Emerald Isle Assurances and Investments Ltd v Dorgan

• Jurisdiction: Ireland
• Judge: Ryan P.
• Judgment Date: 25 January 2016
• Neutral Citation: [2016] IECA 12
• Docket Number: [2014 No. 370 and 393]
• Court: Court of Appeal (Ireland)
• Date: 25 January 2016

[2016] IECA 12

THE COURT OF APPEAL

Ryan P.

[2014 No. 370 and 393]

The President

Irvine J.

Hogan J.

BETWEEN

EMERALD ISLE ASSURANCES AND INVESTMENTS LIMITED,

TIMOTHY MAVERLY AND JAMES MOREY

PLAINTIFFS

AND

PATRICK DORGAN AND OTHERS PRACTICING AS

COAKLEY MOLONEY SOLICITORS

DEFENDANT

Negligence ? Breach of duty ? Damages ? Plaintiffs seeking damages ? Whether defendants were negligent

Facts: The personal plaintiffs, Mr Maverly and Mr Morey, are directors of the plaintiff company, Emerald Isle Assurances and Investments Ltd, which was engaged in the business of a life insurance agent. In 1991 and 1992, Emerald entered into a tied agency agreement with Hibernian Life Ltd for the sale of the latter?s life insurance policies. Disagreements arose between Emerald and Hibernian at the end of 1994 and Emerald instructed the second defendant solicitor, Mr Duane, who issued a summary summons claiming IR£89,260.47. Hibernian issued a notice of termination of the agency. In January 1995, on the plaintiffs? instructions the solicitor issued a plenary summons seeking damages for breach of contract and issued a second summary summons seeking IR£154,691.94 on behalf of his clients. In 1996, the High Court made an order consolidating the proceedings on the application of Hibernian following which an amended statement of claim was delivered seeking special damages in the sum of IR£6,248,600.37. Hibernian delivered its defence in 1997 in which it made a lodgement of IR£425,000. In 2002, Hibernian brought a motion to dismiss the action for want of prosecution. The motion was struck out by consent in 2003 with costs to Hibernian. A forensic accountant, Mr Peelo, was engaged. Then there was a settlement meeting which did not result in agreement. Between 2003 and 2007 there were disagreements between the plaintiffs and Mr Peelo, who was not prepared to furnish a report or to commit himself to giving evidence of sums which in his professional opinion he could not justify. For their part, the plaintiffs were of the view that Mr Peelo?s figures were too low and that he was undervaluing the amount of their legitimate claims. They were not satisfied to have the case presented on the basis of his report. In January 2010, Hibernian?s solicitors brought a motion to dismiss the action on the grounds of inordinate and inexcusable delay. In July 2010, the plaintiffs? action against Hibernian was compromised on terms that Emerald would be paid ?300,000 inclusive of costs. The plaintiffs were persuaded to accept the settlement terms offered by the strong unanimous advice of counsel and of their solicitors that Hibernian?s motion was likely to succeed and that the plaintiffs? case would be dismissed on the grounds of inordinate delay if it went to hearing. The plaintiffs submitted a claim for damages against their former solicitors, Coakley Moloney Solicitors. In January 2012 the High Court dismissed the plaintiffs? claim. The plaintiffs appealed to the Court of Appeal against the dismissal of their action and the defendants cross-appealed seeking their costs. The plaintiffs submitted that: 1) the judge should have held that the second defendant was negligent in his overall handling of the case from an early stage; 2) the High Court was in error in holding that the only breach of duty by the second defendant in the conduct of the litigation was the failure to give a sufficiently detailed warning of the risk of a motion to dismiss for want of prosecution; 3) the trial judge was in error in holding that if a proper warning had been given, it would not have made any difference. The defendants said that the core issue in the action was where responsibility lay for the delay in bringing the case against Hibernian to trial.

Held by Ryan P that Mr Duane was to be faulted and held negligent for a failure to advise his clients appropriately. Applying Hay v O?Grady [1992] 1 IR 210, Ryan P held that the conclusions reached by the High Court were erroneous. Ryan P noted that the essential facts ? all of the facts on which the decision as to the negligence of the second defendant fell to be made ? were not in dispute and that the question for the Court was whether the inferences and conclusions that were drawn by the High Court were correct. In Ryan P?s view, those inferences were reviewable by the Court and they were not correct.

Ryan P held that the Court would allow the appeal and remit the matter to the High Court for assessment of damages.

Appeal allowed.

JUDGMENT of the Court delivered by the President on 25th January 2016

1 This is an appeal by the plaintiffs against the judgment and order of the High Court (Kearns P.) dismissing their claim for negligence against their former solicitors. The personal plaintiffs are directors of the first plaintiff company which was engaged in the business of a life insurance agent. This action arose out of the conduct of proceedings by the defendant solicitors on behalf of the plaintiffs against Hibernian Life Ltd. which were ultimately settled in 2010 for ?300,000.

2 The case under appeal was heard in the High Court over 12 days between 6th December 2011 and 18th January 2012 by Kearns P. who on the latter date delivered an ex tempore judgment dismissing the plaintiffs' claim. The plaintiffs appeal against the dismissal of their action and the defendants cross-appeal seeking their costs.

Background Facts and Relevant Chronology

3 In 1991 and 1992, Emerald entered into a tied agency agreement with Hibernian Life for the sale of the latter's life insurance policies. Disagreements arose between Emerald and Hibernian at the end of 1994 and Emerald instructed the second defendant Mr Duane who issued a summary summons claiming IR£89,260.47 on 24th November 1994. In December 1994, Hibernian issued a notice of termination of the agency with effect from the end of that year. On 15th January 1995, on the plaintiffs' instructions the solicitor issued a plenary summons seeking damages for breach of contract. On the same day, he issued a second summary summons seeking IR£154,691.94 on behalf of his clients.

4 The three separate proceedings moved at different paces. The statement of claim in the plenary proceedings was delivered on 17th October 1996. On 2nd December 1996, the High Court made an order consolidating the proceedings on the application of Hibernian following which an amended statement of claim in the consolidated action was delivered on 18th December 1996, seeking special damages in the sum of IR£6,248,600.37. Following the delivery of particulars, Hibernian delivered its defence on 12th November 1997 in which it made a lodgement of IR£425,000.

5 There was correspondence in 1998 and 1999 between Mr Duane and A&L Goodbody, the solicitors for Hibernian Life in relation to discovery. Hibernian's affidavit of discovery was filed on 25th March 1999 and Emerald's on 31st May 1999. Then there was some further correspondence in relation to the discovery which terminated in August 1999.

6 Mr. Duane sent papers to Senior Counsel, Mr. Shipsey S.C. on 6th June 2000 for the purpose of advising proofs. In his advice on proofs, which was dated 13th March 2001, Counsel advised a number of steps, including preparation of detailed witness statements by Messrs. Maverly and Morey, the identification of an industry expert in relation to practice concerning commission and a report from an independent forensic accountant.

7 On 26th June 2002, Hibernian brought a motion to dismiss the action for want of prosecution. Affidavits were exchanged, and following a number of adjournments, the motion was struck out by consent on 9th April 2003 with costs to Hibernian.

8 A forensic accountant, Mr. Peelo, was engaged on or about 13th or 14th January 2003. Then there was a settlement meeting on 16th January which did not result in agreement. Mr. Peelo then prepared a draft report which was circulated on 3rd November 2003. Emerald was in delay in furnishing information to Mr. Peelo that he sought on 16th January 2003 and which they did not provide until 28th July 2003. In March 2004, he sought further information that Emerald provided in July 2004. Thereafter, Mr. Peelo produced a second draft report on 26th July 2004.

9 The 4-year period between 2003 and 2007 is critical in the case. The period was taken up with disagreements between the plaintiffs and their forensic consultant, Mr. Peelo. The expert was not prepared to furnish a report or to commit himself to giving evidence of sums which in his professional opinion he could not justify. For their part, the plaintiffs were of the view that Mr. Peelo's figures were too low; that he was undervaluing the amount of their legitimate claims and they were not satisfied to have the case presented on the basis of his report. Ultimately, it seems that Mr. Peelo was prepared to stand over a claim of approximately IR£2.8m, whereas the plaintiffs were seeking more than double that amount, their figure being approximately IR£6.25m. Mr. Peelo produced some five or six draft reports during the period 2003 to 2007. Coakley Moloney wrote to their town agents asking them to set the action down for trial and on 22nd October 2009, they again wrote requesting the service of Notice of Intention to Proceed.

10 On 18th January 2010, Hibernian's solicitors brought a motion to dismiss the action on the grounds of inordinate and inexcusable delay.

11 On 7th July 2010, the plaintiffs' action against Hibernian was compromised on terms that Emerald would be paid ?300,000 inclusive of costs. The plaintiffs were persuaded to accept the settlement terms offered by the strong unanimous advice of counsel and of their solicitors that Hibernian's motion was likely to succeed and that the plaintiffs' case would be dismissed on the grounds of inordinate delay if it went to hearing.

The Judgment of the High Court

12 Kearns P...