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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Barry -v- Medical Defence Union [2005] IESC 41 (16 June 2005)
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Cite as: [2005] IESC 41
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Judgment Title: Barry -v- Medical Defence Union Composition of Court: Geoghegan J., Fennelly J., Kearns J. Judgment by: Geoghegan J. Status of Judgment: Approved |
Judgments by | Result | Concurring | Dissenting | |
Geoghegan J. | Appeal dismissed - affirm High Court Order | Fennelly J., Kearns J. | ||
Outcome: Dismiss
- 35 -
THE SUPREME COURT
No 209/2004
Geoghegan J.No 209/2004
Fennelly J.
Kearns J.
BETWEEN/
JAMES M. BARRY
Plaintiff/Appellant
and
THE MEDICAL DEFENCE UNION LIMITED
THE MEDICAL DEFENCE UNION LIMITED
Defendant/Respondent
JUDGMENT of Mr. Justice Geoghegan delivered the 16th day of June 2005 This is an appeal from an order of the High Court (Carroll J.) dismissing an action brought by the appellant against the respondent seeking a number of declaratory and other reliefs essentially with a view to establishing that the respondent as an alleged insurer was obliged to indemnify the appellant, a general medical practitioner, in relation both to certain civil actions brought against him and in relation to disciplinary proceedings before the Fitness to Practice Committee under the auspices of the Medical Council.
Counsel for the respondent in their written submissions to this court have concisely and correctly summarised the two issues which fall for determination in this appeal as follows:
1. Was/is the respondent contractually obliged to indemnify the appellant as alleged?
2. Did the respondent act unlawfully in declining to offer the assistance sought on the appellant’s behalf?
Having regard to the arguments put forward at the oral hearing of this appeal and indeed the written submissions of the appellant, I am obliged to deal with both issues, though in my view, to some extent at least, the first issue is not a genuine issue in the case at all but more a kind of smokescreen to avoid real confrontation with the second issue which is much more important on the facts of this particular case. I will expand on what I mean by that later on in the judgment.
The first question to be considered therefore is what was the contractual relationship between the appellant and the respondent. The case made by counsel for the respondent on this question is quite simple. They refer to the Memorandum and Articles of Association of The Medical Defence Union Limited and in particular to Article 48 of the Articles of Association. I should explain that The Medical Defence Union Limited, generally known as “The MDU”, is a limited company under English law, the members of which are members of the medical and dental professions. It is worth quoting two of the stated objects numbered (iii) and (iv) respectively.
“(iii) To give advice or legal assistance to or defend or to take part in advising, assisting or defending members or applicants for election to membership or former members of the MDU or the personal representatives of deceased members or former members who may seek such advice and/or who are or are likely to become parties to or otherwise involved in litigation or disputes in respect of matters concerning or affecting directly or indirectly the professional character or interest or conduct in a professional capacity of any such member, deceased member or former member or which raises directly or indirectly a question of professional principle.
(iv) To indemnify wholly or in part and on such terms and conditions as may from time to time seem expedient any member or applicant for election to membership or former member of the MDU or the personal representatives of any deceased member or former member against liability, loss or expense arising from actions, proceedings, claims and demands by or against them in respect of matters concerning or affecting whether directly or indirectly the professional character or interest or conduct in a professional capacity of any such member or applicant for election to membership or deceased member or former member or which raised directly or indirectly a question of professional principle including all incidental or consequential losses, damages, costs, charges and expenses but exclusive of fines or penalties.”
It becomes clear, however, from the Articles of Association that the obligation of the respondent to its members is to give discretionary assistance. As between the respondent and its members there is no obligation to indemnify. The relevant provisions are contained in Articles 47 and 48. They read as follows:
“47. The Board of Management or any member of the Board of Management or employee or agent or committee of the MDU authorised by the Board of Management for the purpose may subject to the limits of any such authority give advice or legal assistance or defend or take part in advising, assisting or defending in respect of any matter, cause or proceedings, concerning or affecting whether directly or indirectly the professional character or interest or conduct in a professional capacity of any member, any applicant for election to membership, any former member, or any deceased member (who was at the date of his death a member or who was not at the date of his death a member but had formerly been a member and had ceased to be such) or in respect of any matter, cause or proceeding which raises difficulty or indirectly a question of professional principle; provided that
(1) the Board of Management or such member of the Board of Management or employee or agent or committee shall be satisfied that in a case involving a member, applicant for election to membership, former member or deceased member the matter originated or the cause or proceeding arose during the period when the person concerned was a member of the MDU or an applicant for election to membership.
(2) If the Board of Management or such member of the Board of Management or employee or agent or committee decides to act in accordance with this Article the person making a request that it do so shall abide absolutely by every decision of the Board of Management or any such member of the Board of Management or employee or agent or committee on the conduct or defence of the matter and shall not himself without prior consent of the Board of Management or any such member of the Board of Management or employee or agent or committee take any steps with reference to such matter or the determination thereof.
- For the purpose of proviso (1) in the case of an application by a former member for reinstatement on any register for restoration of a licence or entitlement to practice the profession previously carried out by him or the lifting of a suspension the matter shall be deemed to have originated immediately before the date upon which his name was erased from such register or his licence or entitlements so to practice was withdrawn or cancelled or upon which his registration in such register licence or entitlement was suspended as the case may be.
(2) … … … … … …
(3) Any such indemnity may be granted or determined by resolution of the Board of Management or any authorised committee or decision of any authorised agent and the grant of indemnity in every case shall be made only upon such terms and conditions as the Board of Management, committee or agent shall think proper and it shall rest only in the absolute discretion of the Board of Management, committee or agent in every case to limit or restrict the grant of such indemnity or altogether to decline to grant the same or to determine any indemnity so granted without assigning any reasons.”
It has never been entirely clear what the exact case of the appellant has been on the contractual issue. Ground was shifted in different and subtle ways throughout the hearing in the High Court to the near exasperation of the learned trial judge at times, as would appear from the transcript. In reality it would seem to me that only one of the variants put forward by counsel for the appellant in the High Court could conceivably be viable. I will now explain this observation in more detail. It was never in dispute that there was in existence the statutory contract between the appellant and the respondent arising from the Memorandum and Articles of Association but at times counsel for the appellant suggested in the High Court and, indeed, partly suggested in this court that it was an implied term of the statutory contract that the appellant would be entitled to indemnity in the same way and on the same basis as if the respondent was an insurer. Furthermore, in the opening submissions before the learned High Court judge and, indeed, in other parts of the transcript it was urged on behalf of the appellant that this implied term existed from the very beginning of the appellant’s membership of the respondent i.e. 1963. It was later conceded that that was an optimum position and that it might not be possible for the appellant to establish such an implied term from the very beginning but that it certainly existed from the time that the general practitioners became subject to compulsory insurance. This submission whether in its original or modified form was and is at all times unsustainable for the simple reason that there is a clear principle of law that a term may not be implied into a contract if it contradicts an express term. I would not have thought that any authority would be required for that obvious proposition but, in fact, as pointed out by the learned High Court judge in her judgment, it is to be conveniently found in a judgment delivered by Murphy J. in this court with which Hamilton C.J. and Barrington J. agreed in Sweeney v. Duggan [1997] 2 I.R. 531. Carroll J. cites the relevant passage starting at 539 which is in the following terms.
“Whether a term is implied pursuant to the presumed intention of the parties or as a legal incident of a definable category of contract it must be not merely reasonable but also necessary. Clearly it cannot be implied if it is inconsistent with the express wording of the contract and furthermore it may be difficult to infer a term where it cannot be formulated with reasonable precision.”
A variant on the “implied term” argument was that, at least from the stage when compulsory insurance was required, the terms of the statutory contract were not exclusively contained in the Memorandum and Articles of Association but that they were added terms. This submission suffers from the same infirmity in that the only added terms suggested would have been implied terms and there could not be added implied terms which contradicted the express terms.
I turn now to the only argument put forward on behalf of the appellant which could at least in theory be conceivably viable. It was suggested that independently of the statutory contract there was a separate collateral contract providing for indemnity. Again in its original form it was submitted that this collateral contract existed from the very beginning of the appellant’s membership i.e. 1963. That submission, in theory, was never abandoned but it was suggested that it could only be proved to exist from the time of compulsory insurance being introduced. On being pressed by the learned trial judge particularly as to the nature of this so called collateral contract, counsel for the appellant, Dr. White, S.C. was forced into characterising it as neither a written contract nor an oral contract but rather an implied unwritten contract.
In relation to this submission the first hurdle which counsel had to get over was whether conceptually such a collateral contract was possible in law. In the English case of Medical Defence Union v. Department of Trade [1980] 1 Ch. 82, a case heavily relied upon by the respondent, Sir Robert Megarry V-C held that the respondent was not an insurance company for the purposes of English legislation regulating insurance companies. At p. 90 of the report the learned judge observes as follows:
“On the face of the memorandum and articles a member of the union has no right to require the union to conduct legal proceedings for him, and no right to require the union to indemnify him against claims for damages. All that he has is the right to have his request for the union’s help under these heads properly considered by the council or by one of its committees. In practice it is rare for such a request to be refused. Yet although the prospects of such a request succeeding are great, all that the member has by way of right is that his request should be properly considered, and, of course, if it is granted, that the union should conduct the proceedings or indemnify him, or both.”
“Where the body concerned, like the union in the present case, is run by honourable members of an honourable profession it may well be that many members of that profession will be content to rely on the discretion being always exercised in a proper way by the governing body which they elect, with meritorious claims being admitted and the unmeritorious excluded; but this reliance does not convert a legitimate expectation of receiving discretionary benefits in all proper cases into a contractual right to receive those benefits.”
Twenty-five years have passed since that decision and it is common knowledge in this jurisdiction that very large claims for damages have been made and recovered against members of the respondent especially arising out of obstetric mishaps and they in turn have been indemnified by the respondent. As a consequence huge “premiums” are paid. As suggested by Sir Robert Megarry it must be assumed that in the ordinary way despite the discretionary nature of the liability the respondent considers such a claim in much the same way as an insurance company would do and for the most part provides indemnity in all appropriate cases. It is not disputed that there are some contractual obligations on the part of the respondent under the statutory contract. I do not find it necessary to explore the extent of these obligations but I do not rule out that they might not more correctly be expressed in rather stronger terms than is suggested in the judgment of Sir Robert Megarry delivered in a different context. Presumably, if a person is entitled to discretionary assistance there cannot be an improper exercise of the discretion and arguably that improper exercise of the discretion would itself be a breach of contract. None of this arises here, however, in my view, and that is why I described this first issue as largely a smokescreen. There is nothing in the evidence to suggest that there was any objection in principle to providing indemnity to the appellant provided the legitimate requirements of the respondent (which were not that different than the requirement of any insurance company) were complied with. In this case, the respondent wanted personal contact with the appellant and full information relating to the claim. In no case would this be surprising but in this particular case it is especially unsurprising given the dissemination in the media of allegations against the appellant which, if true, might place the appellant altogether outside the ambit of even the discretionary assistance to which his membership of the company might entitle him.
Returning to the question, however, as to whether there might have been an independent collateral contract, such a contract, if it can conceptually exist, would obviously have to be proved given that it was suggested it was an implied contract. But an astonishing feature of the case is that the key party to any such alleged contract, the appellant himself never gave evidence.
On the question of whether such a collateral contract could conceptually exist the appellant primarily relied on an Australian case i.e. Bailey v. New South Wales Medical Defence Union Limited (1995) 132 ALR 1, a decision of the High Court of Australia. If I have understood the exchanges between counsel and the learned trial judge correctly there may have been an element of misunderstanding as to the basis on which this case was being relied upon. The trial judge quite rightly pointed out that the facts of that case bore little or no relationship to the facts of this case and that in particular it was essentially dealing with an amendment to the Articles of Association alleged to have retrospective effect. The majority of the court held otherwise and the basis on which they arrived at that conclusion can be found at p. 414 of the report in the following passage therein.
“There can be no doubt that during each of the years in which Mr. Crawford suffered injury there was a contract of insurance between the Union and Dr. Bailey. Nor, in our view, can there be any real doubt that, notwithstanding that its terms were largely to be found in the company’s Articles, the contract was made individually with Dr. Bailey as an insured and was therefore a special or actual contract which was distinct from the covenants which were deemed to arise from the Articles under the relevant companies legislation.”
Finally, I should add that no support for the appellant’s case in relation to the contractual obligations can be found in the judgment of McCracken J. in Rafter v. Solicitors Mutual Defence Fund [2002] 3 IR 621. It is clear that he adopted the view taken by Sir Robert Megarry V-C and quite clearly held that any indemnity was discretionary nor does it appear to have been held by McCracken J. that if a member at the time he became a member was subject to compulsory professional insurance there was a contractual indemnity. I am satisfied that under the Memorandum and Articles of Association the appellant was only entitled to discretionary assistance and that even if there could be a collateral contract conceptually, no proof of such a contract exists.
I now turn to the second and, in my view, the only really relevant issue on this appeal namely, whether the refusal to date to offer the assistance sought on the appellant’s behalf is lawful. I am quite satisfied that it is. I have used the expression “to date” because it is clear from the evidence and submissions that even now the respondent is prepared to consider any applications for discretionary assistance provided its reasonable requirements are complied with. The appellant has not complied with the reasonable requirements of the respondent at the relevant times as can be demonstrated from a review of the correspondence between the parties. The learned trial judge devoted thirty eight pages of her reserved judgment to reviewing that correspondence. I do not intend to duplicate that exhaustive review as it can be found in the judgment of Carroll J. I will confine myself to some key factors arising out of the correspondence.
It is clear that at the early stages starting with the letter of the 31st July, 1995 from the appellant’s solicitors, Denis O’Sullivan & Co. to Messrs McCann Fitzgerald, solicitors nominated by the respondent to act on behalf of the appellant in relation to certain civil claims which had been brought, was all conducted in a civilised manner. There were letters passing between Messrs Denis O’Sullivan and & Co. and different officers of the respondent as well as with McCann Fitzgerald. The general thrust of that early correspondence was to the effect that Messrs Denis O’Sullivan & Co. on behalf of the appellant were endeavouring to secure that the respondent would take over claims against the appellant on the basis of a normal insurer although it was made clear from the beginning that the respondent would require much more information than had been furnished and that they would require a statement from the appellant. When it emerged that the appellant was receiving medical attention from a psychiatrist, Dr. Peter Fahy, in St. Gabriel’s Hospital, Dublin, the respondent in correspondence displayed great sensitivity in relation to potential direct contact with the appellant expressing concern that such contact might be injurious to his health. By a letter of the 13th November, 1995 the present solicitors for the appellant informed Dr. Beresford who was dealing with the matter on behalf of the respondent as follows:
“As you have correctly appreciated there is no question of Dr. Barry being in a position to give you the detailed instructions which you obviously require.”
“My letter in the second paragraph on page 2 asked you to indicate whether Dr. Barry is capable of providing instructions or assigned authority for your firm to provide those instructions on his behalf, or indeed whether you hold a valid power of attorney in respect of Dr. Barry’s affairs. You have not answered any of these points, merely indicating that there is no question of Dr. Barry being in a position to give detailed instructions.
You will appreciate that without Dr. Barry’s instructions personally, or at the very least some information from you which we may consider which explains why it is that Dr. Barry is not in a position to give instructions, the MDU is not able to offer its discretionary assistance. We will require Dr. Barry’s written instructions that we may act on his behalf, or if he is incapable of providing those instructions, an explanation as to your authority to provide those instructions on his behalf ‘to defend any proceedings from malpractice brought against Dr. Barry’. At the minimum we will require details of the date of the alleged incident or incidents, and details of the context, in order to consider any request Dr. Barry may wish to make seeking our assistance.”
At this stage, relations seem to have broken down. All that that last letter elicited was the service of a notice of change of solicitor substituting Denis O’Sullivan & Co. for McCann Fitzgerald. This notice was followed up by an unnecessarily aggressive and tendentious letter of the 9th July, 1996 from Denis O’Sullivan & Co. to Dr. Beresford. I do not find it necessary to parse the letter in detail. I am satisfied that the allegations of mala fides against the respondent were unsupported by any of the previous correspondence. That letter enclosed an authority from the appellant confirming that Messrs Denis O’Sullivan & Co. had, at all times, acted with his complete authority in relation to all proceedings commenced or defended by him and authorising and requesting his solicitors to make an application for discretionary assistance in the terms of the aggressive letter just referred to. The second last paragraph of that letter read as follows:
“We are now instructed on behalf of Dr. Barry to apply to you for discretionary assistance in relation to the costs and expenses incurred in relation to the most vigorous defence which we have mounted and sustained in relation to each and all of these matters; and which we will continue to sustain even if your organisation does not have the decency to offer suitable support in respect of your member of thirty three years standing.”
A further letter which can be characterised as an abusive letter was then written to the respondent by the appellant’s solicitors on the 8th April, 1997. No point of relevance arises from it.
By letter of the 11th April, 1997 Dr. Beresford expresses his intention to place the appellant’s request for “discretionary assistance” before a committee of the Board of Management on the 15th April. He also requested information relating to the appellant’s wishes with regard to legal representation before the Fitness to Practice Committee. I am skipping a faxed reply to that letter which is not of importance in order to come to a key letter written by Dr. Beresford, dated 29th April, 1997. That letter contained a decision by the Board of Management. This was a decision “to offer advice and legal assistance subject to the following conditions which the Board requires in its absolute discretion in accordance with the Memorandum and Articles of Association”. The two express conditions were as follows:
“A. The legal assistance will be provided by solicitors and counsel appointed by the MDU.
B. That Dr. Barry provides full cooperation by means of full disclosure of the facts and his instructions directly to those so appointed.
In its absolute discretion, the Board will not grant assistance in relation to the costs and expenses incurred in respect of these matters to date.”
Without any valid reason that I can discern, the only reply to that letter was a short letter making it clear that papers had been sent to counsel for the purpose of drafting proceedings against the respondents “for breach of contract, breach of trust, negligence, fraud and other breaches of duty”. The respondent was asked to nominate solicitors for acceptance of service.
From that point on Arthur Cox & Co. acted as solicitors for the respondent in dealings with the appellant. It is clear from their first letter which was dated 25th July, 1997 that the respondent had not refused assistance but required “full information” before it could make a decision as to whether to grant or refuse.
The militancy on the part of the appellant continued in that his solicitors replied to that letter quite shortly but included the following unwarranted observation:
“The entire want of cooperation in this case was from your client to abandon their insured and refuse even to reply to correspondence.”
The next development was a letter of the 23rd September, 1999 in which Messrs Denis O’Sullivan & Co. wrote directly to the respondent with the opening sentence “We understand that you represent Dr. Barry as Insurers.” This, of course, was quite deliberate because, as I see it, the theme running through all the correspondence even though I have not been highlighting it as I have already dealt with the contractual issue, was that the appellant’s legal advisers never accepted that the legal obligation of the respondent was one of granting assistance at its discretion rather than a straightforward contractual obligation to indemnify as an insurer. It would seem to me that a reasonable inference to draw from the correspondence was that it suited the appellant to suggest that the absence of a decision to indemnify was because of some claimed unfettered discretion under the Memorandum and Articles rather than because of any non-cooperation on his part. As I have already clearly indicated, I am quite satisfied however that the latter was the real reason.
It is only fair to say that in relation to certain claims which had been made against the applicant at this stage copies of statements by the respondent were furnished essentially dealing with the medical condition in each case but also denying any impropriety.
Dr. David Morgan who had replaced Dr. Beresford within The Medical Defence Union wrote to Denis O’Sullivan & Co. requesting to know what assistance was being required of the respondent. This led to a relatively conciliatory letter being written to Dr. Morgan, dated 22nd October, 1999. I do not think it is necessary to go into the details of it. The main thrust of it as far as relevance to this appeal is concerned was that Mr. O’Sullivan was indicating that he was perfectly happy to hand over to any solicitor nominated by the respondent but would expect to be paid for work up to date. Following on that letter it is clear that Dr. Morgan reviewed the entire file and then wrote on the 5th November, 1999. That letter included the following paragraph:
“My colleague Dr. Beresford carefully explained the MDU’s position in a letter dated 14th February, 1996 (MDU ref: 9506815). For the avoidance of doubt, I reiterate the essential of what he wrote at the time. In order that the Board of Management of the MDU can consider a grant of discretionary assistance in accordance with the Benefits of Membership as set out in our Memorandum and Article of Association (copy enclosed), the MDU does require a personal approach from Dr. Barry seeking our assistance and providing necessary instructions. If Dr. Barry is not capable of providing instruction, the MDU would wish to have authorisation from a valid power of attorney in respect of Dr. Barry’s affairs.
The MDU does require details of the individual cases in which assistance is requested. We will require details of the date of the alleged incident or incidents to consider any request by Dr. Barry. You have already alerted the MDU to the cases of L… and B… O’C… (9506815 and 9506928 respectively). More recently on 4th October 1999 you alerted the MDU to the case of E. H… (9909163). You have also written about the case of M. K… (9908931).
So that the MDU can consider matters further could you provide details not only in relation to the civil claims but also in relation to the situation with regard to the Medical Council in criminal matters?
I must say at this stage that the MDU is unable to indicate what discretionary benefit (if any) can be provided. Furthermore, the MDU would expect to instruct not only solicitors but experts of their own choice. Furthermore, no undertaking can be given to pay for previous legal costs incurred. Further, the MDU is unable to fund the work involved in the provision of the details above mentioned so that consideration can be given to the request. Again, I reiterate the importance of receiving the member’s instruction.”
1. A willingness to allow McCann Fitzgerald to take over the defence of the actions provided the appellant be indemnified against any judgment and in respect of his costs of defending the action “including his costs incurred to date”.
2. An offer to share “considerable background information”.
3. Threats if necessary to issue third party proceedings against the respondent.
4. Notification that the disciplinary proceedings had been adjourned pending the outcome of criminal prosecutions against the appellant. These according to the letter consisted of some 247 charges of indecent assault launched in November, 1997, more than two years earlier but the solicitors had written no letter to the respondent during the entire period from July 1997 to September 1997.
5. Some very general and mostly statistical information relating to the criminal prosecutions.
6. A clear statement that the civil proceedings would not proceed further pending the outcome of the criminal prosecutions.
7. An offer that if the respondent wanted the appellant to attend at the respondent’s offices that that could be arranged.
8. An offer by Mr. O’Sullivan personally to travel to England for discussions with Dr. Morgan.
If upon receipt of that letter the respondent had acceded to the offers relating to the personal meetings with the appellant and his solicitor that might have been the end of this dispute. Either the contacts would have proved satisfactory in which case there would have been no need for any further discord or what was offered did not materialise in which case the respondent would quite clearly have been entitled to postpone consideration of discretionary assistance. Unfortunately, the respondent took a different course but one for which it cannot be criticised and which was certainly not unlawful. The respondent wrote by letter of the 5th January, 2000 noting that all the civil cases were on hold pending the outcome of the criminal prosecutions and that, therefore, effectively, further consideration of the civil claims should be postponed. By letter of the 8th March, 2000 the solicitors for the appellant wrote to the respondent accepting in principle the postponement but only on condition that neither the Statute of Limitations nor a defence of laches would be pleaded if contemplated proceedings by the appellant against the respondent were withheld. This condition was not accepted by the respondent which reiterated its position as set out in the letter of the 5th January, 2000. This response may not have pleased the appellant and his legal advisers but I cannot discern anything unlawful about it. Further correspondence ensued in which the same condition relating to the Statute of Limitations and the defence of laches were insisted upon.
Presumably, with a view to avoiding the intended litigation between the appellant and the respondent the then senior medical claims handler of the respondent wrote a letter to the appellant’s solicitors on the 2nd June, 2000. It is worth quoting that letter in full:
“Dear Sir
Re: MDU member: Dr. J. Barry
Thank you for your letter dated 18th May 2000.
The position of the MDU in respect of your member has been clearly stated on a number of previous occasions.
With respect to the civil claims for damages relating to psychological or other damage resulting from alleged sexual assault, our position remains as follows:
We will not indemnify our member for any legal costs incurred to date.
We would only consider providing assistance to our member if we are provided with full frank and unrestricted cooperation by our member. This would be direct cooperation and not through any third party. It would include the disclosure of all materials relevant to the claims including documents, photographs and video tapes. Our member would be required to give his full and open cooperation to any legal representatives we might then appoint on his behalf. We are not of the opinion that such cooperation has been forthcoming in the past and we would require immediate direct contact from our member.
You should note that, in the event that we should decide that the circumstances which gave rise to these claims fell outside the provision of ordinary medical services, we would normally withdraw our assistance and would not indemnify members for damages which would arise as a result of such claims.
We would be obliged if you would acquaint our member with the contents of this letter without delay.
If you are instructed to issue proceedings against the MDU, please advise us so that we may nominate solicitors to accept service.
Yours faithfully”
“Re: James M. Barry v. The Medical Defence Union
High Court 2001 No. 199P
Dear Sirs
We refer to the above correspondence between our respective firms and between your office and the MDU regarding requests for assistance made to the MDU on behalf of your client.
The MDU’s position in relation to these requests has been clearly stated on a number of occasions in previous correspondence. As was stated, inter alia by Dr. Morgan of the MDU in his letter to you of the 5th November 1999 and by Dr. Szekely in a further letter to you of the 2nd June 2000, as well as in earlier correspondence from Dr. Beresford, before your client’s request for assistance can properly be considered by the Board of Management of the MDU, the direct personal cooperation and instructions of your client with the MDU is essential. Unfortunately such cooperation and instructions have not been forthcoming to date.
Entirely without prejudice to its powers and entitlements under its Memorandum and Articles of Association, and without prejudice to its defence of the proceedings which your client has seen fit to institute against it (including without prejudice to the position adopted by it to date) our client is prepared to afford your client a further opportunity to cooperate in the matter and to put your client’s request for assistance before the Board of Management who will then consider the request.
It is proposed that the appropriate committee of the Board of Management would consider your client’s request at its meeting on the 17th day of July 2001 with its recommendation being put before the Board itself for approval at its meeting on the 24th day of July 2001. It would greatly assist your client’s request if the following could be provided to Dr. Julian Nield, Head of Claims Handling, MDU Services Limited, 230 Black Friars Road, London SE1 8PJ – Ref. JH/EG/LMB/99 08931 – in advance of the committee meeting and no later than the 13th day of July 2001.
1. Your client’s personal instructions as to the matters giving rise to the various proceedings in respect of which assistance is sought by him.
2. The present status of the criminal proceedings brought against your client.
3. Whether any civil claims have been successful against your client.
4. The total number of civil claims now outstanding against your client.
5. The status of any disciplinary proceedings against your client.
6. Confirmation of full and unrestricted access by the MDU to your clients.
Even if the above is not forthcoming, it is still intended to put the matter before the Board of Management on the 24th day of July 2001. Nevertheless it would be greatly in your client’s interest to provide the information, as requested, to enable the Board of Management to take that into account when making a decision.
We should also make it clear that if there is any additional matter which you wish to draw to the Board’s attention in connection with your client’s application, we would be happy to arrange that it is put before the Board.
We look forward to hearing from you.
Yours faithfully”
- “To the extent that your clients are suggesting that they will reconsider indemnifying our client in the manner required in these proceedings, no objective bystander could regard such a reconsideration of their position as being otherwise than tainted by their own concerns with the present litigation.”
First of all this sentence does not seem to me to be factually correct. There had never been a decision not to indemnify the appellant. Matters had never reached that stage. Quite apart from the sentence being factually inaccurate it obliquely makes a new allegation which ultimately blossomed forth into a major submission made on behalf of the appellant on this appeal. It is suggested that while the litigation was in being the respondent could not give any further consideration to the issue of discretionary assistance or indemnity as any decision made on such discussion would be tainted with apparent bias. The argument is that the respondent could not be perceived by any objective observer as acting in the interest of the appellant while the litigation was in being. I cannot accept that that is so. The record of the management meeting of the respondent makes it clear expressly that the discussions were without regard to the litigation. I am satisfied that no issue of bias arises. Even if it conceivably could arise it could not be operative because the management of the respondent were at all times entitled to continue consideration of requests to the respondent for assistance or indemnity irrespective of what outside or linked events were occurring. In their letter of the 25th June, 2001 the solicitors for the appellant protest that there was no non-cooperation on their client’s part and in this connection they effectively refer back to their letter of the 15th December, 1999. The offers of cooperation in that letter, however, had by this time become redundant because the appellant had chosen the route of litigation against the respondent instead.
Closure was effected by a letter from Arthur Cox of the 3rd July, 2001. Referring to the letter of the 25th June the solicitors for the respondent stated that it was clear that no useful purpose could be served by further correspondence with the solicitor for the appellants. The letter went on to state that the respondent emphatically rejected “the groundless allegations”. The final paragraph of the letter read as follows:
“As indicated in our letter of the 14th June last, your client’s request for assistance will now be considered by the appropriate committee of our client’s Board of Management on the 17th July 2001 and its recommendation will then be put before the Board itself on the 24th July. The decision of the Board will, of course be communicated to you in due course.”
“The Board of Management adopted the recommendation of the Advisory Management Committee of the 18th July 2001, that Dr. Barry be not assisted with this case.”
There is one other matter which has been aired in this appeal and with which I have not dealt with up to now. This is the allegation that the respondent in its dealings did not act in accordance with the requirements of natural and constitutional justice. The learned High Court judge was strongly of the view that these were principles of public law rather than of private law. I agree with that view but there would have been at all times a contractual obligation on the part of the respondent to deal fairly with the appellant’s claim. I think that for all practical purposes this would be tantamount to much the same thing. The precise extent and nature of the respondent’s contractual obligations is quite an interesting question to be considered but it is not necessary to do so in this case. I have already expressed views in relation to the contractual obligations and those views are sufficient to dispose of this appeal. I am satisfied that for the reasons which I have indicated in relation to each stage of the dealings that there has been no breach of any contractual obligation of fairness on the part of the respondent. Accordingly, the appellant’s proceedings were unnecessary and misconceived. The appellant is not entitled to any of the declarations sought in the statement of claim or to any relief by way of damages. I would dismiss the appeal and affirm the order of the learned High Court judge dismissing the action.
Barry v. MDU