IpsofactoJ.com: International Cases [2005A] Part 4 Case 7 [SCIre]


SUPREME COURT OF IRELAND

Coram

O'Carroll

- vs -

Diamond

(practising as Paul F Diamond & Co, Solicitors)

HARDIMAN J

GEOGHEGAN J

KEARNS J

12 APRIL 2005


Judgment

Mr Justice Kearns

  1. I have read the judgment about to be delivered by Hardiman J on the issue of negligence in this case and agree with his reasoning and conclusion. I would also be of opinion that this appeal must fail on causation grounds.

  2. In cases such as the present one, a claimant will only recover damages if the court is satisfied on the balance of probabilities that the claimant would have acted on such advice had it been given and, if so, in a particular way which would have avoided the loss. In opening the appeal Mr. Dwyer, counsel on behalf of the appellant, accepts that proof of causation is a necessary prerequisite to the recovery of compensation.

  3. The point is illustrated in this context by the case of Sykes v Midland Bank Execular & Trustee Co Ltd, [1971] 1 Q.B. 113 in which a solicitor negligently failed to advise the client that the terms of a lease he was proposing to take prohibited him from sub-letting without the lessor’s consent. The client took the lease and subsequently wished to sub-let the property. The lessor refused to give consent and the client claimed from the solicitor for the loss of rental income. The Court of Appeal considered in the light of the evidence that the client had taken other leases with similar provisions and that, the balance of probabilities, he would have taken the lease in question even if correctly advised as to its terms.

  4. In that case, the evidence was unusually unequivocal in that the plaintiff’s evidence was that he would have executed the underlease in any event. Lord Salmon stated (at 127 G-H):-

    .... Mr. Sykes was a remarkably candid witness. He, no doubt disappointingly, would not say that it would have made any difference had the proper advice been given .... at the end of his evidence it certainly appeared that in his view it was as likely as not that the plaintiffs would have acted just as they did even if they had had proper advice about the effect of clause 2 (XI) of the underleases.

  5. In most cases, however, the question of whether advice would have made a difference to a claimant’s conduct involves a fairly sophisticated exercise on the part of the trial judge to determine what a particular person would have done in the specific circumstances obtaining in the case before him.

  6. Inevitably, the trial judge will depend to a large extent upon the evidence and demeanour of the claimant when giving that evidence. The court in discharging this obligation must exercise considerable care having regard to the fact that a plaintiff’s evidence about what he or she would have done if properly advised is bound to be coloured by the fact that an adverse outcome did in fact eventuate. There is an inevitable risk that evidence given by a plaintiff in these circumstances will be coloured (whether consciously or unconsciously) with the benefit of hindsight.

  7. This difficulty has led to widespread discussion in other common law jurisdictions, particularly with regard to advice given in the context of the doctor/patient relationship, as to how courts should go about this task. While the present context is that of solicitor/client, the underlying requirements of proof are not dissimilar. Indeed, authors Dugdale & Stanton (Professional Negligence, Butterworths; 1998 ed. Chap 18, p 397) treat the themes interchangeably. The briefest review of some of the medical cases is thus helpful, not least to decide whether the assessment of a claimant be made by reference to an objective or subjective test as to what he/she would probably have done if appropriate advice had been given.

  8. In the United States the objective test was preferred in Canterbury v Spence [1972] 464 F. 2d 772 and a similar approach was taken in Canada in Reibl v Hughes [1980] 1 14 D.L.R. (3d) 1.

  9. In Canterbury v Spence, Robinson J, in delivering the opinion of the Court, explained the preference for an objective test at p.790:-

    No more than breach of any other legal duty does nonfulfilment of the physician’s obligation to disclose alone establish liability to the patient. An unrevealed risk that should have been made known must materialise, for otherwise the omission, however unpardonable, is legally without consequence. Occurrence of the risk must be harmful to the patient, for negligence unrelated to injury is nonactionable. And, as in malpractice actions generally, there must be a causal relationship between the physician’s failure to adequately divulge and damage to the patient.

    A causal connection exists when, but only when, disclosure of significant risks incidental to treatment would have resulted in a decision against it. The patient obviously has no complaint if he would have submitted to the therapy notwithstanding awareness that the risk was one of its perils. On the other hand, the very purpose of the disclosure rule is to protect the patient against consequences which, if known, he would have avoided by foregoing the treatment. The more difficult question is whether the factual issue on causality calls for an objective or a subjective determination.

    It has been assumed that the issue is to be resolved according to whether the fact finder believes the patients testimony that he would not have agreed to the treatment if he had known of the danger which later ripened into injury. We think a technique which ties the factual conclusion on causation simply to the assessment of the patient’s credibility is unsatisfactory. To be sure, the objective of risk disclosure is preservation of the patient’s interest in intelligent self - choice on proposed treatment, a matter that the patient is free to decide for any reason that appeals to him. When, prior to commencement of therapy, the patient is sufficiently informed on risks and he exercises his choice, it may truly be said that he did exactly what he wanted to do. But when causality is explored at a post injury trial with a professedly uninformed patient, the question whether he actually would have turned the treatment down if he had known the risks is purely hypothetical; ‘viewed from the point at which he had to decide, would the patient have decidedly differently had he known something he did not know?’ and the answer which the patient supplies hardly represents more than a guess, perhaps tinged by the circumstances that the un-communicated hazard has in fact materialised.

    In our view, this matter of dealing with the issue on causation comes in second best. It places the physician in jeopardy of the patient’s hindsight and bitterness. It places the fact finder in the position of deciding whether a speculative answer to a hypothetical question is to be credited. It calls for a subjective determination solelyon testimony of a patient/witness shadowed by the occurrence of the undisclosed risk.

    Better it is, we believe, to resolve the causality issue on an objective basis: in terms of what a prudent person in the patient’s position would have decided if suitably informed of all perils bearing significance. If adequate disclosure could reasonably be expected to have caused that person to decline the treatment because of the revelation of the kind of risk or danger that resulted in harm, causation is shown, but otherwise not. The patient’s testimony is relevant on that score of course but it would not threaten to dominate the findings. And since that testimony would probably be appraised congruently with the fact finder’s belief in its reasonableness, the case for a wholly objective standard for passing on causation is strengthened. Such a standard would in any event ease the fact finding process and better assure the truth as its product.

  10. A similar approach was adopted in Reibl v Hughes [1980] 1 14 D.L.R. (3d) where Laskin C.J.C. delivering the judgment of the Canadian Supreme Court disapproved the subjective test, stating as follows at p.15:-

    It could hardly be expected that the patient who is suing would admit that he would have agreed to have the surgery, even knowing of the accompanying risks. His suit would indicate that, having suffered serious disablement because of the surgery, he is convinced that he would not have permitted it if there had been proper disclosure of the risks, balanced by the risks of refusing the surgery. Yet, to apply a subjective test to causation would, correlatively, put a premium on hindsight, even more of a premium than would be put on medical evidence in assessing causation by an objective standard.

  11. However, a subjective approach has been adopted in Australia in Ellis v Wallsend District Hospital [1990] 2 Med L.R. 103, Bustos v Hair Transplant PTY. Ltd (unreported, New South Wales Court of Appeal, 15th April, 1997) and O’Brien v Wheeler (unreported, Supreme Court of New South Wales, 23rd May, 1997).

  12. A subjective approach has also been preferred in the United Kingdom in Chatterton v Gerson[1981] Q.B. 432, Hills v Potter [1984] 1 W.L.R. 641 and Smyth v Barking H.A. [1994] 5 Med L.R. 285.

  13. Many of these authorities were opened to me in very helpful submissions lodged in the case of Geoghegan v Haris [2000] 3 I.R. 536, in which I ultimately concluded that a pragmatic approach to what a claimant would have decided was the preferred course to follow. This I took as meaning that the court could be guided, and might in certain cases be compelled, where there was a lack of other evidence, to adopt an objective test, but in other instances, where there was reliable and cogent evidence of subjective intent, then it was open to a court to take the view that the objective test could and should yield to a subjective one. I see no reason for adopting a different approach in the instant case in trying to determine what this plaintiff would have done.

  14. There is further guidance to be derived from the medical cases. In cases of elective surgery, the failure to warn must be regarded as more likely to have caused the loss, given that a patient might well decided to forego surgery when he has a real choice in the matter. Conversely, where the medical procedure is absolutely essential and there are no real alternatives, the failure to warn of an inherent risk may be seen as making little or no contribution to the decision of the patient as to which course he or she will adopt.

  15. This case falls four square into the latter category because of the crisis precipitated by the financial difficulties of the plaintiff’s husband. They were of such a magnitude as to threaten not only the family home, but the very survival of the family itself.

  16. While Mr. Dwyer argued that the plaintiff would have ‘abandoned’ her husband had she been properly advised, this is nowhere apparent from the evidence given at the trial. Indeed, evidence was not led from the plaintiff to suggest that she would have altogether severed her own interest in the family home from the requirement to rescue her husband from the predicament in which he found himself. It was thus hardly surprising that the trial judge himself had to endeavour to clarify the position as follows:-

    Mr. Justice O’Neill: leaving aside that. Faced with the situation that you were faced with at the time that both you and your husband were faced with, did you realise that there was a need to, as it were, protect your husband and the only way to do that was by selling the family home available or was it a priority?

    Witness: Well I would not have wanted to protect him, my Lord, because if I was let go to see the Haydens I had other options at the time. I wanted to go and see the Haydens. I should have been let go and come back after a week. There was no huge big rush to sell it on our side. I know the Haydens would want their money and I am sure their solicitor would have wanted the money but I should have been given a chance to go and see them.

    Q

    What did you think you could achieve by seeing Mrs. Hayden?

    A

    I am sure she would have taken the money in instalments or God knows what I would have achieved. I would have achieved something, particularly when it came when we were moving out of the house.

  17. This exchange suggests that the plaintiff’s primary concern arising out of the supposed failure to advise was the fact that it deprived her of an opportunity of negotiating with the Haydens for an extension of time within which to vacate the family home. It does not suggest that she would have adopted a radically different approach to this entire matter, and one which would have left her husband to sink, rather than swim.

  18. At the end of the day, the trial judge was, after hearing and observing the plaintiff for the lengthy period during which she gave evidence, in the best possible position to assess the plaintiff’s credibility, either by reference to an objective or subjective standard or that favoured in Geoghegan v Harris, and it would require something quite out of the ordinary to persuade me, deprived as I am of a similar opportunity of evaluating the plaintiff, to invade in some unspecified way the function of the trial judge in that regard.

  19. Towards the end of his judgment, the trial judge sets out his conclusions and the material upon which they are based in this regard in the following manner:-

    In her own interest what she had to gain was the retention of half of the net proceeds on a sale of the family home, either at the time of the sale to the O’Sullivans or later through a forced sale through the courts. If she opted to agree to the sale to the O’Sullivans, she would have been entitled to close on £49,000. If she refused to cooperate and a sale took place through the courts approximately 2 years later, she probably would have got less ....

    She would of course have had to consider the risks involved in non-cooperation and claiming her half share. Undoubtedly the Haydens would have been very aggrieved if the plaintiff adopted that course and it is probable that they would have pursued Mr. O’Carroll aggressively. This would have resulted in an application to the court to attach him for contempt for failing to have filed an affidavit disclosing where the Hayden funds had gone. If, to avoid a contempt of court, he filed the affidavit in question, he would have then have made admissions which would have placed him in jeopardy in a criminal investigation of the matter. It is probable as well that a complaint would have been made to Gardaí and that a fraud investigation would have ensued, with the likelihood of a criminal prosecution to follow.

    I am mindful of the fact that the plaintiff in her evidence said that she was not interested in protecting her husband. At the time when these events were occurring, I am satisfied that it was different. No doubt the plaintiff was extremely angry with Mr. O’Carroll for getting them into an awful predicament. However, it would seem to me that it was very unlikely that she would have left him exposed to the risk of criminal prosecution and a custodial sentence, with all the attendant consequences of that for Mr. O’Carroll, but more particularly for the plaintiff herself and her children. It would seem to me that the salvaging of her half share from the sale of the family home would not in all probability have outweighed the terrible consequences for the family as a whole of criminal proceedings against Mr. O’Carroll. That is the choice she would have faced at that time.

  20. It seems to me that the foregoing passage clearly demonstrates that the learned trial judge put all the competing considerations in the melting pot when deciding what the plaintiff would probably have done. While Mr. Dwyer suggests there was no evidence of a pending criminal prosecution, it is undeniable that there was a risk of such a prosecution materialising, and indeed it appears that some preliminary communication had been made with local Gardaí. Mr. O’Carroll was effectively unable to swear affidavits in the court proceedings involving the Haydens because the admissions he would have been compelled to make were such as would, at the very least, have terminated his professional career as an accountant. Furthermore, as noted by the learned trial judge, the Haydens would, as a matter of probability, have pursued Mr. O’Carroll all the more aggressively if Mrs. O’Carroll had stood back from her husband’s misfortunes. Finally, and perhaps most importantly, the plaintiff was extremely conscious of her own responsibility both to her husband and her children, and indeed gave distressing testimony of the fact that her daughter had spoken to her when the news of this calamity brook, beseeching her not to separate from her husband or to break up the family.

  21. The court was informed that the family did not, in fact, break up, at least until 1996.

  22. Furthermore, the eventual closing of the sale of the family home did not take place until July, 1992. Whatever her initial distress and confusion, it is inconceivable that in all that intervening period the plaintiff would not herself have realised that she could, if dissatisfied with Mr. Diamond’s advices or the lack thereof, have sought advice from some other solicitor in Naas, or indeed in Dublin.

  23. For all these reasons, I am satisfied that the learned trial judge correctly decided the issue of causation in this case and would therefore dismiss the appeal.

    Mr. Justice Hardiman

  24. The plaintiff brought these proceedings against the defendant, who is a solicitor, claiming damages for professional negligence, breach of duty, and breach of contract. In his judgment delivered the 31st July, 2002 the learned trial judge (O’Neill J.) held that the defendant had been guilty of negligence but further held that the plaintiff had not suffered any loss as a result of this. He therefore dismissed the plaintiff’s claim. The plaintiff has appealed against the dismissal of her claim. The defendant, in turn, has challenged the finding of negligence.

    BACKGROUND

  25. In 1963 the plaintiff married Mr. Frank O’Carroll, who is an accountant. They had four children. In the late 1980s they were living in Ballymore Eustace, Co. Wicklow, in a house which they had built and jointly owned. Adjacent to the house were some lands which were owned by a company of which the plaintiff and her husband were directors and shareholders. As well as the husband’s accountancy practice, they had various other interests: in greyhounds some of whom appear to have been kept on the lands, in an animal feed company, Alert Animal Foods Limited, in CBM Publications Limited, Carpettown Furniture Limited and Remacroft Limited. There were other companies which the plaintiff denied any knowledge.

  26. In November, 1988, the plaintiff suffered a catastrophe from which, she says herself, she has never recovered and which is the basis of these proceedings. This was as a result of proceedings taken against her husband by Cecelia Hayden and Eugene Hayden.

  27. The Haydens, who are mother and son, lived some miles from the O’Carrolls near Ballymore Eustace. Mr. Hayden had done some work for one of the O’Carroll companies. It appears (and this court has not seen the proceedings issued by the Haydens) that they had entrusted Mr. Frank O’Carroll with a sum significantly over £100,000 for investment purposes, and that Mr. O’Carroll had made away with this money. On the12th October, 1988, an ex-parte application was made to the High Court which made orders restraining Mr. O’Carroll from reducing his assets below £140,000, and from dealing with any property or assets of his without the leave of the court. On the 17th October, 1988, those orders were continued and it was further ordered that Mr. O’Carroll swear an affidavit, to be delivered before the 7th November, 1988, which would:-

    1.

    Make full disclosure of his assets inside and outside the jurisdiction, and

    2.

    Make discovery on oath of all documents whatsoever in his possession, control or power relating to the acquisition by him of the moneys of the plaintiff and their subsequent disposition by him.

  28. It appears that Mr. O’Carroll, unfortunately, had no defence whatever to the Hayden proceedings. He said so himself in evidence in this action. In early November, 1988, his position was a very acute and difficult one. He consulted the defendant who retained Mr. Gerard Danaher of counsel. A consultation was held on the 3rd November, 1988, at which the matter was thoroughly explored. Mr. Danaher advised that if Mr. O’Carroll were to swear an affidavit setting out the disposition of the Haydens’ money “it would have left him in jeopardy in regard to the criminal law”, as it was delicately expressed in these proceedings. On the other hand, of course, if he did not swear the affidavit which had been ordered by the High Court he would have been liable to sanction for contempt of court. More immediate even than the possible proceedings which could have led to his incarceration was the fact that, if no affidavit was forthcoming, and no settlement possible, the Haydens’ lawyers would proceed to ventilate their complaint in open court with destructive consequences for Mr. O’Carroll’s practice as accountant, his status as a company director and financial advisor, his reputation generally and his ability to generate income. On the hearing of this appeal, it was agreed by counsel for Mrs. O’Carroll that the events of early November 1988 constituted an immediate and critical emergency not only for Mr. O’Carroll but for his family as well in view of their dependence on him.

  29. In those circumstances it was decided to endeavour to reach a settlement with the Haydens. Solicitor and counsel had been instructed by Mr. O’Carroll that the plaintiff was a joint owner of the family home and a director and shareholder in the land owning company, Cannamore Enterprises Limited. He was advised that her consent to and participation in any settlement was critical. He assured his lawyers that the plaintiff was fully behind him and was willing to charge the family home and to take the steps necessary to allow the company to create a charge over its assets. However, he did not in fact tell her of the crisis until the morning of the 14th November to which date the action had been adjourned in the hope of settlement.

  30. The steps mentioned above were necessary because, after discussions between counsel, it transpired that the only available basis for a settlement was a consent to judgment by Mr. O’Carroll together with the charging of the assets to secure the Haydens position pending a sale to realise the amount of the judgment. A settlement along those lines was negotiated on the 7th November, 1988. It depended, of course, on the plaintiff’s approval and participation.

  31. In the event, a number of documents were executed by the plaintiff on the morning of the 14th November, 1988. These were: a charge over the family home and the Cannamore lands, a resolution of Cannamore Enterprises Limited, form 47 being the particulars of a charge created by a company for the purpose of the registration of the charge, Family Home Protection Act declarations for both the family home and the Cannamore Enterprises Limited lands, and a letter consenting to the use of the land certificates.

  32. Thereafter, the proceedings brought by the Haydens were formally compromised. In the summer of 1989 the house and lands were put up for sale and were sold. Serious difficulties arose with the sale and it became necessary for the plaintiff and her husband to take Specific Performance proceedings against the purchasers, a couple called O’Sullivan. Those proceedings, too, were difficult because the O’Sullivans alleged that a side agreement had been entered into between the plaintiff and Mrs. O’Sullivan which might have invalidated the transaction. The proceedings were ultimately compromised and the sale closed in 1992, according to Counsel for the plaintiff on this Appeal.

    THE PLAINTIFF'S COMPLAINTS

  33. On the 10th of November, 1994, the plaintiff issued proceedings against the defendant for breach of contract, negligence and breach of duty. A statement of claim was delivered on 21st February, 1996. After an exchange of letters about particulars, a defence was delivered on 6th June, 1996. For reasons that do not appear from the papers or from the submissions to this court, the hearing did not take place until the months of January and February 2002 and judgment was given on the 31st July, 2002.

  34. The plaintiff’s complaints can be gathered from the statement of claim. First and foremost, she says that the defendant failed to advise her as to the necessity to obtain independent legal advice in the circumstances which prevailed on the14th November, 1988, and failed to refer her for independent legal advice. To this the defendant’s answer is a simple one: he says that he advised her in strong terms to take independent legal advice but she declined to do so. Further, the plaintiff says that she was not properly advised about her entitlement to an equity in the family home. This claim is not easy to understand since, as appears from the history above, she was a joint owner of the premises. She says that she was not advised by the defendant about the provisions of the Family Home Protection Act 1976; that the defendant failed to take the advice of counsel or senior counsel before dealing with the plaintiff; that he provided incorrect and misleading advice in respect of the settlement in Hayden v O’Carroll; and that he failed to give an account of all moneys handled by the defendant in respect of the “said actions and transactions”. She also complains that the plaintiff told her she had no option but to follow his advices.

    HIGH COURT DECISION ON THE FACTS

  35. It is important to record that the learned trial judge held, firstly, that although there was a conflict of evidence in certain aspects there was overall “a good deal of consistency between the respective versions of events”. Insofar as there was a conflict, however, he preferred the evidence of the defendant to that of the plaintiff. He did so for a number of reasons cogently set out in his judgment at pp. 13 ff, and which I do not propose to repeat here. A portion of the plaintiff’s evidence was incapable of being correct and this was demonstrated by documentary evidence and the evidence of other witnesses. Moreover, even on a reading of the transcript, the plaintiff’s evidence emerges as that of a person who is tormented by a sense of injustice and who has subordinated everything, even her own subjective desire to give truthful evidence, to that. Her evidence varied significantly on vital issues. For example she denied she knew she had a half interest in the family home:

    I didn’t know my rights at all I knew nothing. I suppose I stayed in the country minding the house and having the children and I expected my husband to be doing his job and everything was rosy.

  36. When referred to documents, however, and questioned by the judge she admitted that she had known that they both owned the house. Similarly, dealing with land beside the family home, she first said

    I didn’t even know a company existed .... sure I didn’t even know about a company that my husband had, you know, I knew nothing about them.

    But very shortly afterwards conceded that she knew that “the field” was owned separately by a company. She professed complete ignorance of legal matters, contracts, charges and the like but she had previously been involved in sales and purchases of property and, in 1982, in the creation of a charge over their family home. Indeed, she “imagined” that she had “organised the legal end” of the acquisition of the land in Ballymore Eustace.

  37. The lynchpin of the plaintiff’s case as it unfolded was that she had never been advised to take independent legal advice before deciding to sign the documents which she did sign on the 14th November, 1988. The learned trial judge accepted the defendant’s account of this which he was able to give with some precision because he had contemporary attendances. The learned trial judge said:-

    I accept the evidence given by the defendant’s two secretaries which was to the effect that Mr. Diamond was meticulous and prompt in keeping attendances. I am satisfied that his attendances in relation to the transactions in issue in these proceedings are a fair and truthful account of the business recorded. I do not accept for one moment that Mr. Diamond fabricated any of these records.

  38. The last sentence refers to an allegation made in evidence by the plaintiff. She had frequently and strongly stated that she had never been advised to take advice from another solicitor. She made this allegation stridently even though, as she herself agreed after a long cross-examination, her memory was not good. Furthermore, and perhaps understandably, her reaction to the sudden revelation of her husband’s malfeasance which had exposed them to the Haydens’ claim was to go “bananas” and “berserk” and “hysterical” as she variously described it, a reaction which she had never got over. It was, I believe, this latter reaction which led her into making the allegation that Mr. Diamond had fabricated his attendances, a charge for which there was no objective support. At other times, however, she had sufficient insight to say:-

    I lost my family home, I had to sell my family home to pay off my husband’s debts.

  39. That, indeed, is the sad reality. The failure of her husband to prepare her for that reality until the need to sign legal documents was imminent was an appalling omission on his part. It was not the fault of the plaintiff and it constituted a grievous injustice to her. The difficulties which led to the sale of the family home were not of her making. She has become obsessed by that fact to the point where she seems unable to realise that they were not of Mr. Diamond’s making either.

  40. The principal allegation made by the plaintiff, that Mr. Diamond failed utterly to advise her to take independent legal advice, was stood over this allegation in evidence and the logic of it drove her to make the further allegations that the attendances recording this advice to her were fabricated. In making these grievous and damaging allegations Mrs. O’Carroll, who had been the victim of a grave injustice at the hands of her husband herself inflicted an injustice on Mr. Diamond. It does not appear that the learned trial judge was pressed to accept this fundamental allegation and, of course, on the hearing of this appeal the case proceeded on the basis that Mr. Diamond had indeed advised the plaintiff to take independent advice, and that his attendances accurately reflected what occurred.

    SUBMISSIONS ON APPEAL

  41. The case for the plaintiff proceeded on the basis that, even assuming the advice to take independent advice to have been given, there was a breach of Mr. Diamond’s duty to Mrs. O’Carroll in other ways. Specifically, it was submitted that he should have done more to get her to take independent advice: at one point it was suggested that he should personally have telephoned another solicitor in Mrs. O’Carroll’s presence and put her on the line, therefore compelling her to say something to the other practitioner. More realistically, it was urged both in the High Court and in this Court that he should himself have advised her as to her rights and options if she did not proceed with the charging and subsequent sale of her interest in the family home. This was the view which eventually found favour with the learned trial judge.

    DEALINGS BETWEEN PLAINTIFF AND DEFENDANT

  42. The account of these dealings which was accepted by the trial judge is succinctly set out in two attendances of the defendant, dated the 14th November, 1988 and the 15th November, 1988, as follows:

    14th November, 1988.

    Attending Frank O’Carroll when he telephoned me from home. He said that he was now speaking with his wife and that they didn’t know what they were going to do. He asked whether or not I would talk with her. I told him that I felt she should take independent legal advice in connection with protecting her share of the house.

    He said that she was very upset about the matter. She then came on the phone and I told her that I felt she should obtain independent legal advice if she was in any doubt in the matter. She said that if she had known about it beforehand that she would have gone to see Mrs. Hayden. I said that I didn’t think this would have done much good as I felt that her Solicitors were advising her and that was not going to discuss any matter directly with the Defendants.

    I reiterated to her that she should obtain independent legal advice if there was any problem. I told her however I felt that we had done a very good job in protecting Frank so far and if it had been this time last week, I said that he was getting ready to go to jail for contempt of Court as we would not be in a position to file the necessary Affidavits.

    She said that she didn’t know any Solicitors and I said that there were plenty of reputable solicitors around Newbridge & Naas if she wanted to go and see one of those. I said that obviously a Solicitor would not be in a position to adviser her in relation to all matters concerning this case in an hour or so and it would be a matter where we would have to play for time with the other side.

    I told her that I had not been aware of the Woodwind matter relating to O’Sullivan & Lawlor and obviously this was another situation we would have to try and resolve at some later stage but in the first instance I felt the only thing to do was to taken one case at a time.

    She said that she was very anxious that Mrs. Hayden got her money back and in that regard she wanted to do everything possible to get that.

    She said that she would think about the situation and then said that Frank O’Carroll wanted to have another word with me. I finally said to her that if she was in any doubt about anything that she should get independent legal advice and I could not guide her in the matter.

    I then spoke with Frank and he said that he had discussed the matter further with his wife and he would then arrange to come up to my office. I said to let me know as soon as his mind was made up and I would go over to see Mr. Danaher now and try and h old matters back for a further period of time.

    15th November, 1988.

    Attending Mr & Mrs. O’Carroll when they called in. I explained first of all to Mrs O’Carroll the situation as to what was to be signed this morning if she was willing to do so. I said that I couldn’t advise her to sign it or not sign it and it would be totally up to her as she had already indicated that she wanted to try and keep her half of the house. She said that she was quite willing to go along with the situation now that she understood it more so. She said that she knew the house would have to be sold and they had both decided that this was the only course of action open to them. She said that she wanted to go and talk with Mrs. Hayden as she had been a friend of hers and I told her that I didn’t think it would be appropriate to do that until matters had been resolved fully.

    I then went through all the forms to be signed and explained what the mortgage would mean and that it was a charge that would come in after the charge in favour of AIB. I said that if there wasn’t enough to meet the amount due to the Haydens out of the proceeds of sale of the house, that the greyhounds would have to be sold as would be 8 acres belonging to Cannamore Enterprises and I explained the terms of the resolution as drafted and they both then read all documentation and were happy enough to sign same. In relation to the matter of the Family Home Protection Act Declarations, they said that they would go to the office in Lombard Street and obtain a copy of the relevant extract and would then arrange for the swearing of both Declarations and return them to me.

    I made it very clear that I was not forcing her to sign anything and she said that she understood that and was quite willing to sign all the documentation and said it was the only way that she could protect Frank in the matter.

    I then arranged to witness their signatures where applicable and said that the matter was adjourned until next Monday and would hopefully be finally resolved at that stage. I said that I had got them to sign the forms in relation to the Land Registry and the application to get the Land Certificate in case there was any problems on priority.

  43. It is clear from these documents that Mrs. O’Carroll was informed that Mr. Diamond could not advise her as to whether or not to sign the documents in question. He acknowledged that she had already indicated that she wanted to try to keep her interest in the house. She was urged to take independent legal advice and he offered to try to get for her the time necessary to take advice from another solicitor in a meaningful fashion. It is more than probable that he could have done so since, from the Haydens’ point of view, this would have improved the quality of their security. The plaintiff’s recorded statement that she did not know any solicitors is flatly contradicted by her own evidence in which she mentions at least three who had previously acted for her.

  44. The plaintiff’s case as it now stands is based on the assumption of the truth of what was recorded in these attendances, and on the contention that, even on that basis, the defendant did not do enough. It was specifically suggested, in part on the basis of the evidence of Mr. O’Donnell, an expert called on behalf of the defendant, that, having accepted her as a client, Mr. Diamond should have advised her on the merits of the issue as to whether or not she should sign the documentation and that he, in the words of the learned trial judge,

    was wrong in withholding advice from Mrs. O’Carroll either separately or jointly with her husband and that his omission on this regard is of such an obvious or even glaring nature as to lead inexorably to a finding that his conduct of this aspect of the transaction is not of a standard which one would have expected from a member of the solicitors profession of his standing, and thus was negligent.

    RELATIONS BETWEEN THE PARTIES

  45. The relations between the plaintiff and the defendant were difficult and marked by obvious potential for conflict, for two quite separate reasons. From a legal point of view, Mr. Diamond was requested to act for two parties, husband and wife, one of whom was going to charge her property for the benefit of the other. In these circumstances it is apposite to recall what was said by Barron J. in Carroll v Carroll [1999] 4 I.R. 241:

    The final ground upon which the defendant relies is that the donor received independent legal advice from Mr. Joyce. The question of advice by a solicitor was considered in the High Court (Budd J.) in Gregg v Kidd [1956] I.R. 183. At p. 201 and 202, Budd J. approved certain principles from the judgment of Farwell J. in Powell v Powell [1900] 1 Ch. 243. These were:

    (1)

    A solicitor who acts for both parties cannot be independent of the donee in fact; and

    (2)

    To satisfy the court that the donor was acting independently of any influence from the donee and with a full appreciation of what he was doing it should be established that the gift was made after the nature and effect of the transaction had been fully explained to the donor by some independent and qualified person. Further, the advice must be given with acknowledge of all relevant circumstances and must be such as a competent advisor would give if acting solely in the interests of the donor.

    Accepting these principles, there can have been no independent advice given by Mr. Joyce since at best he was acting for both parties.

  46. A little later Barron J. said:

    As I have said before, a solicitor or other professional person does not fulfil his obligation to his client or patient by simply doing what he has asked or instructed to do. He owes such person a duty to exercise his professional skill and judgment and he does not fulfil that duty by blithely following instructions without stopping to consider whether to do so is appropriate. Having done so, he must then give advice as to whether or not what is required of him is proper. Here his duty was to advise the donor to obtain independent advice.

  47. In my view, this passage is a clear and concise statement of the law and is fatal to the proposition that the defendant should have advised the plaintiff in relation to the transaction, and “was wrong in withholding advice from [her]”. Indeed, as the learned trial judge at one point said in commenting on portion of the passage cited above:

    That would suggest to me that in a situation of conflict between the plaintiff and Mr. O’Carroll, the one person who could not advise Mrs. O’Carroll was the defendant.

  48. Carroll v Carroll of course postdates these events, but it restates legal propositions established since 1900, if not earlier.

  49. I have had the opportunity of considering a very recent English case on Solicitors’ duty, Hilton v Barker Booth & Eastwood [2005] 1 AER 651. There, a firm of Solicitors acted for two separate persons engaged in a property development. The firm was privy to information about one of those persons (that he had served a prison sentence for a commercial offence) in respect of which they owed him a duty of confidentiality. Accordingly, they did not disclose it to their other client. The House of Lords held that if a solicitor put himself into a position of having two irreconcilable duties, that was his own fault. The solicitor who had conflicting duties to two clients could not prefer one to the other. He had to perform both as best he could and “this may involve performing one duty to the letter of the obligation, and paying compensation for his failure to perform the other. But in any case the fact that he has chosen to put himself in an impossible position does not exonerate him from liability”. I have no doubt that this is correct. I do not, however, believe that Mr. Diamond “chose to put himself in an impossible position”. The impossible position referred to in the Hilton case, and in others back to Moody v Cox [1917] 2 Ch. 71, is that of accepting instructions from two persons with conflicting interests without disclosing that state of affairs. In Hilton, the solicitors undertook to act for both parties even though they knew there was a relevant piece of information about one which their professional duty to that person precluded them from disclosing to the other. Furthermore, the solicitors had themselves advanced a substantial loan to one of the clients which in practice would only be recoupable if the other client participated in the planned development. Neither of these facts was disclosed.

  50. In the present case Mr. Diamond made it clear not only that the plaintiff should take independent legal advice but that he could not possibly advise her on the vital question of whether to charge and subsequently to sell the family home and other property. On the authority of Carroll v Carroll, he was absolutely correct in saying this. Does the fact that, having said it, and having received the plaintiff’s instructions that

    she was quite willing to go along with the situation now that she understood it more so .... she knew the house would have to be sold and they had both decided that this was the only course of action open to them,

    he proceeded to explain the necessary documents to her and have her sign them in his office alter his duty? I do not believe that it does, at least in the dramatic and urgent circumstances of this case. In Finlay v Murtagh [1985] IR 232 at 254, Henchy J. referred to the House of Lords decision in Hedley Byrne v Heller [1964] AC 465 as follows:

    .... Once the circumstances are such that a defendant undertakes to show professional care and skill towards a person who may be expected to rely on such care and skill and who does so rely, then if he has been damnified by such default that person may sue the defendant in the tort of negligence for failure to show such care and skill.

  51. It appears to me that the defendant’s solicitor here did not undertake to show professional care and skill towards the plaintiff except in the purely ministerial matter of effecting charges and other documents. He made it perfectly clear that in the circumstances of the case he could not discharge the other and broader duties which a solicitor giving her independent advice would discharge i.e. to discuss whether, from her point of view, it was wise, proper, necessary or desirable to sign the relevant documents.

  52. Furthermore, I do not think that, if Mr. Diamond had taken it on himself to advise Mrs. O’Carroll as to the merits of the transaction, and she proceeded with it, such advice would have been effective to uphold the transaction against challenge. The situation which would then arise could certainly have been distinguished from Carroll v Carroll, where the solicitor did not give any advice at all. But Mr. Diamond would still have been a person who, on criteria established for upwards of a century, could not be independent of Mr. O’Carroll, the person for whose benefit the transaction was to be. Equally, no advice by him could have met the requirement that “the nature and effect of the transaction [be] fully explained to the donor by some independent and qualified person”. Mr. Diamond was of course a qualified person but in the circumstances of the case he could never have been an independent person.

  53. The other aspect of great difficulty confronting both plaintiff and defendant was the extremely fraught and extremely urgent nature of the transaction in contemplation. Because of this it was not remotely comparable to an ordinary charging or conveyancing transaction. There was an immediate threat to the livelihood and earning capacity of Mr. O’Carroll and therefore to the wellbeing of his family. This threat also extended to the destruction of his reputation, which would make it difficult or impossible to generate earnings in any alternative way. His professional standing as an accountant was also under immediate threat. Less immediate, but very real, was the threat of criminal proceedings for fraud. I am satisfied that a complaint of fraud would have been made to the guards if the Haydens’ proceedings were not settled: this appears from the evidence of Mr. Comyn, solicitor. It was indeed agreed on the hearing of this appeal that, by the 14th and 15th of November, 1988, a situation amounting to an immediate crisis existed.

  54. It was in these circumstances that Mrs. O’Carroll simply declined to take independent advice and gave a reason for doing so, that she did not know any solicitors, which was untrue. Despite this, the very acute circumstances prevented the defendant solicitor from taking a number of courses of action which might otherwise have been open. He could not, for example, say that he would not act for either party in the transaction or would not act until she took the advice; he owed a duty to Mr. O’Carroll which he could not then resign. That is why he could not advise the plaintiff. In my view it is utterly impractical to say that he could have forced Mrs. O’Carroll to consult another solicitor in the manner suggested or otherwise. Indeed, it was much to be preferred that Mrs. O’Carroll would consult a solicitor of her own choosing and not of Mr. Diamond’s.

  55. In my view, in these most unusual circumstances, Mr. Diamond took the only steps possible in urging Mrs. O’Carroll to take independent legal advice and in stating emphatically that he could not advise her as to whether or not she should proceed to carry out the proposed transaction. If he had done less, he would not have met the requirements laid down in Carroll v Carroll. If he had tried to do more his advice would not have been independent and would not have met the Carroll v Carroll requirements in that respect. He would then, indeed, have “chosen to put himself in an impossible position”.

  56. I wish to stress that my conclusion in this regard is based on a combination of the legal principles set out in Carroll v Carroll and the very difficult and unusual circumstances of the case. My decision should not be taken as implying that, in other circumstances, a solicitor necessarily discharges his duty merely by urging a person to take independent advice and blandly accepting a decision not to do so. Depending on the circumstances his obligations may be much greater and may include declining to act until such advice is taken. This, indeed, may be a prudent course in the interest of his original client, the person making a disposition or giving a security, and the person for whose benefit any security is given. But each case must be assessed on its own facts. The facts here are unusual and presented an acute dilemma which I believe Mr. Diamond handled as well as any solicitor could in the circumstances.

    EVIDENCE OF MR. O’DONNELL

  57. In reaching his conclusion that the defendant should not have withheld advice from the plaintiff, the learned trial judge heard the evidence of the distinguished conveyancing solicitor, Mr. Rory O’Donnell, who was called for the defendant. The judge said:

    In my view the solution to this difficult problem is to be found in the evidence of Mr. O’Donnell. He seemed to be surprisingly unimpressed with the conflict of interest problem. His evidence as I understand it was to the effect that in circumstances where there was clearly no marital disharmony between the plaintiff and Mr. O’Carroll, he appeared to see no difficulty in them being advised together and having all of the options discussed with them both. In that context he acknowledged that the options available to the plaintiff would have to be discussed.

  58. I wish to make two observations on the evidence of Mr. O’Donnell.

  59. There is no doubt whatever that Mr. O’Donnell is an eminent solicitor, quite correctly credited with great expertise in conveyancing matters. Does that render admissible what is recorded, for example, at page 114 of the Transcript of Evidence given on the 12th February, 2002? There, after a nineteen line statement of assumptions about the facts of the case, the plaintiff’s counsel concluded “If that was the case, what do you think Mr. Diamond’s obligations would be?”

  60.  In Midland Bank v Hett, Stubs & Kemp [1979] Ch. 384 at 402, Oliver J. said, in relation to the evidence of solicitors as to what they would have done in a particular situation:

    I must say that I doubt the value, or even the admissibility, of this sort of evidence, which seems to be becoming customary in cases of this type. The extent of the legal duty in any particular situation must, I think, be a question of law for the Court. Clearly, if there is some practise in a particular profession, some accepted standard of conduct which is laid down by a professional institute or sanctioned by common usage, evidence of that can and ought to be received. But evidence which really amounts to no more than an expression of opinion by a particular practitioner of what he thinks that he would have done had he been placed, hypothetically and without the benefit of hindsight, in the position of the defendants, is of little assistance to the Court; whilst evidence of the witness’s view of what, as a matter of law, the solicitor’s duty was in the particular circumstances of the case is, I should have thought, inadmissible, for that is the very question which it is the Court’s function to decide.

  61. In this case, the learned trial judge evinced uneasiness about portions of the evidence of Mr. O’Donnell, precisely because he was being requested to comment on matters of law. The input of the parties on matters of law is to be by submission, and not by evidence. Since the matter was not fully argued in the High Court I would not make any decision of significance on this basis, but would simply note that there appears to me to be a great deal to be said for the comments of Oliver J., cited above. I wish to emphasise that these matters arose on, our out of, cross-examination and were not volunteered by Mr. O’Donnell.

  62. In any event, I am far from convinced that (assuming it to be admissible) a firm and useful statement emerged from Mr. O’Donnell’s cross-examination. I would stress, in fairness to the witness, that his brief direct evidence seems perfectly clear: he said that a solicitor would normally accept the instructions of a client that his, the client’s, wife was prepared to enter into a particular transaction. He said that in the circumstances pertaining on the 14th November, 1988, the husband’s solicitor had a duty to advise the wife that she should get independent advice, and that that seemed to have been done. Asked about the situation which arose when a hypothetical client declined to take legal advice from an independent source he said that if the client had given the instructions recorded in the attendance on the 15th November

    In my opinion that would have been the normal thing to do and I would have thought that other than mentioning the independent advice, I don’t believe that a solicitor in that situation, as I understand them, would have sent somebody [away] and said ‘sorry I can’t do that’. Now, there would be circumstances where you would have a duty to do that, but I don’t think in this case.

  63. He said that such a duty might arise if there was marital disharmony that the solicitor was aware of or if the charge was required to secure borrowings for a frivolous project. He said he believed it was reasonable for the defendant to act in the charging, having advised the plaintiff to take legal advice, though he said “in a perfect world” he would have got her to sign some document acknowledging that she had been advised to take independent advice.

  64. It may be noted that Mr. O’Donnell also said (pp 80/81) that although he had been retained to give independent advice “reasonably regularly” in difficult circumstances,

    I don’t think I have ever had a situation, either on any side where, as a result of the independent advice, somebody didn’t do something. The decision, in principle, was to support or not to support and the issue of the problem for the family is the one that is the driving force. (sic)

  65. By the end of his evidence, Mr. O’Donnell had altered his testimony to this extent (page 116):

    I think that the advice she would have got from an independent person would be the consequences of signing and the consequences of not signing, and I expressed the view that I couldn’t see how the discussion on both days could have actually happened without those issues having been discussed, to some extent. If they had been discussed, I believe it was reasonable for him to act and to get it signed.

  66. In my view, this passage and others to the same effect illustrate the great difficulty (apart from admissibility) of asking a witness to discuss matters of law without putting the law fully to him. Mr. O’Donnell was at no stage invited to consider the effect of the decision in Carroll v Carroll and the cases cited there on any hypothetical advice or discussion to which Mr. Diamond, as opposed to another solicitor, was a party. Quite clearly it would have been reasonable for him to have acted as he did in relation to the charging documents if another solicitor had discussed with the plaintiff the consequences of signing them or not signing them. But that does not address the situation where the plaintiff had refused to take independent advice and Mr. Diamond was disqualified as an independent adviser by reason of conflict of interest, and incapable of disembarrassing himself of his obligation to the husband. The learned trial judge thought that Mr. O’Donnell was “surprisingly unimpressed” with this problem. In my view, that is not itself surprising: the learned trial judge had, and Mr. O’Donnell had not, the advantage of having the judgment in Carroll v Carroll and the older cases cited therein opened to him and comprehensive submissions made on them. In my view, there is no basis in law for the suggestion that Mr. Diamond, as opposed to any other solicitor, could or should have “discussed” with Mrs. O’Carroll the consequences of signing or not signing the relevant documents, or in any fashion given her legal advice, as opposed to ministerial legal assistance.

  67. Looking at a transaction with hindsight often suggests standards which are unattainable in practice. However, in the circumstances of this case, even with the benefit of hindsight extending now over a period of seventeen years, I cannot see that Mr. Diamond can be faulted for acting as he did. The plaintiff submitted that Mr. Diamond’s duty as a solicitor “overrode” his statement that he could give no advice. Since, however, the latter statement is correct in law, the submission means that anything he did would be wrong, a classic “Catch 22”, which would be most unjust to a person in Mr. Diamond’s position.

  68. Nor do I think that Mrs. O’Carroll did in fact fault Mr. Diamond for a considerable time after the events of November, 1988. She was, understandably, deeply and lastingly distraught, even grief stricken by the events which had occurred and by the loss of her home. The brutal suddenness with which her husband’s position was revealed to her was an exacerbating factor in this. As I have already said, she was the victim of great injustice at the hands of her husband. Her position, already miserable, was worsened in following years by the fact that both she and her husband were afflicted by serious ill health and by the breakdown of their marriage, and separation in more recent times.

  69. But the plaintiff does not appear to have identified Mr. Diamond as the person responsible for her misfortunes until a time approaching six years after the events of November, 1988, in November, 1994. This is so although events subsequent to November 1998 unrolled slowly: it was about nine months before she was asked to sign the contract for sale and there was then a long delay in completing the sale during the course of which there were specific performance proceedings by the O’Carrolls against the purchasers. In all there was up to four years to reflect on what had occurred in a calmer situation than was possible on the14th and 15th November, 1988, before the sale closed. But no proceedings were issued until four days before the sixth anniversary of these events.

  70. The plaintiff, as she herself said at one point in her evidence “had to sell [her] family home to pay off [her] husband’s debts”. This was a tragedy for her and it has unfortunately blighted her life, to judge by the tone and content of her evidence. But it resulted from the peculations of her husband and the immediate threat to the livelihood of himself and his family to which those misdeeds exposed him. The fact that the plaintiff was denied knowledge of that situation until the last possible moment was another tragedy for her and presented Mr. Diamond with an acute professional dilemma. But nothing he did was the cause of the tragedy which overwhelmed the plaintiff. I believe he acted properly in the very difficult circumstances in which he found himself and that he cannot be found negligent in acting as he did. I also agree with the judgment that Kearns J. is about to deliver and with his conclusion that no other course of action on the part of the defendant would, in the circumstances, have avoided the results of which the plaintiff complains.

    CONCLUSION

  71. For these reasons, which are somewhat different from those of the learned trial judge, I would affirm his order dismissing the plaintiff’s claim. Firstly, the defendant was not negligent, in breach of duty or in breach of contract; secondly, nothing the defendant did was the cause of the plaintiff’s misfortunes, and nothing he could have done would have avoided them.


Cases

Sykes v Midland Bank Execular & Trustee Co Ltd, [1971] 1 Q.B. 113

Canterbury v Spence [1972] 464 F. 2d 772

Reibl v Hughes [1980] 1 14 D.L.R. (3d) 1

Chatterton v Gerson[1981] Q.B. 432

Hills v Potter [1984] 1 W.L.R. 641

Smyth v Barking H.A. [1994] 5 Med L.R. 285

Ellis v Wallsend District Hospital [1990] 2 Med L.R. 103

Bustos v Hair Transplant PTY. Ltd (unreported, New South Wales Court of Appeal, 15th April, 1997)

O’Brien v Wheeler (unreported, Supreme Court of New South Wales, 23rd May, 1997).

Carroll v Carroll [1999] 4 I.R. 241

Hilton v Barker Booth & Eastwood [2005] 1 AER 651

Moody v Cox [1917] 2 Ch. 71

Finlay v Murtagh [1985] IR 232

Hedley Byrne v Heller [1964] AC 465

Midland Bank v Hett, Stubs & Kemp [1979] Ch. 384

Authors and other references

Dugdale & Stanton (Professional Negligence, Butterworths; 1998 ed

Representations

Mr. Dwyer, counsel for the appellant.

Mr. Gerard Danaher, counsel for the respondent.


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