The Court of Appeal has set aside the dismissal of Barry English’s professional negligence proceedings against an accountancy firm and sent the case back to the High Court for a fresh hearing before a different judge.
In a judgment delivered on 29 May 2019, Mr Justice Michael Peart said the trial judge’s concerns about possible fraud on the Revenue had not been put to Mr English in a way that gave him a fair opportunity to respond. The Court of Appeal did not decide whether the investment scheme was unlawful or whether Mr English knew that vessel valuations were overstated.
The High Court had dismissed the negligence case on public policy grounds, concluding that the investment scheme was designed to facilitate incorrect claims for capital allowances. Fraud had not been pleaded by the defendants, and they had not put that allegation to Mr English in cross-examination.
After the evidence concluded, the trial judge asked the parties to address whether inflated or incorrectly apportioned vessel prices and professional fees could amount to an illegal arrangement, and what effect such a finding might have on the proceedings. The parties later made written and oral submissions. The Court of Appeal observed that neither appeared to anticipate that the trial judge might dismiss the entire case on public policy grounds.
Mr English’s evidence, as described by the appeal court, was that he did not know for a long time after entering the scheme that the vessels were significantly overvalued. He said the third defendant, Dan Murphy, was to obtain an independent valuation and organised and controlled the transaction, but did not obtain one. The defendants offered no evidence to refute that account, the judgment said. These were matters discussed by the appeal court in reviewing the procedure; it did not determine the underlying negligence claim.
The Court of Appeal said the trial judge could raise possible illegality on his own initiative. But adverse conclusions about Mr English’s knowledge and involvement had to rest on evidence or proper inferences from evidence, and the relevant matters had not been put to him. The request for submissions after the trial was not enough to cure that problem.
The appeal court therefore set aside the High Court order and remitted the proceedings for a rehearing before a different judge. It expressed no view on whether the scheme amounted to fraud and did not decide whether the Revenue Commissioners should be joined in any rehearing.