 and s. 14 with s. 38(2) of the same Act which refers to a court’s entitlement to do what is ‘just and equitable’ in certain circumstances and which will be noted later in the judgment.
Ms Finlay SC, for the Attorney General, at the commencement of her submission, said that the case presented to this Court was a different one to that presented to the trial judge. No doubt, the case has now taken on a somewhat different complexion to that in the court of trial; essentially, the appellants rely on the doctrine of proportionality and would seek to pray in aid the judgments of this Court in Cox v. Ireland [1992] 2 IR 503 and In Re Article 26 of the Constitution and the Matrimonial Home Bill 1993 [1994] 1 IR 305 ; [1994] ILRM 241 . It was submitted on behalf of the Attorney General, that the decision of this Court in Tuohy v. Courtney [1994] 3 IR 1 ; [1994] 2 ILRM 503 had more relevance to what the court had to decide.
The impugned provisions
S. 12 of the Civil Liability Act 1961 provides:
(1) Subject to the provisions of ss. 14, 38 and 46 , concurrent wrongdoers are each liable for the whole of the damage in respect of which they are concurrent wrongdoers.
(2) Where the acts of two or more persons who are not concurrent wrongdoers cause independent items of damage of the same kind to a third person or to one of their number, the court may apportion liability between such persons in such manner as may be justified by the probabilities of the case, or where the plaintiff is at fault may similarly reduce his damages; and if the proper proportions cannot be determined the damages may be apportioned or divided equally.
(3) Subs. (2) of this section shall apply to two or more persons whose acts taken together constitute a nuisance, even though the act of any one of them taken alone would not constitute a nuisance, not being unreasonable in degree.
S. 14 provides:
(1) Where judgment is given against concurrent wrongdoers who are sued together, the court may give judgment against the defendants together or against the defendants separately and, if the judgment is given against the defendants together, it shall take effect as if it were given against them separately.
(2) Subject to subss. (3) and (6) of this section and to ss. 38 and 46 , each of the said judgments shall be for the full amount of the plaintiff’s damages in respect of which the defendants are concurrent wrongdoers, together with any further damages in respect of which the particular defendant against whom the judgment is given is individually liable and, if the same jury has in its verdict apportioned damages between the defendants on the basis that the total of the damages awarded is meant to be equivalent to the plaintiff’s loss resulting from the concurrent wrongs, the plaintiff shall be entitled to judgment against the defendants for the aggregate of such damages.
(3) The plaintiff may agree to accept an apportionment of his damages among the defendants according to their degrees of fault and, in this event, the following provisions shall take effect:
(a) satisfaction of one judgment shall not operate as satisfaction of the others;
(b) the defendants shall have no right of contribution among themselves;
(c) the plaintiff, at any time within the period limited by law for the enforcement of judgments and upon proof that, after taking reasonable steps, he has failed to obtain satisfaction of any judgment in whole or in part, shall have liberty to apply for secondary judgments having the effect of distributing the deficiency among the other defendants in such proportions as may be just and equitable;
(4) Where the court would be prepared to award punitive damages against one of the concurrent tortfeasors, punitive damages shall not be awarded against another of such tortfeasors merely because he is a concurrent tortfeasor, but a judgment for an additional sum by way of punitive damages may be given against the first mentioned tortfeasor.
(5) The judgment mentioned in subs. (4) of this section may specify that such additional sum is awarded by way of punitive damages, and no contribution shall be payable in respect thereof by a tortfeasor against whom such judgment could not properly have been given.
(6) Where, in an action for libel or slander, one of concurrent tortfeasors, would have been entitled to a mitigation of the damages payable by him had he been a single tortfeasor, but another of the said tortfeasors would not have been so entitled, the first mentioned tortfeasor shall be entitled to the said mitigation of damages and shall not be compellable to make contribution except in respect of the amount of damages payable by him; and the judgment against him may be given accordingly.
History of concurrent wrongdoers
McMahon and Binchy, Irish Law of Torts , 2nd ed., 1990 (p. 74 et seq. ) contains a very full history of the background to concurrent wrongdoers to which reference may profitably be made. Any extensive recapitulation of that history in this judgment would be a redundant exercise in view of the scholarly thoroughness the learned authors have brought to their task.
The result of the Tortfeasors Act 1951 , as replaced and elaborated upon in Part III of the Civil Liability Act 1961 , was in fact to ameliorate some of the hardship that defendants had previously endured. Prior to the legislation, a judgment for damages against joint tortfeasors would have been for a single sum against all the defendants, and execution for the whole of this amount could, if the plaintiff saw fit, be levied against one only of the defendants. The defendant thus levied could not recoup against any of the other defendants, the general rule being that he could get neither an indemnity for the whole of what he had paid nor contribution of an aliquot part. This was laid down in Merryweather v. Nixan (1799) 8 TR 186 and was extended from joint tortfeasors to independent tortfeasors causing the same damage: Horwell v. L.G.O. Co. (1877) 2 Ex D 365 at p. 379; The Koursk [1924] P 140 at p. 158. (As noted in the 14th edition of Winfield and Jolowicz on Tort (at p. 627) the rule in Merryweather v. Nixan was regarded as resting on the maxim ex turpi causa non oritur actio . In the extraordinary case of Everet v. Williams (1725) (1893) LQR 197–199 , the plaintiff and defendant were in partnership as highway robbers and ‘dealt with several gentlemen for divers watches, rings, swords, canes, hats, cloaks, horses, bridles, saddles and other things’ at Bagshot, Salisbury, Hampstead and elsewhere. The partnership realised some £2,000. The plaintiff brought a partnership action for an account of this sum. His claim was dismissed as scandalous and impertinent, his solicitors were fined £50 each for contempt, and at later dates both plaintiff and defendant were hanged.)
McMahon and Binchy summarise the three principles that underline Part III of the Civil Liability Act 1961 as follows:
(1) Subject to the rule that the plaintiff cannot recover more than the total amount of the damages he has suffered, the injured plaintiff must be allowed full opportunity to recover the full compensation for his injuries;
(2) Concurrent wrongdoers should be entitled to recover fair contributions from each other in respect of damages paid to the plaintiff;
(3) All matters relating to the plaintiff’s injuries should as far as possible be litigated in one action.
What appellants say law should be
If the appellants’ claim was to prevail it would mean not only that s. 12 and s. 14 of the Act would disappear but that the common law rules would be deemed not to have been taken over on the enactment of the Constitution. While that is a submission with far-reaching implications — needless to say — it represents the logic of the appellants’ submission.
So much law having been cut down, what would be put there instead? Reference was made to s. 38(2) of the Act, as providing the proper solution. Subs. 1 of the section provides that in a case where there has been contributory negligence on the plaintiff’s part he is to have a several judgment for such apportioned part of his total damages as the court thinks ‘just and equitable’ having regard to each defendant’s degree of fault.
Subs. 2 goes on to provide that if, after taking reasonable steps, the plaintiff has failed to obtain satisfaction of any judgment in whole or in part, he shall have liberty to apply for secondary judgments having the effect of distributing the deficiency among the other defendants in such proportions as may be just and equitable.
Mr Gallagher SC contended that at the ‘secondary judgment’ stage the whole case could be revisited and it might be that the trial judge would apportion some of the deficiency to the plaintiff on the basis that it was just and equitable to do so. And so, by analogy, the judge should have, or be deemed to have, a similar power in cases like the Gaspari case.
The court is emphatically unable to accept this construction of the subsection in question. What the judge would be entitled to do under its provisions is to apportion the deficiency so as to have it made up by the remaining, solvent, defendants. The plaintiff would already have had his reward reduced, having regard to the finding of contributory negligence, and that would be the end of any deductions that could lawfully be made in regard to him. So, the answer is that, by analogy with s. 38(2) or otherwise, there would be nothing to put in the place of the provisions struck down and — as already noted — neither would the common law rules have survived the enactment of the Constitution.
Conclusion
The court is unable to accept the validity of the submission made on behalf of the appellants. The legislation provides that once a wrong is established, the wrongdoer or wrongdoers must take the consequences. The wrong done to the plaintiff is regarded as indivisible. As between defendants, it is provided that there can be an apportionment of blame but if a deficiency has to be made up, in the payment of damages, it is better that it should be made up by someone in default than that a totally innocent party should suffer anew. For the Oireachtas so to provide is within its competence in what is truly an area of policy.
As stated by the court in Tuohy v. Courtney (the case involved a challenge to the constitutionality of certain provisions of the Statute of Limitations 1957 ):
It has been agreed by counsel and in the opinion of the court, quite correctly agreed, that the Oireachtas in legislating for time limits on the bringing of actions is essentially engaged in a balancing of constitutional rights and duties. What has to be balanced is the constitutional right of the plaintiff to litigate against two other contesting rights or duties, firstly, the constitutional right of the defendant in his property to be protected against unjust or burdensome claims and, secondly, the interest of the public constituting an interest or requirement of the common good which is involved in the avoidance of stale or delayed claims.
The court is satisfied that in a challenge to the constitutional validity of any statute in the enactment of which the Oireachtas has been engaged in such a balancing function, the role of the courts is not to impose their view of the correct or desirable balance in substitution for the view of the legislature as displayed in their legislation but rather to determine from an objective stance whether the balance contained in the impugned legislation is so contrary to reason and fairness as to constitute an unjust attack on some individual’s constitutional rights.
This statement of principle is applicable to the impugned legislation. Indeed, far from there being anything irrational or disproportionate about the legislation such as was held to exist in Cox v. Ireland and, to a lesser extent, In re Article 26 of the Constitution and the Matrimonial Home Bill 1993 , the court sees the solution propounded in the legislation as being fair and just.
As already indicated, the legislation marked an amelioration and rationalisation of the liability of concurrent wrongdoers inter se from what had been there before. The possibility that one of a number of defendants may be insolvent and unable to meet his or her liability is an unfortunate aspect of litigation; that the risk should fall on the other, solvent defendants who are concurrent wrongdoers, whether because their independent acts cause the same damage or otherwise, rather than upon the plaintiff seems to the court to be a solution that is in harmony with the core principles underlying civil liability.
As a postscript, it should be indicated that the plaintiff [in the Gaspari case] did not at first sue the herd owner, Mr Patrick Diskin. It was Iarnród Éireann which brought him in by means of third party procedure with a view, apparently , to obtaining a contribution or indemnity from him. If it transpires that Iarnród Éireann cannot obtain any significant contribution from Mr Diskin that will not be because of any defect or injustice in the law, but simply because Mr Diskin would not have had the assets to pay a significant contribution to Iarnród Éireann. This is simply one of the hard facts of life. Iarnród Éireann will be in no worse position than anyone else who has a claim against a wrongdoer who cannot pay compensation because such a wrongdoer has not the means to do so.
For these reasons, the court concludes that it has not been established that the sections in question are in any respect invalid having regard to the provisions of the Constitution and, therefore, the appeal stands dismissed.
Connolly v. Dundalk Urban District Council
[1990] 2 IR 1
O’Hanlon J.
The plaintiff, Michael Connolly, is a married man, living in Dundalk, and now almost 50 years of age. He has five children whose ages range from 17 to 25, two of whoma son aged 17 and a daughter aged 19are still living at home. He has worked in various kinds of labouring jobs, including a period of 16 years spent in England where he met his wife. Returning to Ireland he secured employment with the first defendant, Dundalk Urban District Council, as a general operative, and for 12 years or thereabouts up to the 8th January, 1986, he was assistant caretaker in the Castletown Mount waterworks. These waterworks were erected by the second defendant, Mahon & McPhillips (Water Treatment) Limited, pursuant to an agreement made by it with the Urban District Council and dated the 7th May, 1968. Having completed the design and construction of the waterworks, the contractors at a later stage agreed to service the installation by providing three service visits per annum. This arrangement has continued ever since and their charges for their services have been agreed from time to timethe current charges being much more than the figures initially agreed in the year 1972. The supply of water for the town of Dundalk has at all material times been provided from the Castletown Mount waterworks, and the work carried out there has involved the addition of chlorine to the water for purification purposes. This has been achieved by the injection of a high concentration of chlorine gas into the water, and the mixture of chlorine and water is then carried into the general water system where it is diluted to a point where the purification process is maintained while providing a water supply which is fit for human consumption. The waterworks is commonly manned by only two operativesthe caretaker or superintendent, and his assistantand at times only one of these two persons would be required on the premises. On the 8th January, 1986, the plaintiff made his way by motor-cycle to his place of work, which was closed up prior to his arrival. He unlocked the door leading into the waterworks and was proceeding along the ground floor of the building towards the chlorine room which was located at the far end of the building from his point of entry. Upon opening an internal door leading from one part of the control building to another, he was hit by a dense cloud of chlorine gas, some of which he inhaled. He succeeded in getting back to a telephone in a different part of the building; telephoned his superior, Jim Clarke, to tell him what had happened, and then made his way out of the building.
When Mr. Clarke arrived, he found the plaintiff in a very distressed condition outside the building, and prevailed on him to go to hospital. He was found to have pain and difficulty with his breathing; his heart rate was up to 100,30 above normal; he had oedema of the eyes and mouth; the oxygen level in his blood was quite low. He was kept in hospital in Dundalk for two days during which he needed continuous oxygen. His blood pressure became very elevated; he was sweating profusely and suffered tremendous headaches for 48 hours. He was then transferred to the Mater Hospital, Dublin, where his symptoms on admission involved coughing, with green infected sputum; very severe headaches; pain in chest; redness of eyes; elevated blood pressure and respiratory rate. He was very distressed, and was diagnosed as suffering from chlorine poison; infected bronchitis and deep lung injury. He was, however, found to be alert and conscious and able to give a rational account of the incident in which he had been involved. He was kept in hospital for about three weeks, during which he was given oxygen through nasal tubes, and drugs for a condition of hypertension. Dr. Brendan Keogh, who was the consultant supervising his treatment at the time, was puzzled by the abnormally high blood pressure and could not find the cause for this condition. The plaintiff gradually settled down and was described as “fairly well”on being discharged home. At that stage his x-rays and blood pressure were normal. Dr. Keogh saw him again in July of 1988 when he found the plaintiff had recovered from the physical effects of the accident, but still required medication to control his blood pressure and was likely to need this for the rest of his life. He also found an extraordinary change in the plaintiff’s mental condition. He found it impossible to communicate with him and had to obtain his history from his wife who accompanied him. He concluded that the plaintiff had recovered physically but that his mental state appeared to have been grossly affected. At a later examination in April, 1989, and again more recently, he found the plaintiff unchanged in these respects.
There was a large volume of evidence from psychiatrists, a psychologist, and the plaintiff’s wife, concerning his condition since the time of the accident, all of which bore out the finding of Dr. Keogh that the plaintiff’s mental state appeared to have been grossly affected by an accident which must, no doubt, have been very traumatic and terrifying, but which inflicted physical injuries of a comparatively minor character which should, in the ordinary course of events, have cleared up within a matter of weeks, leaving no permanent after-effects in their wake.
In many such cases it is necessary to view with considerable reserve, and to examine very closely, the claims put forward that permanent and deep-rooted psychiatric damage has emerged as a consequence of comparatively trivial physical injuries, but in the present case, having seen and heard the plaintiff in a state of incoherence in the witness-box, which was clearly genuine in character, and having heard the evidence of psychiatrists and other expert witnesses called by the defendants as well as by the plaintiff, I can only come to the conclusion that the plaintiff’s personality and life-style have been permanently shattered by the events of the 8th January, 1986. I am satisfied that for the past four years he has been profoundly depressed; that he has been aggressive and unpleasant to live with; that he has been, and will continue to be, quite unfit to undertake any kind of gainful employment, even in a sheltered workshop; that he is unable to take part in or enjoy any of the forms of recreation which he was able to enjoy before the accidentgoing to football matches, socialising with his friends, reading and so forth; that he is condemned to a miserable, stagnant existence, where he mopes around the home, in a state of total dependence on his wife for all his needs. His marital relations, which she says were normal before the accident, have never been resumed since that date. The description given by his wife and fellow workers of his personality prior to the accident was of an ordinary, pleasant, out-going individual, who got on well at his work and was a good family man in his relations with his wife and family and in helping out around the home. Dr. John Ryan, a consultant psychiatrist called on behalf of one of the defendants, agreed with this overall view of the plaintiff’s condition as given by other medical witnesses in the case, but suggested that treatment in an institution might be worth a trial, in an effort to break the plaintiff’s present state of dependence on his wife, and a change in the drug treatment which has not been varied for a long time past and which does not appear to have done much for the patient. These were, however, in the nature of speculative proposals put forward by him and it could not be suggested by him as a matter of probability or even as a strong possibility, that there was anyhope of improvement for the future in store for the plaintiff, and I think the probabilities are all the other way.
It is now necessary to consider the question of causation in respect of the accident in which the plaintiff was involved and the question of liability in damages in the case of either or both defendants. When the waterworks superintendent, Jim Clarke, had done what he could for the plaintiff, he entered the waterworks wearing a respirator and quickly discovered the cause of the escape of chlorine gas. The chlorine, mixed with water, was carried from the chlorinator located in the chlorine room, through a pipeline constructed of rigid plastic and mounted horizontally to the wall of that part of the waterworks known as the Mahon Building about six inches above floor level. The injection point was located in the Mahon Building and consisted of a four inch diameter PVC upstand pipe cast in the floor and rising about 3 inches above floor level. A filtered water sump, through which the treated water flowed, was located under the floor at that point. The rigid plastic pipe carrying the treated water stopped short about three feet from the injection point, and where it terminated it was connected to a flexible, white plastic pipe, about one inch in diameter, which was bent through ninety degrees into the injection point in the floor and continued vertically into the underground filtered water sump. At some time prior to the entry of the plaintiff into the waterworks the flexible plastic pipe had become disconnected from the rigid plastic pipe, so that the treated water poured out onto the floor of the Mahon Building at a rate of some gallons per minute. The chlorine gas quickly escaped from the liquid and set up poisonous fumes in the atmosphere.
Mr. Clarke cut off the flow of treated water on to the floor of the building by pushing the flexible pipe over the rigid pipe. Later the same morning, Raymond McKenna, an executive engineer with the U.D.C. went back in with Mr. Clarke and saw the two pipes pushed together in the manner described by Mr. Clarke, and also noted the presence of a loose metal clip, known as a jubilee clip, on the white plastic pipe. Peter Lamb, then assistant overseer with the U.D.C., also came that morning and saw the pipes joined in the manner described by Mr. McKenna, and the loose jubilee clip, but his recollection was that the clip was on the rigid pipe, about twelve inches back from the joint. He made the joint more secure by fixing on a black adaptor and sealing it with wavin cement that afternoon. The pipe in that condition was photographed the same day, and the photograph put in evidence. It appears that some more work was done even later in the day by U.D.C. staff who wrapped denzel tape round the joint as a temporary measure until a permanent repair could be effected.
The failure of the joint in the piping was clearly the primary cause of the accident in which the plaintiff was involved, and there was a large volume of expert engineering evidence as to the probable cause for the pipes becoming disconnected in the manner already described. There was also a good deal of controversy as to the manner in which the joint was secured prior to the accident. Mr. Clarke and some other witnesses suggested that the denzel tape was already wrapped around the joint prior to the accident, but I did not find their evidence reliable in this respect and I concluded that the first time it had been usedto secure the joint was during the afternoon following the accident. It was common case that it was unsuitable and ineffective if used for this purpose, save as a temporary, stop-gap measure. Mr. Butler, a fitter employed by the second defendant who had many years experience in carrying out maintenance work on the Dundalk waterworks, gave evidence of service visits in the months of August, 1985 (lasting from the 26th to the 30th of the month) and again from the 9th to the 13th December, 1985, only a few weeks before the occurrence of the accident. He said that in August, 1985, the rigid piping was joined to the flexible pipe by means of a spigot which went into a one and three quarter inch reducer, cemented in with solder, and the entire was held together by a jubilee clip. He produced in court an assembly which he said was typical of what was there at the time. He said that he saw the joint again in the course of his December visit, while working on a wash-pump nearby, and its condition was unchanged. He considered that the pipework in the waterworks was outside the scope of the service agreement with the second defendant, and that he was only concerned with the mechanical plant. It was put to him that the jubilee clip would not go over the joint and he appeared to agree that this was so if it were pushed over the rigid pipe. Mr. McKenna said he did not think the jubilee clip he saw on the pipe on the day of the accident was appropriate for securing the jointit should be a cemented joint. Joseph O’Neill, a consulting engineer called on behalf of the plaintiff, said the joint should be a screw connection with a threaded joint or gasket for anything other than water. A joint of the kind shown in the photograph was not acceptable, with one pipe tapering into another. It was likely to come off under pressure. He said that plastic would crease and crack due to the force used in pushing it in. He would expect the rigid piping to be continued to the end of its run, with a joint fitted, if necessary, to get it into the sump. It appeared to me that the expert evidence on both sides confirmed that the type of joint seen in the photograph taken on the day of the accident was quite unsuitable for its purpose and was likely to fail at some stage, and the failure of the joint, which should have been foreseeable to the plaintiff’s employers, was the primary cause of the accident in which he was involved. Accordingly, I conclude that the first defendant, Dundalk Urban District Council, failed in the duty it owed to the plaintiff to take all reasonable steps to ensure that his place of employment was safe and free from danger of a type which should have been foreseen by it.
The expert evidence adduced in the case also conveyed to me that while alarm systems and ventilation systems were not part and parcel of the conventional installation where chlorine gas was used for water treatment, at the time when the second defendant designed and constructed the Dundalk waterworks in the late 1960s, these additional protective features have become commonplace since that time and have now been widely used for many years prior to the year 1986, when the plaintiff met with his accident. Mr. McKenna, the U.D.C. executive engineer, said that he discussed these safety features with the second defendant prior to the month of August, 1985, but was assured by its representative that if the operatives in the waterworks were doing their job properly there was not much need for a detector. However, when the regular servicing of the waterworks took place inAugust, 1985, the second defendant’s service engineer, Jim Butler, commented as follows in his service report: “Some thought should be given toward the provision of the following items, purely from a safety point of view, particularly where chlorine and fluorine is concerned: (1) Extract or fan and fume detector in chlorine drum store and chlorinator room . . .” This suggestion was followed up quite promptly by the U.D.C. Mr. McKenna attended a course on safety in chlorination of water treatment plants on the 24th October, 1985, and an exhibition of safety devices in Dublin in November, 1985. As a result he concluded that the Dundalk system did not meet the required standards, and decided that an alarm and extractor fans should be installed in the chlorination room, the fans to be activated automatically every fifteen minutes. He wrote to the second defendant for a quotation for the proposed changes in the installation on the 5th November; a quotation came through on the 19th November, and an order for the work was placed on the 6th December, 1985. Unfortunately, but not surprisingly, the work had not yet been put in hand when the accident happened, but was carried out shortly after the plaintiff sustained his injuries. Once again, while the first defendant was obviously activated at all times with the desire to keep its waterworks up to the best standards of safety as well as efficiency, I am forced to conclude that it must be held liable in law in respect of the accident on this ground also, namely, for its failure to acquaint itself in time with the development of safety procedures which had come to be regarded as standard for some significant time prior to the accident, and to give effect to them in the plaintiff’s place of employment.
The U.D.C. has fought the case on a number of different grounds, one being its claim that the responsibility for any failure of the pipework in the system, or any failure to implement in time safety measures which should have been incorporated in the waterworks, should be laid at the door of the second defendant, which was the acknowledged expert in the field, and which was responsible for the original design and construction of the waterworks and later for all aspects of service and maintenance of the system. It is well established, however, that an employer owes a duty to his employee to provide a safe place of work, and cannot escape liability for breach of such duty by employing an independent contractorno matter how expertto perform the duty for him. Goddard L.J. said in Paine v. Colne Valley Electricity Co. [1938] 4 All E.R. 803, 807: “This is a duty which cannot be avoided by delegation. It is no answer to say . . . ‘We employed competent contractors to provide a safe place or plant’.” See also Charlesworth on Negligence, 4th edn., para. 848: “The employer is liable if the failure to exercise reasonable care and skill is that of an independent contractor, and is only excused from liability if the danger is due to a latent defect not discoverable by reasonable care and skill on the part of anyone.”
I must next consider whether a claim in negligence has also been made out against the second defendant. If the joint in the piping was effected in the manner described by its service engineer in the month of August, 1985, and again in the month of December 1985, thenwhile not, perhaps, idealit should have been safe and secure and it is difficult to understand how the two pipes became disconnected on the 8th January, 1986, unless interfered with in some way in theintervening period by some of the waterworks or other U.D.C. staff. However, no reason has been suggested why the waterworks staff should have had anything to do with this particular joint at any time. Secondly, I find it difficult to accept that the second defendant’s service engineer would have taken mental note of the construction and condition of the joint in question in August and again in December, 1985, when not involved in any work on the pipeline in question and expressly disclaiming any responsibility for it as part of the service contract. In this situation I am driven to the conclusion that Mr. Butler is mistaken in his recollection of the nature and condition of the joint when he was on the waterworks premises in 1985. I believe that in all probability the joint was inadequate for a considerable time prior to the accident and that this inadequacy should have been noted and acted upon when the periodical servicing of the installation was taking place. I consider that the second deendant’s obligations under the service contract did extend to service and maintenance of the pipeline and injection point through which the potentially dangerous current of water treated with chlorine was introduced into the water supply for the town.
Furthermore, I am of opinion that the second defendant having designed and erected the waterworks and having thereafter undertaken for reward the periodical service and maintenance of the equipment installed, owed an obligation to the U.D.C. to keep them informed as to changes which modern standards might require in the system from time to time. It appears to me to have recognised this duty by the recommendation made in the report of the service engineer in August, 1985, but unfortunately this came just too late to save the plaintiff from harm. I believe it should have reacted sooner to the developments in its field and should have been aware of serious accidents which had occurred elsewhere and which could be guarded against by technology which had evolved since the waterworks were constructed. If the joint at the time of the accident was merely of the crude type illustrated by the photograph taken later on the same day, then I am of opinion that it did not require the particular expertise of the second defendant to recognise it as being potentially dangerous, and that this should have been apparent to, and observed by, persons with reasonable expertise on the U.D.C. staff, among whom I would include Mr. Clarke.
On these grounds I make a finding of liability for the accident against both defendants and I exonerate the plaintiff from the charge of contributory negligence brought against him. I find that the two defendants were equally responsible for the accident and are therefore entitled to be indemnified one against the other to the extent of 50% of the damages and costs awarded in favour of the plaintiff, and each defendant to be responsible for its own costs of the proceedings.
Turning to the question of damages, I assess damages in favour of the plaintiff as follows.
As regards the claim for loss of earnings, I find that the plaintiff was employed by the U.D.C. as a general operative and by managerial order made on the 3rd January, 1986, prior to the accident, and after consideration of the determination by the waterworks sewerage appeal committee heard on the 26th June, 1984, the plaintiff was appointed to the higher grade of waterworks caretaker grade 3, giving him a weekly wage of £145.65 plus maximum weekend allowance of £11.10. Although this was a source of dissatisfaction to the plaintiff and his union representative, it appears to me to have been the plaintiff’s only legal entitlement at the time and I propose to deal with his claim for loss of earnings to date and into the future on this basis. For loss of earnings to date I award the sum of £25,314.77. For loss of earnings to age 65 I award the further sum of £78,813. As regards the award of general damages, while it is impossible to overstate the disastrous effect the accident has had on the plaintiff and will, in all probability, have on him for the rest of his life, I also have regard to two factorsone, the award of a very large sum for loss of earnings, totalling £104,127.77, and the other, my belief based on the evidence I have heard, and from seeing and listening to the plaintiff, that no award of damages, however large, is likely to enhance his enjoyment of life or bring him much in the way of comfort or consolation. For general damages to date I award a sum of £75,000, and for general damages for the future I award a sum of £100,000.
Summary
Loss of earnings to date
£25,314.77
Loss of earnings for the future
£78,813.00
General damages to date
£75,000.00
General damages for the future
£100,000.00
Total:
£279,127.77
Plus medical expenses
£1,600.00
Total:
£280,727.77
I give judgment for the plaintiff against both defendants for the sum of £280,727.77, together with the costs of the proceedings.
As I have formed the opinion that the plaintiff is incapable at the present time of managing his own affairs, I propose to direct that the sum of £20,727.77 should be paid by the defendants as to £19,127.77 to the plaintiff’s wife to be utilised for his benefit; £1,600 to plaintiff’s solicitors to discharge medical expenses and that the balance of the damages, amounting to £260,000 should be paid into court to the credit of this suit and invested pending the making of an application to the High Court to admit the plaintiff to wardship.
Connolly v. South of Ireland Asphalt
[1977] IR 99
O’Higgins C.J. S.C.
While travelling on his motor-cycle along Monastery Road, Clondalkin, on the night of the 21st January, 1973, the late Jonathan Wade fell off his machine on to the roadway and was run into and killed by a motor vehicle owned and driven by the defendant. His fall from the motor-cycle occurred immediately opposite the entrance to premises owned by the third party and used by them for the purpose of their business. The roadway where he fell and the entrance to the third party’s premises immediately beside it were broken into several pot-holes and were covered by ice. Proceedings were taken in the High Court by the widow of the late Jonathan Wade against the defendant claiming damages by reason of his death. These proceedings were compromised between the parties on terms which recognised that the late Jonathan Wade had been guilty of a degree of contributory negligence and the settlement was approved by the High Court; no question arises in relation thereto.
Under the provisions of the Civil Liability Act, 1961, the defendant claimed a contribution from the third party and, after the settlement of the plaintiff’s claim, the defendant’s claim for a contribution was heard by Mr. Justice Murnaghan sitting without a jury. Mr. Justice Murnaghan decided that the defendant was not entitled to claim a contribution from the third party, and an appeal has been brought by the defendant to this Court against that decision. The defendant claims to be entitled to a contribution from the third party under the provisions6 of s. 21, sub-s. 1, of the Act of 1961. The application of that sub-section to this case and to the defendant’s claim against the third party involves a consideration of whether the third party can be said to be “liable in respect of the same damage” in the same way as the defendant was liable. The “damage”here is the loss of the life of the late Jonathan Wade and “liable” means, in the circumstances, legally liable to the plaintiff.
Is the third party liable in respect of this death in the same manner as the defendant was? Put in another way, the question is whether the plaintiff, while conceding contributory negligence on the part of her husband, could succeed in an action brought against the third party alone in recovering damages for his deathsuch damages being reduced only on account of the contributory negligence of the plaintiff’s husband. Could such an action have succeeded if the plaintiff had brought it, let us suppose, because the identity of the motorist who had collided with her husband had never been discovered? The answer to this question must be considered in the light of the evidence adduced before the learned trial judge and the facts as found by him on such evidence. Let us examine these facts.
It appears that the third party’s premises in Monastery Road, Clondalkin, were situated on the left-hand side as one travelled from the Naas Road towards Clondalkin. This was the direction in which the plaintiff’s husband was travelling. These premises were approached from the roadway by an entrance which was some 50 yards wide and which narrowed to a gateway set some distance back from the road. The third party’s business entailed the constant use of large lorries, both laden and unladen, which travelled to and from these premises over this entrance and the roadway immediately adjoining. As a result of this traffic of heavy lorries, portion of this entrance and the immediately adjoining roadway was damaged in such a manner that a line of pot-holes appeared on the Dublin (or Naas Road) side of the entrance to the third party’s premises. These pot-holes or breaks had appeared on numerous occasions prior to the fatality; in wet weather they became filled with rain water which was splashed around by the wheels of passing vehicles.
On the night of the accident rain water, so splashed, had turned into ice by reason of a heavy frost, and an icy patch from one to two feet in width extended from the edge of the entrance out on to the roadway in the immediate vicinity of this line of pot-holes. Therefore, on the night of the accident the position was that anyone travelling on this road towards Clondalkin would be using a road which, in the vicinity of the third party’s premises, was broken along its left edge into a line of seven pot-holes, and which was covered at that place with a sheet of ice from one to two feet in width and extending out on to the roadway. It appears from the evidence that some of the pot-holes were covered with ice while others contained broken ice. In that condition it seems obvious that this portion of the road was unsafe and dangerous in certain circumstances. Perhaps it was not dangerous for a motorist, or in daylight, but very probably it was dangerous for a motor cyclist or for a pedal cyclist who travelled thereon at night not observing either the holes or the ice. It seems reasonably foreseeable that such a cyclist could very easily over-balance or fall if a wheel of his bicycle skidded on the ice or entered one of the holes.
In his very careful analysis of the evidence, this is what the learned trial judge found had happened to the plaintiff’s husband. The judge found that the deceased over-balanced and fell on to the roadway as a result of coming in contact with this danger on the road. The judge’s finding in this respect is amply supported both by the evidence of the three Gardaà officers in the patrol car which was stationary opposite the scene of the accident, and by the condition of the roadway and the proper inference to be drawn therefrom. While he was on the roadway and occupied in picking himself up and recovering his bicycle, the plaintiff’s husband was driven into and killed by the defendant’s vehicle which approached the plaintiff’s husband from the direction from which he had travelled. The learned trial judge rejected, as he was fully entitled to do, the defendant’s explanation of his failure to avoid colliding with the deceased as being due to his vehicle skidding on the icy patch on the roadway. The learned judge concluded that the defendant was not keeping a proper look-out and that he failed to see the deceased ahead of him on the road as he ought to have done. On the judge’s findings which, of course, I accept, the collision between the defendant’s vehicle and the deceased was not due to the condition of the roadway but to the defendant’s own negligence.
These facts, as found by the learned trial judge, seem to me to establish negligence on the part of the deceased (which was not in issue) and on the part of the defendant, in the absence of either of which there would have been no fatality and no damage. These facts also establish that, despite the existence of this negligence in the case of either or both, there would have been no fatality and no damage had the roadway not been dangerous and had not the condition of the roadway caused the deceased to fall from his motor-cycle.
It is on these facts that the question of the third party’s possible liability to the plaintiff ought to be considered. In the statement of his claim against the third party, the defendant alleged a liability both in nuisance and in negligence. It seems to me appropriate that the question should be considered under each of these headings.
It has been said that actionable nuisance is incapable of exact definition. The term nuisance contemplates an act or omission which amounts to an unreasonable interference with, disturbance of, or annoyance to another person in the exercise of his rights. If the rights so interfered with belong to the person as a member of the public, the act or omission is a public nuisance. If these rights relate to the ownership or occupation of land, or of some easement, profit, or other right enjoyed in connection with land, then the acts or omissions amount to a private nuisance. In this case we are concerned with the allegation that the third party were guilty of causing a public nuisance.
The third party used heavy lorries for the purpose of their business and the lorries travelled, laden and unladen, to and from the premises of the third party over the junction of the entrance with the roadway. This, in itself, was a lawful exercise of the third party’s right to carry on their business and to use for that purpose lorries of their own choosing. However, what the third party did resulted in damage to the roadway upon which these lorries travelled; the damage was caused at the point where the entrance joined the public road on the Dublin side of the third party’s premises. It was clear that at this point the lorries used could not be supported by the road surface, either because of their weight or their number. The, result was that breaks and holes appeared, not rarely, but on numerous occasions. Were the third party entitled to carry on regardless of the damage so caused merely because of their proprietary rights? Sic utere tuo ut alienum non laedas is a maxim which expresses the view that people should have regard to the rights and conveniences of others in the way they use what is theirs. While it may lack preciseness, it has here a sufficient application to prescribe a limit to what it was permissible for the third party to do in pursuance of their legitimate business interests. In my view the third party were not entitled to exercise their rights without regard to whether damage was being or would be caused to the public road.
Damage was caused not only to the third party’s own entrance but also to the roadway, and this consisted of the seven holes already described. Inmy view the question is whether this damage, so caused, constituted a danger to members of the public using the roadway. That the breaks or holes initiated on the third party’s own property appears to me to be immaterial. It is well established that an excavation or interference with one’s own land can be regarded as actionable where the land is so adjacent to the roadway as to constitute a danger to a person who, while using that roadway, turns into or travels thereon and thereby suffers damage: Barnes v. Ward 7; Hardcastle v. South Yorkshire Railway 8; Carshalton U.D.C. v. Burrage. 9
Here the damage to the road surface extended from the third party’s premises out on to the roadway itself. That this damage could constitute a danger to a person using a motor-cycle on that roadway at night is, in my view, not open to question. Once the holes appeared it was to be expected that in wet weather they would retain water which in turn would be splashed by passing traffic. In winter time this led inevitably to the added hazard of an icy patch being formed contiguous to the line of pot-holes. The learned trial judge was satisfied on the evidence that either the pot-holes or one or more of them or this ice caused the deceased to get into difficulties on his cycle and to fall. This in my view is a finding that the deceased’s fall was caused by the danger on the roadway created by the acts and omissions of the third party.
The deceased, having been caused to fall on the public road, was struck and killed by the defendant’s passing car. Not only was he killed because he had fallen in the path of an approaching car but, in my view, the likelihood of such a misfortune happening to him was present from the very moment he was caused to fall.
In my view, the result is that the third party, having so damaged the surface of their own entrance and the adjoining roadway as to create a danger on the roadway, were guilty of committing a public nuisance thereon. The plaintiff, being the widow of the deceased, suffered particular damage because of this nuisance in that it was a factor contributing to his death. On this account she could have maintained an action against the third party in respect of the damage she suffered.
With regard to negligence very little need be said. The third party’s operations caused breaks in the road surface and these breaks were left unrepaired. This was no sudden happening but came about gradually. As the road surface was broken by the pressure of lorry traffic it should have been obvious that a serious road hazard was being created. Nevertheless, nothing was done to remedy the situation. Anyone who renders a road unsafe must contemplate that people using the road may be injured. In my view the third party were negligent in causing the roadway to break and in failing to repair it. It was negligence also to ignore the added risk of splashed water in winter time turning into ice, and so permitting the condition of affairs to exist which confronted the deceased on the night of the accident. In my view what happened was clearly foreseeable by those who caused or permitted this condition of affairs to exist. On this ground of negligence also I am of opinion that the plaintiff could have held the third party liable to her in respect of the death of her husband.
In my view this appeal should be allowed and the defendant should be held entitled to a contribution against the third party.
Kenny J.
On the evening of Sunday the 21st January, 1973, there was a heavy fall of rain. When it stopped, the weather became bitterly cold and there was very heavy frost on the roads near Dublin. At about midnight or shortly after it Jonathan Wade, a well-known artist, was riding a motor scooter on Monastery Road: he was coming from the Naas Road and going towards Clondalkin. The lights on his scooter had not been turned on. Mr. Wade was riding about three feet out from the edge of the highway on which there was no kerb and was travelling at a very slow speed. Monastery Road is 20 feet wide and, as it leads to Clondalkin, has heavy traffic on it at all times.
The third party had offices and land on Mr. Wade’s left which adjoined the highway. There was a wide opening to the gate of the third party’s premises into which heavy lorries went frequently. These heavy lorries, which were laden and unladen, had created seven pot-holes most of which were partly on the highway and partly on the opening which led to the gate. The combined length of the seven pot-holes was about 28 feet and they varied in depth from 2 inches to 6 inches. Water collected in them and was splashed out by the wheels of traffic which might have to travel near the edge of the highway.
On the night when Mr. Wade was killed, water had splashed out on to the highway and had become ice on the road. This patch of ice extended one or two feet on to the highway measured from an imaginary line across the opening which led to the gate. The place where the accident happened was lit by two electric lights placed at the north and south points where the opening began. The lights were dull and did not give good vision.
A Garda patrol car was travelling on Monastery Road in the Naas direction and the Guards in it saw Mr. Wade coming in the opposite direction. They gave evidence that Mr. Wade was off balance as if he had got on to rough ground and was trying to hold himself on his scooter. He did not succeed and fell on the road. He then tried to pick himself and his scooter up. It seems to me certain (and the trial judge so held) that Mr. Wade’s scooter skidded on the ice on the road. The defendant was driving a car at about 30 m.p.h. in the same direction as Mr. Wade was going. The wheels on the left side of his car did not go into the pot-holes or cross the ice. He did not apply his brakes before he struck and killed Mr. Wade. After the accident the defendant said on a number of occasions: “It’s my fault,” “I hope they shoot me for this” and “I did not see him.”
The trial judge stated his findings of fact with admirable clarity and rightly held that the defendant was grossly negligent in failing to see Mr. Wade and in not putting on his brakes. He also held (and I entirely agree with his finding) that Mr. Wade was negligent because he did not see the pot-holes and ice and failed to steer his scooter so as to avoid them.
Mr. Wade’s widow began an action against the defendant only and claimed damages for negligence. The defendant issued a third-party notice against the third party and delivered a statement of claim in which he pleaded that the third party had been negligent and had created a public nuisance which caused or contributed to the accident. The action by Mr. Wade’s widow against the defendant was settled for £25,000 on the morning of the day when it was listed for hearing. As Mr. Wade was survived by a widow and four young children, this figure was a compromise; counsel on this appeal have agreed that it took into account the certainty that a jury would have held that Mr. Wade was guilty of some degree of contributory negligence. The defendant’s claim for contribution against the third party was then heard without a jury by the trial judge, who dismissed it. He held that he did not have to decide finally whether the third party should reasonably have foreseen what happened because, even if the third party were negligent, “I would in these circumstances as between the defendant and the third party have found the defendant 100% at fault.”
Section 21 of the Civil Liability Act, 1961, provides:
“(1) Subject to the provisions of this Part, a concurrent wrongdoer (for this purpose called the claimant) may recover contribution from any other wrongdoer who is, or would if sued at the time of the wrong have been, liable in respect of the same damage (for this purpose called the contributor), so, however, that no person shall be entitled to recover contribution under this Part from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.
(2) In any proceedings for contribution under this Part, the amount of the contribution recoverable from any contributor shall be such as may be found by the court to be just and equitable having regard to the degree of that contributor’s fault, and the court shall have power to exempt any person from liability to make contribution or to direct that the contribution to be recovered from any contributor shall amount to a complete indemnity.”
Section 2 of the Act of 1961 includes a number of relevant definitions.”Wrong” is defined as meaning “a tort, breach of contract or breach of trust, whether the act is committed by the person to whom the wrong is attributed or by one for whose acts he is responsible, and whether or not the act is also a crime, and whether or not the wrong is intentional.” The word “wrongdoer” is defined as meaning “a person who commits or is otherwise responsible for a wrong” and “concurrent wrongs” is defined as meaning “wrongs committed by persons in respect of which they are concurrent wrongdoers.”
I have no doubt that a defendant is entitled to recover contribution from a person who is not sued in the original action only if the plaintiff in the action could have succeeded in proceedings against the person from whom the contribution is claimed. The words in the section “or would if sued at the time of the wrong have been, liable in respect of the same damage” establish this. Therefore, it is necessary to consider whether Mr. Wade’s widow would have succeeded against the third party in an action based on negligence and public nuisance.
Negligence causing death or personal injury is a legal wrong. It is a breach of a duty owed generally. The duty arises when a reasonable human being should have foreseen that his action or omission to act will cause death or injury. Therefore, to make a defendant liable for negligence causing death or personal injury, he must have failed to foresee what a reasonable man would have foreseen. This foreseeability relates not only to what is done or omitted to be done but also to the consequences of doing or not doing what a reasonable man should do. Professor Heuston (the Regius Professor of Law in the University of Dublin) has pointed out in successive editions of Salmond on Torts (in which he has most helpfully almost re-written the whole section dealing with negligence) that the concept of reasonable foresight is used in seeking the answer to two distinct questions,i.e., was the defendant under any duty of care at all and, if so, did he observe the standard required in the circumstances of the case? The concept now extends, in addition to the two mentioned by Professor Heuston, to the result of the failure of the defendant to foresee the consequences of his act or omission to act: Overseas Tankship (U.K.) Ltd. v. The Miller Steamship Co. Pty. 10 [The Wagon Mound (No. 2)]. The most striking feature of the case law on this vexed topic is the variety of terms usedsee Lord Reid’s speech in that case. Montaigne was not the only one who wrote that most of the occasions of the troubles of the world are grammatical.
What should the directors and employees of the third party, as reasonable men, have foreseen in this case? They should have foreseen (a) that the pot-holes which their lorries had made would become full of water in January; (b) that cars, motor bicycles, motor scooters and bicycles would cause water to be splashed across this busy road; (c) that in January there was likely to be severe frost and that, at night at least, the water splashed would become a sheet of ice; (d) that motor bicycles, motor scooters and bicycles would be in great danger of skidding or falling sideways on this patch of ice; (e) that riders of these would be thrown on to the road surface; (f) that lorries or cars following these might run into the riders of these vehicles.
When an accident has happened there is a constant temptation for judges to attribute to the reasonable man a degree of foresight which an Old Testament prophet would have envied. One must not attribute to the reasonable human being a superhuman degree of foresight. Should the directors and employees have anticipated, in addition to the matters I have mentioned, that a driver of a car travelling behind a motor-cyclist who was crossing this icy patch and who had fallen would drive with gross negligence and so kill or injure the motor-cyclist? I do not think that they should but, on the better authorities, this is not a defence to a claim which Mr. Wade’s widow could have made against the third party.
No two accidents are alike and the fact that a defendant did not foresee the exact way in which an accident happened does not excuse him. There are numerous cases on this topic, but I propose to confine myself to three because they are decisions of the House of Lords and of the Privy Council and so of the highest authority. In Miller v. South of Scotland Electricity Board 11 Lord Keith of Avonholm said at p. 34 of the report:
“It has been pointed out in other cases that it is not necessary to foresee the precise accident that happened and similarly it is not necessary, in my opinion, to postulate foreseeability of the precise chain of circumstances leading up to an accident. There does not seem to me to be anything fantastic or highly improbable in the series of happenings that are alleged to have led to the accident here. If it is reasonably probable that an accident may happen from some act of neglect or commission that may be enough to discharge the initial onus on the pursuer, though it would remain, of course, to show that the pursuer was within the class of persons to whom a duty was owed. The question is:Was what happened so remote that it could not be reasonably foreseeable?”
Hughes v. Lord Advocate 12 was not cited to the trial judge or to us; it is so relevant to this case that I propose to outline the facts of it. A child aged 8 years was in company with another boy in Russell Road, Edinburgh. Near the edge of the roadway there was a manhole 9 feet deep. Post Office employees had opened the manhole to work on the telephone cable. They placed a sheltered tent over it and put four paraffin lamps on its corners. At 5 p.m. all of them had left the site for a tea break. The shelter and lamps were thus unattended. The employees had removed the ladder from the manhole and left it beside the shelter; and they had pulled a tarpaulin cover over the entrance to the shelter and left a space of about 2 feet between the lower edge of the tarpaulin and the ground. The lamps were left burning. The boys took one of the lamps and the ladder into the tent to explore. One of them tripped over the lamp which fell into the manhole and caused a violent explosion in which both of them were seriously burned. The cause of the explosion was that paraffin from the lamp had escaped and formed a vapour which was ignited by the lamp. There was coercive expert evidence that the escape of vapour and its ignition by the lamp was highly improbable and could not have been foreseen by anyone. The House of Lords held that the happening of the accident of the type which did occur was reasonably foreseeable even though the way in which it happened (the explosion) could not possibly have been foreseen, and that this did not absolve the defendant from liability. The analogy of this authority to the instant case is striking. Here the third party should have foreseen that a motor-cyclist, the rider of a motor scooter or of a pedal bicycle, would slip or slide on the ice path and fall and, possibly, sustain slight injuries. Although the third party could not have foreseen that a motorist would drive with gross negligence, in my opinion, they are liable. It is a matter of regret that this case was not cited to the trial judge as, if it had been, he might have decided this issue in another way.
The trial judge held that the defendant was 100% negligent, and I understand this to mean that he thought that the third party could not have foreseen that the accident would happen in the way it did. If he meant that the third party’s negligence was not a cause of the accident, it is sufficient to say that this was not mentioned in the argument in this Court. As it was not mentioned, I do not intend to enter into the question of causationa problem which has vexed the best minds of humanity for 2,400 years and the legal discussion of which has been thoroughly obscured by the use of such Latin jargon as causa causans, causa sine qua non, remota causa.
The third authority is the advice of a particularly distinguished Privy Council in The Wagon Mound (No. 2) 13 which was a case based on negligence and nuisance in which Her Majesty was advised that foreseeability of the injury is a necessary element in the measure of damages recoverable in a case of nuisance, and that Hughes v. Lord Advocate 14 was a correct decision.
Therefore, I am of opinion that the third party were negligent, that their acts and omissions to act contributed to the accident, and that they are liable to make a contribution to the damages paid by the defendant.
I think that the third party are also liable in nuisance. In modern conditions of fast-moving traffic, a sheet of ice on a busy highway is a public nuisance for which the person creating it is liable in damages. In McKenna v. Lewis and Laoighis County Council 15 (which was not cited to the trial judge or to us) the former Supreme Court unanimously held that an excavation on land adjoining a highway which lies so close to the highway that a person accidentally straying off the road could fall into it is a danger to persons using the road and so a nuisance.
Sharp v. Powell 16 was relied on to establish that the ice patch was not a nuisance. In that case a servant of the defendant washed his van in a public street. Because of a severe frost and a blockage in a drain, the water did not get away but spread over the street and became a sheet of ice on which the plaintiff’s horse slipped and was injured. The Court of Common Pleas held that the defendant could not reasonably be expected to foresee that water would accumulate and freeze at the spot where the accident happened. I think that the court attributed a remarkable lack of foresight to the defendant’s servant, and I agree with the remarks of Lord Reid at p. 637 of the report of The Wagon Mound (No. 2) 13:”It may be that today the defendant’s servant would be expected to be more wide awake and observant but given the finding of fact regarding foreseeability the rest followed.” The decision in Sharp v. Powell 16 is not authority for the proposition that a patch of ice created by a defendant in a highway cannot be a nuisance.
Counsel for the third party argued forcefully that it is an offence for anyone to interfere with the highway and that his clients could do nothing
as they could not repair the highway. There are two good answers to this contention. The pot-holes were partly on the premises owned by the third party and partly on the highway. The bigger area of each of them was on the property of the third party and they could and should have repaired these. If they had done so, the portion of the pot-holes in the highway would have been minute and the quantity of water in them would have been so much smaller that it would probably not have caused the ice patch. Secondly, the pot-holes beside the highway but not in it were themselves a nuisance because water could accumulate in them and spread on to the road and form an icy patch. He also submitted that a private individual cannot have a cause of action in relation to damage to the highway. But the pot-holes themselves did not cause or contribute to the accident: it was the ice formed from water splashed from the pot-holes which constituted the nuisance. The damage to the highway caused by the third party was merely the reason why the ice formed. This claim by the defendant, while based in part on the pot-holes, rested mainly on the effect which they had on the highway by the formation of the patch of ice. Reliance was also placed on the pot-holes on the property of the third party as being part of the nuisance.
I am of opinion that the defendant is entitled to contribution from the third party on the ground of nuisance. The principles on which contribution is to be assessed, the meaning of “fault” in s. 21, sub-s. 2, of the Act of 1961, and the amount of the contribution were not discussed in argument at all and so we cannot give any decision on these questions at the moment.
Felix Moorehouse v The Governor of Wheatfeild Prison
, The Minister for Justice, Equality and Law Reform, Ireland and The Attorney General
[2010-5534 P]
High Court [Approved]
8 March 2021
unreported
[2021] IEHC 248
Mr. Justice Bernard Barton
March 08, 2021
JUDGMENT
1. This case was remitted back to the High Court by order of a majority of the Court of Appeal on foot of the Plaintiff’s appeal against the order I made dismissing his claim to have the following issues determined:
(1) Determination of the issue as to whether the Plaintiff was guilty of contributory negligence for the accident that befell him, as pleaded by Defendants;
(2) Apportionment of liability as between the Plaintiff and the Defendants if there is a finding of contributory negligence against the Plaintiff;
(3) Assessment of the Plaintiff’s damages, taking account of any apportionment of liability consequent on a finding (if any) of contributory negligence on the part of the Plaintiff.
2. Written submissions were exchanged and filed on behalf of the parties in advance of the resumed hearing which took place on the 2nd February 2021. It is not proposed to repeat in extenso the findings of fact which I made in my judgment delivered the 15th August 2017 (see neutral citation [2017] IEHC 535); rather these will be referred to where necessary in relation to the first issue and, if appropriate, in relation to the determination of the second issue. This judgment should, therefore, be read in conjunction with the judgment of this Court following the trial of the action.
3. The Court is not concerned with the question of liability. This was determined in favour of the Plaintiff by a majority of the Court of Appeal, Costello J. dissenting. For the reasons set out in the judgments of Edwards J. and Donnelly J., the Court of Appeal concluded that I had erred in law by making an order dismissing the Plaintiff’s claim in circumstances where the Plaintiff’s account of how the accident occurred had been rejected. Although obiter I stated that had the Defendant been found liable, I would also have found the Plaintiff guilty of contributory negligence and would have apportioned fault to a high degree against him; remarks which are consequently non-binding.
4. It follows that notwithstanding the Plaintiff’s failure to provide a cogent explanation for how his hand came to be in the path of the blades, the starting point for the resumption of the case is that absent evidence establishing that the Plaintiff had been subjectively reckless (of which there was no finding), his actions would have been no more than a causa sine qua non and not the causa causans. Having adduced adequate proof of the causa causans of the accident arising from the findings of negligence and breach of statutory duty on the part of the Defendants the liability therefor followed, and the Plaintiff is entitled to succeed in his claim against them.
5. In a case where the transcript of the evidence exceeds 4 days it is the practice of the Court of Appeal that the parties agree extracts of the evidence from the transcript which are relevant to the issues on appeal. In this case, the transcripts ran to 29 days. The practice was followed and consequently the Court did not have sight of large tranches of the evidence. Whether or not this explains the reference at para 92 of the judgement by Edwards J. to the “absence of evidence” to establish a finding of “subjectively reckless” behaviour by the Plaintiff is plainly a matter of conjecture; however, the transcript is in fact replete with evidence on which findings have been made, which on the Defendant’s submissions, if accepted, would warrant the Court coming to the conclusion that the Plaintiff was reckless and thus guilty of contributory negligence at common law as well as being in breach of statutory duty.
6. It follows in the circumstances of the case that the Court is concerned to determine whether, on the evidence, the actions or omissions alleged on the part of the Plaintiff were the result of factors such as an error of judgement, carelessness, heedlessness, inadvertence or inattention, or as a result of some positive or deliberate act involving the running of a subjective risk. In this regard it is pertinent to refer to the case pleaded by the Defendants at paras 3 and 4 of the amended defence delivered herein which reads as follows:
“3. The Defendants deny that they are guilty of the alleged contributory negligence or breach of duty or breach of statutory duty.
(a) The incident or accident was caused by the negligence or breach of duty and/or recklessness on the part of the Plaintiff.
(b) The Plaintiff was the author of his own misfortune.
(c) The Plaintiff acted contrary to warning signs in operating and/or purporting to operate the machine as alleged.
(d) The Plaintiff acted contrary to all instruction from the Defendants, their servants and/or agents in operating and/or purporting to operate the machine as alleged.
(e) The Plaintiff acted contrary to all warnings and/or instruction from fellow inmates in operating and/or purporting to operate the machine.
(f) The Plaintiff removed guarding from the machine in operating and/or purporting to operate same as alleged.
(g) The Defendants, their servants and/or agent had shut down the machine.
(h) The Defendants, their servants and/or agent had given instruction not to operate the machine.
(i) The Plaintiff was not authorised to operate the machine”.
7. At paragraph 4 (1) of the defence the following plea appears:
“Further if the accident or incident occurred in the manner alleged or at all and/or if the Plaintiff suffered the alleged or any personal injuries, loss and damage then the Defendants will claim that they are not responsible and/or liable or not wholly responsible or liable to the Plaintiff by virtue of the fact that same arose and/or was caused wholly and/or partly by the negligence and/or contributing negligence on the part of the Plaintiff for the reasons set out above.”
8. At the outset of the principal judgment delivered on the 15th August 2017 a number of issues, observations and findings were set out and discussed in greater detail later in the judgment. For the purposes of contextualising the first and second issues, it may be helpful to set out again the observations made which are relevant thereto as follows:
(i) The cutting/cropping and punch facilities constituted dangerous parts of the GEKA Minicrop which required guarding to minimise or avoid the risk of injury; the opening to the cropping facility was designed and fitted with an adjustable device known as a hold down guide which also served as a safety guard (the guide-guard);
(ii) At the time of the accident, the Plaintiff’s left hand was in the pathway of the shear blades of the machine whose guide guard had been removed; the identity of the individual and responsibility for the removal of the guide guard was in question;
(iii) Both the Plaintiff and Jonathan Nicholson, the Industrial Training Instructor (ITI) with responsibility for supervision and training in the workshop, denied removing the guide-guard; (The identity of the person who removed the guide-guard was established, accordingly, no finding was made against the Plaintiff or ITI Nicholson)
(iv) If fitted and properly adjusted, the guide-guard would have prevented any part of the Plaintiff’s hand entering the cropping compartment to the point where it would have been in the path of travel of the shear blades; the injuries could not have been sustained had the guide-guard been so positioned;
(v) The guide-guard was not a fixed guard; it was adjustable and removable without the use of a tool;
(vi) The cropping facility could be operated without the guide-guard in position; consequently, the cropping blades were exposed, accessible and clearly visible to the operator and anyone supervising the operation of the machine;
(vii) Shortly before the accident, a problem had arisen when two other prisoners were using the cropping facility as a result of which the steel flat or stock bar (steel bar) which they were trying to cut jammed between the cropper blades;
(viii) Following the report to him of the problem, ITI Nicholson removed the steel bar. Whether or not the machine had been completely switched off by him, it had not been locked out in a way which prevented it from being restarted;
(ix) The machine was supplied and fitted with a lock out facility in the form of a pad lockable device; in practice, this was not utilised prior to the accident by either the training staff or by those servicing the machine and was not fitted on the day of the accident;
(x) On the afternoon of the accident there were thirteen prisoners present in the welding workshop; whether the Plaintiff was actively participating in his course or whether he had been assigned to sweeping duties because the available welding booths were already occupied was in question; the Plaintiff claimed he was on his welding course, however ITI Nicholson gave evidence that because he had arrived late to the workshop the Plaintiff had been assigned sweeping duties. I was satisfied that regardless of whether or not the Plaintiff was assigned sweeping duties on the afternoon, he was entitled to use the GEKA cropping machine without obtaining permission to do so.
(xi) The instruction and supervision ratio of staff to prisoners considered appropriate by the IPS was eight to one; whether or not Prison Officer Vincent Maher was in the workshop with ITI Nicholson on the afternoon of the accident was in question; the Plaintiff claimed he did not see him there at any time before the accident; Officer Maher said he was present and gave instructions to the Plaintiff (The Court found that the Plaintiff did not receive any instructions from Officer Maher not to go near the machine.).
(xii) At the time of the accident, neither ITI Nicholson, Officer Maher nor any other member of the prison staff were present in the work and training area where the Plaintiff and the other prisoners were working; the period of absence was in question; The Plaintiff claimed that the area was unsupervised for 10 or 15 minutes at least whereas ITI Nicholson and Officer Maher claimed it was a matter of minutes. The Court found that ITI Nicholson and Officer Maher were both present in the workshop on the afternoon of the accident but that before the occurrence thereof and as a result of a problem which had developed with the GEKA cropping machine, ITI Nicholson had left the area to go to the office to get a lock out/out of order tag. He got delayed as a result of receiving a call from the governor which he took. In the meantime, Officer Maher left the vicinity of the machine and went into the storeroom. Neither Officer Maher nor ITI Nicholson were present in the workshop at the time when the accident occurred.
(xiii) Whether or not the Plaintiff had been instructed and trained in the safe use and operation of the GEKA, and whether or not shortly before the accident he and others in the vicinity of the machine had received instructions from ITI Nicholson and/or Officer Maher not to go near it was in issue; the Plaintiff claimed that he had received neither training nor instructions; ITI Nicholson and Officer Maher claimed he had received both. The Court found that the Plaintiff had received appropriate training and instructions on the use and operation of the machine and had demonstrated his competency in the use thereof to the point that he did not require permission in the workshop to use or operate it.
(xiv) Had such instructions been given not to go near the GEKA, they were confined to prisoners in the vicinity of the machine; those working elsewhere in the workshop would not have been aware that the machine was out of order and was not to be used; significantly, prisoners who had been trained and had demonstrated competence in the operation and safe use of the cropping facility could use the GEKA without seeking permission to do so; (In addition to findings that the Plaintiff had received appropriate instructions and training in the safe use and operation of the machine, he had demonstrated his proficiency in the use and operation thereof and did not require permission to use the machine for cutting steel flats. The court found that no express instruction was given to the Plaintiff not to go near or use the machine by either ITI Nicholson or Officer Maher and for the reasons set out in the judgment would not have been aware that such an instruction had been given to those who had been using or were working in the vicinity of the machine once a problem developed therein.).
(xv) At his request, the Plaintiff commenced a structured methadone programme on the 16th September 2008; he had been using illicit drugs before commencing the programme and had smoked heroin while on transfer to Wheatfield.
(xvi) As a matter of probability, he continued to use illicit drugs both before during and after the accident; details of the type, quantity and level of illicit drugs used were not canvassed with the Plaintiff;
(xvii) Whether the dose of methadone administered on the day alone or in conjunction with other illicit drugs would have had an effect on the Plaintiff’s cognitive and psychomotor functioning material to the cause of the accident was in question; (the court found that the administration of methadone alone and/or in combination with other illicit substances which had likely been ingested by the Plaintiff played no material role in the cause of the accident.)
(xviii), (xix), (xx), (xxi), (xxii), (xxiii), (xxiv), (xxv) and (xxvi) involve a series of subsidiary observations in relation to the use of methadone and illicit drugs as well as the screening therefore.
(xxvii) When stabilised on methadone, it does not follow from a positive result for cannabis and or benzodiazepine that 24, 48 or 72 hours later that the concentration of those drugs in the system is such as would produce a meaningful impact on the level of psychomotor functioning; with all such drugs assessment of the individual for effect by direct conversation, personal interaction and observation is clinically significant.
(xxviii) Any prisoner reporting being unwell or showing signs of intoxication or of being “strung out” is not permitted to enter the workshop but is returned to his cell and, if necessary, referred for medical attention;
(xxix) Cognitive and psychomotor function may be affected to a greater or lesser extent by the presence, quality, quantity, time and type of illicit drugs and/ or methadone in the system; whether the Plaintiff was stabilised on a methadone dose of 60 ml at the time of the accident was in issue; (the Court found that as the Plaintiff was admitted to the welding workshop following a conversation with ITI Nicholson it was highly unlikely that he was exhibiting any signs of being unwell or of being inebriated in any form and that had he been exhibiting any such signs, he would have been returned to his cell by a class officer. The Plaintiff took his dose of methadone most likely between 10 and 10.30 am on the morning of the accident. The Court found that there were no contra-indications apparent to the dispensary nurse when the Plaintiff presented himself for and was administered the prescribed dose of his medication. The Court accepted the evidence of Dr. Scully, who treated and assessed the Plaintiff from time to time before the accident that, had he any concerns about the Plaintiff’s medical capacity to attend and participate in the welding workshop at any time he would have raised and acted upon those concerns; there was no such evidence.)
(xxx) The provisions of the Safety, Health and Welfare Work Act, 2005 (the 2005 Act) and the Safety, Health and Welfare at Work (General Application) Regulations 2007 S.I. No. 299/2007 (the 2007 Regulations) applied to the prisoners when working in the prison workshops.
(xxxi) The Safety Statement in force for the prison workshops at the time of the accident which contained a risk assessment relevant to machinery was drawn up in 2003 and a General Metal Workshop Standard (MS1) was issued in June 2007 but neither were machine specific. Whether the relevant statutory requirements had been complied with was in issue; (the Court found that there was a breach of statutory duty on the part of the first, second and third Defendants in failing to comply with the requirements of the 2005 Act and in particular, Regulations 33 and 34 of the 2007 Regulations .).
(xxxii) The focus of the workshops was on training and up-skilling rather than on production.
(xxxiii) The metal/ welding workshop is self-contained and incorporates an office, toilet facilities, store/ stock room, as well as a work and training area; prisoners, whose names are recorded on a list, have to be admitted individually and are required to wear personal protective equipment at all times while in the welding workshop.
(xxxiv) Metalwork machines, including the GEKA, tools, welding equipment, ten ordinary and three auxiliary welding booths were located in the work and training area of the workshop.
(xxxv) The removal of or making adjustments to the guide-guard was restricted to ITI Nicholson and the servicing engineer; training on the safe use and operation of the machine included information about the purpose of the guide-guard together with an instruction that the machine was never to be used without the guide-guard in place; (the Court found that the Plaintiff had received instructions in training on the safe use and operation of the GEKA machine.)
(xxxvi), (xxviii) are concerned with the provision of PPE and the supervision of prisoners before leaving the workshop.
(xxix) Had there been supervision in the work and training area of the workshop at the time of the accident it is highly unlikely that the accident could or would have occurred;
(xxx) to (xxxi) were concerned with the timing of training sessions and with the issuance of disciplinary reports known as a P19;
(xxxii) Photographs of the GEKA taken by the ITM Austin Stack shortly after the accident show the work piece stop bar fitted in position to the back of the machine; whether the stop bar was missing at the time of the accident was in question; (the Court found that the backstop was in position and was not missing as suggested by the Plaintiff.)
(xxxiii) A Governor’s parade takes place every morning between 9 and 10.30 am. Prisoners are entitled to attend and bring any complaints or other issues of concern which they may want addressed to the attention of the Governor.
(xxxiv) When prisoners have mastered horizontal welding, they progress to vertical welding; the Plaintiff was still engaged in horizontal welding at the time of his accident.
(xxxv) Certificates of competency in the different types of welding are issued once sufficient levels of competency have been reached and demonstrated in front of an external verifier. A training record is kept by ITI Nicholson, generally filled in on a Friday.
(xxxvi) The record for the Plaintiff shows that he attended the welding course over four weeks, commencing on week ending 42 and that he received an induction, a safety video, and safety training, including manual handling, as well as guillotine training;
(xxxvii) and (xxxviii) are concerned with the post-accident servicing of the blades in the GEKA cropping machine.
(xxxvii) to (xli) were concerned with post-accident investigation and will not therefore be repeated. Suffice is to say that for comprehensive overview this judgment should be read in conjunction with the principal judgment of the court delivered in this case.
9. The question of whether or not the Plaintiff was subjectively reckless in doing whatever he did when operating the machine at the time of the accident falls for consideration in the determination of the first issue herein. I did not address it or make a finding in relation to that matter since I did not accept the Plaintiff’s account of the accident, and as a result concluded that he had failed to establish the case he had brought to Court and accordingly dismissed his claim. Given the circumstances in which the case has been remitted back to this Court for a resumption of the action and having regard to the first two issues which must be addressed, this is as convenient a place as any to set out the statutory provisions relevant thereto.
Contributory negligence and breach of statutory duty
10. Section 2 (1) of the Civil Liability Act, 1961 as amended provides for the interpretation of terms used in the Act. “Negligence” is defined as including “breach of statutory duty”. The Act made express provision for the apportionment of liability in a case of contributory negligence in s. 34 which reads as follows:
“34.—(1) Where, in any action brought by one person in respect of a wrong committed by any other person, it is proved that the damage suffered by the Plaintiff was caused partly by the negligence or want of care of the Plaintiff or of one for whose acts he is responsible (in this Part called contributory negligence) and partly by the wrong of the Defendant, the damages recoverable in respect of the said wrong shall be reduced by such amount as the court thinks just and equitable having regard to the degrees of fault of the Plaintiff and Defendant: provided that—
(a) if, having regard to all the circumstances of the case, it is not possible to establish different degrees of fault, the liability shall be apportioned equally;
(b) this subsection shall not operate to defeat any defence arising under a contract or the defence that the Plaintiff before the act complained of agreed to waive his legal rights in respect of it, whether or not for value; but, subject as aforesaid, the provisions of this subsection shall apply notwithstanding that the Defendant might, apart from this subsection, have the defence of voluntary assumption of risk;
(c) …
(2) For the purpose of subsection (1) of this section—
(a) …
(b) …
(c) the Plaintiff’s failure to exercise reasonable care for his own protection shall not amount to contributory negligence in respect of damage unless that damage results from the particular risk to which his conduct has exposed him, and the Plaintiff’s breach of statutory duty shall not amount to contributory negligence unless the damage of which he complains is damage that the statute was designed to prevent.”
11. A simple and classic example of a statutory duty designed to prevent a Plaintiff from injuring himself or herself is the Road Traffic (Construction Equipment and Use of Vehicles) Amendment No. 2) Regulations, 1978 S.I. 360/1978 requiring the use of seatbelts and crash helmets. Contributory negligence at common law has a different meaning in an action for negligence than for an action for breaches of statutory duty. See Stewart v. Killeen Paper Mills Ltd[1959] I.R. 436 at 441. Contributory negligence at the common law is founded on the principle that one owes a duty to take care for one’s own safety in any given set of circumstances. The duty of care owed by a Plaintiff in an action for breach of statutory duty, such as an action under the provisions of the Safety Health and Welfare at Work Act, 2005 (the 2005 Act) has long been considered less extensive than in actions for common law negligence. See Stewart above and Kennedy v. East Cork Foods[1973] I.R. 244 at 249.
12. There is a long line of authority for the proposition that carelessness, inattention or inadvertence on the part of an employee in an action for damages brought for breach of the provisions of the Safety in Industry Acts and more recently the Safety, Health and Welfare at Work Act, 2005, would not warrant the Court in making a finding of contributory negligence against the employee. See also Dunne v. Honeywell Control Systems[1991] ILRM 595 and most recently McWhinney v. Cork City Council[2018] IEHC 472 at para. 49. This is as convenient a point as any at which to mention that although the accident involving the Plaintiff occurred in the workshop of Wheatfield Prison and that the Plaintiff was not an employee in the ordinary industrial sense of the word, it was accepted that the provisions of the 2005 Act and the 2007 Regulations made thereunder were applicable.
13. The Court raised with the parties the decision of the Supreme Court in McSweeney v. McCarthy, (Unreported), delivered on the 28th January 2000 which appeared to be particularly relevant to the first two issues under consideration and in respect of which submissions were made by the parties. That case was decided against the background of the statutory scheme that the health and safety of employees established by the Safety in Industry Acts 1955 to 1980 and the Safety, Health and Welfare at Work Act, 1989. The case involved a trained painter who was employed by the defendant in a chemical factory. Part of his work duties involved carrying out painting at heights with the use of a ladder. The plaintiff fell from the ladder in the course of carrying out his duties. The ladder was neither tied by the plaintiff nor did the plaintiff use anybody to stand or restrain it while he was using it. The case came on for hearing at the High Court in Cork. The plaintiff’s claim was dismissed on the basis that the plaintiff had failed to establish any negligence or breach of duty including breach of statutory duty on the part of the Defendant. The plaintiff appealed against the decision. The Supreme Court allowed his appeal. Delivering the judgment of the court, Murray J., as he then was, observed at the foot of p. 8:
“In these proceedings it is common case that it was foreseeable that the Plaintiff at some point in the course of his duties would require the assistance of someone else to secure the ladder at it’s foot when he had to mount it. This is because the climbing of an unsecured ladder is inherently dangerous. It is also common case that, in the circumstances of this case, it would be placing too onerous a duty on the employer to contend that he should have provided the Plaintiff during entire his period of work with an assistant ready to hold the ladder, as the isolated need arose.”
And on p. 9 he continued:
“The reality of cases like the present is that both employer and employee had an opportunity to consider how the work should be carried out, whether it involved any dangers, and, if so, how they should be avoided. By denying liability because only the employee was present is in effect to seek to plead some sort of last opportunity rule. That, however, is not the basis of liability. Admittedly, the employee is more proximate to the events leading up to the circumstances in which the injury occurred. But this is not the test of liability. The test is dependent upon control of the work.”
The learned judge concluded at p. 17 of the judgment that:
“the Defendants were guilty of negligence and breach of duty, including statutory duty and the learned trial judge erred in law in not so holding.”
He then went on to make the following statement at the top of p. 18:
“Having found that it had not been established that there was negligence on the part of the Defendants, the learned trial judge did not consider the question whether the Plaintiff was guilty of contributory negligence. Again it is clear from the undisputed facts in this case that the Plaintiff himself was guilty of negligence and breach of statutory duty in failing to take reasonable care for his own safety. He fully appreciated the danger of ascending an unsecured ladder and the risk of injury attached thereto, but in spite of such knowledge, he knowingly took the risk of ascending a ladder which was not secured and when there was no person holding the ladder while he was ascending it. In so doing, he, as an experienced workman was not taking reasonable care for his own safety. In not so doing, he was not only in breach of the common law duty but statutory duties by then imposed, namely s. 125 (7) of the Factories Act, 1955 (as amended by Section 8 of the Safety in Industry Act, 1980 ).”
In the circumstances of that case the court apportioned liability 40% to the plaintiff and 60% to the defendant.
14. Section 13 of the 2005 Act provides for the general duties of employee and persons in control of places of work. Section 13 (1) provides an employee shall, while at work —
“(a) comply with the relevant statutory provisions, as appropriate, and take reasonable care to protect his or her safety, health and welfare and the safety, health and welfare of any other person who may be affected by the employee’s acts or omissions at work,
(b) ensure that he or she is not under the influence of an intoxicant to the extent that he or she is in such a state as to endanger his or her own safety, health or welfare at work or that of any other person,
(c) …
(d) co-operate with his or her employer or any other person so far as is necessary to enable his or her employer or the other person to comply with the relevant statutory provisions, as appropriate,
(e) not engage in improper conduct or other behaviour that is likely to endanger his or her own safety, health and welfare at work or that of any other person,
(f) attend such training and, as appropriate, undergo such assessment as may reasonably be required by his or her employer or as may be prescribed relating to safety, health and welfare at work or relating to the work carried out by the employee,
(g) having regard to his or her training and the instructions given by his or her employer, make correct use of any article or substance provided for use by the employee at work or for the protection of his or her safety, health and welfare at work, including protective clothing or equipment,
(h) report to his or her employer or to any other appropriate person, as soon as practicable—
(i) any work being carried on, or likely to be carried on, in a manner which may endanger the safety, health or welfare at work of the employee or that of any other person,
(ii) any defect in the place of work, the systems of work, any article or substance which might endanger the safety, health or welfare at work of the employee or that of any other person, or
(iii) any contravention of the relevant statutory provisions which may endanger the safety, health and welfare at work of the employee or that of any other person,
of which he or she is aware.”
At para. 166 of the original judgment, I found that having regard to the reasons given and the findings made that there was a breach of statutory duty on the part of the first, second and third Defendants in failing to comply with the provisions of the 2005 Act with regard to requirements relating to the provision of a safety statement and risk assessment under the Act and with regard to the duties owed to the Plaintiff under the 2007 Regulations in particular Regulations 33 and 34. In terms of ordinary negligence there were express findings of negligence at paras. 143 and 144. For the purposes of the Civil Liability Act 1961, breaches of statutory duty on the part of the Defendants in this case constitute negligence on their part.
Submissions
15. The Defendants carry the onus of proof to establish, on the balance of probabilities, negligence and breach of statutory duty on the part of the Plaintiff in the sense described by Murray J. in McSweeney v. McCarthy, if there is to be a finding against him on the first issue. It is not intended to summarise the submissions made on behalf of the parties. Suffice it to say that on the evidence and the undisturbed findings of fact the contention advanced on behalf of the Defendant is that the only conclusion the Court could come to is that the several actions of the Plaintiff which resulted in him severing the fingers of his left hand were attributable to a series of deliberate actions which were grossly reckless and constituted a causa causans of the accident.
16. The suggestion advanced on behalf of the Plaintiff that, having rejected his account of the accident the Court could not now make a determination of contributory negligence in the absence of determining how the accident did occur, did not stand up to scrutiny and was without merit factually or at law. On the evidence and the findings made and left undisturbed on appeal there was not, as had been suggested on behalf of the Plaintiff, any element of the Court entering into the realm of speculation for the purposes of trying to establish the reasons for what the Plaintiff did, why he did it or what he was doing it for.
17. The plain facts of the matter were that he came to a machine the operation and purpose of which he was familiar. He had been instructed and trained in the safe use and operation of the machine. He knew the purpose of the machine was to cut metal flats. He knew that the production of flats from the introduction of a length of steel bar was dependent upon and involved a guillotine action about which he had been specifically made aware. He had used and operated the machine under supervision. He had established to Inspector Nicholson his proficiency and knowledge in the safe use and operation of the machine to the point that before using it to cut flats it was not necessary for him to seek the permission of Inspector Nicholson or for that matter any member of staff.
18. When the Plaintiff came to the machine on the afternoon of the accident it was immediately obvious to him, as it was to anyone else who approached it, that the guide-guard had been removed, revealing the blade opening and, in the process, the cropping blade. The Plaintiff knew that the function of the cropping blade was completely dependent upon the operator pressing a foot pedal, that releasing the foot pedal resulted in the cropping action stopping and the blade returning to its rest position. The Plaintiff’s hand was not resting on a steel bar. The back stop was in position, thus avoiding any necessity for him to judge the positioning or distancing of a steel flat in the machine. The Plaintiff’s left hand was palm upwards with the fingers in the path of travel of the cropper blade, a state of affairs visible to the Plaintiff when he pressed the foot pedal which he knew would immediately activate the shear blade.
19. These actions were all carried out in circumstances where he knew from the training and instructions he had received that the machine was only to be used for cutting steel flats. The sauce for the goose was good for the gander. Any alternative cogent explanation for what had happened acceptable to the court was not a sine qua non for a finding of contributory negligence, particularly when regard was had to the evidence before it and the facts as found. The Court was entitled to infer that whatever the Plaintiff was doing in using the machine, he knew that what he was doing was extremely dangerous and that it exposed him to a risk of serious injury which, in the event, is exactly what happened. Mr. O’Scanaill also addressed the Court at some length on the apportionment of liability and drew the Court’s attention to a number of authorities on the approach to be taken by the Court in relation to that exercise. He submitted that in the particular circumstances of the case, the blameworthiness of the Plaintiff far outstripped any blameworthiness that could be attributable to the Defendant and that this was a case where an apportionment of 85 to 90% against the Plaintiff was warranted.
20. On behalf of the Plaintiff, Mr. Keane contended that having rejected the Plaintiff’s account of the accident, it was not open to the Court to speculate on how else the accident may have occurred. This was not a case in which the Defendants had advanced an alternative version of the accident; rather, the case was one where the only explanation or version of the accident was the one advanced by the Plaintiff and that had been expressly rejected for the reasons set out in the judgment of the Court. To find contributory negligence in these circumstances would be to find contributory negligence in abstracto, a conclusion which was legally impermissible. The Court was, so to speak, hoisted on the petard of its own judgment, and could not resile from the consequences of the outcome when it came to address the issues. It had not been pleaded nor had it been put, at least in a full-frontal way to the Plaintiff, that what he was doing amounted, in effect, to a deliberate act of self-harm no doubt because the Defendants would not have been in a position to establish such a case. If pleaded but they were unsuccessful it would have exposed the Defendants to a claim for aggravated damages on the grounds that such a plea amounted to an allegation that the Plaintiff’s claim was a fraud.
21. It was argued the Court of Appeal had found that it was the actions of the Defendants and not those of the Plaintiff which were the causa causans of the accident, in other words, that it was the Defendants’ negligence and breach of statutory duty and not that of the Plaintiff which was responsible for the occurrence of the accident. Mr. Keane drew the Court’s attention to various extracts from the judgment of this Court concerning the findings of fact and the conclusion reached thereon that the Defendants were guilty of negligence and were in breach of statutory duty. The Court was also brought through the judgment of Edwards J. in relation to this aspect of the case.
22. Quite apart from these submissions it was argued on behalf of the Plaintiff that in approaching the issue of contributory negligence, particularly in the context of a breach of statutory duty, that the circumstances were to be viewed not from the perspective of the ordinary reasonable person; rather, what had to be borne in mind were the life circumstances in which the Plaintiff found himself, his circumstances at birth, his social circumstances, the fact that the Court had already acknowledged he was a highly disadvantaged member of society and had grown up and was involved in criminal activity, was a person who left school at an early age, lived in very deprived circumstances, was illiterate, and was innumerate. These were factors which had to be taken into the balance.
23. Referring the Court to McWhinney v. Cork City Council[2018] IEHC 472 and McSweeney v. McCarthy, which depended on its own facts, it was not enough to show an error of judgment or inadvertence on the part of the Plaintiff if contributory negligence was to be established in circumstances where a Defendant is found to be in breach of statutory duty. Mr. Keane distinguished the facts of McSweeney v. McCarthy from the facts in this case, drawing the Court’s attention to the fact that in that case, the actions or omissions of the Plaintiff had been admitted having been negligent. In the absence of a satisfactory explanation as to how and why the accident occurred there was no evidence or finding of fact which would permit the Court to find the Plaintiff guilty of contributory negligence and breach of statutory duty.
24. Even if the Defendants could get over that barrier, they were faced with the difficulty of establishing that the injuries which befell the Plaintiff were other than as a result of an error of judgement or inadvertence absent which there could be no finding against him on the first issue. When regard was had to the majority judgements of the Court of Appeal a finding that the Plaintiff guilty of contributory negligence and an apportionment of fault to the extent of 85 to 90% against the Plaintiff would arguably be a perverse; the higher the apportionment the stronger the argument would be. The perversity of such a conclusion would arise from what in effect would amount to a reversal of the decision of the Court of Appeal that the causa causans of the accident lay with the Defendants.
25. In addressing these issues Mr. Keane urged the Court to have regard to the spirit as well as the letter of the majority judgments in the Court of Appeal. He submitted that it could be inferred from the judgment of Edwards J. in particular that if there were to be a finding of contributory negligence, such should be less than 50%. since in the absence of evidence to establish a finding that the Plaintiff was subjectively reckless any act or omission on his part was a causa sine qua non and not the causa causans of the accident. I understood this submission to be that the only causa causans of the accident was the negligence and breach of statutory found against the Defendants. If the Court was against the Plaintiff on the submission in relation to a finding of contributory negligence, Mr. Keane argued that any apportionment on the second issue should be limited to a maximum of 20%. If, having regard to all the circumstances of the case it was not possible for the Court to establish different degrees of fault, s. 34 (1) (a) provided for the apportionment of liability equally.
26. Finally, Mr. Keane also advanced a claim for aggravated damages because of the conduct of the Defendants during the trial and what amounted to a continuation of that conduct by the Defendants in the submissions made on the first and second issue by Mr. O’Scanaill. I shall deal with that matter presently but returning to the present argument Mr. Keane drew the attention of the Court to the inescapable fact that it was the Defendants who were in control of the workshop, of the system of work therein and of the Geka cropping machine. It was they, who failed to make the Plaintiff aware that the machine had been taken out of use and had left it in a condition constituted a very serious danger to anyone who attempted to use it unawares.
Decision
27. I have adverted earlier to the practice in the Court of Appeal of limiting the transcripts in cases where oral evidence was given over more than four days to an agreed book of extracts of the transcript of the evidence relevant to the issues in the appeal. It is not apparent from any of the judgments delivered in the court precisely what extracts were before the judges who heard the appeal. However, and having had the benefit of the entire transcripts of the evidence at the time when the principal judgment was delivered and having reread these insofar as they are relevant to the first and second issues I am satisfied, with respect to the learned judge, that there is no factual basis to the reference of an absence of evidence to establish on the balance of probabilities that the Plaintiff was subjectively reckless.
28. Whatever the explanation, the transcripts of the Plaintiff’s own evidence, not to mention the evidence of the engineers and the photographic evidence is replete with evidence to support the conclusion that the behaviour of the Plaintiff was itself a causa causans of the accident. This conclusion has very significant implications for the submissions advanced on behalf of the Plaintiff by Mr. Keane. While I accept the submission that it is not appropriate for the Court to venture into the realm of speculation in circumstances where it has rejected the only explanation advanced in the case for the accident, I do not accept for the reasons advanced by him that it follows there cannot be a finding of contributory negligence against the Plaintiff, quite the reverse.
29. In that regard I accept the submissions made on behalf of the Defendants by Mr. O’Scanaill, particularly in light of the observations made in relation to the evidence which, it would appear, was not part of the extracts from the transcript made available for the purposes of the appeal. I consider it pertinent to mention this because had the relevant transcripts been available to be read by my learned colleagues I have absolutely no doubt, having again had the benefit of reading the transcripts, that the reference to the absence of such evidence would not have been made, especially by such a learned and experienced judge as Edwards J.
Conclusion; Contributory Negligence
30. In coming to the conclusion that there was contributory negligence on the part of the Plaintiff I am mindful of the submission made to the Court by Mr. Keane concerning the social and economic background and circumstances not to mention the disadvantages experienced by the Plaintiff in life which were, if I may be permitted to say so, appropriately recognised by the Court in its principal judgment. That being said, the Court has found that although this unfortunate individual’s life was blighted on so many levels, including addiction to illicit drugs, he was able to hold down a job before he committed the crime which ultimately sent him to Wheatfield after conviction. He was able to drive a car and once in prison, apart from trying to get his life back on some sort of normal track, he volunteered for training under Mr. Nicholson so that he could acquire a marketable skill he could deploy once he had served his sentence and was released back out into society.
31. I had no impression that the Plaintiff took this course of action involuntarily. Similarly, although not entirely successful in weaning himself off all illicit substances, he showed a willingness and determination to try and rid himself of his affliction by going on the treatment programme offered to him and other prisoners at the prison. I was particularly impressed by the evidence of Dr. Scully, which I have re-read for the purposes of this judgment. He was aware of the training facilities and programmes offered and available to inmates in the prison workshop and that some of the tasks involved operating dangerous machinery and the use of potentially dangerous materials, such as welding torches. If he had had any concerns about the suitability or capacity of a prisoner to engage in any of these activities, particularly from a safety perspective, he would have intervened. He had no concerns for the suitability or safety of the Plaintiff throughout the time he was undergoing his training or subsequently up to the time of the accident.
32. It has to be remembered that a very considerable period of time elapsed between the occurrence of the accident and when the action ultimately first came on for hearing in December 2015 and trundled on into the following year. All other factors being considered, it would hardly be surprising that the Plaintiff exhibited memory difficulties by the time he came to give evidence. What is material, however, is the Plaintiff’s condition on the day of the accident. The Court has already found that his methadone treatment or a combination thereof with illicit substances played no causative role in the occurrence of the accident and that had he been exhibiting any signs of being unwell or of being in any way affected by his medication and/or use of illegal substances he would not have been permitted to enter the workshop. Subjectively, therefore, the Plaintiff was considered fit to come into a workshop in which he was entitled to undertake unsupervised welding work and, whether or not he had been assigned to sweeping/cleaning duties on that afternoon, was entitled to use the GEKA cropping machine without permission or supervision.
33. Lest it should be necessary to do so, the Court confirms as findings of fact the several matters cited earlier herein and incorporated in the submissions made on behalf of the Defendants. Accordingly, upon those findings I am satisfied and the Court finds that the Plaintiff’s actions in approaching a machine the safe use, operation and purpose of which he had been trained and instructed, that he knew involved a guillotining mechanism, that as a result of the removal of the safety guide guard the cropping blade was visible to him, that it operated by pressing a foot pedal and that he could see his hand upturned in the path of the cropping blade while not resting on a steel flat when he pressed the foot pedal, constituted subjective recklessness and disregard for his own safety; his actions were sheer folly. That he subjectively ran a risk of causing himself a very serious injury when he pressed the machine pedal in beyond question. In the circumstances the Court finds that the Plaintiff was guilty of contributory negligence and was in breach of statutory duty contrary to the provisions of s. 13 of the 2005 Act.
Apportionment of Fault
34. The next issue which falls for determination is the apportionment of fault. This arises in circumstances where it is proved that the damage suffered by the Plaintiff was caused partly by the Plaintiff’s negligence or want of care and partly by the wrong of the defendant. Section 34 (1) of the 1961 Act provides that in those circumstances, damages recoverable in respect of the wrong shall be reduced by such amount as the Court thinks just and equitable having regard to the “… degrees of fault of the plaintiff and the defendant” , subject to the provisos set out in sub. paras. a, b and c of the subsection. Fault is not to be equated with the potency of the causative factors, whether they be acts or omissions, moving from the plaintiff and defendant; rather, fault in this context is equated to blameworthiness of the parties’ respective contributions to the loss and damage. Particularly having regard to the submissions made on behalf of the Plaintiff the measurement of fault is not carried out by purely subjective standards but by objective standards. As observed by Walsh J. in O’Sullivan v. Dwyer(1971) I.R. 275 at 286
“The degree of incapacity or ignorance peculiar to a particular person is not to be the basis of measuring the blameworthiness of that person. Blameworthiness is to be measured against a degree of capacity or knowledge which such a person ought to have had if he were an ordinary reasonable person…Fault or blame is to be measured against the standard of conduct required of the ordinary reasonable man and the class or category to which the party whose fault is to be measured belongs…”
This passage was quoted with approval by Kenny J. in Carroll v. Clare County Council[1975] I.R. 221 at 226-227. See also McCord v. Electricity Supply Board[1980] ILRM 153; Iarnrod Eireann v. Ireland[1996] 2 ILRM 500; Hackett v. Calla Associates Ltd[2004] IEHC 336; Hussey v. Twomey[2009] IESC 1; Moran v. Fogarty[2009] IESC 55; Gallagher v. McGeady[2013] IEHC 100; Shaughnessy v. Nohilly & Anor[2016] IEHC 767 at para. 135 and Kelly v. Meegan[2020] IEHC 698.
35. The percentage reduction of the damages achieved by this process must be just and equitable. The percentages of fault arrived at in the authorities cited on apportionment are illustrative only since the result in was clearly grounded in the particular circumstances of the case to which the relevant principles have been applied. Approaching the task in the way mandated, I find myself unable to accept the submissions of either party with regard to the apportionment which is appropriate. While it is clear that the failure to lock out the machine, ensure the guard was in place and/or that officer Maher remained on station was undoubtedly blameworthy behaviour by omission, however it was also clear that the positive actions of the Plaintiff in operating machine at a time when he could see that his upturned hand was in the path of travel of the cropping blade was blameworthy by commission.
Conclusion; Apportionment of Fault
36. On my view of the evidence and the accident circumstances the Plaintiff’s behaviour while to a significant degree more blameworthy than the blameworthiness of the Defendants was not so blameworthy as to warrant visiting upon him the degrees of fault suggested by the Defendants at 85 to 90%. In my judgment the justice of the case is fairly met by an apportionment of 70% against the Plaintiff and 30% against the Defendants. It follows that the damages to which the Plaintiff is entitled will be reduced accordingly.
Quantum
37. The Plaintiff suffered horrific injuries as a result of the accident injuries which he was primarily responsible for inflicting on himself. The parties were invited to and made submissions to the Court on the level or ranges of general damages in which they considered damages ought to be assessed. Mr. Keane suggested a range of €250,000 to €350,000. He considered a reasonable value in respect of the Plaintiff’s physical injuries to be €275,000 and for the psychological/psychiatric injuries a sum of €50,000, making in aggregate a sum of €325,000. Mr. O’Scanaill, on the other hand, submitted that the appropriate range for general damages on full liability was €150,000 to €175,000. As a result of the accident the Plaintiff sustained amputations to the middle phalanges of the index, middle and ring fingers and through the distal phalanx of the little finger of his left non-dominant hand. By any stretch of the imagination these were very serious injuries.
38. The Plaintiff was brought by ambulance to Tallaght Hospital from where he was transferred to the plastic surgery unit at St. James’ Hospital. He was taken to theatre under a general anaesthetic and underwent micro surgical re-implantation of the index, middle and ring fingers of the left hand. The distal amputated part of the little finger was not salvageable and he underwent a primary terminalisation of the left little finger. Unfortunately, the re-implanted fingers gradually lost their blood supply and died over a number of days. The Plaintiff was taken back to theatre on the 2nd December 2008 and had the failed re-implanted segments of index, middle and ring fingers removed and the amputation stumps formally terminalized. In March 2009 the amputation stumps had healed, although they were still tender and uncomfortable.
39. The Plaintiff was examined and medically reported on in relation to his physical injuries by Mr. J. A. Orr, Consultant Plastic Surgeon. He prepared reports dated the 12th May 2009, and 18th November 2013. He gave evidence. The severed parts of the fingers had been cleanly cut. The amputated digits had been recovered, packaged, and sent with the Plaintiff to hospital. Medical assessment was that there was a possibility of saving the fingers, hence the initial surgery. The injuries suffered by the Plaintiff would have been extremely painful. Mr. Orr explained that any information coming back from the frayed ends of the nerves would be interpreted at a deep level within the brain and within the spinal cord as pain which was difficult to localise. He considered that this sensation would have been particularly distressing though the massaging as a therapy advised and undertaken by the Plaintiff helped to desensitise the area.
40. Mr. Orr described the Plaintiff as having received a severe irreparable mutilating injury to his left hand which in the long term would leave the Plaintiff with a permanently mutilated appearance together with a very considerable loss of function and the likelihood of chronic pain and discomfort in the amputation stumps. Because the Plaintiff was left with very short stumps of the fingers of the index, middle and ring fingers and with no joint beyond his little metacarpal knuckle he is left with a particular disability in terms of fine manipulation. Mr. Orr described what remained of his fingers as being functionally very limited, for example tying shoelaces, doing up buttons and things like that or any form of fine manipulation such as screwing, unscrewing, or putting on and tightening nuts and bolts would be very difficult. He thought that even when it came to more crude functions, such as gripping a handle on a brush or the handle of a shovel or something like that there would also be limitations because there is no capacity to curve fingers around the handle. Unskilled vocational work not to mention the work for which he had been trained would be problematic.
41. With regard to possible reconstructive surgery Mr. Orr referred the Plaintiff thought the Plaintiff might benefit from assessment by Dr. Eadie, a specialist in microsurgical reconstruction of the hand, with a view to a microsurgical transfer or part of a toe to the index and middle finger stumps. Mr. Orr explained that this kind of reconstruction requires a highly motivated patient who is able to completely give up smoking and to cooperate with all aspects of surgery and rehabilitation. As the Plaintiff was a smoker and would apparently have problems in complying with the regime required to prepare himself for such surgery as well as with the required rehabilitation programme, he considered that this option was at best a possibility. He explained that this surgery was generally offered to someone who had a very specific need for a particular finger. He gave as an example, a professional musician. This option also means giving up a toe. In the event he thought it was unlikely that reconstruction surgery of this type was a viable option for the Plaintiff.
42. Mr Orr had expressed a somewhat more optimistic opinion in his initial report; however, he rode back from that quite considerably when giving evidence. The Plaintiff was likely to experience a continuing clumsiness in the use of his left hand for the foreseeable future. The Plaintiff’s many complaints were, in his opinion, entirely consistent with the injury and the physical findings on examination. The impression I formed of Mr Orr’s evidence was that given his socio-economic background and circumstances the Plaintiff’s injuries were going to result in a permanent functional disability that will have significant vocational implications for him. He expects the Plaintiff to have ongoing cold intolerance and painful symptomology if, for example, he inadvertently knocked the stumps of his finger or the stump of a finger against something.
43. With regard to alternative treatment options, Mr. Orr did not think that prosthetics were a realistic option. Even with motivated patients, the majority of people with this kind of injury have a tendency to stop using the prosthetics. There are various problems associated with that kind of treatment. I took from this evidence that fitting the Plaintiff with prosthetic fingers was not a realistic option. Having had an opportunity to view the Plaintiff’s left hand, it was abundantly clear that on return to society, all other things being equal, the Plaintiff was going to be left with a severe physical disability which would have vocational implications. His capacity to undertake vocational work in the field for which he was being trained in the prison workshops is significantly reduced if not altogether closed to him.
44. Evidence was also given by Dr. Sean O’Domhnaill, Consultant Psychiatrist and Psychotherapist. He prepared a report for the assistance of the Court and also gave evidence. In addition to the sequelae of his physical injuries, his opinion was that the Plaintiff had suffered what he described as psychological pain and suffering and that he would need treatment for what he described as the Plaintiff’s “traumatic psychological condition, meeting the criteria for a diagnosis of posttraumatic stress disorder ”. He was at pains to explain, however, that this condition was masked to a considerable degree by the use of prescribed and elicit medication, an issue that would also need to be addressed.
Damages for ‘Pain and Suffering’
45. The third issue which the Court must address is the assessment of general damages for what is generally referred to as ‘pain and suffering’ to date and into the future. O’Higgins CJ. commenting on the purpose of general damages in Sinnott v. Quinnsworth[1984] ILRM 523 stated at 531:
“General damages are intended to represent fair and reasonable monetary compensation for the pain, suffering, inconvenience and loss of the pleasures of life which the injury has caused and will cause to the Plaintiff”.
In carrying out an assessment of general damages for personal injuries the Court is required to apply well settled principles of law. The award must be reasonable and fair to both parties; the amount thereof must be proportionate to and commensurate with the injuries sustained to date of assessment and, where relevant, for the consequences of the injuries likely to be sustained in the future. In addition, the Court is required by virtue of s. 22 of the Civil Liability in Courts Act, 2004 to have regard to the Book of Quantum.
46. The meaning of “pain and suffering” in the context of general damages has been the subject of discussion in authoritative academic legal works on the law of tort and the law of damages as well as in jurisprudence on the subject. For my part, the most comprehensive and yet succinct definition is that offered by McCarthy J. in Reddy v. Bates[1983] ILRM 197 at p. 205 where he stated that general damages:
“…are frequently stated to be for pain and suffering; they would be better described as compensation in money terms for the damage, past and future sustained to the plaintiff’s amenity of life in all its aspects, actual pain and suffering, both physical and mental, both private to the plaintiff and in the plaintiff’s relationships with family, with friends, in working and social life and in lost opportunity”
47. That the Plaintiff has suffered a serious and permanent injury to his left hand is not in issue. The Book of Quantum approaches the ranges of damages for arm or hand amputations by expressing a sum up to a certain limit for the loss of single digits. Where multiple digits are involved the book states:
“There are several factors that need to be considered when calculating the assessment for loss of multiple digits. Such factors would include, which digits and how many digits, dominant hand, appearance, impact on hand function, age, gender and occupation impacts.”
The different facets of life which may be affected as a result of a tortious act covered within this meaning of general damages for ‘pain and suffering’ appears to me to be particularly apposite in the Plaintiff’s case.
48. He has been left with a lifelong cosmetic deformity and functional disability which can fairly be described as profound. It is a source of understandable psychological distress and upset not to mention a constant reminder of a truly horrific accident. I accept the medical evidence adduced in respect of the injuries on behalf of the Plaintiff and am satisfied, and the Court finds that the option of further surgery or fitting the Plaintiff with prosthetics is not a reality for him. Criticism for failing to mitigate his loss by giving up his addiction and submitting to the possibility of further surgery does not, in my judgment, withstand scrutiny. As I understood the evidence of Mr. Orr this option was in any event more of a possibility than a probability; what is more it would involve the Plaintiff giving up a toe which would also have to be taken into account in assessing damages. As it is, the Court has approached the task on the premise that such treatment and surgery is unlikely to be carried out.
49. In assessing damages the Court does not add up figures considered appropriate within the ranges in the Book of Quantum given for each digit. The cumulative effect of the loss of multiple digits to the extent suffered by the Plaintiff has a far greater significance and impact than, for example, the loss of one or two digits, leaving relatively good hand function and ability with adaptation to carry out fine manipulative tasks. Added to all of this, Mr. Orr expressed the opinion that if the Plaintiff accidentally clips his hand off something he will experience a very unpleasant electrical type of pain and that this is a sequela which he thought was likely to persist indefinitely.
Conclusion
50. Having regard to the Plaintiff’s evidence as to how he feels about his injuries, his experience of pain, his description of the limitations of hand function and the medical evidence, in particular, the evidence of Mr. Orr, I am satisfied, and the Court finds that a fair and reasonable sum to compensate the Plaintiff for past and future pain and suffering proportionate to and commensurate with his injuries is €275,000.
Claim for Aggravated Damages
51. An application was made on behalf of the Plaintiff for aggravated damages which was tied into an application made by the Defendant at the conclusion of the trial to have the Plaintiff’s claim dismissed pursuant to the provisions of s. 26 of the Civil Liability and Courts Act, 2004 which Mr. Keane characterised as an accusation, in effect, that the Plaintiff had committed perjury. It was a dreadful accusation to make against the Plaintiff and, in Mr. Keane’s submission, was utterly groundless, particularly in circumstances where the Court found the plaintiff to be an honest witness who had not intentionally set out to mislead the experts to whom he spoke or, for that matter, the Court. My attention was drawn to the transcript of the evidence relating to the application and to an interjection which I made in response to an observation that the Act made no provision for a penalty to be visited on a Defendant for making an inappropriate application under s. 26 in respect of which I “aggravated damages”.
52. It was submitted that this was a remedy to which the Plaintiff should now be entitled, particularly having regard to the findings of fact which the Court made with regard to Inspector Nicholson and Officer Maher and the repetition in submissions on the resumed hearing that the Plaintiff had essentially made up evidence concerning the absence of the backstop to explain away how his hand came to be in the path of the cropping blades, this not to mention the inadequacy of the discovery which was made by the Defendants. The attention of the Court was drawn to the judgment of Cross J. in Keating v. Mulligan[2020] IEHC 47 where €10,000 was awarded for aggravated damages by the trial judge in circumstances where he found that the s. 26 application had been inappropriate.
53. I pause here to mention that in the course of submissions I had raised a query with counsel as to whether, if an award of aggravated damages was appropriate, any award would be affected by an apportionment of fault if made. I accept Mr. Keane’s submission that having regard to the provisions of s. 34 (1) the apportionment envisaged by that provision in circumstances where liability has been found to rest with the Plaintiff and with the Defendant the apportionment was confined to damages recoverable in respect of the wrong and does not apply to aggravated damages.
54. Mr. O’Scanaill accepted that the s. 26 application did not, as he put it, find favour with me; however, he submitted that a significant number of important facts asserted by the Plaintiff had been shown to be incorrect as a result of the cross examination. The depiction in the principal judgment that the Defendant had adopted an approach to the defence of the action as a “circling of the wagons” had to be seen in the context of the statements made and the evidence given by officers Maher and Nicholson as opposed to how the whole case had been run.
55. The approach which had been taken to the evidence of officers Maher and Nicholson was one of caution and what weight was to be attached to the evidence. Mr. O’Scanaill submitted that there was no authority for the proposition that if a Defendant deployed the provisions of s. 26 by making an unsuccessful application, aggravated damages must follow. That was a preposterous suggestion and was certainly not what the Oireachtas intended when the provision was enacted. Moreover, the submissions offered in the course of the costs application had to be seen in that context and not blurred in the way suggested by the Plaintiff.
56. I have read and considered the judgment of Cross J. in Keating v. Mulligan regarding the inappropriate use of s. 26 and dicta to similar effect made by him in Lackey v. Kavanagh[2013] IEHC 341. I find myself in complete agreement with his Lordship. Section 26 of the 2004 Act was not enacted to provide defendants with an additional weapon in the armoury which a Defendant was entitled to deploy in defence of a claim for tactical or other reasons not grounded in evidence or information available at the time sufficient to found the reasonable belief that the plaintiff had or had caused evidence /information to be given which he or she knew to be false and/or misleading in material respect.
57. While the Oireachtas made no provision for an award of aggravated damages to be made to a Plaintiff in circumstances where a Defendant had made an unjustified and inappropriate application pursuant to s. 26, I am satisfied that the Court enjoys an inherent jurisdiction to make such an award where in the circumstances of the case the interests of justice so require. I have reread the transcript in relation to the initial application, and the application regarding costs. I am also mindful that in the course of his submissions Mr. O’Scanaill offered an apology if anything he had said was construed or had been construed in his submissions on the subject issues as a charge against the plaintiff; none such was intended. Having reread his submissions I am satisfied his remarks should not be construed in a way and associated with other matters in respect of which the original application under s. 26 had been moved.
Conclusion
58. I can well understand why Mr. Keane considered it appropriate to make an application for aggravated damages; however, in all the circumstances I consider that at the time it was not unreasonable on the part of the Defendants to move such an application. Applying a subjective test, the onus of proof on a defendant to establish on the balance of probabilities that a plaintiff gave or caused to be given information and/or evidence which he or she knew to be false and/or misleading in any material respect is a heavy one, and not without good reason given the mandatory nature of the consequences which are to follow in the event that the bar is met; in this instance I am satisfied that it was not. The original application was essentially dismissed on the merits, accordingly, and for these reasons the application for aggravated damages is refused.
Ruling
59. There being no claim for special damages the Court will enter judgment in favour of the plaintiff for the amount assessed in respect of general damages less 70%. And the Court will so order.
Roche -v- Wymes
[2008] IEHC 141
JUDGMENT of Mr Justice John MacMenamin dated 8th day of May, 2008.
1. The Tara Bula litigation, and the subsequent dispute between the main Bula promoters have now been before the courts for more than a quarter century. No recital of the facts, so redolent in length and complexity of Jarndyce v. Jarndyce in Dickens’ Bleak House, can do justice to the personal cost, stress and anxiety which the events now to be summarised have had upon all those involved. In this, the latest chapter of this unfortunate saga, the parties were encouraged at the outset to resolve their differences, but to no avail. In the course of this lengthy hearing it has been impossible to avoid the sense that, while the sums of money involved are indeed substantial, they are now almost symbolic; the entrenched stance of the parties based on traumatic past events; predetermined by the respective roles played at critical points in the course of negotiations in the litigation, when the promoters at times must have stood on the brink of financial disaster. The plaintiff, Thomas J. Roche, has since enjoyed a success in business which can only be described as spectacular. The defendant has remained entangled in a morass of litigation. There is now apparently yet further litigation in being between the defendant’s son and son-in-law relating to certain dispositions which may have some connection with the consequences of the earlier litigation. For now I turn to the events which give rise to this claim based on the equitable right of contribution.
2. The plaintiff, Thomas J. Roche, seeks a declaration that the defendant, Michael Wymes, is obliged to pay to him such sum as the Court may determine as representing a ‘rateable contribution’ stated to be due by Mr. Wymes to Mr. Roche on foot of payments of €9 million to National Irish Bank Ltd. (the successor in title to National Irish Investment Bank Ltd. formerly known as Northern Bank Finance Corporation Ltd.), (N.B.F.C.) and €1.4 million to Ulster Bank Ltd. (formerly known as Ulster Bank Markets Ltd. and originally known as Ulster Investment Bank Ltd.) (“Ulster”). These payments, made in 2004, were in respect of guarantees given, inter alia, by Thomas J.Roche and Michael Wymes to those banks, and judgments on foot of the guarantees obtained by the banks against the plaintiff, the defendant, the estate of Thomas J. Roche and Richard Wood.
3. The plaintiff, the defendant, Mr. Richard Wood, together with the late Mr. Thomas C. Roche, the plaintiffs’ father (and the defendant’s father-in-law), were co-guarantors to the indebtedness of Bula Ltd. (“Bula”) to various banks and in particular to NBFC and Ulster. They were the main promoters of the company. The plaintiff says that, because the payments made eliminated or reduced Michael Wymes’ financial obligations and insofar as he and his father’s estate overpaid in discharge of these two debts, he is entitled to claim contribution from the defendant.
Background
4. Bula, a limited company incorporated in 1971, was formed to acquire lands comprising 120 acres at Nevinstown, Co. Meath. Underneath there were valuable mineral deposits. The lands were to be acquired from Patrick Wright. Thereafter the company was to exploit for sale the minerals.
5. Bula’s shareholders were the State; a holding company, Bula Holdings (“Holdings”); and representatives acting on behalf of Patrick Wright (deceased). Voting control of Bula was at all material times vested in ‘Holdings’, an unlimited company. The shareholders of Holdings were Crindle Investments (36%), Loire Investments (24%), Bula Trust (36%) and Mr. D. Godson and Mr. F. Dillon. Loire Investments was beneficially owned, primarily by Mr. Richard Wood, his family and companies associated with them. Bula Trust was beneficially owned primarily, by the defendant, Michael Wymes, his family and companies associated with them. Crindle Investments was beneficially owned by the plaintiff. ‘Holdings’ was formed as a vehicle through which shares were held in Bula between Thomas C. Roche, Thomas J. Roche, Michael J. Wymes and Richard Wood and to govern their relationship with the State and the other shareholders in Bula.
6. NBFC, Ulster and Allied Investment Banks Ltd. provided banking facilities to Bula. The banks took charges from the company to secure its indebtedness. That company’s indebtedness to the banks (up to certain limits) was also personally guaranteed by the late Thomas C. Roche, Thomas J. Roche, Michael J. Wymes and Richard Wood who are collectively referred to in this judgment as the “guarantors”.
7. The relevant guarantees for the purposes of these proceedings are:-
(a) a guarantee dated 25th April 1978 between NBFC and the guarantors for a maximum amount of IR£1,000,000 together with interest and costs;
(b) a guarantee dated 10th January 1980 between NBFC and the guarantors in respect of an additional maximum sum of IR£1,000,000 together with interest and costs;
(c) a guarantee dated 22nd September 1981 between Ulster and the guarantors for a maximum amount of IR£1,828,506.
8. Bula defaulted on its liability to the banks and each of the guarantees was called in.
The 1982 NBFC judgment
9. Judgment was obtained by NBFC against the guarantors on foot of the 1978 and 1980 guarantees in the High Court, on 20th December 1982. This judgment is the starting point in the complex maze of evidence. The court has adopted the approach throughout in seeking to proceed on verifiable material, where possible corroborated independently or in documentary form.
The terms of that judgment.
10. The precise terms of the judgment (highly relevant to these proceedings) provided that NBFC was entitled to recover from the guarantors a sum (including interest) of IR£3,912,335.12 (€4,967,609.20), together with costs. The High Court granted a stay of execution on foot of the said judgment to 1st January, 1984 on conditions specified in the order. The judgment and order of the High Court were appealed to the Supreme Court which made an order affirming that of the High Court on 1st November,1983 with a stay until 1st February, 1984 on condition that the guarantors pay the sums of IR£294,348 and IR£48,000 on or before 3rd January, 1984.
11. The defendant claims that payments were made by the guarantors to NBFC in pursuance of the orders in the aggregate amounts of IR£390,000 during January, February and March, 1984.
12. The judgment (with interest) grew enormously over the years. One of the greatest difficulties in the case has been establishing precisely how much was outstanding on foot of the debt. This is considered later. The interest on the judgment ran on ‘commercial’ rates for the Roches and Richard Wood, not so for Michael Wymes.
13. The court must seek to ascertain any payments said to be made by the sureties, the identity of the parties alleged to have made these payments, and whether these payments were made against the debt arising under the NBFC judgment, or on foot of other Bula loans. The High Court judgment of 20th November, 1982 and the Supreme Court Order of 1st November 1983 are, (unless otherwise indicated) referred to in the course of this judgment as the “NBFC judgment”.
The Ulster judgment
14. The background here is somewhat simpler. On 2nd March 1984 Ulster obtained liberty to enter final judgment against the guarantors in the sum of IR£2,321,559.29 (inclusive of interest claimed to the date of judgment) together with costs of IR£122.50. The order provided that judgment on foot of the said order until 30th April 1984. Judgment on foot of the order on 7th March 1985 was entered against the guarantors in the sum of IR£2,321,559.29 and costs of IR£122.50 (totalling IR£2,321,681.79 (€2,947,908.90)). The Orders of the Master dated 2nd March 1984 and the High Court dated 7th March 1985 are (unless indicated otherwise) referred to in the course of this judgment as the “Ulster Judgment”.
15. Following these two judgments, efforts were made by the creditors to secure payment. Correspondingly, efforts were made by the guarantors to defer enforcement of the judgments and to arrive at some alternative arrangements with the banks. For the Roches this involved in the execution of deeds of mortgage on 9th March, 1984 in favour of NBFC (“the NBFC Mortgage”). Pursuant to this mortgage both father and son jointly and severally covenanted that they would pay on demand the amounts outstanding together with interest on the amount remaining unpaid from the date of demand. This rate of interest was fixed at the same ‘commercial’ rate and in the same manner applicable to the facility given by NBFC to Bula itself. Both father and son further granted mortgages in favour of NBFC over their respective family homes and surrounding lands at Chesterfield, Cross Avenue, Blackrock, Co. Dublin and Woodford, Booterstown Park, Blackrock, Co. Dublin respectively. These were both valuable properties even then.
16. Continued pressure from the banks resulted in Richard Wood, another of the guarantors, providing further security to NBFC, (at commercial rate interest) and in the provision of further security by Bula. A number of payments were made by the guarantors to defray interest accruing on the Bula debts – as opposed to what was owed on the personal guarantees. An issue arises as to whether credit may properly be allowed for such payments to the guarantors.
17. On the 26th October 1983 NBFC registered a judgment mortgage on foot of the NBFC judgment against the interest of Michael J. Wymes in his former home, Bective House, and the substantial lands appurtenant thereto, comprised in Folio No. 7302F and Folio 10020F Co. Meath.
Other litigation
18. The financial difficulties of Bula did not abate. The mine never commenced normal operation. The banks finally called in the loans in September 1985. They appointed Lawrence Crowley as receiver to the company on the 8th October of that year.
19. The defendant claims that in December 1985 Ulster realised security held by it from Rockrohan Estates (“Rockrohan”) over shares in Cement Roadstone and put the proceeds, including accrued dividends amounting in total to IR£690,405 into a non-interest-bearing account which was applied against the Ulster debt only in May 2003. He contends that Ulster ought to have placed these monies into such an account earlier and that, if it had done so, the accumulated principal would have been in excess of the amount claimed by Ulster to be due under the Ulster judgment as of May 2003. The defendant submits the plaintiff failed to take these matters into account when entering into the Ulster settlement in 2004 and that the Ulster settlement was thus an improvident transaction.
The ‘Bank Proceedings’
20. On the 2nd July 1986 proceedings (hereinafter referred to as the “Bank Proceedings”) were initiated. These proceedings (Record Number 1986/6624P) were as between Bula Ltd. (in receivership), Bula Holdings, Thomas C. Roche, Thomas J. Roche, Richard Wood and Michael J. Wymes plaintiffs, and Lawrence Crowley, NBFC, Ulster, AIIB and McKay and Schnellman defendants. The plaintiffs in these proceedings sought damages, including declarations that all loan agreements, securities, guarantees and judgments in favour of the bank should be set aside.
The ‘Tara Proceedings’
21. On the 17th November 1986 yet further proceedings (Record Number 1986/10898P) were also issued by the same plaintiffs against Tara Mines Ltd., the Minister for Energy and Others (the “Tara Proceedings”). These concerned a dispute with Tara Mines Ltd. (“Tara”) the owner of the mine adjoining the Bula lands.
Execution of the judgments – NBFC
22. NBFC made demand of Thomas C. Roche and Thomas J. Roche pursuant to the NBFC mortgage on the 7th December 1987. On the 12th January 1988 NBFC issued proceedings seeking possession of the Roche family lands. These proceedings were stayed pending the final outcome of the Bank Proceedings and the Tara proceedings referred to above.
Dispute between the Guarantors
23. In the early nineties, the Roches themselves formed a view of the merits of the Bank and Tara proceedings. It was one quite different from that of Mr. Wymes and Mr. Wood. The Roches were not optimistic. Mr. Wymes remained totally and entirely convinced of success. The subsequent outcome of the proceedings demonstrates Mr. Wymes’ optimism was ill-founded and ill-judged. None of the relevant substantive proceedings was ultimately successful, despite the pursuit of every procedural avenue. At one point, the Roches had negotiated an outcome which would have allowed Mr. Wymes and Mr. Wood also to emerge relatively unscathed. Both refused. The plaintiff opined in evidence in this case that, had the two latter availed of the offer, both would now be wealthy men. Whatever the validity of that view, Mr. Wymes and Mr. Wood persisted on the course they had charted. Mr. Wood chose to ally himself with Mr. Wymes.
24. On the 4th October 1994 the Roches withdrew as the plaintiffs from the Tara Proceedings. In April 1997 they withdrew as plaintiffs from the Bank Proceedings having endeavoured unsuccessfully to bring about a negotiated settlement in both. The Roches also brought and succeeded in related minority oppression proceedings under Section 205 of the Companies Act through Crindle Investments, the vehicle through which they held their shares. These proceedings involved the issues just described. That case was against Holdings, Bula Trust, Loire Investments, Michael J. Wymes, his son Michael T. Wymes and Richard Wood; that is effectively the Wymes/Wood interests, who acted largely in concert.
Outcome of other litigation then pursued by Mr. Wymes and Mr. Wood
25. Near incessant litigation followed, unsuccessful in outcome for this defendant. It endured over years. On the 6th February 1997 the High Court dismissed all claims made by the remaining plaintiffs in the Tara Proceedings. On the 15th January 1999 the Supreme Court dismissed an appeal brought against that decision. On the 3rd July 2000 the Supreme Court refused an application by the remaining plaintiffs in the Tara Proceedings to set aside its judgment dismissing the appeal in the Tara Proceedings.
26. In June 1997 the High Court had found that the outcome of the Supreme Court Appeal in the Tara Proceedings would determine all issues in the Bank Proceedings, with the exception of issues as to the Statute of Limitations raised by the plaintiffs. The Supreme Court decisions of the 15th January 1999 and the 3rd July 2000 therefore left only for decision issues as to the Statute of Limitations in the Bank proceedings On the 1st February 2002 the High Court dismissed these issues and on the 13th February 2003 the Supreme Court dismissed the appeal against the High Court dismissal of the Statute of Limitations issues in the Bank Proceedings.
27. A further issue the Court must determine is whether, during the currency of the Bank Proceedings, Michael J. Wymes acknowledged either the NBFC or the Ulster judgments.
Proceedings for execution of judgments – Ulster
28. On the 26th February 1997 Ulster registered a judgment mortgage on foot of the Ulster judgment against the interest of Michael J. Wymes in Bective, his house and lands.
29. On the 5th March 1997 Ulster commenced bankruptcy proceedings against the four guarantors. Prior to his death in July 1999, Thomas J. Roche was still faced with the legal and financial consequences of this imbroglio.
30. On the 15th June 2001, Ulster brought a petition for an order for the administration in bankruptcy of Mr. Roche Senior’s estate. These were adjourned from time to time pending the outcome of the Tara Proceedings and the Bank Proceedings. The sums claimed in the bankruptcy proceedings served upon Thomas C. Roche and then Thomas J. Roche were IR£2,321,681.79, being the judgment debt of IR£2,321,559.29 and costs of IR£129.50 a total of €2,947,908.90. No interest was claimed on this amount.
NBFC proceedings resumed
31. On the 1st July 2003 NIB, NBFC’s successor in title, served a notice of intention to proceed with the NBFC Mortgage Proceedings on solicitors acting on behalf of the late Thomas C. Roche and Thomas J. Roche.
32. As is now well known, the plaintiff’s financial position was not solely dependent on Bula. In the decade from the mid-1990s onwards other investments, including National Toll Roads, prospered remarkably. Thomas J. Roche’s financial position had improved very substantially when, on the 25th November 2003 NIB wrote demanding in excess of €11.9 million from him and notifying the estate of Thomas J. Roche that in default of payment, NIB would pursue proceedings to trial in the High Court to seek possession of the entire of the family lands at Chesterfield and Woodford, now very much more valuable in the property boom. Mr. Roche was by then a very wealthy man. Mr. Wymes was not. But his true financial position was then not as dire as it might have appeared. The value of Bective had appreciated very markedly in the rising tide of the appreciation in values.
Payment of €1.4 million to Ulster
33. A hearing date was fixed for the Ulster bankruptcy proceedings of the 30th March 2004. On the 26th March 2004 the plaintiff and the executors of the estate of the deceased (“the executors”) entered into a settlement agreement with Ulster (“the Ulster Settlement”). They agreed to pay the sum of €1.4 million. In consideration, Ulster released and discharged the plaintiff and the executors from all claims (excluding an Order for costs in the Bank Proceedings) and consented to the dismissal of the bankruptcy proceedings against the plaintiff and the executors. The circumstances are dealt with in detail.
Payment of €9 million to NIB
34. On the 23rd June 2004 the plaintiff and the executors entered into a settlement agreement with NIB (the “NIB Settlement”). They agreed to pay the bank €9 million. In consideration, NIB released and discharged them from all claims (excluding an order for costs made in the Bank Proceedings); agreed to discontinue the NBFC Mortgage Proceedings, and to execute a formal release and discharge of the mortgage.
35. The plaintiff says that both these settlements related solely to such obligations as he and the executors might have had to the banks but not to the obligations of any other party, including Mr. Wymes. This too is considered later.
Application by Michael Wymes to cancel NBFC mortgage
36. A year and a half later, on 19th October 2005, Michael J. Wymes applied for the cancellation of the judgment mortgage previously registered by NBFC against his lands at Bective. In that application he referred to the €9 million paid by the Roches under their settlement in support of the application to cancel his judgment mortgage. The judgment mortgage was ultimately removed from the lands in 2006.
The claim for contribution and revisions of the sums claimed
37. The plaintiff only became aware of Michael Wymes’ NIB/NBFC application between Christmas, 2005 and New Year, 2006. On 1st February 2006, Mr. Roche’s solicitors, Arthur Cox, wrote to the defendant’s solicitors requesting payment of €2,669,478 as representing the rateable contribution due by the defendant to the plaintiff on foot of the two payments made to NIB and Ulster. That sum represented a total of €2,448,522 in respect of the two payments made to NIB and €220,956 in respect of Ulster. The defendant disputed that the amounts claimed were due. Proceedings followed.
38. Following the exchange of pleadings and discovery provided by the defendant the plaintiff recalculated his claim in relation to the NBFC judgment to €2,511,977.00; unless a payment stated to have been made by Richard Wood after these proceedings was instituted was proven to have been made. It is now accepted this payment was made. The plaintiff’s NBFC claim against the defendant is therefore reduced to €2,048,375.
39. Having reviewed discovery provided by the defendant, the plaintiff revised his contribution claim in relation to the Ulster judgment to €241,320 unless the defendant proved the payment of €589,841.84 which he made to Ulster in 2006. This payment was made. Therefore the claim against the defendant in respect of the Ulster judgment is €93,860.
The Crindle Settlement
40. It is necessary to now briefly mention one other matter. On 5th October 2005 the plaintiff, the executors, and Crindle Investments entered into a settlement with Crindle’s former solicitors in the sum of €2 million (inclusive of costs). This claim was brought for negligence in the context of the earlier Bula/Tara litigation. The circumstances are not material to these proceedings. The defendant contends that the plaintiff ought to give credit for the amount of the settlement that is referable to him.
41. It is necessary now to outline the legal framework of this case.
The law applicable
The right of contribution
42. The equitable right of contribution and the jurisdiction of the court sought to be exercised can be summarised as follows:-
“The surety’s right of contribution is based upon the equitable principle that a creditor should not be permitted to bring down the burden of the whole debt upon one surety only, and recognises that co-sureties have a common interest and a common burden. The right arises independently of contract from the essence of the relationship of co-surety itself and the concept that the burdens and the benefits of that position should be shared. Where a surety pays more than his rateable proportion of the debt, he is entitled to exercise this right against his co-surety because he has discharged their obligations to the creditor. It exists only where sureties guarantee the same debt.” (See Andrews and Millett, The Law of Guarantees, 4th edition, pp.432-433.
43. In Dering v. Earl of Winchelsea [1787] 1 Cox EQ. CAS 318 Eyre CB stated:
“In the particular case of sureties, it is admitted that one surety may compel another to contribute to the debt for which they are jointly bound. On what principle? Can it be because they are jointly bound? What if they are jointly and severally bound? What if severally bound by the same or different instruments? In every one of those cases sureties have a common interest and a common burden. They are bound as effectually quoad contribution, as if bound in one instrument, with this difference only, that the sums in each instrument ascertain the proportions, whereas if they were joined in the same engagement they must all contribute equally.”
44. In Gardiner v. Brooke [1897] 2 I.R. 6, O’Brien J. observed:
“The case of Dering v. Winchelsea clearly lays down that the right of a co-surety, who has paid more than his share, to contribution, rests on grounds of equity and is independent of contract, and could not therefore be affected by the lapse of time from the making of the contract. The right comes, in equity, originally and absolutely, by the payment and discharge of a common burthen, and has no existence inchoate or complete, until the payment is made (per O’Brien J. at p. 12).
45. In the same case, Johnson J. stated:
“… [the cases] … establish that, if one of several co-debtors is liable to pay, or pays more than his aliquot proportion of the accrued common debt, he is entitled to require and enforce contribution from his co-debtors; that this right springs either from the rule of equity involved in the obligation arising out of their becoming, and at the same time when they became, co-debtors, or from a contract between them at that time, implied by law from the universality of that rule; that by virtue of the original common obligation, any co-debtor may enforce this right against his co-debtors, when, and as soon as, he is damnified by being liable or compellable to pay, or paying the accrued debt or more than his aliquot proportion of the accrued debt which his co-debtors so undertook to share with him.”
46. In Stimpson v. Smyth [1999] 1 Ch. 340, Peter Gibson L.J. described the relevant principles as follows:
“Let me start by setting out certain uncontroversial principles applicable in this area of law.
1. Where more than one person guarantee to the creditor the payment of the same debt an equity arises such that if one of them pays more than his due proportion of the debt, he is entitled to a contribution from his co-guarantor or co-guarantors.
2. It is immaterial whether the co-guarantors are bound jointly or severally or jointly and severally by the same instrument or by separate instruments or the same sum or different sums or the same time or different times or whether the co-guarantor making payment knows of the existence of the other co-guarantor or co-guarantors, the right of contribution is not dependent upon agreement, express or implied.
3. Normally an action for contribution cannot be brought until payment has been made by a co-guarantor of more than his share of the common liability.
4. In particular circumstances an action for contribution will lie even before payment is made; thus, when judgment has been entered by a creditor against one guarantor, who has paid nothing in respect of the judgment, he can maintain an action in equity against his co-guarantor, and obtain an order requiring payment of the co-guarantors due share to the creditor (if a party to the action) or (if the creditor is not a party) an order that the co-guarantor indemnify the judgment debtor, on payment of his own share, against further liability: Wolmershausen v. Gullick [1893] 2 Ch. 514. These principles are all subject to any contractual terms which may limit or extend the entitlement of an interested person.”
47. Gardiner, Wolmerhausen and Stimpson all deal with the issue as to when the right to contribution arises. It is as soon as the surety has paid more than his rateable share of the common liability for the principal debt as between himself and his co-sureties. Then, and on foot of such payment, the surety is entitled to demand contribution from them in proportion to their respective liabilities. Thus, for the purposes of these proceedings, I am satisfied that time begins to run only at the time when the payment of more than the rateable share is made.
48. For clarity, one further fundamental point must be made. That is to say, the authorities make clear that the right of contribution can be asserted against the co-surety despite the fact that the creditor’s right of action against the surety has become time barred. This is made absolutely clear in the decisions of Wolmerhausen v. Gullick and Gardiner v. Brooke, both of which have been referred to earlier, and is also confirmed in the leading texts to which reference will be made later.
49. The surety is entitled to contribution in circumstances where his payment exceeds his rateable share even if it is less than the total limit of his liability (re. Snowdon [1881]). The essential requirement to give rise to a right to contribution is that the surety must pay the creditor a sum in excess of his rateable share. There may also be circumstances in which a surety is entitled to contribution where he pays an amount which is not in excess of the rateable share but payment is accepted by the creditor in full satisfaction of the liability guaranteed. In order to be entitled to a contribution, the surety must be under a legal obligation to pay the debt the subject-matter of the guarantee. Thus, a mere voluntary or ‘officious’ payment will not suffice to give rise to a cause of action.
50. The circumstances of legal compulsion surrounding the payments made by the plaintiff already demonstrate that no such question arises here. The payments were made under legal compulsion, and under the threat of the most serious legal sanctions were payments not made. It is entirely irrelevant whether at the time of the action for contribution, as between the creditor and the co-guarantor, a particular time had elapsed. What is material is the time of payment by the claimant or creditor surety. These payments were both made in 2004. No time issue arises therefore.
Application of the principles: identifying relevant evidence
51. It is now necessary to deal specifically with how the contribution in this case should be calculated and the factors which should be taken into account. The approach adopted in relation to the NIB debt applies equally, insofar as relevant, to the Ulster debt. Prima facie individual sureties like concurrent debtors are under an obligation to pay fully in the absence of an agreement between them. But this is displaced where the liability of one or more sureties is limited and the maximum sums concerned are different. In such a case liability should be apportioned proportionately to the respective maximum limits of the sureties (Ellesmere Brewery Company v. Cooper [1896] 1 Q.B. 75). This authority is highly relevant to the limitation of the defendant’s liability. He claims the extent of his indebtedness is not co-terminous with that of the plaintiff and is limited to a sum of €7.326 million.
52. The challenge which arises in this case is as to how these principles are to be applied in the light of sometimes internally conflicting and unsatisfactory evidence which does not easily lend itself to precise modes of calculation and estimation.
Evidence concerning the NIB settlement
53. The NIB settlement was executed by the parties on 23rd June, 2004. It referred to the guarantee entered into by all four guarantors on 25th April, 1978 in respect of liabilities of Bula Limited to NIB, and to the guarantee entered into by the same parties on 10th January, 1980, also in respect of certain liabilities of Bula Limited to NIB. It provided that references to “the 1982 judgment” were to the judgment of IR£3,912,335.12 with costs and interest granted by the High Court on 20th December, 1982, and affirmed by the Supreme Court on 1st November, 1983 in favour of NIB against Thomas J. Roche, Thomas C. Roche, Michael J. Wymes and Richard Wood. It provided that the payment of the sum of €9 million by Thomas J. Roche and the executors jointly, released Thomas J. Roche, the executors and the estate of Thomas C. Roche, from all or any actions or suits and costs (excluding an order for costs and other proceedings in the High Court, 1986 No. 6624 P, brought between Bula and the Other Parties and Crowley and Others), which NIB might have against Thomas Roche the executors or the estate of Thomas C. Roche.
54. Clause 3.3 provided:-
“The parties hereto hereby agree that this agreement relates solely to such obligations as Thomas J. Roche, the executors and the estate of Thomas C. Roche, deceased, or any of them, may have to NIB and not the obligations to NIB of any other party, whether jointly and severally liable for the same obligations or otherwise, in respect of which NIB expressly reserves its rights.” (emphasis added)
55. Thus, NIB then reserved such rights as it might have remaining against the defendant and also Richard Wood.
56. I am satisfied that rigorous negotiations led to this settlement. The payment was under legal compulsion. There is no sense in which it could be seen as officious or improvident. The plaintiff himself, Ms. Isabel Foley, solicitor of Arthur Cox and Company and by Mr, Ger Ryan of NIB all on this question.
57. The defendant disputed whether the NIB settlement had actually been entered into at all. This was not seriously in contention in the course of the hearing. None of the witnesses were cross-examined on this basis. A further (related) issue, much agitated (among many others) in correspondence was an idée fixe of Michael Wymes that there had been some other collateral or “side deal” made between the plaintiff and the estate of Thomas C. Roche on the one hand and NIB on the other. There was no such evidence.
What was owed and by whom?
58. It is now necessary to consider the claims, the extent of the respective debts, and the negotiations leading to the settlement in some greater detail. Mr. Ryan, then Head of Credit Restructuring of NIB had written to the plaintiff indicating that he remained jointly and severally liable for the judgment obtained against himself, his father, the defendant and Mr. Wood together with the costs and interest pursuant to the guarantees granted. He said that the sum, with interest, was then in excess of €11.9 million plus costs. He indicated that the issues raised in the defence to the NBFC proceedings had all been determined against the plaintiff that the stay on the proceedings had expired, and that arrangements should be made for immediate payment in default of which NIB would bring the proceedings to trial. Negotiations took place in the shadow of legal enforcement proceedings. The plaintiff’s other investments having been highly successful. He was a “mark”. Messrs A & L Goodbody, NIB solicitors, wrote to Arthur Cox, solicitors, furnishing a breakdown of the claims being made by their clients. That letter attached a table showing the sum stated to be due on foot of the judgment less credits from the guarantor’s account as being a total of IR£9,431,868.83 (€11,976,003) plus costs. The schedule claimed interest from the plaintiff and the estate of Thomas C. Roche at the higher commercial rates, a rate applied to the Roches and Mr Wood but not to Michael Wymes. Arthur Cox, solicitors, disputed these claims. In a letter of 27th February, 2004 they attached an amended schedule to reflect what it was contended represented the full value of NIB’s claim based on Courts Act interest. Specifically they disputed the claim for commercial rate interest. They said also that credit had not been given for payments totalling IR£378,348 in early 1984. They contended that the total sum which could conceivably be claimed by NIB according to the schedule which they attached to their letter was €9,368,488.98. This figure was based on Courts Act interest and included credit for the payment of IR£378,348 in early 1984. They offered €4.5 million.
59. This offer was rejected by A & L Goodbody in a letter of 5th May, 2004. There was an impasse. Ultimately, direct negotiations took place between the plaintiff and Mr. Ryan. Mr. Ryan was obdurate on his instructions that no figure less the €9 million would suffice. This figure appears to have been fixed by Mr. Ryan’s principals in Australia. How precisely it was arrived at is unclear. An agreement was reached that the plaintiff and the estate would pay that sum to release and discharge all liability pursuant to the NBFC guarantees, the judgment, the mortgage and the various proceedings. The Roches remained liable for the costs of the bank proceedings which the plaintiff and the estate of Mr. Roche senior were to pay up to March 1993.
60. But one remarkable aspect of the bank’s position and conduct was that the full extent of each and all of the guarantors’ indebtedness was never fully quantified or identified. This was particularly so of the defendant. One can only infer that the bank felt that Mr. Wymes was not a mark, or that his affairs were of such a complexity as to make it easier to pursue Mr. Roche, by then a prominent figure.
61. Having completed the drafting process, a meeting took place on 23rd June, 2004, at which a bank draft for €9 million was paid over. The plaintiff states he borrowed the €9 million from Bank of Ireland. It is not clear precisely how much was contributed by the estate, although Mr. Roche says that, as a result, the estate’s assets were ‘cleared out’ and that perhaps a sum of €2.6 million was expended from that source. Were this so, it is unclear why it was necessary for him to borrow the full €9 million. One possibility is that the balance was used to discharge substantial costs which were still outstanding. The defendant was not informed of the negotiations or the result until afterwards in July, 2004. The evidence from Mr. Roche and Ms. Foley was that this was because of the obdurate stance he had taken at the litigation.
Steps taken by the defendant
62. NIB had taken well-charging proceedings on foot of its judgment of 1982 seeking an order that its judgment order was well charged on the two folios owned by the defendant. This was in proceedings entitled the High Court 2004 No. 133 SP.
63. In the course of a replying affidavit sworn on 8th July and filed on 15th July, 2004 in those proceedings, Mr. Wymes averred that – as of the 17th April, 1980, Hill Samuel Bank (Ireland) had a first charge on the lands and premises comprised in the two folios and had a possession order in respect thereof since May 1985; that as of 2001 he had not been the legal and/or beneficial owner of and had no interest or possession in the lands comprised in Folio 10020F, consisting of other lands adjacent to Bective; that he ‘understood’ that as of the 8th October, 2001, the first chargeant had sold this property to Gerard Dillon, Mr. Dillon is Mr. Wymes son in law; that the sale was at open market value confirmed by an auctioneering firm and by solicitor and counsel; that the transfer to Gerard Dillon of his interest in Folio 10020F was already known to NBFC; it had been notified of this by the Land Registry on 11th February, 2003; that Folio 7302F comprised the farm of circa 200 acres including a house of substantial proportions and various outbuildings; that since 2001, the defendant’s son, Michael T. Wymes, a solicitor working in London had been the registered owner of the first charge entered on 17th April, 1980, of Folio 7302F having purchased that first charge, as well as acquiring that on Folio 10020F from Anglo Irish Bank successor entitled to Hill Samuel Bank (Ireland).
64. It is unnecessary for the purposes of these proceedings to consider these rather opaque averments, or to deal with the nature of the earlier transactions between the defendant, Hill Samuel Bank, and the defendant’s son and son-in-law. The latter two are now apparently unfortunately engaged in litigation with each other in relation to these transactions. I will therefore refrain from any further comment in these issues.
65. However at para. 70 the defendant deposed:-
“70 I am advised that at law the release of a joint and several promisee or debtor discharges the others and that any release to the Roches or one or other of them from the joint and several contractual obligation and judgment debt would result in discharge of the contractual liability and extinguishment, and no judgment debt remaining against the other co-debtors.”
66. The defendant referred to some collateral ‘arrangements’ which he strongly (but wrongly) suspected had been made. He appeared convinced some other deal was done at the time Roches withdrew as plaintiffs in the bank proceedings on the 8th April, 1997. The extent and depth of these ill-founded suspicions are indicative of Mr. Wymes’ state of mind, reflecting a near immovable belief that there had been some collateral deal done. He deposed:
“… (f) It was reported in the Sunday Business Post of 2nd December, 2001 that the late Tom Roche had ‘negotiated a way out of the guarantees years ago’.
(g) It was reported in the Irish Times of the 12th May, 2004, that the property of Thomas C. Roche at Chesterfield, Cross Avenue, Blackrock, Co, Dublin, had been sold for €45 million.”
67. This was substantially true. The defendant was disposed to rely on these reports as evidence regarding discharge of the debt.
68. These press reports were exhibited. This is followed by the following important averments:-
“72 Accordingly, I say and believe that the release of the Roches from the guarantee and judgment debt serves to discharge me from any obligation under the guarantee and judgment debt. …”
The defendant also swore:-
“ …
74 Contrary to the averment (at para. 5 of Mr. Ryan’s affidavit) ‘that the entire amount of the aforementioned judgment remains due and owing, I say that the claim herein is excessive. In particular it takes no account of the realisations of guarantor assets as security furnished on foot of the judgment. Certain of same are referred to at para. 33, 58 and 59 above and total approximately €10 million.
75. I further say that allowance is required to be made for any sums received and/realised by NBFC on foot of the first charge over the properties of the late T.C. Roche and of Thomas J. Roche at Blackrock, Co. Dublin. The said property of the former was part of the security that he referred to at para. 50 and which as aforesaid at para. 71 was on 12th May, 2004, reported in the Irish Times to have been sold for €45 million.” (emphasis added)
69. On foot of these averments the defendant sought discovery of all transactions between the Roches and NBFC.
70. The emphasised averment at para. 72 of the affidavit is of particular importance, in particular the contention that the release of the Roches from the guarantee and judgment debt served to discharge the defendant from any such obligation.
71. The later reference (at para. 74) to certain sums alleged to have been realised which should be discounted from the debt, related to payments stated to have been made following the Court order made on the 1st November, 1983.
72. The averments were made in the context of what were alleged to be defences to the NIB proceedings including:-
“(c) Discharge/release through release of Joint Debtors/discovery”.
73. This could only refer to the Roche payment.
The unavoidable conclusion is that then, in defending the NIB judgment mortgage proceedings in July, 2004, the defendant relied on some agreement or agreements between the Roches and NIB, albeit that at the date of the swearing of his affidavit on 8th July, 2004, he had not yet received a copy of the NIB settlement. He was told about it later that month by letter from Arthur Cox. In testimony, Mr. Ryan of NIB confirmed that “the Roche payment effectively closed out his (i.e. the defendant’s) liability under the judgment/judgment mortgage”.
74. He testified that a calculation of the defendant’s own liability would be based on the judgment of €3,912,335.12 plus six years interest at Courts Act rate. (This was the only interest chargeable against Mr. Wymes.) But this was now approximately €7.326 million, much less than the €9 million which NIB had received from the Roches. NIB’s legal advice too was that the defendant’s liability had been eliminated by the Roche payment.
75. On the 17th October, 2004, Messrs A & L Goodbody wrote a letter to Messrs Ryan Smith & Co., acting jointly for the defendant and Mr. Wood saying that, in the light of ‘developments’ the well-charging proceedings pending before the Master were to be withdrawn.
76. The ‘developments’ can only refer to the Roche payment of which Mr. Wymes by then well knew. But, in evidence before this Court, the defendant claimed that this letter came “straight out of the blue”. He said he was “mystified” by it and that the only thing he could attribute to it at that stage was the “good work” that he and his legal advisers had done in the replying affidavit. His attitude at this hearing to the €9 million payment was, frankly, evasive. He testified in this Court:-
“It is quite likely that there was certainly a possibility that the Roche payment had had some effect, because in the light of the developments as mentioned in this letter, I remember myself Mr. Ryan (his solicitor) on a number of occasions asked each other what developments are being referred to”.
77. When asked in direct examination whether he concluded that perhaps those ‘developments’ were the €9 million Roche settlement he responded:-
“Actually, I was a bit dim for a few weeks, I remember it did not actually hit me”.
78. He said he suspected that there had been a “secret side deal” done with the Roches. He claimed his averments in the affidavit were to be seen in the context of that suspicion rather than in the light of the discharge of the €9 million.
79. I regret I cannot accept the defendant’s interpretation of events on this issue or others. I find it simply disingenuous. I do not accept that the defendant was “mystified” in October, 2004. The only reasonable conclusion is that he was relying and was disposed to rely on some payment, or the actual payment of the €9 million. No other tenable explanation has been given to the Court.
80. In cross examination, the defendant was asked:-
“Q. You do accept, do you not, that on October 2004 when you received the letter from the bank that the payment of the money was what you understood had been the significant contributory factor towards this particular situation; isn’t that right?
A. I believe it could have been. I didn’t know. I wasn’t told.”
81. I regret I find this was evasive. I infer the defendant in evidence was seeking to avoid the consequences which might follow his obvious reliance on the Roche payment, which he clearly relied on to discharge the NIB mortgage. The defendant sought to explain the withdrawal of the NIB claim on the basis of a contention that the claim itself was statute barred. I consider such a proposition entirely unconvincing. It is improbable, to say the least. It was not established in evidence, that NIB withdrew the claim by reason simply of some averments contained in an affidavit that a debt was statute barred. The only reasonable inference is that what caused the proceedings to be withdrawn were the “developments” that is the payment of the €9 million. What was striking was the defendant’s willingness to seize and cling to any conclusion other than the obvious: he was content to rely on the payments when it suited (as will be seen); not content if it gave rise to potential liability. The truth is not to be thus compartmentalised.
Reliance on the €9 million payment by Michael Wymes
82. By contrast, the defendant made a statutory declaration to the Land Registry on 19th October, 2005, for the lifting of the NIB/NBFC well charging order. One item of relevance is to be found in the schedule. It was a reference to the Roche settlement. It was then specifically relied on by the defendant in order to demonstrate to the Land Registry that there were no further sums outstanding on the debt and that therefore the well charging order might be discharged. No reference was made to defences which might have been available relating to the NIB/NBFC debt under the Statute of Limitations. This is in stark contrast to a second statutory declaration relating to a charge held by Allgemeine Bank in relation to Folio 7302F Co. Meath, where the defendant specifically relied upon the twelve-year limitation period as a defence. This latter declaration was made on precisely the same day.
83. The only reasonable inference is that the defendant relied on the Roche payment as discharge of his NIB/NBFC liability. The second statutory declaration shows that any time issue was very much present to the mind of Mr. Wymes on the day. He made no such reliance then in regard to NIB.
84. The precise terms of this declaration are illuminating:-
“4 Pursuant to realisations under securities granted and procured for the benefit of NBFC by the judgment debtors in respect of the judgment, NBFC has, by its own account to Ryan Smith & Co. (solicitors for Richard Wood and myself) in a different context, received payments to a minimum total of £8,278,175.40 (€10,511,114) during the period 21st May, 1984 to 24th June, 2004, which were attributable to the judgment debt. These payment details are set out in a schedule attached to this form.
5 Accordingly, no sum remains due by me under the judgment, and the charge is paid.”
The words ‘by me’ are of significance.
85. The schedule attached to the form 71B makes explicit reference to what is described as a “Roche lodgement” in the sum of £7,088,076.00 on 24th June, 2004, that is the payment of €9 million by the Roches.
86. These averments, taken together, constitute an express reliance on the payment of €9 million in order to cancel the defendant’s liability. They are to be seen in the context of Mr. Ryan’s evidence that the defendant received clear and very substantial benefit or advantage as a result of the payment of the €9 million. The effect of the payment was to ‘extinguish’ the defendant’s liability, and was so treated or appropriated by NIB.
Credibility of the defendant
87. In passing, a further observation as to the defendant’s testimony is apposite; of more relevance later. During the case, Mr. Wymes furnished a document to the Court headed ‘Bective Closing’, a single sheet outlining deductions due from the sale price of €12,975,000. Large sums, approximating to €9 million, were due to Ulster Bank, Laurence Crowley and Tara Mines, leaving a ‘balance’ of €257,500. To an untutored eye, this might be seen, in isolation, as the total position. But he was cross-examined with reference to those combined debts he discharged:-
“Q. In those circumstances that combined sum, nearly €9 million can I ask you to confirm have you sought any contribution from Mr Wood in relation to that payment which you made?
A. I discussed it with Mr. Wood, My Lord, and he said he will honour his, as the honourable man that he is, when he is in a position to do so, if and when he is in a position to do so.
Q. In those circumstances do I understand the position he has agreed to pay you the sum of half the amount that is due.
A. If and when he is able to do so.
Q. That is effectively an entitlement of €4.5 million to be paid by him to you; is that correct?
A. I would think so based on the law of this case.
Q. In this situation you are accepting as you see it an entitlement to be paid €4.5 million by Mr. Wood?
A. Yes, I think so, yes.
(emphasis added)
88. After the defendant had concluded giving evidence, the defendant’s counsel (who was in no way responsible for the document Mr. Wymes himself prepared and submitted), quite properly clarified the position as to the extent of the joint and several liability of the defendant and Mr. Wood, and thus the defendant’s expectation for a contribution. Rather than the sum in question being €4.5 million, it transpired the expected contribution from Mr. Wood could be as much as €6 million. That is not a sum of money one would forget, or to be omitted. The document was misleading; the truth, but not the whole truth. The emphasised excerpt from the transcript is self-explanatory. Because Mr Wymes had discharged a joint and several debt, Mr. Woods was under a legal obligation to pay him, not only as a matter of honour but under the law of contribution (‘the law of this case’). For these reasons, I am unable to hold that Mr. Wymes is a reliable witness whose testimony can be taken at face value.
89. It is now necessary to deal again with the nature of the action in the context of the Civil Liability Act, 1961 and the applicability of time limitations.
The nature of the action
90. As a matter of law, I am satisfied that in an action for equitable contribution (not a form of action for damages encompassed by the Civil Liability Act 1961), the cause of action by one surety who has paid more than his due proportion of the debt against a co-surety for contribution, arises only when the surety making the claim has paid the debt (see Brady and Kerr (The Limitation of Actions) (2nd Ed.) p. 48 and see also Wolmerhausen v Gullick [1893] 2 Ch. 514; Gardiner v. Brooke [1897] 2 I.R. 6).
91. In Lightwood cited earlier, the following observations are made:-
“The right of contribution as between co-sureties or co-debtors, though not founded on contract, but on general principles of justice (Dering v Earl of Winchelsea … ) is analogous to the right of indemnity and is subject to similar rules. It can be asserted against the co-surety notwithstanding that the creditor’s right of action against him is barred. Wolmerhausen v Gullick …; and no action will lie at common law in favour of a surety against his co-surety, or in favour of one co-debtor against the rest, until he has paid more than his share of the debt “whenever” said Parke, B. in Davies v Humphreys … ‘it happens that one has paid more than his proportion of what the sureties can ever be called upon to pay, then and not till then, it is also clear that such part ought to be repaid by the others and the action will lie for it’. Consequently, until the surety has paid more than his share of the entire debt, there is no debt due to him from his co-surety upon which he can found the bankruptcy proceedings against the co-surety; ex parte Snowden …”
92. In Andrews and Millettt The Law of Guarantees (4th Ed.) 2005 para. 12-019, p. 140, the learned authors state:-
“The fact that the creditors claim against the surety has become time barred at the time the sureties claim for contribution is made, will not effect the contribution claim (para. 12-019 p. 450; Davies v Humphreys [1840] 6 N & W 153.”
93. Wolmerhausen and Gardiner, together with the other authorities referred to, clearly establish that the plaintiff’s cause of action for contribution from the defendant in this case, did not accrue until the plaintiff paid more than his rateable share to NIB. Thus, the plaintiff’s cause of action against the defendant in respect of the payment by him of what he claims is more than his rateable share (whether it be principal or interest) in respect of the judgment debt due to NIB/NBFC, did not accrue until 23rd June, 2004 at the earliest, when the sum of €9 million was paid to NIB. (Similar observations apply to the Ulster debt.) Even had the NIB/NBFC debt become statute barred at that time is immaterial.
Ratification
94. The defendant cannot either raise a technical objection that he was not informed or called upon to make a contribution in circumstances where (as has been found here) he has been satisfied to be a beneficiary of such payments thereafter. He has ‘ratified’ or acquiesced in the settlement. He freely accepted it. He has derived advantage from it. His testimony has been referred to. It is necessary only to refer back to the quotations from the defendant’s affidavit of 7th July, 2004, in response to the well-charging proceedings brought by NIB and the reliance placed by him on arrangements which he alleged to have been made between the Roches and NIB, even though at that stage he did not have precise details of the NIB settlement which were sent to him in July, 2004, after the NBFC proceedings were discontinued against the plaintiff and the estate. cf. Ramsey v. North Eastern Railway (1863) 14 C.B. (NS) 641; Tettenborn: Law of Restitution in England and Ireland, 3rd edition, Cavendish, 2002 p. 119; Goff and Jones: Law of Restitution, 6th edition, par. 36-004 and cases therein referred to.
95. A court must, in exercising its equitable jurisdiction, look to the effect of the Roche payment and the benefit which the defendants derived therefrom. By his own actions the defendant freely acquiesced in or ratified the payment. He cannot now disavow such ratification. This is not to allow estoppel give rise to a cause of action: it may permit the equitable right of contribution to be exercised. The defendant’s free ratification of the plaintiff’s payment to his benefit and advantage created a duty between the plaintiff and the defendant which does not permit him to repudiate or disavow that ratification for convenience. The defendant freely accepted the benefit. He incurred a duty and a liability just as a passenger who rides free on a bus.
96. In the course of written submissions extensive authorities have been identified in relation to the applicability of the Statute of Limitations to this claim. I have already indicated that I do not consider these are material in the light of the authorities already outlined. In the course of the hearing this Court has been referred to a substantial number of acknowledgments in relation to both the NBFC and Ulster debts. I do not consider it is necessary to refer to these in detail. In summary, I will hold that there have been acknowledgments by the defendant for the purposes of s. 56 of the Statute of Limitations. These would have the effect that the right of action to recover debt would be deemed to have accrued on and not before the date of such acknowledgment. These were made either to the person or to the agent of the person whose title was being acknowledged, that is to say, NIB itself or the receiver, Lawrence Crowley, who was their agent. Such acknowledgments are contained in affidavits and in defences. To take one example, in a reply to an amended defence of 4th June, 1997, in proceedings 1986 No. 6624 P between Bula Ltd. and Crowley & Ors. at para. 1, it was pleaded on behalf of the plaintiff that under the control of Michael Wymes and Richard Wood:
“The plaintiffs admit the particulars of the judgments appended to paragraph 2 of the defence of these defendants.”
There are many other acknowledgments unnecessary to set out in detail.
Section 35 of the Civil Liability Act 1961
97. A further issue raised is whether the defendant is entitled to avail of the provisions of s.35(1) of the Civil Liability Act 1961 which, it is suggested, might permit the liability of a creditor, in this case NIB, to be identified with the liability of the defendant and Mr. Wood, in the event of the Statute of Limitations successfully being raised. No such finding has been or could be made on the basis of this type of equitable claim. Therefore there can be no issue of contributory negligence.
98. Section 35 (1) is designed and framed to allow for certain provision, for the purpose of “determining contributory negligence . . .”. But one must first ask what is the essential nature of the claim here? Essentially, it is an equitable claim for contribution. It is not a claim relating to a “wrong” as defined in s. 2 of the Act, i.e. it is not in relation to a ‘tort, breach of contract or breach of trust’. It is not a common law claim at all. Provision as to the issue of restitution as to cognisable wrongs under the Civil Liability Act is dealt with in Chapter 4 of the Civil Liability Act, see s. 45 (1) and (2). But any such reference is entirely inappropriate in the present context of a claim for equitable contribution. The point is misconceived. The next issue is of greater relevance. It goes to the heart of the decision which must be made and the application of the principles of law to the case as a whole.
Does the settlement release the defendant in respect of the balance?
99. The defendant contends that the NIB settlement did not purport to constitute a satisfaction of the full amount allegedly due to NIB in respect of the alleged judgment debt and did not purport to amount to a release of the defendant in respect of the balance allegedly due. Thus, it is claimed that if a balance does remain due and owing to NIB (which is denied by the defendant), the plaintiff has not paid more than his rateable proportion of the alleged judgment debt and is therefore not entitled to a contribution.
100. But as found earlier the effect of the NIB payment was to bring a benefit to the defendant. The payment of the €9 million was appropriated, not only to the debt owed by the Roches, but also to any debt owed by the defendant, Michael Wymes. It extinguished his debt. To that extent, it is irrelevant as to how the payment was banked in respect of Bula Ltd. What is relevant is the effect of the payment.
101. However, there is a real lack of clarity in the evidence as to how a calculation of the liability of the respective guarantors on the NBFC judgment is to be made.
102. As pointed out by counsel for the defendant, a difficulty which the plaintiff faced was in establishing the aggregate amount of the indebtedness of the guarantors for the purpose of, in turn, demonstrating to the Court whether or not he had paid more than his fair share. The plaintiff gave in evidence that he paid €9 million to NBFC. Prior to a payment made in 2007, Mr. Richard Wood had previously, in the 1980s, made payments amounting to €3,849,336. Nonetheless, NBFC sought €4,429,405 from Mr. Wood by letter dated 24th November, 2005. The sum of all these figures is approximately €17 million. It emerged during this case and was confirmed in writing that in November 2007, Richard Wood paid €2,639,781 in final settlement to NIB. Thus, taking the total of €9 million, €3,849,336.00 and €2,639,781.00, the total which NIB appears to have received from the Roches and Richard Wood, was €14,489,117.00. In his evidence, the plaintiff testified that he believed that the total indebtedness prior to the Roche settlement was €10,854,407.48. But NIB/NBFC had demanded €11.9 million. Thus, on that calculation, even after the discharge of the €9 million, there remained only a further €1.8 million to be paid. These figures are not readily reconcilable.
103. Mr. Ryan testified the total debt was €11.7 million when the Roche payment was made. He then refined this to the effect that €11.7 million was a sum which had been sought by the plaintiff but a lesser sum was due from the defendant. He testified that Mr. Wood settled his liability which ultimately stood at €4.2 million to NIB, for €2.5 million in 2004 (in fact €2,639,781). Having testified that the total debt was €11.7 million, he then corrected himself and stated that as of 23rd June, 2004, the total outstanding was €11.9 million and that the earlier figure was mistaken. Thereafter, he testified that the sum of €11.9 million was due on 25th November, 2003, and that that sum was greater by 23rd June, 2004. However, that he was unable to state how much was owed by the defendant on either of those dates. The aggregate liability on the basis of those figures was €15.3 million in respect of the Roches and Mr. Wood, that is to say €3.8 million plus €2.5 million for Mr. Wood and €9 million from the plaintiff and Mr. Roche.
104. The bank did not calculate individual aggregate liability of the defendant. The plaintiff’s accountant, Mr. Carson, a partner in KPMG, testified that there was no number he could identify that could be said to be the sum owed by the four guarantors to NBFC as of the settlement in June of 2004, but that the plaintiff said there would be a debt over and above the money paid by him of €1,800,000 and that NIB had testified that such debt would be €2,900,000. Mr. Carson refined his evidence to say that the residual amount of the debt was a sum between zero and €2,900,000 but that it was impossible to say with any degree of precision what the actual figure was. As it transpired, this is immaterial.
The ‘same debt’
105. The defendant seeks to assert that in the absence of a calculation as to the aggregate indebtedness, the plaintiff has failed to establish he has paid more than his share of the common liability of the guarantors. But, as observed earlier, the starting point for the identification of any indebtedness with the defendant must be approached in a different way. It is to look to the common indebtedness of the guarantors, i.e. the ‘same debt’. (See first paragraph in the passage in Stimpson cited earlier.) In his evidence, Mr. Ryan indicated that although the well charging proceedings had commenced against Mr. Wymes in April, 2004, the legal advice which NIB received was that they were limited to a recovery of IR£3.9 million (€4.95 million) plus six years Courts Act interest against Mr. Wymes. The total accrued debt was €7,326,000 as properly accepted by the defendant in closing submissions. The reason for this difference was that, as Mr. Ryan indicated, the position of Mr. Wymes was different from that of the other three guarantors and that the interest accruing against him was courts rate only. This sum was the shared indebtedness of the guarantors, even if that of the Roches or Richard Wood was greater.
106. It has been contended on behalf of the defendant that one approach which should be taken in calculating whether or not there has been overpayment would be to first identify the amount of the debt for which the four guarantors have a common liability. Thus, if some guarantors are liable to courts act interest but other to higher contractual interest, the common liability can only be the debt plus courts act interest. This is a proposition which I am prepared to accept. It is in accordance with established authorities.
107. But the second step suggested is to identify the sums paid by each guarantor towards the discharge of the common liability. Third, identify any other payments made by the guarantors for the mutual benefit of all guarantors which are stated to be referable to, although not necessarily in discharge or reduction of that liability, but in respect of which they all have derived a benefit, that is, by enjoying a deferral of execution of judgment. (This ‘benefit’ test is interesting in the light of the defendant’s earlier evidence as quoted.) Fourth, gross up the payments at steps two and three by at least compound interest to reflect the time value of those payments. Fifth, ascertain whether the common liability has been fully discharged. Sixth, if the common liability has been discharged, the grossed up payments at steps two and three and divide by four to ascertain whether or not there has been an overpayment or underpayment by a particular guarantor. Seventh, if the common liability has not been discharged. Add up the grossed up payments at steps two and three and the outstanding balance of the common debt, then divide by four to ascertain whether or not there has been an overpayment or underpayment of a particular guarantor. But all of these steps are predicated on there being credible evidence as a basis for each stage.
108. In the Dering v. Earl of Winchelsea [1787] 2 Bos p. 270, the principle is to proceed upon the basis that co-sureties of the same debt are entitled to contribution from each other and that while prima facie co-sureties are equally burdened and therefore entitled to equal contributions, they may bind themselves as sureties for different amounts with a corresponding entitlement to proportionate contribution. The approach in Dering was summarised by Aldison B. in Pendlebury v. Walker [1841] 4 Y.C. Ex. 421 441:
“Where the same default of the principal renders all the co- sureties responsible, all are to contribute; and then the law super adds that which is not only the principle but the equitable mode of applying the principle, that they should all contribute equally if each is a surety to an equal amount, and if not equally, then proportionately to the amount for which each of the surety.”
109. Where equality is a relevant basis for contribution, the sum to be awarded is easy to assess but the calculation is predicated on total sum of the debt which has been discharged. But difficulties emerge if the assessment of contribution is to be proportionate rather than equal. This may give rise to two alternative modes of calculation, that is to say either the ‘maximum liability’ basis, or, alternatively, the ‘independent liability’ basis (see Commercial Union Assurance Company Ltd. v. Hayden [1977] Q.B. 804 and see generally Burrows The Law of Restitution, 2nd Edition, Butterworths 2002, pp. 291-293.
110. The swamp-like state of the evidence in the instant case does not allow of such neat solutions as found in the calculation of proportionate liability of insurers in marine contracts (and in the legal text books). This confusion in the evidence was no fault of the plaintiff or his legal advisors. As will be seen, these criticisms apply to the defence evidence also. Here the defendant’s legal advisors are in no way to blame. The difficulty there derives from the limited credibility of the defendant.
111. Instead, the approach which will be adopted in the application of the relevant legal principles takes as a starting point a total ‘common’ indebtedness of the defendant, that is to say the sum of €7.326 million which emerged, eventually, as the total which the defendant in any circumstance could have been required to pay. The division of that sum by four gives rise to a figure of €1.831 million. That figure will be used as a starting point in a process of a calculation to see whether there has been over or underpayment so as to give rise to a result which is to be fair, just and equitable. But this can only be done on the basis of credible evidence. The approach, therefore, is an application of the well-established principles in Dering, Pendlebury, Gardiner, Wolmerhausen and Stimpson.
Allowances or Credits?
112. It is now necessary to deal with the number of individual payments for which it was claimed credit should be given to the defendant.
113. The first was a payment made in 1984 by each of the four guarantors. Two issues arose here: first, how the money was allocated, second, who paid it.
Payment of IR£378,348 by each of the guarantors in total in 1984
114. Mr. David Carson, the plaintiff’s accountant, is a partner in Deloitte and Touche. He is a Fellow of the Institute of Chartered Accountants in Ireland, and a graduate in law. He carried out a detailed forensic examination of the documentation available with regard to this matter and other payments. I am satisfied he was a reliable witness as to fact. Having considered documentation in relation to these payments he concluded that the payments were in respect of the Bula Loan Account as distinct from any payments made in discharge of the guarantor’s liabilities under the judgment. This was not disputed.
115. The composition of the payments of £378,348 referred to was as follows:
Bula loan account £ £
R. Wood 205,174
Paid by guarantors in reduction of guarantee (115,028) (90,146)
M. Wymes 141,881
T.J. Roche 70,940
T.C. Roche Executors 70,941
373,908
Reconciling Amount (Transfer of sum
of £4,440 to the Bula loan account) 4,440
378,348
116. As can be seen, Mr. Carson’s calculation as to the payments of £378,348 include a reconciling amount of £4,440. But, as can be seen, the payments were made into the Bula loan account by the individuals referred to. These were not payments made under the guarantees. In an NIB statement of account for Bula Ltd dated 1st March, 1984; and correspondence dated the 30th January, 1984 from A & L Goodbody, Bula’s solicitors, it was said that:
“As regards to amount paid by the guarantors in January, 1984 our clients are holding these amounts in a suspense account. The amount of this suspense account will be taken into account and calculating of interest due to the principle with Bula loan account.”
This was never disputed by Bula or any of its directors.
117. A letter dated 10th January, 1985, from Bula to NIB and signed by the defendant, Michael Wymes contended:
“This account which according to the statement has a balance of £378,348 CR on 8th January, 1985 is not an account of Bula Ltd and accordingly and should not be reflected on the books of this company.”
He stated that NIB:
“…are not entitled to offset the balance on this account against amounts due by Bula Ltd. except in the context of enforcing the guarantees which have been provided to you by certain Directors and Shareholders of Bula Ltd.”
But in reply NIB wrote on 11th January, 1985:
“The payments which were received by certain of the judgment debtors in January and February, 1984, were credited to the account, the statement of which referred to in your letter. The balance of the account has been taken into account and calculating interest due on the loan of Bula Ltd and this was advised to your solicitors Gerard, Scallon and O’Brien by letter of 13th January, 1984 from A & L Goodbody.”
There has been no other evidence adduced which would supplant the evidence as to how these payments were treated by the bank. There was never any rejoinder to the brisk reposte from NIB on 11th January, 1985: it was paid to the Bula loan account and no other. It was not used to reduce the surety’s liabilities at all. History cannot be rewritten.
£36,735 of a payment by Richard Wood in 1985 attributable to Michael Wymes by reasons of the Orpheus Mining Ltd. payment?
118. On the instructions from the defendant, his forensic accountant, Mr. Hyland, who testified, attributed the benefit of 100% payments of £36,735 from Orpheus Mining Ltd. to the defendant. It was subsequently stated, however, that the apportionment of these payments should be 76/24 as between the defendant and Mr. Wood. But this apportionment was entirely based on what Mr. Wymes told Mr Hyland (and what he said to the court). The defendant was cross-examined on this and agreed he had made an error in asserting 100% ownership of Orpheus. Mr. Wymes accepted that he had no documentation whatsoever to support the assertion that any payment emanating from that company should be attributable to him personally. He did not seek any such documents for the purpose of this hearing. Mr. Wood did not testify. In a schedule to a letter from A & L Goodbody to the Secretary of Barryscourt Ltd., dated 26th November, 2005, credit for these payments was made to Mr. Wood and no other person. The payments were made on 8/01/05 (O’Riada) and 31/10/85 (Bula Orpheus). Barryscourt is Mr. Wood’s company.
119. The evidential deficits were the result of conscious choices by the defendant. No other explanation was tendered for the paucity of the evidence supporting this claim I an unable to reconcile the documentation and letter with the defendant’s testimony. In those circumstances I prefer the evidence of Mr. Carson who recorded his conclusions by reference to contemporaneous documentation. It is not established Mr. Wymes should be entitled allowance on the basis sought by him. He was not a sufficiently reliable witness to permit of such face value acceptance. While the money was paid in to the creditor’s account, there is insufficient evidence that any of the sum should be credited to the defendant. The absence of Mr. Wood as a witness, in the light of the letter of 26th November, is an important factor in weighing the evidence. So too are my previous findings on the defendant’s credibility.
Payment of £475,886 made during 1984 on foot of the judgment agreements.
120. Mr Carson meticulously analysed relevant documentation on this payment. The defendant claimed credit due to him and to Mr. Wood on a 60/40 basis for payments of £348,713 and also said that a separate credit for £107,142 should be afforded to Mr. Wood in respect of payments attributable to him in 1984 to postpone execution. It was agreed by Mr. Carson and Mr. Hyland that the total sum of payments made by Bula to NIB during the period from March 1984 onwards was, in fact £475,886. Mr. Carson concluded that none of the guarantors were entitled to credit in respect of them as their payments were in respect of interest due by Bula itself to NBFC/NIB and did not actually reduce the guarantor’s liability to the bank.
121. The defendant asserted that he was a source of at least some of the payments totalling £475,886 made by Bula. But again there was no record or witness to bear out this testimony. The defendant was unable to refer to any material which would indicate that he, as opposed to Mr. Wood (who was not called) was the source of any other payments made by Bula to NBFC during that period. I regret I cannot accept the defendant’s testimony at face value as reflecting the factual situation that is to say as indicating what actually occurred in 1983 to 1985 by itself without some corroboration, be it positive or negative. In any case, the payments were not made to reduce the surety’s indebtedness and are therefore not to be taken into account.
122. In a transcript of cross-examination of the defendant before the Master, conducted by counsel in the NBFC proceedings on 12th December, 1985 and on 18th December, 1985, the defendant made no claim to have been a source of payments on behalf of Bula to NBFC during the course of 1984. Significantly, though, he did refer to having advanced monies to Bula in 1977/1978 and 1979. This truncated portion of the transcript emanated from the defendant himself. Why in 1985 should he refer to earlier payments but not more recent in the context of that cross-examination?
123. Mr. Wymes was well advised by his counsel in these proceedings. His case was presented with skill and integrity. The deficiencies in the evidence lie at the door of the defendant. When the defendant was asked whether he had taken any steps to obtain supporting records as to these transactions. He said he had not. The absence of Mr. Wood has not been explained at all. His evidence could have eliminated uncertainty. A court cannot make a hypothesis about past events. Either they occurred or did not. He who asserts must prove. This onus lay on the defendant and no-one else.
124. The remit of Mr. Hyland was confined to the consideration of:-
(a) the witness statement of Mr. Thomas Roche,
(b) the witness statement of Michael Wymes
(c) the statement of claim and
(d) certain information or explanations given to him.
125. His brief from the defendant did not include a forensic examination of the documentation relating to the payment of sums paid to NIB on foot of the Bula account. It did not involve any substantive consideration of the documents provided in discovery, save a limited number of excerpts. Why his brief was so confined was unexplained. Thus, in the consideration of the effect of all this material, I prefer the evidence of Mr. Carson to Mr. Hyland. The former examined the material in its context. The latter did not. The court is not prepared to call on Mr. Wymes’ testimony at face value.
Limitation of the Mortgage £500,000, £600,000 or £750,000 plus interest.
126. It is now necessary to consider a further point raised by the defendant, whether the mortgage was limited to a certain sum variously claimed at £500,000, £600,000 or £750,000 plus interest. Mr. Ryan was cross-examined on behalf of the defendant on the basis that the limit of the mortgage was IR£750,000 plus interest. He was adamant in the light of the terms of the NBFC mortgage and the relevant correspondence that the limits referred to in the documentation were temporary only and, in any event, conditional on compliance or terms and conditions set out in the correspondence. Those limits effectively fell away as of September, 1984. On any consideration of the mortgage document itself the sum therein was not limited. If there were limitations, I consider that they were temporary and did fall into abeyance as of September, 1984. This was reflected in a letter from A & L Goodbody of 20th September, 1984, to the plaintiff and his late father. That letter was headed
“Northern Bank Finance Corporation Limited
Re: High Court Judgment for £3,912,335.12 confirmed by the Supreme Court on 1st November, 1983
Dear Sir,
As you are aware we are from Northern Bank Finance Corporation Ltd.
We are instructed by our clients that all agreements made to date for deferring execution of the above judgment have expired and accordingly we now apply to you for payment of the amount of same together with interest and costs. . .”
The claim was for the full amount of the debt, not any lesser sum.
127. As Mr. Ryan stated in evidence, the NBFC mortgage was not limited in any respect but was to secure all sums outstanding on foot of the judgments obtained by NBFC/NIB against the guarantors. While it was agreed in letters from A & L Goodbody to the Roches solicitors on 2nd March, 1984, and subsequent correspondence that the mortgage might be limited to £500,000, £600,000, and £750,000 plus interest on certain terms, these terms were expressly conditional on strict compliance with the terms and conditions set out in the letters which further expressly provided that the deferment granted by the letters would “in no way prejudice in position of the bank in any security or rights held by it” or constituted waiver of NBFC/NIB rights. I accept this evidence of Mr. Ryan on this issue that the amount which NBFC/NIB could claim under the NBFC mortgage was not limited and that the arrangements agreed during 1984 and referred to in that correspondence were temporary, which when the conditions provided for in the correspondence had not been complied with, lapsed, thereby allowing NBFC/NIB to enforce the mortgage for all sums due under the judgment.
128. When NBFC brought a claim against the guarantors, both the plaintiff and the defendant swore replying affidavits for the purpose of resisting the claim. In neither affidavit was the case made that the NBFC mortgage was limited in the manner now alleged. This point too is not borne out by evidence.
Consideration of the evidence
129. There are, too, a number of ironies which derive from the quality of evidence on both sides. The first derived from the very thoroughness of Mr. Carson’s forensic consideration of the discovered documents. I have not omitted from consideration the fact that the ‘credit’ sums referred to above did not come from Bula’s own resources. The company was insolvent. The Roches may well have contributed to the payment of some part of this first sum of IR£378,348 but the plaintiff does not claim the totality of that sum. The defence evidence as to the attribution of the Orpheus payment of IR£36,735 on a 76/24 basis, is fundamentally flawed and does not discharge the onus of proof. It is not in accord with documentary evidence. The claim for £348,713 of the total sum of £475,886 is to be seen in the light of acceptance that Mr. Wood paid the balance of £107,442. The 60/40 apportionment too is entirely uncorroborated. A court cannot act on unsubstantiated evidence where (as here) corroboration would be necessary to support the testimony of a witness whose credibility has been found wanting.
Richard Wood’s payments
130. While Richard Wood made contributions, these are to be ignored both here and in the case of the Ulster debt as they were in the calculation of the effective judgment sum due against the defendant, that is to say in the payments which had the effect of subsuming the defendant’s debt in the case of NIB or substantially reducing it in the case of Ulster.
131. The calculations made hereunder take into account that after 1984, the Roches made no payment on the NIB (or Ulster) debt until they ultimately made the two payments in 2004.
132. Separate from these were payments made by Richard Wood in the years 1984 to 1986 and subsequently in 1991 and 1993, but no account can be taken of these payments.
Conclusion on NIB claim
133.I must conclude the defendant’s liability for contribution is one quarter of €7.326 million. That is, €1,831,500. The plaintiff is entitled to contribution in that latter amount under this head of the claim.
The Ulster €1.4 million payment.
134. The plaintiff claims he is entitled to contribution from the defendant in respect of the payment of €1.4 million to Ulster Bank pursuant to that settlement on the 26th March, 2004. At the outset of the proceedings, it appeared that the plaintiff’s claim for contribution in respect of the settlement was €220,956.
135. On discovery it was ascertained the certain payments were credited to the guarantors which it was said ought not to have been credited as those payments were made in reduction of the liability of Bula to Ulster and were not under the guarantees. On that basis the payments ought not to have been credited to the guarantor’s account. Consequently the plaintiff’s claim against the defendant increased to €241,320.
136. In an amended defence filed on the 16th October, 2006 the defendant stated that he had “recently” paid to Ulster the sum of €589, 841.84 out of the proceeds of sale of “Bective House”. He was entitled to a credit in respect of that payment. The plaintiff did not have evidence of this at that time but Mr. Peter Hayes of Messrs. Whitney, Moore and Keller Solicitors acting for Ulster testified that the defendant had in fact made payment of the sum of €589,841.84 on the 1st August, 2006. Thus, the sum to be claimed against the defendant by way of contribution following the payment of the €1.4million under the settlement is now €93,860 or such sum as the court may find in accordance with equitable principles.
Evidence
137. The Ulster settlement was executed by the parties on the 26th March, 2004. The plaintiff himself, Mr. Carson, Ms. Isabel Foley of Arthur Cox and by Mr. Hayes of Whitney Moore testified on the issue.
138. Mr. Hayes testified that bankruptcy proceedings against the Roches, Mr. Wymes and Mr. Wood commenced in 1997. These were not advanced while the various issues in the bank proceedings were ongoing. Those issues were not resolved until determined by the Supreme Court, ultimately in May, 2003. Thereafter the bankruptcy proceedings were revived. As of October, 2003 the sum being claimed by Ulster against the guarantors on foot of the judgment debt was €1,989,841,85 together with further interest. This was evidenced in an affidavit of Dominic P. Williams sworn on behalf of Ulster on the 17th October, 2003. Mr. Hayes explained in evidence that the bankruptcy proceedings were adjourned from time to time but ultimately listed for 30th March, 2004.
139. In late 2003, negotiations between Mr. Hayes on behalf of Ulster, and Mr. James O’Dwyer and Ms. Foley of Arthur Cox on behalf of the plaintiff began. These too were described as being “tough”. Ultimately these resulted in agreement by the plaintiff and the estate to pay €1.4 million to settle their liabilities. Additionally, Ulster were insistent that the plaintiff and the estate pay costs were ordered by Barr J. in the bank proceedings up until 1993. Mr. Roche and the estate paid all of the plaintiff’s costs in the bank proceedings (including those incurred by the defendant and Mr. Wood) up until 1993, as well as the €1.4 million.
140. Ms. Foley prepared a draft of the settlement agreement. This was amended by Mr. Hayes. She explained that those bank costs (together with the costs which the plaintiff and the estate had to pay in respect of all the plaintiffs, including Mr. Wymes and Mr. Wood in the Tara proceedings up to October, 1994) came to approximately €3 million. The plaintiff borrowed the €1.4 million euro to fund the settlement from his wife. It is not impossible that monies from the Thomas J. Roche estate were also directed to the costs claim, although there is no evidence on this point. It is immaterial to the claim.
141. Following this payment Whitney Moore wrote to the defendant’s solicitors referring to the payment of €1.4 million and confirming that Ulster’s claim against the defendant and Mr. Wood would be reduced by that sum. As a consequence, Ulster were claiming the balance of €589,841.84 against Mr. Wymes and Mr. Wood in the bankruptcy proceedings. The payment of €589,841.84 by the defendant was made on the 1st August, 2006. It is clear from the covering letter from the defendant’s solicitor of 1st August, 2006, that the payment was not made on a “without prejudice basis”. In the course of his evidence the defendant sought to contend that the payment was made on foot of some form of “economic duress”. I reject this evidence which appears contrived as a misconceived effort to provide a line of defence. The payment was to discharge the judgment debt. The payment, together with the sums of €1.4 million was sufficient to discharge the liability of the guarantors under the Ulster judgment. Therefore there can be now no residual liability. The findings made as to time of accrual of the cause of action are applicable here also. They require no repetition.
Acknowledgment
138. Were it necessary to do so, I find that in the course of an affidavit sworn in well charging proceedings brought against him by Ulster on the 5th March, 1995, the defendant swore an affidavit on the 4th June, 1997.
139. It is impossible to avoid the conclusion that the defendant accepted and acknowledged that the Ulster judgment was entered against him on the 7th March, 1985. In the course of that affidavit he stated at para. 10:-
“ …
10. Thereafter judgment was entered against your deponent in order to enforce the said guarantee on the 7th March, 1985, as alleged in the affidavit of Donald Williams.” (sic)
The words speak for themselves. There is no dispute as to the judgment itself.
140. Were it necessary to do so I would hold that there were other acknowledgments by the defendant. These were contained in affidavit sworn by him on the 4th June, 1997, in response to the judgment proceedings brought against him by Ulster; a second affidavit sworn by him in those proceedings on the 7th April, 2005; a supplemental affidavit sworn by the defendant on the 29th March, 2004, bankruptcy proceedings brought against him by Ulster; and a letter written by Pearts (the defendant’s solicitors) to Whitney Moore and Keller dated 27th February, 1997. It is unnecessary to refer to each in detail.
141. Correspondence between Ryan Smith & Co. (the defendant’s solicitors) and Whitney Moore in July 2006 culminated in a letter from Ryan Smith & Co. to Whitney Moore on the 1st August, 2006 pursuant to which the payment was made. It was expressly not on a “without prejudice” basis.
142. I consider all of these are “acknowledgements” for the purpose of the statute together with the payment itself. Ulster’s claim was not statute barred having regard to the commencement of bankruptcy proceedings on 5th March, 1997.
143. The settlement as signed did not release the defendant. The Ulster settlement contained at clause 3.3 a term very similar to clause 3.3 of the NIB agreement. Under the relevant clause in the Ulster settlement the parties agreed that the settlement related only to obligations which the plaintiffs and the executors of the estate of his late father may have to Ulster and not to the obligations to Ulster of any other party. There Ulster was expressly reserving its rights. However, as a matter of fact, Ulster did appropriate the payment of €1.4m to the Roches and the estate to the Ulster judgment debt and actually gave credit to the defendant for that payment. The defendant received, ratified and freely accepted that benefit. This was clearly the effect of Mr. Hayes evidence and was demonstrated by the fact that the defendant obtained credit of the €1.4 million by the plaintiff and the estate on foot of the Ulster settlement.
144. By a letter dated the 29th March, 2004, Whitney Moore and Keller the solicitors for Ulster confirmed the payment of the €1.4 million and confirming that they would be pursuing the defendant purely for the balance of €589,841.84 in the bankruptcy proceedings.
145. The well charging proceedings against the defendant which had been adjourned generally with liberty to re-enter pending the determination of the bank proceedings were re-entered and proceeded with by Ulster. Ulster gave credit to the defendant for the €1.4 million received from the plaintiff and the estate of his late father in the context of those proceedings also. This was borne out in an affidavit sworn on behalf of Ulster by David Peacock on the 4th January, 2005. Mr. Peacock swore on behalf of Ulster that the sum of €589,841.84 remained due and owing by the defendant to the plaintiff on foot of the judgment debt less realised securities and what was described as “amount received from co-guarantors” on 26th March, 2004, namely the €1.4 million received from the plaintiff and the estate. Furthermore in the second affidavit sworn by the defendant in the bankruptcy proceedings on the 7th April, 2005, the defendant himself sought to rely for credit on the receipt of the €1.4 million paid to Ulster by the plaintiff and the estate. Ultimately the defendant did pay the sum of €589,841.84 to Ulster. The logic of this position is unavoidable: the defendant clearly obtained benefit and advantage of the payment of €1.4 million. But here the consequence is quite different.
146. Mr. Hayes said that the payment left nothing due by the guarantors on foot of the judgment. In Ulster’s books the latter payment resulted in the entire judgment debt being cancelled and extinguished in respect of all of the judgment debtors. All the judgment guarantors, including the plaintiff, the estate, the defendant and Mr. Wood had no further liability to Ulster on foot of the judgment debt. The debt must therefore be seen as €1,989,841, that is €1.4 million plus €589,841.
I turn to the claim for credit.
The payment by Orpheus Mining Limited of £64,152 in March 1986.
147. In March, 1986 it is recorded that a payment was made by Orpheus. But it was credited to the Bula loan account on the 23rd May, 1986. It was not a payment credited to the guarantors account. The findings on the Orpheus issue earlier as to credit and consequence do not require repetition. The same evidence as to apportionment of shares was tendered by the defendant. It is insufficient and flawed for the reasons as found earlier.
Credit due to the defendant and Mr. Wood on the 60/40 basis for payment of £253,408 in 1984 in consideration of UIB postponing the entry of judgment against the four guarantors.
148. This contention was again made on the basis of assertion without corroboration. Mr. Carson’s testimony was that this payment is question was made to Bula. It was in respect of payment of interest arising on the Bula loan account. His testimony was based on an examination of all the relevant contemporaneous documents, unlike Mr Hyland’s remit. I consider Mr. Carson a reliable witness on this issue. I do not think that any reliable evidence has been adduced other than to the fact that these were payments of interest arising on the Bula loan. I do not consider that the defendant’s evidence on this issue was satisfactory. There was no corroborative evidence to support Mr. Wymes’ precise contention that he was responsible, on a 60/40 basis, or at all, when payments of £253,408 were made during 1984. I consider the court can only adopt the same approach as earlier. I do not consider the defendant has discharged the onus of proof which devolves upon him on these claims.
Rockrohan
149. A further issue to be considered briefly is whether Ulster should have applied the proceeds of sale of certain CRH shares held by Rockrohan, a company controlled by Mr. Wood, towards the alleged Bula debt until May 2003. It is suggested that if this had been done earlier, the amount standing to the credit of the Bula account as of May 2003 would have been in excess of the amount allegedly due to Ulster. It is claimed that this should have been taken into account by the plaintiff and the estate in reaching the Ulster settlement.
150. I am unable to conclude that this claim for allowance is at all relevant to the debt in suit. It is quite different. The manner in which Ulster treated certain other monies paid by Mr. Wood’s company is irrelevant to this plaintiff’s contribution claim or the defendant’s case. No relevant legal authority has been cited such as would afford the defendant a defence or set off to the contribution claim brought herein. It is an unattractive claim seeking credit for the defendant, on this occasion for Mr. Wood’s company’s payment. It again raises the question as to why Mr. Wood did not testify.
151. Furthermore, I find the same claim was made in the course of the bankruptcy proceedings and in defence of the well charging proceedings brought against the defendant by Ulster. Ulster defended its position in those proceedings as set out in an affidavit sworn on its behalf by Peter Hayes in the bankruptcy proceedings on the 19th March, 2004, and in correspondence.
152. The consequence of the payment is clear. The defendant did, ultimately, pay the sum of €589,841.84. He thereby gave up any grounds for defence which he might have had at that point or which he might have raised. The payment was free acceptance and ratification. It is not open to the defendant to seek to re-litigate or further re-litigate issues in the defence of the contribution claim made against him by the plaintiff. To do so would be an abuse of the process of the court (see judgment of Murphy J. in Bula Ltd. (in Receivership) and Others v Lawrence Crowley and Others (2005) IEHC 212, Unreported, High Court, (Murphy J.) 10th June, 2005.) where proceedings brought by the defendant inter alia against Ulster and NIB/NBFC were dismissed as being an abuse of process and certain other orders were made against the defendant.
Credit for payment to Ulster against sums claimed in respect of NIB settlement
153. The defendant claims that the payment to Ulster in the sum of €589,841.84 out of the sale of “Bective House” in discharge of the balance due in respect of the Ulster judgment affords an entitlement to have that sum credited against all amounts being claimed by the plaintiff by way of a contribution and/or indemnity (including the NIB settlement).
154. The issue was not advanced on behalf of the defendant during the course of the hearing. It was not raised in the course of the defendant’s outline legal submissions. But against it is evidence of the defendant’s ‘catch all’ approach. The guarantee given by the guarantors to NBFC and Ulster were different instruments to different creditors. The NBFC (now NIB) and Ulster were different entities. Each obtained entirely separate judgments against the guarantors under different guarantees for different debts. Whilst any guarantor who has paid more than his rateable share in respect of the sum due on foot of the guarantee (or any judgment on foot of it) it entitled to seek contribution from his co-guarantors under that guarantee, that entitlement does not arise in respect of entirely different instruments of guarantee or judgments obtained on foot of them in favour of a different creditor. No legal basis has been established for the contention that the defendant is entitled to have this sum attributed in discharge of the “general debt” due on foot of both judgments.
Settlement of the Crindle damages claim
155. A final issue for determination is whether the defendant is entitled to credit from the plaintiff and the executors in respect of monies received by them on foot of a settlement in proceedings brought against a number of parties including a firm of solicitors.
156. The solicitors in question were sued by the plaintiff, his late father and Crindle Investments along with Bula Holdings and Bula Limited on 21st February, 1997 seeking (inter alia) damages for negligence breach of duty and breach of contract. The firm had acted for all of the plaintiffs in the Tara proceedings. As a result it was contended that the plaintiff, Mr. Roche Senior and Crindle suffered losses. Amongst the losses alleged were the costs awarded against the Roches in the Tara proceedings and the bank proceedings. An order for costs was made against the Roches in those proceedings up to the date of their withdrawal of those proceedings in October 1994. A further order for costs was made against the Roches in the bank proceedings up to the 1st March, 1993. The plaintiff discharged those costs which came to approximately €3 million. Evidence to this effect was given by Ms. Foley.
157. These costs, including the costs of the plaintiffs in the Tara and bank proceedings included the costs of the defendant and Mr. Wood. In addition to the loss arising from the payment of these costs, the plaintiff, also alleged further losses including loss of an opportunity to settle the Tara and the Bank proceedings as well as losses arising from having to make the payments under the NIB settlement and the Ulster settlement. The proceedings were ultimately settled on the 5th October, 2005, with a payment by the solicitors without admission of liability in the sum of €2 million inclusive of costs, a sum significantly less than the full estimate of the claim
158. As was open to the plaintiffs to bring the proceedings, it might have been open to the defendant to do likewise if he felt that he had a cause of action against the solicitors. He did not do so.
159. I am unaware as to any principle which might require the plaintiff in these proceedings to give credit to the defendant for any part of the settlement monies received on foot of the settlement with the solicitors. The evidence disclosed clearly that the amount received under the settlement was less than the amount paid out by the plaintiff and the estate in respect of the costs of the bank proceedings and the Tara proceedings. What was received under the settlement with the solicitors was considerably less, even than the monies paid out in respect of the cost of the Tara proceedings and the bank proceedings, including those costs for which the defendant was responsible and for which the defendant therefore received substantial benefit.
160. I am unable to find that there is a basis for any credit to the defendant on this footing. No counterclaim was brought by the defendant on this issue.
Calculation
161. The total Ulster debt was €1.989,841.84. One quarter of this sum is €495,460. But here the defendant has therefore made an overpayment and is entitled to allowance therefor. That overpayment is €589,841 less €495,480, a difference of €124,381.
Total claims NIB and Ulster
162. The sum identified for contribution is:
NIB: €1,831,500
Less: Ulster (credit) (set off): €124,381
Total: €1,707,119
There will be judgment for €1,707,119. I will hear counsel in the form of the order.
Ulster Bank Commercial Services Ltd v. Trade Credit Brokers Ltd. & Ors
[2003] IEHC 42 (4 July 2003)
There are two interlinked motions before the Court;
1. By notice dated the 14th May, 2002 the second named defendant (NCM) seeks orders pursuant to O. 19, r. 28 of the Rules of the Superior Courts, 1986 or pursuant to the inherent jurisdiction of the Court dismissing (a) the plaintiff s claim against NCM and (b) the first named defendant’s claim for contribution and indemnity against NCM on the grounds that both claims disclose no reasonable cause of action against NCM and are bound to fail.
In the alternative NCM seeks an order directing the trial of certain issues of law as issues preliminary to the trial of the substantive proceedings herein.
2. By notice dated the 26th day of February, 2003 the plaintiff seeks an order pursuant to O. 28 r. 1 of the Rules of the Superior Courts, 1986 giving the plaintiff liberty to amend its pleadings so as to include a claim against NCM for monies or damages allegedly due and owing to the plaintiff by NCM on foot either of an agreement entered into between NCM and the third defendant (Nakosta) as the
-2-
authorised agent of the plaintiff or alternatively on foot of a constructive trust in favour and for the benefit of the plaintiff.
FACTS
By an agreement in writing dated the 29th day of February, 1996, the plaintiff entered into a factoring agreement with Nakosta whereby the latter agreed to sell and the plaintiff agreed to purchase certain debts (called “receivables”) on particular terms and subject to particular conditions including a condition which required Nakosta to take out a credit insurance policy which would enable Nakosta to recover 85% of any loss which it might sustain arising out of the insolvency of any of the debtors who were the subject of the factoring agreement. It provided further that such insurance policy was to be “endorsed to” the plaintiff.
Pursuant to its obligations under the factoring agreement Nakosta entered into a contract of insurance (No. IST/832901) whereby NCM agreed to provide Nakosta with insurance cover in the terms of its “Commercial Risks Policy” for the period from the 1st March, 1996 to the 28th February, 1997. The first defendant (TCB) was the insurance broker appointed by Nakosta to procure the insurance policy on its behalf.
The following terms of the policy are relevant and have been relied upon by NCM in support of its contentions:
1. Article 4.E which provided that “[W]e have shall have no liability where you sustain a loss but have not complied with the terms and conditions of the credit limit or where you have not established a credit limit before the insolvency occurs.”
2. Article 5.A which provided that “[Y]ou must declare to us the value of all goods delivered or services invoiced under the contracts to which the policy
-3-
applies using the form we will provide. Where appropriate a nil declaration must be submitted. Declarations must be returned to us by the time we specify.”
3. Article 10 which provided that “[Y]ou cannot assign or transfer this policy or any of its benefits without our prior written consent. You may however require claims payments to be made to a named loss payee, using the form we will provide, your obligations under the policy remaining unaffected.”
4. Article 13 which provided that “[P]ayments of all premiums in full at the time we require, and the due performance and observance of every stipulation or the proposal, shall be conditions precedent to any liability on our part. In the event of any breach of any condition precedent we also have the right to retain any premium paid and to give written notice terminating the policy.”
5. Article 18 which provided that “[A]ny misrepresentation, whether fraudulent or otherwise or fraudulent conduct on your part (or on the part of any other person who has a legal or beneficial interest in the policy or its proceeds (in relation to this policy including the proposal) to any claim under it or to any contract to which the policy applies, will render the policy void but we may retain any premium paid and you will be liable to refund to us any payment we may have made under the policy.”
6. Article 21 which provided that “[T]his policy shall be governed by and construed in accordance with English law and be subject to the jurisdiction of the English courts.”
It is agreed and acknowledged by all of the parties to these proceedings that the relationship between NCM and Nakosta is and remains for the purposes of these proceedings regulated by English law and that the transactions between them
-4-
will, pursuant to the terms of the policy be governed by the principles and tenets of English Law.
On the 16th of April 1996 the plaintiff was appointed by Nakosta as a “loss payee” under the policy of insurance This authorised and requested NCM to pay any moneys which were payable to Nakosta under the policy to the plaintiff. The nomination of the plaintiff as a loss payee was effected by means of Nakosta completing and executing a form entitled “Nomination of Loss Company Payee” which provided inter alia that Nakosta authorised and requested NCM to pay to the plaintiff “the whole of the moneys payable to us under any capital or relevant Section of the above Numbered Policy”
At Note l the nomination provided that
“these instructions….
(a) do not constitute an assignment, nor are they intended to confer on the payee any of the benefits of an assignee. ”
The plaintiff’s substantive claim in these proceedings arises out of moneys allegedly owed to Nakosta by three trade debtors whom Nakosta did not pursue and will not pursue for those debts because Nakosta and the three debtors concerned have all become part of a large company group ( LSPC) which has taken a policy decision that intra-group debts will not be pursued and have apparently been written off.
The plaintiff, which has made the payments to Nakosta pursuant to the terms of the factoring agreement seeks to recover damages from TCB for loss and damage allegedly sustained by the plaintiff arising out of alleged misrepresentation, negligence, breach of duty and breach of contract on the part of TCB its servants and agents in and about the procurement and management by TCB of appropriate credit insurance for the plaintiff.
-5-
agents, in and about the procurement and management by TCB of appropriate credit insurance for the plaintiff.
Alternatively the plaintiff seeks to recover the said monies from NCM by way of damages for loss and damage sustained by the plaintiff arising out of negligence, breach of duty and breach of contract on the part of NCM.
The substantive proceedings were commenced by way of plenary summons on the 6th March, 1998 and a statement of claim was delivered on the 22nd May, 1998.
TCB delivered a defence on 15th June, 1998 and NCM delivered its Defence on the 10th June, 1999 whereupon a reply was delivered on behalf of the plaintiff on the 20th September, 1999 and a notice of trial was issued and served on the 19th
February, 2002.
NCM seeks orders dismissing the proceedings brought against it by both the plaintiff and by TCB on the grounds that neither disclose any reasonable cause of action against NCM and that both are bound to fail.
The plaintiff seeks to amend its proceedings so as to widen the extent of its claim against NCM which resists the application to amend, claiming, inter alia, that, even if amended in the manner sought, the plaintiff’s proceedings will still disclose no reasonable cause of action and will be bound to fail (together with the consequential claim for indemnity and contribution by TCB).
The inherent jurisdiction of this Court to strike out or dismiss proceedings which disclose no reasonable cause of action and are bound to fail is well established and has been repeatedly recognised – see Barry v. Buckley [1981] I.R. 306 and Sun Fat Chan v. Osseous Limited [1992] I.R. 425.
In the latter case McCarthy J. was careful to explain at 428 that:
-6-
“By way of qualification of the jurisdiction to dismiss an action at the statement of claim stage, I incline to the view that if the statement of claim admits of an amendment which might, so to speak, save it and the action founded on it, then the action should not be dismissed.”
Although in the instant case the pleadings have been closed I am satisfied that I should deal with NCM’s motions to dismiss on the basis of the new amended claim now sought to be advanced by the plaintiff – that is to say on the assumption that the plaintiff will be successful in its application to amend.
In dealing with this application I am conscious (and have repeatedly been reminded by counsel for all parties) of the well established principles which apply to applications of this kind.
In dealing with this application it is not the function of this Court to determine whether or not the plaintiff will be successful in sustaining its claim. Before granting the relief sought this Court must be entirely satisfied on undisputed facts that if the proceedings are allowed to proceed to a conclusion it will be impossible for the plaintiff to succeed and inevitable that its claim will fail.
Dealing with applications of this kind Hardiman J. in Supermacs Ireland Limited v. Katesan (Naas) Limited [2000] 4 I.R. 273 adopted with approval the following test identified by Murphy J. in Lac Minerals v. Chevron Mineral Corporation of lreland [1995] 1 I.L.R.M. 161:
“The judge acceding to an application to dismiss must be confident that no matter what may arise on discovery or at the trial of the action the course of the action will be resolved in a manner fatal to the plaintiff s contention.”
-7-
The burden of proving that the claim advanced by the plaintiff in these proceedings must inevitably fail is extremely onerous and must be discharged on facts which are undisputed. In this case the burden rests squarely upon NCM in respect of the claims against it by both the plaintiff and TCB.
The plaintiff’s (amended) claim against NCM.
The claim made initially by the plaintiff against NCM was confined to allegations of negligence and breach of contract.
It was pleaded that NCM owed a duty of care to the plaintiff and was in breach of that duty and in breach of contract in:
(a) unlawfully purporting to repudiate an insurance policy in which the plaintiff claimed to have a material interest,
(b) failing to make payments to the plaintiff on foot of the policy,
(c) failing to advise the plaintiff as to the manner in which the policy was being implemented between NCM and Nakosta and failing to advise the plaintiff of the acquisition of Nakosta by LSPC,
(d) failing to advise the plaintiff as to the ongoing financial standing of Nakosta and the alleged breaches by Nakosta of the terms of the policy.
The plaintiff’s claim, as amended, is widened to contend that Nakosta either (a) entered into the contract of insurance as trustee for and for the benefit of the plaintiff or alternatively (b) became a trustee to hold the benefits and rights due on foot of the policy for the benefit of the plaintiff.
Furthermore the plaintiff’s amended claim contends that Nakosta entered into the contract of insurance with NCM on behalf of the plaintiff as the duly authorised agent of the plaintiff who was and is and remains entitled to all of the benefits of the policy.
-8-
The defence advanced by NCM to the plaintiff’s (amended) claim.
It is acknowledged by all of the parties to these proceedings that the principles of English law apply to the relationship between Nakosta and NCM on foot of the contract of insurance and to any of the benefits which flow from that contract.
NCM, having adduced evidence on the part of a member of the English Bar, contends that when the plaintiff’s claim is considered in the light of applicable principles of English law (and indeed applicable principles of the law of this jurisdiction) then the plaintiff’s claim, on its own undisputed facts, must fail and should accordingly be dismissed. It relies upon four separate grounds that is to say:
1. It claims that the plaintiff has no title to sue NCM because, as a nominated “loss payee” it enjoys no privity of contract with NCM and therefore does not enjoy the right to enforce any contractual right on foot of the contract of insurance.
2. It claims that the plaintiff has no title to sue because on the undisputed facts adduced in evidence no principle of English law (or principle of the law within this jurisdiction) could countenance the existence of a trust (either of a constructive nature or otherwise) of the kind contended for by the plaintiff or of any agency between Nakosta and the plaintiff which could conceivably give rise to a contractual relationship between the plaintiff and NCM.
3. It claims that the plaintiff has no title to sue NCM because the law of England (and indeed of this jurisdiction) recognises no duty of care of the kind which, on the undisputed facts adduced in evidence, is contended for on behalf of the plaintiff.
-9-
4. It claims that notwithstanding 1, 2 and 3 above the plaintiff could not have acquired rights greater than those vested in Nakosta itself and, since Nakosta was in breach of several provisions of the contract of insurance including provisions which were deemed to be conditions precedent to any liability on the part of NCM to make payments on foot of the policy Nakosta had forfeited all rights to recover any sums due on foot of the contract which was lawfully terminated by NCM on the 14th February, 1997.
Grounds No. 1 and 2 above can conveniently be taken together.
Grounds 1 and 2
Evidence of English Law has been adduced on behalf of NCM by John Russell Esq. Barrister at Law who is a member of the Bar of England and Wales.
Mr. Russell cited the following passage from the judgment of Donaldson J. in The “The Angel Bell ” [1979] 2 Lloyd’s Rep. 491 (at p. 497):
“…a loss payable clause gives no rights to the loss payee unless it also constitutes or evidences an assignment of the assured’s rights under the policy or evidences the fact that the designated person is an original assured. But it may not be without its value, for it authorises and requires underwriters to pay losses to the loss payee on behalf of the assured and, in the circumstances of a transaction such as this, this authority is probably irrevocable….”
Noting the refusal of NCM to allow for an assignment of the assured’s right under the policy he went on to refer to further recognition of the principle that a loss payee does not in general have a cause of action against an insurer by the House of Lords in Ackman Scher v the Policy Holders Protection Board [1994] 1 Lloyd’s Rep. 121 at p. 132.
-10-
He concluded by stating:
“My opinion is that the English courts would hold that the contractual claim fails on this ground”.
The plaintiff acknowledges that, prima facie, it is not a party to the contract between Nakosta and NCM but it claims that it enjoys and can enforce contractual rights against NCM either (a) as the undisclosed principal on whose behalf Nakosta, acting as its agent, entered into the contract with NCM or, (b) on foot of a constructive trust created by Nakosta for the benefit of the plaintiff.
(a) Agency
The Plaintiff seeks leave to amend its pleadings to include a claim that it is to be inferred from the documents which evidenced the contract between
Nakosta and NCM and from the undisputed facts which gave rise to the contract that Nakosta entered into the contract of insurance as the “duly authorised” agent of the plaintiff. It is claimed that the effect of that agency was the creation of a contract of insurance between the plaintiff and NCM.
NCM claims that this claim, on its own undisputed facts must, when considered in the light of applicable principles of English law, fail and that accordingly the amendment should not be permitted.
The effect of the plaintiffs contention as to agency would be to make the Plaintiff liable on foot of the terms of the policy for the payment of premia and for the due performance and observance of the conditions of the policy without any notice to NCM. Similarly it would confer upon the plaintiff the right to any benefits payable on foot of the policy notwithstanding the plaintiff’s status as a “nominated loss payee” pursuant to the terms of the policy.
-11-
Of greater importance however is the fact that the contract of insurance between Nakosta and NCM expressly provided that the nomination of a “loss payee” under the terms of the policy did not constitute an assignment of the policy and did not confer upon the “loss payee” any of the benefits of an assignee.
Furthermore the nomination of the plaintiff as a “loss payee” under the policy was effected by way of a written document which expressly provided that:
“These instructions … do not constitute an assignment nor are they intended to confer on the payee any of the benefits of an assignee.”
No evidence has been adduced or will be adduced on behalf of the plaintiff of any transaction or communication between the plaintiff and Nakosta or between the plaintiff and NCM or between Nakosta and NCM which would in any way advance the plaintiff’s contention that an agency was created between the plaintiff and Nakosta of the kind contended for which would be enforced by the application of any principles or tenets of English law.
In the circumstances I am satisfied that on the undisputed facts of this case the plaintiff’s claim that Nakosta entered into a contractual relationship with NCM as the agent of the plaintiff is a claim which is unstateable and is bound to fail. In the circumstances the application to amend the proceedings to provide for a claim of agency is declined.
(b) Trust
The plaintiff seeks leave to amend its pleadings to include a claim that Nakosta entered into the contract of insurance with NCM “…as trustee for the benefit and/or on behalf of the plaintiff, or constituted itself, at the time of entering the said policy or subsequently, or was in the circumstances constituted, trustee to hold all
-12-
benefits and rights under the said policy for the benefit and/or on behalf of the plaintiff.”
The statement of claim was delivered on the 22nd May, 1998 and the application for leave to amend in this manner is grounded upon the affidavit of Robert Browne sworn on the 26th February, 2003.
The entire of the evidence adduced in support of the application to amend is confined to the following averment:
“The plaintiff sought appropriate English advice in order properly to respond to NCM’s strike out motion and was advised by English Counsel that there exist circumstances where a nominated loss payee may sue on foot of the policy, namely where the principal assured has constituted himself trustee of the rights of suit under the policy or alternatively where he entered into the policy both on his own behalf and that of the loss payee ….
The plaintiff believes that one or other of those circumstances applies to it …”
The application to amend on these grounds therefore is rooted in an averment by the solicitor on behalf of the plaintiff indicating that he has been advised by English Counsel of the existence of “circumstances” where “the principle assured has constituted himself trustee of the rights of suit under the policy” and that these “circumstances” can give rise to an apparent right on the part of a nominated loss payee to sue “on foot of the policy.”
No “circumstances ” has been described or outlined either in evidence or argument which would assist this Court in identifying the nature of the trust which is contended for. No authority of any kind within any jurisdiction has been cited in support of the contention.
-13-
It is acknowledged by all the parties to these proceedings that the “principal assured” on foot of the contract of insurance is Nakosta. It is further acknowledged that Nakosta did not at any time execute any document or make any representation which would have had the effect of expressly constituting Nakosta as trustee of the rights of suit under the contract of insurance in favour of any other party.
The plaintiff appears to argue that any benefits due on foot of the contract of insurance have become the subject of a trust in favour of the plaintiff and that the “principal assured” (Nakosta) holds the trust property (the benefits) as trustee for the benefit of the plaintiff.
Since it is acknowledged by the parties that there is in existence no express trust of the kind just outlined it follows that the plaintiff is advancing a claim for the existence of a constructive trust in those terms.
The undisputed facts adduced in evidence disclose that Nakosta entered into a contract of insurance with NCM which expressly provided that:
“You cannot assign or transfer this policy or any of its benefits without our prior written consent. You may however require claims payments to be made to a named loss payee, using the form you will provide, your obligations under the policy remaining unaffected.” (See art.10 of the contract of insurance).
The form which was executed in compliance with the above provided, inter alia, that:
“These instructions … do not constitute an assignment, nor are they intended to confer on the payee any of the benefits of an assignee.”
It is has not been indicated either by way of evidence or in argument how, in such circumstances the “principal assured” (Nakosta) has, or could have;
-14-
“… constituted (itself) … trustee of the rights of suit under the policy …”
No decision of the courts of England or Wales (or elsewhere) was cited in support of the plaintiff s contention. Mr. Murray, counsel for NCM referred me to the case of McManus v. Cable Management (Ireland) Limited, a decision of the High Court within this jurisdiction (Unreported, High Court, Morris J., 8th July, 1994) where an analogous contention was rejected by Morris J. without hesitation and the action dismissed on the basis that on the admitted facts of that case the claim advanced could not succeed.
The absence of precedent or other form of legal authority is not of course a bar to the plaintiff’s contention. However no evidence or argument has been advanced on behalf of the plaintiff which would support the existence of a constructive trust or of a right vested in the plaintiff (such as a right of subrogation) which would enable the plaintiff to enforce any of the terms of the contract of insurance on its own behalf or otherwise or to seek any redress whatsoever on foot of a contract of insurance to which it was not a party.
It is true that a constructive trust can attach to property which is held by a person who occupies a fiduciary position towards some other person and the trust can come into existence by virtue of the fiduciary nature of the relationship between the parties.
However in this case Nakosta does not hold any property which is relevant to these proceedings other than disputed rights or benefits on foot of a contract of insurance. What the plaintiff seeks is to stand in the shoes of Nakosta and to seek to enforce whatever rights Nakosta may have arising out of the contract of insurance between Nakosta and NCM.
-15-
It is difficult to see how such a right of subrogation could be deemed to exist, in light of the documentary and other evidence adduced in this case. Accordingly (and quite properly), such a right of subrogation has not been claimed on behalf of the plaintiff.
In the circumstances outlined above and in the absence of evidence or argument as to the nature of any trust which could have been created by virtue of the transactions between the parties in this case and in particular having regard to the precise terms of the written contracts between the parties I am satisfied that on the undisputed facts the plaintiff claimed that it has constituted itself a trustee of the rights of suit under the policy is unstateable and is bound to fail and accordingly the plaintiff’s application to amend the proceedings to provide for such a claim is declined.
GROUND THREE
Negligence
The plaintiff’s claim in negligence is made at para. 10 of the statement of claim and in summary alleges the following breaches of a “duty of care” owed by NCM to the plaintiff
(a) purporting to repudiate the contract of insurance,
(b) failing to pay to the plaintiff sums allegedly due under the policy,
(c) failing to advise the Plaintiff as to the manner in which the policy was being implemented between NCM and Nakosta,
(d) failing to advise the plaintiff as to the acquisition by LSPC of 70% of Nakosta,
(e) failing to advise the plaintiff as to the ongoing financial standing of Nakosta and of alleged breaches by Nakosta of the terms of the policy.
-16-
The plaintiff claims that NCM owed a duty of care to the plaintiff which arose out of alleged proximity between NCM, Nakosta and the plaintiff having regard to the transactions between those three parties.
Insofar as the allegations of negligence at (a) and (b) above are concerned it cannot be rationally contended that either by (a) repudiating the contract of insurance or by (b) refusing to pay sums claimed by the plaintiff NCM were negligent or in breach of any duty of care owed by NCM to the plaintiff.
Both of those two actions taken by NCM were deliberate in character and each comprised a bona fide assertion of a legal right. The portrayal of such assertions as particulars of negligence is unsustainable.
Insofar as the allegation of negligence at (d) above is concerned it is worth recording that on the agreed facts the information as to the acquisition of 70% of Nakosta by LSPC was in fact provided concurrently to the plaintiff and to NCM so that the allegation at (d) above cannot be sustained. I am accordingly satisfied that the breaches identified at (a) (b) and (d) are unsustainable on the agreed evidence.
The allegations of negligence made at (c), (d) and (e) above are premised upon the contention that the proximity of the relationship between NCM and the plaintiff was such as to impose upon NCM a duty to provide the Plaintiff with regular and often confidential information concerning and affecting Nakosta. The nature and extent of this alleged duty has not been defined nor has its genesis being explored or identified.
For the purposes of these proceedings the only connection which existed between NCM and the plaintiff resulted from the nomination by Nakosta of the plaintiff as a “loss payee ” on foot of the contract of insurance between Nakosta and NCM. The contract which gave rise to whatever relationship can be said to exist between NCM
-17-
and the plaintiff contained no express terms which would give rise to the obligation claimed by the plaintiff. Rather the contrary was the case since NCM went to considerable lengths to confer no benefits upon the plaintiff arising out of the relationship.
In Banque Keyser Ullmann SA Skandia (U.K.) Insurance Co. Ltd. [1990] 1 Q.B. 665 the Court of Appeal in England considered the nature of the duty of care owed by a bank to certain insurance companies in respect of credit insurance policies.
The Court held, inter alia, (a) that a person can be liable in negligence for pure economic loss caused to another by omission to disclose information known to that person provided that the person concerned had voluntarily assumed responsibility to make such disclosure to another person who had relied upon that assumption, even where the omission had occurred in the course of pre-contractual negotiations; (b) that in some rare cases the special circumstances and the relationship between the parties might be such that the law would deem such an assumption to be have been made even though it had not been proved as a matter of fact, but no such deemed assumption would arise from an established business relationship in respect of pre- contractual negotiations, even where the contract was one which was based on the utmost good faith.
Of particular relevance to the instant case were the following observations of Slade L.J. at p. 799
“By the same token we would hold that no legal obligation on the part of Mr. Dungate to inform the banks of Mr. Lee’s dishonesty arose, either in contract or in tort, merely because there was an “established business relationship” between the parties, and because the insurers continued to transact further business with the bank. That factor does
-18-
not turn a pure omission into a misrepresentation, in tort any more than in contract. It would not justify the courts treating Mr. Dungate as having assumed a duty or responsibility to speak, in tort, which was not imposed on him by the law of contract. In this context the following observations of Lord Scarman in Tai Hing Cotton Mill Ltd v. Liu Chong Hing Bank Ltd. [1986] AC 80, 107, are apposite:
‘Their Lordships do not believe that there is anything to the advantage of the law’s development in searching for a liability in tort where the parties are in a contractual relationship. This is particularly so in a commercial relationship. Though it is possible as a matter of legal semantics to conduct an analysis of the rights and duties inherent in some contractual relationships including that of bank and customer either as a matter of contract law … or as a matter of tort law … their Lordships believe it to be correct in principle and necessary of the avoidance of confusion in the law to adhere to the contractual analysis: on principle because it is a relationship in which the parties have, subject to a few exceptions, the right to determine their obligations to each other, and for the avoidance of confusion because different consequences do follow according to whether liability arises from contract or tort …’
The judge was, if we may say so, somewhat dismissive of this passage in Lord Scarman’s opinion. He said that the views expressed were tentative in character, and not intended to be of general application. We do not share that view. Lord Scarman’s opinion contains a valuable warning as to the consequences of an ever
-19-
expanding field of tort. It should be no part of the general function of the law of tort to fill in contractual gaps.”
In the instant case it is not suggested that at any stage NCM undertook to provide any information to the plaintiff either on a regular basis or in any other manner and it is not suggested that NCM, either expressly or impliedly represented to the plaintiff that it would offer any advices to the plaintiff at any time as to the manner in which the contract of insurance was being implemented between NCM and Nakosta or in relation to the financial standing of Nakosta from time to time. Furthermore it is not and has never been suggested in these proceedings that the plaintiff ever relied upon express or implied representations by NCM as to the furnishing of information or advice relative to Nakosta.
Insofar as (c) and (e) above are concerned I am satisfied that no duty of care of the kind which, on the undisputed facts adduced in evidence is contended for on behalf of the plaintiff is recognised by English law and that, in fact the existence of such a duty has been expressly denied by the courts within that jurisdiction.
The existence of a duty of this kind has been discussed in this jurisdiction. In Sweeney v. Duggan [1997] 2 I.R. 531 at 539-540, the Supreme Court (Murphy J.), considering whether a term could be implied independently of the intentions of the parties observed:
“Whether a term is implied pursuant to the presumed intention of the parties or as a legal incident of a definable category of contract it must be not merely reasonable but also necessary. Clearly it cannot be implied it is being inconsistent with the express wording of the
-20-
contract and furthermore it may be difficult to infer a term where it cannot be formulated with reasonable precision.”
In Pat O’Donnell & Co. Ltd. v. Truck and Machinery Sales Ltd. [1998] 4 I.R. 191 the Supreme Court (O’Flaherty J.) clarified the position further by indicating at pp. 199-200:
“However, it should be emphasised that the “general duty of care in tort cannot be manipulated so as to override the contractual allocation of responsibility between the parties. Thus if, for instance, a contract provides, whether expressly or by necessary implication, that the defendant is not liable for a particular risk, then the law of tort should not be allowed to contradict that.”
It is acknowledged by the parties that the contract of insurance between Nakosta and NCM is and remains subject to and regulated by the principles of English law. Applying the applicable principles of English law as adduced in evidence and argued by Counsel I am satisfied that the plaintiff as a nominated “loss payee” enjoys no privity of contract with NCM arising out of the contract of insurance between the plaintiff and Nakosta and does not enjoy the right to enforce any contractual right on foot of that contract.
I am further satisfied that no principle of English law (or the law of this jurisdiction) could countenance the existence of either a trust or an agency of the type contended for on behalf of the plaintiff. Furthermore neither English law nor the law within this jurisdiction recognises the existence of a duty of care of the kind contended for on behalf of the plaintiff.
-21-
It follows from the foregoing that the plaintiff has no title to sue NCM and that accordingly its claim against NCM discloses no reasonable cause of action and is bound to fail.
Consideration of Ground 4 (above) is accordingly, unnecessary.
It follows further that the first named defendant’s claim for contribution and indemnity against NCM also discloses no reasonable cause of action and is bound to fail.
Both claims are accordingly dismissed.
Niru Battery Manufacturing Company & Anor v Milestone Trading Ltd & Ors
[2004] EWCA Civ 487
Lord Justice Clarke:
Introduction
This is the second appeal which this constitution of the Court of Appeal has heard from decisions of Moore-Bick J in this action. In the first appeal, in judgments delivered on 23 October 2003, reference [2003] EWCA Civ 1446, we dismissed the appeals of both Credit Agricole Indosuez (“CAI”) and SGS United Kingdom Limited (“SGS”) against the order made by the judge on 17 July 2002 giving judgment against them. The judgment was in the sum of US$5,712,762 together with interest and costs in favour of the claimants, Niru Battery Manufacturing company (“Niru”) and Bank Sepah Iran (“Bank Sepah”), and was given jointly and severally against Mr Mahdavi, CAI and SGS, who were the third, fourth and fifth defendants respectively.
As indicated in paragraphs 2 and 3 of my judgment in the first appeal, the bases of the judge’s judgment were as follows. Mr Mahdavi was held liable in the tort of deceit, as a constructive trustee of monies obtained from Bank Sepah by fraud and as an accessory to a breach of trust. The claim against CAI failed in the tort of deceit but succeeded in restitution on the basis that the circumstances in which it paid money away did not afford it a defence to the claimants’ claim. The claim against SGS succeeded on the basis that it was in breach of a duty of care owed to the claimants. After judgment had been given, it was agreed between the parties, without argument before or determination by the judge, that judgment should be given both jointly and severally against CAI and SGS.
In the first appeal SGS appealed on the basis that the judge was wrong to hold that it owed a duty of care to Niru, that it was in breach of that duty and that the breach caused the loss. The appeal failed on all three grounds, with the result that the position remains that SGS was correctly held liable to the claimants in tort for damages for negligence. As to the position of CAI, Niru and SGS submitted that the judge was wrong to acquit CAI of deceit, while CAI submitted that, having acquitted CAI of dishonesty, he was wrong to hold that it was liable in restitution but should have held that it had a defence of change of position. We concluded that the judge was entitled to acquit CAI of dishonesty and deceit but that, given his conclusions as to the circumstances in which it paid the monies away on the instructions of Mr Mahdavi, he was correct to hold that CAI was liable in restitution. I shall return to the basis of our conclusions below.
This appeal arises out of the contribution proceedings between CAI and SGS, which themselves have a somewhat unusual history, as the judge himself explained in his judgment of 8 May 2003. It is that judgment which has given rise to this second appeal. CAI and SGS issued Part 20 proceedings against each other seeking contribution under section 1 of the Civil Liability (Contribution) Act 1978 (“the 1978 Act”). At the trial it was common ground between them that if they were both liable they could claim contribution from each other under section 1 of the 1978 Act, even though SGS might be liable in tort and CAI in restitution.
That was common ground because of the decision of this court in Friends’ Provident Life Office v Hillier Parker May & Rowden [1997] QB 85 in which it was held that the 1978 Act enabled contribution to be claimed in such circumstances. Both CAI and SGS argued their cases on contribution at the trial on that basis, the argument being almost entirely directed to the relative responsibilities of SGS and CAI for the loss that Niru had suffered. Under section 2(1) of the 1978 Act the amount of contribution recoverable is to be such as may be found to be just and equitable having regard to the extent of the contributor’s responsibility for the damage in question. The judge considered the relative extent of the responsibility of CAI and SGS and prepared a draft judgment in which he concluded that they were equally responsible. He included his conclusions in his principal judgment and distributed it to the parties in draft in the ordinary way.
However, before the judgment was formally handed down, the judge’s attention was drawn to the decision of the House of Lords in Royal Brompton Hospital NHS Trust v Hammond [2002] UKHL 14, [2002] 1 WLR 1397, in which Lord Steyn, with whom the rest of their Lordships agreed, disapproved the part of the judgment in the Friends’ Provident case that had underpinned the parties’ approach to the question of contribution. The judge therefore delivered judgment in the main action and adjourned the Part 20 proceedings for further argument in order to allow the parties to consider and subsequently to address him on the effect of that decision.
Before a further hearing could be held there were what the judge called two further significant developments. The first was that the claimants had entered judgment against SGS and CAI jointly and severally pursuant to an order the terms of which were agreed between all parties to the action. The claimants had decided to look to SGS alone to satisfy the judgment and it had done so. The result was that by the time that the issues between SGS and CAI came to be argued before the judge SGS had paid the whole of the judgment, including a sum that he had ordered to be paid on account of the claimants’ costs, and CAI had paid nothing. Also by then both parties had reflected on the implications of the Royal Brompton Hospital case in the light of these further events.
As a result SGS sought (and was granted) permission to amend its particulars of claim in the Part 20 proceedings to add to its existing claim for a contribution under section 1 of the 1978 Act claims for relief by way of subrogation, recoupment and contribution based on the satisfaction of the judgment. SGS now submitted that it was entitled to recover the whole of the amount which it had paid by way of subrogation and/or recoupment. It further submitted that section 1 of the 1978 Act applied notwithstanding anything said in the House of Lords in the Royal Brompton Hospital case and that it would be just and equitable for CAI to bear either the whole or the majority of the loss.
Mr Bloch QC submitted to the judge on behalf of CAI that neither the principles of subrogation nor those of recoupment assisted SGS and that he should follow the opinion expressed by Lord Steyn in the Royal Brompton Hospital case and hold that the 1978 Act has no application in a case of this kind. Alternatively he submitted (as I understand it) that the judge should apportion the loss equally between CAI and SGS as set out in his draft judgment.
The judge held that SGS was entitled to be subrogated to Niru’s claim against CAI and that it was entitled to recover the whole of the amount it had paid to Niru in respect of its liability for principal and interest. He accordingly gave judgment for SGS against CAI in the total sum of US$7,087,034.80. He further held that SGS was not entitled to recover by way of recoupment and, on contribution, that he should follow Lord Steyn and hold that the 1978 Act has no application as between those liable in damages and those liable in restitution.
This second appeal is brought by CAI pursuant to permission granted by the judge. Mr Bloch QC submits on behalf of CAI that the judge was wrong to hold that SGS is entitled to be subrogated to Niru’s claim against CAI, although, if I understand him correctly, he submits that if that is wrong the court can and should hold that SGS is only subrogated so far as it is just and equitable in all the circumstances. Miss Andrews QC submits on behalf of SGS that the judge was right on subrogation but wrong on recoupment. She also submits if necessary that the judge was wrong to hold that the 1978 Act has no application as between SGS and CAI and that he should have awarded 100 per cent contribution in favour of SGS. She submits that the judge’s view expressed in his draft judgment in this regard was wrong.
I should note in passing that the judge treated the orders for costs differently. He held that the principles of subrogation and recoupment had no application to costs because the liability to costs arose out of the proceedings themselves. He held that SGS was entitled to a contribution from CAI in respect of what it had paid in satisfaction of that part of the judgment and assessed the contribution at 50 per cent. Neither SGS nor CAI challenges that conclusion in this appeal, which is therefore concerned only with liability for principal and interest. In this regard it seems to me to be convenient first briefly to consider the facts then to consider subrogation, recoupment and contribution.
The facts
The facts were set out in great detail in the original judgment of the judge, [2002] EWHC (Comm) 705, and summarised in paragraphs 4 to 26 of my judgment in the first appeal. I shall not repeat them here save in so far as necessary to understand the issues in this appeal. For present purposes it is sufficient to summarise the facts in much the same way as the judge did in his second judgment.
These proceedings arise out of a contract for the sale by Milestone Trading Limited (“Milestone”) to Niru of 10,000 metric tons of lead ingots made in February 1998 which provided for payment by letter of credit against presentation of (among other documents) FIATA multimodal transport bills of lading and an inspection certificate issued by SGS. In due course a letter of credit was opened by Bank Sepah in favour of Milestone. Milestone was one of a group of companies known as the “Woralco” group controlled by Mr Mahdavi. It had no significant assets of any kind and was used by the Woralco group as a single purpose vehicle for entering into the contract with Niru.
In order to obtain the lead needed to perform its contract with Niru, Milestone, acting through Mr Mahdavi, obtained financing from CAI against the deposit of the warehouse warrants relating to the goods. The warrants, possession of which gave CAI complete control over the goods, were to be released to Milestone only on repayment of the advance. However, the letter of credit represented Milestone’s only source of funds and it therefore became necessary for Mr Mahdavi to find a way in which documents could be presented for payment before the warrants had been released by the bank. That was achieved by enlisting the help of the second defendant, Maritime Freight Services Ltd (“Maritime”), which was prepared to issue a FIATA bill of lading stating that it had taken the goods in charge for carriage to Iran at a time when CAI still held the warrants and the goods themselves were still in the warehouse.
Most of the lead that Milestone intended to deliver was held in a warehouse at Gothenburg; the remainder, about 2,000 metric tons, was held in a different warehouse at Helsingborg. By the time Maritime issued its bill of lading SGS, acting on instructions from Milestone, had already inspected, sampled and tested the goods at Gothenburg. On being informed that Maritime had issued a bill of lading recording that it had taken the goods in charge for carriage to Iran, SGS issued an inspection certificate in which it certified, among other things, that the goods were marked with the name of Niru and that the quality, quantity and packing of the goods loaded complied with the contract. The certificate was inaccurate in two respects: the goods were not marked with Niru’s name and had not been put under the control of Maritime, let alone loaded on to any form of transport. The judge held that SGS was negligent in issuing the certificate and therefore liable to Niru in tort. As already stated, SGS’ appeal against that finding failed in the first appeal.
The documents, including the bill of lading and the inspection certificate, were presented to Bank Sepah under the letter of credit by CAI, which presented them as a principal. After some minor discrepancies had been corrected, the documents were accepted by Bank Sepah, but it was unable to make payment because the authorities in Iran failed to make the necessary foreign currency available. The price of lead began to fall causing CAI to become concerned about the adequacy of its security and eventually, after consulting Mr Mahdavi but without telling Bank Sepah or Niru, it sold the goods to reimburse itself. Then, somewhat to everyone’s surprise, funds were made available to enable Bank Sepah to honour the letter of credit and a sum of about US$5.8 million was remitted to CAI for payment to Milestone. The officer responsible for Milestone’s account, Mr Francis, knew that the bank had sold the lead that was to have been delivered under the contract and had assumed that the transaction was dead. He was unsure, therefore, how to respond to the receipt of the funds, but having spoken to Mr Mahdavi he was persuaded to release them to another company in the Woralco group, Nikam Metal Finance Ltd. Needless to say (as the judge put it) they were subsequently lost.
In the result no goods were delivered to Niru by Milestone, or by any other company under the Mahdavi umbrella. Niru was, however, out of pocket because, pursuant to its counter-indemnity, Bank Sepah had debited its account with the full amount of the payment. In short, Niru had been induced to part with the sum of US$5.8 million and received nothing in return other than the sum of US$116,760 which was paid under a performance guarantee provided by Milestone under the contract.
The judge held that CAI had been unjustly enriched by the receipt of the funds from Bank Sepah and that it could not rely on change of position as a defence to a claim in restitution because it had failed to act in good faith when dealing with the funds. The judge also held that, although the funds had been remitted by Bank Sepah, Niru was entitled in the circumstances of this case to recover against CAI in restitution.
As already indicated, CAI’s appeal against liability failed in the first appeal. My own reasons for reaching that conclusion are set out in paragraphs 145 to 170 of the judgments in the first appeal and those of Sedley LJ are set out in paragraphs 176 to 192. I detect no significant difference between us. The key parts of my own conclusions, so far as they are relevant to this appeal, can be seen from the following quotation from my earlier judgment:
“167. I set out the judge’s findings of fact in this regard in paragraph 122 above. On those findings, especially those in paragraphs 120 and 121 of the judgment, Mr Francis did not know that a false bill of lading had been presented to Bank Sepah in order to obtain payment under the letter of credit but he knew that CAI had sold the warrants (and thus the lead) which formed the basis of the transaction and that the transaction could not therefore be completed. He therefore realised that Bank Sepah must have paid by reason of a mistake. Moreover, as the judge put it in paragraph 121 of his judgment, a moment’s reflection would have led Mr Francis to appreciate that the reason given by Mr Mahdavi for wishing to retain the money did not justify the course he was asking the bank to take. In these circumstances the judge was entirely justified in saying at the end of paragraph 121:
“Thus, on the facts as Mr Francis understood them, nothing said by Mr Mahdavi actually undermined Bank Sepah’s right to repayment of the money.”
168. In these circumstances, having realised that Bank Sepah had paid by mistake, to my mind, good faith required Mr Francis to enquire of Bank Sepah before paying the money away in accordance with Mr Mahdavi’s instructions and the judge was correct so to hold. As I read his judgment, the judge acquitted Mr Francis of dishonesty because he did not consciously act in disregard of the standards to be expected of the ordinary honest banker. The judge I think took the view that Mr Francis’ state of mind was that CAI owed no duty to Bank Sepah, which could look after itself, but that CAI did owe a duty to its customer and in those circumstances paid the money away in accordance with Mr Mahdavi’s instructions. The judge thought that that was misguided but not dishonest. As indicated earlier, it is my view that the judge was entitled to reach those conclusions.
169. On the other hand, the judge concluded that good faith required a person in Mr Francis’ position who realised that the money had been paid by mistake to make enquiries of Bank Sepah to ascertain the position and not to pay the money away in the meantime. I have reached the clear conclusion that he was correct so to hold. This is, at the very least, an example of the case of the kind of bad faith expressly mentioned by Lord Goff in Lipkin Gorman and quoted in paragraph 146 above, namely where a person “has changed his position in bad faith, as where the defendant has paid away the money with knowledge of the facts entitling the plaintiff to restitution”. Here, on the judge’s findings of fact, when the money was paid away, Mr Francis (and thus CAI) knew the facts which entitled Bank Sepah to restitution, namely that it had paid under a mistake of fact.
170. In all these circumstances the judge was in my opinion correct to hold that CAI did not act in good faith in paying the money away and that it would be inequitable or unconscionable to deny Bank Sepah a right to restitution by repayment of the monies paid under the letter of credit. I would dismiss CAI’s appeal under this head.”
In the light of those conclusions I summarised my view in paragraph 171(v) and (vi) by saying that as I saw it the essential question is whether on the facts of a particular case it would in all the circumstances be inequitable or unconscionable, and thus unjust, to allow the recipient of money paid under a mistake of fact to deny restitution to the payer and that on the facts the judge was entitled to hold that it would be inequitable, unconscionable and unjust to deny restitution to Bank Sepah of the monies paid under the letter of credit. As I read it, Sedley LJ’s reasoning is to the same effect and the President agreed with us both.
Subrogation
Miss Andrews’ submissions both before the judge and before us may be summarised in this way. Having satisfied the judgment, SGS was entitled to be subrogated to Niru’s rights against CAI (except in so far as the judgment related to costs) and was thus entitled to obtain a full indemnity in respect of the sum it had paid. SGS had been compelled by law to compensate Niru in full; by doing so it conferred a benefit on CAI by relieving it from any obligation to pay Niru; CAI was initially unjustly enriched at the expense of Niru and was now unjustly enriched at the expense of SGS; accordingly, SGS should be granted the remedy of subrogation in order to prevent that unjust enrichment.
As the judge observed in paragraph 28 of his judgment, this argument depends, at least in part, on the proposition that CAI continued to be unjustly enriched as a result of receiving the funds transferred to it by Bank Sepah. Mr Bloch resisted the submission on several bases but the judge ultimately accepted Miss Andrews’ submissions after considering a number of authorities, notably Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221.
He expressed his conclusions in this way in paragraph 54:
“If SGS were denied relief in the present case CAI would in my view be unjustly enriched at its expense, CAI was unjustly enriched by the receipt of the money from Bank Sepah and as a result became liable to restore it, CAI did not cease to be liable when it parted with the money: on the contrary, it remained liable because it had received a benefit which it was bound to restore. That liability merged in the judgment and came to an end only when, and by reason of the fact that, the judgment was satisfied in full by SGS. SGS was not responsible for CAI’s decision to part with the money: that was the result of a combination of Mr Mahdavi’s insistence that the bank follow his instructions and its own failure to act in good faith. CAI has been relieved of liability at the expense of SGS and as a party liable to make restitution on the grounds of unjust enrichment I do not think that in relation to SGS it can be treated as if it did not receive the benefit on which its liability was based, any more than it could in relation to Niru.”
That reasoning seems to me to be compelling and, for my part, absent any authority to the contrary, I would follow it. Moreover, I agree with the view expressed by the judge in paragraph 55 of his judgment that the point can be tested by reference to the position which would have arisen if CAI had retained the money which it had received from Bank Sepah instead of paying it away in accordance with Mr Mahdavi’s instructions.
It is convenient to consider the position in different factual situations as follows: (1) Niru sues both SGS and CAI and obtains judgment against them both jointly and severally and CAI satisfies the judgment; (2) Niru sues both SGS and CAI and obtains judgment against them both jointly and severally and SGS pays the judgment debt in circumstances in which CAI still holds the money received from Bank Sepah; (3) Niru sues both SGS and CAI and obtains judgment against them both jointly and severally and SGS pays in circumstances in which CAI had paid money away and has no change of position defence (this case); and (4) Niru sues SGS but not CAI and obtains judgment against SGS which SGS satisfies.
Before considering these particular situations, it is appropriate to refer to what I agree with the judge is the leading modern authority on the equitable remedy of subrogation, namely the Banque Financière case. In that case, as the judge observed in paragraph 29 of his judgment, Lord Hoffman, with whom the majority of the other members of the House agreed, drew a distinction between contractual subrogation of the kind most commonly encountered in connection with contracts of insurance and subrogation in equity. He pointed out that the former is founded upon the common intention of the parties whereas the latter is an equitable remedy designed to reverse or prevent unjust enrichment. It does not depend on agreement between the party enriched and the party deprived but upon principles of restitution.
Lord Hoffmann summarised the principles governing the availability of the equitable remedy in the following terms at page 234C-D:
“I think it should be recognised that one is here concerned with a restitutionary remedy and that the appropriate questions are therefore, first, whether the defendant would be enriched at the plaintiff’s expense; secondly, whether such enrichment would be unjust; and thirdly, whether there are nevertheless reasons of policy for denying a remedy.”
I return to the examples which I identified above with that general approach in mind.
It is common ground that in the first of the examples CAI would not be entitled to stand in Niru’s shoes and sue SGS in order to recover the amount it had paid to Niru by exercising a right of subrogation. There would in those circumstances be no question of SGS being unjustly enriched by CAI’s payment. Indeed, if CAI had paid back the money in the first place instead of paying it away on the instructions of Mr Mahdavi, as it ought to have done and as it would have done if it had been acting in good faith, Niru would have suffered no loss and SGS would not have been liable to Niru. The only basis upon which CAI might be able to proceed against SGS in those circumstances would be under the 1978 Act, to which I will return briefly below.
In the second example, where CAI retains the money in circumstances in which it should have repaid it, but SGS discharges a joint and several liability with CAI by paying the whole judgment debt to Niru, I do not think that there can be any doubt but that SGS would be entitled to recover the whole of the amount that it had paid from CAI. Any other solution would leave CAI holding monies which, if acting in good faith, it would have repaid to Bank Sepah and thus to Niru. The effect of allowing CAI to retain any part of the monies would be tantamount to affording it a defence of change of position, at least in part, in circumstances in which it had failed to make out such a defence. It was no doubt for this reason that Mr Bloch did not feel able to submit that, if CAI had retained any of the monies paid to it by Bank Sepah, it could have retained them as against SGS.
Moreover, as I see it, that would have been the position regardless of the reason why the monies were mistakenly paid to CAI by Bank Sepah. Thus in my opinion it would make no difference if the mistake was the result of carelessness on the part of Niru or Bank Sepah or negligence on the part of SGS. I briefly considered the case of carelessness on the part of the payer in paragraphs 160 and 161 of my judgment in the first appeal by reference to the decision of the Privy Council in Dextra Bank & Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193, where the judgment of the Judicial Committee was given by Lord Bingham and Lord Goff. The Privy Council rejected the propriety of introducing a concept of relative fault into a determination of whether the recipient of money paid under a mistake of fact or law was obliged to repay it: see the discussion at paragraphs 40 to 46.
It was no doubt for that reason that no-one suggested to us in the course of the first appeal that it was sufficient to show that CAI was negligent in order to defeat a defence of change of position or, indeed, that carelessness on the part of Niru or Bank Sepah would be relevant to the defence of change of position. The view of the Judicial Committee can be seen from paragraph 45 of the judgments in Dextra:
“Their Lordships are, however, most reluctant to recognise the propriety of introducing the concept of relative fault into this branch of the common law, and indeed decline to do so. They regard good faith on the part of the recipient as a sufficient requirement in this context.”
Lord Hoffmann expressed a strong view to the same effect in the Banque Financière case at page 235E-G.
It seems to me that, if carelessness is not sufficient to defeat a claim of this kind by the payer, there is no good reason for holding that negligence on the part of someone else which caused or contributed to the mistaken payment is sufficient. That is because, as Lord Bingham and Lord Goff put it, relative fault is irrelevant and good faith on the part of the recipient is a sufficient requirement for the defence of change of position. By contrast, lack of good faith is to my mind a sufficient basis for holding that the recipient who has failed to repay the money in good faith and who still holds the money is bound either to repay the money to a careless payer or to pay it to a person in the position of SGS in the example, whose negligence has made it liable to the payer. There would have been no such liability if the recipient had acted in good faith.
The third example is this case. For my part, I do not see that there is any difference in principle between the second and third examples. Thus I see no distinction in principle between the position of the recipient who retains the money and the recipient who has paid it away otherwise than in good faith. In both examples the recipient seems to me to be unjustly enriched.
Mr Bloch submits that that conclusion is wrong and would involve an unnecessary and undesirable extension of the categories of case in which subrogation has traditionally been recognised by the courts. A key reason for that submission is that it would have the undesirable effect that CAI would be liable in full in circumstances in which the judge had expressed the view in his first (albeit draft) judgment that SGS and CAI were equally to blame. Not unnaturally in the light of that view, it was an underlying theme of Mr Bloch’s submissions that there was nothing to choose between SGS and CAI and that a solution which left CAI to bear the whole liability would be unjust and thus inequitable.
However, in my judgment, that is not a sound foundation upon which to build a convincing submission. In their written submissions Mr Bloch and Miss Scott submitted (in paragraph 6) that SGS had been found to be at fault for failing to fulfil its duty of care to Niru whereas CAI had been found liable to restore monies received in error on what might be termed a ‘no-fault’ basis. They submitted that CAI could not raise a defence to Niru’s claim because of a ‘commercial’ failure to have regard to Niru’s interests. To my mind, that is not an accurate way of putting the true position. It is correct that SGS’ liability was based on a breach of a duty of care or, to put it shortly, negligence but it is wrong to regard CAI’s liability as no-fault liability or as based on a ‘commercial’ failure to have regard to Niru’s interests.
As indicated in the authorities, including Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, especially per Lord Goff at pages 579 and 580, and the Dextra case, especially in paragraph 45 quoted above, a recipient in the position of CAI would have a defence of change of position only if it acted in good faith and would not have such a defence if it acted in bad faith. In the instant case CAI acted in bad faith in paying the monies away. In these circumstances (as already indicated) it is to my mind be treated, both as between itself and Niru and as between itself and SGS, in the same way as if it retained the monies. It does not seem to me to be appropriate to treat CAI and SGS as equally responsible. It is true that SGS was careless (and thus negligent because of the duty of care owed to Niru) but it would not have been liable if CAI had not paid the money away in bad faith because Niru’s cause of action would not have been complete. For the reasons already given, just as Niru’s carelessness would have afforded CAI no defence to its claim, so SGS’ carelessness or negligence should not in my opinion afford CAI any defence to SGS’ claim (as it were in Niru’s name), now that SGS has discharged its liability to Niru.
This approach seems to me to be consistent with the approach of this court in the recent case of McDonald v Coys of Kensington [2004] EWCA Civ 47. In that case Mr and Mrs Cressman instructed Coys, who were auctioneers, to sell a Mercedes car at auction but expressly instructed them not to sell the car’s personalised number plate TAC 1. Coys sold the car to Mr McDonald, who asserted that the sale included the number plate. The Cressmans sued Coys for damages for breach of contract and Coys settled their claim for £12,000 plus interest, which amounted to £13,608.12 in all. The Cressmans also assigned to Coys all and any causes of action against Mr McDonald. Coys subsequently sued Mr McDonald alleging that he had been unjustly enriched by receiving, at the expense of the Cressmans, a benefit in the form of the number plate which was valued at £15,000 which he knew or ought to have known he was not contractually entitled to have.
The trial judge so held and awarded Coys a total of £15,000. He awarded £1,391.88 under the assignment and £13,608.12 as contribution to Coys’ liability to the Cressmans on the basis that both Coys and Mr McDonald had been liable to the Cressmans in respect of the same damage within the meaning of section 1(1) of the 1978 Act and that it was “just and equitable having regard to the extent of [Mr McDonald’s] responsibility for the damage in question” within the meaning of section 2(1) that he should make a full 100 per cent contribution in respect of Coys’ liability to the Cressmans. In this court it was contended that the Act did not apply because of the reasoning of Lord Steyn in the Royal Brompton Hospital case but the point was taken at a very late stage and the court refused to entertain it and decided the appeal on the assumption that the 1978 Act applied.
One of the defences advanced at the trial by Mr McDonald was that he had changed his position by transferring the car and the number plate to his partner. Both the judge and this court rejected that defence on the facts, holding that there was no such transfer. Mance LJ (with whom Thorpe LJ and Wilson J agreed) said in paragraph 21 that, even if Mr McDonald did transfer the car to his partner, he can only have done so knowing that the car had brought with it the ‘cherished’ mark TAC 1 through some mistake and not as part of the auction bargain. Mance LJ agreed with the judge that as soon as Mr McDonald knew that the car had brought with it the entitlement to the mark he also knew that that was something that he was not supposed to have.
Mance LJ observed in paragraph 22 that it was common ground, based on the Banque Financière case per Lord Steyn at page 227A and The Queen on the application of Charles Rowe v Vale of White Horse DC [2003] EWHC (Admin) per Lightman J at paragraphs 10-11, that four questions arise when considering a claim for unjust enrichment as follows. (1) Has the defendant benefited or been enriched? (2) Was the enrichment at the expense of the claimant? (3) Was the enrichment unjust? (4) Is there any specific defence available to the defendant (such as change of position)? Those questions seem to me to cover essentially the same ground as the three questions posed by Lord Hoffmann set out above.
On the facts of McDonald v Coys the court answered the first three questions yes and the fourth no. As part of his discussion of benefit Mance LJ said this in paragraph 37:
“Looking at the matter generally, I have no doubt that justice requires that a person, who (as a result of some mistake which it becomes evident has been made in the execution of an agreed bargain) has a benefit or the right to a benefit for which he knows that he has not bargained or paid, should reimburse the value of that benefit to the other party if it is readily returnable without substantial difficulty or detriment and he chooses to retain it (or give it away to a third party) rather than to re-transfer it on request. Even if realisable benefit alone is not generally sufficient, the law should recognise, as a distinct category of enrichment, cases where a benefit is readily returnable. A person who receives another’s chattel must either return it or pay damages, commonly measured by reference to its value. …. However, Mr McDonald’s insistence on keeping the mark and the absence of any obvious means of compelling its re-transfer are reasons for analysing this case in terms of unjust enrichment. Mr McDonald knew that he had not bargained or paid for the mark. The mark or its benefit was in practice easily returnable. If Mr McDonald chose to keep it, then I see every reason for treating him as benefited.”
Mance LJ said in paragraph 36 that, although Mr McDonald had not realised the value of the mark, it was a readily realisable benefit and that, if he had transferred it to his partner, that could go at most to a possible change of position defence. In my opinion, the same is true here. Thus I would not accept Mr Bloch’s submission that having paid the money away on Mr Mahdavi’s instructions CAI did not benefit from the payment.
In that case the court rejected the change of position defence on much the same basis as it did here. In the light of Mance LJ’s conclusions in paragraph 21 referred to above, it was held that even if the car had been transferred to Mr McDonald’s partner, he was in possession of sufficient knowledge to exclude inequity or good faith: see paragraph 41.
On contribution Mance LJ expressed his conclusions thus in paragraphs 47 and 48:
“47. … The real damage lies in the [Cressmans’] continuing deprivation of the mark or its value, which was still the result of Coys’ breach, but was, much more directly, the result of Mr McDonald’s determination to retain and refusal to re-transfer the mark.
48. On the hypothesis on which we must approach this part of the appeal, it was therefore open to the judge to treat both parties as causally responsible for the same damage. Bearing in mind that it is Mr McDonald who received the benefit of the mark, and that the whole proceedings would have been unnecessary had he re-transferred the mark to the estate’s order as he should have done, the judge’s conclusion that Coys should recover 100% contribution from him appears to me unassailable in this court.”
Thus in the result Mr McDonald was left liable for the whole of the value of the benefit on the footing that the 1978 Act applied and that a contribution of 100 per cent was just and equitable having regard to the extent of Mr McDonald’s responsibility for the damage in question. I have reached the same conclusion on the facts of this case. The relative positions of SGS and CAI seem to me to be very different. Although both SGS and CAI were liable for the same loss suffered by Niru, as in the Coys case the real damage was caused by CAI’s failure to repay the monies which had been paid by mistake.
As indicated earlier, and as the judge observed in paragraph 55 of his judgment, if the monies had been returned to Bank Sepah immediately by CAI, as they would have been if CAI had acted in good faith, Niru would have been unable to pursue a claim against SGS because it would have suffered no loss and CAI would have had no claim against SGS either. Although (as the judge put it) in one sense SGS would have benefited by the repayment, it could not have been regarded as unjustly enriched because it was only liable to pay the amount of loss actually sustained by Niru: see eg Receiver for the Metropolitan Police District v Croydon Corporation [1957] 2 QB 154. The same would be true if CAI had satisfied the judgment rather than SGS.
The judge plainly thought that his conclusion on subrogation represented the just result notwithstanding his earlier view that contributions of 50/50 would be appropriate under the 1978 Act. He said in paragraph 52 that, in the light of Lord Steyn’s speech in the Royal Brompton Hospital case and the helpful arguments of counsel in the course of the adjourned contribution proceedings, it had become clear that insufficient attention had previously been paid to the question of unjust enrichment and the different nature of the defendant’s liability in each case. I agree.
It is fair to say that the judge added:
“It may be that in a broad sense SGS and CAI were equally to blame for the loss suffered by Niru, but it does not follow that there is no distinction to be drawn between them in terms of the benefit they received. In these circumstances I do not feel constrained by the views I expressed in my final judgment to hold that consideration of justice and equity preclude relief by way of subrogation in this case.”
Mr Bloch relies upon the judge’s observation that it may be that in a broad sense SGS and CAI were equally to blame as being inconsistent with the conclusion that CAI should bear 100 per cent of the loss. However, as I read the judgment as a whole, the judge was saying that when all the circumstances are taken into account, a solution which left CAI bearing the whole of the loss was a just result. In any event, I have reached the conclusion that that is indeed the just solution.
It seems to me that, whether by the route of subrogation, recoupment or the operation of the 1978 Act (assuming it applies) the just result is that CAI should bear the whole of the loss. This too can be tested by considering the position if CAI still retained the monies. In that case, I do not think that there can be any doubt that the just result would be that the whole of the sum paid should be repaid either to Niru or, in circumstances in which SGS had discharged its liability under the judgment, to SGS. To my mind the position is no different in circumstances where CAI has paid the monies away otherwise than in good faith, any more than it was in the Coys case on the assumption that Mr McDonald had transferred the car and its number plate to his partner. Thus, notwithstanding the views expressed by the judge the first time round, I would not accept the central thrust of Mr Bloch’s submission that SGS and CAI were equally liable for Niru’s loss, albeit under different causes of action.
I would add that it seems to me that this conclusion is consistent with the approach of the House of Lords to contribution in the case of Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 1 Lloyd’s Rep 65, where it was held that in deciding issues of contribution between a firm of solicitors held liable for dishonest assistance and two individuals who had been held to be dishonest participants in a fraudulent scheme, an important factor was the amount of money which the latter had received and retained as a result of that participation. The facts here are of course very different but to my mind the key feature of the case is that CAI received monies under the letter of credit and did not return them.
However, Mr Bloch submits to us, as he did to the judge, that there are recognised categories of case in which the remedy of subrogation is appropriate and that this case falls outside them. He relies upon the speech of Lord Selborne in Duncan Fox & Co v North & South Wales Bank (1880) 6 App Cas 1 at 10-11. In short he submits that, in the absence of some prior agreement between the party seeking subrogation and the party against whom the claim is made which determines their respective liabilities, it is necessary for the claimant to show that the defendant is primarily liable in respect of the obligation in question. Although (for the reasons given below in the context of recoupment) I would hold that CAI was primarily liable, I agree with the judge that Lord Selborne was not limiting the categories of case in which the principle might be applied in the manner suggested by Mr Bloch. I also agree with the judge that the law of restitution based on the principle of unjust enrichment has undergone significant development since 1880.
Mr Bloch placed some reliance upon the speech of Lord Diplock in Orakpo v Manson Investments [1978] AC 95 at page 104 and upon the judgment of Millett LJ in Boscawen v Bajwa [1996] 1 WLR 328. In the Orakpo case Lord Diplock said that some rights of subrogation
“are in no way based on contract and appear to defeat classification except as an empirical remedy to prevent a particular kind of unjust enrichment.
This makes particularly perilous any attempt to rely upon analogy to justify applying one set of circumstances which would otherwise result in unjust enrichment a remedy of subrogation which has been held to be available for that purpose in another and different set of circumstances.”
Nothing in the conclusions which I have reached seems to me to be inconsistent with those views. The same is true of the statements of Millett LJ in Boscawen v Bajwa, where he said at page 335:
“Subrogation, therefore, is a remedy not a cause of action … It is available in a wide variety of different factual situations in which it is required in order to reverse the defendant’s unjust enrichment. Equity lawyers speak of a right of subrogation or of an equity of subrogation, but this merely reflects the fact that it is not a remedy which the court has a general discretion to impose whenever it thinks it just to do so. The equity arises from the conduct of the parties on well-settled principles and in defined circumstances which make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff.”
Lord Hutton said much the same in the Banque Financière case at page 245, where he stressed the wide variety of different circumstances in which the remedy of subrogation may be appropriate. He quoted with approval the statement from the then edition of Goff & Jones on The Law of Restitution at page 593 that:
“subrogation is essentially a remedy, which is fashioned to the facts of the particular case and which is granted in order to prevent the defendant’s unjust enrichment.”
Lord Hutton also referred with approval to parts of the passages from the Orakpo case and Boscawen v Bajwa which I have quoted above.
In these circumstances, it is I think clear that the remedy of subrogation is appropriate in much wider circumstances than was submitted by Mr Bloch. As I see it, and as stated in the Coys case, the correct approach today is to ask the questions posed by Lord Hoffmann and Lord Steyn in the Banque Financière case. The judge answered Lord Hoffmann’s questions one and two yes and his third question no. For the same reasons he would have answered Lord Steyn’s first three questions yes and his fourth question no.
In my opinion the judge answered those questions correctly for the reasons which he gave. The judge held that if subrogation were refused, that is if CAI were not ordered to repay SGS, CAI would be benefited or enriched at the expense of SGS and thus answered Lord Hoffmann’s first question and Lord Steyn’s first two questions yes. His reason was that by satisfying the judgment in full SGS had relieved CAI of liability to Niru. That is plainly correct.
Lord Hoffmann’s second question and Lord Steyn’s third question ask whether such enrichment would be unjust. The judge held that it would. In deciding that question he considered all the circumstances of the case and for that purpose he looked behind the judgment. He was in my opinion right to do so for the reasons which he gave in paragraph 39 of his judgment, which it is not necessary to repeat here.
I have already set out in some detail my reasons for concluding that CAI would be unjustly enriched if SGS could not recover the amount it paid to Niru under the judgment. In short, if CAI retained the monies there can be no doubt that continued retention of them would leave it unjustly enriched. It paid them away on the instructions of Mr Mahdavi in bad faith. I have already expressed my view that CAI should not be in any better position by paying the monies away in bad faith than if it had retained them. It would be unjustly enriched in either case: see paragraphs 34 to 49 above.
Lord Steyn’s fourth question is whether there are any defences. I have already expressed my view that CAI has no defence to a claim by SGS based on change of position by paying the money away any more than it had a defence to the claim by Niru on that basis. I can think of no other defences unless there are reasons of policy for denying SGS a remedy, in which case Lord Hoffmann’s third question would have to be answered yes.
In my opinion there are no reasons of public policy to deny SGS a remedy. Mr Bloch relies upon the rule in Merryweather v Nixan (1799) 8 TR 186, as subsequently developed in the cases, namely that contribution was not permitted between tortfeasors. However, as the judge observed, that rule did not apply as between a tortfeasor on the one hand and a person liable in equity on the other. I can see no reason of public policy why the court should not afford SGS a remedy in equity in order to achieve what I regard as the just result. I would accept Miss Andrews’ submission that, as the judge held in paragraph 54, if SGS is not subrogated to Niru’s rights, CAI will remain unjustly enriched, the only difference between that position and the position before the judge’s first judgment being that it will be unjustly enriched at SGS’ expense instead of at the expense of Niru. In short, far from being contrary to public policy, it would, as I see it, be unconscionable for CAI to keep any of the money which it received by mistake and which it paid away otherwise than in good faith.
In paragraph 26 above I identified a fourth example, namely where Niru sues SGS but not CAI and obtains judgment against SGS which SGS satisfies. That is not this case so that there is no need to discuss it in any detail. I would only say that it seems likely to me that SGS would be able to recover in that case too.
It might be objected that it is inappropriate to describe SGS as being subrogated to Niru’s rights against CAI because, once SGS discharged CAI’s obligation under the judgment, Niru no longer had any rights against CAI to which SGS could be subrogated. However, that would be to view the matter too technically. The principle upon which the judge relied was that of restitution by reason of unjust enrichment and, if the remedy of subrogation were not available, the correct course would not be to hold that SGS was not entitled to recover from CAI but to describe its remedy as a direct restitutionary right to payment enforceable against CAI. However, as Lord Clyde put it in the Banque Financière case at page 237F, the remedy may vary with the circumstances of the case, the object being to effect a fair and just balance between the rights and interests of the parties concerned and in my opinion it is appropriate to describe the remedy available to SGS as subrogation.
In any event, for the reasons which I have given I would uphold the judge’s conclusion that SGS is entitled to recover the amount it paid to Niru in discharge of the judgment in accordance with the principles of the law of restitution, whether the remedy is correctly described as subrogation or not.
I would only add this. In the course of his submissions Mr Bloch suggested that it might be possible to hold that SGS’ right or remedy should be limited to something less than the whole of the liability to reflect a just balance between the parties on the facts of this particular case. Having regard to my conclusion that the just result is that CAI should meet the whole of the judgment (except on costs), this point does not arise and I say nothing further about it.
Recoupment
Miss Andrews submits that the judge was wrong to hold that SGS’ claim against CAI does not satisfy the principles of recoupment. Although, in the light of my conclusions on subrogation, it is not necessary to decide this question, I will shortly state my opinion on it since it was the subject of argument. The relevant principles were stated by Cockburn CJ in Moule v Garrett (1872) LR 7 Ex 101 as follows:
“Where the plaintiff has been compelled by law to pay, or, being compellable by law, has paid, money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability: under such circumstances the defendant is held indebted to the plaintiff in the account”.
The judge set out that passage and added that the principle depends upon the compulsory discharge of a liability which rested primarily on the defendant (my emphasis). He referred to paragraph 15-001 of the 6th edition of Goff & Jones on The Law of Restitution, where the position was put as follows:
“In general, anybody who has under compulsion of law made a payment whereby he has discharged the primary liability of another is entitled to be reimbursed by that other. …
To succeed in his claim for recoupment, the plaintiff must satisfy certain conditions. He must show:
(1) that he was compelled, or was compellable, by law to make the payment;
(2) that he did not officiously expose himself to the liability to make the payment; and
(3) that his payment discharged a liability of the defendant.”
The judge held that the payment by SGS to Niru pursuant to the judgment was a compulsory discharge of CAI’s liability under the judgment and that CAI thus obtained the benefit of it. Miss Andrews submits that, having correctly so held, the judge should have asked himself whether, as between SGS and CAI, CAI was primarily or ultimately liable to pay Niru, that he should have considered how to answer that question by reference to the underlying circumstances and that, having done so, he should have answered the question yes.
I would accept those submissions. It seems to me that, for all the reasons already given under the heading of subrogation, the ultimate or primary liability as between CAI and SGS was indeed that of CAI. This case is a far cry from joint (or indeed several) tortfeasors responsible for the same damage. The crucial distinction is that already referred to, namely the fact that CAI was at no time entitled to retain or make use of the monies which it had received by mistake. If it had acted in good faith it would have repaid the monies and SGS would not have been liable at all. In these circumstances both law and equity should in my opinion regard CAI as primarily or ultimately liable as between itself and SGS, as that expression is used in the cases.
The reasons why the judge rejected the claim based on recoupment are set out in paragraphs 59 and 60 of his judgment:
“59. In the present case the satisfaction of the judgment by SGS discharged CAI’s liability under the judgment, but I do not think that of itself can be enough since the judgment was simply the means by which SGS was compelled to pay. The question whether SGS was compelled to discharge a liability that rested primarily on CAI is one that can only be answered by reference to the underlying rights and liabilities.
60. The underlying liabilities of SGS and CAI were, however, quite different in nature: SGS incurred liability in tort and CAI liability in restitution. I do not think that the payment by SGS of damages for negligence would have discharged CAI’s liability to restore the benefit it had received any more than the payment by Esso to the crofters in The ‘Esso Bernicia’ discharged the liability of Hall Russell. In those circumstances Niru would have been unjustly enriched for the reasons explained by Lord Goff in that case and SGS would have been subrogated to its claim against CAI. The fact that SGS has been sued to judgment does not in my view alter the position; that is simply the means by which SGS has been compelled to satisfy its own liability to Niru. For these reasons I do not think that the present case can be brought within the principles of recoupment.”
Miss Andrews submits that that reasoning is flawed and should not be followed. She submits that in those paragraphs the judge did not consider the matter along the lines set out in paragraph 69 above. That appears to me to be correct. It does not seem to me that this case is like the Esso Bernicia case, that is Esso Petroleum Ltd v Hall Russell & Co Ltd [1989] 1 AC 643, where the facts were radically different from those here.
For the reasons given in paragraph 69 I would hold that SGS was entitled to recover by way of recoupment as well as by way of subrogation.
Contribution
I have already expressed my view as to the appropriate result on the assumption that the 1978 Act applies, namely that CAI should pay the whole amount of the judgment save as to costs. This conclusion makes it unnecessary to consider whether the 1978 Act applies. I will therefore add only this.
It is not easy to know how we should approach the problem. As indicated earlier, in Friends’ Provident Life Office v Hillier Parker May & Rowden [1997] QB 85 this court held that the 1978 Act enabled contribution to be claimed as between a tortfeasor and a person liable in restitution. That conclusion was based upon what was held to be the true construction of sections 1(1) and 6(1) of the Act, which provide as follows:
“1(1) Subject to the following provisions of this section any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).
…
6(1) A person is liable in respect of any damage for the purposes of this Act if the person who suffered it …. is entitled to recover compensation from him in respect of that damage (whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise).”
This court held in the Friends’ Provident case that in a case like the present CAI and SGS were liable in respect of the “same damage” within the meaning of section 1(1) of the 1978 Act, namely the loss sustained by Niru, and Niru was entitled to recover “compensation” from both SGS and CAI within the meaning of section 6(1). The court gave “compensation” a broad and purposive interpretation, which was followed in Hurstwood Developments Ltd v Motor and General & Andersley & Co Insurance Services Ltd [2001] EWCA 1785.
In the Royal Brompton Hospital case Lord Steyn considered the problem in some detail and agreed with the view expressed in the 5th edition of Goff & Jones at page 396 that a restitutionary claim is not one for “damage suffered” and that a claim for restitution cannot be said to be a claim to recover “compensation” within the meaning of the Act: see in particular paragraphs 26-30, 33 and 34.
Although Lord Steyn described the views of Auld LJ in the Friends’ Provident case as dicta, it was common ground between the parties in the instant case that they were part of the decision. By contrast, it was common ground between the parties that the views of Lord Steyn were obiter dicta and not necessary for the decision in the Royal Brompton Hospital case. If that is correct, (as it may well be) the strict position appears to be that we remain bound by the decision in the Friends’ Provident case.
In these circumstances, although both parties made detailed submissions on the question whether a claim for restitution is a claim for “compensation”, I do not think that it would be appropriate for me to express my own view on the point, at any rate unless it were necessary to do so in order to resolve the issues in this appeal. In the light of the conclusions which I expressed earlier it is not necessary to express such an opinion. I have already expressed my conclusion that if the 1978 Act applies the just result would be to order CAI to pay a contribution of 100 per cent, as was done in the Coys case, and for similar reasons. No question of any possible conflict between the effects of subrogation, recoupment and contribution therefore arises. On the other hand, if the Act does not apply, the result is the same, namely that SGS is entitled to recover in full from CAI by way of subrogation or recoupment. In these circumstances, it is not necessary or appropriate for me further to lengthen this judgment by my own analysis of the meaning of “compensation” in section 6(1) of the 1978 Act.
Postscript
Since writing the above, I have seen a copy of the very recent decision of this court in Cheltenham & Gloucester Plc v Appleyard [2004] EWCA 291, which contains a valuable discussion of the principles of subrogation. It does not, however, seem to me to contain anything which should lead me to alter the views expressed above.
CONCLUSION
For the reasons I have given I would dismiss this appeal and uphold the conclusion of the judge that SGS is entitled to recover the whole of the amount which it paid to Niru in respect of principal and interest. I would do so on the basis that SGS is entitled to restitution and that the appropriate remedy is the equitable remedy of subrogation, although I would also do so by the application of the principles of recoupment. If the 1978 Act applies, I would hold that CAI should contribute 100 per cent of the same amount on the basis that it would be just and equitable having regard to CAI’s responsibility for Niru’s loss. Finally, I would like to thank counsel for their assistance in this interesting case.
Lord Justice Sedley
I do not dissent from the conclusion reached by the President and Lord Justice Clarke that CAI should indemnify SGS in the full amount of the latter’s liability to Niru. I am, however, uneasy at some of the discontinuities in the developing law of restitution and contribution which the argument before us has exposed. I am mindful that, as Lord Justice Clarke points out, the applicability of the 1978 Act does not matter once one has decided (a) that SGS can recover in full both by subrogation and by recoupment and (b) that if the 1978 Act applies, SGS is entitled to a full indemnity under it as well; but the merits of a not very different case could well be such as to require the court to decide whether it is bound by law to award all or nothing rather than allocate the loss as justice requires.
These Part 20 proceedings concern the just distribution of Niru’s loss as between SGS, who caused Bank Sepah to pay out on a negligent certification that the lead ingots had been loaded when they had not, and CAI, who unlawfully paid away the funds consequently transferred to them. In modern statutory contribution proceedings between two such parties as defendants, it would be unsurprising to find them ordered (as Moore-Bick J was initially disposed to order them) to share Niru’s loss on the ground that but for either defendant’s breach of its duty to Niru the loss would not have occurred. It is only because of the doctrinal difference between restitution and tort that this logic is apparently unavailable to us. I cannot help wondering whether this is the way the law should be going. It is even less satisfactory that the same logic may not be available in subrogation or recoupment, even though these doctrines are directed to the same end of ensuring so far as possible that losses are distributed justly.
There is good authority about the position of a restitution claimant who has neglected his own interests, but none about a restitution claimant who himself has acted unlawfully, where in both cases the claimant has by his act contributed to the occurrence of the eventual loss. In the first class of case one sees readily that the enrichment of the defendant may be no less unjust because of the claimant’s own weakness or foolishness. His neglect of his own interests until 1945 defeated a claim made by him for damages in negligence; since then, if causative, it has diminished any such claim. But a claim in restitution is axiomatically not a claim for damages.
The way in which Miss Andrews accordingly puts her claim in this terra incognita is that SGS, having been sued to judgment for the full amount (indeed having shrewdly paid it), should be regarded as in the same position as the innocent loser in whose shoes SGS now stands. Yet each party to these Part 20 proceedings is able legitimately to say that but for the other’s unlawful act the loss would not have occurred. That is not, either literally or by analogy, the Kelly v Solari situation. Nor is it the situation which has faced the court in any reported case that we have seen. If, as Lord Clyde said in his assenting speech in Banque Financière, at 237, the restitutionary remedy “may vary with the circumstances of the case, the object being to effect a fair and just balance between the rights and interests of the parties concerned”, why should it not be relevant that the right in which SGS sues, whether by subrogation or in recoupment, is a function of its own wrongdoing?
Miss Andrews’ answer, that the entire burden comes to rest on the party “primarily” or “ultimately” liable, is not helpful. Her epithets beg all the questions posed by Lord Nicholls in Dubai Aluminium v Salaam [2003] 1 Ll.R.65, para.51. “Responsibility,” Lord Nicholls said, “includes both blameworthiness and causative potency”. Primary and ultimate liability, by contrast, are protean terms which could as readily implicate SGS as CAI.
This case does not fall within the doctrine of Merryweather v Nixan (1799) 8 TR 186, summarised by Lord Denman in Betts v Gibbins (1834) 2 Ad. & E 57, 74, as being that “between wrongdoers there is neither indemnity nor contribution: the exception [being] where the act is not clearly illegal in itself”. The rule exemplifies the non-justiciability of acts of turpitude, and I agree with Moore-Bick J that it has no application here. If it did, however, it would still not necessarily shut out the application of the 1978 Act.
Section 2(1) of the 1978 Act requires the court to apportion each person’s contribution “having regard to the extent of that person’s responsibility for the damage”. This court, I agree, remains bound by what it decided in Friends’ Provident notwithstanding the doubt later cast upon it by as respected an authority as Lord Steyn who, as both counsel accept, was speaking obiter. Moreover, the academic critique of Friends’ Provident is, at least in my respectful view, not obviously right. Since the word “damage” in s.1(1) has the meaning given to it by s.6(1), the fact (if it is a fact) that a restitutionary claim is not a claim for “damage suffered” is nothing to the point. The question is whether it is a claim for compensation in respect of damage for which the other party is liable. There is no obvious misnomer in describing a claim like the present Part 20 claim as concerned with compensating SGS in respect of damage, that is to say loss or harm, for which CAI has been held liable.
This solution would also address the real difficulty to which Mr Bloch drew attention in relation to restitution: CAI has not been enriched at all. It has parted with the money, and to the extent that the Part 20 proceedings are successful it is now going to be impoverished. There is nothing wrong with that in terms of statutory contribution and elementary justice, but it does not sound like restitution of a sum by which CAI has been unjustly enriched. That could apply only to the conspicuously absent Mr Mahdavi.
Our task has not been made any easier by the parties’ unwillingness to debate an apportioned contribution except under pressure from the court. Counsel’s arguments have essentially been for all or for nothing, and in the circumstances I do not dissent from the conclusion of the other two members of the court that the justice of this particular case requires CAI to reimburse SGS in full, whether by way of subrogation or recoupment or contribution. But for my part I would have preferred to be able to put the statutory remedy of contribution first rather than last among the reasons for so concluding.
Dame Elizabeth Butler-Sloss P
I agree that the appeal should be dismissed for the reasons given by Lord Justice Clarke.
Order: Appeal dismissed. All consequential orders to be decided on paper.
Sheehy v Talbot
, High Court, Edwards J., July 3, 2008JUDGMENT of Mr. Justice John Edwards delivered on the 3rd day of July, 2008
Introduction
1. This is an appeal against the judgment and order of the Circuit Court given in this matter on 9th July, 2007. The appeal was by way of a full rehearing.
2. The proceedings are in the nature of a partition suit and for ease of reference it is proposed to hereinafter refer to the respondent (plaintiff) simply as the plaintiff and the appellant (defendant) simply as the defendant. The case involves a dwelling house property co-owned by the plaintiff and the defendant. At the time of its purchase the parties were not married but were in a domestic relationship and were living together as a couple. The property in question is registered land consisting of a leasehold estate under a long lease. The ownership of that interest is registered in the joint names of the plaintiff and the defendant. Accordingly, they are legally speaking joint tenants. However, as the parties contributed to the acquisition and subsequent improvement of the property in unequal shares the maxim that “equity leans against joint tenancies” comes into play so that in equity the parties are presumed to have acquired the property as tenants in common with beneficial interests proportionate to their respective contributions. Of course, this is only a presumption, and this presumption is open to rebuttal, but as neither of the parties in this case has sought at any time to argue in favour of its rebuttal the court intends to proceed on that basis.
3. Unfortunately, unhappy differences have arisen between the parties and the plaintiff now seeks an order from the court directing the sale of the property and a division of the proceeds as between the parties in proportion to their respective beneficial interests. The plaintiff relies primarily on s. 4 of the Partition Act, 1868, but in the alternative seeks the same relief at the discretion of the court under s. 3 of the Partition Act 1868.
The Law Relating to Partition or Sale in Lieu of Partition
4. The law in this regard is succinctly stated in Wylie’s Irish Land Law, 3rd Ed. at paras. 7.35 and 7.36 thereof (pages 442 – 445 inclusive). Professor Wylie states:-
“[7.35] First, all the co-owners may voluntarily agree to put an end to their co-ownership and to partition the property in the manner they agree. By statute, such a voluntary partition by joint tenants or tenants in common must be by deed. If, however, the joint tenants or tenants in common could not agree on such a partition, there was no right at common law in any one of them to force a partition on the others. Such a right was first introduced by a statute passed by the Irish Parliament in 1542, which enabled a joint tenant or tenant in common to force the partition of the property on the other co-owners, whether or not it was sensible or convenient to have such a partition. This position was improved considerably by the passing of the Partition Acts, 1868 and 1876, both of which applied to Ireland.
“[7.36] These acts gave the court power to order a sale of the property instead of physical partition and to divide the proceeds amongst the co-owners in accordance with their shares. The obvious situation where this power would be invoked would be where the co-owners had held a single item of property, such as a house or other building which could not be easily partitioned so as to give each co-owner a viable part. Several points should be noted about the jurisdiction conferred by the Partition Acts. First, a distinction is drawn between cases where the interest of the applicant for partition or sale, or of the applicants collectively, comprises at least half the value of the property co-owned and cases where it does not. In the case of the former the applicant is entitled to a direction for a sale unless the court ‘sees good reason to the contrary’. In the other cases the applicant must establish circumstances justifying a sale in lieu of partition such as the nature of the property or the number of interested parties, and convince the court that the sale ‘would be more beneficial for the parties interested’ for it to exercise its discretion to order a sale”…“Secondly, it is not entirely clear what the parameters of the jurisdiction under the two provisions is, a matter which has come under consideration by the Irish Courts recently in cases where one co-owner’s interest has been mortgaged or charged and the mortgagee or chargee has invoked the jurisdiction to enforce its security against the other co-owner. For example, the suggestion that a court must order either partition or, if that is inappropriate or impracticable, a sale has been rejected on the basis that the jurisdiction confers a wider discretion, including the power to refuse both applications. Furthermore, the view has been taken that the court has a discretion, in cases where it is minded to order a sale, to postpone making an order pending enquiries about the feasibility of a sale or to make the order but to postpone the date of its becoming effective. Thirdly the jurisdiction can be invoked only by a party or parties “interested” in the co-owned property. This clearly includes a mortgagee of a co-owner’s interest, including a judgment mortgagee.” …“Lastly, in making an order for partition or a sale the court is to give ‘all necessary or proper consequential directions’. It has long been settled that the courts will employ principles of ‘equitable accounting’ and make appropriate adjustments to ensure each co-owner is treated fairly. Costs of the sale are usually borne out of the proceeds, but special costs incurred in respect of a particular co-owner may be ordered to be borne by his share.”
Various authorities are footnoted in Professor Wylie’s text in support of the propositions advanced. However, it is not necessary to refer to them as the court accepts without reservation that the passages just quoted accurately summarize the law.
5. However, for completeness I think it would be appropriate to quote in full ss. 3 and 4 respectively of the Partition Act, 1868 and I now do so. Section 3 is in the following terms:-
“In a suit for partition, where, if this act had not been passed, a decree for partition might have been made, then if it appears to the court that, by reason of the nature of the property to which the suit relates, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions”.
Section 4 is in the following terms:-
“In a suit for partition, where, if this Act had not been passed, a decree for partition might have been made, then if the party or parties interested, individually or collectively, to the extent of one moiety or upwards in the property to which the suit relates, request the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the court shall, unless it sees good reason to the contrary, direct the sale of the property accordingly and give all necessary or proper consequential directions.”
6. Though the lawyers in the case will understand this, it is necessary to state for the benefit of the parties, and in particular for the benefit of the defendant who is not legally represented, that the word moiety means a half, especially in legal or quasi legal use. Where the word is used with the intention of referring to an interest in property, it means a half-part, unless more than two persons are interested in the property in which case it refers to an equal part or share.
The issues
7. In the present case the plaintiff claims to be entitled to a legal and beneficial interest in the premises in question and, though she does not plead it in express terms in her Equity Civil Bill, counsel on her behalf opened the case on the basis that the plaintiff owns “a moiety or more of the premises”. The defendant’s defence is a handwritten document and was, I think, correctly characterized by counsel for the plaintiff as representing a plea de coeur. It does not expressly address the question of whether the plaintiff’s interest amounts to “a moiety or more”. Neither does it address the question as to whether the defendant has “a moiety or more”. However, as the defendant is lay litigant and no point is taken by either party in respect of pleadings, I have approached the case on the basis that the defendant joins issue with the plaintiff in respect of all claims made by her. Furthermore, as it emerged in the course of the evidence that the defendant was himself contending for a 70% interest in the property as against a 30% interest in favour of the plaintiff, it is appropriate to treat him as effectively counterclaiming for a declaration that he is entitled himself to a least a moiety “or more” in the property. Moreover, the defendant’s case is that the court ought, in the exercise of its discretion, to refuse to order either a partition or a sale. The defendant explained in evidence, and I understand it to a central plank of his case, that neither of these steps requires to be taken because for some time the parties have been successfully co-existing and living separate lives under the one roof without unduly interfering with each other, such that de facto the property is already partitioned in the “virtual” sense, although obviously not in the physical sense. Quite simply he contends that the status quo should be maintained.
The Evidence
8. The plaintiff produced the copy of her folio which shows that the property in question, namely the dwelling house situate at No. 8 Inbhir Íde, Malahide, in the County of Dublin is registered in Folio No. 58590L of the Register of Ownership of Leasehold Interests for the County of Dublin. The folio shows that on the 12th May, 1994, the plaintiff and the defendant respectively were registered as full owners. She also produced her Certificate of Rateable Valuation which confirmed that the property has a rateable valuation of €15.87, which is well within the €254 upper jurisdictional limit of the Circuit Court. She explained that she and the defendant first got to know each other back in the 1960’s. They went their separate ways for a while and were reintroduced in 1990 by a mutual friend. At that time the plaintiff was living at 25 Strand Road in Sutton, a premises otherwise known as the “Tuck Shop”. It was in fact a newsagents and grocery shop with living accommodation overhead. The defendant came to reside with the plaintiff upon their reintroduction in 1990 and they co-habited there until 1992 when they purchased the premises the subject matter of the present proceedings. Her evidence was that the purchase price of No. 8 Inbhir Íde was in the order of IR£48,000 or IR£49,000. In addition there was a stamp duty liability and fees were due to solicitors and surveyors and there were certain other expenses associated with the transaction. The total cost of acquiring the property came to in or about IR£56,000. The plaintiff and the defendant each contributed IR£28,000 towards this. The plaintiff paid her IR£28,000 from savings. The defendant borrowed from his then employers, General Accident Insurance Co, to fund his contribution. However, the issue is complicated slightly by the fact that in order to be able to borrow IR£28,000 from General Accident, the defendant needed to clear a pre-existing debt. To do that he borrowed IR£3,300 from the plaintiff in a side deal. Once the purchase was completed the parties took steps to renovate the property. The total costs of the whole deal including both acquisition and renovation came to IR£73,382. The cost of the renovations, being IR£73,382 – IR£56,000 was therefore IR£17,382 and it was agreed that they would split this cost 50/50. Accordingly the defendant’s liability for the renovations came to IR£8,691. He did not pay this to the plaintiff immediately. The plaintiff paid for the entirety of the renovations on the understanding that the defendant would pay him later. The total sum owed by the defendant to the plaintiff was in fact IR£11,991 being the IR£8,691 due in respect of the renovations and the IR£3,300 loaned by the plaintiff to the defendant and previously mentioned. This outstanding sum of IR£11,991 was only paid by the defendant to plaintiff in 2001.
9. When the renovations were completed the parties moved into the premises in 1995. According to the plaintiff, difficulties arose in their relationship after they moved into No. 8 Inbhir Íde. To adopt that somewhat clichéd phrase used in family law litigation, unhappy differences arose between the parties. Moreover, relations between the plaintiff and defendant continued to deteoriate over several subsequent years until they reached the point of being, in the plaintiff’s view, non-existent. According to the plaintiff she and the defendant lived separate lives within No 8 Inbhir Íde in as much as was physically possible having regard to the fact that it is an end of terrace house. The plaintiff’s evidence was that in 2002 an extension was added to the house. She stated that when the house was purchased, the kitchen was in very poor condition. However, they left it as it was and let the house for a brief period. When they moved into the house themselves the plaintiff considered that the kitchen needed an upgrade. However, the defendant would not agree to up-grade of the kitchen. The plaintiff states that relations between them became worse and worse because they were living in a very confined space and eventually she commissioned the extension that was built in 2002 so as to add a new kitchen and a living room at the back of the house. She explained that she had these built with a view to alleviating the unhappy situation in the house by providing both parties with more space. The total cost of the extension was €53,841.19. The defendant contributed a sum of €2,890 towards these works and the plaintiff paid for the rest of it. The basic building works were carried out by Mr. Ryan, a building contactor (who gave evidence later on). The plaintiff’s recollection was that Mr. Ryan was paid a total sum of approximately €38,000. The plaintiff said that it was not €38,000 even and that Mr. Ryan would be in a position to confirm the exact figure. The balance of the total cost of €53,841.19 went on painting, decorating, tiling, a fitted kitchen and so on. The plaintiff confirmed that she had receipts in respect of all of the additional expenditure with her in court. (However, she was not in fact called upon to produce them.)
10. The plaintiff went on to describe her occupation as a financial controller with a firm in Balbriggan. Her present nett weekly income is €358, that is €25,000 per annum less tax and RSI. She is physically challenged and unable to work full-time. Nevertheless she works as much as possibly can. She will be 65 years old on the 7th September of this year and she does not how much longer she will be able to work for. She confirms that the Tuck Shop was sold in 1995. She does not have any pension arrangements, although she does have some savings. She was asked about her knowledge of the defendant’s financial circumstances. She confirmed that she was in court on a previous occasion when the defendant stated that his current income consists of the State Old Age Pension in the sum of €208 per week. The plaintiff does not believe this to be correct. She pointed out that the defendant was an employee at an insurance company (General Accident, now Hibernian) for forty odd years. Upon retirement he was entitled to a defined benefit pension consisting of two-thirds of his final salary. Arising out previous matrimonial proceedings between the defendant and his estranged wife, he is required to pay his wife one third of his pension entitlement and he is entitled to keep two-thirds of it. The plaintiff was unable to say for certain whether or not the defendant has ever collected his pension entitlements from his former employers. She stated that while she was still communicating at some level with him she did become aware that he was in dispute with his former employers in respect of a particular matter. While she was not completely sure of the current position, to the best of her knowledge he has not collected his pension entitlements. She confirmed that the defendant retired at age 65 or 66 and that he is now aged 71. She believes he went on sick benefit before his actual retirement and she does not know the actual date of his retirement. She was asked if she knew what the amount of his pension was. She stated that when he retired he was entitled to something in excess of €16,000 per year. Of that he is entitled to two thirds himself and he is liable to his ex-wife for the other third. She believes that the defendant has being allowing his pension entitlements to accumulate pending the outcome of his dispute with his former employers. She believes that that dispute is before the courts. The plaintiff also testified that to the best of her knowledge, the defendant was the recipient of money due on foot of insurance policies that he had contributed to during his working life. She believes that he has that money invested with Friends Provident. She thinks it was a sum amounting to approximately €200,000 at the time that he invested it. It is not due to mature until 2018, at which time his youngest child will be fifty. He has four children from his marriage. At that stage the defendant himself will be eighty-two years of age. The plaintiff was asked whether the defendant received a gratuity from his former employers upon his retirement. The plaintiff stated that she does not know. However, he had another policy of some sort that he did encash. He used that money to return the money that he owed to the plaintiff. In addition it also enabled him to buy a Mercedes Motor home for the sum of €58,000 or €60,000. He subsequently sold this.
11. The plaintiff was asked what living arrangements she envisaged making if the property was sold in lieu of partition as she was requesting the court to do. It was suggested to her by the court that the proceeds of sale might not yield enough for both parties to buy a new home. In response to that the plaintiff stated that other options exist. She suggested that they could each use their respective equity from the home and, subsidising that from their other resources, buy a smaller property. She stated that she would prefer to take her chances on going forward in a situation where she would no longer be stressed from morning to night. She further stated that her health is very badly affected by endeavouring to live in a situation that is untenable. She later characterised the present living arrangements as intolerable. She accepted that it would not be possible to rent property on €400 a week and live out of that sum as well. She further accepted that neither herself nor the defendant would get a mortgage at their respective ages. She stated that she would cut her cloth according to her measure and go and live wherever she could purchase and she believed that the defendant should do the same. The plaintiff expressed the view that various suggestions that had been put forward by the defendant were totally impractical, such as tossing for who stays. However, for better or worse she wants to achieve a severance of her ties with the defendant. The plaintiff confirmed that she also has the benefit of a widows pension amounting to €190 per week. In relation to her future plans she has not given any consideration to perhaps buying premises and renting a portion of it. She confirmed that in addition to the defendant’s State pension of €208 per week, and the pension that she believes he is entitled to if he were to draw it down, he also earns €120 a month from doing a small job for the same company that she herself works for.
12. Under cross examination by Mr. Talbot the plaintiff agreed that their friendship went back to 1962, a period of forty six years or thereabouts. She would not accept that they were friends still at this stage. She explained that they had become friends in 1962 and knew each other for a year or so. However, life moved on and they were not in contact for many years. They re-met in 1990. The defendant was in trouble and she was anxious to help. She allowed him to come to live with her, free gratis and for nothing. He had no car, he played his golf in Hermitage. He played his golf every Saturday and Sunday. He used her car for fishing. He did exactly what he wanted. She acknowledged that he had been very helpful with regard to getting up in the morning and bringing in the newspapers and all of that sort of stuff. She felt at the time that living with the defendant was the ideal solution to their respective needs, what with her living alone and him needing refuge. However, it has transpired that it has not been possible for the plaintiff and the defendant to remain friends. She characterises the defendant’s every word and motion towards her as demeaning. The defendant put to the plaintiff that he had paid his way from the time that they had commenced living together. The plaintiff denied this. She asserted that he was in a lot of debt and that he paid absolutely no contribution to living expenses for a number of years. The defendant put to the plaintiff that they had been lovers and she agreed that they had. He asked if she could identify a particular point in time at which the relationship between them had begun to deteriorate. She replied that “the total nail in the coffin was the purchase of the motor home”. She stated that she cried, pleaded and begged him not to purchase it. She alleged that he widened the gate of the property in total disregard for her needs and parked the motor home in the driveway. She then stated that even before that they had been going through very unhappy times and that she had arranged for them to go and see a counsellor in ACCORD. This was in 2001 or 2002 and they went to see this counsellor three times. The defendant put it to the plaintiff that the change in the nature of their relationship, that is the deterioration of it, coincided with the plaintiff finding once again her son whom she had put up for adoption at birth. The plaintiff disagreed with that. It was put to the plaintiff by the defendant that she could get vacant possession if she was prepared to rent a two bedroom furnished apartment for him. The defendant put it to her that he had suggested this previously. The plaintiff stated that she had asked the defendant to put his proposal in writing, but he had refused to do so. She stated that there was in fact an add-on to the proposal. The add-on was that he would still keep ownership of half of No 8 Inbhir Íde and this was not acceptable to her. When asked by the judge to explain why the defendant’s proposal would be unacceptable she stated that first of all she would not have enough money to pay the defendant’s rent. Secondly, she could not anticipate for how long that might go on for and what penury that might put her in as time went on. The defendant suggested that the arrangement would only be a temporary one until the appeal to the Supreme Court in his matrimonial litigation was disposed of, at which time he hoped to have sufficient funds to buy out the plaintiff. The plaintiff would not agree that this was a viable proposition. The plaintiff was asked by the defendant if she was being vindictive. She stated absolutely not, that she wished the defendant every joy and happiness in his life. She stated that her only wish and desire was that the matter could be resolved in a way that would enable both parties to move on with their lives. The defendant then asked the plaintiff where the figure of £28,000 which he had contributed towards the purchase of the property had come from. The plaintiff stated that she could not remember. It was then put to the plaintiff by the defendant that the reason he contributed £28,000 was that he was asked for £28,000. He stated that he had had a free hand and could have borrowed £28,000 or £58,000 – it did not matter. He claimed he had said to the plaintiff “Tell me how much I need to borrow. It is a once off situation. I will be retired soon and I may not get another chance to borrow.” The plaintiff disagreed with this. She stated that the defendant had told her that he only had the capability of borrowing IR£28,000 and that he would not be able to pay for the refurbishment until after he had got some money that was coming to him from policies and in connection with his retirement. The plaintiff was then asked how much she realised on the sale of the Tuck Shop. She stated that she had received £159,000 in 1995. The defendant then put to the plaintiff that when he was living with her at the Tuck Shop he “worked his butt off” while she stayed upstairs resting. He put it that he worked in the shop every minute and hour, alternatively he was up on the roof fixing slates or doing the garden or making shelves in the back or painting outside or inside. He suggested to her that she has a very leisurely lifestyle and has always had. He suggested that she only works when it suits her, that she would ring up practically every morning to say she is not well and he would then bring her breakfast in bed, although he had stopped doing that recently. Mr. Talbot contended that what had started in the Tuck Shop continued when they were living in No. 8 Inbhir Íde. The plaintiff agreed that the defendant had performed many tasks in the nature of what might be described as “general maintenance”, and that he had thereby made an indirect contribution.
13. The plaintiff was then re-examined by her counsel and confirmed to him that the £159,000 realised on the sale of the Tuck Shop was saved. None of it was invested in pension funds.
13. The next witness was a valuer called by the plaintiff, a Mr Sean Nolan. He confirmed that he is principal in the firm known as Nolan & Fahey, Auctioneers, Valuers and Estate Agents in Donabate, Co. Dublin. He confirmed that he had been engaged by the plaintiff’s solicitors to conduct an examination of No. 8 Inbhir Íde, Malahide, Co. Dublin and that he did so on 15th May, 2008. He prepared a report for the court and a copy of the report was handed in. He was asked about his qualifications and experience and the court was satisfied with respect to his credentials. He then stated that he had been asked to inspect and value the premises on two different bases. Firstly, as the premises stood and secondly without the extension that had been added in 2002. He confirmed that the title to the property is leasehold but that that would not have great bearing on the value having regard to the length of the lease. He ventured the opinion that the freehold could be purchased for relatively small money, perhaps €500. His opinion as to the current market value of the property, in the condition in which it now is, was €515,000. The valuation of the property without the extension added in 2002, would be in region of €475,000. He then described the premises and it is not necessary for the purposes of this judgment to rehearse in full the relevant description. He confirmed that while it might be technically possible to effect a physical partition of the premises it would not be economically viable to do so. He suggested that it could cost anywhere between €200,000 and €250,000 to physically partition the property. Moreover, such alterations would have a negative impact on the value of the premises. In addition to that, he was highly sceptical that it would be possible to secure planning permission from Fingal County Council for such alterations. He anticipated that if a planning application was lodged for that purpose it would provoke objections from neighbours whose dwellings would be affected.
14. Mr. Nolan was cross examined by the defendant. It was put to him that one bedroom was three times the size of the other. Mr. Nolan replied that bedroom 1 measured 2.3m x 4m; bedroom 2 measured 2.23m x 2.69m and bedroom 3 measured 2.34m x 2.86m. He agreed that it was clear that one of the rooms was significantly larger than the other two. The defendant then indicated agreement with Mr. Nolan that it would be totally impractical to partition the house but suggested to him that two people could live amicably, without too much trouble, with the way that the house is constructed at the moment, namely with two separate bedrooms, two separate dining room cum sitting rooms, and with entrances at the back, to the front and to the side. Mr. Nolan agreed that that was possible, if the parties wished to live in that way. He was then asked about the garden and agreed that the gardens were very nicely maintained. He was asked what value the gardens would add to the house and he said that he would not be able to put a precise figure on that. He agreed that by virtue of the defendant having knocked down the pillars that existed at the front entrance, two cars can now conveniently get through the entrance. He commented that a lot of houses today have to widen their drives because most houses would have two cars.
15. Mr. Nolan was asked by the judge whether, on a 50/50 division of the valuation figure of €515,000 that he had mentioned, it would be possible for the parties to each buy a one bedroom apartment in his area of North Dublin for their respective €257,000 shares. He stated that it was possible, that indeed they could comfortably buy one at this moment in time. He suggested they might even have a small surplus. Pressed on this matter he indicated that one bedroom apartments in his area of North Dublin were running from €225,000 upwards, and that the figure of €257,000 would provide sufficient to ensure that associated costs such as stamp duty, legal fees, surveyor’s fees etc. were also covered. The defendant was afforded the opportunity to ask the witness some further questions in cross examination arising out of the issues raised by the judge. The witness confirmed that the type of property that he was talking about would not come with a car space. However, there are properties available on the market that are not a five minute walk from the train station. The witness was then asked to put a figure on what it would cost to acquire a two bedroom house, alternatively a two bedroom apartment, furnished, within two miles of the Four Courts. The witness responded that the defendant was speaking about a very diverse area. He was then asked to answer the question with reference to Chapelizod. He stated you might be able to get something for a sum in the region of €250,000 there. When asked to clarify if he was speaking of two bedroom properties he said maybe not two bedroom properties. He was unable to put a specific price on a two bedroom apartment within Chapelizod because he did not have details to hand relating to prices in that district. However, he confirmed that it was unlikely that the defendant would be able to buy either a two bedroom house, or a two bedroom apartment, together with garden and parking, for half the proceeds of the sale of No. 8 Inbhir Íde. Mr. Nolan was then asked about what it would cost to rent a two bedroom property in the same general area as that in which the plaintiff now resides and he suggested that it would cost €1,200 per month on the basis of a twelve month lease. He agreed that a rental subsidy might theoretically be available to somebody in Mr. Talbot’s position, although he would have to be means tested in respect of that. However, he stated it was probably not realistic to expect that he would qualify for a state subsidy. He was then asked about the possibility of income being generated by the rental of part of a property to a lodger. He was unable to offer a view on this, as his work did not involve letting property on that basis.
16. The next witness was Mr. Patrick Ryan, a building contractor. Mr. Ryan confirmed that he built the kitchen extension that was added to the property in 2002. The extension amounted to 240 square feet and he looked after constructing the floors walls and roofs, as well as plumbing, electrics and the constructing of decking to the rear of the building. It took twelve weeks to do the work. The contract price was €34,000 and he was paid in stage payments. There were also extras and he was paid a sum of €3,632 in respect of extras, principally the decking. He did not install the fitted kitchen nor did he do the tiling or paving. He was asked about the cost of partitioning the house. He was reluctant to volunteer an estimate of the cost but when pressed suggested that you would be talking of a sum of in or around €200,000.
17. Under cross examination by Mr. Talbot, Mr. Ryan agreed that the old kitchen was functional but not beautiful. Mr. Ryan confirmed that he dealt solely with the plaintiff. He said that he was not asked to the opening of the extension. Indeed, he was not aware that there had been an opening. That concluded the plaintiff’s case.
18. The defendant was then asked if he wished to go into evidence and he stated that he did. He was invited into the witness box and was sworn. He then commenced to read from a document which he had provided to the court in advance. It is in the nature of a written submission. It was pointed out to the defendant that there is a difference between giving evidence and making submissions. He was informed that if he wanted the court to take into account any matter with respect to the facts of the case, the court would have to receive sworn testimony on oath so that he could be cross examined if necessary by counsel for the respondent. In addition, he would have an entitlement to make any submissions that he might wish to make at the end of the case. It does not appear that the defendant appreciated the distinction being made and proceeded in any event to read his pre-prepared submission into the record as though it were evidence. As the “submission” in question contained a mixture of factual and legal assertions, the court decided, in the exercise of its discretion, to allow the procedure, albeit that it was an irregular one. However, counsel for the plaintiff was allowed to cross examine him when he had finished.
19. The defendant’s submission commenced with a request “for judgment and transcript.” He also asked for costs under the “Litigants in Person Act, 1975”, though there is no such Act on the statute books in this country. He then asked that in the event of a sale being ordered that carriage of the sale would be granted to his solicitor, Neil Blaney of Portmarnock, who holds the deeds to the property. The defendant then referred to an application made by him to the Supreme Court on 19th June, 2008, for a priority hearing of the appeal in his matrimonial litigation. He stated that he had been informed that the court cannot allocate him a date at this time because the list is already full. He stated that he had been told that while it remains possible, it is also unlikely, that he will get a hearing this term, or even next term.
20. The defendant then referred to previous motions in the present proceedings, some of which were heard by Mr. Justice McGovern, and some of which were heard by this Court. These motions related to procedural issues and, strictly speaking, have no bearing on the merits of the case. However, as the defendant is clearly under a misunderstanding and misapprehension as to what in fact occurred in the course of these interlocutory hearings, and feels deeply about it, I think it is desirable to address these matters. Insofar as I have been able to ascertain what occurred in this case from a perusal of the file, the following seems to be the position. Following the Circuit Court hearing the defendant lodged a Notice of Appeal. That Notice of Appeal was lodged within time and after some months the matter came up in the High Court list of Circuit Appeals for hearing. It appears that both sides missed it in the list and it was struck out in default of an appearance by anybody on the hearing date. When the defendant discovered that the case had been struck out for no appearance he was anxious to have it reinstated. This could only be done on consent. In fairness to them, the solicitors for the plaintiff were willing to consent. In that regard they wrote a letter to the defendant dated 18th February, 2008, in the following terms:-
“Dear Mr. Talbot,
We confirm that we have discussed the matter of the extension of time for re-entry in the appeal with our client and she is agreeable to same provided the matter is applied for within the next week to ensure that there is no further delay in this matter and that the case gets on for hearing.”
Unfortunately, this letter though it was intended to be helpful sowed the seeds of a misunderstanding.
21. It sowed the seeds of a misunderstanding because the letter referred, somewhat unfortunately, to “the extension of time for re-entry”. The defendant did not need any extension of time. What he needed was the plaintiff’s consent to the matter being re-entered. I am completely satisfied that the letter was intended to convey just that, namely that the plaintiff’s solicitors were prepared to consent to re-instatement as long as it would be done promptly. However, the actual phraseology of the letter falls into the category of “things that could have been better put” and as a result it created unnecessary confusion, at least in the mind of the defendant.
22. The next thing that happened was that the defendant brought a motion before Mr. Justice McGovern on 3rd March, 2008, claiming:
“That appeal set aside 14th January, 2008, without notice to, or knowledge of self- representing respondent, be instead allowed maximum time to proceed because of related matter outstanding in Supreme Court and unsuitability of Partitions Act 1868 to 1876.”
This motion was grounded upon a handwritten affidavit of the defendant. That affidavit is in the following terms:-
“I seek enlargement of time to appeal, agreed by the plaintiff, the facts being 9th July, 2007, was the first and only precipitant hearing before President C.C. sympathetic to the strong case for unequal sharing but restricted to 50/50 by Partitions Act 1868-76 which sits uneasily with common law principles of justice. Plaintiff’s resources stretch far beyond those I can summon so that judgment leaves me homeless and destitute a second time. It is impossible to get Partitions Act 1868-76 to understand why 50/50 is mandatory and, although not married, why there is not recourse to provision in Family Law (d) Act 1996 for the safe and easy partitioning that already exists. Mr. Keane, at the time Chief Justice, said, “Equal division of assets is emphatically not mandated in Irish law”. Mrs. Justice Susan Denham said, “The need is for proper provision not division”. Only income @ 71 y.o. is €230 p.w. pension from Social Welfare. Once married, now single, I feel discriminated against unconstitutionally by outdated Partitioning Act 1868-76. Mr. David Neenan, Registrar, 14th January, 2008, accepts, as self-litigant, “I should have been forewarned of strike out prejudiced by not being present to object and conversely ask maximum enlargement of time when resolution of related matter before Supreme Court helps, hopefully, finances.”
23. When the matter came on for hearing before McGovern J. on the return date, he reinstated the proceedings. It is clear that this much happened because the Registrar recorded the outcome in his notes with the single word “reinstated”. However, the defendant appears to have mistakenly believed that McGovern J., who had been handed up the letter of the 18th of February 2008 as confirmation of the plaintiff’s attitude, had also agreed to adjourn the proceedings until after the Supreme Court appeal in the defendant’s matrimonial case had been concluded. What seems to have happened next was that, in apparent conflict with his belief that the proceedings had been adjourned for a lengthy period, the defendant received notification that the re-instated appeal would be heard on the 26th of May 2008. This undoubtedly provoked his ire. He then attempted to take up an order to the effect that “time” in the proceedings “had been extended”. He claims that the Registrar refused to draw an order to that effect. Now it is clear to me from the defendant’s submissions that he is confused in his own mind as to what the notion of “extension of time” involves, and that he erroneously equates it to adjournment of the proceedings. A perusal of the file establishes that no order has been drawn reflecting an adjournment of the present proceedings by McGovern J until after the Supreme Court has given judgment in the defendant’s matrimonial proceedings. Moreover, there is no note of any such an order having been made. Of course, the Registrar could only draw such an order if McGovern J. had indeed made an order to that effect. I do not believe that McGovern J made any such order, and I consider that the defendant is mistaken in believing that he did.
24. What happened next was that the defendant then caused the matter to be re-entered before McGovern J. and it came on before him again on 21st May, 2008. It seems that on this occasion the defendant complained bitterly that he had been unable to take up an order after the previous hearing in early March. Further, that notwithstanding that the plaintiff had on that occasion “consented to an extension of time” this was now being disputed. In the circumstances, he requested confirmation from the court that “time had been extended”. He further sought a stay on the present proceedings (presumably until after his appeal to the Supreme court in the matrimonial case had been dealt with). It seems that McGovern J, though possibly having little or no specific recollection of the particular case, and probably not fully appreciating the nature of the confusion then existing in the mind of the defendant, was happy to “confirm” whatever it was that he had done in March, but there was no question of him agreeing to stay the proceedings. The file discloses that following this hearing an order was drawn in the following terms:-
“And counsel for the applicant indicating to the court that the applicant consented to an extension of time for the issuing of the said notice of appeal on 3rd March, 2008, the court, for the avoidance of doubt, confirms that on consent that the time for the issuing of the notice of appeal had been extended.
And the court THUS REFUSES to stay the hearing of the notice of appeal on Monday 26th May, 2008.”
25. The court as presently constituted was assigned the Circuit Appeals list on 26th May, 2008. When the case was called, the defendant made two applications to me. His first application was that the proceedings should be in camera. I refused that application because these are not proceedings brought under either the Judicial Separation and Family Law Reform Act 1989 as amended by the Family Law Act 1995 or under the Family Law (Divorce) Act 1996. The parties are not, in fact, married. Moreover, there is no other statutory provision on foot of which the defendant would be entitled to have the proceedings heard in camera. I pointed out to the defendant that the Constitution requires that justice be administered in public save where the Oireachtas has, by Statute, expressly provided otherwise and that, in the circumstances, the case would have to proceed in public. The defendant then applied to me for an adjournment of the proceedings. The grounds on which he sought his adjournment were two-fold. Firstly, he stated that he had understood that the case would not be proceeding as a result of McGovern J. confirming that time was being extended; secondly, he was not in any case ready to proceed. It was unclear to me at that point what exactly had happened previously and what exactly the defendant meant by his statement that “time had been extended”. However, I was sympathetic to his application for an adjournment on the second ground advanced, namely that he was not ready, and I asked him how long he would need. At that point, he stated he would need two years. When I enquired as to why he would require two years in order to be ready to do the case, he informed the court about the pending appeal in the Supreme Court in his matrimonial proceedings. I informed him that I was not prepared to postpone the hearing of the appeal in the present proceedings until after the outcome of the Supreme Court appeal in his matrimonial proceedings but that, in the exercise of my discretion, I would give him a reasonable time within which to make the necessary preparations, given that he seemed to be under the impression that the case was not to proceed, possibly arising out of some misunderstanding. I informed him that I was willing to adjourn the case for four weeks to enable him to prepare and that the matter would be listed for hearing on 23rd June, 2008.
26. It is quite clear to me that the genesis of the problem is that Mr. Talbot seized upon the phrase “extension of time for re-entry in the appeal” which appears in the letter of 18th February, 2008 from the plaintiff’s solicitors and mistakenly interpreted that as being consent on their part to a deferral of the entire proceedings herein until after the hearing of his Supreme Court appeal in the matrimonial proceedings. Perhaps it was a case of hearing only what he wanted to hear, but he seems to have been of the view that that was what McGovern J. agreed to as well. Manifestly, McGovern J. did not agree to this. Unfortunately, the defendant’s misunderstanding in that regard has caused him to perceive conspiracies everywhere and he has regrettably been free and easy with robust and unfortunate allegations of deliberate obstruction on the part of officials, of bias on the part of members of the judiciary, of the telling of deliberate lies and untruths by his opponent’s legal team, and of duplicity on the part of the plaintiff. I am satisfied that all of these allegations are groundless and I hope that this judgment will, in part, serve to reassure the defendant that there has simply been a misunderstanding on his part as to what it was that the plaintiff’s solicitors were agreeing to. It is quite clear to me that notwithstanding the meaningless terms of the plaintiff’s solicitor’s letter of 18th February, 2008, and the incorrect reference therein to an extension of time for re-entry, McGovern J., when the matter was before him in early March 2008, interpreted this letter as representing the consent of the plaintiff to the reinstatement of the appeal and he made an order accordingly.
27. As I have said, much of the submission read into the record by the defendant at the hearing of the appeal sets out the plaintiff’s perspective on the events that I have just outlined. Apart from that, however, there is little of substantive relevance to the issues that I have to decide in this case. The defendant submitted that the Partition Acts were solely designed for married couples and could not be used for the determination of proprietary disputes between an unmarried couple. He is quite simply wrong about this and I so rule. He directed the court’s attention to para. 19.61 in Shatter’s Family Law, Fourth Edition, under the heading ‘Property Rights’. However, this passage deals with s.36 of the Family Law Act 1995. The plaintiff is, in this case, relying on the Partition Acts 1868-1876 and is not relying upon the Family Law Act 1995. The defendant also referred to the unsuitability and unconstitutionality of the Partition Acts 1868-1876, pointing out that they pre-date the foundation of the State. However, as I have pointed out to the defendant several times, I have no jurisdiction to hear a challenge to the constitutionality of the Partition Acts, in the context of a circuit appeal. The court was also referred to a judicial statement of former Chief Justice Ronan Keane wherein he is said to have stated in a particular case that “equal division of assets is emphatically not mandated by Irish legislation”. Further, Mrs. Justice Susan Denham was cited as having stated “the need is for proper provision not division”. This court acknowledges that these statements (or statements approximating to those quoted) were made. However, it is also aware of the context in which those statements were made. Neither statement was made in the context of relief claimed under the Partition Acts, 1868 to 1876 in respect of a property owned by an unmarried couple. Rather, they were made in the context of family law proceedings between married persons, under specific family law legislation providing, inter alia, for the making of property adjustment orders in respect of matrimonial property.
The defendant further submitted that under inequality (sic) legislation, discrimination is outlawed on the grounds of marital status. Accordingly, the defendant argues that co-habiting couples are to be regarded as equal before the law regardless of whether they are married or unmarried. I am satisfied that no question of discrimination on the grounds of marital status arises in the present case. The defendant further asserted that “to ensure the existence of amiable partitioning” he pays all bills in respect of the house and has done so since the 1st March, 2007. By way of example he points out that he paid a heating bill recently in the sum of €457 and another one subsequently in the sum of €280. He claims to be paying all bills including food bills (except for treats that the plaintiff decides to bring in for her). The defendant asserts that the plaintiff has far more resources than he has but that nevertheless he has made every effort to accommodate her demands. He asserts that she is just too demanding.
When the defendant had concluded his submission the Court enquired whether he had any problem with the 50/50 apportionment that had been given in the Circuit Court and, if so, what alternative apportionment he contended for. He replied that he did have a problem with the 50/50 apportionment and felt he was entitled to a 70/30 apportionment in his favour. He reiterated that he wanted the status quo maintained. He stated that he was in favour of amiable partitioning on the basis that has already existed for some time, in other words that the parties would continue to live separate lives under the same roof but that there would no physical partitioning of the property or no sale and division of the proceeds in lieu of physical partition. It was put to the defendant that from the plaintiff’s perspective the present situation is intolerable. He was asked what outcome he was contending for in the event of the court accepting the plaintiff’s evidence in that regard. He was asked if he was asking for a physical partitioning or a sale in lieu of partitioning and division of the proceeds. He agreed that physical partitioning was not a practical solution – that it was not on at all.
28. In cross-examination by counsel for the plaintiff he was asked to clarify his financial means. He confirmed that his pension has now gone up from €208 to €230 per week. He was asked about other assets and told the court that he has four life policies, one for each child, and that they are single payment fixed term policies. They will not mature until 2018 when he is eighty-two years of age and his youngest daughter Nicola is fifty. He was asked if the policies could be cashed in at this stage and he stated that they could not. He was then asked about his pension entitlements arising by virtue of his former employment. He acknowledged that his pension entitlements have been apportioned as between himself and his estranged wife in the ratio 60/40. That leaves him personally with a current gross pension entitlement of €9,600 p.a. However, he points out that he is not drawing his pension because he is in dispute with his former employers and is engaged in litigation with them. He expressed confidence that he would win that litigation. In the meantime the pension which has not drawn is accumulating. He accepted that the current value of pension entitlements not drawn down is in the order of €63,000 or thereabouts. He further acknowledged that he was entitled to a gratuity upon retirement but stated once again that he has not yet availed of this because of his dispute with his former employer. As the court understands it, the gratuity is not in addition to his pension entitlements. Rather, he can take some of his pension entitlement as a cash lump sum instead of as an annuity. If he opted for this it would obviously reduce the amount of the annuity payable to him. In any event he has not availed of any lump sum entitlement. He confirmed that with respect to the legal proceedings that he has in being against his former employer he is not legally represented. He claims that the reason he is not legally represented is that it is impossible to get any solicitor or barrister to act against an insurance company. He was then asked about other litigation that he is involved in including a professional negligence claim against a firm of solicitors and a claim against a golf club and the Golfing Union of Ireland. He acknowledged his involvement in those other cases. He was asked about his weekly outgoings and he confirmed that his full pension of €230 is spent on household bills and on his car. He was asked about the Mercedes Motor Home referred to in the plaintiff’s evidence, and how much he got for it when he sold it. He stated that he received something in the order of €20,000 to €24,000. He has €8,000 to €10,000 left at this stage and it is in a Post Office account. He draws on it from to time to supplement his old age pension. He has no other assets.
Decision
29. I am satisfied on the evidence that both parties contributed equally to the acquisition and initial renovation of No. 8 Inbhir Íde. However, with respect to the extension that was added in 2002, it is clear that the plaintiff paid for the vast majority of the costs of it in direct contributions. The total costs came to €53,841 and the defendant paid only €2,890 of that. The plaintiff paid the balance of €50,951. Accordingly to the valuer, the added value accruing to the premises overall by virtue of this extension is actually less than the cost of constructing it. The added value amounts to some €40,000, which in approximate terms amounts to 8% of the total value of the property (ie 8% of €515,000). Mr Talbot’s direct contribution to that added value amounts to about 0.6% (ie 0.6% of €515,000). For ease of calculation, I will round that up to 1%. Accordingly of the 8% added value created by the extension a proportion representing 7% is attributable to the plaintiff’s direct contributions, and a proportion representing 1% is attributable to the defendant’s direct contributions.
Additionally, Mr. Talbot contends he made indirect contributions to both the acquisition and improvement of the overall premises. The evidence is unsatisfactory in that regard because it is greatly lacking in detail. Moreover, the evidence is that the plaintiff’s contributions to both the acquisition and improvement of the premises came from savings and not from borrowings. In those circumstances, it is very difficult to say that the parties would not have been able to acquire and improve the property “but for” the indirect contributions of the defendant. As against that, the plaintiff herself has acknowledged that the defendant did make some indirect contributions by providing general maintenance services in respect of the property over the years.
If I was deciding this case solely on the basis of direct contributions I would, on the evidence, have to apportion beneficial ownership in the following way.
In respect of the 92% of the property value represented by the premises excluding the 2002 extension the parties are each entitled to an equal share, ie 46% each. In respect of the 8% added value represented by the 2002 extension this must be apportioned between the parties in the ratio 7:1. Accordingly the overall apportionment will be 53%: 47% in favour of the plaintiff. However, having regard to the evidence that I have with respect to indirect contributions from the defendant I am prepared to increase the defendant’s proportion on account of that. It is very difficult to do so on any exact or scientific basis because of the unsatisfactory state of the evidence but having regard to the plaintiff’s acceptance that the defendant has made indirect contributions in the nature of general maintenance, having regard to the defendant’s own evidence with respect to that, and having regard to the period concerned, I am prepared to raise the defendant’s proportion by 3%, and correspondingly reduce the plaintiff’s proportion by 3%, so as to the give each of the parties a 50/50 interest in the property. It follows from this that I regard the defendant’s claim that he should be entitled to 70% interest in the property as being not sustainable on the evidence and wholly unrealistic.
I accept the evidence of the plaintiff that the relationship between the parties has deteriorated to the point where it is virtually non existent. I accept that the parties are not friends anymore. I further accept the evidence of the plaintiff that she finds the present situation to be a huge strain and that this is having an adverse effect on both her physical and psychological health. She has characterised the situation as intolerable and I accept that it is intolerable for her. In those circumstances I believe that the defendant’s suggestion that the status quo should be maintained is simply untenable. As the plaintiff is interested in the property to the extent of one moiety she is entitled to an order for a sale of the property in lieu of partition and a distribution of the proceeds on a 50/50 basis pursuant to s.4 of the Partition Act, 1868. Accordingly, I grant her a declaration to that effect, and I direct that the property be sold and that the net proceeds of the sale after payment of taxes (if any) and the costs and expenses associated with the sale should be divided equally between the parties. I direct that the plaintiff’s solicitors Messrs. Tom Collins and Company of 132 Terenure Road, North, Terenure, Dublin 6 and the solicitor nominated by the defendant, namely Mr. Neil Blaney of Portmarnock, County Dublin are to have joint carriage of the sale. The solicitors having joint carriage shall agree between them the most appropriate mode of sale with a view to obtaining the best possible price for the property, including whether or not it is to take place by tender, by private treaty or by public auction, and in that regard they may advertise the property (or cause it to be advertised), they may retain such third party professional assistance as they may require, and they may fix an appropriate reasonable reserve.
I further grant an order directing the defendant to do all such things, perform all such acts and sign all such documents as may be necessary to give effect to the sale that I have ordered. Further, I wish to make it clear to him that if he fails to co-operate in the sale, or if he attempts to frustrate the sale in any way, I will regard it as a contempt of court and the matter can be re entered before me at any time for the purposes of seeking to have him attached and possibly committed to prison for contempt of court.
In case it is necessary for her to do so I grant the plaintiff liberty to apply to this Honourable Court for an order directing the County Registrar/Registrar of Titles to execute all such documents as may be necessary to give effect to the sale that I have directed.
Costs
30. The normal rule is that costs should follow the event. However, I am acutely conscious that if I award the costs of these proceedings against the defendant it may not leave him with sufficient funds to put a roof over his head after the sale. I think that in all the circumstances of the case I am going to exercise my discretion to make no order as to costs. In other words each side should bear their own costs of these proceedings. However, all reasonable conveyancing costs associated with the sale, and all expenses reasonably incurred by the solicitors having joint carriage of the sale, are to come out of the sale proceeds.
Liberty to apply
31. Both sides are to have liberty to apply in the event of unforeseen difficulty in giving effect to any or all of my orders and directions.