Philip Keane v Dermot McGann Groundworks Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Binchy
• Judgment Date: 08 July 2021
• Neutral Citation: [2021] IECA 192
• Court: Court of Appeal (Ireland)
• Docket Number: Record No. 2021/10

Between/

Philip Keane

Plaintiff/Respondent

and

Dermot McGann Groundworks Limited

Defendant/Appellant

[2021] IECA 192

Ní Raifeartaigh J.

Power J.

Binchy J.

Record No. 2021/10

THE COURT OF APPEAL

Damages – Conditional order of garnishee – Absolute – Appellant appealing from an order making absolute a conditional order of garnishee – Whether the order was wrong in law and defective

Facts: The defendant/appellant, Dermot McGann Groundworks Ltd, appealed to the Court of Appeal from an order of the High Court (O’Hanlon J) whereby she made absolute a conditional order of garnishee attaching a sum of money obtained by the appellant in other litigation, for the purpose of satisfying an award of damages and costs previously made by O’Hanlon J, in favour of the plaintiff/respondent, Mr Keane, as against the appellant in the proceedings. Ten grounds of appeal were set out. The first of these stated that the order made by O’Hanlon J on 12th January, and perfected on 21st January, 2021, making absolute a conditional order of garnishee made by Cross J on 18th December, 2020, was wrong in law and defective. The remaining nine objections were all directed to the refusal of O’Hanlon J to revisit her ruling of 12th January, 2021.

Held by Binchy J that it is most likely, though not necessarily exclusively, through the mechanism of O. 45 RSC that special circumstances of the kind referred to by Hogan J in Response Engineering Ltd v Caherconlish Treatment Plant Ltd [2011] IEHC 345 will be identified and adjudicated upon. Binchy J held that, in particular, O. 45 rr.5 and 6 provide for the making of claims by third parties to an interest in the funds sought to be attached; O. 45 r. 5 specifically refers to a claim to a lien – which would, for example include the appellant’s solicitors’ claim to a lien over the monies sought to be attached. Binchy J held that it empowers the Court to direct inquiries into such claims, but before the Court may exercise its powers under the rule, or inquire into any claim of “special circumstances” a claim must be advanced in the first place, which affords the party seeking the order of garnishee an opportunity to respond. Binchy J held that no claim of any kind was advanced, leaving the trial judge in the situation referred to by Hogan J, i.e. the proofs for the application were satisfied, no special circumstances were identified, and therefore the substantive order made by the trial judge on 12th January was made well within the discretion conferred on her under the rule.

Binchy J held that the appeal would be dismissed. Binchy J’s provisional view was that the costs of the appeal should follow the event and that the appellant should pay the costs of the respondent, to be adjudicated in default of agreement.

Appeal dismissed.

UNAPPROVED

JUDGMENT of Mr. Justice Binchy delivered on the 8 ^th day of July, 2021

1 . This is an appeal from an order of the High Court (O'Hanlon J.) whereby she made absolute a conditional order of garnishee attaching a sum of money obtained by the defendant/ appellant in other litigation, for the purpose of satisfying an award of damages and costs previously made by O'Hanlon J., in favour of the plaintiff/ respondent as against the defendant/ appellant in these proceedings. An unusual feature of this case is that that other litigation was taken by the defendant/ appellant against its insurers and insurance brokers after the award made by O'Hanlon J. in favour of the plaintiff/ respondent (in these proceedings), for the express purpose of securing funds to satisfy that award. The amount recovered by the appellants in that other litigation was inclusive of the costs incurred by the appellant in pursuing those other proceedings. All of this is against the background that it appears to be accepted that the appellant has very little or no other means to satisfy the award made by O'Hanlon J. in favour of the respondent, and enforcement of that award would result in the liquidation of the appellant, with little prospect of recovery for the respondent.

2 . On 26 ^th October, 2017, the respondent suffered an injury while at work in the employment of the appellant, causing him the loss of the index finger of his left hand. He issued proceedings against the appellant arising out of that accident. On 29 ^th November, 2018, O'Hanlon J. handed down judgment in the proceedings, finding for the respondent and awarding him the sum of €100,000 in respect of general damages and €5,315.69 in respect of special damages, together with the costs of the proceedings, when ascertained. The order of the High Court was perfected on 20 ^th December, 2018. The costs were subsequently referred for adjudication and determined in the sum of €123,896.86, which included the sum of €8,965.00 in respect of the stamp duty payable on taking up the adjudication order.

Indemnity Proceedings

3 . Following the conclusion of the proceedings, they were adjourned from time to time for mention by reason of a dispute between the appellant and its indemnifiers. The appellant issued proceedings against both its insurance brokers and insurance underwriters (the “Indemnity Proceedings”). While no specific evidence has been advanced as regards the financial standing of the appellant, it has been indicated in general terms that it is either insolvent or on the brink of insolvency. This appears to have been implicitly accepted by the respondent who took no steps to enforce his judgment as against the appellant, and instead co-operated in the ongoing adjournment of the proceedings while the appellant prosecuted proceedings as against its insurers (Capital Cover Group Limited, a Lloyds syndicate, the “Underwriters”) and insurance brokers (Fingal Insurance Group DAC, the “Brokers”) with a view to securing indemnity to enable it to satisfy the judgment obtained by the respondent.

4 . I should also mention that the context in which the proceedings, which were otherwise concluded, were from time to time adjourned, was that the court put a stay of execution on the award in favour of the respondent, when the order was perfected on 20 ^th December, 2018. This stay was initially until 28 ^th February, 2019, but was I believe, continued as the matter was adjourned from time to time, all so as to facilitate the conduct of the proceedings taken by the appellant against the Underwriters and the Brokers, which was in the interests of both the appellant and the respondent.

Settlement of Indemnity Proceedings

5 . Following a mediation that took place in Dublin on 15 ^th December, 2020, the appellant settled its claim for indemnity as against the Brokers, for the total sum of €250,000. Settlement with the Underwriters was also reached, on terms less attractive to the parties to those proceedings, involving simply the withdrawal of those proceedings, with each party to bear their own costs. The terms of settlement with the Brokers provided for the division of the settlement sum as to €170,000 in respect of the legal costs of the appellant incurred in three separate sets of High Court proceedings i.e. the respondent's proceedings in the High Court against the appellant, and the two separate sets of proceedings brought by the appellant as against the Brokers and the Underwriters, with the balance of €80,000 to be paid to the respondent, inclusive of his costs. The settlement was committed to writing, and the terms of settlement contained a confidentiality clause whereby the parties there to agreed that its terms were to be kept confidential and not disclosed save as may by required by law.

6 . The appellant had invited the respondent to attend and participate in the mediation, which took place in Dublin, but the solicitor for the respondent (who is Limerick based, as is the solicitor for the appellant) was unable to attend in person. However, he was available for remote participation, and did speak with the mediator during the course of the mediation. It has not been suggested, however, that the respondent was in any way party to or approved of the terms of this agreement.

Appellant Notifies Respondent of Settlement of Indemnity Proceedings

7 . By letter dated 16 ^th December, 2020, the solicitors for the appellant wrote to the solicitors for the respondent informing them of the settlement. In this letter they stated that they had been able to “ secure a payment of €80,000 for the plaintiff in the personal injury action inclusive of his costs”. They also stated that they had “ agreed to reduce the overall costs [incurred by the appellant] of the three actions which were due and owing to us, inclusive of VAT, outlay and counsel, in an amount of €90,000 approximately.”

8 . The letter went on to state that they intended, on receipt of the settlement funds to make payment of a sum of €80,000 to the solicitors for the respondent, in full and final settlement of the respondent's claim, including his costs. The letter concluded by stating that in default of the respondent accepting this amount (of €80,000) the respondent could, as the main creditor of the appellant, petition the court for the liquidation of the appellant, and in that event the solicitors for the appellant would “ freeze” the sum of €80,000 and hand it over to the liquidator appointed in due course. The letter did not give any indication as to the balance payable to the appellant's solicitors pursuant to the terms of settlement, in respect of the legal costs incurred by the appellant in the three sets of proceedings, i.e. the sum of €170,000.

Garnishee Application

9 . Upon being notified of the settlement, the respondent made an application, ex parte, for a garnishee order over the settlement proceeds. This application came before Cross J. on 18 ^th December, 2020, on which date the respondent sought an order attaching the sum of €229,212.55 of the proceeds of the settlement entered into between the...