Defender Ltd v HSBC Institutional Trust Services (Ireland) DAC

• Jurisdiction: Ireland
• Judge: Clarke C.J.,O'Malley J.,Irvine J.
• Judgment Date: 17 June 2019
• Neutral Citation: [2019] IESCDET 125
• Court: Supreme Court
• Date: 17 June 2019

[2019] IESCDET 125

THE SUPREME COURT

DETERMINATION

Clarke C.J.

O'Malley J.

Irvine J.

BETWEEN

DEFENDER LIMITED

PLAINTIFF

AND

HSBC INSTITUTIONAL TRUST SERVICES (IRELAND) DAC

DEFENDANT

AND

RELIANCE MANAGEMENT (BVI) LIMITED

FIMAN LIMITED

DAVID WHITEHEAD

AND

RELIANCE INTERNATIONAL RESEARCH LLC

THIRD PARTIES

APPLICATION FOR LEAVE TO APPEAL TO WHICH ARTICLE 34.5.4° OF THE CONSTITUTION APPLIES

RESULT: The Court adjourns consideration of this application for leave pending the filing of further submissions by the parties arising out of the fact that an appeal in the same proceedings is pending before the Court of Appeal.

REASONS GIVEN:

ORDER SOUGHT TO BE APPEALED

COURT: High Court

DATE OF ORDER:22nd January, 2019

DATE OF PERFECTION OF ORDER: 28th January, 2019

THE APPLICATION FOR LEAVE TO APPEAL WAS MADE ON 14th February, 2019 AND WAS IN TIME.

Application

1 The applicant (‘Defender’) seeks leave to appeal from an order of the High Court (Twomey J.) made on 22 January 2019, and perfected on 28 January 2019, which held, in a preliminary ruling in relation to Defender's claim for damages in professional negligence and breach of contract against the respondent, HSBC Institutional Trust Services (Ireland) DAC (‘HSBC’), that, amongst other things, under s. 17(2) of the Civil Liability Act 1961 (‘the 1961 Act’), Defender's total claim against HSBC was to be reduced by 100%, for the reasons set out in two written judgments of the Court, delivered on 4 December 2018 ( [2018] IHEC 706) and 22 January 2019 ( [2019] IEHC 32).

Jurisdiction

2 The general principles applied by this Court in determining whether to grant or refuse leave to appeal having regard to the criteria incorporated into the Constitution as a result of the Thirty Third Amendment have now been considered in a large number of determinations and are fully addressed in both a determination issued by a panel consisting of all of the members of this Court in B.S. v. Director of Public Prosecutions [2017] IESCDET 134 and in a unanimous judgment of a full Court delivered by O'Donnell J. in Price Waterhouse Coopers (A Firm) v. Quinn Insurance Ltd. (Under Administration) [2017] IESC 73. The additional criteria required to be met in order that a so-called “leapfrog appeal” direct from the High Court to this Court can be permitted were addressed by a full panel of the Court in Wansboro v. Director of Public Prosecutions [2017] IESCDET 115. It follows that it is unnecessary to revisit the new constitutional architecture for the purposes of this determination.

3 Furthermore, the application for leave filed and the respondent's notice are published along with this determination (subject only to any redaction required by law) and it is therefore unnecessary to set out the position of the parties.

4 In that context, it should be noted that HSBC does not oppose the grant of leave and that in the respondent's notice, leave to cross appeal is sought.

Background Facts

5 The underlying proceedings involve a claim made by Defender Limited against HSBC for $141 million in damages for professional negligence and breach of contract. Under the terms of a custodian agreement between Defender and HSBC, Defender invested $540 million in a Ponzi scheme operated by a third party, Bernard L. Madoff Investment Securities LLC (‘BLMIS’), which is not a party to these proceedings. Having subsequently incurred significant losses as a result of the fraud, Defender settled with the trustee of BLMIS for approximately 75% of its losses and brought these proceedings against HSBC in order to recover the balance of its loss. HSBC relied on the provisions of the 1961 Act, and in particular s. 17(2), to argue that it had a complete defence to the damages claim.

6 The High Court (Twomey J.) ordered that a preliminary legal issue, as to whether a full defence could be sustained by HSBC in reliance on the provisions of the 1961 Act, be determined in advance of the hearing of the substantive proceedings. In the first judgment on this matter, delivered on 22 December 2018, it was held that, for the purposes of the preliminary determination, Defender's case had to be taken at its height and that the Court had to assume that HSBC was guilty of negligence and, therefore, that both HSBC and BLMIS were concurrent wrongdoers, for the purposes of s. 11 of the 1961 Act.

7 The Court then considered, amongst other things, the effect which Defender's settlement with the first concurrent wrongdoer, BLMIS, had on the liability of HSBC, as the second concurrent wrongdoer. Under s. 17(2) of the 1961 Act, it was determined that, as a result of the settlement, Defender is ‘identified with’ BLMIS. Construed in reference to s. 35(1)(h) of the 1961 Act, it was held...