Solicitors’ insurer seeking judgment for €4.9m under 2011 settlement with Bloxham

An appeal court ruling means a solicitors’ insurer can pursue its application for judgment for €4.9 million allegedly outstanding under a 2011 settlement with Bloxham stockbrokers.

The January 2011 settlement was made in proceedings over heavy losses suffered by the Solicitors Mutual Defence Fund (SMDF) Ltd fund after investing in a bond which fell 97 per cent in value.

SMDF, now R & Q Ireland Company Limited by Guarantee, claims it lost almost all of its then reserves of €8.4 million due to negligence of Bloxham, which collapsed in 2012.

Its chairman Patrick Dorgan has said it had to get a €5 million guarantee from the Law Society to protect its position, ceased offering indemnity to solicitors in 2012, and is now in run-off. It ultimately applied to the Society to fund a rescue package of up to €13 million, and finalised a run-off agreement with R&Q in November 2016.

The insurer applied to the High Court last year for leave to re-enter proceedings, initiated in 2009 against Bloxham, for the purpose of seeking judgment for €4.9 million arising from the 2011 settlement.

Re-entry was opposed by lawyers representing five former Bloxham partners - Arthur Quinlan of Stradbrook Road, Blackrock, Co Dublin; Angus McDonnell of Ballymoney Park, Kilbride, Co Wicklow; Pramit Ghose of St Mary's Road, Ballsbridge, Dublin; Martin Harte of Idrone Terrace, Blackrock, Co Dublin; and Anne Barrett of Shrewsbury Park, Merrion Road, Ballsbridge.

They argued a High Court order of January 31st 2011, made when the settlement was announced, stated the proceedings were “struck out with liberty to re-enter”.

They claimed those words prevented any matter other than the original cause of action being re-entered, but the SMDF insisted the proceedings could be re-entered for the purpose of seeking judgment.

Judgement

In a judgment last May, Mr Justice Denis McDonald said it could not have been intended the proceedings would be re-entered with a view to allowing the original claim be relitigated, and said “liberty to re-enter” was given for some other purpose.

In that context, it was “entirely legitimate” to have regard to the underlying settlement agreement, he said. The words liberty to re-enter were “plainly there” to give effect to the provisions of that agreement, he concluded.

On Monday, a three judge Court of Appeal upheld the High Court decision.

Giving the judgment, Mr Justice Donald Binchy said it would be quite wrong to find the words "liberty to re-enter" are "otiose" on the basis what precedes them extinguishes the proceedings altogether. The January 2011 order made clear the court did not have that intention as the order would have made express provision for liberty to re-enter.

Such an interpretation would not just be contrary to the parties’ intention, as clearly expressed in the settlement agreement, but would also deny the SMDF the very remedy provided for in that agreement if the appellants defaulted in honouring he financial commitments undertaken by them to the SMDF in that agreement.

‘Liberty to re-enter’

While the phrase “liberty to re-enter” is normally used to enable an original claim to be re-entered and relitigated to a conclusion, that does not preclude re-entry for some other purposes, such as making agreed orders as provide for in terms of settlement, as in this case, he said.

The judge noted re-entry of the proceedings would not cause prejudice to either side and stressed the COA interpretation of the meaning of the January 2011 order does not preclude the Bloxham side raising a defence alleging the application for judgment is out of time.

On foot of those and other findings, the appeal by the Bloxham appellants was dismissed.