Supreme Court: Property developer wins appeal against summary judgment granted against him

About this case:

• Citation:
  [2019] IESC 52
• Judgment:
  External link
• Court:
  Supreme Court
• Judge:
  Mr Justice Michael Peart

Background

The appellant, Mr Patrick O’Connor, is a property developer whose solicitor was Michael O’Connell. When Mr O’Connell was first instructed to act for Mr O’Connor in three sets of proceedings, he was a partner in MJ Horgan & Sons. When MJ Horgan & Sons ceased trading in 2009, Mr O’Connell was engaged as a consultant by Timothy J Hegarty & Son, and he continued to be instructed by Mr O’Connor who assured him that all fees and outlays would be discharged by him from the future sales of certain properties. The professional fees incurred by Mr O’Connor when Mr O’Connell was with MJ Horgan & Sons, and those incurred after he joined Timothy J Hegarty & Son amounted to €107,394.71.

Due to the absence of an actual undertaking from Mr O’Connor to pay the fees, Timothy J Hegarty & Son ceased acting for Mr O’Connor and came off record in the various proceedings. Thereafter, Mr O’Connor instructed James Riordan & Partners.

In order to obtain his litigation files, in November 2010, Mr O’Connor agreed to pay €95,000. According to that agreement, Mr O’Connor agreed to pay €20,000, and if he failed to do so he would pay interest on any unpaid portion at the rate of 3% until paid, and that he would pay the balance of €75,000 “from the proceeds of sale of 42 Alden Grove on completion of the sale”. It was agreed also that if that sum of €75,000 had not been paid by 30th September 2011 interest on that sum would be paid at the rate of 3% until payment was made. The initial sum of €20,000 was paid in due course, though not by the 30th April 2011.

In the High Court in March 2013, Ms Justice Iseult O’Malley granted judgment of €76,761.76 (€75,000 principal and €1,761.76 interest) against Mr O’Connor.

Supreme Court

In the Supreme Court, the principal issue was whether or not the trial judge was correct to determine that the replying affidavits filed by Mr O’Connor in opposition to the respondent’s notice of motion seeking liberty to enter judgment for the sum remaining unpaid under the said agreement did not disclose an arguable defence such that the matter should be adjourned to a full plenary hearing. 

Mr Justice Peart summarised the four issues principally relied upon by Mr O’Connor:

• (i) That he entered into the compromise agreement dated 1st November 2010 under duress/undue influence;

• (ii) That the said agreement is null and void on the grounds that the respondent firm had a conflict of interest such that Mr O’Connor ought to have been advised to seek and obtain independent legal advice before entering into the agreement;

• (iii) That in any event under the said agreement he was under no obligation to pay the sum of €75,000 by the 30th September 2011 other than out of the proceeds of sale of 42, Alden Grove (which has not yet occurred) subject to the payment of interest thereafter, and therefore that the sum of €75,000 is not due and owing;

• (iv) That he has a defence by way of equitable set-off arising from a counterclaim he seeks to bring against Mr O’Connell of the respondent firm in respect of professional negligence, both in respect of a period when he was a member of the respondent firm as well as during a period when he was a partner in the firm of M. J. Horgan & Sons, previously instructed by Mr O’Connor in relation to certain matters.

In addition to those potential grounds of defence, Mr O’Connor also appeals against the trial judge’s refusal to accede to his application to join James Riordan & Partners, so that he could pursue a cross-claim in negligence against that firm also, by way of a defence to the respondent’s claim by way of an equitable set-off.

Firstly, Mr Justice Peart said that it was understandable that Mr O’Connor would have felt some pressure to reach an agreement so his files could be released, but this did not amount to duress or undue influence.

Considering the complaint that there was a conflict of interest, trial judge expressed no conclusion in relation to conflict of interest. Mr Justice Peart said this was possibly because “in her mind it was subsumed into the question of duress/undue influence”, but that it was “a separate issue raised by Mr O’Connor in his replying affidavit which was fully opened before the trial judge”. Stating that it was necessary to reach a conclusion as to whether that question amounted to a potential and arguable defence to the claim being brought on foot of the said agreement, Mr Justice Peart considered the evidence and said that the question went beyond mere subjective assertion. Finding that there was an arguable defence, Mr Justice Peart directed a plenary hearing on this second issue.

On the third issue, Mr Justice Peart also found that the trial judge erred in concluding that there was not an arguable defence based on Mr O’Connor’s contended construction of the agreement,  and directed a plenary hearing on this issue.

On the fourth issue, Mr Justice Peart said it would be inequitable for Mr O’Connor to bring a counterclaim in negligence in circumstances where he already commenced separate proceedings in that regard and has not progressed them. Mr Justice Peart also refused the application to join James Riordan & Partners, stating that if he wished to take such proceedings, he should institute separate proceedings against them.

• by Seosamh Gráinséir for Irish Legal News