Insurance Update: A Warning to Solicitors from the Court of Appeal about Dormant Cases
15 February 2016
The Court of Appeal recently overturned a High Court decision where the Judge had concluded that the solicitor was not liable for losses allegedly arising from delays in proceedings.
In the proceedings which gave rise to this professional negligence action, Coakley Moloney (“CM”) solicitors had acted for Emerald Isle Assurances and Investments Limited against Hibernian Life Ltd. The claim arose from the termination of a tied agency agreement and sums allegedly due by Hibernian to Emerald.
After Hibernian brought an application to dismiss the action for delay in 2002, CM engaged a forensic accountant to prepare a report on Emerald’s alleged loss. However, between 2003 and 2007 Emerald could not agree with this forensic accountant about what value to put on their claim. As far as Hibernian’s solicitors were concerned, they heard nothing from CM for six and a half years until CM served a Notice of Intention to proceed in 2009.
In January 2010 Hibernian brought a second application to dismiss the action on the grounds of inordinate and inexcusable delay. Both Senior Counsel and solicitors advised Emerald that there was a real risk that this application would be successful. Emerald settled the claim for €300,000 inclusive of costs. Emerald subsequently brought proceedings against CM.
The High Court decision
The High Court, in January 2012, found that “both sides had a degree of culpability”. The President of the High Court concluded that, whilst CM had failed to give a detailed, explicit and elaborate warning as to the consequences that would or might follow from such delay, any such warning would have made no difference in the circumstances.
The Court of Appeal decision
The three Court of Appeal judges were explicitly critical of the solicitors’ “woeful pattern of sporadic, ineffectual efforts to make progress.” Furthermore, the Court disagreed with the President’s inference - that a warning would have made no difference – and thus overturned the High Court decision. The Court of Appeal confirmed that the solicitor “should have given explicit warnings to the plaintiffs as to the consequences” of the delay.
A solicitor’s obligation
The Court of Appeal confirmed that the solicitor’s obligation is to “address the situation and to give clear advice to his clients as to what the options were and what the risks were.” They also disagreed with the President and concluded: “What the solicitor cannot do is simply to say that the client would not have paid attention to any warning and therefore he is not liable.”
Legal practitioners should take note. Is there a file in your cupboard that you avoid because you have run out of ideas? Take advice. Consult a colleague. Warn the client about delay. The lesson is – do something. It will no longer be sufficient simply to sit on your hands and hope it will sort itself out in the end.
For more information, please contact a member of our Insurance team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.