The High Court has refused an application to strike out or stay a couple’s claim against a solicitor over advice on an investment-backed loan, finding the claim was stateable and not bound to fail.
The ex tempore judgment was delivered by Ms Justice Murphy on 1 July 2016. The application was brought by the third defendant under Order 19 of the Rules of the Superior Courts and the court’s inherent jurisdiction. He argued that the claim disclosed no cause of action, was frivolous or vexatious, or was bound to fail and would amount to an abuse of process.
The plaintiffs, who were representing themselves, said they planned in March 2002 to buy a retail premises known as “Lynn’s” at 59 Griffith Place, Waterford City. They intended to run the business for 15 years and sell it on retirement. They sought funding advice from the second defendant, described in the judgment as apparently an accountant.
The plaintiffs said Bank of Scotland initially offered a straightforward mortgage repayment arrangement. They said the second defendant advised them instead to use funding from ACC Bank, paying interest monthly and investing in a Friends First endowment-type policy assigned to the bank. The policy’s value could rise or fall and was not guaranteed to cover the capital debt at maturity. The plaintiffs said neither the second nor third defendant told them of that risk.
The third defendant had been retained to advise on the legal aspects of the transactions and witnessed the plaintiffs’ signatures on the loan sanction letter, mortgage and assignment of the policy to ACC. The plaintiffs alleged he was negligent and breached his contract by failing to explain the policy’s volatility, the risk it might not repay the debt, and its alleged unsuitability for their plans.
Justice Murphy acknowledged deficiencies in the pleadings and the third defendant’s point that he had not obtained a peer report before proceedings were issued. But she said an application to end a claim at this stage faced a high threshold, and the power should be used sparingly in the clearest cases. She considered this was not such a case.
The court said whether there had been a breach of duty and whether any loss resulted were matters for the trial court. It refused the application. The judgment did not decide the underlying negligence or contract claim.