THE HIGH COURT
7149P 1985
BETWEEN
MICHAEL MORRISSEY AND ANGELA MORRISSEY

PLAINTIFFS
AND

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

DEFENDANTS

Judgment of Mr. Justice Johnson delivered on the 13th of May, 1988
The Plaintiffs in this matter sued the Defendants for a number of declarations regarding their business relationships with the Defendants in or about the year 1981 and 1932, and in addition sued them for damages for fraud, negligence, breach of contract, libel and slander.

The Defendants in their defence pleaded that by agreement in writing, dated the 2nd day of February 1984, between the Plaintiffs on the one part and the Defendants on the other part, the Plaintiffs did in consideration of the Defendants agreeing to accept the sum of E94,000 in full and final satisfaction of all liabilities, due by the Plaintiffs or either of them to the Defendants agree inter alia to waive all rights of action against the Defendants or any of their officers, servants or agents, with-the exception of any right of action which they may have had against one Ail,le O'Donoghue of the Bank of Ireland, Lisduggan in the County of b1aterford, in his personal capacity and that in the premises the Plaintiffs have no right of action against the Defendants, in respect of any of the matters alleged in the Statement of Claim.
By their reply the Plaintiffs alleged that the agreement of the 2nd of February was null and void, and claimed as a result that they were not prohibited from bringing the action. The issue which falls primarily to be decided in this case is as to whether or not the agreement in -writing dated the 2nd of February of 1984, which both acknowledge to have been made was null and void as alleged.

In dealing with the issue, as a preliminary issue, it has been accepted that the agreement was made but the plaintiffs say that the same was procured by fraud on the part of the Defendants, and the issue which I have to try is as to whether or not the agreement entered into on the 31st of January 1984, and dated 2nd February 1984, is void by reason of fraud.
Three grounds were advanced by the Plaintiffs to establish the fraud upon which they rely.
(1)	The failure of the Bank, the Defendants, to provide details and copies or the originals of the authorisations, whereby the sums of £57,555 and £119,000 were taken from the accounts of the Plaintiffs in February and March 1982.
(2)	The failure of the Defendants to disclose to the Plaintiffs the existence of a securities realised
account, in respect of the sum of £7,500 which was set up in January of 1984, for the purposes of protecting the Defendants in respect of the bond to the Waterford Corporation,
(3)	The manner in which the Defendants dealt with the bond to Waterford Corporation on behalf of the development company Volens Limited.

In order properly to understand the implications in this case it is necessary, I feel, briefly to give a resume of the facts as they appeared in evidence. The first named Plaintiff, Mr. Morrissey, was prior to 1980 a very successful businessman in Midleton, Co. Cork. There he was involved in a building business from which he sold out, and at that time at approximately £100,000 in cash.

Mr. Morrissey and his wife, the second named Plaintiff, moved to Waterford where he once again embarked on building development, and formed a company called Volens Limited. He became interested in a site in Ballinakill, County Waterford and came into contact at that time with Mr. O'Donoghue the manager of the Lisduagan branch of the Defendant bank. It is quite clear that Mr. O'Donoahue and Mr. Morrissey became very good friends, and discussions took place between. them regarding the various business ventures upon which it was Mr. Morrissey's intention to embark.

Mr. and Mrs. Morrissey bought the lands at Ballinakill in their own name, and then it was agreed that Volens would develop the site. Volens Ltd. was a company set up by Mr. Morrissey in which a Mr. Forde was a partner. Mr. 117orde was a Bachelor of Engineering. In late 1980 or early 1981 Mr. Morrissey had a number of different accounts in the bank, and was borrowing on same and in addition was a guarantor of the Volens account in the sum of £75,000. 

Volens in addition had taken out a bond with the Defendants, for the purpose of satisfying the statutory requirements of the Waterford Corporation in respect of the development at Ballinakill, and Volens Limited had undertaken to indemnify the bank in respect of the said bond. In late 1980 and early 1981 the Plaintiff purchased property at Coolfin House, County Waterford, with money which was advanced to him by the bank. The Plaintiff indicates that this was money which he took because of the literal insistence of the bank manager, although he himself felt he was overdrawn. In July 1981 an audit was done in the accounts of Volens and everything appeared to be in order. Mr. Morrissey, though overdrawn at the bank, and committed to a very great extent was by no means out of his depth and as long as Volens projection and the Ballinakill development continued, as was expected, there does not appear to have been any reason to expect that he would not have come through with a profit, and have gone on to develop further sites, and indeed on to become an excellent customer of the bank.

Unfortunately in late 1981 it became clear to Mr. Morrisey that, far from Volens Limited being in good condition, that he has been defrauded by his partner and in his own words at one meeting he had been robbed. This appears in one of the documents to which Counsel referred in opening and may not have in actual fact been given in evidence. This of course cast a completely altered aspect on the credit situation of Mr. Morrissey at the bank.

Volens, far from being a secure and well run company, was now deeply in trouble. The Defendants through Mr. O'Donoghue in 1982 immediately took steps to transfer the liability for the company to Mr. and Mrs. Morrissey personally. There is a dispute and controversy regarding the manner in which the joint account of the Plaintiffs was opened in February of 1982, and in the manner in which £57,555 was removed therefrom and transferred to the credit of Volens Limited, and a similar dispute arises out of the situation which developed in the bank regarding the debit notes for (.119,000 signed in March 1982.

At this time cheques were stopped and delayed in payrient, and quite clearly the word regarding Volens precarious condition quickly percolated the business community. Despite this alteration in circumstances which occurred so speedily the Plaintiffs traded on, and in early 1983 was decided to attempt to effect a compromise with the Defendants.

This compromise was entered into with the advice of the Plaintiffs' solicitor, Mr. O'Callaghan. Unfortunately owing to the depression in the property market at the time, and due further to the absence of capital on the part of Mr. Morrissey, he was unable to honour his commitments under that set'-lement. In late 1983 the Waterford Corporation was writing to him and threatening to remove planning permission, because the site had not been developed in accordance with the plan.

As is well known to all the parties this is Waterford Corporation's absolute prerogative, and under the circumstances of this case it is difficult to see what else they could have done. They also called on the Bank of Ireland to honour the bond above mentioned. The bank did not honour the bond and in early January 1984 Mr. O'Callaghan on behalf of the Plaintiffs wrote to the bank once again seeking a meeting for the purposes of attempting to effect a compromise of the situation.

It must be remembered that during at least the previous 18 months there had been expressions of dissatisfaction by the Plaintiffs, combined with threats to sue the bank.

A meeting of the 31st of January 1984 was called by the Plaintiff and was attended by Mr. Desmond and Mr. Black, Solicitors on behalf of the bank, and by Mr. Morrissey and his solicitor, Mr. O'Callaghan. A discussion took place and 1 have no hesitation in saying that both parties to that agreement intended, and sought, and had a mutual recognition that it was in the best interests of both parties that all the sites at Ballinaki11 should be sold, as soon as possible. In order to effect this it was indicated that a further £18,000 was required to carry out the works additional to what had already been done, in order to comply with the requirements of the Waterford Corporation. The sum mentioned in the agreement which was to be paid by the Plaintiff to the Defendants is £94,000 and was to be in full and final settlement of the sum due and owing by the Plaintiffs to the Defendants. They dispute as to whether or not that sum included or did not include {7,500 in respect of the bond to the Waterford Corporation but that is a matter for interpretation and not for a matter which goes to the essence of the contract.

This agreement effected a reduction of some £10,000 on the figure agreed in March 1983 and an overall drop in the total debt due by the Plaintiffs to the Defendants of some E106,000. This is the agreement which it is alleged by the Plaintiff was procured by fraud and is therefore null and void. The parties hereto have agreed the law correctly stated in Kerr on Fraud and Mistake 7th Edition and particular reference has been made to the paragraph at page 96 dealing with compromises. One particular sentence thereof which it is urged on me should apply to this particular case I quote.

"A party to a compromise who has knowledge of a fact must not take upon himself to decide that the suppressed fact is immaterial if it could by any possibility have had any influence on the decision of the other party."

I believe myself that that is the basic principle upon which this case can be decided and the question of a decision on the `acts will bind thereafter.

Allegations of fraud as I have stated come under three headings and I will now deal with these in turn. 

Firstly the failure to produce the authorisation. Tn this regard a request to see the authorisation in respect of both the accounts opened in February 1982 was made by the Plaintiffs on a number of occasions as appears from the correspondence. These authorisations were never produced prior to the agreement. However, Mr. Black did assure Mr. O'Callacihan that they were in order. These authorisations were produced in Court. Mr. Morrissey made some reference to them in his evidence. However at no time did he identify them in Court. Mr. O'Callaghan having identified them said that it might have changed his mind or coloured his view. However, Mr. O'Callaghan did not say what it was in the documents that might have changed his mind or coloured his view. He did not indicate at any time that these authorisations were not in order, as had been stated by Mr. Black, and neither of them stated what it was that in any way would have prevented them entering into the agreement which they did enter into. It would appear to be clear from the evidence given by Mr. Morrissey and Mr. O'Callaghan the reality of this matter is that irrespective of what the situation regarding the authorisations was the liability of Mr. Morrissey to the bank was known and acknowledged to be extremely high in any event, and I feel that under the circumstances that any allegations which had, prior to the making of the making of the agreement, been made by Mr.Morrisey to Mr.	O' Callaghan or to the bank regarding the authorisations were put aside by them at the time of the making of the agreement of January 1984, on the basis that the agreement was in the best interests of the Plaintiffs. The evidence given in this case would indicate that neither Mr. Morrissey nor Mr. O'Callaghan could question the facts that the authorisations as they appeared in Court here were in order.
I believe myself that this is more clearly stated where in the Plaintiffs answer to me on question No. 17 on the book of the 12th of Februarv 1988 when asked "Had the bank honoured the bond in accordance with the agreement of 1984 would we be here today at all?" Answer: "I don't think so because even at that time I thought I could still work it all out".

Under these circumstances, and having regard to the above stated fact that there does not appear to have been any real specific allegation made regarding the authenticity or regularity of the authorities, which tend to satisfy me on the balance of probabilities that there was fraud attached thereto or fraud attached to the withholding thereof I feel that the Plaintiff has failed on that heading of fraud.

Secondly is the existence of the securities realised account. This arose in the following fashion. On December the 29th 1983 the Plaintiffs sent to the Defendants a sum of £111,864 by way of bank draft made out to the Bank of Ireland Limited Volens Account. This was returned to Mr. O'Callaghan and a request was made that it should be made out to Mr. and Mrs. Morrissey's account. This was done. When that money came to the bank a sum sufficient to pay off the Volens Account was paid into it. A sum of £7,500 was set aside in a securities realised account for the purposes of meeting the indemnity due by Volens to the bank in respect of the bond, and the balance was paid into Mr. and Mrs. Morrissey's account, some £39,000. It has been alleged that the bank were fraudulent in failing to divulge to the Plaintiffs in the course of the meeting the existence of this account. I feel it is necessary to look at the reality or the case as explained by the bank. There are circumstances in which one might consider that the bank had treated dishonestly with the Plaintiffs in not revealing the exi tence of this account. However the evidence went on to show that this was a book-keeping exercise wherein rather than give credit immediately to Mr. and Mrs. Morrissey on foot of their account that that sum was reserved to pay in respect of the bond. The Morrisseys suffered no loss as a result of this for the interest on the accounts had ceased and was not running, and it is interesting to note that when making the calculations regarding the final sum which was to be paid, Mr. Desmond quite clearly gave full credit for the £111,864--to the Plaintiffs. This was done because for the purpose of the agreement of the 31st of January 1984 Mr. Desmond's base figure was that of an agreement of 1983, March, namely a full total of £215,000 plus £7,500 in respect of the bond, and in coming to the meeting Mr. Desmond -took as his figure that there was a balance of £.104,500 due and owing still on foot of the agreement of 1933, plus an indemnity on the bond which was meant to be liven at that time, but which Mr. Morrissey had not entered into and it was from that figure, and I accept his evidence on this, that he gave a deduction of £10,000 on the total, and allowed an indulgence of £18,000, which was to be made available to Mr. Morrissey for the purposes of completing the works. Under these circumstances the existence, or otherwise-, of the securities realised account in no way prejudiced the Plaintiffs in their negotiations, for full credit was given in the calculations and the figures to the fact tha4- £7,500 had been paid by Mr. Morrissey towards his liabilities in the bank.

I recognise that a serious dispute exists between the r,&-ties as to whether or not the £7,500 mentioned in the agreement of 1984 is one and the same of the £7,500 as is to be utilised for the purpose of indemnifying the Defendants
in respect of the bond. However, in my view that is a matter of interpretation of the agreement and does not affect the manner in which the agreement was come to.

Thirdly, the Plaintiffs relied on the failure to pay the bond by the bank to the Corporation. The bond was first called on the 11th November 1983 and Mr. Black, the law
agent wrote about it in November 1983, and Mr. Desmond dealt with it in an internal memo of November 1983. It is essential I think to the bona fides of the Defendants that in both these cases, it was agreed that, the bank had a liability under the bond, and there was certainly no decision not to pay it at that time. But a decision was taken to investigate it, which does not appear unreasonable. On the 14th of January,1984 Mr. Stephenson the Assistant Manager of the Lisduggan branch of the bank in a memo requested from the law agent instructions as to whether or not he should pay the bond. This does not appear to have been replied to. It is absolutely certain as I have stated above that the intentions of both parties that the meeting of the 31st of January 1984 and that the making of the agreement was to ensure that the development should smoothly, and I am quite satisfied that it was an implied term  of that agreement that the bond would be paid, became necessary, to effect the development and the I am satisfied that no request for the immediate payment of the bond was made, at the negotiations involved in this agreement, and I am also satisfied that the general approach of the bank to this agreement was that by making £18,000 available they hoped to avoid the necessity of paying the bond.

In May of 1984, the work, having been partially completed the Waterford Corporation once again wrote to the bank making alternative suggestions but not actually
calling in the £7,500. However, it was made absolutely clear to the bank at that time that difficulties had arisen, as indeed it had been made clear to them in January 1984, from the letter from Mr. Purcell which claimed that there were difficulties in the sale of the sites which involved the Waterford Corporation, and involved planning permission and involved the indemnity provided by the bond.

I am at a complete loss to understand how the bank failed to honour its bond at that time, or to provide additional finance which would have enabled the Plaintiff
to complete the sale of the sites. It is with great regret I Dave to say that, whether the bank was protecting members of its own staff, who would appear to have possibly strayed outside their authority, in the course of their dealings with Mr. Morrissey, or otherwise scant regard appears to have been paid to the reality of Mr. Morrissey's record in Midleton of a hard-working and successful businessman who had been an excellent customer of the bank and whose custom they had courted when he came to Waterford. It was as a result of the unfortunate experience he had with his partner that he was seeking the assistance of the bank which he had supported over the years. It is equally interesting to rote further that the persons who actually agreed to or refused the loans requested by Mr. O'Donoghue in the early stages appear never to have met with the Plaintiff. Had Mr. O'Donoghue's request for an additional £140,000 in 1982 been acceded to, it would appear to me quite likely that this case would never have come to Court, and that the Plaintiff would have managed to trade through his difficulties in this regard. Having regard to this case it can be said that it was Mr. O'Donoghue alone, who appeared to
have faith in the Plaintiff and in his capacity to survive, and who requested that further finance be made available. However, despite the inexplicable behaviour of the bank after the agreement was made, my charge is to ascertain whether or not they acted fraudulently prior thereto or in the making thereof. I am satisfied having seen the memos of November 1983 of Mr. Desmond and the memo of Mr. Stephenson in January 1934 and the directives of Mr. Flack and having heard the evidence that there was no conspiracy, or decision on the part of the bank, not to pay the bond and therefore I hold that on this also the Plaintiff has not discharged the onus of proving that there was a fraud on the part of the bank.

However, the case does demonstrate an extraordinary involved, convoluted and inefficient decision-making process, and an ambiguity on the obligations which are undertaken by issuing a bond which I find quite bizarre. The concept that when one is called on to pay a bond that one does not reply within six months would indicate under normal circumstances an inability to pay at best, and an extraordinary reluctance to pay at worst and I wonder that if the bank were in a situation where they called on a guarantee from someone for the sum of £7,500 and that person did not dignify their call with a reply, whether or not six months would have been allowed to go by before some further step would have been taken. Whether this speaks of the indolence of the bank or the inefficiency of the local authority I-don't know. In the circumstances as above stated I find that the contract of agreement of the 31st of January 1984 is not void for fraud and therefore stands as a bar to the proceedings in this case.