Man fails to show good reason for delay in pursuing case against his former solicitors

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Desmond Monahan, sought damages from his former solicitors, Kevin Byrne and Shane Coyle, for breach of contract, breach of fiduciary duty and misrepresentation.

The plaintiff contended that he and another individual, Mr Ray White, jointly borrowed some €2.2 million from Allied Irish Banks which was secured by certain mortgaged property. €1.08 million of this was paid to the defendants on trust for the plaintiff.

The essence of the complaint was that €790,500 of these monies was paid by them to Mr White on 30th June 2006 and a further sum of €146,250 was paid on 16th August 2006. It is said that these payments were unauthorised and led to the plaintiff being made liable jointly and severally with Mr White to AIB in the amount of €2,338,097.

If the plaintiff is correct, then his cause of action crystallised as soon as the payments were made, meaning the six year limitation period in contract and tort had nearly expired when the proceedings were issued on 7th June 2012.

However, the summons was not served on the defendants during the 12 month period permitted by Order 8, rule 1 in the Rules of the Superior Courts.

After the Master of the High Court made an order extending the time by six months, the summons was eventually served on the first defendant on the 2nd and 6th December 2013.

On 9 June 2014, the plaintiff’s solicitors provided the defendants with a copy of the affidavit grounding the application.

Sex weeks later, the defendants sought an order pursuant to order 8, Rule 2, seeking to have the service of the summons set aside. This was granted by Hedigan J.

Delivering the appeal judgment, Mr Justice Gerard Hogan outlined Order 8, rule 1, which stipulates that no original summons shall be enforced for more than twelve months, but that it can be extended if the Court is satisfied that there was “good reason” for the delay.

He noted that any ex parte order renewing a summons can at most have a provisional status, since by definition the court will not yet have had an opportunity of hearing the other side, citing Adam v. Minister for Justice 3 I.R. 53; DK v. Crowley 2 I.R. 744; Chambers v. Kenefick 3 I.R. 526 and Doyle v. Gibney IEHC 10.

In relation to what constituted a “good reason”, he cited Peart J inMoynahan v. Dairygold Cooperative Society Ltd. IEHC 318, which defined the task for the court as being to determine whether the reason offered is one which justifies the inaction which occurred, especially in circumstances where it is now alleged that the delay has caused prejudice to the defendant’s ability to defend.

Turning to the facts of the case, he noted that the good reasons offered by the plaintiff to justify a renewal of summons were:

First, the file was mislaid and/or was incomplete as a result of which the new solicitor was not happy to take on the file.

Second, the solicitor for the plaintiff was reluctant to sue his colleague in his own town for professional negligence.

Third, there was a real risk that the plaintiff’s claim would become statute barred if the summons was not renewed beyond the 6th of June 2013.

In relation to the first reason, the Judge found it critical that the file had remained incomplete, even when the renewed summons was eventually served on the first defendant.

This suggested that the absence of a complete file was not a real impediment to the service of the proceedings. Thus, it was not a “good reason”.

In relation to the second, while the unwillingness was acknowledged as understandable, it should have been known for some time that the claim was going to happen, and the solicitor should have arranged for another solicitor to act.

The Judge noted that it “ought to have been obvious that considerable urgency attached to this matter, since the proceedings were actually issued within - at best - weeks of the six year limitation period expiring”. Thus, this was not a “good reason”.

Finally, while it was noted that there was authority to suggest that the fact that a plaintiff’s action might otherwise be statute-barred is itself a good reason, such as Baulk v. Irish National Insurance Company Ltd I.R. 66 and McCooey v. Minister for Finance I.R. 159, it was clear that those decisions had been effectively qualified, for example by Moloney v. Lacey Building and Civil Engineering Ltd. IEHC 8, 4 I.R. 417, Maloney is O’Brien v. Fahy, Supreme Court, 21 March 1997 and Roche v. Clayton 1 I.R. 596.

The Judge found that it was clear from this case-law that the “fact that an action might otherwise be statute-barred does not in itself constitute a “good reason” within the meaning of Order 8, rule 1 by which a summons should be renewed”.

Furthermore: “Recent decisions have also stressed that the renewal of a summons outside of a limitation period is to some degree at odds with an underlying principle of the Statute of Limitations itself, namely, that a defendant is entitled to assume that he will not face the prospect of litigation after the expiration of a fixed passage of time.”

These included O’Reilly v. Northern Telecom (Ireland) Ltd. IEHC 168, 1 I.R. 214; Allergan Pharmaceuticals (Ireland) Ltd. v. Noel Deane Roofing ; and Moloney v. Lacey Building and Civil Engineering Ltd. IEHC 8, 4 I.R. 417.

Thus, it was concluded that the plaintiff had advanced no “good reason” to justify the renewal of the summons.

Lastly, the Judge considered the plaintiff’s argument that the defendants had delayed unduly in making the application to have the renewal of the summons set aside.

The Judge found that while ideally the defendants should have moved within days of the service by the plaintiff upon the first defendant in December 2013, a delay of seven months before bringing the set aside application is not a sufficient delay in these circumstances such as would disentitle the defendants from bringing this application.

The plaintiff’s appeal was therefore dismissed.