Barry v Medical Defence Union Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Carroll
• Judgment Date: 31 March 2004
• Neutral Citation: [2004] IEHC 62
• Judgment citation (vLex): [2004] 3 JIC 3106
• Court: High Court
• Date: 31 March 2004

[2004] IEHC 62

THE HIGH COURT

Carroll

No 1991P/2001

Barry v. Medical Defence Union Ltd.

BETWEEN

JAMES M. BARRY

PLAINTIFF

AND

MEDICAL DEFENCE UNION LIMITED

DEFENDANT

Citations:

MEDICAL PRACTITIONERS ACT 1978 PART 5

GLOVER V BLN 1972 IR 388

GARVEY V IRELAND 1981 IR 75

CARNA FOODS LTD V EAGLE STAR INSURANCE CO IRL LTD 1995 1 IR 526

CARNA FOODS LTD V EAGLE STAR INSURANCE CO IRL LTD 1997 2 IR 193 1997 2 ILRM 481 1998/13/4384

COMPANIES ACT 1985 S14 (UK)

COMPANIES ACT 1963 S25

MDU V DEPT OF TRADE 1980 CH 82

INSURANCE COMPANIES ACT 1974

RAFTER V SOLICITORS MUTUAL DEFENCE FUND LTD 1999 2 ILRM 305

Abstract:

Contract - Breach - Terms and conditions - Interpretation - Nature of contract - Whether contract of insurance between plaintiff and defendant - Indemnity - Plaintiff’s obligations under contract of indemnity - Whether plaintiff entitled to have rules of natural justice applied to interpretation of contract.

Facts: the plaintiff, a medical practitioner who was sued by former patients, claimed that he purchased professional indemnity insurance from the defendant entitling him to an indemnity in respect of any order for damages or costs obtained by former patients in respect of negligence or breach of duty and for the costs of defending same. He claimed that he was entitled to the exercise of good faith by the defendant in its dealings with him and that in making any determination in such dealings, the defendant would act in accordance with the requirements of natural and constitutional justice. In the alternative, the plaintiff claimed that the defendant made warranties and representations to him in the former terms to induce him to pay sums to the defendant. The defendant denied that the plaintiff purchased indemnity insurance and contended that his entitlements were discretionary and subject to the terms and conditions set out in its memorandum and articles of association. They asserted that a person making a request for legal assistance was bound to abide by every decision of the Board of Management of the MDU on the conduct or defence of the matter and should not, without prior consent, take any steps to pursue such a matter.

Held by Carroll J in dismissing the action that the only contract that fell to be considered was the memorandum and articles of association. There was no justification for extending the rules of natural justice to the area of private contract. The entitlement of the plaintiff as a member of the MDU, under the memorandum and articles of association, was to have his request for assistance and indemnity fairly considered by the board. The plaintiff, for his part, was obliged to abide absolutely by every decision of the MDU on the conduct or defence of the matter and not to take any steps with reference to the matter without the prior consent of the board.

Reporter: P. C.

1 Ms. Justice Carroll delivered the 31st day of March, 2004 .

2 The Plaintiff who is a medical doctor issued a plenary summons in this matter on 9 ^th February, 2001. In his statement of claim delivered 23 ^rd February, 2001 the Plaintiff claims that he purchased professional indemnity insurance from the Defendant (referred to as the MDU) for over twenty seven years until his retirement in 1995, by way of annual sums, entitling him to an indemnity in respect of any order for damages or costs obtained by a patient or former patient in respect of negligence or breach of duty of the Plaintiff as a medical practitioner; also for costs incurred in defending any such claim or in defending any disciplinary proceedings brought against him under Part 5 of the Medical Practitioners Act, 1978. He claims that he was entitled to the exercise of good faith by the MDU in its dealings with him and that in making any determination in such dealings the MDU would act in accordance with the requirements of natural and constitutional justice.

3 In the alternative he claims there was a contract preliminary or collateral to his becoming a member of the MDU whereby the MDU bound itself to provide the same entitlements.

4 Alternatively the Plaintiff claims that the MDU made warranties and representations to the Plaintiff in the terms already stated in order to induce the Plaintiff to pay sums to the MDU.

5 The Plaintiff was sued by three former patients in the Circuit Court, which actions were defended by the Plaintiff's solicitors, Messrs. Denis O'Sullivan & Co. He was also sued by thirty six other Plaintiff's, former patients, in the Circuit Court, in the years between 1995 and 1999. The Plaintiff also took judicial review proceedings in two of those cases (E309/96 and E388/95). In addition, three High Court actions were initiated against him by former patients in 1995 and 1996.

6 Notice of Inquiries under Part 5 of the Medical Practitioners Act, 1976 dated 17 ^th November, 1995 and 21 ^st February, 1996 were served and judicial review proceedings in respect of those inquiries were brought (ultimately unsuccessfully).

7 A claim for personal injuries was not pursued.

8 By way of relief the Plaintiff claims inter alia a series of declarations that he is entitled to be indemnified for any damages or costs obtained against him in any of the actions mentioned, including the judicial review proceedings, and also for the costs incurred in defending any of the civil actions or prosecuting the related judicial review actions. He also claims the costs of defending the disciplinary proceedings and prosecuting the related judicial review proceedings.

9 The MDU in its defence delivered 21 ^st June, 2001 denies the Plaintiff purchased professional indemnity insurance or that the Plaintiff is entitled to any indemnity as claimed. It also denies any preliminary or collateral contract. The defence says that the Plaintiff was a member of the MDU and his entitlements were subject to the terms and conditions set out from time to time in the Memorandum and Articles of Association. It claimed the MDU could give to a member advice or legal assistance or defend any matter affecting the professional character or interests or conduct in a professional capacity or raising a question of professional principle. The person making a request was bound to abide absolutely by every decision of the Board of Management of the MDU (or other authorised person or committee) on the conduct or defence of the matter and should not without prior consent take any steps with reference to such matter.

10 The MDU claims that under Article 48 (which is set out in its material parts, in the Defence) an indemnity may be granted in whole or in part with regard to actions affecting the professional character or interests or conduct in a professional capacity of a member raising a question of professional principle but only on such terms and conditions as the Board of Management should think proper, the Board of Management (or other authorised person or committee) to have an absolute discretion to limit or restrict the grant of such indemnity or altogether to decline to grant the same or to determine any indemnity granted without giving any reason.

11 The MDU claims that while the Plaintiff requested indemnity in respect of the civil actions, it has not to date agreed to provide the indemnity. It claims the Plaintiff has to date failed to co-operate by providing information and instructions in relation to the proceedings and the circumstances giving rise to them, in spite of repeated requests. The MDU denies that it acted otherwise than in good faith and also denies that the rules of natural and constitutional justice have any application to the dealings between the parties, their relationship being governed by the terms of the Memorandum and Articles of Association.

12 The MDU admits the Plaintiff through his agent (i.e. his solicitors) sought an indemnity in respect of the disciplinary proceedings under the Medical Practitioners Act, 1978and said it agreed by letter dated 29 ^th April, 1997 that it was prepared to offer advice legal assistance subject to conditions that the legal assistance would be provided by solicitors and counsel appointed by the MDU, that the Plaintiff would provide full co-operation by means of a full disclosure of the facts and that his instructions would be given directly to those appointed. The MDU said it could not grant assistance in relation to costs and expenses incurred to date. That offer was not accepted by the Plaintiff.

13 The MDU also said that while a request was made for indemnity in respect of the costs incurred as a result of the judicial review proceedings in relation to the disciplinary proceedings, the MDU declined to grant indemnity, as it was entitled to do.

14 It denied it acted wrongfully or in breach of contract or otherwise than in good faith in its dealings with the Plaintiff and claims that all requests by the Plaintiff for advice, assistance or indemnity were properly and fairly considered by the MDU on the basis of the information and material furnished by or on behalf of the Plaintiff.

15 It claims it reconsidered the matter on 24 ^th July, 2001 and told the Plaintiff it would assist his request for assistance if specified information was provided by him.

16 In his reply the Plaintiff joins issue with the MDU, claiming the MDU is estopped from denying their liability and by amendment he claims the decisions of 31 ^st May, 2000 and 18 ^th July, 2001 were made in bad faith and in violation of natural and constitutional justice and used as a device in litigation and were unfair in that the MDU refused an offer of the Plaintiff to personally attend its office for interview when the MDU attributed pre-eminent importance to such interview in deciding whether to allow an indemnity. In relation to the decision of 31 ^st May, 2000 the Plaintiff claims it was unfair as it was kept secret from the Plaintiff. In relation to the decision...