Fraud claims predating August 2007 dismissed as collateral attacks on 2013 compromises; conspiracy struck out.

THE COURT OF APPEAL

Neutral Citation Number: [2018] IECA 394

Record Number: 2016 315

Peart J.

Whelan J.

McGovern J.

BETWEEN/

MARTIN SMALL

PLAINTIFF/

APPELLANT

- AND -

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

FIRST NAMED DEFENDANT/

RESPONDENT

AND

DERMOT FREHILL

SECOND NAMED DEFENDANT

AND

HELEN RAFTERY

THIRD NAMED DEFENDANT

AND

CONLETH HARLOW PRACTISING UNDER THE TITLE AND STYLE OF CONLETH HARLOW AND CO., SOLICITORS

FOURTH NAMED DEFENDANT/

RESPONDENT

JUDGMENT of Ms. Justice Máire Whelan delivered on the 19th day of December 2018

1. This is an appeal against the judgment and order of Mr. Justice Mac Eochaidh made on 2nd June 2016 wherein he ordered that the

within proceedings brought by the plaintiff/appellant as against the fourth named defendant/respondent be dismissed.

Background

2. The appellant is a businessman and resides in Roscommon. From about the year 2003 he operated partnerships with Fionan Raftery.

The latter fell ill in 2007 having been diagnosed with cancer. Fionan Raftery died on or about 18th April 2011.

3. The first partnership was established in 2003 to carry out a development in Knockcroghery, Co. Roscommon. The appellant and the

deceased had a 50:50 interest in its development project. A second partnership was established subsequently, on a 60:40 basis in

favour of Fionan Raftery, which involved the acquisition of certain lands at Golf Links Road, Roscommon, financed with a loan from

Bank of Ireland (“the bank”) in the sum of €3,150,000 which was advanced in or about the month of December 2004.

4. It appears that at all material times the respondent Conleth Harlow (hereinafter “the solicitor”) acted as solicitor for the

partnership. He was also the personal solicitor for Fionan Raftery and his wife Helen Raftery. He was never Mr. Small’s personal

solicitor. These partnerships involved the acquisition of sites and the carrying out of development work and subsequent disposition of

dwelling units. It would appear that the development work on the partnership sites was carried out by a limited liability company,

Raftery and Small Developments Limited. As with virtually all such development enterprises, the economic crash that engulfed the

State had a significant deleterious impact on the business of the partnerships and company. The appellant is clearly greatly aggrieved

at the reversal of fortunes experienced by him in the economic downturn.

5. On 27th February 2012 the appellant issued two sets of proceedings out of the Central Office of the High Court. The first

proceedings were against his deceased partner’s legal personal representative, Helen Raftery, and Bank of Ireland and the second

against the solicitor. The first set of proceedings were litigated by way of an application for interlocutory injunctions and ultimately

were the subject of compromises made in the High Court on foot of orders in the months of May and June 2013 respectively. With

regard to the second proceedings brought against the solicitor alone, though issued, same were never served. The plenary summons

was never the subject of an application for leave to renew. It appears that the solicitor only discovered the existence of the said

proceedings an appreciable period of time after they issued. This application is concerned solely with the latter proceedings.

2012 Writ

6. The 2012 general endorsement of claim seeks damages against the solicitor for loss, damage, inconvenience and expense arising

from alleged breach of contract, professional negligence, breach of duty and breach of statutory duty. The pleadings were settled by

counsel. They have remained in abeyance, never served.

Current Proceedings

7. On 16th January 2014 the within proceedings were instituted. As against the solicitor, in addition to the reliefs claimed in the 2012

writ, the appellant seeks, inter alia, damages for fraud, misrepresentation, breach of trust, breach of fiduciary duty together with

damages for the loss of opportunity caused by the alleged breaches of duty including breach of statutory duty. Punitive damages are

sought.

Statement of Claim

8. A statement of claim in the within second proceedings was delivered on 18th June 2014. At para. 8 of the statement of claim it is

pleaded:

“The fourth named Defendant [the solicitor] acted at all material times for the following parties to these transactions, the

Plaintiff, the first named Defendant, the third named Defendant, her late husband Fionan Raftery and many legal entities

which the Plaintiff and the late Fionan Raftery had, together with arrangements the third named Defendant had with her

late husband to give legal affect to these and other ancillary transactions. In acting for over seven parties to these

transactions, the fourth named Defendant acted in a wholly conflicted manner, to the detriment of the interests of the

Plaintiff thereby occasioning the Plaintiff irreparable financial loss and damage together with catastrophic psychological

trauma and stress arising from the matters in suit.”

9. What precisely is encompassed within the words “these transactions” twice referenced in para. 8 of the statement of claim is

unclear. Details of a loan agreement entered into over nine and a half years previously on 16th December 2004 are pleaded at para. 9.

At para. 13 the appellant pleads that he and his deceased partner agreed to sell four acres of their partnership site at Golf Links

Road, Roscommon to the OPW for €3m. He pleads that the defendants entered an agreement without his knowledge or consent to

discharge a mere €1m. out of the sale proceeds of €3m. towards the partners’ loan agreement with the first named defendant bank.

10. At para. 15 of the statement of claim the appellant pleads:

“As a result of the manner in which the Defendants permitted the late Fionan Raftery to organise his affairs, the Plaintiff

encountered interminable cash flow issues in respect of the Knockcroghery development. The Plaintiff is now aware that

these issues arose out of arrangements sanctioned by the Defendants to unjustly enrich the late Fionan Raftery at the

Plaintiff’s expense and to use joint sale proceeds from both sites at Knockcroghery and Golf Links Road to clear the

personal debts of the third named Defendant and her late husband to the detriment of the Plaintiff.”

11. The appellant contends that as a result of these actions “the development at Knockcroghery was not completed before the end

of the property boom” and he was denied a “legitimate opportunity to profitably complete the development and fully repay his debts

to the banks.”

12. At paras. 17, 19 and 20 of the statement of claim he outlines events surrounding an earlier loan advance which took place in the

month of June 2005. He pleads that the fourth named defendant/respondent gave a second undertaking to the bank over properties

of his partner which were already encumbered in regard to liabilities of the said partner and the latter’s wife. At para. 20 he pleads “all

Defendants were colluding in that regard to the detriment of the Plaintiff”.

Two loan offers of November 2007

13. At para. 23 of the statement of the claim the appellant pleads that on 21st November 2007 the bank sanctioned a further loan to

the partnership in the sum of €2,163,978 to continue the existing facility and provide an additional €500,000 to assist with the re-

structure of existing facilities and cover interest roll up of €151,000. The appellant pleads:

“The Plaintiff is now aware that the first named Defendant issued two different loan offers on that date. The loan offer

signed by the Plaintiff contained four conditions precedent to drawn down. The second loan offer contained six conditions

precedent to draw down, condition six confirming the rationale for the drawdown of the additional €500,000 to close a

number of accounts controlled by Fionan Raftery and to apply the balance of €400,000 in permanent debt reduction to

the facilities held by Fionan and Helen Raftery.”

14. The statement of claim pleads that the loan offer placed:

“an onus on the fourth named Defendant to confirm the disbursement of funds, meaning he, along with the other

Defendants was a party to defrauding the Plaintiff and indeed by letter of 14 December 2007, the fourth named Defendant

confirms his knowledge of these arrangements and falsely confirms that he has independently advised his clients in this

regard, in circumstances, where these transactions were conducted on the Plaintiff’s behalf without his knowledge or

consent”.

15. At para. 27 of the statement of claim the appellant pleads that he is now exposed “to a debt of €500,000, from which he derived

no benefit, as the transfer of the 10% equity in the Golf Links Road site, to make the Plaintiff and the late Fionan Raftery equal

partners of the site, was now worthless.”

16. Para. 30 of the statement of claim pleads “the Plaintiff has suffered irreparable financial loss and damage as a result of the fraud,

fraudulent misrepresentation, negligence and breach of contract by the Defendants”. The appellant in the prayer to the statement of

claim seeks the following reliefs against the solicitor:

“3. Damages for the loss of opportunity caused to the Plaintiff by the negligence, breach of duty including breach of

statutory duty and breach of contract, fraud and fraudulent misrepresentation of the Defendants:

4. Exemplary damages as against the fourth named Defendant for fraud, fraudulent misrepresentation and breach of

fiduciary duty.”

The motion

17. On 22nd July 2014 the solicitor issued a notice of motion seeking inter alia:

(i) an order pursuant to O. 19, r. 27 of the Rules of the Superior Courts striking out the proceedings against the solicitor

on the basis that they constituted an abuse of process.

(ii) In the alternative an order pursuant to O. 19, r. 28 striking out the proceedings against the solicitor on the grounds

that the statement of claim discloses no reasonable cause of action against the solicitor and on the basis that the

statement of claim is frivolous or vexatious and bound to fail.

(iii) There is an alternative claim for an order pursuant to O. 19, r. 27 of the Rules of the Superior Courts striking out the

proceedings against the solicitor on the grounds that same are unnecessary and scandalous or tend to prejudice or

embarrass the solicitor and

(iv) a further alternative plea for an order pursuant to the inherent jurisdiction of the court dismissing the proceedings

against the solicitor in the interests of justice.

The hearing of the motion

18. The motion was heard before the High Court judge on 31st May and 1st June 2016. Judgment was reserved and delivered on 2nd

June 2016. There were four other motions listed for hearing including an application on the part of the bank to strike out the

proceedings on the grounds that same were unnecessary and scandalous or in the alternative that they constituted an abuse of

process. There was also a separate motion brought by the appellant to amend his statement of claim delivered previously on 18th

June 2014.

19. The appellant had sworn approximately eight affidavits in respect of the various motions all of which appeared to have been

considered by the court. In addition, there were five affidavits before the court which had been sworn between 15th March 2012 and

30th November 2012 by the appellant in the 2012 proceedings against the bank and Helen Raftery. There was a motion before the

court in separate summary proceedings brought by the bank against the appellant, Record Number 2013/1073S, seeking summary

judgment for sums totalling €3,020,122.86.

Contentions of solicitor

20. In his grounding affidavit of 18th July 2014, the solicitor contends as follows:

(1) that the 2014 proceedings were brought by the appellant solely for the purposes of frustrating the summary

proceedings of the bank;

(2) that the proceedings were brought in breach of the settlement agreement received by the High Court in 2013;

(3) that the proceedings concern matters previously litigated and that an estoppel arose against the plaintiff from

claiming on foot of them and are bound to fail.

21. It was further argued that the proceedings against the solicitor constituted an abuse of process, were frivolous and vexatious and

had been brought for an improper purpose.

The key issue specified

22. The affidavits set out the key transactions with which the appellant is taking issue in the proceedings. Same included; (a) a

business arrangement between the appellant and his deceased partner, Fionan Raftery, regarding land at Knockcroghery, Co.

Roscommon, (b) a business arrangement between the appellant and the said partner regarding lands comprising 11.75 acres situated

at Golf Links Road, Roscommon and (c) the purchase of a licenced premises known as “Daltons” situate at Fuerty, Co. Roscommon.

The solicitor deposes at para. 5 of his grounding affidavit that:

“…the Plaintiff alleges that the Bank of Ireland and the other named Defendants in the proceedings… conspired without his

knowledge to use the lands situate at both Knockcrockery, Co. Roscommon and Golf Links Road, Roscommon, Co.

Roscommon together with the sale proceeds of 4 acres of the said property situate at Golf Links Road, Roscommon, sold

by the Plaintiff and the late Fionan Raftery for the sum of €3,000,000.00 for the benefit of the Bank of Ireland and the

late Fionan Raftery and it is alleged to the Plaintiff’s detriment. The Plaintiff thereby alleges that he has lost the

opportunity to profit from the development of these lands… and whereby he is now unable to pay his debt to the Bank of

Ireland.”

23. At para. 8 the solicitor deposes:

“…the matters raised in the Proceedings now before this Honourable Court are identical in all material respects to the

matters that were raised and dealt with in previous Proceedings bearing Record Number 2012/2023P and/or concern

matters which ought properly to have been raised in those Proceedings. I further say that the matters raised in the

Proceedings now before this Honourable Court are also identical in all material respects to the matters that were raised

and dealt with in the previous allied Proceedings bearing Record Number 2012/2024P instituted by the Plaintiff and/or

concern matters which ought properly to have been raised in those Proceedings…”

24. Referring to the 2012 proceedings against the bank the solicitor further deposes at para. 8 of his grounding affidavit:

“…it is clear from a review of the matters arising on foot of those proceedings and from the contents of the Affidavits put

forward by the Plaintiff in support of those claims that the issues which the Plaintiff sought to litigate are identical to and

based upon the same matters as those set forth in the instant proceedings…”

25. It is argued that in entering into the settlement agreement of 5th June 2013 with the legal personal representative of Fionan

Raftery, the appellant had “agreed and confirmed that no new proceedings would be instituted by him (the instant Plaintiff) in respect

of the matters raised in the proceedings.” The solicitor asserts in his grounding affidavit that the matters raised in the within

proceedings were also “identical in all material respects to the matters that were raised and dealt with in the Proceedings bearing

Record Number 2012/2023P...”

26. At para. 13 of the grounding affidavit the solicitor deposes that:

“Pursuant to the Terms of the said Settlement Agreement [13th June 2013] it was agreed that no new proceedings would

be issued by the Plaintiff herein in respect of the matters which the Plaintiff is seeking to litigate in the instant

proceedings… and which are identical to and based upon the same matters as those set forth [and] raised in the prior

Proceedings…”

27. He deposes that the 2012/2024 claims “were settled on the basis of a compromise of all matters arising on foot of the previous

proceedings issued by the Plaintiff herein with the benefit of Independent Legal Representation and Advice…” He also contended that:

“the plaintiff has failed to comply with an acknowledgment given by him in compromising the previous proceedings as

instituted that there is an issue of property owned jointly by him and the late Fionan Raftery to be addressed, which

property is subject to a Charge in favour of the First Named Defendant to these proceedings.”

28. The solicitor further deposes that he has no case to answer on the merits.

29. In a replying affidavit filed by the appellant opposing the motion the appellant denies that his statement of claim did not disclose a

cause of action. He claimed he was entitled to amend same so as to show a cause of action. In later affidavits the solicitor

contended that the claim was statute barred against him.

30. In regard to the contention that the claim was statute barred as against the solicitor the appellant relied on the fact that he was

now claiming fraud:

“I also say and am so advised that the issue of the claim being statute barred is a matter to be determined at the trial of

the action and not in an application to have the proceedings struck out…”

31. The appellant also contended before the High Court that the compromise of 2013 was of no relevance to the solicitor who was

not a party to the said proceedings. In an affidavit sworn in September 2015, the appellant deposes that the solicitor “never acted

for me personally”. As a consequence of him acting for Fionan Raftery and Helen Raftery “a conflict of interest arose in respect of him

also acting for the partnership to my detriment.”

Position of appellant

32. In the affidavits sworn before the High Court the appellant recounts a series of complaints. He deposed that the solicitor had

acted negligently and in breach of his fiduciary duty to him in relation to a loan transaction in June of 2005 when the bank advanced

€770,000 to Fionan Raftery and his wife on the same day that a loan of €3.461m. was advanced to the partnership when the security

advanced by the deceased’s partner was one and the same in respect of both loans and the appellant contends as a consequence

the security for the partnership’s loans was diluted. In connection with the sanctioning of a loan by the bank for the acquisition of

Daltons public house in March 2006 for the benefit of Fionan Raftery and his wife the appellant contended in the said affidavit at

paras. 11 and 12 that there was collusion between the bank and the solicitor and the deceased, Fionan Raftery, in respect of the

securities created in March 2006.

November-December 2007

33. In relation to the loan sanctioned on 21st November 2007 it was contended that:

“The issuing of the two loan offers covering the same loan was done for the purpose of hiding from me the true purpose

of the loan and as such not only amounted to a breach of contract on the part of the First Named Defendants and Fionan

Raftery but also amounted to a fraud against me. By the Fourth Defendant colluding in this arrangement he also not only

acted in breach of contract and in breach of his fiduciary obligations to me but also fraudulently.”

34. The appellant equally contends in his affidavit that the conduct of the bank and also of the solicitor in relation to the loan offer of

21st November 2007 further diluted the security for the partnership and exposed the appellant personally to greater financial risk and

that this was done without his knowledge or consent. In particular, he instances that a guarantee which had previously been provided

by Helen Raftery, the wife of Fionan Raftery, in respect of partnership borrowings was, with effect from 21st November 2007, dropped

or waived and no longer formed part of the security. He claimed that the said security was dropped without his knowledge or consent

and that an implication of the loan offer of 21st November 2007 was that Fionan Raftery was given “an unsecured loan of €500,000

and in addition removed the Knockcroghery lands belonging to the Rafterys, which they and the bank valued at €1.5 million as

security for the said loan…”

35. The appellant asserts that the solicitor and the bank were aware that the loans of the partnership were joint and several and

thereby totally understood “the catastrophic consequences this would have on me by dropping this type of security while knowing

Fionan Raftery was terminally ill with lung cancer.”

36. As a consequence, the appellant contends “that the solicitor acted in a conflicted manner and negligently and in breach of his

fiduciary duty and conspired with the first named defendant in the fraudulent interference with a loan offer facility letter to my

financial detriment.”

37. The appellant claims that the fact that his partner, Fionan Raftery, was directed by the solicitor to obtain independent legal

advice in connection with the loan transaction of November 2007 is indicative of the solicitor’s focus on the Raftery’s welfare to his

disadvantage. (para. 23 of the affidavit filed 17th September 2015).

38. The appellant also sought to rely in his original replying affidavit sworn on or about 1st September 2014 (and reiterated a year

later in his affidavit of 17th September 2015) that the solicitor had in the past issued letters which were in breach of proper legal

practice and procedure.

39. At para. 18 he asserts that the solicitor colluded with the bank in regard to procuring deposits or monies required to secure

personal properties for the deceased, Fionan Raftery. He further deposes that the solicitor misappropriated funds from another client

account held at his office on behalf of another partner, who was also involved with his partner, Fionan Raftery, in a different project.

He alleges that this occurred in March 2006 to facilitate a deposit request for €210,000 to the bank for the public house premises that

Fionan Raftery and his wife were purchasing.

40. The appellant characterises events surrounding the loan offer facility letter of the 21st November 2007 as “… a successful

attempt of criminal activity to fraudulently change a loan offer document to conceal information from the Plaintiff by the first, second

and fourth named Defendants…” (para. 20)

41. At para. 21 of the said affidavit, the appellant refers to a letter of 14th December 2007 from the solicitor to the bank which, he

contends:

“… confirms his knowledge of these arrangements and falsely confirms that he has independently advised his clients in this

regard in circumstances where these transactions were conducted on the Partnership’s behalf without the Plaintiff’s

knowledge or consent.”

42. The appellant contends that a general pattern of behaviour by the solicitor is exhibited whereby, inter alia, the solicitor treated

the deceased, Fionan Raftery, as the preferred customer or client and in doing so the solicitor acted negligently and also fraudulently

and in breach of the appellant’s contractual rights and he has suffered substantial financial loss arising therefrom.

Judgment of 2nd June 2016

43. Mr. Justice Mac Eochaidh delivered his ex tempore judgment on 2nd June 2016. He noted at p. 8 that at about the time when a

plenary summons was issued against the bank and Helen Raftery:

“a plenary summons was also issued naming Mr Harlow, his solicitor, as a defendant in separate proceedings. That plenary

summons was issued but was never served on Mr Harlow and he found out about it subsequently and certainly well

outside the time when the plenary summons ought to have been served before lapsing. So he didn’t know about it during

the time when it was in existence and when it had legal effect.” (lines 28-32)

44. He notes that two versions of the loan facility letter of 21st November 2007 came into existence:

“… there is a significant dispute in this case and on this motion as to which of the loan facilities was the one executed

and implemented by the relevant parties.” (p. 9, lines 16-18)

45. He notes that the solicitor had been acting for the partnership and that the late Mr. Raftery received independent legal advice

from Ms. Bríd Miller, a solicitor. He notes that a letter written by the solicitor to the bank on 14th December 2007 was:

“a relatively important letter in these proceedings… the letter is exhibited in an affidavit sworn on the 24th October 2012

and filed on the 19th of November 2012. It is perfectly clear from the letter that Mr Harlow was behaving in a certain way

in respect of monies drawn down or loaned or borrowed to the partnership from the bank of Ireland and this Court asked

when it was that Mr Small was aware of the existence of this letter and a number of answers were given; it was first

suggested that the first awareness of the existence of this letter or the content of the letter or the activities described

in the letter being conducted by the solicitor were [learned of] very recently… approximately mid-May of 2016. It was

then conceded that perhaps [it] was April of 2015 in an earlier affidavit.” (pp. 9-10, lines 27-34, 1-7)

46. The judge concluded that the appellant was aware of that correspondence since the 2012 proceedings and in particular from

November 2012 and further that on foot of a data request same had been supplied to the appellant by the bank possibly in early

2011:

“… certainly well before the institution of the first set of High Court proceedings and therefore Mr Small knew or ought to

have known of the content of the letter of his solicitor dated the 14th of December 2007.” (p. 10, lines 17-20)

47. At p. 12 of the ex tempore ruling the judge observed:

“Nonetheless his repeated reference to the condition on which the loan was made is evidence that he was completely

aware that the loan was given on the basis that some of it would be used for Mr. Raftery’s purposes and that he was

absolutely aware that this was something that harmed his interests, that he believed harmed his interests, and he was

absolutely aware that this was happening indeed had happened and that his solicitor had proceeded to give instruction to

the bank to do exactly that, which offended him greatly.” (lines 18-24)

48. The judge noted that the appellant did not immediately serve the plenary summons which he had issued. He had failed to write to

the solicitor setting out his objections and complaints:

“He remains… modest in his complaint about it and didn’t do as one would have expected… about what he says was a

monstrous act of betrayal on the part of his solicitor.”

“The Court is now aware, as indicated, that not only did Mr Small know the existence of the correspondence between his

solicitor and partnership solicitor and the bank during the course of the proceedings and not make a urgent complaint

about what must have been very alarming content to him… he was aware of the existence of this correspondence prior to

the institution of the proceedings against the bank and prior to the institution of the proceedings issued but never served

against Mr Harlow, and that is a matter of which the Court notes and takes into account in the judgment it’s giving in this

case…” (p. 13, lines 1-3, 5-12)

49. The judge noted that at para. 23 of the statement of claim delivered by the appellant in the within proceedings he had pleaded;

“The plaintiff is now aware that the first named defendant issued two different loan offers on that date”, being 21st November 2007.

The judge further noted that:

“The loan offer signed by the Plaintiff contained four conditions precedent to drawdown. The second loan offer contained

a six-condition precedent to draw down, condition six confirming the rationale of the drawdown of the additional €500,000

to close a number of accounts controlled by Fionan Raftery and to apply the balance of €400,000 in permanent debt

reduction to the facilities held by Fionan and Helen Raftery. The loan offer also places an onus on the fourth-named

defendant to confirm the disbursement of funds meaning that he along with the other defendants was a party to

defrauding the plaintiff and indeed by letter of the 14th of November 2007, the fourth-named defendant confirms his

knowledge of these arrangements and falsely confirms that he has independently advised his clients in this regard”.” (p.

14, lines 19-29)

50. The judge notes that the appellant was contending that the letter of 14th December 2007 (erroneously referred to in the

judgment as the 14th November 2007) allowed him to allege fraud against Mr. Harlow.

51. At p. 17 of the ex tempore judgment Mac Eochaidh J. concludes that:

“… it appears that a Henderson v. Henderson complaint is entirely appropriate with respect to the first and non-issued

proceedings. The Court has some concern that the Henderson v. Henderson rule couldn’t really apply to proceedings

which were issued but never served because in a sense, the Henderson v. Henderson rule is designed to stop a person

from being harassed by multiple suits and of course Mr Harlow was never harassed by the first suit at all because he didn’t

know of its existence. So, if the Court is wrong in applying the Henderson v. Henderson rule to unissued proceedings,

then what the Court will do is apply the same reasoning it applied in respect of the second reason for applying the bank’s

– for [upholding] the bank’s application…” (p. 17, lines 15-25)

52. He goes on to state that:

“… it would be wrong to allow Mr Small to sue the solicitor in fraud on the basis of the content of the letter of the 14th of

[December] 2007 because that absolutely involves re-litigation of complaints against his former partner because it is

inevitable that he will say that the content of that letter establishes… that Mr Raftery was in conspiracy not only with

the bank but with his solicitor to ensure that partnership monies were used for Mr Raftery only and that Mr. Small knew

nothing about the content of that letter.” (p. 17, lines 25-32)

53. The judge continued at pp. 17/18 of the judgment:

“When he sues Mr Harlow in respect of those matters, he unavoidably sues Ms Raftery in respect of them as well because

Mr Harlow cannot defend himself in respect of [the] proceedings without joining Mrs Raftery back into the proceedings…”

(lines 34, 1-3)

54. He concluded:

“… because if the allegation is true… then Mr Harlow would have to be able to defend himself at least by sharing liability

with his alleged co-conspirator, the late Mr Raftery, and that would involve re-litigating matters which have been settled

and so this Court will not allow a settled case to be reopened and so for that reason in case I’m wrong on the Henderson

point, I uphold Mr Harlow’s application to strike out the second set of proceedings which have been issued, that is the

2014 proceedings.” (lines 5-12)

Grounds of Appeal

55. The grounds of appeal relied upon were, firstly, that the judge erred in striking out the proceedings against the fourth named

defendant/respondent on the basis of the rule in Henderson v. Henderson and secondly, that he was in error in making the order on

the alternative basis that the compromise reached between the appellant and Helen Raftery in earlier litigation in 2013, on the basis

that neither would issue proceedings in respect of matters raised in those settled proceedings, meant that if the current proceedings

were permitted to proceed it was likely that Helen Raftery would become a party to the within litigation which would be a breach of

the terms of the 2013 compromise.

The law

56. In reaching a determination as to whether the within proceedings can or ought to be struck out as constituting an abuse of

process pursuant to O. 19, r. 27, O 19, r. 28 or indeed pursuant to the inherent jurisdiction of the court, the issues and background

to the proceedings and the conduct, in particular of the appellant, requires to be carefully evaluated.

57. As the authors in Delany and McGrath on Civil Procedure, 4th Edition, Round Hall, 2018 at 15-03 observe: “The necessity for

proceedings to be determined with expedition stems from the nature of the adjudicative process carried out by the courts which

depends, in many cases, on oral testimony given by witnesses whose recollection will inevitably become less accurate and reliable

with the passage of time. As Diplock LJ said in Allen v Sir Alfred McAlpine & Sons Ltd, “[t]he chances of the court being able to find

out what really happened are progressively reduced as time goes on. This puts justice to the hazard.” However, an order dismissing

proceedings for want of prosecution can also inflict considerable hardship on a plaintiff who may have suffered serious injury and have

no other means of compensation and, as Diplock LJ also commented in Allen, an order to dismiss “will not lightly be made”.”

58. It is clear that the exceptional nature of the application means that it ought only be made where necessary to protect the

legitimate interest of the applicant who stands to be adversely affected. The court in exercising its discretion must consider the

balance of justice, the interest of fairness and whether there will be manifest and disproportionate prejudice to the defendant if the

litigation be permitted to continue. The relevant factors must all be weighed in the balance by the judge in reaching a determination.

59. I am satisfied in the instant case that the rule in Henderson v. Henderson was not appropriately applied by the High Court. Whilst

a writ issued in 2012 against the solicitor, he remained wholly oblivious as to its very existence for many years. It lay dormant and

unserved. No application was made for its renewal. Beyond the issuing of writ Record Number 2012/2024P the said claim is dormant. In

issuing the 2014 proceedings against the solicitor the plaintiff is merely taking advantage of the opportunity offered by the Rules of

the Superior Courts.

60. Therefore, the solicitor cannot reasonably contend, based on the jurisprudence, that he is faced with “successive civil actions”

arising from “the same factual matters”. Whilst it is accepted that the rule in Henderson v. Henderson has diverged substantially from

the original ruling given by Wigram V.C. the primary principle which informs the rule is that it serves the public interest that there

should be finality in litigation and that the practices and procedures of the courts should give priority to efficiency and to economy in

the conduct of litigation. As was noted by Lord Bingham in the House of Lords decision in Johnson v. Gore-Wood and Company Limited

[2002] 1 A.C. 1 at p. 31:

“…a party should not be twice vexed in the same matter… The bringing of a claim or the raising of a defence in later

proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse)

that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all.”

It will be recalled that in that case Lord Bingham counselled against the adoption of:

“too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the

public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial

question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise

before it the issue which could have been raised before.”

Abandoned Plenary Summons

61. The 2012 proceedings never progressed beyond the issuing of a writ. There never was a temporal point in the conduct of the

2012 proceedings when it could be fairly said of the appellant that he either “could or should” have brought forward all claims. The

writ was abandoned. Estoppel does not arise.

62. There is no “decision” that the solicitor can point to in regard to the prior 2012 proceedings. It cannot be reasonably said that the

appellant is seeking as against the solicitor to re-litigate a matter that has in any way been considered by a court of competent

jurisdiction at any time.

63. As Delany and McGrath on Civil Procedure notes at 16-99 in analysing the jurisprudence on Henderson v. Henderson:

“The balancing process which must be carried out by the courts in this context was referred to by McGovern J in Vico Ltd

v Bank of Ireland, where he stated that the right of access to the courts, whether under the Constitution or the

European Convention on Human Rights, is a right which is not unlimited and is subject to certain constraints based on

public policy and legal principles. McGovern J added that “the right of access to the courts carries with it the

responsibility to accept the decisions of the courts and not to use the court process to launch a collateral attack on or

undermine earlier decisions of the courts on similar issues between the same parties or parties with a privity of interest.”

64. I am satisfied that the rule in Henderson v. Henderson, as the jurisprudence has developed in this jurisdiction, does not avail the

solicitor as a basis for dismissing the proceedings against him. Neither can he successfully contend that the rule in Henderson v.

Henderson ought to be applied by analogy for his benefit. The solicitor has failed at the most basic level to establish that the doctrine

in Henderson v. Henderson could be applicable or available to him in support of his motion to have the proceedings dismissed or in the

alterative struck out against him.

Alternative grounds

65. The alternative basis for dismissal of the proceedings articulated by the High Court judge was that the within proceedings against

the solicitor amounted to a collateral attack on the earlier compromises by Mr. Small of separate proceedings, Record Number

2012/2023, with, inter alia, Helen Raftery, the legal personal representative of his deceased partner and the bank.

66. In my view, the reasoning which led to this determination is unsound. It is to be borne in mind that a determination that

proceedings constitute a collateral attack on an earlier decision of a court of competent jurisdiction may be, but is not necessarily, an

abuse of the process of the court. Secondly in the instant case, the solicitor was not a party to the 2012/2023 litigation nor a privy

of any party to the litigation that came before the High Court in 2013 where orders were made.

67. In the instant case the solicitor was not a party to the litigation which was the subject of consent orders made firstly in respect

of the bank and secondly in respect of Helen Raftery before the High Court in May and June 2013.

68. The solicitor cannot take adventitious advantage of the mere fact that coincidentally a writ was issued against him in 2012

though never served and never progressed in any way. It is not a relevant basis to have the current proceedings dismissed. There is

no question of the re-litigation of any issue raised as against the solicitor since there never was any litigation prosecuted against him

in the first place.

Unfairness

69. It is necessary to evaluate whether in broad terms the current proceedings can be characterised as giving rise to unfairness

operating upon the solicitor or otherwise whether they bring the administration of justice into disrepute.

70. One has to bear in mind the fundamental right of citizens and individuals to bring their claims before the courts and the courts

should be slow in general to dismiss such claims prematurely or to seek by analogy to extend the principles unless there is

demonstrably an element of vexation or the use of litigation for an improper purpose.

71. An appeal against the decision to strike out on the grounds of abuse can be characterised as a challenge to the judgment of the

court below rather than to the exercise of discretion. In reviewing the decision of the High Court considerable weight and respect

must be accorded to the views of the judge who made the original decision.

72. As was stated by Charleton J. in the Supreme Court decision of Talbot v. Hermitage Golf Club [2014] IESC 57:

“Among the unenumerated rights in Article 40.3 of the Constitution is the right to have access to the courts for the

purpose of litigation. This was described by the Supreme Court in Tuohy v Courtney [1994] 3 IR 1 at 45 as “the right to

achieve by action in the courts the appropriate remedy upon proof of an actionable wrong causing damage or loss as

recognised by law.” The resources of the courts are there for litigants. Those resources are not, however, unlimited. No

litigant is entitled to more than what is reasonably and necessarily required for the just disposal of a case within the

context of the other demands on court time. Whether it is an unrepresented litigant or not, the resources which the

courts decide to assign to a case must depend upon: the importance of the legal issues involved; the gravity of the

wrong allegedly suffered by the moving or counterclaiming party; the monetary sum involved; and the public interest in

the outcome of the case. Courts are entitled, and indeed are required, to foster their resources. This is both a matter of

public and private interest. Court resources used in litigation are funded by public money. In addition, the parties pay for

legal representation. Litigants should not be faced with cases that are longer or more expensive than they need to be for

a fair resolution. In many instances, costs if awarded against a losing party may not be recovered. In that regard, putting

reasonable limits on submissions in terms of time and allowing a measured number of hours or days for each side to litigate

their case is both right and appropriate.”

Other grounds relied upon by solicitor

73. The solicitor additionally claimed that the proceedings were an abuse of process, frivolous, vexatious, bound to fail, unnecessary

and scandalous. As regards the claim that the proceedings are scandalous, an allegation of dishonesty, whilst it amounts to a

scandalous fact, does not render the claim scandalous per se. It is generally accepted that the primary question is whether the

matter alleged to be scandalous by an applicant would be admissible in evidence to demonstrate the truth of any allegation in the

pleading which is material by reference to the relief that is being sought.

74. It is asserted that several of the claims against the solicitor are potentially statute barred. The issue of the statute of limitations

is to be pleaded by way of defence. Where appropriate, and subject to the established jurisprudence, the issue can in certain

circumstances be the subject of a preliminary issue. Beyond the bare assertion that the statute is a matter of pleading, it cannot be

said that there is any evidence before this Court to suggest that if the statute of limitations is raised in any defence delivered on

behalf of the solicitor that Mr. Small could escape from that defence in relation to any issue which pre-dates August 2007. All

allegations of conspiracy or collusion irrespective of the date of same are nothing more than collateral attacks on the compromises

reached with the bank and Mrs. Helen Raftery in May and June 2013.

Fraud

75. Pursuant to s. 71 of the Statute of Limitations 1957, a limitation period will not begin to run against the defendant if

“(a) the action is based on the fraud of the defendant or his agent or any person through whom he claims or his agent, or

(b) the right of action is concealed by the fraud of any such person.”

Section 71(1) provides that the limitation period begins to run only when the plaintiff “has discovered the fraud or could with

reasonable diligence have discovered it.” It is clear in the instant case that the appellant has adopted a somewhat scattergun

approach with regard to the various allegations that he levels against the solicitor in the pleadings. Notice must be taken of his

affidavits in the 2012 and current proceedings. No claim of fraud against the solicitor is now stateable which pre-dates August 2007.

Motion to Amend – Appeal 2016/301

76. I am satisfied, having reviewed the statement of claim in its current iteration and the matters specifically pleaded against the

fourth named defendant/respondent therein together with the draft amended statement of claim proposed to be served on the fourth

named defendant/respondent, that the advancing of any claims including the allegation of fraud, is not permissible in relation to any

matter pleaded which precedes the month of August 2007 as same would amount to a collateral attack on the 2013 compromises.

Further, all claims based on conspiracy or collusion irrespective of when they are alleged to have occurred require to be struck out as

a collateral attack on the 2013 compromises.

77. I am satisfied that it cannot now be stated by Mr. Small that any fact or matter which he now seeks to characterise as fraud and

pre-dates August 2007 is justiciable. The equitable rules governing fraud are clearly within the purview of Chapter V of Part III of the

Statute of Limitations 1957.

78. A reasonable cause of action necessarily implies that it has some prospect of success when considering the allegations as

pleaded, and when the proposed amendments, are considered. The mere fact that the appellant’s case is very weak and may not be

likely to succeed is not a ground for striking it out without more.

79. The mere fact that in determining this motion on appeal I am of the view that some elements of the pleadings with the proposed

amendments result in aspects of Mr. Small’s claim being merely arguable is not at all binding on the trial judge in the sense that it

does not entitle Mr. Small to contend that he should be treated at the trial of the action as having made out some kind of prima facia

case in regard to any outstanding ground whatsoever which he is advancing against the solicitor in the statement of claim. The

determination of this appeal leaves open all points to be argued fully before the trial judge on the evidence as may be adduced.

Conclusions

80. I would allow the appeal only to a very limited extent. All allegations claiming collusion or conspiracy must be struck out

irrespective of when same are alleged to have occurred. All other allegations that pre-date the month of August 2007 must also

properly be the subject of an order that same be dismissed in the exercise of the inherent jurisdiction of the Court, inter alia, to

protect the bank and Helen Raftery from a collateral attack on the 2013 compromises. However, any allegation pleaded pertaining and

confined to events particularly between the months of August 2007 and December 2007 with regard to the fourth named

defendant/respondent are maintainable subject to the appellant amending the statement of claim in such a manner as to exclude and

excise all other pleas, claims and allegations including of collusion, conspiracy or impropriety as implicate the Bank or Fionan Raftery or

Helen Raftery. I would allow the motion to amend the statement of claim on the limited basis that, without exception, all claims and all

proposed amendments pertaining to matters pre-dating August 2007 be refused and all such claims be struck out. Further, that so

much of the statement of claim as pertains to conspiracy or collusion be struck out. The statement of claim is to be confined to

claims for breach of contract, negligence and fraud only as post-date 1st August 2007.