McGrath v Reddy Charlton McKnight

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 30 March 2017
• Neutral Citation: [2017] IEHC 210
• Court: High Court
• Docket Number: [2010 No. 5323 P]
• Date: 30 March 2017

[2017] IEHC 210

THE HIGH COURT

Baker J.

[2010 No. 5323 P]

BETWEEN

MARY MCGRATH, PATRICK JOSEPH MCGRATH

AND

THOMAS MCGRATH

PLAINTIFFS

AND

REDDY CHARLTON MCKNIGHT

DEFENDANTS

Professional Ethics and Conduct – Practice & Procedures – Land & Conveyancing – Dismissal of claim – Inordinate and inexcusable delay

Facts: The defendants sought an order for the dismissal of the plaintiffs' claim for want of prosecution. The plaintiffs had filed a claim for damages against the defendants for receiving professional advice for the purchase of certain commercial property. The plaintiffs claimed that due to the negligence of the defendants, in advising the plaintiffs, the lessee of the said property had commenced an action against the plaintiffs, which was detrimental to the interests of the plaintiffs. The defendants alleged that since the purchase of that property took place in 1991, they would be prejudiced by the continuation of the proceedings as none of the solicitors who advised the plaintiffs were available. The plaintiffs had also filed a claim against the solicitor of the defendants' firm in relation to the action commenced by the lessee of the said property.

Ms. Justice Baker dismissed the plaintiffs' claim in relation to the purchase of the commercial property in 1991. The Court, however, refused to dismiss the plaintiffs' claim against the solicitor in relation to the commencement of an action by the lessee of the commercial property. The Court held that the continuation of the proceedings in relation to the 1991 purchase of the property would be adverse to the defendants' interest as the plaintiffs were aware of the possibility of enforcing the covenants against the freehold owners when they purchased two shopping centre developments at that time. The Court found that there had been a considerable delay in prosecuting the proceedings in that regard. The Court, however, held that the delay in prosecuting the claim against the solicitor had been appropriately explained by the plaintiffs, and thus, such a delay would be excused.

JUDGMENT of Ms. Justice Baker delivered on the 30th day of March, 2017.

1 This judgment is given in the application by the defendants for an order dismissing the claim of the plaintiffs claim for want of prosecution and/or on the grounds of their inordinate and inexcusable delay in prosecuting the proceedings.

2 The first, second and third plaintiffs are siblings and business partners and at all material times carried on the business of property investors, landlords and property managers. Proceedings were commenced by plenary summons dated 3rd June 2010 against the defendants, a firm of solicitors who acted for them and provided professional advice and services in regard to certain property transactions including the purchase of certain commercial property.

3 In 1991 the plaintiffs purchased the reversionary interests in two shopping centres, in Ballyfermot and Finglas, County Dublin. Until or around the month of October 2006 in circumstances which will appear below, the plaintiffs say they were unaware that the positive freehold covenants on the part of the occupants of the anchor shops in the shopping centres, including and in particular the positive covenants to provide services to the common areas and to pay service charges were not enforceable.

4 In or around the month of July, 2003 a lessee of one of the units in the Finglas Shopping Centre, Cardiff Meats Limited, commenced Circuit Court proceedings against the plaintiffs arising from a failure to provide services to the common areas of the shopping centre. For convenience I refer to this litigation as ‘the Cardiff Meats proceedings’. The plaintiffs in the present proceedings, the defendants in the Circuit Court proceedings joined the occupiers of the anchor store in the Finglas Shopping Centre as third parties to the proceedings and claimed against them an indemnity arising from a breach of an alleged covenant to pay service charges.

5 The Circuit Court proceedings concluded in a decision by Murphy J. on appeal to the High Court on Circuit in May, 2007 that the positive freehold covenants were unenforceable by the plaintiffs against the owners of the anchor shop and the third party claim was therefore dismissed.

6 Following the decision of the High Court on Circuit the plaintiffs concluded a settlement with Cardiff Meats Limited and with other lessees of the Finglas Shopping Centre. It was also required to pay the costs of the plaintiffs and of the third party.

7 In the present proceedings the plaintiffs claim in respect of advice received in or about the time of the purchase of the Finglas and Ballyfermot properties in 1991, arising from the fact that in each case the positive covenants to provide or contribute to the costs of services did not run with the land and were not enforceable against the freehold owners of the adjoining lands. The claim is made that the defendants acted negligently and in breach of duty in failing to advise the plaintiffs of the full import and the nature of the positive covenants, and in failing to advise or properly advise the plaintiffs in the conduct of the defence of the Cardiff Meats proceedings, following receipt of advice from counsel with an expertise in conveyancing in November, 2006 that the positive freehold covenants did not run with the land.

8 The claim is framed as a claim for damages measured as the diminution in value of the reversionary interests, and for the costs and damages paid in and arising from the Cardiff Meats proceedings.

9 The defence pleads inter alia that the claim is barred under the Statute of Limitations 1957, but this motion is not concerned with that plea, but rather with the application by the defendants to dismiss the claim on the grounds of the inordinate and inexcusable delay of the plaintiffs in prosecuting the proceedings.

Chronology of proceedings

3rd June, 2010 plenary summons issued claiming damages for professional negligence.

23rd July, 2010 an appearance entered on behalf of the defendants.

23rd Nov, 2010 statement of claim delivered.

8th Mar, 2011 motion for judgment in default of defence issued.

24th Oct, 2011 the defendants were given four weeks for the delivery of a defence.

18th Nov, 2011 defence delivered (one year after service of statement of claim).

18th Nov, 2011 notice for particulars served by defendant.

22nd Nov, 2012 the plaintiffs serve first notice of intention to proceed.

5th Feb, 2013 plaintiffs serve a notice for particulars on the defence, fifteen months after the defence was served. A motion by the plaintiffs to compel replies to these resulted in a consent order of 4th June, 2013, that the defendants furnish replies.

7th Feb, 2013 the plaintiffs furnish replies to notice for particulars served on 18th November, 2011.

20th June, 2013 replies to particulars furnished by defendants in compliance with order of 4th June, 2013.

30th July, 2015 plaintiffs serve notice of change of solicitor and second notice of intention to proceed (five years from plenary summons).

31st July, 2015 plaintiffs raise further notice for particulars relating to para. 46 of the defence, which pleads the Civil Liability Act 1961.

10 As can be seen from the chronology at the date of the issue of the motion seeking to dismiss on 30th March, 2016, almost six years had elapsed since the plenary summons had issued, and while the pleadings may have closed, save perhaps for the furnishing of a reply to defence, no request for discovery or other ancillary procedural steps have been taken by either the plaintiffs or defendants.

The arguments

11 The claims in respect of which the proceedings are brought relate to matters that occurred surrounding the purchase of the shopping centres in 1991, and between the time of the commencement of the Cardiff Meats proceedings in July, 2003 and their ultimate conclusion following an appeal to the High Court on Circuit in 2007. At the latest, the plaintiffs were aware since receiving substantial advice from counsel in November, 2006 that the positive freehold covenants were unenforceable, save for the prospect of arguing that an estoppel might ground a claim. The defence pleads, inter alia, that the plaintiffs knew since 1991 of the informal nature of the arrangement for the services for the common areas, and that no enforceable legal agreement existed for the provision or costs of such services in the absence of a formal management company structure. It asserted that the plaintiffs with that knowledge proceeded to purchase the shopping centres in anticipation of reaching an agreement for ongoing provision of or payment for services. The plaintiffs deny they had such knowledge, and say that it was only when the Cardiff Meats proceedings were commenced in July, 2003, and following the taking of advice from counsel not associated with those proceedings and with specialist knowledge in conveyancing matters, that they knew of the legal difficulties in enforcement.

12 The defendants argue that there has been a serious delay on the part of the plaintiffs in prosecuting this case, and in particular an unexplained two-year delay between June, 2013 and July, 2015, which of itself is argued to be sufficient to justify the dismissal of the proceedings, taken in conjunction with the delay in the commencement of the proceedings part of which relate to a transaction which occurred in 1991.

13 The defendants also argue that the proceedings are a ‘direct attack on the professional competence and reputation of the defendants as an established firm of solicitors’. The affidavit evidence is that some of the solicitors who might be witnesses in the case are no longer employed in the defendant firm and that to ask these persons to recall and deal with events going back to 1991 in relation to complex litigation is ‘to...