Lyons v Delaney and Others

JudgeMr. Justice Binchy
Judgment Date03 November 2015
Neutral Citation[2015] IEHC 685
CourtHigh Court
Date03 November 2015
Lyons v Delaney & Ors
No Redaction Needed
Approved Judgment







[2015] IEHC 685

[No. 9760P/2011]


Contract – SS. 71 and 72 of the Statute of Limitations Act, 1957 – O. 16, r. 8(3) of the Rules of the Superior Courts – Damages for breach of contract and negligence – Whether delay in serving third party notice would be invalid.

Facts: The applicant by way of notice of motion sought an order pursuant to Order 16, rule 8(3) of the Rules of the Superior Courts setting aside the third party notice served on the applicant. The applicant argued that the plaintiff's claim would be statute barred, that the applicant was not a partner in the firm at the time of the plaintiffs' cause of action, and that the defendants had failed to act reasonably in bringing forward an application to join the applicant as third parties to the proceedings.

Mr. Justice Binchy held that the application for an order setting aside the third party notice would be granted in light of the finding that the defendants had applied to join the applicant as a partner and therefore, the applicant would be deemed to be a partner for the purpose of the present proceedings. The Court observed that the applicant would be entitled to raise any issues. The Court observed that the delay committed by the plaintiff would be considered leisurely.


1. This is an application by way of notice of motion brought on behalf of the second named third party herein, Paraic O'Kennedy ("the applicant"), for an order pursuant to Order 16, rule 8(3) of the Rules of the Superior Courts or, in the alternative, pursuant to the inherent jurisdiction of the Court setting aside the third party notice served herein on the applicant. The applicant makes this application on the grounds:


That the plaintiff's claim is statute barred and/or;


That the second named third party was not a partner in the firm of O'Sullivan and Associates, Solicitors ("OSA") at the time the plaintiffs' cause of action accrued and/or;


That the defendants ("the respondents") did not act as soon as reasonably possible in bringing forward an application to join the third parties as third parties to the proceedings. The applicant claims to have been prejudiced by reason of an alleged delay on the part of the respondents in bringing forward the application to join him as a third party, in particular by reason of the fact that the insurers of the firm O'Sullivan and Associates have declined to indemnify the third parties in relation to the claim on grounds of delay in notification of the same.


2. The plaintiff issued proceedings against the defendants claiming damages for breach of contract and negligence, by plenary summons dated the 28 th October, 2011. An amended plenary summons issued on 15 th November, 2011. While the Court was not informed as to the date of service of the summons, an appearance was entered on behalf of the respondents on 8 th November, 2012 by Messrs. Dillon Eustace, solicitors. The statement of claim was delivered by the solicitors acting on behalf of the plaintiff on 1 st February, 2013.


3. The substance of the claim being made by the plaintiff against the defendants is that the defendants, who had been the plaintiff's financial and taxation advisers as far back as the 1980s, invited the plaintiff on 25 th August, 2003 to make an investment in a consortium known as the Ritz Hotel Carlow Consortium, which was undertaking a development known as the Ritz Centre in Carlow. The plaintiff claims that while she was advised that the investment might produce a profit, she was assured that in any event she would obtain the return of her original investment and that the principal focus of the investment was to secure tax free allowances available to investors in the development. On the strength of this advice, the plaintiff claims that, she made an investment in the amount of €108,500.00 on 2 nd September, 2003 and subsequently obtained the benefits of the capital allowances.


4. The plaintiff claims that on the 26 th August, 2003 the first named defendant entered into a transaction on the plaintiff's behalf, but without her authority, whereby he executed in the name of the plaintiff a commercial mortgage offer facility with Irish Nationwide Building Society ("INBS"), a mortgage deed over the property upon which the Ritz Hotel was constructed and a co-ownership agreement in respect of the same property. The plaintiff claims that she knew nothing of these arrangements and, most importantly, was completely unaware that there was any borrowing associated with the development, less still any borrowing for which she would have any liability. The plaintiff further claims that in subsequent years, and sometime between 2006 and 2008, she executed at the request of the defendants, a power of attorney in relation to the transaction, without having been advised by the defendants as to the true nature of the transaction or the effect of the power of attorney.


5. In short, it may be said that the plaintiff's claim as against the defendants is that they failed to advise her that they were entering into a transaction on her behalf which involved borrowing of which she was unaware and which she did not authorise. As a result, the plaintiff, together with others in the consortium, is now facing a claim brought by NAMA (as successor to Irish Nationwide Building Society) in an amount in excess of €4 million.


6. Although the Court was not fully appraised of the difficulties encountered in repayment of the loan to INBS, it appears that that society must have been making demands of consortium members for repayment of the loan, and that it did so on the basis that it had full recourse for repayment of the loan against all consortium members, and that its recourse was not limited to the development known as the Ritz Centre. On 22 nd January, 2010, the third named defendant, writing in his capacity as a member of the consortium and on behalf of his wife Sandra Thorpe, (also a consortium member), sent a letter to Mr. Cathal O'Sullivan of OSA claiming that it was always his understanding that the transaction was a non-recourse transaction and that INBS could have no recourse to consortium members. The letter also expressed a number of concerns about other potential headings of loss, and without saying so in exact terms, the thrust of the letter was that in the event that Mr. and Mrs. Thorpe should suffer any losses as a result of the failure by OSA to advise properly in relation to the transaction, or to implement the same properly, it was his intention to recoup any such losses through the professional indemnity insurances of OSA.


7. On 14 th November, 2011, Eversheds Solicitors, acting on behalf of the first, second and fourth named defendants, wrote to OSA informing them of the intention of their clients' to recover any losses incurred by their clients arising out of any claims that might be made against the first, second and fourth defendant, by INBS, other members of the consortium and other parties by reason, inter alia, of the loan advanced by INBS to the consortium being found to be fully repayable without limitation of recourse. The letter concluded by advising the firm to notify its professional indemnity insurers. The applicant claims by this time he was no longer a partner in the firm of OSA.

The Third Party Proceedings

8. By notice of motion dated 21 st November, 2013, the defendants sought an order pursuant to Order 16, rule 1 of the Rules of the Superior Court, giving the defendants leave to issue and serve a third party notice on Cathal O'Sullivan and Paraic O'Kennedy practising under the style and title of OSA. While Order 16, rule 1(3) requires such an application to be made within twenty-eight days from the time limited for delivering a defence (in this case that period would have expired on 29 th March, 2013), the Courts have acknowledged that only a tiny percentage of such applications are made within the prescribed time. Accordingly, in the words of Kelly J. in Connolly v. Casey [1998] IEHC 90, it would "require very exceptional circumstances for the Court to accede to an application of this sort [to set aside a third party notice] if the only complaint related to a failure to observe strict compliance with the provisions of this rule". Apart from the Rules of the Superior Courts, section 27(b) of the Civil Liability Act 1961 requires third party proceedings to be brought as soon as reasonably possible, in matters involving concurrent wrongdoers.


9. Since both the defendants and Mr. O'Kennedy in support of their own positions have each set out a chronology of events it is appropriate at this juncture to set out a table that reflects the position of both parties.

22 nd January, 2010

Letter from Mr. Patrick Thorpe to Mr. Cathal O'Sullivan advising of his intention to hold O'Sullivan and Associates responsible for losses.

10 th June, 2011

Letter from second defendant, John Locke, to Eversheds (then solicitors for first, second and fourth defendants) expressing an intention to pursue O'Sullivan and Associates for any damages that may be sustained by the fourth defendant as a result of claims from investors.

28 th October, 2011

Plenary summons issued.

14 th November, 2011

Letter from Eversheds to O'Sullivan and Associates on behalf of first, second and fourth defendants advising of their intention to recover any losses from O'Sullivan and Associates.

15 th November, 2011

Amended plenary summons issued.


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4 cases
  • Cantrell v Allied Irish Banks Plc
    • Ireland
    • Court of Appeal (Ireland)
    • 18 July 2019
    ...having considered in some detail the judgment of Fennelly J. in Gallagher v. ACC Bank and the decision of Binchy J. in Lyons v. Delaney [2015] IEHC 685, identified a number of material differences between the facts of the present cases and those in Hegarty v. O'Loughran and Gallagher v. ACC......
  • Cantrell v AIB Plc
    • Ireland
    • High Court
    • 28 April 2017 no doubt that Fennelly J. considered that Mr. Gallagher's case was ‘clear on its own particular facts’. In Lyons v Delaney and others [2015] IEHC 685 Binchy J. had occasion to consider the circumstances in which the decision in Gallagher might be distinguished. Lyons concerned an applica......
  • Cantrell v Allied Irish Banks Plc
    • Ireland
    • Supreme Court
    • 10 December 2020
    ...the investment or the inclusion of the LTV covenant. He referred with approval to observations of Binchy J. in Lyons v. Delaney and ors [2015] IEHC 685 (Unreported, High Court, Binchy J., November 3 rd, 2015), as to the fact-specific nature of the decision in Gallagher, and quoted with appr......
  • Elliott v ACC Bank Plc
    • Ireland
    • Court of Appeal (Ireland)
    • 13 October 2020
    ...identified by Fennelly J. at para. 111 of his judgment, which Baker J. found had been aptly summarised by Binchy J. in Lyons v. Delaney [2015] IEHC 685 when he stated that the core of the claim of the plaintiff in Gallagher “was that the product was not a suitable product to borrow money t......

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