Mark Smith v Mark Cunningham, Kevin Sorohan, Anne-Marie Sorohan and Paul Kelly Practicing under the Style and Title of Paul Kelly & Company Solicitors

• Jurisdiction: Ireland
• Judge: Mr Justice Maurice Collins
• Judgment Date: 20 October 2021
• Neutral Citation: [2021] IECA 268
• Docket Number: RECORD NUMBER 2018 / 289
• Court: Court of Appeal (Ireland)

Between

Mark Smith

Plaintiff/Respondent

and

Mark Cunningham, Kevin Sorohan, Anne-Marie Sorohan and Paul Kelly Practicing under the Style and Title of Paul Kelly & Company Solicitors

Defendants/Appellants

[2021] IECA 268

Whelan J.

Ní Raifeartaigh J.

Collins J.

RECORD NUMBER 2018 / 289

THE COURT OF APPEAL

CIVIL

Damages – Negligence – Statute barred – Respondent seeking damages for negligence and breach of duty – Whether the respondent’s claim was statute barred

Facts: The plaintiff/respondent, Mr Smith, claimed damages for, inter alia, negligence and breach of duty. He claimed that the defendants/appellants, Paul Kelly and Company Solicitors, were negligent and in breach of duty in failing to ensure that he got a good marketable title to property situated at Gubardorish, Drumlish, County Leitrim, and failed to ensure that all legal preconditions were met. The plaintiff also maintained a claim for breach of contract against the Solicitors in the same terms as in the claim for negligence and breach of duty. As a preliminary issue, the Solicitors claimed that the plaintiff’s claim was barred by virtue of the provisions of the Statute of Limitations Act 1957. On 26 June 2018, the High Court (Meenan J) held that the plaintiff’s claim was not statute barred. The Solicitors appealed to the Court of Appeal against the High Court’s decision. They said that the Judge misapplied the principles in Brandley v Deane [2017] IESC 73 which, they suggested, were limited in their scope to property damage claims. The case as pleaded against the Solicitors was that there were defects in the title to the property. It was noted that those defects were present at completion and were capable of being ascertained at that point, the defects devalued the property immediately and constituted damage, and that there might have been difficulty and/or uncertainty in quantifying that damage in monetary terms did not take away from that fact that the plaintiff had, on his case, suffered non-negligible loss in 2006. It was noted that the plaintiff had in 2006 acquired property that was less valuable than the property he should have acquired and he could at that point have sued the Solicitors for the difference in value or the cost of putting the title issues right. As regards Brandley, it was said that the Judge was wrong to equate the title defects with the latent defects in the foundations that McKechnie J was addressing himself to; that had led him to hold that the cause of action accrued even later than the date on which the defects were actually discovered by the plaintiff by reference to a fortuity – the date of rescission of the contract – that had no intrinsic connection to the cause of action.

Held by Collins J that any alleged negligence on the part of the Solicitors in relation to the purchase of the property in July 2006 resulted in actual damage at the time of the transaction. Collins J held that the plaintiff’s cause of action for the tort of negligence against the Solicitors accrued at that point; it was accepted that his cause of action in contract accrued at that point also. Collins J noted that the proceedings were not commenced until 2014, significantly after the expiry of the six year limitation period provided for by s. 11(2)(a) of the 1957 Act. Collins J held that in the absence of any suggestion of any factor that might affect the running of time in the ordinary way – there was no suggestion of disability, concealment or mistake – the plaintiff’s claim against the Solicitors was statute barred.

Collins J made an order allowing the Solicitors’ appeal and declaring that the plaintiff’s claim against the Solicitors was statute-barred. It appeared to Collins J that the Solicitors were entitled to the costs of the proceedings against them, including (but not limited to) the costs of the motion in the High Court and the costs of the appeal to the Court of Appeal.

Appeal allowed.

No Redactions Required

JUDGMENT of Mr Justice Maurice Collins delivered on 20 October 2021

PRELIMINARY

1 The law governing the limitation of actions may lack glamour but its vital practical importance cannot be doubted. Statutes of limitation have been a feature of the Irish legal system for many centuries. A comprehensive limitation act was first enacted in Ireland in 1634. 1 The 1634 Act – amended from time to time – was replaced by the Common Law Procedure (Ireland) Act 1853 which continued in force until its repeal by the Statute of Limitations 1957 (“ the 1957 Act”). The 1957 Act, amended and supplemented by later enactments, remains the principal source of law in this area.

2 Every limitation regime involves policy choices. Among the policy issues and choices that arise in this context are what the basic limitation period(s) should be (and whether different periods should apply to different causes of action) and in what circumstances those basic periods should be extended or disapplied and/or the running of time postponed.

3 One significant such issue is whether the limitation rules should be subject to a “ discoverability” test so that the applicable limitation period would start to run only where injury or damage is “ discoverable” i.e. when a reasonable person exercising reasonable diligence would have discovered such. 2

4 In Morgan v Park Developments [1983] ILRM 156 – a property damage claim – the High Court (Carroll J) read such a test into section 11(2)(a) of the 1957 Act, 3 animated by the Court's view that an interpretation of that section that would bar a claim before the plaintiff was aware of it was “ indefensible in the light of the Constitution.” 4 However, Morgan v Park Developments was overruled by the Supreme Court in Hegarty v O' Loughran [1990] 1 IR 148 – an action for personal injuries – with the Court holding that there was no scope to construe section 11(2)(a) or (b) 5 so as to read in a discoverability test as a matter of statutory interpretation. Hegarty v O' Loughran left open the possibility of a constitutional challenge to section 11(2) as so construed. However, when such a challenge was subsequently brought in Tuohy v Courtney [1994] 3 IR 1 – a professional negligence action arising from a property transaction – it failed, the Supreme Court concluding that section 11(2) involved the balancing of conflicting constitutional rights by the Oireachtas and that the balance struck by the Oireachtas was not so contrary to reason and fairness as to constitute an unjust attack on the constitutional rights of persons in the position of Mr Tuohy.

5 In the aftermath of Hegarty v O' Loughran, the Oireachtas legislated to introduce a discoverability regime for personal injuries actions in the form of the Statute of Limitations (Amendment) Act 1991 ( “the 1991 Act”). Such legislation had been recommended by the Law Reform Commission in 1987 6 and the 1991 Act was based on the draft Bill prepared by the Commission. However, despite repeated judicial prompting 7 and Law Reform Commission recommendations, 8 the Oireachtas has not to date legislated to provide for a discoverability test in relation to tort claims generally. (A version of the discoverability test applies to defective product claims under section 7 of the Liability for Defective Products Act 1991 but that limited exception reflects the requirements of article 10(1) of the Council Directive 85/37/EEC rather than any policy choice on the part of the Oireachtas).

6 The recent decisions of the Supreme Court in Brandley v Deane [2017] IESC 83, [2018] 2 IR 741 (“ Brandley”) and in Cantrell v Allied Irish Banks plc [2020] IESC 71, [2021] PNLR 9 (“ Cantrell”) appear to cast some doubt on the correctness of both Hegarty v O' Loughran and Tuohy v Courtney. But, however the law may develop in the future, the present legal position is clear: “ a discoverability test cannot be read into or deduced from” section 11(2) of the 1957 Act: per McKechnie J in Brandley v Deane, para 85.

7 The Statute of Limitations (Amendment) Act 1991 excised section 11(2)(b) from the 1957 Act and made some consequential adjustments to the language of section 11(2)(a). In substance, however, 11(2)(a) remains as it has been since 1957, namely that “an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.” This language may seem beguilingly straightforward. Its simplicity is, unfortunately, apparent rather than real. It has generated a large and complex body of case-law concerning the issue of when a cause of action in tort “ accrues”. 9 The 1957 Act itself provides no guidance on this point. It is clear from the authorities that as regards torts which are not actionable per se – and that category includes claims for negligence and breach of duty – the cause of action does not accrue until damage is sustained. But even in claims involving damage to property, significant issues may arise in identifying the precise point when a claim in negligence “ accrues”. Brandley is testimony to the potential complexities involved in such an exercise. Where the claim is for financial loss, the exercise is more difficult still and, from the point of view of litigants, one fraught with uncertainty. That is graphically illustrated by Cantrell. There, the High Court (Haughton J) held that the plaintiffs' claims in tort for alleged misselling were not statute-barred. This Court came to the contrary conclusion. On further appeal, the Supreme Court restored the decision of the High Court. These conflicting decisions were based on different views as to when damage had been suffered by the plaintiffs and thus when their causes of action in negligence had “ accrued” for the purposes of section 11(2).

8 How section 11(2)(a) is interpreted and applied is obviously a matter of the greatest practical importance. McGee, Limitation Periods (8 ^th ed; 2018), at para...