Matthew Reilly and Another v Ruairi O'Ceallaigh and Others
| Jurisdiction | Ireland |
| Judge | Mr Justice Ryan |
| Judgment Date | 06 December 2013 |
| Neutral Citation | [2013] IEHC 565 |
| Court | High Court |
| Date | 06 December 2013 |
[2013] IEHC 565
THE HIGH COURT
BETWEEN
AND
GAMLEN CHEMICAL LTD v ROCHEM LTD 1980 WLR 614
MULHEIR v GANNON 2009 3 IR 433
AHERN & ORS v MIN FOR AGRICULTURE & ORS UNREP LAFFOY 11.7.2008 2008/2/240 2008 IEHC 286
Solicitors law - practice and procedure - Duty of diligence- Transfer of file - Order for costs - Delay - Justifiable delay
Facts: The Court considered whether it would hand over the file and documents of the former solicitors of the plaintiff to the solicitors now acting for the plaintiff. The Court considered a delay of sixteen months and the relevance of such conduct.
Held by Ryan J. that the Court would make an order for the handing over of the file subject to the undertakings. There had been a delay of sixteen months which was not justified. There had been a breach of duty of diligence. There would be an order for the taxation of costs, with a caveat that it was open to the parties to agree the amount.
JUDGMENT of Mr Justice Ryan delivered the 6th December 2013
The question in this case is whether the court should order the plaintiffs' former solicitors, Sean McDonnell and Co., to hand over their files and documents relating to this action to the solicitors now acting for the plaintiffs, Giles J Kennedy and Co. The notice of motion also seeks directions so far as necessary as to the payment or security for McDonnell and Co.'s costs and that firm's lien.
A solicitor can be held to have implicitly terminated the retainer where the circumstances give rise to the implication. One of those circumstances is where the solicitor has not carried out his work with due diligence on behalf of his clients. This is the ground on which the plaintiffs rely in this case. They say that Mr. McDonnell did effectively or indeed absolutely nothing in a period of sixteen months during which the case stagnated and that they were obliged to go to another solicitor in order to get the action moving again and bring it forward towards a conclusion. Mr. McDonnell denies lack of due diligence and explains how there was a particular complexity in the case and that the lack of progress was understandable until the situation clarified itself.
The following legal principles apply to the application.
1. "If before the action is ended, the client determines the retainer, the solicitor may, subject to certain exceptions not here material, exercise a possessory lien over the clients papers until payment of the solicitors costs and disbursements." -Gamlen Chemical Limited v. Rochem Limited [1980] W.L.R. 614 at 624 per Templeman L.J.
2. "Where the has himself discharged his retainer, the court then will normally make a mandatory order obliging the original solicitor to hand over the client's papers to the new solicitor against an undertaking by the new solicitor to preserve the lien of the original solicitor." - ibid
3. "In exceptional circumstances, the court may impose terms where justice so requires, for example, if the solicitor has admittedly paid out reasonable and proper disbursements which must be repaid, the court might make an order for the handing over the papers to the new solicitor providing the sum paid out by the original solicitor was repaid. This is a discretionary matter for the court to consider when making an order." - ibid 624/5
4. "Applying those principles, the following questions arise in the present case; first, did the solicitor discharge the client or did the client discharge the solicitor? Secondly, if the solicitor discharged the client, was there reasonable cause for the solicitor to do so? Thirdly, if there was reasonable cause for the solicitor to discharge the client, and the solicitor did so, should the court impose terms on the delivery of the client's papers and documents by the solicitor to the new solicitor, other than the term which requires the new solicitor to undertake to preserve the lien of the original solicitor?" - ibid at 625
5. In Mulheir v. Gannon [2009] 3 I.R. 433, Laffoy J. followed Gamlen v. Rochem ordering delivery of the file to the new solicitors on conditions (a) that the plaintiffs reimburse the outlay incurred by the defendant (b) the new solicitors give an undertaking to hold the files subject to the original solicitor's lien and to return them to him on the conclusion of the proceedings (c) the delivery of the files was without prejudice to the solicitor's claim for costs against the plaintiffs. The court proceeded on the assumption that the defendant solicitor had discharged himself for reasonable cause. It was not in dispute in that case that the original solicitor had recommended that the clients retain alternative legal representation thereby, as the court held, effectively terminating his retainer. There was conflict as to whether or not the solicitor had good reason to terminate the retainer because of the behaviour of the plaintiffs.
6. In Ahern v. Minister for Agriculture and Food and Others [2008] IEHC 286 (Unreported Laffoy J., High Court, 11 th July, 2008) the court made a similar order to Mulheir v. Gannon and rejected an application by the client applicant that payment of the taxed costs and outlay of the former solicitors should be deferred to the successful outcome of the claim, subject to an undertaking being given by the new solicitors to "discharge the same following that outcome". Laffoy J. said:
"The former solicitors' entitlement to recover costs from the client and the client's liability therefore are matters of contract between the client and the former solicitors' which the Court has no jurisdiction to adjudicate on in an application of this nature."
7. The Court of Appeal in Gamlen and Laffoy J adopted the observations of Lord Cottenham LC in Heslop v Metcalf (1837) 3 My. & C. 183 in a part of his judgment at 188-190 that concluded "I think the principle should be, that the solicitor claiming the lien, should have every security not inconsistent with the progress of the cause."
8. "Once proceedings are under way, the claimant's solicitor has a duty to prosecute the action with reasonable diligence." - Jackson and Powell on Professional Liability 7 th Ed. citing as authority The Flowerbole (a Firm) v, Hodges Menswear Limited, the Times, June 14 th 1988, CA.
9. If a solicitor fails to act with all due diligence and care on behalf of his client, the latter is no longer obliged to continue the retainer. When a dissatisfied client terminates the relationship without proper grounds and instructs a new solicitor, the original solicitor is not bound by any agreement to accept only such costs as may be recovered from the other party in the litigation. See McHugh v. Keane, (Unreported, Barron J., High Court, 16 th December, 1994). In that case the court was concerned with a 'no foal no fee' agreement between solicitor and client and the question arose on the termination of the relationship by the client. The court held that where a solicitor accepted instructions on that basis, there was a corresponding obligation on the client not to withdraw his instructions until the proceedings concluded.
10. In a situation where the client unreasonably left the solicitor, but the solicitor had issued an unreasonable bill of costs to the plaintiff, the court (Barron J.) measured a sum which was in that case approximately 50% above the amount of the outlay that had been claimed in the bill of costs. - McHugh v. Keane. That case illustrates how the court will adopt a flexible attitude to what is just and reasonable in circumstances where the relationship of solicitor and client has broken down.
11. The court in Gamlen was careful to allow for exceptional cases where the application of a general rule would not be appropriate or just. The circumstances might call for special conditions to be applied to the transfer of papers depending on the nature of the case and other features of the relationship.
In this case the plenary summons was issued on the 3 rd December, 2009 and the statement of claim was delivered on the 9 th December, 2009. Following a series of demands for a defence and a motion for judgment, the defendants delivered their defence and counterclaim on the 24 th May, 2010. The plaintiffs' solicitors, Messrs McDonnell and Co., served notice of trial on the 29 th July, 2010.
The action brought by the plaintiffs arose out of an agreement made in November, 2007 by the plaintiffs to buy land in Co. Meath from the first named defendant in respect of which the plaintiffs paid a deposit of €400,000. The plaintiffs claim that they paid that sum to the defendant firm of solicitors as solicitors for the first named defendant, who was a member of the firm and that the money was paid to the firm as stakeholder. The defendants acted as solicitors for both the vendor and purchaser in the transaction. The sale did not proceed and the plaintiffs sought the return of their deposit and...
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Buckner v Project Design and Building Consultants Ltd
...The plaintiffs, in making the application, sought to rely on Mulheir v Gannon [2009] 3 IR 433 and Reilly and anor v O’Ceallaigh and ors [2013] IEHC 565. Held by Barrett J that this reliance was misplaced as those cases were concerned with the release of papers in ongoing proceedings while t......