Mooney v Kearns
| Jurisdiction | Ireland |
| Judge | Ms. Justice Murphy |
| Judgment Date | 25 January 2016 |
| Neutral Citation | [2016] IEHC 31 |
| Docket Number | [2010 No. 10294P] [2010 No. 10344P] |
| Court | High Court |
| Date | 25 January 2016 |
[2016] IEHC 31
THE HIGH COURT
Murphy Deirdre J.
[2010 No. 10294P]
[2010 No. 10344P]
Contract – Breach of contract – Practice & Procedure – O. 7, r. 3 of the Rules of the Superior Courts – Professional indemnity insurance – repudiation of contact of indemnity – Liability of insurer – Award of costs – Joinder of parties
Facts: The solicitor of the first named defendant in both proceedings sought leave to come off record pursuant to the denial of the insurer to indemnify the first named defendant under the professional indemnity insurance. The plaintiffs who had already initiated a series of cases for breach of contract against the defendants alleged that where a solicitor instructed by an insurer sought leave to come off record, the insurer must be joined as a party to the litigation for payment of all the costs incurred by another party.
Ms. Justice Murphy held that the insurer must bear all the costs incurred by the plaintiffs in both proceedings and that the Court would take the necessary steps to join the insurer as a party to the proceedings. The Court in consonance with the judgment of Kearns J. in Byrne v. John S. O'Connor & Co. [2006] 3 IR 379 held that an insurer who exercised its right of subrogation stepped into the shoes of a defendant and it must diligently pursue the case without excessive delay as the plaintiff in such cases would always be at risk of termination of the concerned policy by the insurer, thus discontinuing its involvement in the litigation. The Court held that the award of costs should form a collateral and integral part of the questions involved in the underlying case if the delay caused by a non-party had direct bearings on the expenses incurred by the party diligently pursuing the litigation.
This case concerns two motions to come off record pursuant to Order 7, rule 3(1), of the Rules of the Superior Courts, issued by LK Shields, who are the solicitors on record for the first named defendant, Martin J. Kearns, in the above two sets of proceedings. The first set of proceedings were commenced by Michael Mooney and Audrey Mooney (2010/ 10294 P), while the second set of proceedings were issued on behalf of John Bermingham (2010/ 10344 P). The plaintiffs are represented by the same solicitor, Mr. Thomas O'Dea. Both notices of motion seeking leave to come off record were issued on 12th March, 2015.
Mr. Kearns is a solicitor and notary public based in County Galway who obtained a professional indemnity insurance policy from Quinn Insurance Limited for the period from 1st December, 2009 to 30th November, 2010.
On 10th November, 2010, proceedings were commenced by the plaintiffs by way of plenary summons. The plenary summons was served personally on Mr. Kearns on 18th November, 2010. The proceedings are two of eighty nine separate actions (one of which has been discontinued) commenced by plaintiffs who invested in property in Adeje, Tenerife, which were sold by the remaining defendants. The plaintiffs allege inter alia, misconduct and professional negligence against Mr. Kearns and seek damages for breach of contract, negligence, breach of duty (including statutory duty) and negligent misstatement. The claims relate to the manner in which Mr. Kearns notarised certain documents required by the investors for the purposes of making the investments.
The applicant solicitors, LK Shields, were nominated to act by Quinn Insurance on behalf of the first defendant, Mr. Kearns, in respect of all eighty nine cases. On 3rd December, 2010 LK Shields solicitors entered an appearance on behalf of Mr. Kearns in respect of the proceedings concerning both plaintiffs in the instant case.
The Statements of Claim in respect of Mr. and Mrs. Mooney, and Mr. Bermingham were delivered to LK Shields on 13th April, 2011. On 5th May, 2011, plenary summons were sent by the plaintiff's solicitor in respect of thirty five other claims. On 2nd June, 2011, LK Shields wrote to the solicitor for the plaintiffs, to confirm receipt of the additional thirty five plenary summonses. That letter also stated as follows:
‘Please note that as questions arise as to the provision of indemnity to Martin Kearns by his professional indemnifiers in respect of every Summons issued by your firm, we do not intend to enter Appearances to these summonses until such time as Martin Kearns entitlement (or otherwise) to indemnity has been determined’.
On 28th June, 2011, Mr. Thomas O'Dea, solicitor for the plaintiffs, wrote to the applicant solicitors seeking confirmation of their position as they had not yet entered an appearance in respect of the thirty five plenary summonses. Mr. O'Dea wrote to LK Shields again on 22nd August, advising that if he did not hear from the applicant solicitors within twenty one days he would issue motions for judgment in default of appearance. LK Shields responded to Mr. O'Dea the following day, noting as follows:
‘Our position in relation to indemnity remains the same. We are currently awaiting Counsel's advises(sic) in respect of this issue and in the circumstances we should be obliged if you would confirm that you will not issue motions for judgment in default of Appearance until we revert’.
Mr. O'Dea responded to the applicant on 29th August, 2011 as follows:
‘This position is totally unsatisfactory. Our clients cannot be expected to wait indefinitely for your client to decide whether or not to provide cover. We will bring Motions for Judgment in Default of Appearance within the time stated in my letter of 22nd inst unless you immediately confirm whether or not you intend to indemnify the first named Defendant herein’.
The Court does not appear to have been furnished with the response from LK Shields, however it can be inferred from Mr. O'Dea's letter of 6th October, 2011 that such communication involved a request for particulars in the instant cases, in which Statements of Claim had been served, since he wrote as follows:
‘I refer to your letter enclosing Notice for Particulars. We are preparing replies and these will be furnished in due course.
In regard to the final paragraph of your letter we note that an unconditional Appearance was entered by you and the question of indemnity was not raised at any time prior to this. I understand therefore that indemnity is not an issue in this case’.
The applicant replied to Mr. O'Dea's letter by way of letter dated 19th October, 2011, stating:
‘We do not accept that the issue of indemnity was not raised prior to our letter enclosing notice for particulars dated 16th September 2011. The matter is still under investigation and we cannot comment on indemnity or cover issues’.
Mr. O'Dea avers that the applicants ultimately entered appearances on behalf of the first named defendant in all eighty nine cases.
In or around November, 2011, Liberty Insurance Limited (‘Liberty Insurance’) purchased the assets and liabilities of Quinn Insurance, including Mr. Kearns' policy.
In or around 21st December, 2011, the plaintiffs' solicitor avers that he received a call from Ms. Aoife Bradley of LK Shields seeking his permission to proceed on the basis of a pathfinder case. The plaintiffs' solicitor avers that it was his understanding from this conversation that counsel's opinion had been received and that indemnity was being granted to the first named defendant. On 21st December, 2011, the plaintiffs' solicitor wrote to the applicant as follows:
‘I refer to our telephone conversation in regard to the above matter. It is our opinion that your proposal of using a “pathfinder” procedure in respect of any of the above cases is inappropriate. A Defence in each case must now be filed. We expect to receive same early in the New Year or, as stated in our 21(sic) letter, Motions for Judgment in Default of Defence will issue without further notice’.
On 21st March, 2012 the plaintiffs' solicitor was served with a notice of motion and affidavit seeking a court order to proceed on the basis of two pathfinder cases. On 22nd March, 2012 the plaintiffs' solicitor received a further letter from Ms. Bradley of LK Shields which stated as follows:
‘We refer to our previous correspondence on the issue of indemnity resting with our letter to your firm dated 19 October 2011.
Kindly note that pursuant to the terms of the relevant Policy of Insurance, and on the advice of Senior Counsel, Martin Kearns' professional indemnifiers (Liberty Insurance Limited) takes the position that there is a separate excess of €20,000 payable by Martin Kearns in respect of each of the 89 claims.
We are informing you of this in case it may be relevant to your decision making process in the proceedings.
For the avoidance of doubt, our client denies liability. He will be defending all the actions and seeking costs orders, as appropriate.’
On 2nd May, 2012, by order of the High Court, following a motion for judgment in default of defence, it was decided, on consent, that the proceedings of Mr. and Mrs. Mooney and those of Mr. Bermingham would be the initial ‘pathfinder’ cases. The remaining eighty six cases were stayed pending the determination of these cases. Costs were also awarded against Mr. Kearns.
The applicant solicitors filed a defence on behalf of Mr. Kearns on 23rd May, 2012 and on 24th July, 2012 a reply to the defence was delivered. On 22nd August, 2012 interrogatories were served on LK Shields, same being replied to on 21st January,...
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