Ipsofactoj.com: International Cases [2006] Part 1 Case 9 [SCIre]


SUPREME COURT OF IRELAND

Coram

Kennedy

- vs -

Law Society of Ireland

DENHAM J

FENNELLY J

GEOGHEGAN J

McGUINESS J

21 APRIL 2005


Judgment

Geoghegan J

  1. This appeal has a long history which includes two substantive judgments of this court delivered by Murphy J. and Fennelly J. on the 4th April, 2001 and the 20th December, 2001 respectively. The issues of fact in the dispute between the parties have long been finally determined and I do not intend to review them in any detail in this judgment. What is at issue in this appeal can be shortly explained by reference to the two previous decisions of this court already referred to. Originally, the third- named respondent, as an investigating accountant on behalf of the first-named respondent (“the Law Society”), had been entrusted by the Society with what has been described as a “two-pronged investigation”. One prong of the investigation was the ascertainment by her of whether the appellant had complied with the Accounts Regulations. That was the only disclosed purpose of the investigation. The other prong, however, which was not originally disclosed, was the investigation of suspect litigation processed by the appellant.

  2. For the purposes of these investigations, the Law Society instituted proceedings by way of plenary summons seeking injunctions against the appellant in relation to his files. In those proceedings there was an application for interlocutory injunctions against the appellant which came on for hearing before Costello J. and which feature quite prominently in this appeal. At this stage of the judgment it is sufficient to note that, as of that stage, the appellant had become aware of the second purpose of the investigation.

  3. The appellant delivered a defence and counterclaim in those proceedings. In the prayer part of the counterclaim he sought damages. In the body of the counterclaim taken in conjunction with the pleas in the Defence which of course were repeated for the purposes of the counterclaim the case pleaded for the purposes of the damages claim was essentially confined to an allegation that the Law Society and its officers, the two other respondents had acted ultra vires in authorising and carrying out the second prong of the investigation.

  4. The appellant also instituted judicial review proceedings which were, in due course, consolidated with the plenary action to which I have already referred. For all practical purposes the issues raised by the judicial review proceedings were similar to the issues involved in the counterclaim to the plenary proceedings. In the statement grounding the judicial review application there was also a claim for damages as well as various judicial review type reliefs but in this instance the actual claim for damages was worded as “damages for breach of statutory and public duty”. Nothing, however, turns on this in my view.

  5. Murphy J. in his said judgment of the 4th April, 2001 with whom the other members of the Supreme Court agreed concluded that the investigation of fraudulent claims is not an authorised purpose under the Solicitors Accounts Regulations, 1984. Murphy J. went on to observe:

    As an investigating accountant is not empowered by the Regulations to investigate fraudulent claims processed by a solicitor he may not be appointed for that purpose.

  6. On that occasion this court left over for further consideration the question of the legal consequences of these findings. A resumed hearing took place for that purpose and, as already mentioned, a secondary judgment was delivered by Fennelly J. on the 20th December, 2001 with which again all the other members of the court agreed. In that judgment, Fennelly J. pointed out that the issue then before the court flowed from the following passage in the earlier judgment of Murphy J.:

    In the present case it would seem that Ms Foley was appointed for a duality of purposes or on the basis of an ulterior motive. As the learned trial judge held, Ms Foley was required to undertake a ‘two-pronged investigation’. One prong of the investigation, that is to say, the ascertainment by her of whether Mr. Kennedy had complied with the Accounts Regulations was fully and properly disclosed; the other prong, the investigation of suspect litigation processed by Mr. Kennedy’s firm, was concealed initially though quickly became apparent.

    Both investigations proceeded and were completed in spite of the objection by Mr. Kennedy to the production of certain confidential documents which, ultimately, he was required to produce by the order of Costello J. made on the 29th day of July, 1993. The report of Ms Foley formed the basis of the decision of the Society to seek an inquiry (in February 1996) by the Disciplinary Tribunal of the High Court into the conduct of Mr. Kennedy. Whether in reaching that decision the Society was entitled to rely on all or any part of Ms Foley’s report is a matter which would require further consideration ....

  7. Fennelly J. goes on to quote the following passage in the last page of the judgment of Murphy J.:

    There remains the question as to what legal consequences flow from the appointment by the Society for two purposes one of which was ultra vires and the other intra vires. The matter must be remitted to the High Court for the purposes of assessing damages (if any) to be awarded to Mr. Kennedy but it would seem appropriate for this court to determine, first, whether the appointment of Ms Foley was defective in whole or in part and, secondly, whether the report prepared by her or any part of it can be relied upon by the Society for any purpose. It will be necessary also to consider the nature of the order to be made by this court having regard to the complex history of the proceedings and the orders already made herein.

  8. Fennelly J. in his judgment came to the conclusion that although the appointment was invalid in his view and that the report the product of the inquiry was indissociable from the decision of the Compensation Fund Committee based upon it which had to be quashed, nevertheless by analogy with the views expressed by Kingsmill Moore J. in the famous O’Brien case, Fennelly J. expressed the view that in the absence of evidence of deliberate and known abuse, the Law Society would not be inhibited from relying on evidence which though unlawfully acquired in the circumstances could have been lawfully acquired.

  9. The Supreme Court in its earlier decision had reserved to the High Court any question of damages to be paid to the appellant but Fennelly J. made clear that nothing in his judgment implied any entitlement to damages flowing from the invalidity of the appointing decision. The High Court were to consider the matter in the light of the general law including the then recent decision of this court in Glencar Exploration Plc v Mayo County Council [20 Aug 1998, [1998] IEHC 137, [2002] 1 IR 84] which had been decided on the 19th July, 2001 and, therefore, subsequently to the earlier Supreme Court decision.

  10. That was the state of play in which this case returned to Kearns J. in the High Court. There would appear to be strong internal evidence to suggest that up to that point, the appellant and his legal advisers had believed that a finding of ultra vires would lead automatically to damages. In addition to submissions and comments which would seem to have that effect in the course of trials in the High Court both the counterclaim in the plenary proceedings and the grounding statement in the judicial review proceedings would give that impression. Clearly, the express clarification on this point given by Fennelly J. raised alarm bells. An application was brought to the High Court by the appellant seeking amendment of the Points of Claim so as hugely to increase the amount of damages claimed and to allege nine causes of action. On the 14th February, 2003 the High Court (Kearns J.) refused that motion to amend. No appeal was brought from that order. It is now attempted to appeal that order by way of this appeal but clearly that cannot be permitted. It would, at any rate, seem improbable in the extreme that this court would ever have allowed such an appeal having regard to the wide ranging amendments sought in the context of there having been a full trial in the High Court in 1999 of all factual issues lasting some nineteen days.

  11. In refusing the application to amend, Kearns J. expressed the view that the existing pleadings were adequate to ground a damages claim. This is strongly disputed by the respondents who maintain that once the appellant is not entitled to damages for ultra vires conduct per se the pleadings do not disclose any other cause of action.

  12. Kearns J., however, did not take this extreme view of the pleadings. In his judgment which is the subject of this appeal and is dated the 30th July, 2003, he said the following:

    The matter therefore comes back before this court on the original pleadings, coupled with additional particulars of personal injury, loss and damage which have been delivered on behalf of the plaintiff. On the question of any entitlement to damages it seems to me that two basic questions fall to be determined:

    (a)

    Was the Law Society, by acting ultra vires in the manner found by the Supreme Court, guilty of misfeasance of public office?

    (b)

    In the unauthorised use of its statutory powers, was the Law Society guilty of negligence such as would entitle the applicant to damages?

    I propose to address these two primary issues, and then consider the remaining additional or ancillary claims at the conclusion of this judgment.

  13. For all practical purposes the learned trial judge in his judgment summarily dismissed the so-called “remaining additional or ancillary claims” and in my opinion, he was quite right to do so. He pointed out that they were not pleaded in the original pleadings and, of course, neither were they. He added that he was, in any event, satisfied that the facts as already found did not support any of these claims. I agree with both observations.

  14. For much the same reasons, however, the learned trial judge, should not have embarked on a detailed treatment of the claims in negligence and breach of statutory duty. As a general proposition it can safely be said that apart from exceptional circumstances, a body such as the Law Society carrying out a public function in pursuance of a public duty is not liable to a private individual in tort unless the authority in so acting has committed the tort of misfeasance in public office. I will be explaining this tort in more detail later on in this judgment but subjective mala fides is an essential feature of it. To allow damages to be awarded for breach of an alleged duty of care owed to the individual on the basis of what a reasonable person might have done (and therefore an objective test) would be to undermine the clear limits attached to the tort of misfeasance in public office. I would accept that there may be circumstances where, without undermining the tort of misfeasance in public office, a private duty of care may be owed in respect of some particular aspect of the carrying out of the duty. But in such a case, the negligence would have to be precisely pleaded, if for no other reason, so as to enable it to be properly answered at the trial. The main item of negligence suggested in this case is that independent legal advice should have been obtained by the Law Society. But that case was neither pleaded nor made at the trial. I agree with the views expressed by Fennelly J. that effectively an administrative body could ground to a halt if it was under some legal obligation to obtain legal advice in relation to every issue that might arise. While I would not absolutely rule out that there may not be exceptional circumstances where such a duty would arise, it would be quite wrong to entertain it now on a hearing confined to the issue of damages and in circumstances where it has not been properly pleaded. Even if it had been properly pleaded and the Law Society had had a proper opportunity to meet it, it is difficult to conceive that it could possibly have succeeded. Being of that view, I do not consider that this is an appropriate case to consider again the interesting questions arising from the interplay particularly of Anns v London Borough of Merton [1978] A.C. 728, Ward v MacMaster [1988] I.R. 337 and Caparo v Dickman [1990] 2 A.C. 605. Having regard to the constituents of the tort of misfeasance in public office, I think it unlikely that Lord Wilberforce (whose speech in Anns is now overruled by the House of Lords) would ever have countenanced a parallel Donoghue v Stevenson private duty of care in a case such as this and I rather suspect that McCarthy J. who had expressed similar views in Ward would have considered that there was a “compelling exemption based upon public policy” given the ingredients of the tort of misfeasance in public office. I would have no hesitation, therefore, in rejecting the grounds of appeal based on negligence and breach of statutory duty.

  15. Notwithstanding the infirmity of pleading, the learned trial judge acted correctly and within his discretion in my view in embarking upon a consideration of the first of the two main issues which he perceived as arising. Whatever the appellant and/or his legal advisers may have believed there was never a valid claim for damages for ultra vires conduct unless there was misfeasance of public office. That must, therefore, be implied in the claim for damages. Ideally, the Points of Claim should have contained more precise details of how it was alleged that the tort arose. But once the case had been sent back to the High Court by this court with a view to considering whether a damages claim arose or not I think it was reasonable for the learned High Court judge to adopt the course which he did adopt in relation to this aspect of the case.

  16. The tort of misfeasance in public office has been variously though not inconsistently defined. Kearns J. in commencing his treatment of the subject said the following:

    Misfeasance in public office consists of a purported exercise of some power or authority by a public officer otherwise than in an honest attempt to perform the functions of his office whereby loss is caused to a claimant. Lack of vires is insufficient of itself to ground a cause of action sounding in damages. In the ordinary course, the quashing of the decision by judicial review completes the remedy.

  17. That is, I think, a reasonable summing up of the result of the authorities. The learned trial judge goes on to quote Keane J. (as he then was) in McDonnell v Ireland [1998] 1 I.R. 134 at 156 –

    the .... tort is only committed where the act in question is performed either maliciously or with actual knowledge that it is committed without jurisdiction and with the known consequence that it would injure the plaintiff ....

  18. This passage begs the question to some extent as to what is meant by “maliciously”. Counsel for the appellant made it clear both in the court below and in this court that although malice was alleged it was not malice in the sense of an intention at the relevant time to injure the appellant. Rather it was malice in the sense of mala fides.

  19. The most exhaustive treatment of the subject is to be found in the speech of Lord Steyn in the relatively recent decision of the House of Lords in Three Rivers District Council v Bank of England [2000] 3 All E.R. 1 as pointed out by Kearns J. Lord Steyn identified two different forms of liability in misfeasance of public office. There is what he called “targeted malice” by a public officer which is conduct intended to injure. That necessarily involves bad faith in the exercise of the public power for an improper or ulterior motive. The second form of liability identified by Lord Steyn is where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. As Lord Steyn then puts it “it involves bad faith in as much as the public officer does not have an honest belief that his act is lawful.” It is the second type of liability which is claimed by the appellant in this case. Lord Steyn, however, expands on those definitions by pointing out that “reckless indifference to consequences is as blameworthy as deliberately seeking such consequences. It can therefore now be regarded as settled law that an act performed in reckless indifference as to the outcome is sufficient to ground the tort in its second form.”

  20. Subjectivity and recklessness are not easy bedfellows though analogous concepts do apply in the criminal law in relation to say manslaughter and certain types of non-fatal injury offences. It is, I think necessary to consider whether this court should adopt this extension into the concept of “reckless indifference”.

  21. Lord Steyn, with minor qualifications, was effectively approving the lengthy reasoned judgment at first instance of Clarke J. In the following passage of his speech at p. 9 of the report, Lord Steyn puts in context the relevance of “recklessness”:

    The basis for the action lies in the defendant taking a decision in the knowledge that it is an excess of the powers granted to him and that it is likely to cause damage to an individual or individuals. It is not every act beyond the powers vesting in a public officer which will ground the tort. The alternative form of liability requires an element of bad faith. This leads to what was a disputed issue. Counsel for the bank pointed out that there was no precedent in England before the present case which held recklessness to be a sufficient state of mind to ground the tort. Counsel argued that recklessness was insufficient. The Australian High Court and the Court of Appeal of New Zealand have ruled that recklessness is sufficient (see Northern Territory of Australia v Mengel (1995) 185 CLR 307, Garrett v A-G [1997] 2 NZLR 332, Rawlinson v Rice [1997] 2 NZLR 651). Clarke J. (at 581) lucidly explained the reason for the inclusion of recklessness:

    The reason why recklessness was regarded as sufficient by all members of the High Court in Mengel is perhaps most clearly seen in the judgment of Brennan J. It is that misfeasance consists in the purported exercise of a power otherwise than in an honest attempt to perform the relevant duty. It is that lack of honesty which makes the act an abuse of power.

  22. Lord Steyn went on to deal with the limits of the tort. He had no hesitation in rejecting a test which had been suggested in the Court of Appeal and which was stricter than any test laid down by Clarke J., namely, a test of knowledge or foresight that a decision would cause damage. His Lordship did not consider that such a test readily fitted into the standard of proof generally required in the law of tort and specifically in the case of an intentional tort. Indeed he considered that such a test would unnecessarily emasculate the effectiveness of the tort. Lord Steyn considered that the real choice was between the test of knowledge that the decision would probably damage the plaintiff (which was the test suggested by Clarke J.) and the test of reasonable foreseeability which was contended for by counsel for the plaintiffs in that case. Lord Steyn went on to make the following comment at p. 12 of the report:

    And there has been no academic criticism of the view of Clarke J. that a test of foreseeability is not enough in this tort. Given that his groundbreaking first instance judgment has been poured over by many judicial and academic eyes, this is a factor of some significance. Nevertheless, it is necessary to consider the merits of the competing solutions from the point of view of principle and legal policy.

  23. In the event Lord Steyn came down firmly in favour of the test enunciated by Clarke J. and I find myself in agreement with his reasoning. If the “reasonable foreseeability” test was permitted it would introduce an objective element and effectively remove the requirement of bad faith. To the argument that recovery of all foreseeable losses was necessary in a democracy as a constraint upon abuse of executive and administrative power, Lord Steyn pointed out that the force of that argument was “substantially reduced by the recognition that subjective recklessness on the part of a public officer in acting in excess of his powers is sufficient. Recklessness about the consequences of his act, in the sense of not caring whether the consequences happen or not, is therefore sufficient in law.” He went on to point out that this test represented a satisfactory balance between two competing policy considerations, that is to say, invoking the law of tort on the one hand to combat executive and administrative abuse of power and on the other hand not allowing public officers to be “assailed by unmeritorious actions”.

  24. A feature of advocacy in this court in recent years, largely due to the internet, has been the extensive citing of case law from common law jurisdictions such as Australia, New Zealand and Canada quite apart from UK decisions. In cases therefore involving pure common law unmodified by either the Constitution or Irish statute law it would seem to me to be particularly important that considerable respect be paid to any consensus that may have emerged in these common law jurisdictions without in any way surrendering the right to disagree. I do not think that there is any Irish authority which prevents the element of subjective recklessness being introduced into the ingredients of the tort of misfeasance in public office (a tort which has not received much judicial consideration in this jurisdiction at any rate). I would, therefore, favour acceptance in this jurisdiction of that concept in the context in which it is introduced by Clarke J. and ultimately in the House of Lords by Lord Steyn.

  25. I turn now to consider whether the respondents acted in bad faith in the sense relevant to the tort the ingredients of which have been defined. The case made in this regard is extremely thin. It is largely based on a hearing of an interlocutory injunction application made before Costello J. in the High Court on the 30th July, 1993. The Law Society’s counsel on that occasion was Mr. Patrick MacEntee, S.C. and there was an issue of getting access to client files in the possession of the appellant. After the judge had indicated that following a decision of the English Court of Appeal he was of the view that privilege as such did not arise but that there could be questions as to the duty of confidentiality being a contractual duty. Mr. MacEntee then said the following:

    That would be my submission, as far as it goes. But in this case the situation is that, having gone in, certain matters have come to our attention, matters which lead us to believe that we should investigate matters that are possibly outside the strict scope of the Solicitors’ Accounts Regulations. These are matters on which we have a well grounded suspicion of irregularity and no more than that.

    The matter that the Society would like Your Lordship to decide is whether having gone in under the Solicitors’ Accounts Regulations and matters having come to our attention which oblige us to use or to exercise the obligation of the general supervision of solicitors imposed upon us by our Charter and by the 1954 and 1960 Acts and by the legislative process in giving us power to control solicitors and regulate their professional conduct, we are obliged as we believe, to enlarge our inquiry and to see documents and papers relating to matters that may not be confined exclusively to the investigation of irregularities under the Solicitors’ Accounts Regulations but may disclose other irregularities.

    There is no express power to do this given by statute that I have been able to find but the Solicitors Act, 1954 is expressed in its opening preamble to be ‘an Act to provide for the admission enrolment and control of solicitors’.

  26. After some further discussion between the judge and Mr. MacEntee, Costello J. said the following:

    .... it seems to me that under the statutory regulations you have a very clear power. Certainly there is a statutory duty on the solicitor. If in the course of carrying out an investigation you have now come to the conclusion that you want wider inspection, then you would have to show – and there is a legal basis for this – why in the circumstances. Need we go into that today. If the regulations are construed as you want them construed, the accountant can ask for all the files for the purposes of the regulations and Mr. Kennedy will have to cooperate and produce all the files. If you want to carry out an investigation for other purposes, you could then take such steps as are necessary to do that if Mr. Kennedy objects to your doing so.

  27. Mr. MacEntee replied as follows:

    Mr. Kennedy has indicated objections to our doing so, My Lord. As Your Lordship will readily appreciate, any investigation into suspected irregularities – and I hasten to say that it is no more than a suspicion – must be carried out with dispatch. As Your Lordship is aware from the affidavit of Mr. Connolly, Mr. Kennedy has apparently been writing to clients and they have been taking their files away.

  28. Mr. MacEntee then addressed the judge on what he considered to be the wide powers confirmed by regulation. Costello J. proceeded to grant a number of injunctions and in the course of doing so he referred to the wider claim and said the following:

    Any rights which the Society may have in relation to this second claim, a claim on which I am expressing no opinion, will be protected. It is then for the Society to decide whether they want to re-enter this matter in the Long Vacation and I will give them liberty to do so.

  29. After dealing with questions there was then the following exchange between Mr. MacEntee and the judge.

    Mr. MacEntee:

    I should tell Your Lordship that it is the intention of the Society to continue its investigation and to call for the production of all files which it feels it ought to examine, be they files in relation to which they have no suspicions whatever or files in relation to which it has a suspicion other than an accounts suspicion.

    Judge:

    That is a fair point. You have indicated what the Society wants to do, Mr. MacEntee. Should there be any dispute about it, it can be raised on motion.

  30. It became quite clear that there was no bad faith on the part of the Society in initially not disclosing the second reason why it wanted the files. The investigation could have been defeated if there was such disclosure and that appears to have been the only motive. Furthermore, the transcript of the hearing before Costello J. does not, in my opinion, support the view either that the Law Society knew that it was acting illegally or that there was any order or ruling by Costello J. that the Law Society had to return to the court for permission to carry out any investigations which went beyond what was specified in the Accounting Regulations. All the findings of fact by Kearns J. on the issue of mala fides would appear to me to be well-founded and were entirely open on the evidence. It is rather absurd, indeed, to suggest that the Law Society allegedly knowing at this very early stage that they were acting illegally but had then gone through all the processes of High Court and Supreme Court etc. purporting to establish otherwise.

  31. There is, of course, a further problem for the appellant on this appeal which has been pointed out by counsel for the respondents in their written and oral submissions. It is said by reference to transcript that the appellant disclaimed reliance on malice in relation to the period for which the court was dealing, that is to say, April to October 1993. In their written submissions, counsel for the respondents set out the transcript of an exchange between the court and Mr. Gilhooly, S.C. counsel for the appellant, at the hearing. The trial judge pressed Mr. Gilhooly very hard to make it clear whether he was making a case of malice or not. I am not satisfied that the matter was ever in fact clarified even though the judge thanked counsel for the clarification. Nor was it all that clear at the hearing before this court as to what Mr. Gilhooly had conceded in the court below. The trial judge appears to have dealt with the matter in fact on the assumption that “targeted malice” was not being alleged but that the second basis for the tort of malfeasance in public office was an issue. I am approaching the appeal also on that assumption though the position is none too clear.

  32. Returning to the facts, it is to be noted that Kearns J. in his original judgment of the 5th October, 1999 at p. 39 said the following:

    According to Mr. Kennedy, he informed Mr. Galvin that the files were targeted and that there was a clear pattern to the manner in which the inspector was looking at the files.

    Mr. Galvin for his part has quite a different recollection of this telephone conversation with Mr. Kennedy. His recollection, which I accept, is to the effect that Mr. Kennedy was concerned that some individual members of the Council of the Law Society might ‘have it in for him’ and that he Mr. Galvin was able to reassure Mr. Kennedy that that was not in fact the position.

    From his own description of these conversations both with Mr. Galvin and Ms. Foley, I am quite satisfied that Mr. Kennedy was well aware within days of the inception of this investigation that the question of fraudulent claims was in fact being looked at by the Law Society accountant in addition to a thorough ‘root and branch’ investigation of the books and accounts of the practice which was proceeding simultaneously and which came across evidence of many apparent irregularities.

  33. In an earlier part of the same judgment at p. 13 the learned judge referred to the evidence of Mr. Ward McEllin, the then Chairman of the Compensation Fund Committee of the Law Society and said that Mr. McEllin had explained more frankly the policy of the Law Society in the course of his evidence. The judge went on to note

    his view simply was that the investigation of fraudulent claims could not be disclosed to the investigation subject. He advised the court that if a solicitor is being dishonest and is involved in fraudulent claims, ‘you do not knock on his door to say .... we are here to look at your files to see if you are fraudulent. If you do the files will disappear or be filleted or be recreated.

  34. At p. 13 of the judgment of Kearns J. of the 30th July, 2003 which is the judgment now under appeal, the learned judge made the following crucial finding:

    Accepting as I do that the foregoing accurately represents the applicable law on this topic, it follows that the court must consider all the surrounding facts and circumstances of this investigation to see if the Law Society, as alleged by the applicant, either had actual knowledge that it lacked the necessary statutory powers to do what it did, or was guilty of ‘reckless indifference’ as to the legality of its actions.

    For the purpose of arriving at a conclusion in this regard I have re-read the portions of transcript to which I have been referred by the parties, including the evidence of Mr. Connolly, Ms. Foley, Mr. Galvin, Mr. McEllin and Mr. O’Rourke, the accountant whose evidence I was specifically asked to read by Mr. Gilhooly on behalf of Mr. Kennedy. I have also had regard to the documentation prepared for the injunction application before Costello J. and to the transcript of those proceedings. Furthermore, I have had regard to my own findings of fact already made, which have been neither challenged nor disturbed on appeal.

    I conclude that the applicant falls short, on the balance of probabilities, of establishing a case of misfeasance in public office either on the basis that the Law Society had actual knowledge, or was recklessly indifferent to the possibility, that it lacked appropriate statutory powers for the form of investigation which it in fact undertook. The factors or reasons which persuade me to this conclusion are as follows:

    (a)

    The Law Society, at the time of its decision to investigate, had available to it information from reliable sources indicating a connection between Mr. Kennedy and Mr. Rossi Walsh, a notorious criminal, who was involved in promoting fraudulent claims. Walsh had referred 22 claims to Mr. Kennedy’s office. This information can only be seen, in my view, as providing a reasonable cause or basis (and not a capricious or malicious one), for the Law Society to take action by way of investigation, even if the decision itself to rely on the 1984 Regulations for that – and the other ‘legal’ purpose was ultra vires.

    (b)

    The statutory powers availed of by the Law Society for the purposes of this investigation had been relied upon by the Law Society without objection or legal challenge, to investigate other solicitors’ practices for fraudulent claims.

    (c)

    An investigation under the Regulations was in no sense untimely, having regard to the lapse of time since the last investigation and the policy of the Society to conduct regular investigations or inspections. Additional factors considered at the time and referred to in evidence by Mr. Connolly, Registrar of the Law Society, including a history of 23 complaints against the practice over the preceding seven years and the discovery of irregularities on previous investigations.

    (d)

    The express finding in my judgment in favour of Mr. Galvin’s account of a conversation between Mr. Kennedy and Mr. Galvin when he contradicted Mr. Kennedy’s belief that members of the Law Society ‘had it in for him’ (p. 39). Further, it has now been clearly accepted by or on behalf of the applicant that no question of malice in its subjective sense arises in relation to either the decision to investigate or the course of the investigation up to October, 1993.

    (e)

    The finding in my judgment that the purpose of the investigation was as to 50% an investigation into the books and accounts of the practice, and 50% into the possibility of fraudulent claims was replicated on the issue of purpose or motive and has not been challenged. Such a finding is incompatible with any suggestion that the inquiry as a whole was launched either with malice or reckless indifference.

    (f)

    While the applicant contends that the initial non-disclosure of the ‘hidden agenda’ is indicative of bad faith, I prefer and accept the explanation offered by Mr. Ward McEllin that the reason for non-disclosure was to protect the investigation from the possibility that files might be removed, ‘filleted’ or destroyed. Furthermore, the accountancy evidence before me indicated that non-disclosure of this part of an investigation to a person investigated might be permissible where fraud was suspected (p. 110). Counsel for Mr. Kennedy referred the court to the Registrar’s statement in evidence (Day 12, p. 79) to the effect that if suspicions of fraudulent claims were mentioned to him when writing to Mr. Kennedy it could leave the Society open to being sued. While Mr. Gilhooly relies on this evidence as showing bad faith and an absence of honest belief on the part of the Registrar that the Society possessed the requisite powers under the Regulations, it seems to me to be no more than an expression of prudence or caution to which the Registrar typically had regard when notifying solicitors of pending investigations. He explained (pp. 79/80) that it was not the practice of the Law Society to alert individual solicitors that they had suspicions or that there were allegations. As he stated, the practice was that the investigators ‘would do the entire investigation from A to Z’ and not concentrate on one particular area. It seems to me that Mr. Connolly had more in mind the possibility of defamation proceedings if his letter went too far and the investigation yielded up nothing. While this was undoubtedly flawed reasoning on Mr. Connolly’s part, and while the Law Society, as they now admit, handled this part of the investigation badly, I do not find that these shortcomings, on the balance of probabilities, establish actual knowledge or reckless indifference of the want of statutory authority for the form of investigation which occurred.

    (g)

    In so far as the injunction application before Costello J. is concerned, I am satisfied that the fact that ‘other inquiries’ were in contemplation by the Law Society was disclosed during that hearing. Furthermore, the actual nature of the ‘hidden agenda’ was spelled out in open court by counsel for the applicant without demur from counsel for the Law Society. I am satisfied there was no material non-disclosure in the context of the injunction application which would establish actual knowledge or reckless indifference on the part of the Law Society that they lacked statutory authority to investigate the possibility of fraudulent claims.

  35. I have deliberately included this lengthy quotation from the judgment of Kearns J. because the findings of fact contained within that passage would seem to me to be fatal to the appellant’s appeal. What clearly emerges from the judgment of the learned trial judge was his view that there was no evidence of bad faith on the part of the Law Society which would support an allegation by the appellant of deliberate or reckless behaviour. In so far as he has made primary findings of fact these cannot be interfered with by this court. In so far as he has drawn inferences it would seem to me that they were legitimate inferences.

  36. Accordingly, I would dismiss the appeal.


Cases

Anns v London Borough of Merton [1978] A.C. 728; Ward v MacMaster [1988] I.R. 337; Caparo v Dickman [1990] 2 A.C. 605; Donoghue v Stevenson [1932] AC 562 (HL); Glencar Exploration Plc v Mayo County Council 20 Aug 1998, [1998] IEHC 137, [2002] 1 IR 84; McDonnell v Ireland [1998] 1 I.R. 134; Three Rivers District Council v Bank of England [2000] 3 All E.R. 1

Legislations

Solicitors Accounts Regulations, 1984

Representations

Mr. Gilhooly, S.C. for the appellant


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