McAleenan v AIG (Europe) Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Finlay Geoghegan,,Ms. Justice Finlay Geoghegan
• Judgment Date: 16 July 2010
• Neutral Citation: [2010] IEHC 128,[2010] IEHC 279
• Docket Number: [2008 No. 9658P & 2008 No. 244COM]
• Date: 16 July 2010

McAleenan v AIG (Europe) Ltd

COMMERCIAL

BETWEEN

FIONA MCALEENAN

PLAINTIFF

AND

AIG (EUROPE) LIMITED

DEFENDANT

[2010] IEHC 128

[No. 9658 P/2008]

[No.244 COM/2008]

THE HIGH COURT

INSURANCE

Contract

Policy - Professional indemnity insurance - Exclusion clause - Whether entitlement to indemnity - Whether contract avoidable on grounds of material non-disclosure - Provision of multiple undertakings to multiple financial institutions on same properties by partner in practice prior to inception of contract - Status of plaintiff in law practice - Whether plaintiff insured as employee or partner - Construction of policy - Exclusion clause - Contra proferentem - Whether policy joint or composite - Effect of finding policy bundle of separate contracts - Whether policy avoidable even if plaintiff not partner and policy is composite policy - Whether entitlement to repudiate against all insureds where dishonest material non-disclosure by one insured in the proposal form - Whether statement in proposal form basis of contract - Whether inaccurate statement in proposal form justified repudiation irrespective of whether or not statement innocently made - Reliance on justification not in original letter of avoidance - Estoppel by representation - Whether if policy not avoidable and plaintiff was employee she estopped from enforcing policy as an employee by reason of statute - Materiality of whether solicitor's practice is owned by a sole principal or is a firm - Fraud - Whether misrepresentations material - Whether misstatement by plaintiff in proposal form made recklessly - - Analog Devices BV v Zurich Insurance Company [2005] 1 I.R. 274; [2005] 2 ILRM 131, Aro Road and Land Vehicles Ltd v ICI [1986] IR 403, Chariot Inns Limited v Assicurazioni Generali Spa [1981] IR 199; [1981] ILRM 173 and Derry v. Peek (1889) 14 App. Cas. 337 applied - General Accident Fire and Life Assurance Corporation Limited v Midland Bank Limited [1940] 2 KB 388; [1940] 3 All ER 252 followed - Stekel v Ellice [1973] 1 WLR 191; [1973] 1 All ER 465 and Yorkville Nominees Pty Ltd v Lissenden (1985-1986) 160 CLR 475 approved - New Hampshire Insurance Company v MGN Ltd [1997] LRLR 24, Rohan Construction v Insurance Corporation Ireland plc [1986] ILRM 419, Arab Bank plc v Zurich Insurance Company [1999] 1 Lloyd's Rep 262 and Superwood Holdings plc v Sun Alliance and London Insurance plc [1995] 3 IR 303 considered - Partnership Act 1890 (53&54 Vict c 39), ss 4 and 14 - Solicitors (Amendment) Act 1994 (No 27), s 26 - Solicitors Acts 1954 -1994 (Professional Indemnity Insurance) Regulations 1995 (SI 312/1995) - Solicitors Acts 1954 to 2002 (Professional Indemnity Insurance Regulations 2007) (SI 617/2007) - Plaintiff's claim dismissed (2008/9658P - Finlay Geoghegan J, 06/05/2010) [2010] IEHC 128

Mc Aleenan v AIG [Europe] Ltd

Facts: The plaintiff solicitor sought an indemnity from the defendants pursuant to a Professional Indemnity Policy. She had been initially employed in the firm of Michael Lynn & Co as a solicitor. The question arose as to whether by her conduct, written statements and dealings she had become a partner. She had described herself as a partner in a solicitors practice in her applications for Practising Certificates in recent times and had signed a Proposal Form for professional indemnity insurance as a Partner in certain places. She had denied any non-disclosure, misrepresentation or untrue statements that would give the defendant an entitlement to avoid the policy. The issue arose as to whether inter alia the plaintiff was a partner in the firm of Michael Lynn & Co in 2007, whether the Policy was joint or composite and whether the defendant was entitled to avoid the Policy.

Held by Finlay Geoghegan J. that the plaintiff was not a partner of Michael Lynn and no partnership had come into existence between them. The Policy issued was a composite policy and the defendant was not entitled to avoid the Policy against the plaintiff by reason of the alleged fraudulent non-disclosure by Lynn. The defendant was entitled to rely on the additions grounds of avoidance that it had invoked. The plaintiff in the Proposal Forms signed had misrepresented to the defendant that she had the status of partner in the practice and she ought to have been aware of the obligations on his to give full and accurate disclosure. She had made untrue statements in the Form. She had no intent to deceive the defendant as to her status in the Firm. The misrepresentation was a material one and the defendant had discharged the onus of establishing that the misstatement as made recklessly, giving the defendants grounds to avoid the Policy. An order would be made dismissing the claim of the plaintiff.

Reporter: E.F.

PARTNERSHIP ACT 1890 S14(1)

PARTNERSHIP ACT 1890 S1(1)

PARTNERSHIP ACT 1890 S2

PARTNERSHIP ACT 1890 S1

TWOMEY PARTNERSHIP LAW 2000 PARA 7.01

LINDLEY & BANKS LINDLEY & BANKS ON PARTNERSHIP 17ED 1995 PARA 5.65

STEKEL v ELLICE 1973 1 WLR 191 1973 1 AER 465

PARTNERSHIP ACT 1890 S4(1)

SOLICITORS ACTS 1954 TO 2002 (PROFESSIONAL INDEMNITY INSURANCE) REGS 2007 SI 617/2007

ANALOG DEVICES BV & ORS v ZURICH INSURANCE CO & ANOR 2005 1 IR 274 2005 2 ILRM 131 2005/2/242 2005 IESC 12

REARDON SMITH LINE LTD v HANSEN-TANGEN 1976 1 WLR 989 1976 3 AER 570

INVESTORS COMPENSATION SCHEME LTD v WEST BROMWICH BUILDING SOCIETY 1998 1 WLR 896 1998 1 AER 98 1998 1 BCLC 493

NEW HAMPSHIRE INSURANCE CO LTD & ORS v MGN LTD & ORS 1997 LRLR 24 1996 CLC 1728

ROHAN CONSTRUCTION LTD & ROHAN GROUP PLC v INSURANCE CORP OF IRELAND LTD 1986 ILRM 419 1986/4/1406

SOLICITORS (AMDT) ACT 1994 S26

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 REG 4

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 REG 4(B)

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 REG 5

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 APPENDIX

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 REG 6

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 APPENDIX(1)

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 APPENDIX(2)

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 APPENDIX(2)(K)

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 APPENDIX(7)

MERKIN COLINVAUXS LAW OF INSURANCE 8ED 2006 PARA 14.03

GENERAL ACCIDENT FIRE & LIFE ASSURANCE CORP LTD & DRYSDALE v MIDLAND BANK LTD & ORS 1940 2 KB 388 1940 67 LL L LR 218

ARAB BANK PLC v ZURICH INSURANCE CO 1999 1 LLOYDS 262 1998 CLC 1351

FISHER v GUARDIAN INSURANCE CO OF CANADA 123 DLR (4TH) 336

SOLICITORS ACTS 1954 TO 1994 (PROFESSIONAL INDEMNITY INSURANCE) REGS 1995 SI 312/1995 APPENDIX(7)(A)

MACGILLIVRAY & LEGH-JONES MACGILLIVRAY ON INSURANCE LAW RELATING TO ALL RISKS OTHER THAN MARINE 9ED 1997 PARA 17.28

P SAMUEL & CO LTD v DUMAS 1924 AC 431 1924 18 LL L LR 211

YORKVILLE NOMINEES PTY LTD v LISSENDEN 1985-86 160 CLR 475 1986 HCA 6

SUPERWOOD HOLDINGS PLC & ORS v SUN ALLIANCE & LONDON INSURANCE PLC (T/A SUN ALLIANCE INSURANCE GROUP) & ORS 1995 3 IR 303 1995/13/3385

MACGILLIVRAY & ORS MACGILLIVRAY ON INSURANCE LAW 11ED 2008 PARA 17.008

ARO ROAD & LAND VEHICLES LTD v INSURANCE CORP OF IRELAND LTD 1986 IR 403 1986/1/40

CHARIOT INNS LTD v ASSICURAZIONI GENERALI SPA & COYLE HAMILTON HAMILTON PHILLIPS LTD 1981 IR 199

DERRY & ORS v PEEK 1889 14 APP CAS 337 1889 5 TLR 625

MACGILLIVRAY & ORS MACGILLIVRAY ON INSURANCE LAW 11ED 2008 PARA 16.001

AKERHIELM & ANOR v DE MARE & ORS 1959 AC 789 1959 3 WLR 108 1959 3 AER 485

TWOMEY PARTNERSHIP LAW 2000 PARA 7.35

1 1. The plaintiff is a solicitor. She worked in the solicitors' practice of Michael Lynn & Co. from November 2004 until September 2007. The plaintiff, in these proceedings, claims to be entitled to an indemnity from the defendant pursuant to a Professional Indemnity Policy Number SPI36161, issued for the period 1 ^st January, 2007, to 31 ^st December, 2007 ("the Policy"). The Insured named in the Schedule to the Policy are "Overseas Property Law/Michael Lynn & Co".

2 2.On 20 ^th December, 2007, the defendant purported to avoid the Policy by reason of alleged material non-disclosures at the time of the proposal for insurance in April 2007, and an endorsement in May 2007. On 22 ^nd September, 2009, by letter from its solicitors, the defendant furnished additional justification for avoiding the Policy against the plaintiff. The defendant issued separate proceedings [2009 No. 4137 P] against the plaintiff and Michael Lynn, in which it seeks a declaration that it was entitled to avoid the Policy. Those proceedings have been stayed as against the plaintiff pending the determination of these proceedings.

3 3. The defendant asserts that there has been a valid avoidance by it of the Policy against the Insured named in the Schedule, Overseas Property Law/Michael Lynn & Co. The avoidance against Overseas Property Law which is stated to be one of the trading names of a limited liability company, Overseas Legal and Tax Services Ltd., is not directly relevant to these proceedings. Michael Lynn & Co. is not a legal person. It was the name under which either Michael Lynn, as principal, carried on practice as a solicitor, or the name under which Michael Lynn and the plaintiff, in partnership, carried on practice as solicitors. Insofar as the avoidance by the defendant is against Michael Lynn, the plaintiff does not contest same: she does contest the defendant's entitlement to avoid the Policy as against her.

Factual background

4 4. The factual background to the present dispute may be relatively shortly stated. It will be necessary...