Kennedy v The Law Society

• Jurisdiction: Ireland
• Judge: Justice Kearns
• Judgment Date: 30 July 2003
• Neutral Citation: 2003 WJSC-HC 5416
• Court: High Court
• Date: 30 July 2003

2003 WJSC-HC 5416

THE HIGH COURT

Kearns

155 JR/1996

GILES G KENNEDY & CO v. LAW SOCIETY OF IRELAND & ORS

BETWEEN

GILES J. KENNEDY CARRYING ON PRACTICE UNDER THE STYLE OF GILES J. KENNEDY AND COMPANY

APPLICANT

AND

THE LAW SOCIETY OF IRELAND, PATRICK JOSEPH CONNOLLY AND AISLING FOLEY

RESPONDENTS

Citations:

SOLICITORS ACCOUNTS REGS (NO 2) 1984 SI 304/1984

GLENCAR EXPLORATION PLC V MAYO CO COUNCIL 2002 1 IR 84 2002 1 ILRM 481

MCDONNELL V IRELAND 1998 1 IR 134

PINE VALLEY DEVELOPMENTS V MIN ENVIRONMENT 1987 IR 23

THE LAW OF TORTS GRUBB 2002 755

THREE RIVERS DISTRICT COUNCIL & ORS V BANK OF ENGLAND 2000 3 AER 1

YUEN KUN YEU V AG OF HONG KONG 1987 3 WLR 776 1987 2 AER 705 1988 AC 175

DAVIS V RADCLIFFE 1990 2 AER 538

CALVELEY V CHIEF CONSTABLE AT MERSEYSIDE POLICE 1989 1 AER 1025 1989 AC 1228 1989 2 WLR 624

X & ORS (MINORS) V BEDFORDSHIRE POLICE CCM (MINOR) V NEWHAM BC 1995 3 AER 353

LONRHO LTD V SHELL PETROLEUM CO LTD 1981 2 AER 456

BEAUDESERT SHIRE COUNCIL V SMITH 1996 120 CLR 145

NORTHERN TERRITORY OF AUSTRALIA V MENGEL 1995 185 CLR 307

WINFIELD & JOLOWICZ ON TORT 15ED 1998 55

BRADFORD CORPORATION V PICKLES 1895 AC 587

ALLEN V FLOOD 1898 AC 1

JONES V SWANSEA CC 1989 3 AER 162

R V BOWDEN 1995 4 AER 505

KING V LA LAVIA 1999 3 IR 413

DUFF V MIN AGRICULTURE 1997 IR 22

HANAHOE V HUSSEY 1999 3 IR 69

GLENCAR EXPLORATION PLC V MAYO CO COUNCIL 1993 2 IR 237

DONOGHUE V STEPHENSON 1932 AC 562

ANNS V LONDON BOROUGH OF MERTON 1978 AC 728

SUTHERLAND SHIRE COUNCIL V HEYMAN 1985 157 CLR 424

PEABODY TRUST V SIR LINDSAY PARKINSON LTD 1985 AC 210

CAPARO V DICKMAN 1990 2 AC 605

MURPHY V BRENTWOOD DISTRICT COUNCIL 1991 1 AC 398

WARD V MCMASTER 1988 IR 337 1989 ILRM 400

SINEY V DUBLIN CORPORATION 1980 IR 400

BEATTY V RENT TRIBUNAL & MCNALLY UNREP O'DONOVAN 16.5.2003

PARTRIDGE V GENERAL COUNCIL OF MEDICAL EDUCATION 1890 25 QBD 90

HEDWORTH V THE LAW SOCIETY UNREP COLBERT 10.3.1996 (UK)

KABERRY V LAW SOCIETY 2001 EWCA CIV 108

MILLER V LAW SOCIETY 2002 4 AER 312

HARRIS V LAW SOCIETY OF ALBERTA 1936 1 DLR 88

VORATOVIC V LAW SOCIETY OF UPPER CANADA 1978 87 DLR 140

EDWARDS V LAW SOCIETY OF UPPER CANADA 2000 48 OR (3D) 329

SOLICITORS AMDT ACT 1994 S36

CONSTABULARY (IRL) ACT 1836 S50

Synopsis:

- [2004] 1 ILRM 178

The Supreme Court held inter alia that the investigation of the possibility of fraudulent claims in Mr. Kennedy’s practice was not an authorised purpose under the Solicitors’ Accounts Regulations, 1984. This judgment was concerned with whether, having regard to the ultra vires exercise of statutory powers by the Law Society, Mr. Kennedy was entitled to claim damages.

Held by Kearns J. in finding that the applicant’s claim for damages could not succeed that the applicant fell short, on the balance of probabilities, of establishing misfeasance of public office. Moreover, the duty of care which arose in the course of an investigation by the Law Society of a solicitor was to the public rather than to the individual solicitor. The applicant’s subsidiary arguments based on trespass, abuse of process, malicious prosecution, breach of contract, breach of fiduciary duty, trespass to chattels, deceit and legitimate expectation also failed.

1 Justice Kearns delivered the 30th day of July, 2003.

2 This judgment should be read in conjunction with a number of other judgments arising out of the same set of facts and circumstances. Firstly, this Court in its judgment delivered on the 5 ^th day of October, 1999 held that the two-pronged investigation by the Law Society into the accounts and practice of Giles J. Kennedy and Co. on foot of a decision made by the Society on the 15 ^th April, 1993 was authorised under the Solicitors' Accounts Regulations, 1984. The investigation was directed in the first instance to the books and accounts of the practice. The second leg of the investigation however was to investigate the suspicions of the Law Society that fraudulent personal injury claims were being processed through the practice. At the conclusion of a lengthy hearing before this Court, I made findings of fact, including findings that the time and effort devoted by the Law Society and its agents to each part of the investigation was an equal fifty per cent, and that the purpose of the investigation could likewise be characterised by the same apportionment. None of the facts as found by this Court in its judgment delivered on the 5 ^th day of October, 1999 were challenged or disturbed in the subsequent appeal by Mr. Kennedy to the Supreme Court.

3 In its judgment on the 4 ^th day of April, 2001, the Supreme Court held that the investigation of the possibility of fraudulent claims in Mr. Kennedy's practice was not an authorised purpose under the Solicitors' Accounts Regulations, 1984. It concluded that that portion of the investigation was ultra vires. At the conclusion of its judgment, the Supreme Court directed that the matter be re-entered before it for further argument as to what legal consequences flowed from the appointment of an investigating accountant by the Law Society into a solicitor's practice for two purposes, one of which was ultra vires and the other intra vires.

4 A further judgment of the Supreme Court delivered on the 20 ^thday of December, 2001 considered other issues arising, including, firstly, whether the appointment of Ms. Foley as investigating accountant was defective in whole or in part and, secondly, whether the report prepared by her or any part of it could be relied upon by the Law Society for any purpose.

5 In the latter judgment, the Supreme Court held that the decision to appoint the accountant was invalid and should be quashed. The Court also found that the decision of the Compensation Fund Committee based upon the report of the investigating accountant, should also be quashed. In further holding that the Law Society should not be permitted to rely on the evidence of the processing of spurious claims for the various reasons set out in the judgment of the Court, the court nonetheless concluded that, in the absence of evidence of deliberate and knowing abuse, a professional disciplinary body was not inhibited from relying on evidence which could have been lawfully acquired but was in fact gathered as a consequence of a decision rendered invalid by the contemporaneous pursuit of an unauthorised purpose.

6 The judgment of the Court, delivered by Fennelly J., concluded as follows (at p. 23):-

"Finally, the Court has already reserved to the High Court any question of damages to be paid to Mr. Kennedy arising from the appointment and investigation of the accountant. For the elimination of all doubt, it should be emphasised that nothing in this judgment implies that any entitlement to damages flows from the invalidity of the appointing decision. The High Court will consider that matter in the light of the general law including the recent decision of this Court in Glencar Exploration Plc. .v. Mayo County Council [2002] 1 I.R.84."

7 The issue therefore that now arises before this court is to consider whether, having regard to the ultra vires exercise of statutory powers by the Law Society, Mr. Kennedy is entitled to claim damages.

8 In the aftermath of the two judgments of the Supreme Court, the applicant sought to deliver a voluminous and amended Points of Claim which, in addition to alleged special damage to date amounting to £2.5 million, claimed in addition damages, including aggravated damages, arising under multiple different headings including negligence, breach of statutory duty, trespass, deceit, breach of fiduciary duty, breach of contract, abuse of powers (including statutory powers), trespass to goods, conversion and/or detinue, misfeasance of public office, abuse of civil process. The general damages claim includes a claim for personal injuries.

9 In a judgment delivered on the 14 ^th day of February, 2003, I decided against admitting or allowing these amendments for the reasons therein stated and directed that the matter proceed to finality on the existing pleadings, subject to the qualification that the applicant could furnish additional particulars of personal injury, loss or damage, as in any other case. I also found that the applicant's essential contentions and claims were contained and set out in the original pleadings.

10 The matter therefore comes back before this Court on the original pleadings, coupled with additional particulars of personal injury loss and damage which have been delivered on behalf of the plaintiff. On the question of any entitlement to damages it seems to me that two basic questions fall to be determined:-

11 (a) Was the Law Society, by acting ultra vires in the manner found by the Supreme Court, guilty of misfeasance of public office?

12 (b) In the unauthorised use of its statutory powers, was the Law Society guilty of negligence such as would entitle the applicant to damages?

13 I propose to address these two primary issues, and then consider the remaining additional or ancillary claims at the conclusion of this judgment.

Misfeasance in public office

14 Misfeasance in public office consists of a purported exercise of some power or authority by a public officer otherwise than in an honest attempt to perform the functions of his office whereby loss is caused to a claimant. Lack of vires is insufficient of itself to ground a cause of action sounding in damages. In the ordinary course, the quashing of the decision by judicial review completes the remedy. As Keane J. (as he then was) observed in his judgment in McDonnell .v. Ireland [1998] 1 I.R 134 (at p. 156):-

"(the) … tort is only committed where the act in question is performed either maliciously or with actual knowledge that it is committed without jurisdiction and with the known consequence that it would injure the plaintiff…"

15 In dealing with the right...