We look at the recent judgment in Niamh O'Leary –v -Seamus Turner, John O'Leary, Bride O'Leary, Catherine O'Connor, Sean Nolan, Cormac Mullane, all practising under the style and title of M.J. O'Connor & Company  IEHC 7 (delivered on 18 January 2018) and consider the potential implications for professional indemnity insurers.
The claimant's claim was for damages of €1.72m for alleged professional negligence by the defendants, partners in a firm of solicitors retained by the claimant in March 2005 to advise her on the purchase of a commercial site in Wexford. At the time of the purchase, the premises were held subject to and with the benefit of a commercial occupational lease made on 5 March 2002. The claimant claimed that the defendant firm failed to advise her regarding the statutory renewal rights of the existing tenant at the time of the contract for sale.
This background is important insofar as the issue of the passage of time runs through the heart of this case. The originating summons issued on 26 August 2010. On 23 August 2011 it was served on three of the defendants. It was subsequently renewed on 24 October 2011 and served on the remaining defendants between December 2011 and February 2012. Holohan Solicitors formally came on record for the claimant on 23 November 2011. A notice of intention to proceed was served on 16 February 2015 and an appearance was entered on behalf of the all of the defendants on 30 May 2016.
Strike out application
In September 2016, the defendants brought an application to strike out or dismiss the claimant's claim for want of prosecution and/or delay.
When considering whether to dismiss for delay, Ms Justice Baker had to consider whether the delay was inordinate and inexcusable and where the balance of justice lay.
The judge noted that the proceedings were commenced in 2010, 5 years after the causes of action accrued in 2005. There were also significant delays after the proceedings were issued (indeed the judge said that between 2010 and 2016 there was 'no material advance in the proceedings') and the case was still not ready for trial some 12 years later. The judge concluded that the delay was inordinate.
The judge considered whether there was a 'real and justifying excuse'. The claimant's excuses were as follows:
- The claimant's husband died shortly after the sale closed which clouded her judgement and made it difficult for her to formulate a clear approach with respect to the proceedings. The judge stated that while she did not purport to measure the extent of the claimant's grief, her husband's death could not afford an explanation which might excuse the length of the claimant's delay in prosecuting the proceedings after they had been commenced.
- The claimant's then solicitors issued a plenary summons in August 2010 and in October 2010 she engaged Holohan Solicitors. The reason given for the lapse in time in prosecuting the case was that that firm were a 'strong advocate' of alternative dispute resolution and they had attempted to resolve the matter with the defendant's law firm without going to litigation including through an intermediary. The judge held that this did not justify the delay and that the fact an intermediary failed to achieve a positive outcome made the prosecution of litigation more pressing.
- The claimant's solicitor had asked the defendant's solicitor multiple times to identify their insurers and alleged that the defendant's solicitor sought to frustrate the process by withholding this information. The judge held that the question of who insured the defendant firm and whether they had insurance should not have prevented the proper and expeditious prosecution of the claim.
- The claimant alleged that there was 'culpable inaction' by the defendant, for example by delaying in entering an appearance for a period of six years. The judge found that the failure of the part of the defendants to nominate solicitors or accept service cannot excuse or explain the delay from 2012-2016 by the claimant.
Finally, the judge looked at the balance of justice. She looked to the personal difficulties of the claimant, specifically, the financial and personal turmoil she endured that triggered the onset of understandable stress and anxiety but concluded that 'no authority has been identified that permits a court to excuse culpable and otherwise unexplained delay on account of personal and financial circumstances of the type identified'.
The judge also examined whether the defendant had been prejudiced. She noted that there was general prejudice given the passing of time and the fact that the member of staff in the defendant who had dealt with the claimant had retired in 2008. She also pointed to two factors which led her to believe there was 'a degree of actual prejudice':
- There were a number of dealings with the claimant and defendant firm at the time of the purchase which would lead to the memories of the parties to be confused and it would be difficult at this remove for witnesses to be entirely clear as to what conversations occurred on what dealings.
- The defendant argued that it would be difficult to identify the extent to which the general difficulties that were encountered by the claimant at the time of her alleged loss were attributable in part or at all to the economic collapse. The judge considered that much of the evidence in relation to the claimant's loss would be 'coloured by the passage of time and the various shifts in economic prospects and the value of real property in the State over the intervening years'.
The judge also took into account the defendant's contention that 'the [claimant] was not genuinely intending to proceed with this claim, having regard to the delay and lack of any communication with the firm over the intervening years and that a defendant may be prejudiced in a general way if he or she is unaware of the existence of an intention to sue or that existing proceedings are intended to be pursued'.
She concluded that all these factors amounted to 'concrete prejudice sufficient to tilt the balance of justice in favour of the dismissal of the action'.
The courts are becoming less tolerant of delay in the prosecution of proceedings. In a similar case of McAndrew –v- Egan  IEHC 346, the judge referred to 'disquiet about the court's heretofore excessive indulgence when dealing with stale claims and which advise of the need for much greater consideration to be given to the courts' own constitutional obligations and compliance with Ireland's obligations under Article 6.1 of the European Convention on Human Rights'.
This is particularly true of claims against professionals arising from events during the Celtic Tiger era because (i) the automatic prejudice that occurs by virtue of higher premiums and reputational damage and (ii) assessing a claimant's potential loss would be 'coloured by the passage of time and the various shifts in economic prospects and the value of real property in the State over the intervening years'.
Given the Irish High Court's recent efforts to ensure that cases run more efficiently and the case law indicating a less indulgent approach to dilatory claimants, professional indemnity insurers should review any stale claims and consider whether there is an opportunity to bring a successful strike out application. This is particularly so where the potential to release a reserve and close a file far outweigh the cost of the application and/or risk that the 'sleeping dog' claimant wakes.