Supreme Court: No evidence to support alleged misrepresentation by Leopardstown in mediation agreement

About this case:

• Judgment:
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Background

In January 1998, Leopardstown Club Limited granted Templeville Developments Limited a 35-year lease of certain of the lands and premises of the racecourse. Mr Phillip Smyth is the principal shareholder and a director of Templeville. Templeville took possession of certain lands for constructing a sports club, and arranged for the construction of eleven tennis courts.

The relationship between the parties was described as “strained and fractious”, and there have been several legal disputes between the parties.

In September 2011, there were nine major items of actual or threatened litigation between the parties. The parties then entered a complex mediation process. This mediation resulted in the Mediated Settlement Agreement (MSA) in October 2011.

The MSA was a written agreement between Leopardstown, Templeville and Mr Smyth; it included maps prepared by Arup Engineers, which were signed by the parties.

In accordance with the MSA, Templeville was to make certain payments to Leopardstown. The initial payment was made, but by 2012 the relations between the parties had deteriorated.

High Court

Leopardstown issued proceedings seeking a declaration that the MSA remained in full force, and sought judgment for monies due and owing, damages and other reliefs.

Templeville claimed that by furnishing a map used in the negotiations leading to the MSA and referred to in the MSA, Leopardstown had misrepresented that a site which pursuant to the MSA was to be endorsed on the lease from Leopardstown to Templeville “was not materially affected by an underground ESB cable”. It was further pleaded that relied upon the said representation which was false in entering the MSA and were therefore entitled to rescind the MSA.

It was also pleaded that the MSA was voidable at the instance of Templeville for mistake.

Leopardstown denied the alleged misrepresentation and mistake, pleaded that Templeville were aware of the ESB cables prior to the execution of the MSA, and that Templeville were not entitled to void the MSA.

Mr Smyth asserted that he did not know of the transverse cable and this evidence was rejected. Justice Denham explained that the trial judge made a primary finding of fact that Mr Smyth was not a credible witness.

After a 14-day hearing, the High Court gave judgment for Leopardstown against Templeville.

Court of Appeal

The appeal pursued was confined to the rejection by the High Court of Templeville’s claim to be entitled to rescind the MSA on the grounds of the alleged misrepresentation in the map attached to the MSA in showing only one ESB cable and failing to show a second cable.

The Court unanimously allowed Templeville’s appeal, finding that the trial judge had made no findings of fact as to whether there had been a misrepresentation; that the findings as to Templeville’s prior knowledge of the cables could not be sustained; and held that the matter should be remitted to the High Court for retrial.

Supreme Court

Delivering the principle judgment of the Court, Justice Denham identified two broad issues:

At the core of the appeal was the proper approach of an appellate court considering the established jurisprudence.

It was held in Hay v O’Grady 1 IR 210:

“If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings, however voluminous and, apparently, weighty the testimony against them.”

The principles identified by the Hay v O’Grady jurisprudence include the following:

The High Court held that Templeville was aware of the transverse cable, and made a clear finding of fact in relation to the evidence of Mr Smyth, that he was not believable. There was credible evidence to support that finding. According to McCaughey v Irish Bank Resolution Corporation Limited IESC 17, the decision as to the credibility of a witness was itself an issue of fact.

Justice Denham criticised the Court of Appeal for proceeding as if it were a trial court re-hearing a case and considering evidence afresh. In substituting its own inferences of fact, the Court of Appeal erred in dismissing the trial judge’s findings as to credibility and facts.

Justice Denham was satisfied that the Court of Appeal exceeded its jurisdiction by misapplying Hay v O’Grady.

Turning to the issue of misrepresentation, Justice Denham emphasised that there was a conflict of submissions, but not of evidence. As per Gahan v Boland, once there was evidence to support the judge’s findings, Templeville’s claim as to misrepresentation, must fail. An appeal court should not set aside primary facts of that nature found by the trial judge and supported by credible evidence.

In all the circumstances, the Supreme Court unanimously allowed the appeal, set aside the judgments and order of the Court of Appeal, and affirmed the judgments and order of the High Court.