Leopardstown Club v Templeville Developments: Court of Appeal exceeded its jurisdiction in overturning High Court’s finding of fact

Here, the Supreme Court overturned the decision of the Court of Appeal in this case and affirmed the judgment of the High Court (Charleton J). Answering the questions certified, the Court held:

(i) First, in essence, did the Court of Appeal exceed its jurisdiction by misapplying Hay v O’Grady? I would answer this in the affirmative, for the reasons given.

(ii) Second, the issue of misrepresentation and the application of the correct law. The Court was not asked to overrule Gahan v Boland. Once there was evidence to support the learned High Court judge’s finding, as to the credibility of Mr Smyth, this was a finding of primary fact which should not be set aside by an appellate court as it was supported by credible evidence. Further aspects of the law on misrepresentation did not arise.

 

Background

In 1998 Leopardstown granted Templeville a 35 year lease over land at Leopardstown race course. Templeville constructed a sports club including indoor and outdoor tennis courts. However, the relationship between the parties has been fractious and has resulted in many legal disputes. In 2011 there were nine separate disputes between the parties. The parties entered into a complex mediation process which led to a Mediated Settlement Agreement to resolve all of the outstanding disputes. The Agreement was made a rule of court.

That did not resolve the disputes, though. In 2012 Leopardstown issued High Court proceedings seeking a declaration that the Agreement was still in force and seeking money owed, damages and other reliefs. Templeville counterclaimed that Leopardstown induced it into the Agreement by misrepresentation regarding two ESB cables which run under the property.

In the High Court (here), Charleton J granted Leopardstown the orders sought, stating:

70. It is impossible not to be satisfied that Templeville had knowledge of the transverse ESB cable. I am satisfied that Philip Smyth [Templeville director], in claiming no knowledge of the cable is giving evidence that, in these circumstances, a court could not accept.

Templeville appealed that decision.

 

Hay v O’Grady [1992] 1 IR 210

 

The rule from Hay v O’Grady was stated by by McCarthy J at 217:

1. An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge who hears the substance of the evidence but, also, observes the manner in which it is given and the demeanour of those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial.

2. 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 truth is not the monopoly of any majority. …

 

Court of Appeal

 

Allowing Templeville’s appeal, the Court of Appeal issued two judgments. Hogan J (here) stated:

123. Third, the findings made by the High Court to the effect that Templeville had such knowledge cannot be sustained. Specifically, the trial judge did not apply the correct legal test in assessing this question, since he should have considered whether Leopardstown had established on the balance of probabilities that Templeville had actual and complete knowledge of the existence of the traversing cable in the manner required by the Supreme Court in Gahan. It was not enough, for example, to point to the existence of ESB manholes on the tennis court site in order to fix Templeville with knowledge, as this would go constructive rather than actual knowledge only.

Finlay Geoghegan J (here) wrote a concurring judgment finding that the evidence before the trial judge did not establish that Templeville had complete knowledge of the existence of the two cables at the time it entered the Agreement. She stated at [31]:

The onus on this issue of actual and complete knowledge is on Leopardstown and it does not appear that it can be considered as discharged by such credibility findings of the trial judge.

 

Leopardstown sought leave to appeal to the Supreme Court. The Court granted leave on two issues of general public importance:

(a) The principle and application of the rule in Hay v O’Grady [1992] I.R. 210 and the jurisprudence derived therefrom. The legal status of explicit or implicit findings of fact, and inferences by a trial judge, are fundamental to the role of appeal courts and a matter of general public importance. In essence did the Court of Appeal exceed its jurisdiction by misapplying Hay v O’Grady?

(b) The test and criteria to establish misrepresentation are matters of law which were addressed by this Court in Gahan v Boland [1985] ILRM 218. The Court was not asked to overrule Gahan v Boland. An issue was raised as to the nature of what should be proved in order to show misrepresentation, and, in particular, whether it must be shown that the representee was actually induced to enter into the transaction by reason of misrepresentation. Can constructive knowledge be a defence? (It was noted that since s. 86 of the Land and Conveyancing Law Reform Act, 2009, there are new rules regarding constructive knowledge. The Act of 2009 is not in issue on this appeal).

 

Supreme Court

Chief Justice Denham wrote the judgment for the five judge panel.  MacMenamin J wrote a concurring judgment. Allowing Leopardstown’s appeal, Denham CJ held that Gahan v Boland did not create an onus on Leopardstown to establish that Mr Smyth had conscious knowledge of the two cables on the day he entered the Agreement [97]. There was ample evidence to support the trial judge’s finding that Mr Smyth had knowledge of the cables, and that was sufficient to defeat Templeville’s claim of misrepresentation [98]. And Hay v O’Grady establishes that an appeal court should not set aside a trial judge’s finding of fact which is supported by credible evidence.

The Court overturned the decision of the Court of Appeal and affirmed the High Court orders.

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