Solicitors Mutual Defence Fund Ltd v Costigan
| Jurisdiction | Ireland |
| Judge | Mr. Justice Denis McDonald |
| Judgment Date | 14 May 2020 |
| Neutral Citation | [2020] IEHC 213 |
| Docket Number | [No. 2009/10863 P.] |
| Court | High Court |
| Date | 14 May 2020 |
AND
AND
[2020] IEHC 213
Denis McDonald J.
[No. 2009/10863 P.]
THE HIGH COURT
COMMERCIAL
Functus officio – Settlement agreement – Re-entry of proceedings – Plaintiff seeking to re-enter proceedings – Whether the court was functus officio
Facts: Under an order made by Finlay Geoghegan J on 31st January, 2011, the proceedings as against the first to fourteenth defendants, Mr Costigan, Mr Deasy, Mr Dempsey, Mr Finnegan, Mr Ghose, Mr Gunnell, Mr Harlowe, Mr McDonnell, Mr Maguire, Mr Quinlan, Mr Tinney, Mr Sheerin, Ms Barrett and Mr Harte, were struck out with liberty to re-enter. That order was made following a written settlement agreement entered into on 28th January, 2011 between the plaintiff, Solicitors Mutual Defence Fund Ltd, and the first to sixth, the eight, the tenth to eleventh and the thirteenth to fourteenth defendants. Under the settlement agreement, a number of payments were to be made by those defendants including a sum of €6m payable in six instalments of €1m each on dates running between 1st October, 2011 and 1st March, 2016. Pursuant to a notice of motion issued in June 2019, the plaintiff sought to re-enter these proceedings as against the defendants who were parties to the settlement agreement and sought an order granting judgment against those defendants for the sum of €4,921,276.59 being the balance alleged to be outstanding on foot of the settlement agreement. The application to re-enter the proceedings was opposed by the fifth, eighth, tenth, thirteenth and fourteenth defendants. They argued that the effect of the order made on 31st January, 2011 striking out these proceedings was to make the court functus officio thereafter. Accordingly, they contended that the only mechanism available to the plaintiff to enforce the settlement agreement of 28th January, 2011 was for the plaintiff to commence fresh proceedings on foot of that agreement. While a number of issues arose in the course of the lengthy exchange of affidavits which took place between the participating parties, the only issue which the High Court (McDonald J) was required to resolve was the issue as to whether the court was or was not functus officio. The matter came before McDonald J pursuant to a direction made by Barniville J. A hearing in relation to that issue subsequently took place on 4th March, 2020.
Held by McDonald J that, having had regard to what he considered to be the clear meaning and effect of the order of 31st January, 2011, he believed that there was no basis to conclude that, under the terms of the order made by Finlay Geoghegan J, the court was functus officio for all purposes.
McDonald J held that the plaintiff was entitled, subject to any defences that the defendants may legitimately raise, to re-enter these proceedings by way of notice of motion with a view to pursuing its entitlements under Clause 15 of the settlement agreement.
Liberty to re-enter proceedings granted.
The only issue which I am required to decide, at this point, is whether the court is functus officio in these proceedings as a consequence of an order made by Finlay Geoghegan J. on 31 st January, 2011. Under that order, the proceedings as against the first to fourteenth named defendants were struck out with liberty to re-enter. That order was made following a written settlement agreement entered into on 28 th January, 2011 between the plaintiff and the first to sixth, the eight, the tenth to eleventh and the thirteenth to fourteenth named defendants. Under the settlement agreement, a number of payments were to be made by those defendants including a sum of €6m payable in six instalments of €1m each on dates running between 1 st October, 2011 and 1st March, 2016.
Pursuant to a notice of motion issued in June 2019, the plaintiff has now sought to re-enter these proceedings as against the defendants who are parties to the settlement agreement and has sought an order granting judgment against those defendants for the sum of €4,921,276.59 being the balance alleged to be outstanding on foot of the settlement agreement.
The application to re-enter the proceedings is opposed by the fifth, eighth, tenth, thirteenth and fourteenth named defendants. They argue that the effect of the order made on 31 st January, 2011 striking out these proceedings was to make the court functus officio thereafter. Accordingly, they contend that the only mechanism available to the plaintiff to enforce the settlement agreement of 28 th January, 2011 is for the plaintiff to commence fresh proceedings on foot of that agreement.
While a number of issues arose in the course of the lengthy exchange of affidavits which took place between the participating parties, the only issue which I am required to resolve, at this stage, is the issue as to whether the court is or is not functus officio. The matter comes before me pursuant to a direction made by Barniville J. A hearing in relation to that issue subsequently took place on 4 th March. 2020 at which I heard submissions from counsel for the plaintiff, counsel for the eighth and tenth named defendants, counsel for the fifth and fourteenth named defendants and counsel for the thirteenth named defendant.
Before proceeding further, it is necessary to summarise the relevant underlying facts.
The plaintiff is a company limited by guarantee which, for some time, provided indemnity cover in respect of professional risks for solicitors in Ireland. According to the plaintiff, the defendant stockbrokers were retained by it to provide stock-broking and investment advisory services. On 20 th January, 2005, the plaintiff invested €8.4m in a bond which it contends was recommended to it by the defendants as an appropriate and suitable investment. The plaintiff alleges that the bond subsequently lost 97% of its value.
Arising out of the performance of the bond and the advice allegedly given by the defendants, the plaintiff commenced proceedings against the defendants in December 2009 in which it claimed damages for breach of contract, negligence, breach of duty and other alleged wrongs. A compromise of the plaintiff's claim as against the defendants was subsequently reached on the terms set out in the settlement agreement of 28 th January, 2011. Under Clause 1 of the settlement agreement, the plaintiff agreed to accept payment of €7.3m in full and final settlement of all claims arising out of the purchase of the bond. Under Clause 2, the defendants who were parties to that agreement agreed to pay to the plaintiff €1.3m by 1 st March, 2011 and by Clause 7, the balance was to be paid, as noted above, by six instalments of €1m each payable on 1 st October, 2011, 1 st March, 2012, 1 st March, 2013, 1 st March, 2014, 1 st March, 2015 and 1 st March. 2016.
Clause 15 of the settlement agreement dealt with what was to happen if there was any default in payments of any of the instalments of €1m: -
“15. In default of payment of any instalment … within seven days of the due date, SMDF shall be entitled to apply to re-enter these proceedings before the Commercial Court and obtain Judgment against Bloxham jointly and severally for the sum of €8,400,000.00 … less any payments made in accordance with the schedule …”
Clause 19 provided that the proceedings were to be struck out with no order as against the fifteenth named defendant. Clause 21 was in the following terms: -
“21. At the first opportunity after the execution of these Terms of Settlement, the Parties will jointly mention this matter to the Judge of the High Court having charge of the Commercial List for the purpose of obtaining the following orders: -
(a) These proceedings are to be struck out.
(b) No Order as to costs.
(c) Liberty to both parties to re-enter”.
It should be noted that the settlement agreement also dealt with a number of other matters including: -
(a) A requirement that Bloxham should itself provide a sworn statement of affairs to be made available on a confidential basis to certain named parties on behalf of the plaintiff:
(b) the plaintiff was required to assign its interest in the bond to the partners of Bloxham within fourteen days of payment of the first instalment of €1.3m due on 1 st March, 2011;
(c) the plaintiff agreed to join as a co-plaintiff in proceedings to be issued in England subject to the plaintiff obtaining, at Bloxham's expense, the benefit of adverse costs insurance;
(d) Bloxham and the individual defendants who are parties to the settlement agreement agreed to indemnify the plaintiff in respect of any award of costs or damages made against the plaintiff in the English proceedings;
(e) in the event that any monies recovered by the plaintiff in the English proceedings exceeded the amount of the settlement sum, Bloxham was to be repaid from the excess;
(f) the settlement also dealt with the continuing pursuit of the third party proceedings by the defendants against the third parties;
(g) Bloxham consented to the plaintiff re-entering the proceedings before the Commercial Court for the purpose of enforcing the obligation to provide the statement of affairs.
The payments of €1.3m due on 1 st March, 2011 together with the payment of the first two instalments of €1m were all made to the plaintiff. However, no payment was made in...
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