THE HIGH COURT
Record No. 1987 No. 10656P
BETWEEN
PRIVATE MOTORISTS' PROVIDENT SOCIETY LIMITED (IN OFFICIAL LIQUIDATION)
PLAINTIFF
AND
JOSEPH MOORE
DEFENDANT
Judgment of Mr. Justice Lynch delivered the 18th day of November 1988.
The Plaintiff's claim in this action is for a declaration that a purported contract made on the 19th day of October 1983 between the Plaintiff and the Defendant did not constitute a valid contract between the Plaintiff and the Defendant for the sale by the Defendant to the Plaintiff of one million shares in P.M.P.A. Insurance Company Limited and for other ancilliary declarations and Orders.

The defence contained (inter alia) a plea of estoppel by record based on the Judgment of Murphy J., given on the 2nd October 1987 in proceedings between the same parties bearing Record No. 10966P of 1986. I heard detailed submissions from Counsel for both the Plaintiff and the Defendant on this issue which was heard as a preliminary issue on the 4th of October 1988 before any evidence was tendered and I reserved my judgment overnight. On the 5th of October 1988 I delivered my Judgment on that issue not as a written Judgment but with a stenographer to make a verbatim note of it. I rejected the Defendant's plea of estoppel by record and a subsiduary plea of unfairness to the Defendant and I then heard the evidence and submissions in the substantive action.

THE FACTS
The Plaintiff is an Industrial and Provident Society first registered as such on the 26th of April 1958. The Defendant is one of the founder members of the Plaintiff and at all times material to this action the Defendant was a member of the Committee of Management of the Plaintiff and was the dominant member thereof. The Defendant was also Chairman of an associated Company, namely, the P.M.P.A. Insurance Company Limited (hereinafter called the Insurer). The insurer's directors included many of the Plaintiff's Committee of Management in addition to the Defendant and the Defendant who owned about 3 million shares in the Insurer was also the dominant director of the Insurer. The Plaintiff and the Insurer were in effect members of a large and complex group of companies all under the same ultimate management of whom the Defendant was the dominant personality.

The Plaintiff had accepted deposits of moneys from members of the public and had lent out moneys to other members of the public including the Defendant. As at the 19th of October 1983 the Defendant owed to the Plaintiff just short of £335,000 for moneys lent by the Plaintiff to the Defendant and interest thereon. By virtue of the Industrial and Provident Societies (Amendment) Act 1978 the Plaintiff was under an obligation to repay the amount of their deposits to all depositors not later than the 14th of November 1983 and consequently the Plaintiff needed to get in moneys lent by it to enable it to make such repayments.

The Insurer was a public Company whose shares were quoted on the Dublin Stock Exchange until in or about the month of September 1982 when stock exchange facilities were
withdrawn. Thereafter the Plaintiff decided to make a market for buying and selling the Insurer's shares and the Plaintiff itself commenced to buy and hold such shares as well as acting as an intermediary for the buying and selling of shares by members of the public. The Plaintiff maintained such market by fixing a selling price and a buying price for the Insurer's shares from time to time. In December 1982 the Plaintiff advertised its buying price at 39p per share and for some months prior to October 1983 the buying price was 40p per share. Between October 1982 and the 27th of May 1983 the Plaintiff had purchased and itself owned 1,246,715 shares in the Insurer. Between the 27th of May and the 23rd of September 1983 the Plaintiff purchased a further 977,480 shares in the Insurer bringing its total holding of shares in the Insurer to 2,224,195 at the latter date. On these figures the average purchases per month between October 1982 and May 1983 were 178,102 shares and between May and September 1983 were 244,370 shares per month. The increase in the monthly average from May to September 1983 is accounted for by sales of large numbers of such shares by members of the Committee of Management of the Plaintiff to the Plaintiff during that period at 40p per share.
On the 19th of October 1983 the Insurance (No. 2) Bill 1983 was introduced in the Oireachtas and was dealt with as an emergency measure during that day. The Bill passed all stages and became law the same day in the form of the Insurance (No. 2) Act 1983.

During the course of that day the 19th October 1983 there were very strong public rumours that the Bill or Act was aimed at the Insurer and this in turn caused a run of
depositors looking for repayment of their deposits from the Plaintiff. At 4 p.m. on the 19th October 1983 the Defendant telephoned Mr. Gordon Gallagher who was Financial Controller of the group and more particularly of the Insurer to say that he wished to sell one million shares in the Insurer to the Plaintiff. Mr. Gallagher summoned Mr. Leo Mahon the Administration Manager and acting Chief Executive of the Plaintiff to inform him of this communication from the Defendant. Mr. Mahon had been Administration Manager for some two years and was acting Chief Executive Officer for about six months prior to October 1983 during which time the permanent Chief Executive Officer, Mr. Denis O'Brien, was absent due to illness.
Mr. Gallagher informed Mr. Mahon that he,

Mr. Gallagher, would have nothing to do with the proposed transaction even though he was an authorised cheque signatory and that Mr. Mahon should be careful about his own position and should make sure that he, Mr. Mahon, got and acted on specific instructions from the Defendant and did not initiate anything himself. Mr. Gallagher made it clear that the reason why he would have nothing to do with the transaction was because he thought it an inappropriate transaction given the Bill then before the Oireachtas and the rumours that the Insurer would be the Company to be the subject of an application to the High Court pursuant to the provisions of the Bill.
Mr. Mahon then obtained from his own office a blank share transfer form and a cheque book of the Plaintiff and went to the Defendant in the latter's office in the Insurer's premises. The Defendant confirmed to Mr. Mahon that he wished to sell one million of the Insurer's shares to the Plaintiff and Mr. Mahon got the blank transfer form typed up by the Defendant's secretary inserting a price of 40p per share being the then current buying rate. The transfer was then signed by the Defendant and Mr. Mahon then made out a cheque from the Plaintiff in favour of the Defendant for £400,000 being one million shares at 40p per share.
Mr. Mahon then got this cheque signed by two authorised signatories who were also members of the Committee of Management, namely, Mr. Seamus O'Mordha (who is a son of the Defendant)'and Mr. Michael Dore. Neither Mr. O'Mordha nor Mr. Dore gave evidence before me. In the absence of any evidence from either Mr. O'Mordha or Mr. Dore I infer and find as a fact that both signed merely as authorised signatories and because they were requested to do so by the Defendant through the medium of Mr. Mahon and neither considered as members of the Committee of Management the appropriateness of the transaction and in particular the value of the Insurer's shares in the circumstances then obtaining. Mr. Mahon was not an authorised cheque signatory nor was he a member of the Committee of Management and it did not occur to him to query the transaction which did not appear to him to be out of the ordinary. He simply did as he was told to do by the Defendant.

There is no minute in the Plaintiff's minute book indicating that the Committee of Management ever formally authorised Mr. Mahon to buy or sell shares in the Insurer on behalf of the Plaintiff. I am satisfied however from the volume of dealings both in the form of purchases by the Plaintiff itself and in the form of purchases and sales to other persons which exceeded nine million shares by the 23rd of September 1983 that the Committee of Management did in fact authorise the buying and selling of shares in the Insurer in the ordinary course of business of the Plaintiff and the Insurer and that Mr. Mahon and presumably other members of the Plaintiff's staff were authorised to implement such sales and purchases.

THE SUBMISSIONS
The Plaintiff claimed that the sale by the Defendant and the purchase by the Plaintiff of the one million shares in the Insurer was a nullity on three grounds.

First, the Plaintiff submitted that the Plaintiff itself has no power under its rules to acquire shares although the Committee of Management may do so on its behalf under Rule 54 and in particular the Plaintiff submitted that it had no power to. maintain a market in the Insurer's shares.	Rule 54 of the Plaintiff's rules so far as relevant for the purposes of this case provides as follows:
"The Committee may invest any of the capital of the Society in:-
 (c) the shares of or on the security of any other registered society or of a Building Society registered under the Building Societies Acts or of any company registered under the Companies Acts or incorporated under any statute or charter provided that no such investment may be made in the shares of or on the security of any society or company other than one with limited liability."

Secondly, the Plaintiff submitted that Mr. Mahon was not specifically authorised by the Committee of Management to enter into this particular transaction and ought to have been so specifically authorised if it were to be valid.

Thirdly, the Plaintiff submitted that irrespective of the second submission there was no valid contract between the Plaintiff and the Defendant because what happened was not an offer by the Defendant accepted by the Plaintiff or vice versa but a direction by the Defendant obeyed by the Plaintiff through its servants and agents who were in a subservient position vis-a-vis the Defendant.

The Defendant submitted first that there was a standing offer by the Plaintiff to buy the Insurer's shares at 40p per share and that this offer was accepted by the Defendant and
that this was a normal transaction.

Secondly, the Defendant submitted that no question of ultra vires could arise in this case because in fact £400,000 had been paid to and received by the Defendant as found by
Mr. Justice Murphy in his Judgment of the 2nd of October 1987 in the 1986 proceedings and this could not have resulted from a transaction which was a nullity.

Thirdly, the Defendant submitted regarding the allegation that the contract was not authorised that this contract was a performed contract and that a performed contract cannot be nullified except for fraud which is not alleged by the Plaintiff in this case and furthermore that the rules of the Plaintiff do not provide that the Committee of Management cannot do anything without a written minute of their decisions.

CONCLUSIONS
Regarding the Plaintiff's submissions that the transaction was vires the Plaintiff in that the Plaintiff could not invest in the Insurer's shares although the Committee of Management might do so on its behalf, in my opinion this submission is not valid. Rule 54 authorises the investment of the Plaintiff's funds by the Committee of Management in any company registered under the Companies Acts which the Insurer is. This means that the Plaintiff could invest in the purchase of the insurer’s shares. The rules do not appear to give any express power of selling shares but the power to buy shares necessarily involves a power to sell shares also because otherwise the funds of the plaintiff would be permanently locked into any shares which the plaintiff might buy and that would defeat the main objectives of the plaintiff. Therefore it seems to me that even the maintenance of a market in the Insurer's shares was not ultra vires the Plaintiff although it may have stretched its powers of buying and selling shares to the limit. The maintenance of the market in the Insurer's shares was primarily for the benefit of the Insurer but it could and did also benefit the Plaintiff to some extent by generating funds through the difference between the selling the buying prices of the Insurer's shares.

Regarding the Plaintiff's submission that Mr. Mahon did not have authority to buy shares on behalf of the Plaintiff I am satisfied that he and presumably other employees of the Plaintiff also must have been and were authorised by the Committee of management even though there is no formal minute to that effect to deal with the purchase and sale of shares in the ordinary and usual course of such business. Shares were regularly purchased by members of the public who insured their motor vehicles with the Insurer in order to gain the discount allowed by the Insurer on the premiums when the Insured owned not less than 1,000 shares. These shares were also regularly sold by such persons if for example they ceased to be insured with the Insurer or perhaps if they required to raise some ready capital quickly.

However, the purchase of one million shares from the Defendant was not a transaction in the ordinary and usual course of the Plaintiff's business of buying and selling shares in the Insurer. It was a transaction of a magnitude and in circumstances and at a time such that it would have required the specific consideration and authorisation by the Committee of management and no such consideration or authorisation took place. Mr. Mahon did not have power or authority to bind the Plaintiff to such a purchase and of course the Defendant as a member of the Committee of Management is not entitled to the benefit of the provisions of Section 8 of the Companies Act 1963.

Furthermore, I am satisfied that the Plaintiff's submissions regarding the absence of any agreement or contract for want of any real offer and acceptance are also valid. There was no standing offer by the Plaintiff to buy the Insurer's shares at 40p per share except in the ordinary and usual course of the Plaintiff's buying and selling such shares. The purchase in question was not as I have said in the ordinary and usual course of such business. What happened was that the Defendant using his dominant position directed that the sale and purchase should be effected and effected immediately and so it was without any consideration by anyone on behalf of the Plaintiff as to whether it was or was not a wise, prudent and appropriate purchase on behalf of the Plaintiff in the circumstances then obtaining on the 19th of October 1983. The sale by the Defendant and the purchase by the Plaintiff were effected solely at the behest of the Defendant and without any free and genuine assent by or on behalf of the Plaintiff to the terms of such sale and the sale and purchase is and was therefore wholly unauthorised by the Plaintiff.

Once I am satisfied as to the lack of authority of the Plaintiff's servants or agents to purchase the said shares I see no difficulty in giving relief to the Plaintiff just because the Defendant received the purchase money as he undoubtedly did and the Plaintiff received the one million shares.

I therefore declare that the purchase by the Plaintiff from the Defendant of one million shares in the Insurer for £400,000 on the 19th October 1983 as implemented by the servants and agents of the Plaintiff was unauthorised by the Plaintiff and is not binding on the Plaintiff.

I further declare that the said sum of £400,000 paid by the Plaintiff to the Defendant on the 19th October 1983 was and is money received by the Defendant to the use of the Plaintiff and the Defendant is obliged to repay the said sum to the Plaintiff.

I accordingly order that the Defendant repay to the Plaintiff £400,000 with interest thereon at 11% per annum from the 19th October 1983 to the date of payment.
I further declare that the Plaintiff and its Official Liquidator hold the said one million shares in the Insurer purchased by the Plaintiff from the Defendant as aforesaid on the 19th October 1983 on trust for the Defendant and I order that on receipt of the said sum of £400,000 with interest thereon as aforesaid the Plaintiff and its Official Liquidator retransfer the said one million shares to the Defendant.
Signed:

KEVIN LYNCH

THE HIGH COURT
Record No. 1987 No. 10656P
BETWEEN
PRIVATE MOTORISTS' PROVIDENT SOCIETY LIMITED (IN OFFICIAL LIQUIDATION)
PLAINTIFF
AND
JOSEPH MOORE
DEFENDANT
APPEARANCES
For the Plaintiff:
Peter Shanley Senior Counsel and Ian Finlay Barrister-at-Law (instructed by Messrs. McCann Fitzgerald Sutton Dudley, Solicitors, 30 Upper Pembroke Street, Dublin 2.).
For the Defendant:
Maurice Gaffney Senior Counsel and Patrick Hanratty Barrister-at-Law (instructed by Mr. Denis Sweeney, Solicitor, 13 Lower Baggot Street, Dublin 2.).
AUTHORITIES ON THE ISSUE OF ESTOPPEL
Halsbury Volume 16, paragraph 1526 (4th edition).
Haysted -v- Commissioner of Taxation (1926), Appeal Cases
155.
Shoe Machinery Company -v- Cutlen (1896), 1 Chancery 672.
Spencer Bower on Res Judicata (1924 edition) page 108.
Humphreys -v- Humphreys (1910)
Public Trustee -v- Ginsworth (1967) 2 All England Reports page 167.
Khan -v- Golenchia International (1980) 2 All England Reports 259.
Reg. -v- Hartington Manor (1858) 4 E. and B. 780.
AUTHORITIES CITED ON SUBSTANTIVE CASE
Companies Act, 1963, Section 8.
Usher Company Law, page 133.
Thomas Williamson Limited (In Receivership) and Sophocles Limited (In Receivership) -v- Bailieborough Co-operative Agricultural Society Limited, Costello J., 31st July 1986.