Fraudulent misrepresentation concerning completion of resort by controller of construction companies

Mark Tottenham BL, 6 November 2019 (© Decisis)

November 7, 2019

Harlequin Property (SVG) Ltd v O'Halloran [2019] IESC 76 (Supreme Court, MacMenamin J, 1 November 2019)

Supreme Court dismisses appeal from High Court, and affirms determination that the director and controller of a group of construction companies was guilty of fraudulent misrepresentation and deceit concerning a resort development in St Vincent and the Grenadines, in that, from the middle of 2009 he continued to represent to the developer that the development would be complete by July 2010 and unlawfully paid money to himself from the companies' accounts, on the grounds that there was substantial evidence upon which the trial judge could make his findings.

MacMenamin J (nem diss): Claim by companies incorporated in St Vincent and the Grenadines (SVG) - properties acquired for resort development - sums raised from investors - determination that companies had been induced to part with money by means of fraudulent misrepresentation - director of a group of companies - companies retained to proceed with construction of project - findings of fact made in High Court concerning misrepresentations - project not completed in time - representations that it would be completed by a particular date - legal status of findings of fact - whether findings supported by credible evidence - substitution of inferences - tort of deceit - nature of representations - assurances that resort would be completed by specified date - evidence as to payments - substantial regular payments made by employers - falsity of the representations - knowledge of builder that, as of summer 2009, it was unlikely that phase 1 would be completed by July 2010 - extraction of monies - payments made to defendant's own accounts - payments made by company to wedding organiser in respect of defendant's own wedding.

 

Quotation from judgment (courtesy of the Courts Service of Ireland):

'McGovern J. made a series of findings of fact regarding misrepresentations which Mr. O’Halloran made, primarily to Mr. Ames of Harlequin. He held that Harlequin relied on these, and that Mr. O’Halloran ignored advices and information available to him which indicated that the project simply could not be completed by the set deadline of the 1st July, 2010. The judge concluded that Mr. O’Halloran induced the two respondent companies to make a series of payments to the ICE Group, and thereafter unlawfully extracted the money from the ICE companies and transferred it to Ireland.

...

This proposition was based on a premise that this Court might determine some aspects of the High Court judgment’s findings to be unsustainable. A court could only reach such a conclusion if there was no evidence to justify the findings.

...

The judgment records that, on the 18th May, 2010, Mr. O’Halloran met with David Ames, and his wife, Carol Ames, at Harlequin’s office at Basildon in England. The Ames testified that by this stage, they were extremely concerned about their perception of the lack of progress with the works (para. 37). McGovern J. accepted Mr. Ames’ testimony that he believed that he and his company had been misled, but that in the light of commitments made, and desperate to ensure that the opening could proceed on the agreed date, he nonetheless agreed that the company would make an additional seven payments of US$1m per week to the ICE Group (para. 37). This testimony was borne out by the fact that, on the following day, Harlequin did make a payment of US$1m to the ICE Group. On the 27th May, 2010, Harlequin paid another US$1m. This was the last payment made before the ICE Group was dismissed from the project on the 11th June, 2010.

...

The Court has been told that, as of the 11th June, 2010, Mr. Amin estimated that the cabanas were 69% complete. He considered that Block 1 of the development was 11% complete, Block 2 was 74% complete and Block 3 was 34% complete. He found that the infrastructural works were 12% complete and that what was termed the “back of house” facility was 0% complete. The waterfront village and restaurants were 10% complete, the spa facilities were 0% complete, and the generator and sewage treatment plant was 0% complete. Mr. Amin estimated that the cost to complete Phase 1 as of the date of his inspection would be US$36,060,117 based on the ICE Group rates, or US$70,715,375 based on the likely 2010 market rates. This was extremely telling evidence - unless it could have been rebutted.

...

The payments to Weddings by Franc are in themselves significant. It is not possible to conceive how these were lawful payments from ICE. This was a transaction which was personal to Mr. O’Halloran. The transfers say much as to his control of the companies.

...

It is, of course, true, that there are occasions when those involved in construction projects make assurances to clients as to deadlines which turn out to be over-optimistic. But there are features about the evidence in this case which caused the trial judge to take a less sanguine view and which raised what happened to a different order of seriousness, beyond mere negligent misrepresentation or breach of contract. He was entitled to reach these conclusions.'

 

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

 

Key Cases Cited:

Banco Ambrosiano SPA v Ansbacher Company Ltd [1987] ILRM 669

Bryan ME McMahon and William Binchy, Law of Torts (5th edn, Bloomsbury Professional 2013)

Edgington v Fitzmaurice (1885) 29 Ch Div 459

Ennis v Butterly [1996] 1 IR 426

Forshall and Fine Arts Collections Ltd v Walsh (Unreported, 18th June, 1997) High Court (Shanley J.)

Harlequin Property (SVG) Ltd and Anor v Wilkins Kennedy [2016] EWHC 3188; [2016] All ER (D) 76

Hay v O’Grady [1992] 1 I.R. 210

Jones v Gunn [1997] 3 IR 1; Re Fredrick Inns [1991] 1 ILRM 387

Leopardstown Club Ltd v Templeville Developments Ltd [2017] IESC 50; [2017] 3 I.R. 707

McCaughey v Irish Bank Resolution Corporation Ltd and Anor [2013] IESC 17

Northern Bank Finance Corporation Ltd v Charlton and Ors [1979] 1 IR 149

Shinkwin v Quin-Con Ltd [2001] 1 IR 514

Standard Chartered Bank v Pakistan National Shipping Corporation [2002] 3 WLR 1547

Superwood Holdings plc v Sun Alliance and London Assurance plc (Unreported, 27th June, 1995) Supreme Court (Denham J.)

West Mercia Safetywear v Dodd [1988] BCLC 250

Winkworth v Edward Baron Development Company [1987] 1 All ER 114

Yukong Lines of Korea v Rendsburg Investments Corporation and Ors (No. 2) [1998] 4 All ER 82