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	High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Culhane & Anor v. O'Maoileoin [1988] IEHC 31 (17 November 1988) URL: http://www.bailii.org/ie/cases/IEHC/1988/1988_IEHC_31.html Cite as: [1988] IEHC 31

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THE HIGH COURT

BETWEEN:

PATRICK CULHANE AND VERA CULHANE

PLAINTIFFS

AND

MICHAEL B. O'MAOILEOIN TRADING AS MICHAEL B. O'MAOILEOIN & CO.

DEFENDANT

Judgment of Mr. Justice Murphy delivered the 17th day of November 1988.

In 1978 David P.L. Hewson was the owner of a substantial property known as Attyflin Park, Co. Limerick. Attyflin Park included a substantial residence as well as a tillage farm comprising some 330 acres. Mr. Hewson arranged to have his property offered for sale by public auction on the 18th of July 1978. Mr. and Mrs. Culhane, the Plaintiffs in these proceedings, were anxious to acquire Attyflin. They too were farmers and owned a dairy farm near Askeaton, Co. Limerick. The Plaintiffs' farm comprised some 150 acres and they calculated that the sale of those lands together with the dairy herd would realize a sum in excess of £500,000. In addition the Plaintiffs had formulated in very broad terms a plan to sell off a field comprising some 60 acres of the Attyflin Park property and to dispose of smaller parts thereof which had development potential. In addition they hoped to convert the residence into a restaurant and guest-house. However, as farm land at the time was changing hands for sums of approximately £3,000 per acre it was clear that the transaction was a substantial one in connection with which the Plaintiffs would require a wide range of professional and technical advice as well as substantial financial assistance. If the scheme envisaged by the Plaintiffs was feasible perhaps it would be possible to repay or reduce the borrowings within a period of a few years or even months but it was clear that at the outset the Plaintiffs would require to borrow sums in the order of £lm.

Apart from one very preliminary and hurried meeting with their local Bank Manager the Plaintiffs had not in fact made any arrangements to procure the necessary finance prior to the date of the auction. Instead the Plaintiff, Mrs. Culhane, spoke to her brother, Michael B. O'Maoileoin, the Defendant herein, who was a Solicitor and sought his assistance in relation both to the financial and legal aspects of the transaction. On the 18th of July 1978 the Plaintiffs with Mr. O'Maoileoin attended at the auction and it is their evidence that they, acting on the Defendant's representation that he had arranged the necessary finance, bid for the premises, Attyflin Park, and were declared the purchasers thereof at £950,000. The Plaintiffs were required by the terms of the contract of purchase to pay a deposit of £95,000. It was the evidence of the Plaintiffs that they were advised, indeed coerced, by the Defendant to draw a cheque in the amount of £95,000 in favour of the auctioneer by way of deposit. The Plaintiffs informed Mr. O'Maoileoin that they did not have funds available to them to meet a cheque of that amount but Mr. O'Maoileoin assured them that he would make the necessary arrangements with a Mr. McGlynn to have the cheque honoured. On Friday the 21st of July 1978 the Manager of the Plaintiffs' Bank, Mr. Horgan, contacted them and informed them that the cheque had been presented for payment and advised them that the cheque would have to be dishonoured unless funds could be made available to him not later than the following Monday morning.

The Plaintiffs immediately contacted Mr. O'Maoileoin seeking an explanation as to why the necessary finance had not been provided and they were told by him that it was due to the unavailability of Mr. McGlynn. In fact the Plaintiffs endeavoured, with the assistance of Mr. Horgan, to obtain an advance of £95,000 from the Allied Irish Banks but the application which was hurriedly made in that behalf was refused. In so far as Mr. O'Maoileoin agreed to arrange finance prior to the auction or accommodation for the specific purpose of meeting the cheque in respect of the deposit paid by the Plaintiffs it is clear that he failed in his duty to the Plaintiffs. However, the irony is that as a result of the sharp fall in the value of agricultural land (which occurred about the year 1979) the Plaintiffs would have been immeasurably better off if as a result of the breach of contract and negligence of the Defendant they had failed entirely in their effort to acquire the Attyflin property. On the other hand the Plaintiffs could not have complained if their Solicitor had effectively and efficiently implemented their instructions. It would seem that the only scenario which the Plaintiffs had to fear was some ambiguous involvement in the transaction. Tragically that is precisely what happened. On the 4th of August 1978 Mr. O'Maoileoin did ultimately obtain for the Plaintiffs an advance of £95,000 from Allied Irish Finance Company Limited. The advance took the form of a cheque drawn in favour of the Plaintiffs who endorsed it in favour of the Defendant who then converted it into a bank draft. The parties then attended at the office of Mr. Hewson's Solicitors, Messrs. Hickey Kirwan Beauchamp and O'Reilly, where they met with Mr. Anthony Kirwan. Mr. O'Maoileoin tried to persuade Mr. Kirwan to accept the bank draft by way of deposit on foot of the contract signed by his clients but Mr. Kirwan refused to accept it. So much is common case. The area of dispute relates to what happened in the period between the date of the dishonour of the cheque on the 24th of July 1978 and the meeting on the 4th of August. It is clear that the Solicitors for Mr. Hewson wrote to Mr. O'Maoileoin on the 27th and 28th of July. In their first letter they threatened to rescind the contract of the 18th of July for the non-payment of the deposit and in the second letter they implemented their threat. However, they did add without prejudice a proposal to enter into fresh negotiations for a new contract. What the Plaintiffs say is that they 'phoned Mr. Hewson who was then residing in England and sought from him an extension of time for the payment of the deposit. It was Mrs. Culhane's evidence that Mr. Hewson said that he was agreeable to that course but that the Plaintiffs should contact his Solicitor and indeed Mrs. Culhane and Mr. Hewson who also gave evidence confirmed that Mr. Hewson had given to Mrs. Culhane the telephone number of his Solicitor, Mr. Jonathan Brooks, a member of the firm of Hickey Beauchamp Kirwan and O'Reilly. The Plaintiffs did contact Mr. Brooks - apparently on the 28th of July - and the outcome of the discussion with him was that no sale would be entered into for at least a week. It was the evidence of both Plaintiffs that they understood that in effect time had been extended for one week.

Mrs. Culhane, who is, as I have said, a sister of the Defendant, explained that Mr. O'Maoileoin was very difficult; very autocratic. Indeed Mrs. Culhane and all of the witnesses who gave evidence agreed that in the course of such contact as they had with Mr. O'Maoileoin at this period he was arrogant and indeed abusive. The culmination of this domineering attitude appears to have occurred in the discussions which took place between Mr. O'Maoileoin and the Plaintiffs immediately following their meeting with Mr. Kirwan on the 4th of August 1978. According to the evidence of Mr. Culhane, the Plaintiffs were informed by Mr. O'Maoileoin that he was taking "sole charge of their affairs" and that "he was taking over totally". Apparently that is what he said and certainly that is what he did.

On the 11th of August 1978 Mr. O'Maoileoin instituted proceedings on behalf of Mr. and Mrs. Culhane against David P.L. Hewson for specific performance of the contract for sale dated the 18th of July 1978. He then arranged to register those proceedings as a lis pendens against Attyflin Park. The Plenary Summons was served on Mr. Hewson outside the jurisdiction pursuant to the Order of this Court and on the 6th of October 1978 a Statement of Claim was delivered. The defence was delivered on the 19th of October and on the following day a motion on behalf of Mr. Hewson to have the lis pendens vacated was granted by Mr. Justice McWilliam. The Judgment of the trial Judge is on the file and in his Judgment he sets out in full his reasonings for granting the Order sought. He makes it clear that he was satisfied that the contract of the 18th of July 1978 had been lawfully determined by the vendor because of the failure of the purchasers to pay the deposit. He then goes on to deal with the question whether that contract was subsequently revived or a new contract created. Mr. Justice McWilliam rejected entirely the case made in an affidavit sworn by Mr. O'Maoileoin in which he said that Mr. Denis O'Mahony, the auctioneer, had agreed to waive the requirement for the payment of the stipulated deposit at any time prior to the 4th of August 1978. The Judge rejected that contention on the basis that as a matter of law an auctioneer would have no power or authority to make such a concession. The Judge also went on to say that if he was correct in his view that the contract had been terminated then any agreement to revive the original contract would require to be evidenced in writing. It is obvious that this decision must have represented a very considerable reversal for Mr. and Mrs.' Culhane or more particularly for Mr. O'Maoileoin who had taken upon himself the responsibility of prosecuting the case on behalf of his clients.

On the 25th of October Mr. Hewson telephoned Mrs. Culhane and proposed that the action should be settled on the basis that he would complete a sale of the property to the underbidder and that the resulting loss of £4,000 and the costs to date would be borne by Mrs. Culhane. It would also seem that Mr. Hewson attempted to explain to Mrs. Culhane the weaknessess of her case as they had emerged in the course of the motion to vacate the lis pendens. By letter of the 25th of October Mrs. Culhane informed Mr. O'Maoileoin of the nature of the offer that had been made and the problems to which Mr. Hewson had adverted. And she went on to say in her letter:

"If what Mr. Hewson tells us is right settle up our case for once and for all. He is to ring again on Tuesday contact us before then."

In fact Mr. O'Maoileoin did write at some length to his clients on the 31st of October 1978. It is perhaps understandable that Mr. O'Maoileoin was disturbed by the fact that the Defendant had bypassed his own Solicitors and Mr. O'Maoileoin and made direct contact with Mrs. Culhane. However, in relation to the prospects of succeeding in the action it seems that he was adamant that there was only one " contract, that is the contract dated the 18th of July 1978 and that the date for the payment of the deposit had been waived. As he refers to the fact that the motion proceeded without an affidavit sworn by Mr. and Mrs. Culhane I infer that he attached importance to the evidence which they were in a position to give and which certainly represented a different case from that made in Mr. O'Maoileoin's affidavit. Certainly the case which Mr. and Mrs. Culhane were in a position to make did not depend upon the actual or ostensible authority of any agent of the vendor. In any event it does seem that Mr. and Mrs. Culhane accepted the views set out in Mr. O'Maoileoin's letter of the 31st of October and the action continued with commendable dispatch and was duly heard by Mr. Justice McWilliam over a period of three days commencing on the 14th of December 1978.

It is the evidence of both Mr. and Mrs. Culhane that between October and December 1978 they were not consulted about the proceedings or given any advice in relation thereto. Whilst the pleadings were drafted by Mr. O'Maoileoin himself it does appear that ounsel were instructed to conduct the actual hearing. It was the evidence of the Plaintiffs that they attended a consultation with Counsel immediately prior to the proceedings but no written opinion was obtained from Counsel with regard to the prospects of succeeding in the action and they were instructed by Mr. O'Maoileoin not to involve themselves in the consultation with Counsel.

The Plaintiffs themselves may have some misunderstanding as to the case which was made by them or on their behalf in December 1978. Indeed Counsel on their behalf sought to argue that there was considerable ambiguity as to what concession, if any, Mr. Hewson had made to the Culhanes. However, here again I have the advantage of access to the written judgment of Mr. Justice McWilliam dated the 22nd day of December 1978 in which he sets out with his usual clarity the case made by the Culhanes in the following terms.

"The case now made is that the Plaintiffs telephoned the Defendant between 4.30 and 5 o'clock in the afternoon of Friday the 28th of July 1978 and that the Defendant (Hewson) agreed to extend the time for payment of the deposit until Friday the 4th August 1978 and that this arrangement was confirmed by the Solicitor for the Defendant on the telephone when the Plaintiffs telephoned him about half an hour later."

Those facts were disputed by Mr. Hewson and his Solicitor, Mr. Brooks. In seeking to resolve this conflict the trial Judge had regard first to the fact that any such concession seemed to be in conflict with the correspondence which emanated from the Solicitors on behalf of the vendor and, secondly, that this case had not been made on the motion to vacate the lis pendens. However, for the purposes of these proceedings the essential fact is that the specific performance action was based and based almost exclusively on the oral evidence of Mr. and Mrs. Culhane and that the Plaintiffs' case failed primarily for the reason that the learned trial Judge rejected that evidence. It is true to say that even if he had accepted the evidence other evidential problems might well have arisen. The decision of the trial Judge was not appealed.

Indeed it is clear having regard to the nature of the decision that an appeal would have been unstatable. Ultimately Mr. Hewson completed the sale of the premises to the underbidder at a loss of £4,000. In addition the costs awarded to the Defendant were ultimately taxed at £9,314.40. In addition the vendor claimed the interest which he would have earned on the purchase price from the date of the original contract to the completion of the sale to the underbidder. It appears that the vendor's claim for costs, loss of bargain and interest was computed in August 1982 at a sum of £70,000. In addition Mr. and Mrs. Culhane undoubtedly incurred legal expenses including fees payable to Counsel as well as a variety of travelling and other expenses. The travelling expenses were estimated at a sum of £3,000 and Mr. O'Maoileoin apparently computed the legal costs payable to him at a sum of £13,000.

Yet another problem relates to the finance provided by Allied Irish Finance Company Limited.

It was the evidence of Mrs. Culhane that she had told Mr. O'Maoileoin as early as September 1978 to pay off Allied Irish Finance and to clear off the interest. Indeed it was her evidence that Mr. O'Maoileoin had assured her that the moneys had been paid back to the bank. In fact it emerges that no payment was made to Allied Irish Finance Company Limited until the 3rd of August 1979 when Mr. O'Maoileoin paid to the bank the sum of £81,666 only. Apparently he had contended to the bank that he was entitled to deduct a sum of £13,334 as his costs of the unsuccessful proceedings. In addition to the shortfall, the sum appropriated for costs, there was due on foot of the account to the 30th of July 1979 an additional sum for interest amounting to £11,892.53. In the result there was due by the Plaintiffs in these proceedings to the bank in August 1979 a total sum of £25,226 with interest continuing thereafter. It may be appropriate to add that Counsel on behalf of the Plaintiffs conceded that the other items claimed in the particulars of special damage are duplicated by the items already referred to.

It remains now to consider what legal remedies are open to the Plaintiffs on the basis of the foregoing undisputed facts. First, it was contended that the Defendant was guilty of negligence and breach of contract in failing to arrange finance for the purchase of the Attyflin premises and subsequently in failing to make arrangements to ensure that funds would be available to meet the Plaintiffs1 own cheque for the payment of the deposit. I accept that the Defendant was negligent and in breach of contract in both of these respects but as I have already pointed out it seems to me that neither wrongdoing was the cause of any of the horrific loss subsequently sustained by the Plaintiffs.

Secondly, it was contended that Mr. O'Maoileoin failed to negotiate a settlement of the specific performance action as he had been instructed so to do by his client in her letter of the 25th of October 1978. In my view that case as such cannot be sustained. The instructions given by the client were based on the assumption and conditional upon acceptance of the proposition that the Defendant in the proceedings was correct in his argument that the Plaintiffs had no case. In his letter of the 31st of October 1978 Mr. O'Maoileoin gave his reasons for rejecting that assumption and it seems to me that his clients accepted that argument and that accordingly the instructions to negotiate a settlement were effectively withdrawn.

Thirdly, it was contended that the failure of the Defendant to take written instructions from his clients; to maintain contact with them; to advise and consult with them from time to time or to secure the written or at any rate oral opinion of Counsel constituted negligence. Apart from recognising that Mr. O'Maoileoin processed the litigation with commendable dispatch the evidence makes it clear that his behaviour to his clients was at the very least discourteous and at the worst outrageous. On the other hand it does not seem to me logical to analyse his conduct by reference to particular acts or omissions. In that regard it seems to me that it is necessary to form a judgment on his claim to take over the conduct of his clients' affairs. Undoubtedly that is what he said he would do and what in fact he did. The immediate issue is whether his clients authorised or ratified this unusual procedure. Mr. O'Maoileoin made it clear that he intended to act on his own initiative in promoting the interests of his clients. Whilst he made this claim in what appears to have been an arrogant and intolerant manner he was in fact dealing with two mature and competent people, one of whom was of course his sister, who could have taken effective steps to limit the Defendant's authority or indeed dismiss him from their service. The reality is that they permitted him, as they now deeply regret, to exercise the authority which he had usurped. If they had not implicitly acquiesced in that arrangement their claim would not be one based in negligence but would constitute a total repudiation of the proceedings brought in their name. The very fact that the Plaintiffs both attended in the High Court and gave the crucial evidence on which the issue turned makes it impossible for them to repudiate Mr. O'Maoileoin's authority to act on their behalf or indeed to act on their behalf in the manner in which he had indicated at the outset. In these circumstances it seems to me that Mr. O'Maoileoin's failure to take the steps which any reasonable prudent Solicitor would take to advise and consult with his client in the course of litigation would not necessarily constitute negligence in the special circumstances of this case.

Fourthly, it is contended that even if Mr. O'Maoileoin had effectively plenipotentiary powers to act on behalf of his clients it was still his duty to exercise reasonable care-in the conduct of his clients' business. Under this heading it was argued that the decision of Mr. O'Maoileoin and undoubtedly it was his decision - to proceed with the litigation when the Court had already vacated the lis pendens was clearly negligent. It was argued that when the Plaintiffs in the specific performance proceedings could not sustain the lis pendens that had been registered there was no practical possibility of their succeeding in the lis itself. However, as I have already pointed out it is clear from the Judgments of Mr. Justice McWilliam that the case made on behalf of the purchasers at the hearing of the action was substantially different from that made on the motion. Indeed it was this difference which weighed heavily with the trial Judge in rejecting the evidence of Mr. and Mrs. Culhane. However, it seems to me that it would be difficult if not impossible to fault a Solicitor for relying upon the accuracy and credibility of his own clients testimony. If the evidence of a party is not accepted this may reflect on the integrity of the witness or the unavoidable fallibility of a judge or jury but it is difficult to see that it could form a basis for an action for negligence against the legal advisers of the party concerned. In these circumstances it seems to me that the action insofar as it is based upon negligence by the Solicitor in pursuing or maintaining the proceedings fails.

Fifthly and finally it is said that the Defendant had no authority to deduct the sum of £13,000 or any sura in respect of costs claimed by him out of the £95,000 repayable to Allied Irish Finance. That seems to be clearly the case. However, it is further contended that there was no justification for the retention by Mr. O'Maoileoin of the sum of £95,000 when the action had been concluded in December of 1978. Again, it seems to me that that contention is unanswerable. However, the Plaintiffs in these proceedings go further and argue that it was the duty of Mr. O'Maoileoin to repay the moneys borrowed as early as September 1978. It was argued that this obligation was imposed on him by the instructions given to him by Mrs. Culhane and in any event form part of the duty imposed on him under his general obligation to protect his clients best interests. I would recognize that it would be essential for Plaintiffs pursuing a specific performance action to ensure if that during the continuance of the proceedings that they were in a position to complete the transaction if called upon to do so and for that reason perhaps a Solicitor would be reluctant in his clients interests to return the moneys borrowed to the financial institution or at any rate to do so without making some provision for a fresh advance if that should become necessary or desirable. However, whatever argument could be made in that regard it would seem highly imprudent in the ordinary sense of those words and negligent as a matter of law to take no steps either to prevent interest running on the advance or at least to ensure that interest should accrue on it for the benefit of the client pending the completion of the transaction so that the deposit interest could at least be offset against the interest charged on the borrowing. I did not have the benefit of any argument on behalf of the Defendant in relation to this or any other matter but it seems to me that if the Plaintiffs were required to bear interest on the £95,000 for a period of approximately one month that would have represented all of the charge which should have accrued if their Solicitor had acted with reasonable competence on their behalf. It follows that all other interest accruing on the moneys borrowed results from the negligence or breach of contract of their Solicitor Mr. O'Maoileoin. As the interest for the period of almost exactly one year from the 4th of August 1978 to the 30th of July 1979 was £11,892 the share of that properly payable by the Plaintiffs in my view amounts to £991 and the balance of £10,901 the balance of the total amount for interest up to August 1979 would be recoverable as damages from Mr. O'Maoileoin. To that sum of £10,901 must be added the sum of £13,334 wrongly deducted by Mr. O'Maoileoin from the bank advance and this gives a figure of £24,235 as of August 1979. However, the damages to which the Plaintiffs are entitled must be calculated so as to include the interest charged on that part of the balance from August 1979 to the date hereof. This computation can be made if evidence is provided as to the interest charged by the bank over that period or alternatively the matter can be dealt with before the Examiner of the High Court. In either event there will be judgment in due course for the amount so computed.

Finally, perhaps I should explain that the evidence and arguments in this matter have been set out in this Judgment at some length because there was no appearance on behalf of the Defendant and no stenographic record was kept of the proceedings. In those circumstances it seems to me that …. [missing] in this form for the benefit of the Defendant and any persons claiming through him. This is particularly true in the present case as the Defendant has been adjudicated a bankrupt and the Official Assignee in Bankruptcy though not seeking to be represented on the hearing of the action may well wish to have or need to know the basis of the Judgment and Order herein.

As I have been informed that the Defendant no longer resides within the jurisdiction of the Court I propose to extend the time fixed for an application under Order 36, Rule 33 to set aside the verdict or Judgment herein and provide that in place of six days from the date of the trial there should be a period of ten days from the date of the service by such manner as the Order shall direct - of the Order to be made herein.

Doc No. 2503S (MS)