Get it in writing!

In a recent case (Healy v Ulster Bank Ireland Ltd) [2009] the High Court had to consider whether a representation allegedly made by Ulster Bank Ireland Ltd (”Bank“) to Mr. Healy was actually made, and, if Mr. Healy acted to his detriment in relying on that alleged representation.

 The facts were that Mr. Healy, a Doctor, and another medical colleague entered into a partnership to develop lands and in the course of that enterprise they entered into personal guarantees to the Bank. The partnership between the men was dissolved in 2007 and a payment of €2.2 million was paid to Mr. Healy by his then business partner. In return, Mr. Healy was to take over the assets and liabilities of the partnership, which, inter alia, would have included the guarantee to the Bank.

 Mr. Healy then lodged the above monies with the Bank following assurances (i.e. representations) that he would not be liable under the guarantee and would take free of any liability to the Bank. Mr. Healy claimed that if that were not the case then he would not have lodged the monies with the Bank in the first place.

 Approximately one year later the Bank took the money from his account on foot of the guarantee and set it off against the debit balance then outstanding to the partnership. 

Mr. Healy alleged that the Bank was not entitled to take those monies and that they had been wrongfully set-off and converted by the Bank for its own use. He said that as a result he had suffered loss and damage and claimed for damages. He also claimed that the Bank could not (i.e. it was estopped) from denying the representations made to him in 2007 to the effect that he had no further liability under the guarantee in favour of the Bank as he had relied on the Bank to the extent that he had lodged the monies at the Bank on foot of those assurances. 

McGovern J. went on the judgement of Keane C.J. on Ryan v Connolly [2001] where that case was cited with approval, adding that: 

“A party seeking to rely on the principle cannot rely on a strained or fanciful interpretation of the words used…” 

The Court accepted the evidence that if the Bank employee had made the assurances alleged by Mr. Healy then it would have been contrary to normal bank practices. The Court underlined that the burden of proof rested on Mr. Healy and on the balance of probabilities he must show the Court that he had been released from his guarantee and that the Bank was not entitled to set-off those funds and that he had therefore suffered loss and damage as a result. 

Accordingly, the Court rejected Mr. Healy’s account of the meeting in question and held that he was not entitled to the relief that he claimed. 

The above is a clear example of “get it in writing” when dealing with third parties and we would always strongly recommend to our clients to not rely on a “nod and wink” or assurances made in private in relation to such matters. Problems such as these can be easily avoided and it is best to grasp the nettle early on in order to settle the matters in writing and to not have to revisit it later when the costs and the stakes will have inevitably escalated.

 Please contact David on dreilly@dreilly.ie for further information on this topic or any other legal problem or commercial matter.