THE HIGH COURT
			1996 No. 25P
BETWEEN
CROFTER PROPERTIES LIMITED
			PLAINTIFF
AND
GENPORT LIMITED
			DEFENDANT
JUDGMENT of Mr. Justice McCracken delivered the 23rd day of April, 2002.
Pleadings
	Under lease dated 12th May 1981 (herein called “the lease”) made between Crofter Properties Limited (herein called “Crofter”) as lessor and Genport Limited (hereinafter called “Genport”) as lessee.  The premises known as Sachs Hotel Morehampton Road in the City of Dublin were demised to Genport for the term of 21 years from 1st August 1980 subject to an initial rent of £68,750 per annum, escalating at the rate of 10% per annum throughout the term.  This was in effect a lease of the hotel as a going concern including all the furnishings in the hotel.  The lease contained a covenant by Genport to pay the rent as and when it was fell due and also contained a forfeiture clause in the event of the rent reserved or any part thereof being in arrear for 21 days after it became due.  Crofter’s claim in these proceedings is for arrears of rent, which it is now agreed amounts to £588,605.41 and also a claim for possession of the premises based on the forfeiture clause in the lease, by reason of the non-payment of the rent.
	Genport have counter claimed for:-
	(1) Damages including exemplary or aggravated or punitive damages for 
		(a) Injurious falsehood 
		(b) negligent misstatement.
		(c) defamation 
		(d) wrongful interference with the economic interests of Genport
	(2) An order determining the fair rent payable by Genport to Crofter for such 		period as the Court shall think fit in respect of the premises
	(3) set off of damages awarded against the rent owing.

	Genport also claim relief against forfeiture by way of defence to Crofter’s claim.  The real dispute in these proceedings concerns the counterclaim and the right to relief against forfeiture.  
	It should be said that for reasons totally outside the control of both parties there has been considerable delay in the hearing of these proceedings.  On 23rd April 1996, the hearing of the action having commenced and a number of witnesses having been called, I granted an adjournment to permit Genport to seek evidence from certain witnesses in the United Kingdom by way of letters of request issued to Her Majesty’s High Court of Justice in England, but I only granted such adjournment on the basis that there would be a payment to Crofter on account of arrears of the sum of £100,000 within 28 days and that Genport should pay all gales of rent in full as they fell due pending the determination of the action, together with interest at approximately 8% per annum on the balance remaining due.  While there have been some defaults in making these payments, I do not propose to take them into account in this judgment, and therefore the amount which is claimed by Crofter is in fact the amount which was due at the date of issue of these proceedings less the lump sum of £100,000 which has been paid.

The parties to these proceedings
	Crofter is a company owned and controlled by Hugh Tunney, who has been a very successful business man and who is the owner of a large estate in Co. Sligo called Classiebawn.  He had also in his time owned several hotels, and at the time of the granting of the lease, Crofter in fact owned the hotel business being carried on in the premises the subject of the lease.  Mr. Tunney had a lady who worked for him in various capacities over the years, and who might be described as his personal assistant, called Caroline Devine.  She was at one time secretary and a director of Crofter.  As well as owning Classiebawn, Hugh Tunney kept a suite at the Gresham Hotel in Dublin and Caroline Devine divided her time between the day to day running of Classiebawn and working with Hugh Tunney in the Gresham Hotel, but spent at least half of the year living in Classiebawn.  Nobody else except Hugh Tunney and Caroline Devine lived there, although employees did work on the farm attached to it.  
	Genport is the company which managed Sachs Hotel in the premises the subject matter of the lease.  The controlling interest in Genport was at all material times owned by Mr. Philip Smyth, who over the years owned and operated several hotels and nightclubs among other business ventures, and was also a very successful business man.  It appears that he sold his interest in Genport some two years ago, but that does not affect the matters to be determined in this action.
	Unfortunately over the years serious disputes arose between the parties and their principals, Hugh Tunney and Philip Smyth, giving rise to some considerable bitterly fought litigation.  A brief outline of this litigation is necessary in order to understand fully the present dispute between the parties. 
	The first action, which commenced in 1988, was between Philip Smyth and Genport Limited as plaintiffs and Hugh Tunney, Crofter Properties Limited, Gerard B. Coulter and Caroline Devine as defendants.  This was a lengthy and complicated action heard over several weeks by Murphy J.  It concerned a claim that a document relating to the settlement of an even earlier dispute between the parties had been altered by or on behalf of the defendants after it had been signed, and that the defendants had conspired fraudulently to conceal this alteration.  That action was dismissed as was an application by the plaintiffs therein to adduce additional evidence for the purpose of an appeal to the Supreme Court.  Costs in that action were awarded to the defendants against the plaintiffs.
	The second action, also instituted in 1988, was an action by Crofter Properties Limited as plaintiff and Genport Limited as defendant.  Crofter’s claim was based on forfeiture for breach of covenant in the lease based on failure to comply with the schedule of dilapidations and failure to account for various chattels and furnishings in the premises which had remained the property of Crofter.  I held that Crofter had acted unreasonably in their dealings with Genport in relation to the alleged defects and that Genport were not given a reasonable time in which to remedy any breaches of covenant which existed, and I dismissed the claim for possession.
	The third proceedings, which were in fact a counterclaim in the previous forfeiture proceedings, constituted a claim by Genport against Crofter for breach of covenant and breach of contract.  The breach of covenant referred to was a breach of the covenant for quiet enjoyment in the lease, while the claim for breach of contract was basically a claim that Crofter had embarked on a course of action for the purpose of commercially damaging Genport and for the purpose of forfeiting or injuring Genport’s interest in the premises.  In effect, it was claimed that the whole proceedings were an abuse of the process of the Court.  I held that the proceedings were instituted and maintained with reasonable and probable cause, and that the counterclaim for breach of covenant for quiet enjoyment must fail.

The facts leading to counterclaim in these proceedings 
	The background to the issue which I have to decide can only be described as bizarre.  In 1992 officers of the South East Regional Crime Squad in the United Kingdom began to get telephone calls from a lady described as having an Irish accent who would not identify herself.  In the course of these calls a number of allegations were made about various matters, including allegations about Sachs Hotel, and also about the behaviour of Philip Smyth’s brother, who is a senior officer in the Garda Siochana.  It should be said that the latter allegations were subsequently investigated by the Gardai and found to be totally groundless, but they do have some relevance to the present proceedings in that they appear to show malice against a member of Philip Smyth’s family, and indeed a knowledge by the caller of the family connection between Philip Smyth and his brother.  
	The allegations which were made which gave rise to the present dispute are contained in certain reports of the Regional Crime Squad.  The first is dated 26th October 1992, and has been supplied with certain portions blanked out for reasons of confidentiality.  This report starts by recording the arrest of Alan James Johnston from Enniskillen in possession of 15 kilos of high quality heroin, and continues:-
“This arrest received considerable press coverage in both the north and south of Ireland.  A few days after the arrest an Irish woman contacted the investigation team offering information about Johnston and his associate (name blanked out).  No information has been released to the media about Johnston’s associates or other suspects.  This female declined to give any details of herself.  It became apparent that she was aware of both the publicised and non publicised details of Johnston’s background.
	Since that time this female has regularly maintained contact but has refused to meet with either of the officers she is willing to speak with.  These officers are DS Condon and DS Johnson of SO9 at YN.  The information given by this woman indicates that she has inside knowledge of both the Irish police and custom services, and alleges corrupt practice in both.”

	There is then a large portion blanked out, which is followed by:-
“Allegedly as part of a money laundering operation on behalf of the IRA.  The source states that a lot of funds are “cleansed” through an Irish company called Princeton Limited.  This company apparently owns hotels and clubs in Dublin including Saks Hotel and the Hippodrome.  It allegedly has property in the Doncaster area of the UK.  
	One of the directors of Princeton is called Philip Smyth who is allegedly known to (portion blanked out) Johnston.  Philip Smyth has property at Harldane, Brighton Road, Foxrock Dublin.  His brother and co-director is Paul Smyth.  Paul Smyth is allegedly a member of the Garda and until recently the Superintendent in charge of personnel at Phoenix Park.  He has recently been promoted to Chief Superintendent and posted to Portlaoise.  This source states that Paul Smyth has actively inhibited any inquiry about (name blanked out) and associates.  The Solicitor for Princeton is Kieron McNally or MacAnally.  The source claims the Smyth brothers are close personal friends of (name blanked out).
	Also working for the Smyths is Brendan Kinsella, a Private Detective.  He worked for Irish Customs until 1985; he retains good contacts and sometime impersonates a customs officer.  He is allegedly currently being targeted by Irish customs.  
	The source was asked to glean information about (name blanked out) Johnston and (name blanked out) their whereabouts and associates.  She has given some useful detail.
	This source appears to have excellent contacts within Irish customs.”

	There is then another large blanked out portion, and the document concludes:-
“Taken together these facts seem to indicate a security problem within the Irish police and custom service.  Because of the nature of these allegations no action has been taken to check any details.
	The Irish female refuses point blank to meet myself or any other officer under any circumstances.  She appears to be a well educated woman, her tone, mode of speech and information levels lead me to believe that she may be a police or customs official.”

	There is a further record of conversations with this lady contained in an undated document, but which I am satisfied from the evidence refers to a conversation which took place with this lady between 20th November 1992 and March 1993.  The relevant portions of this are:-
“Johnston’s claims of Armstrong and Sherry having police contacts received some corroboration from an Irish female who has regularly contacted this office since Johnston’s arrest.  The identity of this female is unknown but it is believed that she may be a police or customs employee.  She appears to have excellent knowledge of the internal workings of the Garda and of the Irish Customs targets and operations.  This woman has refused all personal detail and to meet with any police officers.  Her reasons for this are that she fears for own personal safety if she was ever identified.  
	This woman has claimed that Sherry is part of a money laundering operation on behalf of the IRA, and that moneys are cleansed through an Irish company called Princeton Limited.  This company allegedly owns hotels and clubs in both Eire and the UK.  One of the directors of Princeton Limited is called Philip Smyth, who is allegedly known to Sherry.  His brother and co-director is Chief Superintendent Paul Smyth of the Garda.  The source states that Chief Superintendent Smyth has actively inhibited any enquiries about Sherry and associates, allegedly by misuse of his authority while head of personnel by transferring “troublesome” officers.  This source has stated the company’s Solicitor is Kieron McNally or MacAnally whose IRA connections are apparently well known in Eire.  Also employed is a Brendan Kinsella, a former Irish customs officer, allegedly still very well connected within that organisation.”

	There are some other records of conversations with this lady which contain peripheral references to Philip Smyth, but nowhere in any of the conversations does Genport appear to have been mentioned.  The South Eastern Regional Crime Squad appears to have considered that her information was not of great value, but treated the allegations against Chief Superintendent Paul Smyth very seriously because they were allegations against a police officer.  They contacted the Gardai primarily in this context, and in due course investigations were made into the allegations against Chief Superintendent Smyth, and also into the allegations in relation to money laundering.  While I do not know exactly what form these investigations took, they certainly did not involve anything in the nature of a raid on Sachs Hotel premises, and they concluded that there was no truth in the allegations.
Who made the phone calls?
	Genport and Philip Smyth did not become aware of these calls for some time, but when they did, they became suspicious that the calls had been organised maliciously by Crofter as part of an attempt to put Genport out of business and recover the premises.  I have heard considerable evidence from officials of Eircom, who have produced detailed records of telephone calls made from Classiebawn.  These records established that a large number of calls to the South Eastern Regional Crime Squad were made from Classiebawn over a period from July 1992 to July 1994.  Some of these calls were of a very short duration, presumably because the person asked for was not available, but a number were quite lengthy, lasting in some cases over 20 minutes.  The South Eastern Regional Crime Squad did not keep detailed records of these calls, which is perhaps understandable as a matter of policy where informers are concerned.  However, as a result the evidence as to many of the calls is rather vague or generalised.  There is however clear evidence that some of the calls were made at times which correspond with the records produced by Eircom.  I have no doubt that these calls were made from Classiebawn.  
	Genport allege that these calls were made by Caroline Devine.  She has denied on oath that she made the calls.  However, her evidence also makes it quite clear that she was the only person other than Hugh Tunney who had unrestricted access to telephones in Classiebawn over the relevant period.  While there may have been other females in the house from time to time, it is quite inconceivable that anybody else could have made the number of calls over the period of time that were in fact made.  I have no doubt, despite her denials on oath, that Caroline Devine made these telephone calls.
In what capacity did she make these calls?
	Caroline Devine has given evidence that she has been employed by Hugh Tunney for many years, having trained in hotel management.  She describes herself as the Estate Manageress for Classiebawn, and has been working for Hugh Tunney for over 20 years.  She was a director of Crofter until 13th December 1992 and was also secretary of Crofter at some period.  She was, therefore, a director of Crofter at the time when at least some of these calls were made, and clearly played a part in the management of Crofter.  On the other hand, she was also a party to the first set of proceedings in which fraud was alleged against her, she was awarded her costs in those proceedings, and those costs have not been paid.  She certainly may have had personal animosity against Philip Smyth and Genport by reason of these matters.
	The vicarious liability of a company for wrongs committed by a third party clearly exists where those wrongs have been committed by it servants or agents.  Indeed it has often been said that a company can only act through individuals who are its servants or agents.  The general principles were dealt with in some detail in the Privy Council case of Meridian Global Funds Management Asia Limited -v- Securities Commission (1995) 3 All E.R. 918.  Lord Hoffmann said at p. 922:-
“Any proposition about a company necessary involves a reference to a set of rules.  A company exists because there is a rule (usually in a statute) which says that a persona ficta shall be deemed to exist and to have certain of the powers rights and duties of a natural person.  But there would be little sense in deeming such a persona ficta to exist unless there were also rules to tell one what acts were to count as acts of the company.  It is therefore a necessary part of corporate personality that there should be rules by which acts are attributed to the company. These may be called “the rules of attribution.”

	The company’s primary rules of attribution will generally be found in its constitution, typically the articles of association, and they will say things such as “for the purpose of appointing members of the board, a majority vote of the shareholders shall be a decision of the company” or “the decisions of the board in managing the company’s business shall be the decisions of the company”.  There are also primary rules as to attribution which are not expressly stated in the articles but implied by company law, such as “the unanimous decision of all the shareholders in a solvent company about anything which the company under its memorandum of association has power to do shall be the decision of the company”: see Multinational Gas & Petrochemical Company -v- Multinational Gas & Petrochemical Services Limited (1983) Ch 258.
	These primary rules of attribution are obviously not enough to enable a company to go out into the world and do business.  Not every act on behalf of the company could be expected to be the subject of a resolution of the board or an unanimous decision of the shareholders.  The company therefore builds upon the primary rules of attribution by using general rules of attribution which are equally available to natural persons, namely the principles of agency.  It will appoint servants and agents whose acts, by a combination of the general principles of agency and the company’s primary rules of attribution, count as the acts of the company.  And having done so, it will also make itself subject to the general rules by which liability for the acts of others can be attributed to natural persons, such as estoppel or ostensible authority in contract and vicarious liability in tort.”

	I do not understand Crofter to dispute these principles in anyway, but Crofter does make the argument that on the facts of this case there is no evidence of a relationship of principle and agent, and indeed the facts point in the other direction.  I certainly accept that in the very strange circumstances of this case, the question of whether any relationship existed between Crofter and Caroline Devine, and of liability for any loss caused by the phone calls, is a question of fact to be determined from the evidence given.
	The decision is not made any easier by the attitude taken by Crofter.  Although Caroline Devine was called as a witness by Genport, she has denied making the calls, and Crofter have chosen not to call any further evidence.  There is thus no direct evidence of the relationship between Caroline Devine and Crofter other than that she was an officer of that company.  In particular, there is no denial on behalf of Crofter in evidence that she did not act as its servant or agent.  Crofter do, of course, argue that the evidence which has been given on behalf of Genport does not lead to an inference of agency.
	There are a number of matters of evidence which are very relevant, although unfortunately some of them cancel each other out.  I would propose to consider them individually:-
1. The relevant calls were made from Classiebawn, from telephone lines belonging either to Hugh Tunney or to one of his companies.  Hugh Tunney also lived in this house for a good deal of the time and he paid the telephone bills.  There were 134 telephone calls in all made to the South Eastern Regional Crime Squad, and it is suggested that Hugh Tunney must have been aware of these calls.  As against that, it would appear that Caroline Devine was the person who actually paid the bills in the sense of writing the cheques, and therefore Hugh Tunney would never have seen the actual telephone bills.  There is also no actual evidence of whether he was in Classiebawn at the time the calls were made, and perhaps more importantly there is evidence from the police officers who received the calls that on a number of occasions calls were terminated abruptly  by the caller from which it can certainly be inferred that she did not want anybody else in the house to hear her making the calls.  To some degree these points cancel each other out.
2. There is a long history of litigation between Crofter and Genport which has at times has been bitterly fought.  Crofter had on several occasions in the course of this litigation sought to forfeit the lease, and it was very much in Crofter’s interest to do so as it would then get vacant possession of a very valuable piece of property.  Thus Crofter had a clear motive to try to damage Genport.
3. If Hugh Tunney was aware that the calls had been made, his was certainly the directing mind and will of the company which would lead to a strong inference that this was in fact related to the dispute between Crofter and Genport.  This is particularly so as the only relationship between Hugh Tunney and Philip Smyth was the relationship between their respective companies, namely Crofter and Genport.  
4. It was urged on me that I am entitled to have regard to the fact that Crofter failed to call any evidence, and in particular that Hugh Tunney did not give evidence and did not deny either his knowledge of the calls or make the case that, if the calls were made, they were not made on behalf of Crofter.  There is certainly ample authority that the failure to call a witness is something which the Court may take into account.  For example, it was stated in the House of Lords in R -v- IRC, ex parte TC Coombs & Co (1991) 2 A.C. 283 at p. 300:-
“In our legal system generally, the silence of one party in the face of the other party’s evidence may convert that evidence into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence.  Thus, depending on the circumstances, a prima facie case may become a strong or even an overwhelming case.  But, if the silent party’s failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party may be either reduced or nullified.”

	I certainly accept this as a correct statement of the law, and the failure of Hugh Tunney to give evidence is certainly a matter which should be taken into account.  However this is a very unusual case, in that Caroline Devine did give evidence, although as a witness for Genport rather than for Crofter.  She, of course, completely denied making the calls, and I have already found that I think she did make them.  However, the fact that she did give such evidence somewhat lessens the impact of the failure of Hugh Tunney to give evidence.  
4. Many of the other calls made on the same days as the calls to the South Eastern Regional Crime Squad were calls made on behalf of Crofter.  They were calls to Crofter’s Solicitor, Crofter’s Accountant and to a number of other people connected with Crofter, and I think it is quite clear that on the days the relevant calls were made, calls were also made by some person acting on behalf of Crofter, and quite clearly these telephones were used regularly for conducting Crofter’s business.
5. Against this must be balanced the fact that many of the calls were clearly personal calls, made both to members of Caroline Devine’s family and members of Hugh Tunney’s family.  These were calls which could not be said to have been made on behalf of Crofter.
6. While Crofter undoubtedly had a motive for making the calls in that they could lead to the possible closing down of Sachs Hotel, Caroline Devine also had a personal motive for making these calls.  She was a party to the first set of proceedings, in which Genport and Philip Smyth effectively alleged fraud and forgery against her.  They failed in this action, and costs were awarded to Caroline Devine, which costs have never been paid.  Her motive would not be one of personal gain, but rather one of revenge, but it is still quite a possible motive.
	Many of these matters somewhat cancel each other out, and none of them are decisive in themselves.  I recite them primarily to show that I have taken them into account.  However, there are a number of factors in relation to the calls themselves which in my view are of considerable importance.
	It is a strange fact that these calls were made to a Regional Crime Squad of the English police, and were not made to the Gardai.  It may well be that the reason for this was to try to hide the identity of the caller, but if the purpose was to damage Sachs Hotel, this would certainly lessen of the effectiveness of the calls.  More importantly, however, is the contents of these calls.  Evidence was taken on commission from the relevant police officers in England, and it appears that the calls commenced very shortly after the arrest of a gentleman called Alan Johnston for serious drug offences.  While in all something in the region of 150 calls were made from Classiebawn, most of them were of a very short duration, and were probably terminated when the person sought was not available.  However, there would appear to have been 5 or 6 calls taken by Detective Sergeant Condon and 10 or 12 calls taken by Detective Constable Paul Edwards.  Unfortunately there are only contemporaneous notes of 3 of these calls, although there are several reports which were made relating to the calls in general, and I have the benefit of evidence of the two officers which gives some idea of their general impression of these calls.
	The earliest contemporaneous note is dated 8th January 1993 and reads:-
“Paddy Freeman now taken over Johnston’s garage business.  He had  quarter of a million which was drug money.  Philip Smyth, a good friend of Johnston’s. Sherry and Armstrong about in Monaghan and Dublin respectively won’t come over border.  “A” now living, when in Spain, with a Spanish girl.  Wife knows all about it.  Conway arrested in a Dublin hotel for drugs, £120,000 bail.  Now on the run.”  
	The second note which is dated 26th January 1993 reads:-
“Information received from Irish female source at 10 am 26/1/93.
	There is a meat packing company in Lockerbie, Scotland owned by the “RAFIQ” brothers.  They have property in Wales and Eire also. This company is involved in money laundering believed drugs money.  A large scale fraud has been discovered in their Irish business by Deloitte & Touche company (Receivers and Auditors).  This is not common knowledge but it is likely to make headlines in Eire in the next month or two.”

	The third contemporaneous note relates to a conversation on 7th May 1993.  Considerable portions of it have been blanked out on the basis that they are not relevant to the present case and may contain confidential information.  The portion that is left reads:-
“She said that she watches all the “Cook Reports”.
	Also mentioned, although I am not sure in what context was a Private Investigator called Kinsella (Arrow Investigations) who is an ex-customs official and a friend of Smyth.  
	She then went on to talk of (name blanked out) and the fact his current Court case in Dublin has so far released seven of the “accused” and that two remain.  This is reported in the local papers.  CALL ABRUPTLY ENDED.”
	Two of these refer to Philip Smyth being a friend of somebody, but none of them refer to Genport or to Sachs Hotel, and indeed one of them relates to information which has nothing whatever to do with Philip Smyth or Genport.
	The first report is that of 26th October 1992 by Detective Inspector Condon which I have set out above.
	There is also a report from Detective Constable Paul Edwards dated 20th April 1995, which appears to have been prepared following requests from Chief Superintendent Paul Smyth.  It again connects her original contact with the arrest of Alan Johnston and includes the following:-
“I do not recall her specifically talking about Chief Superintendent Smyth but she mentioned his brother and the company owned by him on several occasions.  I was aware that who she was talking about was Chief Superintendent Smyth’s brother.
	None of her telephone calls were tape recorded.
	For my part I felt her information was little more than gossip and rumours.  	On the relatively few occasions that I took steps to verify what she said I found 	that the information given was widely known having been reported in the 		press.  
	On occasions I felt that she may have been maintaining contact as much for 	her own purpose as anything else”.

	Finally, there is the internal report prepared sometime between November 1992 and March 1993 by Detective Sergeant Condon as he then was which I have also quoted above.    
	It is quite clear from these documents and from the evidence of the police officers that the initial contacts were made by her in relation to the arrest of Alan Johnston and for the purpose of giving information about him and his associates.  She also made serious allegations against Chief Superintendent Smyth and against a meat firm in Scotland.  Neither Alan Johnston, his associates or the Scottish meat firm had any connection whatever with either the plaintiff or the defendant.  I do not think it could possibly be said that her comments in relation to these persons could have been made either in her capacity as an officer or as an agent for Crofter.  It might be said that her allegations against Chief Superintendent Smyth were made for the purpose of damaging Philip Smyth, but I do not think they could be said to have been made as agent for Crofter for the purpose of damaging Genport.  There is therefore only one allegation made in October 1992 which actually refers to Genport and which could be said to be directly related to the relationship between Crofter and Genport.  I do not think that one can take an isolated allegation made in one of 15 to 20 telephone calls and say that Crofter is liable for the consequences of that allegation when it would appear to have no connection with many of the other allegations made.  
	Accordingly, while I am quite satisfied Caroline Devine made the calls, I am not satisfied that Crofter can be made vicariously liable for the effect of the calls and I must dismiss these proceedings.