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1. In relation to the plaintiff's claim there is no dispute; the money is due and owing. There was a challenge as to the compound interest. I accept the submissions furnished by Mr O'Neill, counsel for the plaintiffs, an that issue. And I am satisfied that the monies in full are due and owing.

The fundamental issue in this case is that raised in the defendant's counterclaim as to the existence of a duty of care on the part of the plaintiffs to the defendants in the particular circumstances as given in evidence in this case. The onus is patently on the defendant to establish his case on the balance of probabilities.

Turning to the evidence -- I accept Mr Delaney's evidence as being, on balance, the more accurate account of the relationships between the plaintiff and the defendant over the years during which they did business. I accept the other witnesses who were called on behalf of the plaintiff insofar as it is relevant to the determination of the issue of law that is before me.

As for the defendant -- I do not think the defendant set out to mislead me but I have major reservations as to his evidence before me. To take an example, which is paragraph 17(a)(b)(c)(d) of the statement of Claim, there is in my view no evidence to support those allegations.

Likewise in relation to paragraph 18, there is no evidence to support the allegations which are very serious: Allegations of falsehood -- misleading, inaccurate advice alleged to have been given by the plaintiffs to the defendant, which is alleged to have resulted in the defendant suffering loss. I take that as an example. I reject that.

The defendant had been a most successful entrepreneur until in or about 1987 when his fortunes changed. I am satisfied that this was due to the dispute which arose between the defendant and his wife. And when this case opened before me on 14 January I indicated that I wished all of the matters which were private as between the defendant and his wife would not be raised in open court. And counsel for both parties acceded to that. However, having considered the case at great length I am satisfied that these events are integral to the issues between the plaintiff and the defendant in this case. Far from it being the case that the plaintiffs failed to advise the defendant, I am satisfied that the defendant at no time made his position clear to the plaintiffs.

As of 1986/87 he was a man of substantial wealth. His wife then commenced proceedings against him. And having considered the evidence at great length, I am satisfied that the defendant set out an a deliberate course to dissipate his assets so as to defeat, on the balance of probability, his wife's claim against him. I am satisfied that he never made this position clear to the plaintiffs. I am satisfied that Mr Delaney, on behalf of the plaintiffs, was a close friend of the defendant but was not aware of the full intent of the defendant's actions in this regard.

I note at the particular time that nobody seemed to have averted to the fact that there could have been an issue of severance in relation to the family home and the extensive acreage of some 300 acres that the defendant owned at the time. I am satisfied also on the balance of probabilities that the defendant's spouse would not have executed the consent which was necessary to give effect to the plaintiffs' security.

I am recognising the reality of this case, which is that there is currently no security by virtue of the defendant's actions. I accept that the plaintiff ascertained that the security was worthless due to the absence of the wife's consent in or about 12 October 1988. At this stage I am satisfied there was no possibility of the defendant obtaining his spouse's consent due to the nature of the matrimonial disputes. In addition, I accept that the defendant had reduced his operations from in or about 1987 when his wife had instituted proceedings. And it seems to me that the coincidence of this run-down in his business cannot under any circumstances, having regard to the evidence that I have heard, be laid at the plaintiffs' door.

I note particularly that the defendant had vigorously contested the proceedings by his wife from 1987 to 1992 and that he had in the proceedings commenced in May 1991 contested them for some time. Nonetheless, there is the most unusual circumstance that he did not contest his spouse's claim to the family home before the High Court, and he did not appear before the High Court to contest his wife's claim to the family home, which was then worth between #800,000 and #1,000,000 excluding the 300 acres. I am equally unimpressed by the fact that prior to his decision not to contest these proceedings he had granted a ten-year lease of the surrounding farm lands to a third party.

I regret to come to the conclusion that during these years the defendant was running an agenda which he did not make the plaintiffs aware of and did not make this court aware of. In the circumstances I accept the evidence adduced on behalf of the plaintiffs in relation to the counterclaim.

I turn now to the nature of the issue of law that was raised in this case: As to the nature of the relationship of banker and customer -- this is one of general contract which is basic to all transactions. Special contracts can also arise but these are only brought into being in relation to specific transactions or banking services. I note that Bankes LJ in Joachimson v Swiss Bank Corporation [1921] 3 KB 110 at page 117 held that in the ordinary case the relationship of banker to customer depends "entirely or mainly upon an implied contract." This relationship may be said to begin the moment the parties enter into relations or negotiations which are to be considered part of the contract ultimately concluded. The negotiation must however be part of the process and lead directly to the agreement.

The next paragraph is headed:

"Duty of care owed by a banker to a customer:

The existence and scope of an implied contractual duty of care owed by a banker to his customer has arisen principally in the context of the execution of payment instructions, the of giving advice in relation to investments, the duty of secrecy, the duty of giving information as to the credit of a customer and the duty of taking and realising security.

A duty of care in tort can also arise where the parties are in a contractual relationship."

However, I note the opinion of Lord Scarman, when he held in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank [1986] Appeal Case at 80, [1985] 2 AER at 947:

"Their Lordships do not believe that there is anything to the advantage of the law's development in searching for a liability in tort where the parties are in a contractual relationship. This is particularly so in a commercial relationship. Though it is possible as a matter of legal semantics to conduct an analysis of the rights and duties inherent in some contractual relationships, including that of banker and customer, either as a matter of contract law when the question will be what, if any, terms are to be implied or as a matter of tort law when the task will be to identify a duty arising from the proximity and character of the relationship between the parties, their Lordships believe it to be correct in principle and necessary for the avoidance of confusion in the law to adhere to the contractual analysis: On principle because it is a relationship in which the parties have, subject to a few exceptions, the right to determine their obligations to each other and for the avoidance of confusion because different consequences do follow according to whether liability arises from contract or tort, eg in the limitation of action."

Exceptions to this principle have arisen in the English courts. It was held that a contracting party may be liable in tort to another for misrepresentations or misstatements made before the signing of a written agreement (Esso Patroleum Co Ltd v Mardon [1976] 2 All ER 5) or the entering into of a general contractual relationship such as that of banker and customer (Woods v Martins Bank Ltd [1959] 1 QB 55). And it is necessary to note that whether or not a tortious duty of care arises is wholly dependent an the circumstances of each case."

Turning to the issue before me in this case in relation to contracts of security: A contract creating security is not a contract of utmost good faith requiring full disclosure of all material facts by both parties (Paget's Law of banking, at page 492).

The English courts have indicated that before a duty of care arises between a banker and a customer in relation to the signing of a security document, it is generally necessary for the banker to have chosen to have made some form of representation to the customer.

A contract of security can be avoided if it has been induced by a material misrepresentation of fact made by the bank or its agent (Kingsnorth Trust Ltd v Bell [1986] 1 All ER 423). Statements as to the terms and effect of a security document, although involving a representation as to the effect in the law of security, will nevertheless probably be classified as a representation of fact (Chitty on Contract, page 214-215).

Where a banker chooses to explain the terms and effect of a security document in circumstances where he knew or ought to have known that the person to whom the explanation is proffered would rely on it in deciding whether or not to execute the security, it is likely that a duty of care will arise on the part of the banker not to misstate the position proffered.

The duty of care owed by a banker to a customer in relation to the terms and the effects of a security document arose in Cornish v Midland Bank plc [1985] 3 All ER 513, which in my view is authority for the proposition that where a banker chooses to explain the nature and effect of a security he must take care not to misstate the position.

However, it was also suggested by Kerr LJ, that in certain circumstances, a bank may owe a duty to the giver of security at least if he is a customer to proffer some explanation as to the nature and effect of the security document to be executed. However, he expressed this duty of care to be confined to customers only and this in my view is indicative of the fact that the duty may indeed be contractual in nature, and therefore must be taken to arise from an implied term of the contract between the banker and the customer.

Turning to the position of the Irish courts on the issue: I think it is fair to say that there has been little opportunity to examine the extent and the duty of care which arises between banker and customer. I note that it has recently been decided by the Supreme Court in Bank of Ireland v Smith [1996] 1 ILRM 241, in the context of the Family Home Protection Act 1976, (according to which the consent of the spouse must be obtained prior to the conveyance of the "family home" in relation to a security document) that the plaintiff bankers did not owe a duty of care to the spouse to explain the charge fully to her or to suggest that she should obtain independent advice. The Supreme Court in particular noted that the only reasons why the plaintiffs should have taken such steps was to ensure that their own interests were protected and that the consent would not be open to challenge.

While this dicta does not resolve the issue currently before me between the plaintiffs and the defendants, it seems to me that the Supreme Court has indicated a limit to the duty of care contractual or otherwise, which can arise between banker and customer. Likewise, it seems to me that this case can be distinguished, in that the spouse had indeed signed the required consent form in accordance with the Family Home Protection Act 1976, and to this extent the bank had discharged its liability on obtaining consent. However, it seems to me that the salient point is that the bank did not owe a duty to the spouse to explain the nature and effect of the document which she was signing.

Amongst the many other cases cited to me there was that of Kennedy v AIB unreported in the High Court an 18 May 1995 before Murphy J. In this case the judge placed significant importance an the distinction between a situation in which a bank is obliged to act for both its own interests and that of a customer and the situation where the bank is not required to inform the customer of the nature and effect of the transaction. The judge suggests, it seems to me, that whether or not a bank is obliged to explain the effect of a transaction is dependant on several factors: For example, the nature of the transaction and the experience and qualifications of the customer which enabl him to understand the transaction, and hence, do not require it to be explained to him.

Where a bank is in a situation which only requires it to act in its own interests, then naturally a tortious duty of care does not arise in relation to the customer. However, if it can be proven that the transaction in question is complicated and the customer involved could not possibly understand its nature and effect due to a lack of knowledge or experience, then it may be the case that a bank in such circumstances will owe a duty to the customer of care to explain the nature and effect of the transaction.

That case, however, in my view may be distinguished by the evidence of the fact that the bank actually informed the customer that the grant in that case of the additional loan was in fact subject to conditions and further approval. To this extent the bank had chosen to proffer an explanation as to the nature and effect of the transaction, and by definition a tortious duty of care would have arisen at this point. The consequences of this were not in issue in that particular case and the question was left undecided. The judge did, however, highlight a situation in which the bank was acting purely in its own interests, and in such circumstances therefore did not owe a duty of care to the customer.

I accept the submissions submitted by the plaintiff and the defendant in this case. I compliment counsel for the attention to detail. I accept in full the submissions relied upon by counsel for the plaintiffs on this issue. Therefore, it seems to me -- adopting the submissions made by counsel for the plaintiff -- having regard to the issues that I have herein before adumbrated, I would conclude this case as follows: The factors required before establishing that a tortious duty of care can arise between the parties, such as the plaintiff and the defendant in this case, are it seems to me as follows: Primarily it must be adduced before the court from evidence that the banker in question had chosen to proffer an explanation of the security documents in question to the defendant. Were this indeed to be the case, then the banker may only be presumed to have been negligent where it is clear from the evidence that information in the explanation constituted either a misstatement of a misrepresentation to the customer.

Secondly, it must be established whether or not the plaintiff was acting in its own interest or whether the plaintiff was obliged to have regard to the interests of the customer. If it can be established that the plaintiff was under no obligation to act in any manner other than in its own interest, then no tortious duty of care can arise.

Thirdly, it must be adduced from the evidence whether or not the defendant knew or could have known from his own knowledge and experience that the transaction would be invalid without his wife's consent. If the defendant had no knowledge of the complicated nature of this transaction or any experience of such a transaction, then the plaintiffs might be considered to have owed the defendant a duty to explain the transaction before it was concluded.

Finally, and in the alternative, for the defendant to succeed it must be established whether or not he actually requested any information in relation to the requirements and the criteria to comply with. And indeed if the customer had requested the information, then he must establish on the balance of probabilities whether or not the bank replied in a negligent manner.

Having regard to the law as I have stated and having regard to the evidence that I have accepted, I am satisfied that the defendant has failed to establish any of the criteria required by either Irish or English law to establish that there was tortious duty of care in these particular circumstances. I reiterate that in my view, regrettably the defendant kept the plaintiffs and the court in the dark as to his real intentions. In the circumstances I have to come to the conclusion that the plaintiff has failed to establish his counterclaim in this action. And I therefore dismiss it.

In these circumstances there will be judgment for the plaintiffs in the amount sought in the Pleadings.