The High Court has ruled that Seamus Mallon was liable in principle for undertakings given by former partner Joseph Traynor, even though Mallon had no personal knowledge of them. It also found that the undertakings and the negligence of ACC Bank’s solicitor made Traynor Mallon and the solicitor concurrent wrongdoers. The amount of any contribution or indemnity was deferred to a later hearing alongside ACC’s damages claim.
The judgment, delivered by Mr Justice Clarke on 4 March 2011, concerned liability between solicitor Brian Johnston and third parties Traynor and Mallon. Johnston had previously been found negligent in handling ACC’s mortgage and lending transaction. ACC’s damages against Johnston had not yet been assessed. Traynor had allowed judgment to be entered against him in default; this hearing dealt with Mallon’s liability and the legal basis for Johnston’s third-party claim.
The court found that the partnership ended at a meeting on 30 March 2006, before any of the relevant undertakings were given. Although the former partners later signed an agreement on 30 August, the judge said its wording did not revive the partnership and reflected “unfortunate drafting”. Traynor continued the practice, used the old firm’s letterhead and gave undertakings in its name. Mallon had taken no steps to notify the public, former clients or others dealing with the practice that the partnership had ended. Johnston was unaware of the change.
The judge found that Traynor therefore retained ostensible authority to bind Mallon when giving the undertakings. The undertakings, which included a promise to use ACC funds solely to purchase property at Castlewarden, were within the ordinary course of a solicitor’s conveyancing business. The court held Mallon responsible for Traynor’s breach despite Mallon’s lack of direct knowledge.
The court also rejected Mallon’s argument that ACC could not rely on the undertakings because it had not authorised Johnston to accept them. Johnston was acting as ACC’s agent, and the court said ACC was entitled to the benefit of undertakings given to him and relied on by him.
On causation, the judge found an inextricable link between Johnston’s negligence and the breach of undertaking: the money would not have been lost without both. The court concluded that the damage was the same for the purposes of the Civil Liability Acts, making Johnston and Traynor Mallon concurrent wrongdoers.
The ruling determined only the principle of Johnston’s entitlement to seek a contribution or indemnity from Mallon. The court deferred the amount, and how the parties’ relative liabilities should be divided, until ACC’s damages hearing.