ACC Bank Plc v Anthony Barry t/a Barry & Company Solicitors and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian J. McGovern
• Judgment Date: 24 June 2014
• Neutral Citation: [2014] IEHC 322
• Docket Number: [No. 74 SP/2013]
• Court: High Court
• Date: 24 June 2014

[2014] IEHC 322

THE HIGH COURT

[No. 74 SP/2013]

ACC Bank PLC v Barry (t/a Barry & Co Solicitors) & Ors

BETWEEN

ACC BANK PLC.

PLAINTIFF

AND

ANTHONY BARRY CURRENTLY PRACTISING AS A SOLICITOR UNDER THE STYLE AND TITLE OF BARRY & COMPANY SOLICITORS, ORLA CUMMINS FORMALLY PRACITSING UNDER THE STYLE AND TITLE OF ANTHONY BARRY & COMPANY SOLICITORS AND CURRENTLY PRACTISING IN THE STYLE AND TITLE OF ORLA CUMMINS SOLICITOR, JULIE SHANLEY FORMERLY PRACTISING IN THE STYLE AND TITLE OF ANTHONY BARRY & COMPANY SOLICITORS AND CURRENTLY PRACTISING IN THE STYLE AND TITLE OF SHANLEY GLENNON & COMPANY

DEFENDANTS

Bank – Loan – Land Development – Borrower – Solicitors – Sale of Practice – Undertakings –Breaches – Indemnification – Initial Loan Cheque Issue – Sale Proceeds – Practice & Procedure –Delay – Losses

Facts: The plaintiff was a Bank and the defendants were solicitors who practised individually and in partnership with each other. The first defendan, principal of Anthony Barry & Company Solicitors, acted on behalf of Brian Doyle (the Borrower) who borrowed money from the plaintiff to develop land. The first defendant gave a solicitor”s undertaking to the plaintiff and sold his practice to the second and third defendants, claiming they both took on his undertakings. It appeared the first defendant agreed to indemnify the second and third defendants against claims arising after the commencement date in respect of any activities of the business performed by him prior to the commencement dates which arose as a result of any act, omission or default on his part. The second and third defendants agreed to indemnify the first defendant against claims arising after the commencement date in respect of any activities of the business after that date which arose as a result of any act, omission or default of the second and third defendants or their servants or agents. The second defendant maintained the first defendant took carriage of certain files at that time, upon the understanding all undertakings would be taken over by him in his new firm Barry & Company. The borrower”s Solicitors gave undertakings to the Bank and the borrower obtained two loans from the Bank. At the time of sale of the first defendant”s practice to the second and third defendants, he had not complied with his undertaking that within one month of the initial loan cheque issue he would stamp and lodge for registration various documentation, nor by the time of sale of the practice completed and lodged with the Bank a report or Certificate of Title. In the facility letter he agreed to secure a first legal mortgage and charge on the development site and work in progress at Glack, Longford and to arrange to obtain his solicitor”s undertaking. On 27^th October 2005, the first defendant undertook to furnish to the plaintiff the sale proceeds of the unit development and the proceeds of sale of the properties sold at Glack were transferred to the Bank. A letter of loan sanction and agreement for bridging finance in respect of a development at Newtowncashel, County Roscommon issued to the Borrower. The Newtowncashel facility was for €589,000 and the second and third defendants agreed to extend the first legal mortgage and charge over the site and work in progress at Lackagh (Glack) and undertook and furnished €150,000 out of the sale proceeds of the property at Lackagh once the Lackagh site loan facility had been repaid. When the first defendant sold his practice to the second and third defendants, the Glack mortgage had not been stamped or lodged for registration and he was in breach of his undertaking to do so within one month. Mr Michael W. Carrigan, experienced conveyancing solicitor suggested the Borrower had good marketable title to the properties as he was able to sell them and held the delay in stamping and lodging the mortgage and charge for registration was a technical or administrative default; if the delay did not deprive the Bank of its” entitlement to first mortgage in charge over the property and the Bank suffered no consequential loss.

Held by Mr Justice Brian J McGovern solicitors must be held accountable in respect of any losses suffered by parties to whom they give an undertaking where there has been a breach of that undertaking by the solicitor and that the plaintiff claimed a declaration the defendants were guilty of misconduct, yet having lodged a complaint with the Law Society such body did not take any steps against the defendants and there was no appreciable loss suffered by the plaintiff as a result of those breaches and further the action was an abuse of process.

Application refused

Mr. Justice Brian J. McGovern

1 The plaintiff is a Bank. The defendants are solicitors who, at various times, practised individually and in partnership with each other. In 2005, the first named defendant was the principal of the firm of Anthony Barry & Company Solicitors in Athlone. He acted on behalf of Brian Doyle of Kenagh, County Longford (the "Borrower"), who borrowed monies from the plaintiff for the purpose of developing land. On 21^st October, 2005, he gave a solicitor's undertaking to the plaintiff, and on 1^st December, 2005 (five weeks later), he sold his practice to the second and third named defendants.

2 The first named defendant claims that the second and third named defendants took over all undertakings from him on the sale of the practice. However, it appears from the Asset Purchase Agreement at Clause 11.2, that the first named defendant agreed to indemnify the second and third named defendants against all claims arising after the commencement date in respect of any activities of the business performed by him prior to the commencement date which arise as a result of any act, omission or default on his part. The second and third named defendants agreed to indemnify the first named defendant against all claims arising after the commencement date in respect of any activities of the business after that date which arose as a result of any act, omission or default of the second and third named defendants or their servants or agents. The third named defendant was not represented and, by agreement, the case did not proceed against her. The proceedings against the fourth and fifth named defendants, originally named in the proceedings, were struck out by order of the court on 22^nd April, 2013. The action, therefore, proceeded against the first and second named defendants only.

3 In December 2005, having sold his practice, the first named defendant was given signing authority for all Certificates of Title and accountable trust receipts for and on behalf of Anthony Barry & Company. That company ceased trading in February 2010, when the second and third named defendants went their separate ways. The second named defendant maintains that the first named defendant took over certain files at that time, on the understanding that all undertakings would be taken over by him in his new firm of Barry & Company. But it seems that the first named defendant did not do so.

4 There were a number of undertakings given by the Borrower's solicitors to the Bank. The first was the undertaking of 21^st October, 2005, given by the first named defendant ("the first undertaking"). By that undertaking, the first named defendant undertook, inter alia, as follows:

5 (a) Within one month from the initial loan cheque issued (in respect of property at Glack, County Longford ("the Glack loan facility") to stamp and lodge for registration the plaintiff's Deed of Charge/mortgage over lands at Glack, County Longford, referred to as both Glack and Lackagh, County Longford ("Glack mortgage") in the Land Registry;

6 (b) as soon as practicable, to complete and lodge with the plaintiff a report...