Insurance brokerage entitled to damages against Cork-based law firm

A firm of insurance brokers is entitled to damages against a Cork-based firm of solicitors over negligent handling of litigation, the Court of Appeal has ruled. The amount of damages will be decided later by the High Court.

Coakley Moloney Solicitors, South Mall, Cork, had denied negligence.

Emerald Isle Assurances and Investments Limited, with registered offices at Togher, Cork, and its two directors, Timothy Maverley and James Morey, who each hold a 50% shareholding in the company, sued over the solicitors’ handling of a legal action brought by Emerald over termination of its contract with Hibernian Life.

In that action, Emerald alleged the late 1994 termination was unlawful, ruined Emerald’s business and caused the loss of 80 jobs.

It brought proceedings against Hibernian seeking damages and other reliefs and the case ultimately settled in 2010 for €300,000 including costs.

In its action against the solicitors, Emerald alleged the case against Hibernian settled at an undervalue due to negligence by the law firm.

While dismissing the claim of negligence in a 2012 judgment, Mr Justice Nicholas Kearns said both sides had “a culpability”.

He found Sylvester Duane of the law firm gave various warnings between 2003 and 2006 which were not appropriately heeded by the Emerald side, including a risk an application would be brought to have the proceedings halted for want of prosecution.

While satisfied no elaborate warning was given and there was a breach of duty concerning the advice given insofar as Mr Duane was concerned, Mr Justice Kearns also found a more elaborate warning would not have brought about any other result.

Giving the three judge appeal court’s judgement granting Emerald’s appeal against that 2012 decision, Mr Justice Sean Ryan said it was clear from late 2003 there was a major disagreement between Emerald and a forensic accountant, Des Peelo, about the value of the Emerald claim.

Mr Peelo suggested the maximum value was €2.8m while Emerald argued it was three times that.

What happened over the next four years was “an unimpressive display of solicitors professional practice”, he said.

Mr Duane could be faulted for allowing discussions and debate between the Emerald side and Mr Peelo continue for four years without any resolution.

Mr Duane never sent a clear explicit letter outlining the danger the case could be struck out for want of prosecution unless the situation was resolved by a decision.

His negligence goes far beyond the failure to give an elaborate warning to Emerald, the judge held.

He also ruled the High Court erred in finding, even if an explicit warning was given, the Emerald side would not have paid any attention to it.


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