Deliberate Misrepresentation

Context

Prior to the 1960s, liability for negligent misrepresentation or misstatement had not been established as a tort /civil wrong. Negligent misrepresentation could nonetheless have significant implications in various other contexts, in particular in the context of contractual negotiations. See our chapter in relation to misrepresentations in the context of contracts.

There is a separate form of liability for fraudulent or deliberate misrepresentation and false statements. Unlike the case with a claim for negligent misstatement, a special relationship need not have existed between the claimant and the defendant. It may also constitute a serious crime.

A person who deliberately makes a false statement is liable for all of the direct consequences that arise from it. Unlike the case with negligence, it is not just limited to the consequence which are reasonably foreseeable.

Deceit / Fraudulent Misrepresentation

The misrepresentation must be of a past or present fact. It may be written or spoken or may be made through other effective communication. It will commonly arise in the context of a sale of an asset, whereby some important fact is misrepresented which has the effect of causing the buyer to buy or pay a higher price than would otherwise be paid.

In order to succeed in a case for deceit, the claimant must prove the following on the part of the defendant;

• the making of a representation regarding a past or existing fact;
• that the representation was made knowing or without belief in its truth or with reckless  disregard as to whether it is true;
• that it was intended to be acted upon by the defendant;
• that the claimant  acted on it and thereby suffered loss or damage

The representation of fact may be by spoken or written words. It may happen in a business context or otherwise.  It may arise, for example, in the sale of goods.

Requirements

The tort of deceit, which is based on a fraudulent misstatement, does not require any prior relationship or proximity between claimant and defendant. Because liability is based on fraud, the rules on remoteness are more expansive. The defendant is liable for all loss that flows directly. Issues of reasonable foreseeability do not arise.

The tort of deceit requires that a representation be made as to present or past matter of fact. The person making the representation must

• know that it is false,
• have no belief in its truth or be reckless as to whether it is true or false; and
• intend that the defendant should rely on and act on it.

The defendant must, in fact, act on it and suffer loss and damage in a consequence.

Nature of Statement

The statement is usually made by spoken words. In some circumstances, it may be implied, for example. A person may deliberately wear a particular uniform to give a false impression for a specific purpose.

Generally, silence would not be enough. If a statement is made, which becomes false in the course of negotiations, it must be corrected.

A half-truth may amount to misrepresentation if it omits to say one thing and thereby suggests something else. The defendant may be under a legal obligation to give information in some circumstances, such as where a fiduciary duty exists.

The statement must be one of fact rather than one of opinion. However, in certain circumstances, an opinion implies underlying facts, and the assertion of the opinion impliedly asserts these facts. In this case, there may be liable where the underlying fact is false.

The person making the statement must know that the statement is false or acts with reckless disregard for its truth. Where a person honestly believes something to be true, there is no liability for deceit.

Intent and Reliance

The defendant must have intended the claimant to act on the basis of the statement. If it is addressed to a group of people, it is enough that some members of the group so acted.

It is necessary to show the claimant relied on the truth of the representation. The person must be induced to enter into a transaction by reason of the false statement. If the claimant carries out his own investigation and relies on it, there can be no liability.

Loss

Damage must be proved. This could be financial, personal injury or damage to property.

The claimant must have suffered loss as a consequence of the fraudulent misrepresentation. It will generally be an economic loss but could be damage to property or even personal injury.

Loss and damage flowing directly from the misrepresentation will be recoverable. The defendant is liable for all loss that flows directly. Issues of reasonable foreseeability do not arise.

Silence / Positive duty to Correct

Silence, by itself, is not generally enough to constitute a misstatement. However, there may be misrepresentation by silence.

In some cases, a person is obliged to disclose information known to him, such as under the principle of utmost good faith, in the context of insurance contracts. The defendant may stand in a fiduciary position relative to the claimant. In this case, he may be liable for inaction and silence in his dealings with the person to whom the fiduciary duties are owed.

Where a statement is true when made but subsequently becomes false, there is an onus on the person who made the statement to correct it. Where a statement is literally true by its terms but in context, it is, in fact, misleading, there may be a misrepresentation if it is not corrected or clarified.

In certain contexts, something may be held out as being a particular thing or having a particular nature or quality by its setting. The placing of something in a particular place or category may amount to a misrepresentation.

Beliefs & Opinions

Promises are not generally beliefs in that; they indicate future intentions and commitments.  However, some promises may be or may imply a statement of fact. It has been famously said that the state of a person’s mind may be a matter of fact so that a stated intention to do a particular thing can be misrepresented if the requisite intent is not, in fact, present.

An opinion does not generally constitute a fact other than the fact that the person believes the opinion concerned. Words of praise or “puffing”, particularly in the context of advertisements, are unlikely to constitute statements of facts in most cases.

There may be penal consequences for false or misleading statements in advertisements, under consumer protection legislation, by way of prosecution or civil enforcement.Legislation may deem such statements to be contractual terms.

Knowledge and Intention

The person who makes a misrepresentation must know that it is false or be reckless as to its truth. A person who makes an honest mistake or who is careless will not be liable for deceit.

The defendant must have intended that the claimant acts on the basis of the representation. It must be “operative”. If the statement comes to the attention of third parties to whom it is not addressed or is not intended to be relied on, there is no liability to them.

The representation need not be made only to the defendant. Where it is made to one party and passed to another closely connected party, and relied on by that party, there may be a fraudulent misrepresentation.

The claimant must rely on the misrepresentation. Accordingly, if he never saw or heard it or acted exclusively on his own information, there can be no reliance. The defendant may be liable, even if the claimant made his own enquiries but which failed to detect the falsity of the matter concerned.

Various Issues

Clauses in contracts which purport to disclaim reliance on fraudulent misstatements are unlikely to be upheld at common law. They are specifically invalidated as unfair contract terms in UK legislation.

A representation design to procure credit is unenforceable unless it is made in writing by the person concerned. This is because of the legislation which requires that guarantee be proved in writing and signed by the guarantor.

The Statute of Frauds Amendment Act 1828 applies principally to guarantees. It provides that no action should be brought to charge any person on a representation or assurance made concerning the character, conduct, credit, ability, trade or dealings of another person to the intent or purpose that such a person may obtain credit, money or goods unless the representation or assurance is made in writing and is signed by the party to be charged (the defendant. This creates somewhat of an anomaly in that it does not apply to negligent misrepresentations.

 

Cases

Derry v Peek

House of Lords [1886-90] All ER Rep 1
LORD BRAMWELL:
I am of opinion that this judgment should be reversed. I am glad to come to this conclusion, for, as far as my judgment goes, it exonerates five men of good character and conduct from a charge of fraud, which, with all submission, I think wholly unfounded—a charge supported on such materials as to make all character precarious . . .
. . . I think we need not trouble ourselves about ‘legal fraud,’ nor whether it is a good or bad expression; because I hold that actual fraud must be proved in this case to make the defendants liable . . .
[ makes an excellent remark, that:
`mercantile men dealing with matters of business would be the first to cry out if I extended the notion of deceit into what is honestly done in the belief that those things would come about, and when they did not come about, make them liable in an action of fraud.’ . . .

…. says . . . :
`There is a duty cast upon a director who makes that statement to take care that there are no statements in it which in fact are false; to take care that he has reasonable grounds for the material statements which are contained in that document , which he intends should be acted on by others. And although in my opinion it is not necessary there should be what I should call fraud, there must be a departure from duty, and he has violated the right which those who received the statements have to have true statements only made to them.’
This seems to be a most formidable matter. I agree there is some such duty. I agree that not only directors in prospectuses, but all persons in all dealings, should tell the truth. If they do not, they furnish evidence of fraud; they subject themselves to have the contract rescinded. But to say that there is ‘a right to have true statements only made,’ I cannot agree, and I think it would be much to be regretted if there was any such right. Mercantile men, as STIRLING J says, would indeed cry out. No qualification is stated. If this is law, the statement may be reasonably believed to be true by him who makes it, but, if untrue, there is to be a cause of action; and that although he may have refused a warranty. I hope not. There is a duty to tell the truth; but it is a duty of imperfect obligation. It is a duty for non-observance of which the law gives no remedy if there is no fraud . . .
I think, with all respect, that in all the judgments there is, I must say it, a confusion of unreasonableness of belief as evidence of dishonesty, and unreasonableness of belief as of itself a ground of action . . . I think it is most undesirable that actions should be maintainable in respect of statements, made unreasonably perhaps, but honestly. I think it would be disastrous if there was ‘a right to have true statements only made.’ This case is an example. I think that in this kind of case, as in some others, courts of equity have made the mistake of disregarding a valuable general principle in the desire to effect what is, or is thought to be, justice in a particular instance. It might, perhaps, be desirable to enact that in prospectuses of public companies there should be a warranty of the truth of all statements except where it was expressly said there was no warranty. The objection is to exceptional legislation, and to the danger of driving respectable and responsible men from being promoters, and of substituting for them those who are neither. In this particular case I hold that, unless fraud in the defendants could be shown, the action is not maintainable … .
LORD HERSCHELL:
To make a statement careless whether it be true or false, and, therefore, without any real belief in its truth, appears to me to be an essentially different thing from making, through want of care, a false statement which is nevertheless honestly believed to be true. And it is surely conceivable that a man may believe that what he states is the fact, though he has been so wanting in care that the court may think that there were no sufficient grounds to warrant his belief.
I shall have to consider hereafter whether the want of reasonable ground for believing the statement made is sufficient to support an action of deceit. I am only concerned for the moment to point out that it does not follow that it is so because there is authority for saying that a statement made recklessly, without caring whether it be true or false, affords sufficient foundation for such an action . . .
. . . I think those who put before the public a prospectus to induce them to embark their money in a commercial enterprise ought to be vigilant to see that it contains such representations only as are in strict accordance with fact, and I should be very unwilling to give any countenance to the contrary idea. I think there is much to be said for the view that this moral duty ought to some extent to be converted into a legal obligation, and that the want of reasonable care to see that statements, made under such circumstances, are true should be made an actionable wrong. But this is not a matter fit for discussion on the present occasion. If it is to be done, the legislature must intervene . . . It ought not, I think, to be done by straining the law, and holding that to be fraudulent which the tribunal feels cannot properly be so described. I think mischief is likely to result from blurring the distinction between carelessness and fraud, and equally holding a man fraudulent whether his acts can or cannot be justly so designated . . .

Pearson & Son, Ltd v Lord Mayor, &c., of Dublin

House of Lords.

30 May 1907

[1907] 41 I.L.T.R 221

The Lord Chancellor (Loreburn), Earl of Halsbury, Lords Ashbourne Macnaghten, James of Hereford Robertson, Atkinson, Collins

April 16, 17, 18; May 30, 1907

 

Lord Loreburn, L.C.

This is an action for deceit brought by Messrs.  Pearson & Son, contractors, against the  Dublin Corporation. Inasmuch as I am about to propose that the case be remitted for a new trial, it is desirable that I should say no more than is necessary to explain my view. The plaintiffs’ case is that they were induced to enter into a contract for the construction of certain sewage works by statements made by and on behalf of the defendants as to the existence, to a depth of nine feet below ordnance datum, of an old wall. Undoubtedly, evidence was adduced at the trial from which the jury might, if they thought right, conclude that the plaintiffs were so induced by statements made on behalf of the defendants. Also, there was evidence for the jury that those statements were made either with a knowledge of their falsity, or—which is the same thing—with a reckless indifference whether they were true or false, on the part of the engineers employed by the defendants to make the plans which were submitted to the plaintiffs as the basis of the tender; and had the case rested there, I gather that the Chief Baron would have left the case to the jury, and that the learned judges, who subsequently had this litigation before them, would have approved this course. But another feature of the case was considered fatal to the plaintiffs’ claim. The contract contained clauses, which I need not cite at length, to the effect that the contractors must not rely on any representation made in plans or elsewhere, but must ascertain and judge of the facts for themselves; and, therefore, the Chief Baron withdrew the case from the jury. As I understand it, the view he held, in substance confirmed by the Court of Appeal, was that the plaintiffs so forewarned had no right to rely on any representation, and could not be heard to say they were induced by statements on which by contract they were not to rely. Or, at all events, it was said that the defendants, being themselves innocent, are protected by such clauses against the consequence of contractors acting on false statements made by defendants’ *222 agents, however fraudulent those agents might be. Now, it seems clear that no one can escape liability for his own fraudulent statements by inserting in a contract a clause that the other party shall not rely upon them. I will not say that a man, himself innocent, may not under any circumstances, however peculiar, guard himself by apt and express clauses from liability for the fraud of his own agents. It suffices to say that in my opinion the clauses before us do not admit of such a construction. They contemplate honesty on both sides, and protect only against honest mistakes. The principal and the agent are one, and it does not signify which of them made the incriminated statement or which of them possessed the guilty knowledge. It is not necessary to say anything as to the Public Authorities Protection Act, for the King’s Bench Division held that it did not apply to this case, and I am entirely of the same opinion. I respectfully recommend to your lordships that this case be sent for a new trial, and that the respondents pay the costs of this appeal and the costs in the Court of Appeal, the costs of the first trial to abide the event.

Earl of Halsbury.

I concur in thinking that in this case there must be a new trial, and for that reason I wish to say as little as possible on the merits of the case. The Chief Baron refused to leave the case to the jury upon the grounds to be presently examined, but in the course of what I have to say I want to point out at once that all I wish to affirm is that there was evidence produced by the plaintiffs which they had a right to have submitted to the jury. I do not assume that the jury would have found that fraud had been committed by anyone. Still less do I propose myself to find fraud proved as a fact, but simply that it was a question which ought to have been submitted to the jury. The sole question here appears to me to be that question. It was an ordinary action for fraud, causing damage to the plaintiffs. Tenders were invited for a contract to execute certain work, and certain plans and specifications were held out to intending contractors, as what I will at present call notices of what the work was intended to be. A contract was ultimately concluded upon the terms thus held out, and I may say at once that, apart from the question of fraud, there was nothing proved which could have called for an answer from the defendants. It is not necessary to go far in reciting the questions of fact. [His Lordship referred to the incorrect statement as to the wall, pointed out in the Lord Chief Baron’s judgment, and continued.] The one point which led to the Chief Baron’s judgment was, to use his own words, that the statement which he finds as a fact to be inaccurate does not contain a representation “intended to be acted on that the structure penetrated nine feet below datum line.” With the sincere respect that I have for anything said by the Chief Baron, I cannot help saying that there is some confusion here. The words may be the subject of contract, and they may be so qualified or cut down by other words as to alter their primary meaning, but the intention with which words are used is the condition of mind of the person using them, and that is a question of fact to be ascertained by a jury. If one assumes that the statement is false, and that it has caused a person to act upon it to his prejudice, the question whether it was fraudulently made by the person who made it may, and ought to be, decided by a jury. But the learned judge seems to think that the 43rd section of the contract removes it from being a question of fact for a jury, and that it becomes thereby a question of law for the judge. I must say, notwithstanding my great respect for the learned judge, I entirely differ from that view. The action is based on the allegation of fraud, and no subtlety of language, no craft or machinery in the form of contract, can estop a person who complains that he has been defrauded from having that question of fact submitted to a jury. I assume, of course, that there is evidence proper to be submitted to a jury, as in this case I think there was, and, if I rightly understand the Chief Baron, he would have submitted it to the jury but for the operation of that 43rd clause. I am wholly unable to understand why it was not proper to submit to the jury the question, whether the answer given by the defendants’ agents in respect of this very matter did or did not prove that the false statements contained in the plans were or were not fraudulently made, and if they were not intended to be acted on by the persons to whom they were made. [His Lordship reviewed the evidence as to the preparation of the plans, and continued.] I do not understand the learned judge to express any doubt as to the liability of the principals for the fraud of their agents, if there was fraud: Cornfoot v. Fowke, 6 M. & W. 358. If it was supposed to decide that the principals and agent could be so divided in responsibility that the united principal and agent might commit fraud with impunity, it would be quite new to our jurisprudence. One of the learned judges who decided the case of Cornfoot v. Fowke (ubi sup), explained it by saying that it was only decided on a point of pleading, and another by saying that it was attempted to add a term to a written contract which was not in it. Whether these were *223 satisfactory reasons I do not care to inquire. It is enough to say that the case is not law if it is supposed to affirm the proposition to which I have referred. Willes, J., said that he would be very sorry to suppose that case ever decided anything but a point of pleading, and added, in Barwick v. English Joint Stock Bank, L. P. 2 Exch. (Ch.) 259, 262, 265, in delivering the judgment of himself and Blackburn, Keating, Mellor, Montague Smith, and Lush, JJ., that the division of opinion in Udell v. Atherton, 7 H. & N. 172, arose not so much upon “the question whether the principal is answerable for the act of an agent in the course of his business—a question which was settled as early as Lord Holt’s time (Hern v. Nichols, 1 Salk. 289)—but in applying that principle to the peculiar facts of the case; the act which was relied upon there as constituting a liability in the sellers having been an act adopted by them under peculiar circumstances, and the author of that act not being their general agent in business as the manager of a bank is. But with respect of the question whether a principal is answerable for the act of his agent in the course of his master’s business, and for his master’s benefit, no sensible distinction can be drawn between the case of fraud and the case of any other wrong.” [His Lordship stated that the House of Lords had nothing to do with the question of damages, and continued.] I cannot conclude without saying that I desire to associate myself entirely with the observations which have been made by the Lord Chancellor, that it matters not in respect of principal and agent (who represent but one person) which of them possesses the guilty knowledge, or which of them makes the incriminating statement. If between them the misrepresentation is made so as to induce the wrong, and thereby damages are caused, it matters not which is the person who makes the representation or which is the person who has the guilty knowledge. I concur in the motion of the Lord Chancellor.

Lords Ashbourne, Macnaghten, James of Hereford, and Robertson, concurred.

Lord Atkinson [Stated the evidence as to the preparation of the plans and the grounds upon which the Lord Chief Baron withdrew the case from the jury, and continued.]—In commenting on clause 43 he expresses himself as follows:—“My clear opinion is that, with that statement in the specification, upon which the contractor was to make his tender, he is not entitled in point of law to say ‘I acted to the extent of a hair’s breadth upon the statement contained in these plans.’ He was told he should act upon his own judgment, and satisfy himself as to the dimensions, levels, character and nature of the existing works, and I regret to say that if he has not done that, but, on the contrary, has acted upon their statement, he is not entitled to recover upon that as a representation made with intent to be acted upon.” The rule of law thus laid down by the Chief Baron would apply to any action for deceit founded upon the plans and specifications. He makes no distinction between conscious and unconscious fraud, such as is made by the Court of Appeal—a distinction which if sound would appear to me to amount to this, that the contractor should be held to have a cause of action for  deceit if he was deceived by a deliberate lie, but no cause of action if he was deceived by a false and reckless statement not really believed in by those who made it, though in law equally fraudulent, and equally valid as the ground of such an action. With all respect to the learned judges presiding in the Court of Appeal, I think this distinction unsound, and, as I understood, it was not insisted upon before your Lordships by the defendants’ counsel in their able arguments. It would appear to me that a clause such as article 43 deliberately introduced into a contract by a party to the contract, designed beforehand to save him from all liability for a false representation made recklessly and without any real belief in its truth, is as much “conceived in fraud” and as much “part of the fraud” as if the representation had been false to the knowledge of the person who made it, because, to use Lord Bramwell’s words in Smith v. Chadwick (9 App. Cas. 187, at p. 203), “An untrue statement as to the truth or falsity of which the man who makes it has no belief is fraudulent, for, in making it, he affirms he believes it, which is false.” If, therefore, the direction given to the jury is to be upheld on the grounds upon which it was purported to be based, it must, in my opinion, be because these several articles of the contract, on their true construction, are to be held to embody a contract by the plaintiffs that they in effect are not, under any circumstances, to have a remedy by action for  deceit for any fraud which may be practised upon them by the defendants or by those acting on their behalf in the nature of a false, representation, that is a contract to submit to a fraud. As at present advised, I am inclined to think, on the authority of Tullis v. Jackson, [1892] 3 Ch. 441, and Brownlie v. Campbell, 5 App. Cas. 925, 937, 956, that such a contract would be illegal in point of law, and, with the most profound respect for the Chief Baron, I do not think that the articles of the contract relied upon can, on their true construction, be held to have had fraud, whether conscious or unconscious, within their purview or contemplation, or to apply at all to such a case of fraud *224 as the present is alleged to be. They were, I think, intended to apply, and do apply, to inaccuracies, errors, and mistakes, or matters of that sort, but not to fraud, whether of principal or agent or of both combined. I observe that the Chief Baron refers to Thorn v. Mayor and Commonalty of London, 1 App. Cas. 120, as an authority for holding, to use his own words, “that the object and effect of this clause 43 is to render the contractor a person who must depend upon his own knowledge acquired by his own engineers”; but the action in that case was an action for breach of warranty, not for  deceit. The contention of the plaintiff there was that if a man “stipulates that work shall be done in a certain manner, he undertakes that it can be done in that manner,” and the decision in effect was that no such undertaking is given by a stipulation of this kind. If the present action were founded on a warranty, expressed or implied, that the information given by the plans was accurate, or the works feasible, it may well be that article 43 would furnish a complete answer to the plaintiffs’ claim, but that is an entirely different matter. [His Lordship next dealt with the argument for the respondents, that the only representations made to the plaintiffs were innocently made by the defendants themselves, not by their engineers as their agents, and continued.] The only other point relied upon by the defendants on this appeal was that they were within the protection of the Public Authorities Protection Act, 1893 (56 & 57 Vict., c. 61), the fraud for which they were sued having been an act done by them “in pursuance or execution of any public duty or authority,” and that the action, which was only instituted on July 30, 1904, over four years after the false representation had been made, and over three years after the damage had commenced to accrue, was late. The answer to that upon the facts is that where, as in this case, the damage is continuing damage, the period of six months does not, under the express words of the statute, commence to run until after the damage has ceased. Here the damage continued till Aug. 27, 1903, and on Dec. 2 previous it was agreed between the plaintiffs and the defendants that the claims of the former in respect of the wrong now sued for should stand over till after the completion of their contract, an event which did not take place till the month of June, 1904. The Chief Baron decided, on the authority of Sharpington v. Fulham Guardians, [1904] 2 Ch. 449, that the making of a false representation, by which a person was induced to enter into a private contract with a public authority for the construction even of works authorised by statute could not be held to be an act done by that authority “in pursuance or execution of a public duty,” and that, therefore, the statute did not apply. The judges of the King’s Bench Division concurred, and the question was not dealt with by the Court of Appeal. Were it necessary to decide the point now, I should, for myself, be ready to concur in opinion with the Chief Baron, but owing to the existence of the arrangement which I have mentioned, I think it is not necessary to decide it. On the whole, I am of opinion that the decision of the Court of Appeal in Ireland was wrong, and should be reversed, and the judgment of the King’s Bench Division affirmed, and that this appeal should be allowed, and the order as to costs suggested by my noble friend on the woolsack made.

Lord Collins concurred.

Appeal allowed, and case remitted.

Harlequin Property (SVG) Ltd & Ors v O’Halloran & Anor

[2019] IESC 76 (01 November 2019)

Judgment of Mr. Justice John MacMenamin dated the 1st day of November, 2019Introduction1. Harlequin Property (SVG) Limited (“HSVG”), the first-named respondent, wasincorporated in St. Vincent and the Grenadines (“SVG”) as a special purpose vehicle tobuild a multi-million dollar resort on the Caribbean island of St. Vincent. The companymade an agreement with the government of SVG to that end. It acquired properties forthe development in the picturesque Buccament Bay area of the island. At its peak, theproject had the potential to employ up to 1,000 construction workers for its duration.2. Harlequin Hotels and Resorts Limited (“HHR”), the second-named respondent, wasincorporated by the parent group of both respondents to this appeal to operate hotels andresorts throughout the Caribbean. The company sold villas, hotels and property units toinvestors.3. Once it was opened, the Buccament Bay project would have provided significant long-term employment on the island. It is the subject matter of this appeal.4. Harlequin sought and received large sums of money from investors for the project. Thereare aspects of these background dealings which were of questionable legality. The projectwas described in court proceedings in England as having some of the characteristics of aPonzi scheme (Harlequin Property (SVG) Ltd. and Anor. v. Wilkins Kennedy [2016] EWHC 3188;[2016] All E.R. (D) 76, at para. 43).5. Unfortunately, the first-named respondent is now controlled by a bankruptcy trustee; thesecond, a company registered in the Cayman Islands, was placed in liquidation by orderPage 2 ⇓of the courts in that jurisdiction on the 11th September, 2018. Part of the background tothat unhappy situation is set out in the judgment and order under appeal.6. On the 23rd July, 2013, McGovern J. granted judgment against the first-named appellantto both respondents (collectively “Harlequin”, save where otherwise appears) in the sumof €1,575,500 ([2013] IEHC 362). He held that the first-named appellant (“theappellant”), Padraig O’Halloran, had by fraudulent misrepresentation personally inducedHarlequin to part with large sums of money to the value of the award or more. Themoney was transferred to Irish bank accounts under the appellant’s control. McGovern J.held that there was no evidence that Mr. Donal O’Halloran, the first-named appellant’sfather, had engaged in any unlawful conduct and dismissed the case against him.7. Mr. Padraig O’Halloran appealed the judgment against him. The matter was subsequentlyremitted to the Court of Appeal, but thereafter transferred back to this Court on foot ofArticle 64 of the Constitution.8. Mr. O’Halloran represented himself in this appeal. At the outset of the appeal therefore,the Court explained the legal and procedural framework within which the case would beconsidered. The Court drew attention to the legal principles applicable to findings of factmade by a High Court judge. By his fluency, command of detail and understanding of thelegal issues, Mr. O’Halloran demonstrated that he was well capable of presenting his caseon the appeal.9. The essence of the High Court judgment can be stated quite briefly. David Ames andCarol Ames were directors of the two Harlequin companies. Mr. Ames was the effectivecontroller of both. Mr. O’Halloran was the director and controller of a group of companiesnamed the “ICE Group”. Harlequin originally embarked on the large development on theBuccament Bay site by way of a subcontract to another developer: Ridgeview. AfterHarlequin discharged Ridgeview in July 2008, the ICE Group was retained to proceed withconstruction of the project.10. The sums of money involved in this retainer were very substantial. Some of the detail, inthe subsequent hearing before McGovern J., was complex. The case ran for 30 days in theHigh Court. Yet, despite these features, what is under appeal is essentially a fact-basedjudgment.11. McGovern J. made a series of findings of fact regarding misrepresentations which Mr.O’Halloran made, primarily to Mr. Ames of Harlequin. He held that Harlequin relied onthese, and that Mr. O’Halloran ignored advices and information available to him whichindicated that the project simply could not be completed by the set deadline of the 1stJuly, 2010. The judge concluded that Mr. O’Halloran induced the two respondentcompanies to make a series of payments to the ICE Group, and thereafter unlawfullyextracted the money from the ICE companies and transferred it to Ireland.12. The first stage of the project was to be completed and ready to take guests on the 1stJuly, 2010. Before then, over the period of September 2008 to May 2010, the partiesPage 3 ⇓made a series of agreements for the purposes of constructing the first element of whatwas to be this resort. The project was to include a marina, a number of restaurants, adiving shop, a reception and a beach bar. The scope of the work, identified in anagreement made on the 20th May, 2009, underwent a number of subsequent iterations.In later meetings on the 23rd and the 24th January, 2010, and the 18th May, 2010, itwas altered in scope. By then, the project had been reduced to what was described by theHigh Court judge as being two restaurants, a swimming pool, 60 cabanas for guests andothers to be used for various purposes; an “apartment block 2” to be completed foraccommodation, with the hotel staff to reside in cabanas until this was available; somesports facilities; an “apartment block 3” to be completed up to the 5th floor with roofframes fitted; and waterfront and retail villages (para. 18(e) of the High Court judgment).McGovern J. held that Mr. O’Halloran gave undertakings regarding the completion of theproject in a series of meetings up to the time ICE was discharged on the 11th June, 2010.During the same period, the judge found that Mr. O’Halloran took funding from ICE anddiverted it to his own use.The Main Legal Considerations13. Two main legal considerations apply in this appeal. The first relates to the legal status offindings of fact, the second to the nature of the tort of deceit arising from fraudulentmisrepresentations. In this case, both are closely interrelated. Much depended on how thejudge assessed context, identified what was said and done and analysed the intentions ofthe parties to the transactions.First Legal Consideration: The Status of Findings of Fact14. The first observation must concern findings of fact. The principles governing thesefindings have been set out in numerous judgments of this Court, including Northern BankFinance Corporation Ltd. v. Charlton and Ors. [1979] 1 I.R. 149, Hay v. O’Grady [1992] 1I.R. 210, McCaughey v. Irish Bank Resolution Corporation Ltd. and Anor. [2013] IESC 17,and Leopardstown Club Ltd. v. Templeville Developments Ltd. [2017] IESC 50; [2017] 3I.R. 707. They are well known and may be dealt with briefly.15. Such findings can be seen as falling into two categories: those the answers to which givea factual resolution of conflicting oral testimony, and those the answers to which do notresolve conflicts of such testimony, but are an evaluation of facts found or admitted(Northern Bank, per Henchy J., at p. 190). Another brief way of describing these twocategories is, in the first category, findings of fact, and in the second, inferences fromfacts. The legal authorities emphasise that an appellate court must proceed on the basisthat it did not enjoy the opportunity of seeing and hearing the witnesses as did the trialjudge who heard the substance of the evidence, and was able to observe both the mannerin which it was given and the demeanour of the witnesses (Hay v. O’Grady, per McCarthyJ., at p. 217).16. It follows that, where such findings of a trial judge are supported by credible evidence, anappellate court will generally be bound by them no matter how voluminous andapparently weighty testimony to the contrary might be (Hay v. O’Grady, at p. 217). Anappellate court will only set aside a finding of fact based on one version of the evidencePage 4 ⇓when, on taking a conspectus of all the evidence, it appears to that court that,notwithstanding the advantages the tribunal of fact may have had in seeing and hearingthe witnesses, the version of the evidence on which the judge acted on could notreasonably be correct (Northern Bank, per Henchy J., at p. 191). An appellate courtshould, therefore, be slow to substitute its own inferences from findings of fact wheresuch inferences depend on oral evidence heard by the trial judge (Leopardstown Club, perDenham C.J., at para. 82). It may only do so for a very clear reason. Of particularrelevance to this appeal is that a finding as to the credibility of a witness giving evidenceis a finding of fact (Leopardstown Club, per Denham C.J., at para. 39).Second Legal Consideration: The Nature of the Tort of Deceit17. McGovern J. correctly summarised this second legal consideration in the High Courtjudgment:“81. At law, a misrepresentation is made fraudulently if, when he makes it, therepresentor knows that the representation is untrue or is reckless as to whether itis true or not. A person who deceives another fraudulently and therebycauses loss is liable in damages for the tort of deceit.” (Emphasis added)At para. 118, he concluded on the law:“Applying the law to the facts in this case, I hold that the first named defendantwas guilty of fraudulent misrepresentation and deceit and that he is liable to theplaintiffs in damages.”18. The elements of deceit can be summarised in this way:(a) that the alleged representation consisted of something said, written, or done, thatamounted to a representation;(b) that the defendant was the person who made the representation;(c) that the plaintiff was the person to whom the representation was made;(d) that the representation was both false and fraudulent;(e) that the representation was a material inducement for the plaintiff to act upon it;(f) that the plaintiff did, in fact, alter his or her position on foot of the representation;and(g) that he or she thereby suffered damage.(see, Forshall and Fine Arts Collections Ltd. v. Walsh (Unreported, 18th June, 1997) HighCourt (Shanley J.), at p. 64; Ennis v. Butterly [1996] 1 IR 426; Superwood Holdings plcv. Sun Alliance and London Assurance plc (Unreported, 27th June, 1995) Supreme Court(Denham J.), at pp. 27-28; and Bryan ME McMahon and William Binchy, Law of Torts (5thPage 5 ⇓edn, Bloomsbury Professional 2013), at para. 35.02). These tests were also applied bythis Court in Northern Bank.19. Each one of these elements is essentially factual. The first three, (a), (b) and (c), consistof an identification the parties involved, and the words which amount to a representationas to a particular state of affairs or an issue of fact. The fourth element, (d), isfundamental: the words used must be untrue and uttered or written with dishonestintent, motive, or recklessness. As to (e), it must be shown that the representation wassuch as to induce the plaintiff to act upon it. To show (f) and (g), a claimant must sustaindetriment or damage in reliance on the misrepresentation. If a judge makes such findingson a solid basis of fact, a significant onus rests on an appellant to show an appeal courtthat a trial judge erred in some very significant way or misdirected himself or herself as tothe law.20. The task of this Court, therefore, is not to look at and consider the evidence for thepurposes of deciding whether the judge ought to have accepted the particular evidencewhich he did. Rather, it is to consider whether there was testimony before the High Courtwhich supports the judge’s findings and whether such inferences as he drew were fairlyand properly drawn.21. McGovern J. held that each one of the legal tests as to deceit were satisfied. Lookingagain at what was set out at para. 13 above, he found that, on numerous occasions, Mr.O’Halloran had represented to Mr. Ames that Phase 1 of the Buccament Bay project wouldbe completed by the 1st July, 2010.22. It has long been established that the state of a man’s mind is “as much a fact as the stateof his digestion” (Edgington v. Fitzmaurice (1885) 29 Ch. Div 459, per Bowen L.J.).Critically, in the context of (d), that is falsity. McGovern J. was satisfied that Mr.O’Halloran made these representations when he knew they were untrue or was recklessas to their truth (para. 74). He held that, since some time in summer 2009, Mr.O’Halloran was aware that the project could not be completed by the 1st July, 2010(para. 73).23. The judge held that, in reliance upon these statements, Harlequin continued to employthe ICE Group and poured ever-increasing sums of money into the project (para. 90). Heconcluded that the representations were a material inducement to Harlequin to continuemaking payments on foot of these representations, at a time when Mr. O’Halloran knew,both from his own knowledge and from information which he was receiving, knew thatPhase 1 simply could not be delivered by the 1st July, 2010. He found that Mr. O’Halloranpersisted in ignoring all warnings which he received from professionals, such asarchitects, surveyors and others involved in the construction project, and that hecontinued to press Harlequin for more and more funds (para. 90).24. The judge heard evidence from expert witnesses called on behalf of Harlequin. Thissatisfied him that the basic elements of this major construction project had not been putin place in order to enable the works to be completed by the deadline (para. 91). Few, ifPage 6 ⇓any, of the accepted methods for ascertaining costs and compliance were present.Professional witnesses, who entered on the site after Mr. O’Halloran’s ICE Group had beendismissed on the 11th June, 2010, found that the site was far from the condition onewould have expected if there had been any genuine intention to finish the project on time(para. 91). McGovern J. accepted the evidence which showed that substantial workremained incomplete at a time when the ICE Group was financially insolvent and lackedthe capital required to meet its contractual obligations to Harlequin.25. The judge also concluded that, during the period from summer 2009 to the date of ICE’sdismissal on the 11th June, 2010, Mr. O’Halloran continued to divert substantial sums ofmoney paid by Harlequin for the completion of the project to his own purposes, in whatMcGovern J. described as “bogus” transactions (para. 47). He held that Mr. O’Halloran didso when he must have known that, by his actions, Phase 1 could not be delivered on theagreed date (para. 91).26. The judge held that “all the evidence” pointed to the conclusion that Mr. O’Halloranmisappropriated significant sums paid by the ICE Group for the completion of Phase 1,and that the level of misappropriation increased significantly in the last few months priorto the ICE Group being dismissed from the site (para. 92). He concluded that, while theremight be some dispute between the parties as to whether or not Mr. O’Halloran wasentitled to draw down some of the monies paid by Harlequin to the ICE Group, whetherby way of salary or otherwise, there could be no justification for the size of the verysubstantial payments diverted from the project to his Irish accounts and to those of DonalO’Halloran. In the latter case, the same were allegedly to repay loans which DonalO’Halloran had made to the appellant (para. 92).27. McGovern J. made a series of findings of fact. To set aside the judgment and awarddamages, therefore, Mr. O’Halloran faced the task of showing that the findings eitherwere not based on evidence, or that the judge had not correctly directed himself on theapplicable law, or both. The issue in the case is simple. It is, did Mr. O’Halloran deceiveHarlequin to pay these large sums of money by fraudulent misrepresentations as to thecompletion date and then extract the monies for his own benefit?Were the Findings Based on Evidence?28. Did the learned trial judge did base his factual findings on evidence? Clearly, on therespondents’ side, McGovern J. felt that aspects of Mr. Ames’ evidence were not entirelysatisfactory. For example, he held that Mr. Ames’ evidence on the contract price was lessthan certain. But on critical issues, such as payments made, withdrawals extracted, andthe progress of the work, there was other evidence upon which the judge also relied.McGovern J. made a series of adverse findings in relation to Mr. O’Halloran’s evidence onkey material issues in dispute.The Appellant’s Submissions29. The appellant informed this Court that his solicitor had been ill and that he hadexperienced difficulty in retaining counsel, although he had been fully represented byPage 7 ⇓senior and junior counsel in the High Court. At the appeal, he made oral submissions tothe Court as well as relying on the written submissions prepared by his then counsel.30. First, he raised a point regarding two emails from a Mr. Simon Taylor, which, hecontended, were relevant to the issues and had been claimed as privileged in therespondents’ affidavit of discovery. It is clear that he was under a misapprehension onthis point. The documents were discovered.31. This case has a complex jurisdictional background. There have been legal proceedings inthree or more jurisdictions, both in the Caribbean and these islands. The appellant madea series of submissions based on a judgment of the High Court of England and Wales. It isnecessary to say something more about this case in order to explain his submissions.32. To understand Mr. O’Halloran’s case, one must know that, as mentioned at para. 4 above,there have been associated proceedings in the courts of England and Wales againstWilkins Kennedy (“WK”), a firm of accountants originally retained by Harlequin. Variousparties, including Mr. Ames and the accountants who purported to give him advice on theproject, were sternly criticised in the judgment. None of the principal parties involvedemerge from the affair with their reputations unscathed, or their credibility entirely intact.33. In the appeal, instead of directly addressing many of McGovern J.’s findings of fact, theappellant adopted a more oblique approach by selecting some passages from the Englishjudgment. That judgment has no specific legal status in this appeal, and no applicationwas made to render it admissible. Nonetheless, the Court was prepared to extend latitudeto the appellant and to consider the judgment de bene esse.34. In the proceedings in England, the liquidators of Harlequin claimed negligence againstWK. In a very detailed judgment, Coulson J. (as he then was) held that the firm wasliable to Harlequin in the sum of US$11,630,970.50 (para. 895). He held that, althoughHarlequin had been guilty of substantial contributory negligence, the liability for damagesnonetheless arose from WK’s breach of duty to the company and, in particular, the breachof duty by Mr. Martin MacDonald, whose role in this affair requires some furtherdescription.35. Mr. MacDonald (known as “Mac”) was, at one point, a friend of Mrs. Ames. Ultimately, hebecame both financial advisor and auditor to the Harlequin companies. David and CarolAmes trusted him implicitly. Coulson J.’s judgment describes an evolving situation where,over a period of two years from 2008 to 2010, Mr. MacDonald moved away from being afiduciary advisor to Harlequin to being a close friend and ally of Mr. O’Halloran and ICE.Rather than acting as a monitor or check on payments made to ICE, he became anadvocate on behalf of Mr. O’Halloran’s companies.36. In the judgment under appeal, McGovern J. characterised the same situation as being onewhere Mr. MacDonald, Mr. Ames’ former friend, was ultimately “in league” with Mr.O’Halloran (para. 77). McGovern J. described this as a “serious conflict of interest”.Page 8 ⇓37. McGovern J. held that, throughout this period, Mr. MacDonald did nothing to restrain Mr.Ames from paying monies over to Mr. O’Halloran’s companies. In fact, he activelyencouraged him to make these payments. This was at a time when, as both McGovern J.and the English judgment independently concluded, there was no possibility that thecontract could be fulfilled by the set completion date.38. In this appeal, Mr. O’Halloran sought to contrast some selected points in the Englishjudgment with evidence and findings in the Irish proceedings. To take some examples,Coulson J. placed a somewhat different value on work done on the cabanas from evidenceof the same surveyor witness in the Irish proceedings. Referring to these calculations, Mr.O’Halloran sought to make the case that this difference indicated that the “area hadchanged”. The significance of this point to the issues in this appeal is difficult to follow. Ifit was meant to convey that more work had been done on the project than was indicatedin the evidence before McGovern J., the point does not seem to have any direct relevanceto the essence of the case, which concerned representations and the removal of funds. Ifit had any other meaning, it is difficult to see how it is material to the key issues in thisappeal.39. Counsel for Harlequin explained that any difference between the figures in the Irish andEnglish proceedings arose because in England, the High Court judge had preferredevidence on the value of the cabanas given in the proceedings by and on behalf of WK.But this has little bearing on the sums paid over and then removed during the relevantperiod from the summer of 2009 to the 11th June, 2010.40. Mr. O’Halloran submitted that there was an inconsistency between Mr. Ames’ testimonyas recorded in the English judgment and as conveyed to McGovern J. This concernedwhether, in addition to the other payments, Harlequin would also make what is termed a“bullet payment” to ICE of STG£5 million on completion of the works. In fact, there wasno such inconsistency. Again, even if there was, it is not relevant to the main issues.41. Mr. O’Halloran drew attention to the fact that Coulson J. found the evidence of a lawyeracting for Harlequin, Mr Commissiong, to be unreliable. He pointed out that this lawyerhad given evidence before McGovern J. But McGovern J. did not place any reliance on hisevidence and, in fact, did not refer to that testimony in any significant way.42. It can be said that when Mr. O’Halloran effectively sought to adopt the English judgmentas part of his argument, he deployed a double-edged sword. A number of points emergefrom that judgment with considerable clarity. Mr. MacDonald’s role is described in greatdetail. So, too, is the role of another accountant, Mr. Jeremy Newman. The Englishjudgment makes the point that Harlequin did not own all the land upon which it wasproposing to build (para. 44). Some of the lands remained in the ownership of thirdparties.43. Mr. O’Halloran contended that the trial judge had erred in preferring evidence tendered tothe High Court by a surveyor, Mr. Sanjay Amin, to evidence which had been called on hisPage 9 ⇓behalf by a Mr. Rupert Spencer of Tower Consultants Ltd. This issue is dealt with at paras.72-77 below.44. Mr. O’Halloran also sought to persuade the Court that the trial judge erred by notidentifying the nature of the contract price. Bizarrely, there was never an agreed contractprice for the project. Mr. O’Halloran explained the relevance of this point on the basisthat, had the trial judge made such a finding, he would also have been required to makefindings as to whether or not the contract was, or was not, profitable from thedefendant’s point of view. McGovern J. held that this was irrelevant. In fact, he found thatthe sums paid by Harlequin to ICE ought to have been sufficient to complete Stage 1, butwould not have produced significant profit to the ICE Group (para. 79(iv)). In my view,the High Court judge was correct in holding that this point was immaterial to what he hadto decide.45. Mr. O’Halloran also sought to submit that the trial judge erred in his identification of thestandard of proof necessary in fraudulent misrepresentation. There is no indication thatthe judge misdirected himself on this issue of law.46. While not strictly speaking relevant to the issues before this Court, the most strikingfeature about the two judgments is that, despite the fact that the cases were heard ondifferent evidence, and although WK were the parties to, and defendants in, the Englishcase and Mr. O’Halloran was not, the judgments were in total agreement on 15 out of the16 factual issues dealt with. On the 16th issue, Coulson J. had available evidence fromWK on the bullet payment which was not the case for McGovern J. as WK were not aparty to the Irish proceedings. Whether or not there was an agreement betweenHarlequin and ICE on a bullet payment upon completion is again not relevant to thisappeal.47. Seen as part of a larger canvass, the heart of Mr. O’Halloran’s case was set out in thesubmissions prepared by counsel for this appeal. It was that this Court should preferevidence proffered on Mr. O’Halloran’s side to that adduced on behalf of Harlequin. Thisproposition was based on a premise that this Court might determine some aspects of theHigh Court judgment’s findings to be unsustainable. A court could only reach such aconclusion if there was no evidence to justify the findings. To repeat, the true issue iswhether there was evidence before the High Court which would fairly entitle McGovern J.to reach the conclusions which he did (see, Hay v. O’Grady, cited at para. 14 above). Thepoints raised in argument by Mr. O’Halloran, and in the written submissions, simply didnot sufficiently address this fundamental question.48. One particular point stands out from the judgment under appeal. Much of the appellant’scase depended on his own credibility as a witness. On the key issues, McGovern J.indicated he found the appellant to be less than credible. This evidence is criticised atvarious points as being vague and general (paras. 46 and 79(vi)). This was anassessment which the judge was entitled to make. He gave reasons for his conclusion inconsiderable detail. This critical issue was not directly addressed in this appeal either.Page 10 ⇓Representations49. The High Court judge carefully examined the nature of the representations which Mr.O’Halloran made. At para. 58, McGovern J. held that the appellant made representationsassuring Harlequin of delivery by the 1st July, 2010 on the following dates:“16th-17th May, 2009; 23rd-24th November, 2009; 24th-25th January, 2010; 23rdFebruary, 2010; 25th March, 2010; 29th March, 2010; 29th-30th April, 2010, and18th May, 2010.”50. He held these oral assurances were also repeated in many emails, including those datedthe 16th February, 2010; 15th, 18th, 25th, 28th March, 2010; 5th, 19th and 30th April,2010; 5th, 7th and 23rd May, 2010 (para. 59).51. McGovern J. observed:“To focus on but one of these emails (23rd March, 2010), the first named defendantstated to Mr. David Ames: ‘Your resort WILL BE OPEN! On 1st July!’”This was clear evidence. The High Court was entitled to conclude that representations tothat effect were made by Mr. O’Halloran to David Ames and others in Harlequin.The Evidence as to Payments52. McGovern J. held that the appellant’s case on the issue of what was actually agreedbetween the parties shifted ground more than once. The evidence as to payments actuallymade was critical however.53. The transactions began with a series of payments made in the year 2008. Beginning onthe 4th September, 2008, Harlequin made a payment of US$100,000, followed bypayments each week thereafter for 12 weeks of US$125,000 (para. 34)54. Mr. Ames’ testimony before McGovern J. was that Mr. MacDonald told him on the 13thOctober, 2008, that the ICE Group was doing a very good job, and that, in order to speedup construction, weekly payments should be increased to US$165,000 per week untilChristmas 2008 (para. 34). Mr. Ames, on behalf of Harlequin, took Mr. MacDonald’sadvice. These payments, and the ad hoc manner in which they were made, must be seenas the background to the more focused findings relating to further arrangements between2009 and 2010, the period during which McGovern J. held that the fraudulentmisrepresentations causing damage to the respondents were made, and during whichtime he considered Mr. MacDonald’s role as giving rise to the appearance of a conflict ofinterest.55. Mr. MacDonald did not give evidence in the Irish proceedings. The judgment nonethelessdescribes his role in some detail. The extent of his new alliance with Mr. O’Halloran isshown by the fact that he agreed to become Mr. O’Halloran’s best man, and participatedin a lavish stag weekend at the Monte Carlo Grand Prix, all at a time when therelationship between Harlequin and the ICE Group had begun its final, inevitable collapse(para. 76 of the High Court judgment. See, also, para. 9 of the English judgment).Page 11 ⇓56. Counsel for Harlequin submitted in this appeal that, in the High Court and elsewhere, Mr.O’Halloran, or those earlier acting in court on his behalf, had posited various versions ofthe terms of the agreement(s). These included:(a) a plea in further related court proceedings in SVG and Barbados to the effect that afixed price contract to complete Phase 1 had been concluded on the 19th May,2009, for the sum of US$58,634,322 to be paid in 43 weekly instalments ofSTG£450,000;(b) an affidavit sworn in the English proceedings where Mr. O’Halloran claimed that, infact, there was a contract concluded in September 2008 – but this was solely forremedial works—and an agreement in relation to construction works which was notreached until the 19th May, 2009;(c) the opening submission by the appellant’s counsel, where it was suggested that thecontract was for a fixed price of US$76,043,396, a figure reflected in answers tointerrogations; and(d) under cross-examination, a statement that a contract was concluded on the 1stSeptember, 2008, to construct the entire Buccament Bay resort for a fixed price ofUS$119m.This last version had not been referred to prior to the High Court hearing, and,apparently, was not previously known either to his counsel or his expert witness. Mr.Rupert Spencer, in his testimony on behalf of Mr. O’Halloran, said that he understood abid for US$119m had been rejected. I add here that, at answer 19 in the sworn answer tothe respondents’ interrogatories, Mr. O’Halloran deposed that the ICE Group entered intoa “fixed price contract” with Harlequin, and as such, the ICE Group was not obliged toapply monies received exclusively toward the Buccament Bay or other authorisedprojects.57. In fact, this Court has been told that, in the course of the High Court trial, Mr. O’Halloranmade a further contention. This was to the effect that a separate agreement, inSeptember 2008, had been reached for remedial works for an agreed figure of US$4m, onwhich he expected to make a 25% profit. This Court was further informed that, undercross-examination in the High Court, Mr. O’Halloran said that, by May 2009, 85% of theremedial works undertaken on foot of this 2008 contract had been completed for theagreed figure. But, in written submissions prepared for this appeal, Mr. O’Halloran’s legaladvisors claimed that a figure of US$9m was actually spent on remedial works whichwould have resulted in a loss to the ICE Group. This can only be described as an areawhere the appellant’s case did not occupy a fixed point. But it does not provide a firmfoundation for the contention that the judge erred by not making findings on cost orpricing.The Relevant Payments and AgreementsPage 12 ⇓58. There was evidence that in a preliminary agreement, made on the 17th March, 2009, ICEwas to be paid STG£400,000 per week. In May 2009 there was a further agreement tocomplete Phase I in 43 weekly payments of STG£450,000 (para. 35). Faced with theseareas of uncertainty as to any fixed price for the entire contract, McGovern J. made thepoint in his judgment that the case before him was not a building contract where theagreed price would undoubtedly be significant (para. 27). He held that although theremight be disputes as to the exact costings of the project, they were not critical to theissues he had to decide. He described the contract price issue variously as “peripheral”and “tangential” to the main issues which he had to decide (para. 27). I respectfullyagree.59. The judge was correct in holding that the contract price was irrelevant. The main issuewas not whether there was an agreed contract price; nor was it whether the contractwould prove profitable. McGovern J. was sceptical as to whether it would have beenprofitable, whether priced at figures given in evidence of US$96 per sq. foot or even atUS$154 per sq. foot. Instead, the true questions on this aspect were, first, whether themonies paid over by Harlequin were sufficient for completion of the work, and, second,whether the appellant unlawfully misappropriated monies paid to the ICE Group. The factthat the contract price was uncertain, or subject to variation, was not relevant to theultimate issue to be determined, which was that, no matter how calculated, there was nolawful basis for the monies paid over for the project to be extracted on foot of what Mr.O’Halloran told Harlequin.60. The consequence of Mr. O’Halloran’s submission was that it fixed the focus more squarelyon his actions and words during the particular timeframe the judge identified betweensummer 2009 and June 2010, the representations he made, and transactions he engagedin, during that period. There were a series of agreements, each based on a reduction onthe scale of the project, but often with increased rates of payment to ICE.61. McGovern J.’s critical findings commence with an arrangement made in November 2009.He held at para. 35 that, at a meeting which occurred in that month, Harlequin agreedwith ICE to a revised and reduced scope for Phase 1 to be completed by the deadline ofthe 1st July, 2010, and further agreed that some remaining works would have to bedelivered after that date. He held that, by the 28th January, 2010, Harlequin had paid 41out of the 43 weekly payments on the basis of ad hoc arrangements made as far back asMay 2009 (para. 35).62. The trial judge held as a fact that, on the 23rd February, 2010, the parties then agreed toa new payment plan (para. 36). Under this arrangement, Harlequin was to pay the ICEGroup STG£600,000 per week, which was to be supplemented by additional ad hocpayments as and when required in order to ensure that Phase 1, as by then defined, wasdelivered on the due date.63. The judge concluded that Mr. Ames agreed to make these additional and larger paymentsbecause he had become increasingly concerned that the set deadline of the 1st July,2010, would not be met (para. 36). He held that Harlequin continued to make thesePage 13 ⇓weekly payments of STG£600,000 until the 18th May, 2010, and that, a little more than aweek earlier, on the 10th May, made a further payment of US$435,000 to the ICE Group(para 36).64. The judgment records that, on the 18th May, 2010, Mr. O’Halloran met with David Ames,and his wife, Carol Ames, at Harlequin’s office at Basildon in England. The Ames testifiedthat by this stage, they were extremely concerned about their perception of the lack ofprogress with the works (para. 37). McGovern J. accepted Mr. Ames’ testimony that hebelieved that he and his company had been misled, but that in the light of commitmentsmade, and desperate to ensure that the opening could proceed on the agreed date, henonetheless agreed that the company would make an additional seven payments ofUS$1m per week to the ICE Group (para. 37). This testimony was borne out by the factthat, on the following day, Harlequin did make a payment of US$1m to the ICE Group. Onthe 27th May, 2010, Harlequin paid another US$1m. This was the last payment madebefore the ICE Group was dismissed from the project on the 11th June, 2010.65. The judge did not, in fact, have to place total reliance on Mr. Ames’ evidence. The factthat the payments were made was not only found from the evidence of Mr. Ames, butwas corroborated by the evidence of Mr. Paul Jacobs, a consultant forensic accountantwith Grant Thornton. With one exception which Mr. Jacobs himself corrected, McGovern J.accepted his expert evidence as to the inflow and outflow of funds as being thorough andcomprehensive, especially with regard to Mr. O’Halloran’s withdrawal of monies (paras.28-30). The appropriations by Mr. O’Halloran were set out in a “schedule ofmisappropriation”, which, less this one insignificant feature, the judge held to beaccurate. This was not challenged in the appeal.Falsity of the Representations66. The evidence relating to the work actually done during the relevant period from summer2009 up to the date of ICE’s dismissal on the 11th June, 2010, is a key factor in theassessment of Mr. O’Halloran’s bona fides. If in the High Court he could have establishedas a fact that the work was progressing apace and according to schedule, or even thatthere was a real chance of the deadline being met, then clearly his assurances toHarlequin would not have been false misrepresentations.67. But, in fact, the judge found there was significant evidence which pointed the other way.It was to the effect that, on the basis of the work actually done, ICE had no chance ofmeeting the deadline, and that this should have been clear from summer 2009 onwards(para. 73).68. Mr. Sanjay Amin, a quantity surveyor, testified on behalf of Harlequin in the High Court.His evidence was that he visited the site on the 11th June, 2010. This was the day ICEhad been dismissed, but 20 days prior to the stipulated deadline of the 1st July. He andhis team of two other quantity surveyors spent a total of nine days on the site. He wastherefore in a position to base his calculations on a thorough assessment of what wascompleted by that stage.Page 14 ⇓69. The Court has been told that, as of the 11th June, 2010, Mr. Amin estimated that thecabanas were 69% complete. He considered that Block 1 of the development was 11%complete, Block 2 was 74% complete and Block 3 was 34% complete. He found that theinfrastructural works were 12% complete and that what was termed the “back of house”facility was 0% complete. The waterfront village and restaurants were 10% complete, thespa facilities were 0% complete, and the generator and sewage treatment plant was 0%complete. Mr. Amin estimated that the cost to complete Phase 1 as of the date of hisinspection would be US$36,060,117 based on the ICE Group rates, or US$70,715,375based on the likely 2010 market rates.70. This was extremely telling evidence – unless it could have been rebutted. If accepted, itindicated the sheer scale of the work which remained to be done, even within three weeksof the projected completion date. It, and similar testimony, also was evidence upon whichMcGovern J. could draw inferences as to the truth or falsity of Mr. O’Halloran’s statementsthat the project would be completed on time.71. Mr. Amin’s evidence went further. It not only indicated that the rate of progress on theproject was slow, but that there had been efforts made to conceal this fact. There wasevidence that some of the work done was effectively the creation of a ‘Potemkin village’;that is, to put on a veneer that work had been completed when it had not (para. 66). Mr.Amin’s evidence was that landscaping had been carried out around the cabanas beforeengaging in essential drainage works. Mr. O’Halloran denied that this is what occurred,but the judge held that there was substantial corroborative evidence to the contrary. Hewas entitled to draw this conclusion.72. In this appeal, Mr. O’Halloran invited the Court to prefer the evidence of Mr. RupertSpencer, a quantity surveyor, over that of Mr. Amin. Mr. Spencer was employed by TowerConsultants Limited, a firm which apparently had previously had a business relationshipwith Ridgeview, the original contractors, between 2006 and 2007 (para. 72). But therewas also evidence before the High Court that Mr. Spencer had had a prior businessassociation with Mr. O’Halloran through connections with another surveyors’ firm, RiderLevitt Bucknal (“RLB”). In fact, at one point, Mr. Spencer’s company, Tower Consultants,had been a one-third owner of RLB, which, in the past, had been paid US$150,000 by theICE Group. There was further evidence before the High Court of other close businessconnections between ICE employees and RLB.73. Applying the legal principles identified earlier as to findings made by a trial judge, there isno basis for this Court to now conclude that Mr. Spencer’s evidence should be preferredover that of Mr. Amin. When it comes to inferences, a court will be slow to draw any otherthan those drawn by the trial judge. McGovern J. made clear that his findings of fact werebased on the evidence.74. The evidence in the High Court was that Mr. Spencer had limited experience of providingexpert reports. He conceded that his membership of the Royal Institute of QuantitySurveyors had lapsed in 2009, and admitted he had not undertaken any quantity surveywork between October 2010 and January 2013. Mr. Amin had visited the site shortly afterPage 15 ⇓Harlequin took over in June 2010. Mr. Spencer visited the site seven weeks later afterHarlequin’s new contractors had undertaken a great deal of work in order to ensure whatwas by then called Phase 1A was ultimately delivered by a new date of the 13th August,2010. 75. Before the High Court, Mr. Spencer said he did not enquire into, and was not aware of,the work done since the ICE Group had been dismissed, and apparently had spent lessthan one day on the site. He testified in the High Court that he worked frommeasurements found in drawings and could not recall which properties he had personallyviewed.76. Mr. Amin based his calculations on the value of the work done using a rate of US$96 persquare foot. On the other hand, Mr. Spencer sought to value the works on the basis thatthe relationship between Harlequin and the ICE Group had started on the wrong footingand appears to have used his own judgment in determining how to approach what heconsidered a unique set of circumstances. Mr. Spencer chose not to attach photographs tohis report, by contrast to Mr. Amin.77. There is no basis for now rejecting Mr. Amin’s evidence or reversing McGovern J.’sfindings of fact based on that evidence, which was corroborated.78. In addition to Mr. Amin’s testimony, two witnesses called on behalf of Harlequin bore outthis general account. These were Mr. David Campion, an architect, formerly with MurrayO’Laoire Architects, by then working for Harlequin, and Mr. Sean O’Connor, the projectmanager who took over the site in June 2010 after ICE had been discharged. Mr. Campiongraphically described the site at that time as resembling a “graveyard of knackeredmachinery”. Mr. O’Connor said that at that stage the site was an “absolute mess” and thatthere was a lack of essential supplies (para. 64).79. The judge rejected Mr. O’Halloran’s testimony to the effect that Harlequin had failed toprovide him with the required finance to complete the work. He held that adequatepayments had, in fact, been made. He also held that the fact that Mr. O’Halloran’sevidence was implausible on this issue was demonstrated by the evidence of otherwitnesses, including Mr. Campion, who testified that, even by the time of meetings on the23rd and the 24th November, 2009 – at which point Mr. O’Halloran was indicating a 1stJuly, 2010, deadline completion date – the project was already so far behind that all themonies received from Harlequin would have been needed in order to deliver anythingmeaningful by that date.80. Seen in hindsight, the judge was entitled to also regard this as very significant evidence.It meant that if the monies paid over were actually extracted from the ICE companies anddevoted to other purposes, it would reduce to nothing the chances of any successfulcompletion of the project by the 1st July, 2010.81. There was yet further evidence as to the rate of progress at a point midway through therelevant period, between summer 2009 and June 2010. Mr. Campion testified that inPage 16 ⇓January 2010, the then project manager, Mr. Kevin Webster, produced what is called a“Gantt Chart” (para. 63). This is a form of bar chart which is used as a production controltool. It is used in project management to provide an illustration of a schedule that helpsto plan, coordinate and track specific tasks in a project. This showed that a more realisticcompletion date for the project was not July 2010, but rather April 2011. Mr. GilbertAquino, an architect, also testified on behalf of Harlequin that he was firmly of the viewthat Phase 1 could not have been completed by the 1st July, 2010 (para. 64).82. Mr. O’Halloran invited the High Court to consider a surveyor’s report which was datedJanuary 2010. The firm of surveyors, RLB, concluded that the programme, although“ambitious, was achievable”, and with continued diligence of the main contractor anddesign team should achieve a successful outcome. The judge found this was, at best, a“guarded response”. A report in February 2010 concluded with the belief that overall, aPhase 1 soft opening date could be achieved at Buccament Bay (para. 68). But bothreports raised concerns about the level of coordination required in order to ensure thatthe resort would be ready in time and identified a number of threats to the achievementof this.83. McGovern J. considered that a reading of these and later reports indicated that theauthors were extremely careful in their phraseology. He observed that, in a final reportdated the 21st May, 2010, RLB concluded that having considered the progress on the siteby reference to the projected opening date of the 1st July, 2010, completion could not beachieved given what was described as the lack of functional infrastructure and the thencurrent level of works incomplete (para. 70). The report noted that “the levels ofresources did not appear to be the same as observed in February”. It drew attention tothe absence of key materials, labour skills and essential works which led the consultantsto conclude that it would not be possible to project a revised date for the opening withany confidence. On this the judge observed that “[w]hatever hopes might have existeduntil then about meeting the opening date, they were now well and truly dispelled” (para.70).84. All this is to be seen in the light of Mr. O’Halloran having accepted in cross-examinationthat, insofar as he did make assurances on the 25th and 26th May, 2010, that the projectwould be complete by the 1st July, 2010, it would have been wrong of him to do so (para.71). McGovern J. held that this report was of insufficient weight to offer any comfort toMr. O’Halloran, or to provide justification for what he held to be the many representationsmade (para. 73). These were all findings he was entitled to make.Mr. O’Halloran’s State of Mind when the Representations were Made85. McGovern J. held that the evidence was that Mr. O’Halloran made repeated assurancesthat the deadline would be met, and that it would be necessary to increase payments tohis company to achieve this end. Mr. O’Halloran contended that his companies werestarved of funds. The judge held there was no evidence of this assertion.86. Evidence of a full and candid exchange of information between the two parties to anagreement might potentially rebut a finding of fraudulent conduct. The judge referred toPage 17 ⇓evidence which, he concluded, showed that Mr. O’Halloran was far from candid withHarlequin.87. McGovern J. held that from the beginning of the year 2010, not only did Mr. O’Halloranassure Mr. Ames and Harlequin that all was well, but that, despite requests forinformation, he failed to keep the companies fully informed as to the progress of thebuilding works. He held that Mr. O’Halloran sought to ensure that all information going toMr. Ames and Harlequin would be directed through him (para. 61). His decision to controlthis information was to ensure that Harlequin did not ascertain the true position withregards to the works at Buccament Bay (para. 79(ix)). This, too, was a critical finding offact.88. From time to time, a piece of evidence will emerge in a case which is itself more eloquentthan hours of verbal testimony or mountains of documentary evidence. McGovern J.identified two pieces of evidence which must of course be assessed against thebackground of the many oral representations which he held were actually made that theproject would be completed by 1st July, 2010.89. First, McGovern J. referred at para. 61 to an email dated the 15th January, 2010. In it,Mr. O’Halloran was communicating to two employees of the ICE Group: Mark Coggle andKevin Webster. The email was copied to other employees. It stated:“Hi Guys,Please don’t give Dave Ames any information, please direct the information throughme!…”90. In the appeal, Mr. O’Halloran sought to explain this communication on the basis that Mr.Ames was a volatile, unpredictable, “Walter Mitty” type character, who was difficult tohandle. With respect, this was utterly unconvincing. What is said in the email must beplaced within the context other evidence and the findings based on that evidence. Itshowed concealment, as the judge concluded.91. It may also be viewed in the context of the evidence regarding the absence of progress ofthe project as established in the evidence of Mr. Amin, Mr. Campion and Mr. O’Connor.This is in addition to Mr. Jacob’s evidence that, by June 2010, the ICE Group waseffectively insolvent and had not brought Phase 1 to anything like completion at a timewhen the Buccament Bay project constituted 94% of its total turnover (para. 31).92. Further, McGovern J. heard evidence which established that in the month of February2010, Mr. O’Halloran met with a firm of consultants, Knowles, in order to discuss whetherhis companies could disengage from the project (para. 67). He was advised that thiswould not be possible. Mr. O’Halloran claimed in evidence that he sought this advicebecause of Harlequin’s failure to make payments on schedule. But again there was noevidence that either the ICE Group, or he himself, had complained of failure to makepayments. This meeting took place in the same month as the agreement made withPage 18 ⇓Harlequin for an increase in the payments to be made in pursuance of achieving the 1stJuly deadline.93. Evidence of concealment before the High Court did not end with that one email. Thesecond key piece of evidence was that, as McGovern J. found, on the 5th May, 2010, lessthan two months prior to the deadline date of the 1st July, Mr. Kevin Webster againemailed Mr. O’Halloran asking how to respond to Mr. Ames’ request for an update on theprogress of the project. It is striking that Mr. Webster felt the need to consult with Mr.O’Halloran regarding information which Mr. Ames was surely entitled to have. Mr.O’Halloran’s email reply to Mr. Webster was that the latter’s response to Mr. Ames shouldbe “… nice and simple along the lines that we are working towards the required deadlines,don’t spook him” (para. 65). (Emphasis added). On this, and referring to Mr.O’Halloran, McGovern J. held that “[c]learly, the first named defendant did not intend Mr.Ames or the Harlequin companies to become aware of the actual prospects of an openingby 1st July, 2010” (para. 65). This was a reasonable conclusion.94. McGovern J. held, at para. 73:“Having considered all the evidence in this case, I am satisfied that from some timein the summer of 2009, it was clear to the first named defendant that it wasunlikely that Phase 1 would be completed by 1st July, 2010.”McGovern J. went on to say:“The position was abundantly clear by November 2009, from which time the firstnamed defendant was making assurances about the delivery date. I do not acceptthat the RLB report is of sufficient weight to give comfort to the first nameddefendant because of the information deficit which existed when they prepared thereport, and because there are unresolved disputes about the accuracy of that reportand the independence of RLB.”These, too, were findings of fact which the learned trial judge was entitled to reach.Reliance95. Turning then to reliance placed by Harlequin on Mr. O’Halloran’s representations,McGovern J. held:“74. I have already concluded that the first named defendant made representationsconcerning the opening date of Phase 1 by 1st July, 2010, and that theserepresentations were made by the first named defendant in circumstances wherehe knew that the opening date of 1st July, 2010, could not be achieved for Phase1. ”He went on to find as facts:“Those representations were made knowingly, or at the very least, recklessly, as totheir truth. There can be no doubt, on the evidence, that Harlequin placed reliancePage 19 ⇓on those representations. The first named defendant was well aware of the fact thatHarlequin was under enormous commercial pressure to deliver the Buccament Bayresort by 1st July, 2010. As a result of the representations made by the first nameddefendant, a number of steps were taken by Harlequin:-(a) Harlequin purchased a large quantity of furnishings at a cost ofapproximately US$12.7m which were delivered from China. These were forthe fitting out and furnishing of the rooms and facilities in the resort;(b) Harlequin employed a large number of managers and staff in SVG to preparefor the opening on 1st July, 2010;(c) Bookings had been made and commitments were made to investors and 397people were booked to visit the resort in July 2010;(d) From March 2010, Harlequin took steps to ensure that the hotel would beready and operational by 1st July, 2010. Recruitment interviews took placeand rooms were hired in other local small hotels to establish temporaryoffices in order to conduct training for new staff to run the resort;(e) The plaintiffs committed to purchasing all of the food and beverage itemsnecessary for the opening. This required considerable logistical commitmentand expense to bring in stores from Miami to SVG in refrigerated containers.”96. These were all findings the judge was entitled to make on the evidence tendered to him.Referring again to the ingredients of the tort of deceit as set out at para. 18 above,Harlequin “altered its position” on foot of the misrepresentations. These steps are also tobe seen in light of the increased payments made from the summer of 2009 onwards: afurther alteration of position.97. The judge dealt with the role of two members of the firm of WK. The part played by thefirst, Mr. Martin MacDonald, has been outlined. Mr. MacDonald was the main contactbetween WK and the ICE Group. McGovern J. described him as “more than a member ofan accountancy firm retained by Harlequin” (para. 75). He had become a “close friendand confidante” of David and Carol Ames. The judgment describes that, as time went by,Mr. Ames relied more and more on his assistance, and that, eventually, Mr. MacDonaldbecame, for all intents and purposes, the Chief Financial Officer of Harlequin.98. The judgment goes on to describe the role of Mr. Jeremy Newman, who testified. He, too,was an accountant with WK. McGovern J. stated:“Mr. Jeremy Newman was retained to give tax advice to Harlequin. After sometime, he became involved in giving advice to the ICE Group. This was a matter ofconcern to Mr. Ames, who was reassured that sufficient safeguards were put inplace to avoid any conflict of interest on the part of personnel within WilkinsKennedy. On 23rd November, 2012, Mr. Newman resigned from Wilkins KennedyPage 20 ⇓and has now gone into business with Mr. Padraig O’Halloran. Together, they haveset up a new construction and civil engineering company in Jordan” (para. 75).Mr. Newman assisted the appellant as a McKenzie friend in this appeal.99. The judge observed that Mr. Ames felt very “let down” by Mr. MacDonald, and with somejustification (para. 77). By that time, Mr. Newman was also working for the ICE Group.100. Thus far, this judgment has addressed the circumstances in which monies were paid up toJune 2010.The Extraction of Monies101. There was evidence before McGovern J. that, during this same period, substantial sumswere extracted. The judge set out the evidence of Ms. Shona Quammie, who wasemployed by the ICE Group on the 22nd June, 2009 (para. 50). She was in charge of alltransfers and disbursements of monies within the ICE Group. She remained employed inthat capacity until she resigned from that post on the 16th June, 2010, at which time shejoined Harlequin in the same position. McGovern J. found her to be a “credible witness”(para. 50).102. Ms. Quammie testified that there were no cash flow projections in ICE, and that Mr.O’Halloran chose what was paid and not to be paid (para. 51). She testified that by April2010, she was more and more dealing with pressure and queries from creditors as thedeadline for the opening of Phase 1 became closer (para. 52). Her testimony was that,especially from in or about March 2010 until the time the ICE Group was dismissed, shewas not permitted to pay invoices or bills without Mr. O’Halloran’s approval (para. 52).103. Ms. Quammie’s evidence of the circumstances of Mr. O’Halloran’s withdrawal of monieswas, the judge felt, clear. She testified that, at the same time as she was fending offcreditors, she was being directed to make regular and substantial payments from ICEGroup’s bank accounts to Mr. O’Halloran’s personal bank accounts in Ireland (para. 52).This evidence was supported by contemporaneous emails which she had decided to retainas she was concerned to protect her position (para. 53). McGovern J. found this evidenceto be “compelling” (para. 54). The trial judge pointed out that the claim brought in thisjurisdiction only related to monies found to have been transferred to this jurisdiction. Theevidence went so far as to demonstrate that 26% of all the monies paid by Harlequinduring this time was spent on items identified by Mr. Jacobs in a “MisappropriationSchedule” which was provided to the Court (para. 44).The Nature of the Sums Removed104. At para. 43, McGovern J. held that the following ever-increasing “Irish payments” weremade at Mr. O’Halloran’s behest to his own bank accounts:“January 2009: Transfer to Bank of Ireland Account (the 584 Account) US$110,000February 2009: Transfer to Bank of Ireland Account (the 584 Account) US$5,000March 2009: Transfer to Bank of Ireland Account (the 584 Account) US$10,000Page 21 ⇓April 2009: Transfer to Bank of Ireland Account (the 584 Account) US$60,000June 2009: Transfer to Bank of Ireland Account (the 584 Account) US$50,000July 2009: Transfer to Bank of Ireland Account (the 584 Account) US$38,000.Transfer to PTSB (the 479 Account) US$100,000.October 2009: Transfer to Bank of Ireland Account (the 584 Account) US$150,000.Transfer to PTSB (the 479 Account) US$100,000.November 2009: Donal O’Halloran (second defendant) US$358,000. Transfer toBank of Ireland Account (the 584 Account) US$150,000.Transfer to PTSB (the 779 Account) US$150,000. Weddings by Franc Ltd.US$72,000.December 2009: Adare Manor US$25,800. Transfer to Bank of Ireland Account (the584 Account) US$50,000. Transfer to PTSB (the 779 Account) US$50,000.Weddings by Franc Ltd. US$25,800 (to be deducted as same payment in respect ofAdare Manor December 2009).February 2010: Transfer to Bank of Ireland Account (the 584 Account)US$300,000.March 2010: Weddings by Franc Ltd. US$129,000.May 2010: Transfer to Bank of Ireland Account (the 584 Account) US$350,000.”Taking all these payments into account, McGovern J. calculated that the total “Irishpayments” amounted to US$2,257,800 (para. 43). He attached significance to the extentto which, on and after June 2009, the pattern and size of the payments increased. Thesecould not, by any stretch of the imagination, be seen as “salary payments”.The Judge’s Findings on the Payments105. McGovern J. observed:“44. In the meantime, the first named defendant was making substantialpayments in the Caribbean in respect of other matters which the plaintiffs allegewere quite unconnected with the Buccament Bay project. These have been referredto earlier and include such matters as the purchase of a Falcon Jet aircraft, aracecourse in St. Lucia, the Hertz franchise in St. Lucia and a quarry in SVG. Therewere other items referred to in the course of the evidence. The Schedules appendedto the witness statement of Mr. Paul Jacobs and supported in his evidence showthat the level of payments for what the plaintiffs claim were matters unrelated toBuccament Bay increased in the latter half of 2009 and the beginning of 2010.While these payments are not part of the Irish proceedings, they are relevant toestablish a pattern of behaviour on the part of the first named defendant and highlevels of expenditure at a time when more and more money was required toPage 22 ⇓complete the construction of Phase 1 of the development. In the course of hisevidence, Mr. Paul Jacobs referred to a study which he undertook to show inpercentage terms what monies paid by Harlequin to the ICE Group were paid out onitems which are shown in the ‘Misappropriation Schedule’ to his report whichincludes both Irish and Caribbean payments. He noted that there was an increasein the proportion of monies being used for items on the Misappropriation Scheduleas time went by, and in particular, he noticed an uplift in relation to the period ofOctober and November 2009. He calculated that approximately 26% of the moniespaid to the ICE Group by Harlequin in respect of the Buccament Bay project werepaid out on items specified in the Misappropriation Schedule.”106. McGovern J. then went on to hold:“45. Looking specifically at the purchase by the first named defendant of a house atShippool, Innishannon, County Cork for €790,000, Mr. Jacobs was able to identify atotal of €761,000 which was lodged by four transactions lodged into the account ofthe solicitor for the first named defendant in the deal. Of that sum of €400,000 wascomprised in a bank draft that preceded the Bank of Ireland mortgage loan offer.Mr. Jacobs was satisfied that this sum came from the first named defendant’s bankaccount and that 98% of the lodgements into the bank account came from the ICEGroup. Other than that, he was not able to say precisely how the €400,000 wasactually funded.”107. McGovern J. found:“46. A total of US$1,673,000 was sent by the ICE Group to the first nameddefendant’s bank accounts in Ireland to establish what was referred to as “Irishoperations”. In February 2010, there were three payments US$100,000 sent to thefirst named defendant’s Irish accounts. One was sent on 11th February, 2010, oneon 17th February, 2010, and one on 24th February, 2010. They were describedas management fees. It was also put to the first named defendant that betweenOctober 2009 and February 2010, US$950,000 had been sent to his Irish accountsexcluding repayments made to loans alleged to have been made by the secondnamed defendant. The first named defendant said that the funds were sent to setup an operation in Ireland. He stated that the money was ring fenced forexpenditure on Harlequin projects. He stated that the ICE Group intended to set upan operation in Ireland which would support the Caribbean operations. Whenasked how this would do so, his evidence was vague and unclear. Althoughhe claimed that the monies were ring fenced for that purpose, some of the moniesincluded the substantial sum of US$201,000 to ‘Weddings by Franc’. The firstnamed defendant admitted that insofar as some of these payments werestated to be for discharging invoices and some were stated to be formanagement fees or salary, that they were not in fact for that purpose.While he did give some evidence about negotiating for the lease in respect of officesat Penrose Wharf in Cork, no lease was ever signed and it was difficult toPage 23 ⇓understand how his business, which was predominantly in the Caribbeanat that stage, was going to be helped by relocating offices to Cork. The firstnamed defendant admitted that an ICE Group company had beenincorporated in the UK on 2nd October, 2008. Therefore, if the Group requireda European based company to handle its affairs, one wonders why it could not havebeen done by the UK company. In any event, it was clear that at the timewhen many of these payments were made, the Buccament Bay project wasstalling and required substantial injections of cash to meet the openingdeadline.” (Emphasis added)The emphasised words almost speak for themselves. The evidence was “vague andunclear”. The true purpose of the transfers was concealed.108. McGovern J. concluded:“47. The only conclusion one can come to is that the monies were sent to Ireland underbogus descriptions of “invoices” or “management fees” or “salary” so as toconceal their true purpose. While there was evidence that certain steps had beentaken with a view to setting up an Irish office for the ICE Group, there would be noneed for such a charade had these funds had been legitimately and properlydiverted for this purpose. Furthermore, such an undertaking was entirelyunconnected with the Buccament Bay project.” (Emphasis added)These were findings the judge was entitled to make on the evidence.Damages109. The findings on loss and damages were based on the payments made at a particular time,within a particular context. It is true that, theoretically, the judge might have fixedhimself with the task of balancing out work done by ICE as compared with the paymentsextracted by Mr. O’Halloran. To my mind, he was quite correct in refraining from engagingin what would have been a complex and unnecessary exercise which would have involvedcalculating the damages which were not being sought, as contrasted to those which were.110. The evidence was that the sums of money which had been paid over by Harlequin weresufficient for the performance of the contract – if performance had been undertaken ingood faith. These were common law damages. The respondents limited the quantum oftheir claim to the timespan and the particular payments made into the Irish accounts. Ifthe claim might have been put on the basis of being proprietary in nature, or aconstructive trust, together with knowing receipt, or a Quistclose Trust accompanied bytracing, the award could not have been any less.111. The order made by McGovern J. on the 31st July, 2013, was that the respondents were torecover the sum of US$1,575,500 from Mr. O’Halloran personally. Drawn from thepayments, the figures were broken down as follows:•Payments between the 29th June, 2009, and the 31st May, 2010, 22 in number;that is, US$1,488,000Page 24 ⇓•Payments made by the ICE Group to Weddings by Franc in respect of a weddingplanned by Mr. O’Halloran at Adare Manor with his then fiancée. These amounted tothe 6th November, 2009, US$72,000, the 17th December, 2009, €20,000, the 8thMarch, 2010, €50,000, and the 12th March, 2010, Eastern Caribbean equivalent of€50,000.The “non-dollar” figures were converted into their dollar equivalents for the purposes ofthe judgment.112. It has not been said that any of these calculations were incorrect. The payments toWeddings by Franc are in themselves significant. It is not possible to conceive how thesewere lawful payments from ICE. This was a transaction which was personal to Mr.O’Halloran. The transfers say much as to his control of the companies. The Weddings byFranc payments set out above, which came to a total of US$72,000, were added the eurosums from the 17th December, 2009, the 8th March, 2010, and the 12th March, 2010,amounting in total to €120,000.113. The learned trial judge also took into account two payments made directly to Mr.O’Halloran Snr.’s bank account of US$179,000. These were made on the 13th November,2009, and the 20th November, 2009. He held that Mr. O’Halloran, Jnr. was liable forrepayment of these. This amounted to a total sum in US dollars of US$1,918,000 and€120,000, giving rise to the ultimate award.114. In assessing damages, the judge confined himself to what he referred to as the “Irishpayments”; that is, the payments into Mr. O’Halloran’s Irish bank accounts. He held thatfrom the summer of 2009, Mr. O’Halloran knew that the ICE Group could not deliverPhase 1 of the project by the 1st July, 2010, and that, therefore, the Irish payments fromthat time onwards were sums misappropriated from Harlequin. McGovern J. held thatthese sums could be taken into account in assessing the damages to be awarded forfraudulent misrepresentation giving rise to the tort of deceit. In so doing he ignored all ofwhat he termed the Caribbean and other payments referred to in the course of the trial,save as to their corroborative value and showing a pattern of behaviour of Mr. O’Halloranwith regard to the diverting of funds from the Buccament Bay project.The Law115. Apart from making submissions regarding the standard of proof, Mr. O’Halloran did notmake any other observations on the legal authorities cited.116. As to the law, McGovern J. correctly observed that the case before him bore certainsimilarities to the well-established tests for deceit referred to at para. 18 earlier. He alsoobserved that there are similarities to the old case of Edgington v. Fitzmaurice (cited atpara. 22 above). In Edgington, it was held that a prospectus was deceptive when itcontained false statements of what the company intended to do with the investor’s moneyonce they received it. Monies were advanced by the plaintiff for a specific purpose, andthe company subsequently became insolvent. The English Chancery Court held that thePage 25 ⇓representations as to the purpose for which the monies would be applied were capable asoperating as a material misstatement of fact, capable of giving rise to an action in tort.117. In Standard Chartered Bank v. Pakistan National Shipping Corporation [2002] 3 W.L.R.1547, Lord Hoffman observed that no one could escape liability for fraud by saying thathe or she wished to make it clear that he or she was committing a fraud on behalf ofsomeone else and that he or she was not to be held personally liable.118. McGovern J. correctly applied dicta to be found in Shinkwin v. Quin-Con Ltd. [2001] 1 I.R.514, where this Court (Fennelly J.) indicated that a separate personal duty could beimposed on a company director arising from his or her close proximity to a tortious act.McGovern J. held that the facts of this case, and the extent of Mr. O’Halloran’s control,demonstrated that this principle was applicable.119. The judge also correctly directed himself that the standard of proof was that enunciatedby this Court in Banco Ambrosiano S.P.A. v. Ansbacher Company Ltd. [1987] I.L.R.M.669. There, Henchy J. observed that he was unable to discern in principle or in practiceany rational or cogent reason why fraud in civil cases should require a higher degree ofproof than that required for the proof of other issues in a civil claim. McGovern J. correctlydirected himself on the relevant legal principles (para. 89).120. Given his conclusion on this primary issue on fraudulent misrepresentation giving rise todeceit, the judge did not consider it necessary to consider any alternative claim made onbehalf of the respondents that Mr. O’Halloran could be held liable simply by reference tothe duty owed to creditors by directors in circumstances where the latter are aware thatthe company is insolvent, or nearly so (see, Jones v. Gunn [1997] 3 IR 1; Re FredrickInns [1991] 1 I.L.R.M. 387; West Mercia Safetywear v. Dodd [1988] BCLC 250;Winkworth v. Edward Baron Development Company [1987] 1 All E.R. 114. See, also,Deirdre Ahern, Directors’ Duties: Law and Practice (Round Hall 2009), at p. 185; andYukong Lines of Korea v. Rendsburg Investments Corporation and Ors. (No. 2) [1998] 4All E.R. 82, at p. 89. But see also, Gavin Lightman, Gabriel S Moss and Ian F Fletcher,Lightman and Moss on the Law of Administrators and Receivers of Companies (5th edn.,Sweet and Maxwell 2011), at p. 12). For the reasons set out in this judgment, I also donot consider it is necessary to embark on such a consideration.121. For completeness, I would add that the judge set out his reasons for holding that whatoccurred in this case did not give rise to what is known as a Quistclose trust, or aconstructive trust (para. 118). In view of the conclusion I have reached, it is unnecessaryto deal with these questions either. The findings render the appellant personally liable forthe amount of the award.122. I mention here one disturbing aspect of the case. What is written now is no reflection onthe Irish lawyers who acted entirely correctly in these proceedings. But there is clearevidence that, at some point, a person or persons, so far unidentified, interfered withcopy emails said to have been sent by Mr. O’Halloran to a Ms. Trish Young, then an ICEemployee. The purported emails contained additions which have been found by expertPage 26 ⇓independent analysis to be interpolation and not written by Mr. O’Halloran, but whichpurported to be written by him. These were used in proceedings elsewhere, but wereexhibited in an application for interim relief made on behalf of the respondents to theHigh Court. Fortunately, no Irish court made an order on foot of, or in reliance on, theseemails. It is clear that they were provided by others and that the Irish lawyers actedentirely in good faith. These emails have no bearing on the outcome of the main issues inthis appeal.Conclusion123. Seen with all the clarity of hindsight, this case can be reduced to its bare essentials. It is,of course, true, that there are occasions when those involved in construction projectsmake assurances to clients as to deadlines which turn out to be over-optimistic.124. But there are features about the evidence in this case which caused the trial judge to takea less sanguine view and which raised what happened to a different order of seriousness,beyond mere negligent misrepresentation or breach of contract. He was entitled to reachthese conclusions.125. This was, in essence, a “fact case”, where the judge was fully entitled to accept theevidence upon which he proceeded to make sustainable findings, and where he correctlydirected himself on the relevant law. Even had Mr. O’Halloran been legally represented, itis impossible to conceive how the result would have been any different. I would dismissthe appeal, and hear counsel on the form of the order, and any ancillary orders, whichmay arise from the efflux of time since the judgment.

Result: Appeal allowed