Court allows solicitor negligence claim for contribution against former partner despite personal innocence.

Neutral Citation Number: [2011] IEHC 108

THE HIGH COURT

2008 10559 P

BETWEEN

ACC BANK PLC

PLAINTIFF

AND

BRIAN JOHNSTON, PRACTISING UNDER THE STYLE AND TITLE OF BRIAN JOHNSTON & CO, SOLICITORS

DEFENDANT

AND

JOSEPH TRAYNOR & SEAMUS MALLON

THIRD PARTIES

JUDGMENT of Mr. Justice Clarke delivered the 4th day of March, 2011

1. Introduction

1.1 This judgment relates to issues which have arisen between two solicitors. In an earlier judgment in these proceedings (ACC v.

Johnston [2010] IEHC 236) (“the principal judgment”) I found that the defendant (“Mr. Johnston”) was guilty of negligence in the way

in which he handled a mortgage and lending transaction on behalf of the plaintiff (“ACC”). Mr. Johnston has sought an indemnity

against the firm of solicitors who acted for the purchaser/borrower in the same transaction. One of the disputes which arises

concerns whether the second named third party (“Mr. Mallon”) was, in fact, a member of the firm in question at all material times.

1.2 There is no doubt but that undertakings were given on a number of occasions relating to the underlying transaction, which

undertakings appear on notepaper bearing the title “Traynor Mallon”. Mr. Johnston seeks to make both the first named third party

(“Mr. Traynor”) and Mr. Mallon liable on foot of those undertakings in circumstances where it is clear that the relevant undertakings

have not been complied with.

1.3 Mr. Traynor has allowed judgment to be given against him in default. However, Mr. Mallon has suggested that no liability attaches

to him on a number of bases to which it will be necessary to refer in early course.

1.4 It should also be noted that, for reasons set out in the principal judgment, the question of the calculation of any damages to

which ACC might be entitled as against Mr. Johnston awaits further hearing. Likewise, I directed that the issues which should be tried

as and between Mr. Johnston and Mr. Mallon, at this stage, should be confined to liability issues, with the question of the quantum of

any indemnity or contribution which Mr. Mallon might have to make (in the event that he is liable) being also left over to such a

further hearing. Obviously if no liability attaches to Mr. Mallon, then he is not an appropriate or necessary party to that further

hearing. On the other hand, if Mr. Mallon is found liable, then it equally follows that he is entitled to be heard on the damages

question.

1.5 In that context, it is appropriate to turn to the issues which arise.

2. The Issues

2.1 As already noted there is no dispute but that certain undertakings were given on notepaper headed “Traynor Mallon” and that the

undertakings concerned have not been complied with. Likewise, there is no dispute but that it was Mr. Traynor who was personally

responsible for the giving of the undertakings concerned. Mr. Mallon has given sworn testimony (which was not challenged on behalf

of Mr. Johnston) that he had nothing to do with the giving of the undertakings concerned and, indeed, was unaware at any material

time that such undertakings had been given. There is, therefore, no allegation of personal wrongdoing on the part of Mr. Mallon.

However, the case made on behalf of Mr. Johnston is that the relevant undertakings were given with either the actual or ostensible

authority of Mr. Mallon such that he is now liable for any breach of same.

2.2 Against that proposition a number of arguments are put forward by Mr. Mallon.

2.3 First, it is said on behalf of Mr. Mallon that, while a partnership between Mr. Traynor and himself formerly existed and practised

under the title of Traynor Mallon, that partnership, it is said, came to an end in March, 2006 (there being some debate about the

precise date in March), such that the partnership was no longer in being when any of the relevant undertakings were given. The first

in time of the undertakings which are material to this case was given in August, 2006. On that basis it is argued on behalf of Mr.

Mallon that the partnership which he had with Mr. Traynor had terminated prior to any of the undertakings in question being given.

Mr. Johnston contests, on the facts, as to whether the partnership between Mr. Mallon and Mr. Traynor in fact ended in March.

Rather, it is argued that the partnership did not come to an end until the 30th August, 2006, by which stage at least the first (and

financially most significant) of the relevant undertakings had been given. The first issue is, therefore, as to when the partnership

between Mr. Traynor and Mr. Mallon in fact came to an end.

2.4 The second issue which arises concerns the question of whether Mr. Traynor still had ostensible authority to bind Mr. Mallon even

after the partnership came to an end. This issue arises in two different ways. First, ostensible authority is argued on behalf of Mr.

Johnston as a fallback position in respect of the August undertaking to which I have referred. In that context it is said that, even if

Mr. Johnston is wrong in arguing that the partnership continued to subsist until the 30th August, nonetheless Mr. Traynor continued

to have ostensible authority to bind Mr. Mallon notwithstanding the earlier dissolution of the partnership concerned. In addition, it is

clear that the other undertakings relied on post-dated, on either view, the dissolution of the partnership for those undertakings were

given well after the 30th August. So far as those later undertakings are concerned, Mr. Johnston accepts that they were given at a

time when the partnership did not exist but nonetheless contends that Mr. Traynor retained ostensible authority to bind Mr. Mallon.

The second set of issues which arise are, therefore, questions of both law and fact as to whether Mr. Traynor had ostensible

authority so as to bind Mr. Mallon even after the partnership between them had been dissolved. The factual basis for Mr. Johnston’s

argument under this heading stems from the fact that it is said that Mr. Traynor had taken no steps to inform the public (and, in

particular, Mr. Johnston) that the partnership between him and Mr. Traynor had come to an end.

2.5 In summary, so far as the status of the partnership is concerned, the issue is one of actual authority with ostensible authority as

a fallback position insofar as the August, 2006 undertaking is concerned, while the issue is one of ostensible authority only in relation

to the subsequent undertakings.

2.6 Clearly, if Mr. Mallon is right in respect of those issues, then he is not responsible for any undertakings given by Mr. Traynor and

no further issues arise. However, even if Mr. Mallon is found, contrary to those submissions, to be responsible for some or all of the

relevant undertakings given by Mr. Traynor, then a number of other issues are raised by Mr. Mallon in his defence.

2.7 First, Mr. Mallon argues that there is no direct link of sufficient causal connection between any losses which ACC may have

suffered and the undertakings given by Mr. Traynor. For the reasons set out in the principal judgment I was satisfied that Mr.

Johnston was negligent and in breach of his contractual terms of retainer with ACC in accepting the undertakings concerned. On that

basis, Mr. Mallon argues that there is no true casual connection between any losses which ACC might have suffered and the

undertakings for, it is said, without Mr. Johnston’s negligence the relevant transactions would not have gone ahead so that no loss

would have been incurred. Against that argument it is submitted on behalf of Mr. Johnston that it equally follows that had the

relevant undertakings being complied with, no loss would have occurred. The next issue which arises is, therefore, one concerning

causation.

2.8 Finally, Mr. Mallon argues that, even if he is liable on Mr. Traynor’s undertakings, it cannot be said that he is a “concurrent

wrongdoer”, within the meaning of the Civil Liability Act 1961 (as amended), with Mr. Johnston. It is said that, in order that Mr. Mallon

and Mr. Traynor be concurrent wrongdoers, two matters must be established. First, that Mr. Mallon would, in fact, have a liability to

ACC for if Mr. Mallon would not have a liability to ACC then he could not be a concurrent wrongdoer in any sense of that term. As a

result of the way in which ACC made out its case against Mr. Johnston, it is argued that Mr. Mallon could not be liable to ACC on the

undertakings concerned, for ACC disavowed any knowledge or reliance on those undertakings.

2.9 Second, it is argued that the requirement in the Civil Liability Act, 1961(s. 11) that, in order for two parties to be concurrent

wrongdoers, both must be responsible for the same “damage”, is not met because, it is said, the liability of Mr. Mallon (should it exist)

is for a breach of some or all of the relevant undertakings whereas the liability of Mr. Johnston arises for negligence in accepting

those undertakings. It is said that a proper application of the meaning of the term “damage” as used in the Civil Liability Acts and as

interpreted by the courts, leads to a conclusion that any liability which Mr. Mallon might have (contrary to his submissions) is not a

liability in respect of the same “damage” and, thus, does not lead to Mr. Mallon being properly considered to be a concurrent

wrongdoer with Mr. Johnston. In those circumstances it is argued that Mr. Johnston, having no independent cause of action against

Mr. Mallon, is not entitled to maintain third party proceedings against him in the absence of both of them being concurrent

wrongdoers within the meaning of the Civil Liability Acts.

2.10 Against the background of those issues it is appropriate to turn next to the facts which are, to a considerable degree,

uncontroversial. It will be necessary to leave over some questions as to the proper inferences to draw from those facts, having

regard to the law, to a later section of this judgment. In addition, as much of the conveyancing transaction in respect of which Mr.

Traynor acted for the purchaser (“Mr. Tiernan”) and Mr. Johnston acted for ACC as lender, was described in detail in the principal

judgment, I propose only to set out a brief description of those facts but refer in more detail to the additional facts which arise solely

in the context of the issues between Mr. Johnston and Mr. Mallon. On that basis I now turn to the facts.

3. The Facts

3.1 Mr. Traynor was apprenticed to Mr. Mallon at his solicitor’s practice in Castleblaney, Co. Monaghan until his entry onto the roll of

solicitors sometime in the late 1980s. On qualification Mr. Traynor, without the offer of a full time position in Castleblaney, proposed

to establish a practice in Dundalk, Co. Louth, with the assistance of Mr. Mallon. Mr. Traynor and Mr. Mallon thereafter practised under

the title of “Traynor Mallon & Company, Solicitors”. Mr. Traynor managed the practice while Mr. Mallon, who was and remains based

primarily at his practice in Castleblayney, provided the financial backing to the new firm and took a less involved role in its

management. When pressed on the nature of his supervisory role over the firm’s affairs, Mr. Mallon indicated that, while he would

review the biannual statutory reports produced by the firm’s accountants for the Law Society in order to remain informed on the

running of the Dundalk office he admitted that he and Mr. Traynor did not meet at regular intervals, but rather they met informally

“whenever meetings needed to be had”. Nevertheless it was accepted by Mr. Mallon that the responsibility of the partners was joint

and several.

3.2 On 17th May, 1989 Messrs. Mallon and Traynor concluded a written agreement at the inception of the firm to regulate their

relationship. While the agreement describes the relationship as one of employer and employee respectively, albeit with provision for it

to morph into a partnership after a period, there is no dispute but that a partnership came to exist between the two before 2005.

They practised publicly under the business name of Traynor Mallon & Co. while privately an equal profit share arrangement persisted.

The point at which the partnership relationship commenced is not nearly as contentious as the issue over its dissolution.

3.3 It would appear that at some point in 2002, during an audit of the Dundalk office, Mr. Jim Ryan, an accountant, discovered so-

called “irregularities”. The effect of those irregularities was that both partners were obliged to contribute in excess of €200,000 in

order to clear a deficit in the firm’s client account. During the course of his evidence Mr. Mallon expressed misgivings over Mr.

Traynor’s management of the partnership business. While Mr. Mallon’s concerns abated following the 2002 incident the situation again

deteriorated towards the end of 2005 to such an extent that Mr. Mallon retained his own bookkeeper to spend time managing the

affairs at Traynor Mallon. In any event Mr. Mallon decided in early 2006 to put in place a situation whereby the partnership would be

dissolved.

3.4 To that end, Mr. Mallon instructed solicitors to write to Mr. Traynor by letter dated 14th March, 2006 in which his aggravation and

umbrage with Mr. Traynor’s conduct and breach of trust was expressed. The letter further called on Mr. Traynor to account for any

benefits he had received from the partnership and moreover, citing his alleged conduct, Mr. Mallon demanded that Mr. Traynor

voluntarily absent himself from the running of the practice and to turn over his keys to Mr. Mallon. Finally Mr. Traynor was informed of

Mr. Mallon’s intention to apply to court to dissolve the partnership on grounds of misconduct. It was ventured in the alternative that

Mr. Mallon was willing to buy out Mr. Traynor’s interest in the firm but only following a full reconciliation of the partnership accounts.

In his evidence Mr. Mallon expressed the view that this letter, to his mind, effectively dissolved the partnership.

3.5 Thereafter, both Messrs. Mallon and Traynor, in the company of their respective legal advisors, met outside the Law Library on

the 30th March, 2006 in an effort to come to terms on the final dissolution of the firm. There is no dispute as between Messrs. Mallon

and Traynor that the partnership of Traynor Mallon & Company was terminated on, if not before, that date. Indeed this view is shared

by Mr. Ken Connolly BL, who acted for Mr. Mallon and was also present at that meeting. Mr. Connolly in his evidence described the

breakdown in the relationship between the two gentlemen in terms where “they couldn’t even look at each other in the hall”. Mr.

Connolly was unequivocal in his view that any partnership that existed between Messrs. Mallon and Traynor had come to an end

before or at the meeting of the 30th March and that it was abundantly clear to him that into the future there was not going to be

any partnership between the two. Similarly, there is no dispute between the parties that, at the conclusion of the meeting on the

30th March, it was proposed that Mr. Traynor would purchase Mr. Mallon’s interest in the firm but that aside, further agreement was

not reached on the shape and form of any final financial arrangement. The effect which the March 2006 exchanges were to have on

the partnership of Traynor Mallon is, however, a matter of much contention.

3.6 Counsel for Mr. Traynor sought to lay much emphasis on the fact that Messrs. Mallon and Traynor saw fit to conclude a written

document dated the 30th August, 2006 whose purpose, on its face, was “[t]o transfer the firm to Joseph Traynor, to determine the

partnership between Seamus Mallon and Joseph Traynor […] [and] in the event that a partnership is not so found to determine the

joint practice arrangement of the said parties practising under the said style and title […]” and which also included the following term:

“[u]pon the signing hereof, Seamus Mallon shall no longer be a partner of the firm.” It was contended that it was an implication of this

agreement that, prior to its execution, a partnership persisted between the parties. In his evidence Mr. Mallon disagreed with this

contention and explained that, as far as he was concerned, the partnership had been determined in March and therefore the only

function of the agreement was to tie up the loose ends in relation to finance arrangements. Following a valuation by Mr. David Rowe

of the firm Outsource, which placed a figure of circa €1.8 million on the firm as at 31st December 2005, Mr. Mallon agreed to sell his

interest to Mr. Traynor for €1.5 million. Of this Mr. Mallon received approximately half by way of bank draft and cheques. In October

2009 Mr. Mallon obtained a judgment against Mr. Traynor for the balance, some €834,615, which included interest. There was some

suggestion by counsel for Mr. Johnston that Mr. Traynor fraudulently used part of the monies obtained from ACC for the Castlewarden

lands in part satisfaction of the dissolution agreement’s financial arrangements. In any event this matter does not fall to the court to

decide as ACC is not pursuing a claim against Mr. Mallon in this regard.

3.7 Counsel for Mr. Johnston also laid particular emphasis on the confidentiality clause of the August agreement which provided that

“this agreement is confidential between the parties.” It was advanced that this evidenced a desire on the part of Mr. Mallon to

maintain the public perception that Traynor Mallon & Company continued to practise unchanged as it would have been to Mr. Mallon’s

detriment financially, it is said, in terms of securing the receipt of the bullet payments under the August agreement, were the

dissolution to be made public. Mr. Mallon again rejected this contention and instead asserted that his interpretation was that the

confidentiality clause merely applied to the financial terms of the settlement and that he naturally expected Mr. Traynor to publicise

the dissolution and to boast about the fact that he now owned his own firm which was to be styled “Traynor & Company”. In

circumstances where Mr. Traynor continued to use the letterhead of Traynor Mallon & Company in the period between March 2006

and September 2007, at least in correspondence with Mr. Johnston, the issue of notice of the dissolution is of central importance to

the determination of this case.

3.8 Following the March exchanges, a number of steps were taken in order to effect the dissolution of the partnership. On a basic

level Mr. Mallon testified that he did not involve himself in the supervision or management of the Dundalk offices from January 2006

onwards. Indeed Mr. McQuillan, an auditor and accountant, gave evidence that, for tax purposes, the partnership terminated as of

the 31st December 2005. This date was also used as the date to determine the partners’ closing capital account balances as part of

the financial arrangements for the dissolution. Furthermore, Mr. Mallon suggested that for VAT, PAYE and PRSI purposes the change in

circumstances of the firm would have been notified to Revenue, although the when and how of this where not entirely clear to the

court. Mr. Traynor, separately, proceeded on the 22nd May, 2006 to register the business name of “Traynor & Company Solicitors”

with the Companies Registrar.

3.9 The state of the evidence was that, on the 25th August, 2006, Mr. Patrick Groarke, on behalf of Mr. Mallon, wrote to the Law

Society notifying them that his client was in the advanced stages of agreeing to sell his interest in Traynor Mallon to Mr. Traynor.

Thereafter, it would appear that Mr. Traynor wrote to the Law Society on the 11th October, 2006 advising that the effective date of

dissolution of the partnership was the 31st March, 2006. Mr. Traynor again wrote on the 24th October, 2006, enclosing details of his

firm’s new letterhead. Furthermore, correspondence from Rosemary Fallon, Executive Officer for the Law Society, was brought to the

court’s attention which did indicate that, according to their records, the practice of “Traynor & Co. Solicitors” commenced on the 1st

April, 2006, until its closure on the 4th February, 2010.

3.10 The firm’s insurers, however, were not informed until December 2006 when the firm’s professional indemnity insurance policy

came up for renewal. There was no notification published in Iris Oifigiúil or any newspaper of record. The firm’s banking arrangements

remained in place until August during which time Mr. Mallon remained a joint signatory on cheques. Mr. Mallon explained this by noting

that his property in Castleblayney secured the firm’s overdraft. Post-dissolution, Mr. Traynor continued to run the practice from the

Dundalk office with most if not all of the same staff and handling all of the previous files. Indeed, were a client to arrive to the office

on the 1st April, 2006, Mr. Mallon conceded that they would not notice any change unless Mr. Traynor explained the dissolution of

Traynor Mallon and its reconstitution in the new form of Traynor & Co. In explaining these apparent omissions Mr. Mallon expressed

the view that, as the purchaser, he would have expected Mr. Traynor to have taken all of the necessary steps to publicise his new

business. He also expressed the view that he had never encountered an advertisement detailing the departure of a partner from a

practice. A point of significant note, as mentioned earlier, is that Mr. Traynor continued to conduct his business using the Traynor

Mallon letterhead which listed both Messrs. Mallon and Traynor as partners in the firm. It was this action, although never fully

explained to the court, which bears directly on the core issue of the undertakings in this case.

3.11 In July, 2006 Mr. Brian Johnston was appointed by ACC to act as their solicitor in relation to a number loans to Mr. Tiernan,

which have been the subject of the principal judgment. Mr. Johnston first wrote on the 24th July, 2006 to Traynor Mallon & Co.

Solicitors in respect of the lands at Castlewarden, Co. Kildare notifying them of his appointment. Mr. Traynor thereafter corresponded

with Mr. Johnston using the Traynor Mallon & Company Solicitors’ letterhead from the 27th July, 2006, until the letterhead changed to

“Traynor & Company, Solicitors” on the 6th September, 2007, and on no less than seventeen separate occasions. At this point it may

also be of note that, on the 28th August, 2006, Mr. Traynor wrote to Mr. Groarke, who was acting for Mr. Mallon in the context of

the dissolution, using the Traynor Mallon letterhead. In any event, of greater concern are those letters which contained undertakings

purportedly on behalf of Traynor Mallon on which Mr. Johnston testified to relying.

3.12 As described previously, Mr. Traynor gave a number of undertakings to Mr. Johnston during the period from July, 2006 to

September, 2007. The principal undertaking for present purposes was the confirmation given by Traynor Mallon on the 24th August,

2006, to Mr. Johnston that “the monies received from ACC bank will be used solely for the purchase of the property at Castlewarden”.

Mr. Johnston’s reliance on same is evidenced by his return letter of the 25th August in which he encloses an uncrossed cheque in

favour of Mr. Traynor’s client and notes that “this is made payable at your client’s request, but that we will be relying on your

undertaking to hold this money and to use it for the sole purpose of purchasing the lands at Castlewarden”. As appears from the

principal judgment most of the relevant monies were paid over on the basis of that undertaking. The other relevant undertakings

include, in broad terms: an undertaking to furnish ACC with all net proceeds of the sale of lands at Redbarns Road, Dundalk, Co. Louth

and Annagasson, Dundalk Co. Louth and to assign any deposits held in respect of the contracts of sale of those properties in

permanent reduction of Mr. Tiernan’s debt; an undertaking to lodge four million euro to the ACC Bank from the sale of lands at Hill

Street, Dundalk, Co. Louth in permanent reduction of the sums due to the bank and which were secured on the same property; in

respect of property at Tullydonnell, Co. Louth, an undertaking to furnish Mr. Johnston with appropriate title documentation and maps

in early course. However, ACC does not claim that any losses arise in relation to those undertakings. Further there was an

undertaking to lodge the title documents immediately on the sale of the Castlewarden property being completed. Finally, there was an

undertaking to stamp and register the title documents, including the deed of transfer, for the Castlewarden property. Further monies

were paid over on foot of this undertaking.

3.13 As pointed out, on the basis of at least some of these undertakings, considerable sums of ACC’s money were transferred to Mr.

Traynor’s firm. The relevant undertakings were not honoured and the money has effectively vanished and would not appear to be

recoverable against either Mr. Tiernan or Mr. Traynor.

3.14 It should also be noted, as set out at paragraph 4.25 of the principal judgment, that ACC advanced a further sum of €1,000,000

to Mr. Traynor’s client following an approach from Mr. Tiernan. This money was advanced on the strength of the security of a

solicitor’s undertaking to pay ACC an additional €1,000,000 from the sale of the Hill Street property. In early 2007, Traynor Mallon duly

furnished Mr. Johnston with the required undertaking. However, these additional funds were also advanced on the basis of the existing

security apparently held by ACC and were thus believed to be secured on the Castlewarden lands and, from Mr. Johnston’s

perspective, on the undertakings given in respect of those lands.

3.15 Following complaints to the Law Society by Mr. Johnston for the breach of undertakings, Mr. Traynor was subject to

investigation. In April, 2009 Mr. Mallon was appointed by the President of the High Court to act as practice manager of the firm. From

that point Mr. Mallon has cooperated with the Solicitors’ Mutual Defence Fund and the Law Society in investigating the practise of Mr.

Traynor. Mr. Mallon continues to run the reconstituted practise at Dundalk while Mr. Traynor is no longer entitled to practise as a

solicitor.

3.16 Against the background of that general description of the facts it is appropriate to turn to the issues which arise. I propose

dealing with any disputed questions of fact under each of the relevant headings. Likewise, I propose dealing with any relevant legal

questions under those headings. In the circumstances it is appropriate to turn to the first issue which is as to the time at which the

partnership between Mr. Mallon and Mr. Traynor actually came to an end.

4. When did Traynor Mallon come to an End?

4.1 As pointed out earlier, while there is a difference between Mr. Traynor and Mr. Mallon as to the precise date in March, 2006 when

the partnership between them can be said to have come to an end, both suggest that their partnership had ended at the very latest

by the 30th March. The principal underlying facts are not in dispute. Mr. Mallon wrote to Mr. Traynor, through his solicitors Messrs.

Groarke & Co, on the 14th March. One possible conclusion is that that letter, of itself, brought the partnership to an end. In

Halsbury’s Laws of England Vol. 35, para. 164, the circumstances in which the dissolution of a partnership by notice can occur are

stated in the following terms:-

“Subject to any agreement between the partners, a partnership for which no fixed term has been agreed, and for no fixed

adventure or undertaking, may be dissolved by any partner by giving notice of his intention so to do to the others. The

Partnership Act 1890, does not require the notice to be in writing. The firm is dissolved from the date mentioned in the

notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice. The

notice must amount to an unambiguous intimation of a final intention to dissolve the partnership and must be given to all

partners unless the articles otherwise provide.”

4.2 The first issue to be addressed is as to whether the letter of the 14th March, 2006 meets that test. Two questions seem to me

to arise. Both stem from the terms of the letter itself. In material part that letter provides as follows:-

“Dear Mr. Traynor, We are instructed by the above named Seamus Mallon in respect of regularising matters regarding the

determination of the partnership practising under the style and/or title of Traynor Mallon & Company, Solicitors […] Finally

we have been instructed, in the absence of your consent to dissolve the partnership, to apply to Court pursuant to

Section 35© and 35(d) of the [Partnership] Act to dissolve the Partnership on the grounds of your professional

misconduct. […]”

4.3 It is clear, therefore, that the letter does not specify a date from which the partnership is to be treated as coming to an end.

However, as is clear from the passage from Halsbury cited above, in the absence of the relevant notice specifying a date from which

the partnership is to be dissolved, the date of receipt of the notice will be the operative date. The fact, therefore, that the letter

does not specify a date is not, of itself, fatal.

4.4 The second question which arises concerns the terms of the letter and whether it can be described as being “an unambiguous

intimation of a final intention to dissolve the partnership”. That the notice must be unambiguous is clear from cases such as Stewart

v. Gladstone [1878] 10 Ch.D. 626 at 650. On balance I have come to the view that the relevant letter is not sufficiently unambiguous

to amount to a sufficient notice of dissolution. The letter speaks of the intention of Mr. Mallon to seek a dissolution from the High

Court. It is, of course, open to a partner to go down the route of applying to court for a dissolution of the partnership. Where

dissolution occurs as a result of a court process the dissolution is normally taken to date from the issue of proceedings. There is,

therefore, a difference in substance between a dissolution by notice and a dissolution by the court. Insofar as the letter addresses

the question of dissolution, it appears to do so in the context of intimating that the dissolution will take place by court process. If

that be so, then the dissolution was not to have immediate effect but rather would have had effect whenever that court process was

begun. At a minimum the letter is ambiguous as to whether it is intended to immediately bring the partnership to an end rather than to

threaten that the partnership will be brought to an end, in the absence of agreement, by the issuing of appropriate proceedings. It

can, of course, be the case that a party who has actually caused the dissolution of a partnership by notice may nonetheless issue

proceedings seeking ancillary relief including, if there be a dispute, a declaration that the partnership has already dissolved. However,

there is a difference between an application to the court to dissolve the partnership, on the one hand, and an application to the

court to declare that a partnership has already been dissolved by notice, on the other hand.

4.5 It is next necessary to consider whether the meeting of the 30th March gave rise to a dissolution of the partnership. All who

attended that meeting and who gave evidence are agreed that it was clear, as a result of that meeting, that the partnership was to

come to an end. All that was left, it is said, was to agree the financial terms. There would appear to have been some discussion as to

those financial terms at the meeting of the 30th March, but no agreement was reached. I accept, therefore, as a fact, that at the

meeting of the 30th March it was agreed between Mr. Mallon and Mr. Traynor that the partnership would be dissolved with immediate

effect. In addition, it was agreed that Mr. Traynor would take over the business of the partnership as it stood. It remained for the

parties to agree the financial terms on which Mr. Traynor would take over the partnership business. However, it does not seem to me

that the fact that the parties had not agreed those terms is fatal to the conclusion that the partnership had been dissolved on that

date. If it had proved impossible for Mr. Mallon and Mr. Traynor to agree the amount which Mr. Traynor was to pay to Mr. Mallon,

then it would have been open to Mr. Mallon to commence proceedings which would have led to a recognition by the court that the

partnership had been dissolved on that date and which would also have led to the court making ancillary orders to provide for a

valuation of the partnership assets as of that date and the like.

4.6 Before leaving this topic I should deal with two points made on behalf of Mr. Johnston against the proposition that the partnership

can be said to have been dissolved on the 30th March. First, it is said that there was no agreement between the parties as to the

date by reference to which the partnership was to be valued. That is true so far as it goes. However, it is clear on the facts as I

have found them, that there was an unambiguous intention displayed by both parties at the meeting of the 30th March to bring the

partnership to an end. That is, for the reasons which I have already set out, sufficient. It is also clear that, by operation of law, the

date for the valuation of the partnership then becomes the date on which that unambiguous intention is notified to both parties. It

seems to me that where all parties agree that a partnership is to be dissolved then same amounts to a mutual notice by all parties to

the others, immediately communicated, which notice is unambiguous as to the dissolution of the partnership. It follows that the

partnership is, subject to the parties having agreed some other date, to be dissolved as of that date and any valuation process is to

occur as of that date.

4.7 In that regard argument is made on behalf of Mr. Johnston that no one was given instructions to value the partnership as of that

date. That is again true so far as it goes. However, it does not seem to me that it is appropriate to draw any inference adverse to

Mr. Mallon’s contention arising from that fact. The valuation of Mr. Mallon’s entitlements was not an exact science. The evidence

established that a preliminary valuation of the partnership had been arrived at some months earlier. The key elements of that

valuation involved certain limited tangible assets of the partnership but were principally concerned with the value of work already

done in the solicitors practice while the partnership subsisted. The valuation involved fees already billed to clients but not yet paid,

together with work in progress being work already done on files in the solicitor’s office which had not yet been converted into a fee

note to the client concerned. There must, necessarily, have been a significant amount of estimation in coming to any view as to the

value of the partnership under both of those headings. Fees billed will not necessarily be paid. In some cases a client may be unable

to pay or significant difficulty might be encountered in forcing payment thus incurring collection costs. Therefore, the full value of

fees already billed is unlikely, in practise, to be recovered or recovered without some cost. Likewise, any estimation of the value of

work in progress, being work done on cases or matters which have not yet been billed, necessarily involves an estimation. Similar

questions concerning recoverability would also arise under those headings. If the court, or an arbitrator, were required to value the

partnership for the purposes of determining the rights and obligations of the former partners on a dissolution, then obviously a best

estimate under all of those headings would need to have been made. Likewise, an estimate of the value of any goodwill attaching to

the partnership would need to have been made. However, such a process is far from an exact science.

4.8 When added to those factors it is also necessary to consider the practical realities of the situation whereby the value of the

partnership would be significantly reduced unless its business could continue. In those circumstances, it is hardly surprising that Mr.

Mallon regarded both the amount which he was to receive from Mr. Traynor and the time over which it was to be paid to be matters

primarily for a practical commercial negotiation (admittedly one conducted against the background of Mr. Mallon’s actual entitlements)

rather than a rigorous exercise of valuation. That practical negotiation is what Mr. Mallon anticipated on the 30th March, and that

practical negotiation is what, in fact, ensued leading to an agreement on the relevant commercial terms which was incorporated into

the written document of the 30th August.

4.9 The second point concerns the terms of that document itself. There is no doubt but that the way in which that document is

drafted implies that the partnership continued up to the date of the agreement. Indeed the agreement itself is open to ambiguity. For

example, Clause 3 provides:-

“Joseph Traynor acknowledges that the firm remains the property of Seamus Mallon subject to any payment to which the

said Joseph Traynor may be entitled (which is not admitted) until payment in full of the amounts specified at Part III

hereunder is made to and receipted by Seamus Mallon.”

On the other hand Clauses 18 and 19 provide:-

“18. Upon the signing hereof Seamus Mallon shall no longer be a partner of the firm and in consideration of the terms and

provisions of the within agreement shall have no share, interest or entitlement in any assets or business of the firm.

Seamus Mallon shall at that time sign each and every document necessary to transfer the business and assets of the firm

to Joseph Traynor or his assigns and/or nominees and shall surrender his authority over each of the bank accounts of the

firm.

19. As and from the date of the signing hereof Seamus Mallon shall have no responsibility whatsoever to the clients of the

firm (including in respect of their funds held in the clients account(s) and Joseph Traynor shall and hereby does provide a

full and absolute indemnity to Seamus Mallon in this regard.”

How it is possible to reconcile Clause 3 with Clause 18 is difficult to say. Two points need to be made in that regard. First, if, in truth,

the partnership had been dissolved as of the 30th March, it does not seem to me that the partnership can be revived retrospectively

by an implication derived from the terms of the agreement subsequently entered into on the 30th August. It would, of course,

notwithstanding an actual dissolution on the 30th March, have been possible for Mr. Traynor and Mr. Mallon to have reached terms on

the 30th August which made express provision for events that occurred between the 30th March and the 30th August and to provide

for the rights and obligations of the parties in respect of those events. That did not happen. It does not seem to me that it is

appropriate to treat the 30th August agreement as retrospectively providing for the continuation of a partnership which had, in fact,

dissolved on the 30th March. Likewise, I am not satisfied on the facts that the wording of the agreement of the 30th August ought

lead me to come to a different conclusion as to whether the partnership had, in truth, been dissolved on the 30th March. I am

satisfied on the evidence that there was an unambiguous acceptance by both Mr. Traynor and Mr. Mallon, on the 30th March, that

the partnership was then at an end leaving only negotiations as to the precise financial arrangements to be concluded. The terms of

the agreement of the 30th August are, in my view, a result of unfortunate drafting rather than reflecting the actual legal and factual

situation.

4.10 In all those circumstances I am satisfied, as a matter of fact, that the partnership between Mr. Mallon and Mr. Traynor came to

an end on the 30th March. In follows that there was, in fact, no partnership in existence between them at the time when any of the

relevant undertakings were given on the notepaper bearing the heading “Traynor Mallon”. However, as pointed out, that finding does

not resolve the case, for Mr. Johnston places reliance on ostensible authority. In those circumstances it is necessary to turn to the

question of whether Mr. Traynor had the ostensible authority of Mr. Mallon to give undertakings on behalf of an apparent continuing

partnership between them on any of the dates when the undertakings relevant to these proceedings were given. I, therefore, turn to

the question of Mr. Traynor’s ostensible authority.

5. Mr. Traynor’s Ostensible Authority

5.1 It seems to me to be appropriate to start, under this heading, by setting out the fundamental legal principles which underlie the

ostensible authority of a partner to take action on behalf of the partnership, at least insofar as those principles have some relevance

to the issues which arise in this case.

5.2 It is, perhaps, appropriate to start by stating the obvious. Ostensible authority is only relevant when there is no actual authority.

If the relevant partner has actual authority then that is sufficient to bind the partnership. Ostensible authority is, therefore,

concerned with circumstances where partners may be bound for each other’s actions even though the partner actually committing

the wrongful act may not have actual authority.

5.3 Second, it is important to note that, in order for any person to have the ostensible authority of another, the person relying on

ostensible authority must be able to point to actions or omissions on the part of the person sought to be bound which justify implying

authority. It is not possible to rely simply on the statements or actions of the person who is said to have implied authority. This is

sometimes referred to as the bootlaces or bootstraps problem. A person cannot pull himself up by his own bootlaces. A person cannot

create a situation where they have the implied authority of a third party simply by asserting or acting as if they have that authority.

These general principles apply equally to the ostensible authority of employees or agents as much as they do to partners. In the

context of partnership, therefore, the mere fact that someone says that they are a partner of a third party or acts in a way which

implies that they are such a partner, does not give that person ostensible authority to bind the third party. The third party has done

nothing to create the ostensible authority. It is necessary, therefore, that a person claiming the existence of such an implied

authority must be able to point to some act or omission on the part of the alleged partner from which it is reasonable to imply the

existence of the partnership and the entitlement of the putative partner to bind that partnership.

5.4 However, beyond those general principles it is important to note that the case law concerning ostensible authority of partners

(and, where relevant, by implication similar authorities in the field of employer/employee and principal/agent) is concerned with a

whole variety of different types of cases which are separately concerned with different bases on which it might be suggested that

ostensible authority does not exist. In some cases (such as Re: Hall [1865] Ir. Ch. 287, Martin v. Sherry [1905] 2 I.R. 62 and DPP v.

McLoughlin [1986] I.R. 355 and many others) the question was as to whether there was a partnership relationship at all. In other

cases (such as Allied Pharmaceutical Distributors & Anor v. Walsh & Ors [1991] 2 I.R. 8) there was undoubtedly a partnership but the

question was as to whether the particular actions of a partner were within or without the implied authority of the partner concerned

to act. That authority will extend to the ordinary business of the partnership but not beyond in the absence of additional

circumstances which would justify implying authority on the particular facts of the case. In the context of professional partnerships it

might be reasonable, to use an Irish terminology, to describe this as the “nixer” problem. The fact that someone may be a partner (or,

indeed, an employee) in or of a professional firm does not necessarily mean that that partner may not do work outside the scope of

firm in the form of what is often colloquially referred to in Ireland as a nixer. It would be a question of fact in each case to decide

whether the firm acted in any way which could be said to confer ostensible authority on the relevant person in respect of the

transaction concerned. That problem deals with situations where the work is of the type normally done by the partnership but may

not, in fact, have been done by the partner on the occasion in question within the parameters of the partnership’s business. If the

work is not actually done within the parameters of the partnership business, then the question will nonetheless arise as to whether

the partner had implied authority to bind the partnership in all the circumstances of the case. It was this type of issue that arose in

Kooragang Investments Pty Ltd v. Richardson & Anor [1982] A.C. 462.

5.5 A different but analogous problem may arise where the work done is outside the scope of what the partnership normally does but

where there may be reason to believe (viewed from the perspective of the person dealing with the partnership and having regard to

acts or omissions on the part of the other partners) that the work was nonetheless being done for the partnership. If, for example, a

partnership became aware that a partner was, in the partnership offices and using partnership resources, providing services which

were outside the ordinary scope of the partnership, and continued to permit the partner to carry out those tasks, then it might very

well be that implied authority would be present even though as and between the offending partner and the remainder of the

partnership different considerations might apply.

5.6 It is, therefore, in my view, important, when analysing any of the decided case law, to pay particular attention to the precise

problem which the court confronted in the case in question. The court’s analysis is necessarily informed by the question which the

court is being required to answer. In this case the question is of a particular type. There was undoubtedly a partnership in existence.

Mr. Traynor had, certainly until March, 2006, ostensible authority to bind the partnership within the ordinary course of the

partnership’s business. It seems to me that, on the facts of this case, two real questions arise. The first is as to the status of Mr.

Traynor’s ostensible authority after the dissolution of the partnership. The second is as to whether the giving of undertakings of the

type given by Mr. Traynor in this case can be said to be within the scope of the ordinary course of a solicitor’s practice. I should

emphasise that there is no question in this case of special circumstances which would confer implied authority on Mr. Traynor outside

the ordinary scope of a solicitor’s practice. I propose addressing both of those issues in turn.

5.7 The first question concerns the ostensible authority of an undoubted former partner to bind, on an ostensible authority basis,

other former partners after the partnership has been dissolved but where the former partner said to have bound others continues with

the partnership business. The Partnership Act 1890 (s. 36(1)) does suggest that a partner who has left the partnership may continue

to be bound by partnership actions unless and until notice of departure is given. In that context, the law makes an entirely logical

distinction between existing customers and new customers. A partner leaving the partnership may give public notice in Iris Oifigiúil of

the new status of the partnership and, thereafter, the remaining partners will no longer have implied authority to bind the retiring

partner so far as new customers are concerned. In relation to existing customers then something more is required for those customers

as they must have the departure of the relevant partner brought to their attention and unless there is actual evidence of such

customers having had a public notice brought to their attention, then something more may well be required.

5.8 In the course of argument it was suggested on behalf of Mr. Mallon that the wording of s. 36(1), referring as it does to a

continuing firm, has no application to a case where there were only two partners and the partnership is dissolved for, it is said, in

those circumstances there is no longer any firm because, in turn, a firm requires at least two partners. Whatever may be the merits of

that argument as a matter of textual analysis, it seems to me to be clear that most of the provisions of the Partnership Act 1890

were simply declaratory of the common law position that had evolved prior to its enactment. It is clear from cases such as Parkin v.

Carruthers 3 Esp. N. P. C. 248, which is cited in Carter v Whalley (1830) 109 E.R. 691, at 692, that the common law position that

existed prior to the Partnership Act 1890 imposed the same obligations of notice on parties to a completely dissolved partnership,

where one continued the business, as the common law did in respect of a retiring partner from a partnership where, in substance if

not in theoretical legal form, the partnership continued to do business with two or more remaining partners. I describe that position as

being one of substance rather than theoretical legal form for it is, of course, theoretically the case that a new partnership can be

said to come into existence where a partnership is dissolved by the resignation of an individual partner. Given that the Partnership Act

1890 was largely designed to codify existing common law provisions, it does not seem to me that that Act should be taken, by

implication, to have amended the common law, unless the Act expressly and specifically purports so to do. I see no reason to depart,

therefore, from the common law position which was that notice of the dissolution of a partnership involving just two partners was

required in order that persons continuing to deal with the apparent partnership should be deprived of being able to argue that the

partner continuing on with the business of the partnership was acting with the ostensible or implied authority of the former

partnership.

5.9 Applied to the facts of this case it seems to me that, where a firm of solicitors is dissolved, but where, to the knowledge of those

solicitors, the business of the firm is to be continued by one or more of them, then those carrying on that continuing business have

the ostensible authority of those who are no longer involved unless and until those departing from the business give appropriate

notice of that fact. In that context, appropriate notice is general public notice in respect of persons who are not former clients or

persons who had dealings with the former firm and specific notice in the case of those who were former clients or had such dealings.

5.10 The reason for that position is obvious. If someone never was a partner then it requires some act or omission on their part to

give rise to an implication that they would be bound by the partnership. If, for example, Mr. Mallon and Mr. Traynor had never been

partners, then an assertion by Mr. Traynor that Mr. Mallon was his partner could not create implied authority on the part of Mr.

Traynor to bind Mr. Mallon. It would require some act or omission on Mr. Mallon’s part, from which a person dealing with Mr. Traynor

might reasonably be entitled to imply that Mr. Traynor was acting on Mr. Mallon’s behalf, to create such a situation. In those

circumstances there is no implied authority until Mr. Mallon does or omits to so something that creates that implied authority.

5.11 However, where there is an existing partnership then the situation is different. Mr. Traynor had, in fact, authority up to a certain

point. Persons dealing with the firm were entitled to assume that, as long as the firm continued in existence, Mr. Traynor had the

authority of Mr. Mallon. Mr. Mallon was bound because he had acted, by actually being Mr. Traynor’s partner, in a manner which held

himself out as being bound for Mr. Traynor’s actions within the ordinary confines of the solicitors practice. This is not, therefore, a

case about whether there ever was implied authority on the part of Mr. Mallon in the first place. Rather it is case where there

undoubtedly was implied authority on behalf of Mr. Mallon and the question is as to when it ends. It seems to me clear that implied

authority, once given, continues unless and until circumstances become apparent which would not entitle a third party to treat that

authority as continuing. Of course there may be circumstances, not relevant in this case, where it might not be reasonable to infer

that authority continues even in the absence of notice. A person who had ostensible authority, for example, solely to carry out one

transaction or a specified series of transactions, could not be said to have any continuing implied authority once the relevant

transactions had been completed. But this is not such a case. Mr. Traynor had general authority to carry out the solicitor’s practice

which he conducted in partnership with Mr. Mallon for as long as that partnership should subsist. By that course of action Mr. Mallon

conferred an implied authority on Mr. Traynor to continue to bind him until such time as notice or other circumstances would have led

any particular person dealing with the firm to reasonably conclude that the partnership was no longer in place.

5.12 In that context, it is appropriate to refer to Tower Cabinet Co Ltd v Ingram [1949] 2 K.B. 397 in which case the fact that a

former partner’s name continued on the notepaper did not create ostensible authority. Be that as it may, the partner in the case in

question was clearly unaware that the former partner continued to use notepaper with his name on it. In addition, the claimant

company had not dealt with the partnership while the defendant was a party. Neither matter is the case here.

5.13 On the facts of this case a number of matters are absolutely clear. Mr. Mallon took no steps to inform either the public generally

or the clients of Traynor Mallon or those dealing with the firm, in particular, that the partnership was at an end. As pointed out

earlier, Mr. Mallon accepted that someone going into the office on the 1st April, 2006, would not have been aware of any change.

There is no evidence of any general public awareness or any specific awareness on the part of Mr. Johnston, of the change in

circumstances, at any time which is material to the undertakings which are relevant to this case. It does not seem to me to be

necessary to decide whether that was a deliberate policy on the part of Mr. Mallon (as counsel on behalf of Mr. Johnston suggests) or

whether, as Mr. Mallon alleges, it was simply that Mr. Mallon assumed that Mr. Traynor would be more than happy to tell anyone that

he was now the sole proprietor of the firm. Even on the latter basis it is clear that Mr. Mallon took a chance by leaving it to Mr.

Traynor to inform clients, the public generally, and other firms of solicitors (such as Mr. Johnston) who might have to deal with

Traynor Mallon, of the fact that Traynor Mallon was no longer a firm involving Mr. Mallon. There is no evidence that Mr. Traynor, in

fact, took it on himself, at any material time, to inform any persons about the change in circumstance. It follows that Mr. Traynor

continued to have implied or ostensible authority to bind Mr. Mallon at the time when any of the relevant undertakings in these

proceedings was given. The second question to which it is now necessary to turn is as to whether it can be said that those

undertakings were given in the ordinary course of business.

5.14 There was much concentration at the hearing as to whether it was reasonable for Mr. Johnston to accept the relevant

undertakings in all the circumstances of the case. While that question is also relevant to the degree of culpability of Mr. Johnston, on

the one hand, and Mr. Traynor (and, if necessary, Mr. Mallon), on the other hand (an issue to which I will turn), it does not seem to

me to be relevant to the issue with which I am now concerned. The question under this heading is not as to whether it could be said

to be in the ordinary course of business for Mr. Johnston to take the undertaking, but rather whether it can be said to have been in

the ordinary course of business for Mr. Traynor to give it. In that context, I accept the evidence of Mr. Felix McTiernan, who is, of

course, a most experienced conveyancing solicitor, which was to the effect that undertakings of the type given by Mr. Traynor were

regularly given by solicitors in the course of the completion of conveyancing transactions. The undertaking was to the effect that

Traynor Mallon would only use monies for a particular purpose, in this case the completion of a sale or the payment of stamp duty. It

may be, for reasons which are gone into in some detail in the principal judgment, that the practise of closing on undertakings in that

way was a practice which exposed many clients to unnecessary additional risk, which risk should not have arisen without express

advice and instructions. However, the fact that carrying out a transaction in a particular way may have been an unwise way of

conducting the transaction, does not alter the fact that undertakings as to what is to happen to money paid over formed (and, to an

extent, continue to form) a normal part of many conveyancing transactions. To put it at its lowest, there appears to have been a

practice that solicitors acting for vendors regularly give undertakings to use portions of purchase monies to discharge existing

encumbrances, such as mortgages. Conveyancing is a central part of many solicitors business. Giving undertakings as to where money

which is handed over in conveyancing transactions is to go is a part of that business.

5.15 It is important to recollect that the focus in this case is on whether the actions of Mr. Traynor in giving the undertakings can be

said to have been actions taken in the ordinary course of a solicitor’s practice. That is, it seems to me, a significantly different

question from one as to whether it was negligent of Mr. Johnston to accept those undertakings without his client’s authority. Indeed,

it is implicit in the principal judgment that had Mr. Johnston, in fact, had ACC’s authority, then there would have been nothing wrong

with the transaction at all. There was some additional risk. If, for whatever commercial or other reasons, ACC were willing to take

that additional risk, then that was ACC’s decision. If ACC had given its consent, then how could it be said that the giving of the

relevant undertaking by Mr. Traynor would have been outside the course of Mr. Traynor’s solicitors practice. On that basis, whether

Mr. Johnston was authorised to take the undertaking concerned cannot determine whether it was within the course of Mr. Traynor’s

business to give it. In the circumstances, I have no doubt that the giving by Mr. Traynor of an undertaking as to what was to happen

to the proceeds of sale, in the form in which he did, was within the ordinary course of business. The case law on undertakings, such

as United Bank of Kuwait v. Hammond & Ors [1887] 1 W.L.R. 1051, is more concerned with undertakings given which might be outside

of the type of transaction which a solicitor normally engages in as a solicitor or where the solicitor had no reasonable expectation of

getting the funds the subject of the undertaking. Those questions do not seem to me to arise on the facts of this case.

5.16 It follows that Mr. Traynor had the ostensible authority of Mr. Mallon to carry on the ordinary solicitors business which they had

previously carried on, and had that ostensible authority at all times material to the giving of the undertakings in question. This is

because Mr. Mallon took no steps to inform the public, the practice’s clients, or other firms of solicitors who might have to deal with

it, that the partnership was at an end. In addition, as it happens, Mr. Johnston was not aware of the termination of the partnership.

In those circumstances, and having regard to my finding that the relevant undertakings were given within the ordinary course of a

solicitors practice, I am satisfied that Mr. Mallon is responsible, as a partner, for the undertakings given by Mr. Traynor and Mr.

Traynor’s failure to comply with them, even though Mr. Mallon was not directly aware of the undertakings concerned. In that regard,

Mr. Mallon is no different from any partner who may ultimately have to answer for negligence or other wrongdoing carried out by

partners. His personal innocence is not, unfortunately, in those circumstances, any defence.

5.17 Given my finding that Mr. Mallon is liable for the actions of Mr. Traynor, two further questions arise which go to the liability of

Traynor Mallon, rather than the independent liability of Mr. Mallon, for the acts of Mr. Traynor. I turn to those questions the first of

which involves the provisions of the Civil Liability Act 1961 (as amended), in relation to concurrent wrongdoers.

6. Concurrent Wrongdoers

6.1 Both points under this heading stem from the provisions of the Civil Liability Act 1961 (s. 11). It is important to say something

about third party claims before going on to analyse the two points raised. There are a wide range of bases on which it may be

considered appropriate to join a third party to proceedings. The defendant may have some entirely independent reason for being

entitled to claim relief connected with the main action as against the proposed third party. For example, a defendant may claim that a

third party is liable to indemnify that defendant under a contract (whether of insurance or otherwise). The defendant may claim to

have a separate cause of action against the third party which is sufficiently connected with the claim brought by the plaintiff against

the defendant so as to make it convenient that both matters be dealt with together. However, unless the defendant has an

independent or standalone cause of action against the third party, then it seems that in order to be able to pursue a third party

claim, a defendant has to be able to establish that the proposed third party is a concurrent wrongdoer, in the sense in which that

term is used in the Civil Liability Acts.

6.2 For reasons which I analysed in Moloney & Anor v Liddy & Ors [2010] IEHC 218, the position at common law was that a defendant

could not sue a concurrent wrongdoer liable for the same damage to the plaintiff. The Civil Liability Acts were designed to alter that

position and to permit a defendant to bring appropriate proceedings against a concurrent wrongdoer in those circumstances. If both

are sued in the same proceedings, then there will be a claim for contribution or indemnity between the defendants. If only one is

sued, that defendant can join the other as a third party. In such cases, the relevant defendant does not have an independent cause

of action against either its co-defendant or the third party, but is permitted, provided that both are concurrent wrongdoers, to bring

a claim in the proceedings against either the co-defendant or the third party under the provisions of the Civil Liability Acts.

6.3 It follows that Mr. Johnston is only entitled to claim against Traynor Mallon (howsoever that firm might be taken to be actually, or

by implication, constituted at any relevant time) if either Mr. Johnston has an independent, standalone claim against Traynor Mallon,

or if Mr. Johnston and Traynor Mallon can be taken to be concurrent wrongdoers.

6.4 I did not understand Mr. Johnston to argue that he had any independent claim against Traynor Mallon. It follows that, on the

facts of this case, Mr. Johnston is only entitled to a remedy against Traynor Mallon if both can be described as concurrent

wrongdoers for the purposes of the Civil Liability Acts. In that context, two points are made on behalf of Mr. Mallon. However, before

dealing with those points, it is relevant to note that judgment in default has already been obtained by Mr. Johnston against Mr.

Traynor. Obviously, to the extent that Mr. Mallon might be correct in either or both of the points which he makes, then that point

would apply equally to Mr. Traynor. However, it is accepted by Mr. Johnston that the fact that he has obtained judgment in default

against Mr. Traynor cannot in any way bind Mr. Mallon so that Mr. Mallon is entitled, if he be correct, to rely on either or both of the

points to which I am about to refer.

6.5 I have already noted that both points stem from the wording of section 11(1). That section provides as follows:-

“For the purpose of this Part, two or more persons are concurrent wrongdoers when both or all are wrongdoers and are

responsible to a third person (in this Part called the injured person or the plaintiff) for the same damage, whether or not

judgment has been recovered against some or all of them.”

It is clear, therefore, that in order that Mr. Johnston and Traynor Mallon be concurrent wrongdoers, then two conditions are required

to be met:

(a) Both must be liable to the same party (on the facts of this case, ACC); and

(b) the liability must be in respect of the same ‘damage’.

Both of those matters are contested on behalf of Mr. Mallon.

6.6 So far as the first point is concerned, attention was drawn on behalf of Mr. Mallon to the stated position of ACC in these

proceedings, which was to the effect that it placed no reliance on the undertakings given by Traynor Mallon, for it was ACC’s case

(and a case which I accepted) that ACC were unaware, at any material time, that the relevant undertakings had been given.

However, it seems to me that that argument misses the point. Mr. Johnston was ACC’s agent. The undertakings were given by

Traynor Mallon to Mr. Johnston in his capacity as ACC’s agent. The fact that, as and between ACC and Mr. Johnston, ACC were not

aware of and did not authorise the acceptance of those undertakings, does not, in my view, mean that ACC would not be entitled to

rely on the undertakings. ACC are bound by the actions of their agent. They are also entitled to the benefit of their agent’s actions.

ACC may not have wished Mr. Johnston to accept undertakings, but he having accepted those undertakings, ACC are at least entitled

to the benefit of them. It may be that ACC did not consider it worthwhile to pursue Traynor Mallon. That is neither here nor there.

The fact remains that the Traynor Mallon undertakings were given to ACC’s agent and relied on by that agent and it seems to me to

follow that Traynor Mallon is liable to ACC in respect of any obligations arising under the undertakings.

6.7 The second point is more complex. In Moloney, I had occasion to review relevant authorities on the question of the meaning of

the term “same damage”. For the reasons analysed in Moloney I came to the view, following both Canadian and United Kingdom

jurisprudence, that the term “same damage” did not mean the same thing as “same damages”. Thus, a loss associated with a failure

by legal advisers to commence proceedings in time (from which flowed the loss of the chance to bring the relevant proceedings) is

not the same damage as the loss that might have been pursued in the cause of action thereby lost. This is so even though, in at

least some cases, the calculation of the damages may be closely analogous.

6.8 Applying the same reasoning it is necessary to consider whether the damage caused to ACC by, on the one hand, Mr. Johnston’s

negligence and, on the other hand, Traynor Mallon’s failure to comply with its undertakings, is the same damage. For the reasons

analysed in the principal judgment, I was satisfied that the consequences of Mr. Johnston’s negligence vis-à-vis ACC was such as

required the case to be viewed on a “no transaction” basis. In other words, the inference to be drawn was that had Mr. Johnston not

been negligent, no transaction would have taken place. In practical terms that means that had Mr. Johnston not been negligent,

ACC’s money would have remained with Mr. Johnston and would never have been handed over to Mr. Traynor.

6.9 What then are the consequences of Traynor Mallon’s breach of undertaking. There were two possible ways in which Traynor

Mallon could have complied with the various undertakings given to Mr. Johnston. First, the monies could actually have been employed

in completing the sale to Mr. Tiernan and in paying the stamp duty on that transaction. Had that happened, then ACC would, in

principle, have obtained a proper first legal charge over the relevant property. There might well, however, have been complications

stemming from the true purchase price, to which it will be necessary to return. However, in order for ACC to have succeeded against

Mr. Johnston it would, of course, have been necessary for ACC to establish not only that Mr. Johnston was guilty of negligence but

also that there was a casual connection between that negligence and whatever loss ACC might be able to establish. There is, as I

have noted, a complicating factor in this case which stems from the fact, as is pointed out in the principal judgment, that it would

appear that the real contract price between Mr. Tiernan and the vendor to Mr. Tiernan, was a lot less than the €7m that appeared on

the copy contract which was given to ACC. It will be necessary to return to the consequences of that complication in due course.

However, leaving that matter aside for the moment, no negligence on the part of Mr. Johnston could have any causal connection with

any loss suffered by ACC had Traynor Mallon actually complied with its undertaking and closed the sale. Subject to the real problem

concerning the difference in consideration, ACC would have got what it bargained for. It was Mr. Johnston’s job to procure a first

legal charge before releasing the monies. However, if ACC actually got a first legal charge at the end of the day, then even if Mr.

Johnston might have been negligent in exposing ACC to a risk by closing on an undertaking, that risk would not, in fact, have

materialised or caused any loss, and the same legal charge would have been put in place as would have occurred had the three way

closing that was anticipated taken place. Subject, therefore, to the difference in consideration point, if Traynor Mallon had actually

complied with the undertaking in the sense of procuring the closing of the sale and the paying of the relevant stamp duty, then there

would be no liability on either side to ACC.

6.10 The other way in which Traynor Mallon could have complied with the undertaking was, of course, to retain the money unless and

until the sale was closed. The fact is that Traynor Mallon did not do so. It would appear that some but not all of the money was

handed over to the vendor’s solicitor, such that the status of the sale in question must now be subject to some considerable

controversy. On the evidence the balance of the monies would appear to have been paid in various ways either for the benefit of Mr.

Traynor personally or for Mr. Tiernan. The consequence, in those circumstances, is that the money is “gone” when, had the

undertaking been complied with, it would have been kept by Traynor Mallon unless and until the sale could be properly closed.

6.11 It seems to me, therefore, that, again subject to the difference in consideration point, the breach by Traynor Mallon of its

undertaking and the negligence of Mr. Johnston give rise to the same damage. The damage is that the money is gone. If Mr. Johnston

had not been negligent it would not be gone. If Traynor Mallon had complied with its undertaking and, absent an actual closing, it

would not be gone. If Traynor Mallon had complied with its undertaking and completed the transaction then subject to the point

concerning difference in consideration to which I will now turn, there would be no loss in either case.

6.12 Under this heading, it is finally necessary to turn to the question of the difference in consideration. As pointed out in the

principal judgment, it is difficult to envisage how a three way closing could have occurred without the difference in consideration

becoming apparent. Whatever draft deeds might have been prepared in advance of the three way closing, it is inevitable that an

actual executed deed would need to have been produced at that closing which would have specified the correct consideration. I

should say in passing that it does not seem to me that questions concerning the failure of Mr. Johnston to have a draft deed

presented to him in advance of handing over the money are of any relevance in this case. It may well have been in breach of normal

practice for Mr. Johnston not to have insisted on sight of such a draft in advance. However, it does not seem to me that there is any

real possible causal connection between that possible negligence and any loss on the facts of this case. Given that a false and

doctored version of the contract for sale (apparently executed) had already been produced, it seems highly unlikely that the

production of a similarly false and doctored draft deed (unexecuted) could not have been secured. It seems to me to be highly

probable, therefore, that, had a three way closing been attempted, there would have, in fact, been no closing, for it seems to me

inconceivable that it would have been possible to manage the procedure necessary for such a closing (involving, as they would, the

vendor’s solicitor) without it becoming apparent that what the vendor was actually getting as the purchase price was very different

from what ACC and its solicitor (Mr. Johnston) believed was that purchase price. The only reasonable inference to draw is, therefore,

that, in the absence of negligence on the part of Mr. Johnston there are no circumstances in which the sale might have closed.

6.13 It is in this context important to note that there is no plea of fraud made against Traynor Mallon. The claim in the third party

proceedings against Traynor Mallon is confined to an allegation of breach of undertaking. If, therefore, Traynor Mallon had actually

closed the sale, paid the stamp duty, and arranged for the relevant documentation to be transmitted to Mr. Johnston, then it follows

that this could have been done, in compliance with the undertaking, even though the consideration actually paid to the vendor was

very different from that which ACC and Mr. Johnston understood that it was to be. However, the fact of the difference in

consideration would have been discovered when the relevant documents were transmitted to Mr. Johnston. In that context, it is

necessary to construe what the true nature of the undertaking given by Traynor Mallon actually was. That question of construction

arises in the highly unusual circumstances where Traynor Mallon had transmitted to Mr. Johnston a false version of the contract of

sale from which Traynor Mallon must have known that both Mr. Johnston and ACC believed that the purchase price was €7m. How

then is one to construe an undertaking given in that context in circumstances where the true purchase price which Mr. Tiernan had

agreed to pay was significantly less?

6.14 In that context, it does not seem to me that it could be said that Traynor Mallon had complied with its undertaking if it were

simply to have closed the sale at €4.6m and paid the appropriate stamp duty on that amount. In those circumstances, I am not

satisfied that there was any way in which Traynor Mallon could have complied with its undertaking other than by closing a transaction

which was the one which Mr. Johnston and ACC believed was to be closed (i.e. a transaction at €7m). There is not, therefore, in my

view, despite the difference in consideration point, any practical way in which a situation could have arisen whereby Traynor Mallon

could have properly complied with its undertaking other than by retaining the monies. There was no reality to the sale closing at €7m.

There was, therefore, no reality to Traynor Mallon complying with its undertaking by closing the sale. The only basis on which Traynor

Mallon could properly have complied with its undertaking was, therefore, by retaining the money. It follows that, in that eventuality,

the loss attributable to the breach by Traynor Mallon of its undertaking is that the money is gone in just the same way as the loss

attributable to Mr. Johnston’s negligence is that the money gone. In those circumstances, I am satisfied that the “damage” is the

same. The damage is that the money is gone.

6.15 In all those circumstances, I am satisfied that Traynor Mallon and Mr. Johnston are concurrent wrongdoers. It is finally necessary

to turn to the question of causation.

7. Causation

7.1 In substance, in reliance on cases such as Canole v Redbank Oyster Company Ltd. & Anor [1976] 1 I.R. 191, it is argued on

behalf of Mr. Mallon that there is no causal connection between any losses suffered by ACC and the breach of undertaking by Traynor

Mallon for, it is said, those losses would not have occurred without Mr. Johnston’s negligence. However, it seems to me that there is

an inextricable link between Traynor Mallon’s breach of undertaking and Mr. Johnston’s negligence. The loss could not have occurred

without both. If Mr. Johnston were not negligent, then Mr. Traynor would never have got the money. If Traynor Mallon were not in

breach of undertaking then the money would have remained with Traynor Mallon and could have been retrieved by ACC. If Mr.

Johnston had been negligent but Traynor Mallon had not been in breach of undertaking then, for the reasons already analysed,

Traynor Mallon would have retained the money and it would have been available to be repaid to ACC so that no loss would have

arisen. If Mr. Johnston had not been negligent then the money would never have left his account and could equally have been

returned to ACC. In Redbank Oyster Company a second act of negligence, in allowing a boat to put to sea when it was known to be

dangerous, meant, in the words of Henchy J., that the firm who had negligently repaired the boat “were being relegated to an area of

remoteness within which responsibility in negligence does not operate”.

7.2 However, it seems to me that this is not the sort of case where something occurred to break the causal link between Traynor

Mallon’s breach of undertaking and any loss suffered by ACC. True it is that Traynor Mallon might not have had an opportunity to

breach the relevant undertakings if Mr. Johnston had not been negligent in accepting them. But the loss did not occur simply by the

monies being handed to Traynor Mallon. The loss occurred when Traynor Mallon dealt with those monies other than in accordance

with its undertaking. There is not, in my view, therefore, any basis for suggesting that there is a lack of causal link between Traynor

Mallon’s breach of undertaking and any losses which ACC may have suffered.

8. Conclusions

8.1 In summary, therefore, I am satisfied that Mr. Traynor, operating under the style of Traynor Mallon, had authority to bind Mr.

Mallon at all material times. Mr. Traynor was operating in the ordinary course of a business as a solicitor in giving the relevant

undertakings. The breach by Traynor Mallon of those undertaking renders Traynor Mallon a concurrent wrongdoer for the purposes of

the Civil Liability Acts with Mr. Johnston such as, at the level of principle, entitles Mr. Johnston to seek to claim a contribution or

indemnity against Traynor Mallon. For the reasons already set out that entitlement includes an entitlement to pursue such a claim

against Mr. Mallon, even though he be personally innocent of any wrongdoing.

8.2 The only remaining question is as to the damages to which ACC may be entitled (an issue which, as I have pointed out, has been

deferred) and the question as to how the relative liabilities of Mr. Johnston on the one hand and Mr. Mallon and Mr. Traynor on the

other hand are to be deal with. I have come to the view that it would be inappropriate at this stage to deal with the relative positions

of Mr. Johnston and the former partners in Traynor Mallon. The precise way in which ACC will make out its loss is not yet clear. It is

possible that different considerations as to the respective liabilities of Mr. Johnston and the former partners in Traynor Mallon might

apply to different heads of loss. In those circumstances, it seems to me to be appropriate to defer a decision on the precise way in

which the obligations of those parties as and between each other should be determined until the damages hearing when the precise

basis on which ACC will be entitled to damages will be clear.

8.3 Therefore, for the purposes of this hearing, I determine that, at the level of principle, Mr. Johnston is entitled to a contribution or

indemnity from Mr. Mallon with the amount of that contribution or indemnity to be determined at the same hearing as is to take place

for the purposes of determining the amount of damages to which ACC is to be entitled as against Mr. Johnston.