McAleenan -v- AIG (Europe) Limited Neutral citation (2010) IEHC 128 High Court
Judgment was given by Ms Justice Mary Finlay Geoghegan on May 6th, 2010
Judgment
The defendant insurance company, AIG (Europe) Ltd, was entitled to void a professional indemnity insurance policy covering the plaintiff because she had materially misrepresented her status at the legal firm of Michael Lynn Co by signing the proposal form as a partner.
Background
The plaintiff is a solicitor who worked in the practice of Michael Lynn from November 2004 until September 2007, when she resigned and reported her concerns about his practice to the Law Society, leading to it investigating the practice and ultimately striking Mr Lynn off the Roll of Solicitors.
In December 2007, the insurance company sought to avoid the professional indemnity insurance policy against the plaintiff by reason of material non-disclosures at the time the proposal for insurance was signed in April 2007. It also, separately, issued proceedings to void the policy with Michael Lynn.
The plaintiff was employed as a litigation solicitor by Michael Lynn in 2004, with responsibility also for family law. She signed undertakings on behalf of the firm for the purpose of conveyancing transactions.
Liz Doyle also worked in the office, mainly as the full-time personal assistant to Mr Lynn, who was frequently absent. She was regarded as his “eyes and ears”. She did not give evidence, but was referred to.
The firm sought insurance cover from the defendant company early in 2007 and eventually obtained it, after the plaintiff signed the proposal form on April 12th, 2007.
Following concerns about the practice in August 2007, the plaintiff sought legal advice on September 7th and made contact with the Law Society the next working day, a Monday.
The society advised her to leave the Michael Lynn practice immediately. She did so and, two days later, the Law Society entered the practice.
In December, the insurance company wrote to Ms McAleenan voiding the policy on the basis that there had been material non-disclosures at the time of the proposal, including the provision of multiple undertakings on the same properties.
Ms McAleenan claimed that she was, at all material times, an employee of Michael Lynn; that the policy was a composite, as distinct from a joint policy; that she was one of the insured as defined in clause 3 (a) (ii) of the policy (an employee) and had a contractual right to be indemnified, and that she was unaware of any circumstance that might give rise to claims against the practice.
The insurance company said she had held herself out as a partner, and had signed the proposal form in this capacity. It also contended that the policy was a joint, not a composite one.
Evidence was given that there had been discussions between Mr Lynn and Ms McAleenan on the possibility of her becoming a partner, but that no partnership had come into existence. There was correspondence with the Law Society in which she said she was a partner, and she signed the proposal form as “partner/ principal/director”.
Decision
After considering the law on partnership and the facts in this case, Ms Justice Finlay Geoghegan concluded that the plaintiff was not a partner, but an employee in the practice.
In relation to the insurance policy, she concluded that it was a composite and not a joint policy and that a solicitor employed with Michael Lynn Co came within the definition of “the insured” in clause 3 (a) (ii). Under a composite policy, dishonest or fraudulent acts or omissions of one insured would not preclude recovery by an innocent co-insured. It was not entitled to repudiate Ms McAleenan’s policy because of Mr Lynn’s behaviour.
The defendant had also sought, in an amended defence, to repudiate the policy because Ms McAleenan had misrepresented herself as a partner in signing the proposal form. Ms McAleenan said the form had been filled in by Ms Doyle and given to her to sign. She said she did not recall noting on the form that the detail concerning her purported status as partner was completed.
“The plaintiff is a solicitor . . . [she] either was or ought to have been aware of the obligations of full and accurate disclosure on a person seeking assurance,” said Ms Justice Finlay Geoghegan.
She found that she did not make an untrue statement that she was a partner knowingly, but she did make it “recklessly”, in that she was careless as to whether the statement was true or false. This was a material misrepresentation, in that the insurance company would have had certain expectations of a partner in relation to supervision of the practice. She therefore dismissed the plaintiff’s claim.
The full judgment is on www.courts.ie
Frank Callanan SC, John O’Donnell SC and Gary Compton BL, instructed by Beauchamps Solicitors, for the plaintiff; Rory Brady SC, Brian Cregan SC and Niamh Hyland BL, instructed by Lennon Heather, for the defendant