Supreme Court of Ireland Decisions

Judgment Title: Richardson & anor -v- Madden and Richardson & anor -v- O'Donovan & ors

Neutral Citation: [2010] IESC 13

Supreme Court Record Number: 400/05 & 402/05

High Court Record Number: 1999 4465 P & 1999 2816 P

Date of Delivery: 09/03/2010

Court: Supreme Court

Geoghegan J.
Macken J.
Finnegan J.





BETWEEN


MICHAEL RICHARDSON AND WENDI FERRIS RICHARDSON

and



GERARD MADDEN

THE SUPREME COURT

BETWEEN


MICHAEL RICHARDSON AND WENDI FERRIS RICHARDSON

and



DERMOT O’DONOVAN, MICHAEL SHERRY, MICHAEL HOGAN, ADRIAN FRAWLEY AND THOMAS DALTON PRACTISING UNDER THE STYLE AND TITLE OF DERMOT G. O’DONOVAN AND PARTNERS SOLICITORS

Judgment of Mr Justice Finnegan delivered on the 9th day of March 2010

For ease of reference in these judgments I propose referring to Michael Richardson and Wendi Ferris Richardson as “Mr Richardson” and “Ms Richardson” respectively and together as “the Richardsons”: to Gerard Madden as “Mr Madden”: and to the partners in Dermot G. O’Donovan and Partners as “the solicitors” and to the partner principally concerned in the events giving rise to these proceedings, Michael Hogan, as “Mr Hogan”. Appeal No. 400/2005 is a claim by the Richardsons against Mr Madden for breach of contract. Appeal No. 402/2005 arises out of the same set of circumstances and is a claim by the Richardsons against the solicitors for damages for negligence, breach of duty and breach of contract. By order of the High Court (Johnson J.) made the 24th March 2003 it was directed that the two actions should be listed for hearing on the same date, tried by the same judge and that the Richardsons claim against Mr Madden should be tried first. The actions came on for hearing on the 5th April 2005 and the learned trial judge directed that, since the evidence to be adduced in each of the actions was common, all the evidence should be heard after which he would decide each case separately, the claim against Mr Madden to be first determined and the claim against the solicitors to be determined immediately thereafter.


Pleadings
(a) Appeal No. 400/2005

In their statement of claim the Richardsons plead that they entered into a binding oral agreement with Mr Madden to pay their legal costs in respect of proposed judicial review proceedings to be taken by the Richardsons, a company of which Mr Madden is a director and others against the Independent Radio and Television Commission (hereinafter “the IRTC”). Further Mr Madden agreed to indemnify the Richardsons in respect of any liability they might incur for legal costs to the IRTC or other parties to the proceedings. Judicial review proceedings were duly issued and leave was obtained on the 3rd April 1997. On the 29th April 1997 the Richardsons instructed the solicitors that they did not wish to proceed any further with the Judicial Review proceedings. Notwithstanding this the proceedings continued with the Richardsons included with the applicants and were ultimately unsuccessful and orders for costs were made against the Richardsons and the other applicants by the Supreme Court on the 10th June 1997 and by the High Court on the 2nd May 1997 and on the 18th July 1997. The Richardsons became aware of these orders on the 14th July 1998 by which time the costs of the IRTC had been taxed in the amount of IR £66,078.43. Interest runs on the said sum at 8% p.a. from the 18th July 1997. Mr Madden failed and refused to indemnify the Richardsons. The Richardsons claim damages for breach of contract.

The defence delivered by Mr Madden denies the agreement and relies upon the Statute of Frauds. Further the Richardsons having instructed the solicitors that they were withdrawing from the proceedings on the 29th April 1997, after that date Mr Madden could have no liability for costs incurred as any liability sustained by the Richardsons after that date was attributable to negligence and breach of duty on the part of the solicitors. Further it is pleaded that the agreement alleged is champertous and illegal. Finally if the defendant entered into any agreement such as that alleged he did so on behalf of a company Limerick 95 FM Limited.

(b) Appeal No. 402/2005

In these proceedings the Richardsons plead that the solicitors were instructed to act on their behalf in relation to the judicial review proceedings against the IRTC. There were four applicants in the proceedings, the Richardsons and Mr Franks being together one of the four and the solicitors required IR £10,000 from each on account of costs. The full sum of IR £40,000 was paid by Mr Madden. Leave was obtained on the 3rd April 1997. On the 28th April 1997 Mr Richardson attended a meeting with Mr Hogan and a request was made of Mr Richardson for IR £10,000 in respect of fees. On the 29th April 1997 by letter the Richardsons instructed the solicitors that they did not wish to proceed further with the judicial review proceedings. Notwithstanding this the proceedings in their name were not discontinued and the Richardsons remained named as applicants. Briefly the Richardsons claim that the solicitors were negligent, in breach of duty and in breach of contract as follows:-

(a) Mr Richardson had informed the solicitors of the indemnity agreement with Mr Madden. The solicitors failed to advise the Richardsons to have the agreement reduced to writing: Mr Madden denied the existence of an indemnity.

(b) The solicitors failed to advise the Richardsons of the risk to them of having to bear any costs order made against them as the other applicants in the Judicial Review proceedings were limited liability companies.

(c) No letter pursuant to section 68(1) of the Solicitors (Amendment) Act 1994 dealing with the circumstances in which the Richardsons might be required to pay costs to the respondents in the Judicial Review proceedings was furnished.

(d) Failed to carry out the instructions to discontinue the proceedings insofar as the Richardsons were applicants.

In their defence the solicitors deny receipt of any letter dated 29th April 1997 or that they were instructed by the Richardsons not to proceed with the Judicial Review. It is denied that the Richardsons informed the solicitors of the indemnity agreement with Gerard Madden. Negligence, breach of duty and breach of contract are denied.


Factual background
The Richardsons are a married couple. Mr Richardson had worked in radio for a number of years and had been part owner of an unlicensed radio station transmitting in the Limerick City and County area known as “Big L” between 1978 and 1985. From 1985 to 1989 he worked in other radio stations. He then worked abroad for some years and returned to Limerick in 1996. In November 1996 the IRTC advertised for expressions of interest in a radio licence for Limerick City and County. The Richardsons together with a friend John Franks submitted such an expression of interest for a station to be called “Big L Radio Limerick”.

In 1996 the holder of a licence for Limerick City and County was Radio Limerick One Limited, the principal shareholder in which is Mr Madden. That licence had been terminated by the IRTC which termination resulted in an application by the company for Judicial Review which was pursued in the High Court and the Supreme Court but without success. Following the conclusion of these proceedings, in July 1996 the IRTC advertised for expressions of interest but in the meantime permitted Radio Limerick One Limited to continue broadcasting pending the appointment of a new licencee. Thus Radio One Limerick Limited continued to benefit from advertising and other revenue and would continue to do so until the new licencee was appointed.

There were nine expressions of interest in response to the advertisement. On the 21st March 1997 the IRTC informed five of the nine that their applications had been unsuccessful and that the remaining four applicants would be invited to make oral submissions. A meeting of representatives of four of the unsuccessful applicants was held on the 24th March 1997: these applicants are as follows:

(i) The Richardsons and Mr John Franks,

(ii) Radio Limerick 1995 Limited in which Mr Madden had an interest,

(iii) Maigueside Communications Limited in which Mr Pat Fitzgerald, Bertie Wall and John Riordan had interests, and

(iv) A consortium headed by Mr Tom Nolan.

The purpose of the meeting was to discuss mounting a challenge by way of judicial review to the decision of the IRTC to exclude the four applicants from the process. In the course of discussions Mr Richardson made it clear that he would not be responsible for any costs associated with any proceedings. After that meeting Mr Fitzgerald contacted the solicitors by telephone and spoke to Mr Hogan. That afternoon Mr Fitzgerald, Mr Wall and Mr Riordan had a meeting with Mr Hogan at which they sought advice as to the prospects of mounting a successful challenge to the decision of the IRTC. Mr Hogan obtained the advice of senior counsel in relation to proposed proceedings. On the 25th March 1997 a meeting was held in the offices of the solicitors between Mr Hogan and Mr Madden, Mr Nolan, Mr Fitzgerald and Mr Richardson.

As to what transpired at the meeting there were differences between witnesses in their recollection and evidence. At the meeting there was a discussion in relation to the costs of proceedings. Mr Hogan required IR £40,000.00 towards the solicitors costs and Mr Madden agreed to pay the same. Mr Richardson’s evidence was that he made it clear that he was not prepared to make any contribution towards the cost of the proceedings or to bear any responsibility in respect of any costs arising out of any decision to proceed. There was then a further discussion outside the office of the solicitors between Mr Madden, Mr Nolan and Mr Richardson. Mr Madden assured Mr Richardson that he would be responsible for all costs associated with the proceedings. That afternoon Mr Hogan was instructed to proceed.

Proceedings were instituted by way of Judicial Review against the IRTC and the Minister for Transport, Energy and Communications. Named as applicants were Maigueside Communications Limited, New Limerick FM Limited, Limerick 95 FM Limited, Michael Richardson, John Franks and Wendy Ferris-Richardson. Other than the Richardsons each of the other applicants were bodies corporate with limited liability. Maigueside Communications Limited was incorporated for the express purpose of seeking the radio licence. New Limerick FM Limited and Limerick 95 FM Limited were incorporated after the licence applications had been made and before the commencement of the proceedings. Leave to issue the judicial proceedings was given on the 3rd April 1997: the order recites that an undertaking as to damages had been given on behalf of the applicants by their solicitors.

On the 28th April 1997 Mr Richardson attended on Mr Hogan in connection with swearing an affidavit of discovery. Mr Richardson’s evidence was that he was asked by Mr Hogan for IR £10,000 towards costs. This caused him concern. On the following day he wrote a letter dated 29th April 1997 to Mr Hogan in the following terms:-

“Dear Michael,

Thank you for your recent copy file sent to me on the 18th of this month. I am sorry that I was not able to return your telephone call regarding the hearings to be heard in Dublin on the 25th.

Further to your request for funding the court proceedings, I must reiterate my original position that I am unable to proceed as a partner in this venture for reasons that have already been stated.

It is a pity that it was allowed to go this far before anything was done to correct the situation. May I take this opportunity through you to wish everyone success in whatever shape it comes.

Yours sincerely,

Michael Richardson

Also on behalf of Wendy Ferris-Richardson, John Franks.”

Mr Richardson’s evidence was that he drove to Limerick with a view to delivering the letter by hand but as he approached the solicitor’s premises he saw Mr Hogan and Mr Fitzgerald coming out of the building and he gave Mr Hogan the letter.

Mr Richardson received a letter from the solicitors on the 15th May 1997 which appeared to be in the form of a circular sent to all the applicants in the proceedings. It commenced “Dear…………..”. The letter outlined the then current state of the proceedings. Thereafter Mr Richardson received no communications from the solicitors or the other applicants in the proceedings notwithstanding that the proceedings progressed to a hearing.

On the 2nd May 1997 the Minister for Transport, Energy and Communications applied to be dismissed from the proceedings on the ground that no cause of action was disclosed against him and this application was successful and the Minister was awarded costs against the applicants. Also in May an application on behalf of the applicants for discovery was made and this was unsuccessful in the High Court: an appeal to the Supreme Court was unsuccessful on the 10th June 2007. Costs were awarded against the applicants. The failure of this application was considered to be a serious blow to the prospects of the application being successful. The substantive proceedings were heard on the 19th June 1997. In judgment given on the 18th July 1997 the applicants were refused the reliefs which they sought and costs were awarded against them including all reserved costs.

Mr Richardson was not advised by the solicitors or the other applicants of any aspect of the proceedings after the 15th May 1997. He was not informed that costs had been awarded against him, Ms Richardson and Mr Franks in favour of the Minister nor that costs had been awarded to the IRTC and against them in respect of the discovery motion and appeal and of the substantive proceedings. Ms Richardson and John Franks were never advised at all by the solicitors or the other applicants as to the orders for costs which had been made and which affected them.

Mr Hogan’s evidence was that he did not receive the letter of the 29th April 1997 nor did he speak to Mr Richardson in the presence of Mr Fitzgerald outside his office on the 29th April 1997. Further the affidavit of discovery was sworn on the 23rd April 1997. Mr Patrick Fitzgerald also denied any meeting with Mr Richardson on the 29th April 1997.

In August 1997 Mr Madden offered Mr Richardson employment. Some weeks later Mr Richardson enquired as to what had happened to the case and Mr Madden informed him that they had lost. There was no mention of any liability for costs. Throughout 1997 and 1998 the solicitors and the solicitors for the IRTC were in communication in relation to costs and the solicitors were in communication with Mr Madden about these costs. Mr Richardson was not included in these communications or advised of the same. On the 14th July 1998 the solicitors for the IRTC informed Mr Richardson that judgment in respect of costs had been registered against him. Ms Richardson received an identical letter as did Mr Franks. On the 18th July 1998 Mr Richardson who was then in the employment of Mr Madden had a meeting with Mr Madden and for that meeting he wore a recording device. In the course of the recorded conversation he put to Mr Madden his understanding of his position with regard to costs. Mr Madden’s only reply was “OK”.

In February 1999 bankruptcy petitions were presented against Mr Richardson and Ms Richardson. The proceedings against Mr Madden were commenced on the 28th April 1999 and the proceedings against the solicitors on the 11th March 1999.


Findings of fact by the learned trial judge on appeal 400/2005
The learned trial judge made the following findings of fact in the following terms:-

“1. The challenge by way of judicial review to the decision of the IRTC was commenced on the initiative of Gerard Madden. It was largely for his benefit. The only benefit to be derived from the proceedings by the other applicants was a possible opportunity to make a new application to the IRTC for a radio licence at a future time with a comparatively limited chance of success. Mr Madden stood to benefit significantly financially by delaying the decision of the IRTC and the award of a new licence. He was entitled to continue broadcasting until the award of a new licence and to enjoy the advertising and other revenues associated with that broadcasting. He actively encouraged the other applicants to participate in the proceedings.

2. At all material times and in particular during the meetings held on the 25th March 1997 at the office of D.G. O’Donovan & Partners, Michael Richardson made it clear to Gerard Madden, to Mr Michael Hogan and to the other potential applicants that he did not have the resources to participate in the litigation and was not prepared to make any contribution towards the costs of or incidental to those proceedings.

3. Immediately after the meeting at the offices of D.G. O’Donovan & Partners on the 25th March 1997 Michael Richardson repeated his assertion that he was not in a position to make any contribution towards the costs associated with the litigation. Gerard Madden in the presence of Tom Nolan then assured Michael Richardson that he would ‘pick up the bill’. Mr Nolan in the presence of Gerard Madden also assured Michael Richardson that ‘Gerard will take care of everything’.

4. On the evening of the 25th March Gerard Madden telephoned Michael Hogan. He told Michael Hogan that he would be responsible for all costs associated with the proceedings. I accept the evidence of Michael Hogan that Gerard Madden confirmed on that occasion that he would be personally responsible for all the costs associated with the proceedings and he made it clear that he was not referring merely to the costs incurred by Mr Hogan in prosecuting the proceedings but would also be responsible for any costs awarded against the applicants.

5. Gerard Madden sought to suggest that his recorded reply ‘OK’ to Michael Richardson’s observation ‘there would be no costs, like you would handle the costs’ was in the nature of a query. Having had the opportunity to hear the recording of the conversation I did not get that impression. At no point during the conversation did Mr Madden demur from the suggestion that he had agreed to ‘handle the costs’.

6. Between the 17th October 1997 and the 3rd March 1998 Michael Hogan wrote a number of letters to Gerard Madden advising him that the solicitors on behalf of the IRTC were now seeking to recover very substantial sums of costs due to their client. Notwithstanding the urgency of those letters Gerard Madden did not respond. Significantly he never suggested that the responsibility to discharge those costs lay with anyone other than himself. His failure to do so was consistent with the evidence of Michael Hogan. It was consistent with the evidence of Michael Richardson. It was consistent with the existence of an extant agreement by Mr Madden to indemnify the plaintiffs in respect of all costs of and incidental to the proceedings. I am satisfied on the evidence and on the balance of probabilities that Gerard Madden expressly agreed on or about the 25th March 1997 that he would indemnify Michael Richardson and Wendy Ferris-Richardson in respect of all the costs of and incidental to the proposed challenge by way of Judicial Review in the High Court seeking to quash the decision of the IRTC.”

Having so found the learned trial judge held the Richardsons entitled to recover damages from Mr Madden to compensate them for the loss, damage, distress, disruption, inconvenience and loss of reputation which they had sustained as a result of Mr Madden’s breach of contract.


Findings of fact by the learned trial judge on Appeal No. 402/2005
On behalf of the Richardsons Mr Simon McAleese solicitor gave evidence. In short the practice adopted by Mr Hogan fell short of that required of a reasonably competent and prudent solicitor. In particular advice should have been given of the risks associated with litigation and in particular of the consequences of failure and the award of costs against an unsuccessful party. This could be done by way of compliance with section 68 of the Solicitors (Amendment) Act 1994. Such advice should have been given to both Mr Richardson and Ms Richardson. Further in the circumstances of this case it was the responsibility of Mr Hogan to ensure that there was an enforceable and coherent costs indemnity agreement between the Richardsons and Mr Madden. Mr Hogan had a duty to keep each of his clients advised as to the progress of the litigation. No evidence was led on behalf of the solicitors seeking to challenge the evidence of Mr McAleese. The learned trial judge made the following findings of fact.

1. Mr Hogan failed to offer any advice to Ms Richardson at any stage about any aspects of the proceedings and so failed to adopt the appropriate practice expected of a reasonably competent and prudent solicitor.

2. Had Ms Richardson been advised by Mr Hogan of the risks attendant upon the proceedings she would not have embarked upon the proceedings.

3. It is unlikely that Mr Hogan gave a warning to the applicants in the Judicial Review proceedings in the terms contemplated by section 68 of the Solicitors (Amendment) Act 1994 as to the circumstances in which liability to pay costs of any other party might arise.

4. Mr Hogan being aware that Mr Richardson was unwilling to participate in any proceedings which would leave him exposed to a risk of any expense ought to have taken appropriate measures to protect Mr Richardson from exposure to the risk of a liability as to costs or alternatively have fully advised him in relation to such liability.

5. Mr Hogan failed to advise the Richardsons of the orders for costs made in favour of the Minister for Transport, Energy and Communications by the High Court on the 2nd May 1997 and the Supreme Court on the 10th June 1997.

6. The failure of the application for discovery represented a severe set back to the prospects of a successful challenge by way of judicial review and the Richardsons should have been advised that there was then a real and serious risk of an award of costs against them. Mr Hogan failed to advise Mr Richardson of the risks attendant upon the litigation, that the claim might fail and that Mr Richardson would then be primarily and personally liable to discharge the IRTC’s costs. Being aware that Mr Richardson was unwilling and probably unable to pay any costs imposed a particular duty on Mr Hogan.

7. Mr Hogan was aware that the Richardsons did not enjoy the protection enjoyed by their fellow applicants which were corporate bodies and this increased the onus on Mr Hogan to advise and protect the Richardsons.

8. On the balance of probabilities Michael Richardson wrote a letter dated 29th April 1997 and it is probable that he handed the letter to Mr Hogan in the manner which he described in evidence.

9. The solicitors failed to deal appropriately with and act upon the letter of the 29th April 1997.

Accepting the evidence of Mr McAleese, the learned trial judge found the solicitors to be negligent in breach of duty and in breach of contract. The Richardsons accordingly he held entitled to damages for loss, damage, inconvenience, distress and damage to reputations sustained by them in consequence of the negligence, breach of duty and breach of contract.


Assessment and award of damages
The learned trial judge noted that the IRTC had registered judgment against the plaintiffs in the sum of €88,902.30 together with costs and that interest ran on the said sum from the 18th July 1997 at 8 per cent per annum. Efforts had been made to execute on foot of the judgment. Bankruptcy proceedings had been commenced against the Richardsons but stayed. Their marriage was subjected to considerable strain. They had suffered a great deal of distress inconvenience, disruption and damage to their reputations. Over a period in excess of six year, if Mr Madden had discharged his contractual obligations, the Richardsons would not have sustained that loss and damage. If the solicitors had discharged their contractual and other obligations the Richardsons would not have sustained that loss and damage. The loss and damage flowed directly from the defendants in each of the actions. Mr Madden and the solicitors both having caused the same loss and damage to the Richardsons no issue as to indemnity or contribution as between those defendants arose. Mr Madden and the solicitors are concurrent wrongdoers and there should be joint and several judgment against them.

The issue of the quantum of damages was adjourned to the 8th June 2005. On that day on consent the Richardsons were permitted to amend their pleadings to include a claim for an indemnity against Mr Madden and the solicitors. The court found the Richardsons entitled to be indemnified by Mr Madden and the solicitors jointly and severally in respect of:-

1. The costs due to the IRTC in respect of costs of the Judicial Review proceedings.

2. The additional costs incurred by the IRTC in respect of bankruptcy proceedings issued against the plaintiffs.

3. The costs due to the Minister for Transport, Energy and Communications in the Judicial Review proceedings.

4. Cost incurred by the Richardsons in defending the bankruptcy proceedings including an application to the Supreme Court for a stay.

For general damages the learned trial judge awarded each of them, Mr Richardson and Ms Richardson the sum of €59,500 against Mr Madden and the solicitors jointly and severally.


Submissions on Appeal - Appeal No. 400/2005
The Notice of Appeal raises thirty one grounds. However at the hearing these were considerably reduced. Counsel for Mr Madden sought to rely on two grounds. The first was the ground contained in the notice of appeal at paragraph 5 which is as follows:-

5. The learned trial judge erred in law and fact and/or in a mixed question of law and fact in finding that Mr Madden accepted personal responsibility for all costs associated with the proceedings against the Independent Radio and Television Commission as opposed to solely the costs of the applicants in prosecuting the said proceedings against the Independent Radio and Television Commission.
In addition counsel for Mr Madden sought to argue an issue raised in the defence at paragraph 2:
2. Mr Madden denies that he at any time had any contract with Ms Richardson or entered into the alleged or any agreement or owes the alleged or any duty to her whether in the manner alleged or at all.
With regard to this second ground counsel for the Richardsons objected on the basis that it was not pursued at the hearing before the High Court, was not a ground in the Notice of Appeal and was not mentioned in the initial submissions filed on behalf of Mr Madden.

As to the first ground, counsel for Mr Madden submits that, taking the evidence of Mr Richardson as being correct, the function of the court is to construe the words used against the matrix of facts available to the parties which would affect the way in which the language used would be understood by a reasonable man: Reardon, Smith, Lyon Limited v Hansen Tangen [1971] 1 WLR 1381. The context in which statements were made by Mr Madden at the meeting on the 25th March 1997 was that Mr Hogan had indicated that IR £40,000 would be required for the litigation to go forward that being IR £10,000 from each of the four interested groups. Thus the context was the requirement that provision be made for the fees of the solicitors who would act on behalf of the applicants in the Judicial Review proceedings. When Mr Madden said he would cover the costs this should be interpreted as referring to these costs only and not to any liability for costs awarded to other parties to the proceedings. Likewise when on the street outside the solicitor’s office Mr Madden said that he would pick up the tab this should be similarly construed. On the same occasion the statement by Mr Nolan that Mr Madden “will settle it all” should be narrowly construed. Mr Richardson’s evidence is clear that there was no discussion at the meeting on the 25th March 1997 of costs becoming payable to other parties to the proceedings. No letter pursuant to section 68 of the Solicitors (Amendment) Act 1994 was provided and had one been provided this might have brought the issue into focus. While Mr Richardson’s understanding of the indemnity given is clear, his understanding does not regulate the interpretation of the indemnity.

For the Richardsons counsel relied on Mr Richardson’s direct evidence and evidence in cross-examination by counsel for Mr Madden. In particular in cross-examination on day 2 the following exchange took place:

Q. Yes. Well just to stop there for a minute. I don’t think that is exactly what you said yesterday, because I think you suggested yesterday that the question of an indemnity in respect of all the costs was given by Mr Madden to you in front of Mr Hogan at the meeting.

A. Correct.

Q. You would agree that that was what you suggested yesterday

A. Yes.

Q. And shortly thereafter.

A. I would not have gone ahead with any of this had it not been the case.

When in the course of the taped conversation Mr Richardson put to Mr Madden his understanding of the arrangement, which was that all costs would be borne by Mr Madden, Mr Madden did not demur. Again Mr Hogan was quite adamant that in a telephone conversation on the day upon which the indemnity was given Mr Madden confirmed the extent of the indemnity. The transcript Day 10 at Q.17 reads:-
“Q. And what did Mr Madden say in that phone call?

A. He confirmed that he would be responsible for all costs associated with the proceedings. All costs not just my costs. All costs.”

There was a contemporaneous note on Mr Hogan’s file of that telephone conversation. There was evidence that both Mr Richardson and Mr Madden had previous experience of litigation where issues as to the costs of unsuccessful parties had arisen. Finally the conduct of Mr Hogan and Mr Madden in relation to correspondence in relation to the costs of the IRTC is relevant. Mr Hogan communicated exclusively with Mr Madden. Mr Madden did not suggest that anyone other than he was the party liable for the costs. Accordingly there was ample evidence before the High Court upon which it could conclude that the indemnity was to extend to all costs and not just the costs of the solicitors for the applicants in the Judicial Review.

As to the second ground it is submitted on behalf of Mr Madden that as Ms Richardson was not present at the meetings of the 25th March and as she was unaware of the indemnity on her own evidence she could not be a party to the agreement reached with Mr Richardson. On behalf of the Richardsons reliance is placed on the evidence of Mr Richardson at day 3 question 30 that he spoke to Ms Richardson after the meetings of the 25th March and he told her of the case to be taken and that Mr Madden was going to pick up the bill. Ms Richardson’s evidence was to the effect that she was aware of the meetings when her husband returned and that she raised with him why the indemnity could not be in writing.


Conclusion on Appeal No. 400/2005
As to the first issue when the trial judge made findings of fact he accepted that at the meeting in the solicitor’s office on the 25th March 1997 Mr Richardson made it clear to Mr Madden and to Mr Hogan and to the other potential applicants that he did not have the resources to participate in the litigation and was not prepared to make any contribution towards the costs of and incidental to the same. Immediately after the meeting, outside the solicitor’s office he repeated his assertion that he was not in a position to make any contribution towards the costs associated with the litigation and Mr Madden in the presence of Tom Nolan assured Mr Richardson that he would pick up the bill. Mr Nolan in the presence of Mr Madden also assured Mr Richardson that Mr Madden would take care of everything. I am satisfied that on that evidence alone having regard to the clearly stated position of Mr Richardson it was open to the learned trial judge to construe the oral agreement as an indemnity in relation to all costs associated with the litigation rather than as contended for by Mr Madden costs of the applicants in the said litigation only. There is further evidence to support this construction. The learned trial judge found the litigation was largely for the benefit of Mr Madden with limited benefit to the other applicants. Mr Madden in his direct evidence was questioned and answered as follows:-

Q. Did Mr Richardson say anything about wanting a written record of the meeting?

A. Yes, he said he wanted it in writing what was said, to bring home to his wife, so he could discuss it with her.

Q. What was Mr Hogan’s response to that request?

A. Because of the subterfuge, if that is the right word, that our problem was, with the meeting, with the application for the judicial review, was that the IRTC would paint it that it was a case brought by me not by the four individuals, and he could not put that down in writing.

The learned trial judge sought an explanation of that last answer and Mr Madden replied as follows:-
A. Well, what he said was that the IRTC would go the High Court judge and say that I was trying to bring a case, a mock case too, you know like the case was heard, and this was going to be a continuation of the last case, not a new case. So, it had to be very important that it would like that all four people had problems, not just me.
This, it seems to me, illustrates the particular interest Mr Madden had in the proceedings and is an explanation as to why he should indemnify the Richardsons. While litigation continued Mr Madden continued, through his company, to benefit from broadcasting income. The other parties to the litigation would benefit, if successful, in perhaps being able to make a further application to the IRTC. The other interested parties in the litigation had the benefit of limited liability with companies formed especially for the purpose of the application to the IRTC and involved in the litigation and did not require an indemnity. The Richardsons however were personally at risk.

The record of Mr Madden’s conversation in which Mr Richardson put to Mr Madden his understanding of the scope of the indemnity is relevant; Mr Madden did not suggest that Mr Richardson was mistaken. There was available to the learned trial judge the evidence of Mr Hogan of the telephone conversation which he had with Mr Madden on the evening of the 25th March 1997 in which Mr Madden had made it clear that he would be responsible for all costs and not just the applicant’s own costs of the proceedings. Finally the course of dealing between Mr Hogan and Mr Madden in relation to the demands for costs from the IRTC supports Mr Richardson’s evidence. Mr Hogan wrote only to Mr Madden in relation to the costs and it was never suggested by Mr Madden that some one else might be liable for any part of the same.

I am satisfied that there was abundant evidence upon which the learned trial judge could reach the conclusion which in fact he reached as to the scope of the indemnity given by Mr Madden to the Richardsons.

As to the second ground I am satisfied that the indemnity was given not to Mr Richardson alone but to the group which he represented at the meeting on the 25th March 1997. The applicants in the Judicial Review proceedings represented four of the disappointed applicants to the IRTC, that is three limited companies and the group comprised of Mr Richardson, Ms Richardson and Mr Franks. Numerically there were six applicants but at the meeting of the 25th March 1997 in discussing the solicitors fees it was at all times clear that these should be divided in four rather than in six, a one fourth share of the costs being attributable to the Richardsons and Mr Franks. In these circumstances it is quite clear that the indemnity was intended and understood to be for the benefit of the disappointed entity represented by the Richardsons and Mr Franks. It extended to Ms Richardson on the evidence of both Mr Richardson and Ms Richardson. Ms Richardson was aware of the issue of an indemnity and that it was not in writing. If it is the case that she was initially unaware that the indemnity extended to her, in the circumstances where she together with Mr Richardson and Mr Franks represented a single disappointed applicant to the IRTC, and where Mr Richardson was acting on behalf of all three, it was always open to her to ratify anything he did on her behalf: by instituting the proceedings to enforce the indemnity she had ratified the agreement. Mr Madden cannot succeed on this ground.

An issue was raised by Mr Madden as to quantum: he contended that after the 29th April 1997 the costs liability incurred by the Richardsons was attributable to the default of the solicitor in failing to discontinue the proceedings in their name. I do not consider this a point well taken. Mr Madden’s agreement with the Richardsons was to indemnify them against costs orders and this he failed to do. If as a result of negligence, breach of duty or breach of contract on the part of the solicitors his liability in this regard has been increased that of course is a matter which he can pursue in separate proceedings or indeed could have pursued in these proceedings by way of a notice of contribution and indemnity but this he did not do.

Accordingly the applicants are entitled to the indemnity which they seek from Mr Madden and to damages for breach of contract.


Submissions on Appeal No. 402/2005
I propose to deal with the submissions on each of the ten grounds of appeal pursued by the solicitors at the hearing. Grounds 3, 7 and 8 were not pursued. Grounds 1 and 2 are taken together.

1. That the learned trial judge erred in law and in fact in finding that the solicitors were negligent and in breach of duty to Ms Richardson.

2. That the learned trial judge erred in law and in fact in finding that the solicitors were negligent and in breach of duty and in breach of contract with Mr Richardson.

It was accepted by Mr Hogan on behalf of the solicitors that it would have been appropriate to communicate with Ms Richardson. It was accepted that no section 68 letter was sent and that that of itself amounted to a breach of statutory duty. In the light of these admissions the submission that there was no contract with Ms Richardson is no longer relevant.

For the solicitors it is argued that no loss has resulted from the alleged negligence, breach of duty or breach of contract on their part. The loss resulted from the failure of Mr Madden to honour his obligations and discharge all costs of the Judicial Review proceedings. In each case the tort of negligence was incomplete as a wrongful act does not give rise to a claim in damages until the loss accrues. It is incumbent upon the Richardsons to exhaust their remedies against Mr Madden: if they recover the damages against Mr Madden then they would have no cause of action against the solicitors no loss having been sustained.

In response to this submission the Richardsons argue that had the solicitors acted without negligence, breach of duty and breach of contract no loss would have been sustained by them. The loss was in fact sustained once the Richardsons acted without advice and embarked upon the proceedings and continued after the respondents failed to discontinue the proceedings in the name of the Richardsons when instructed to do so on the 29th April 1998.

4. That the learned trial judge erred in fact in finding that Mr Hogan in evidence accepted that he had failed to adopt the appropriate practice expected of a reasonably competent and prudent solicitor in respect of not advising Ms Richardson.

In submissions the solicitors accepted that Mr Hogan should have requested all of the parties to attend at the offices of the solicitors or he should have written to advise the parties whom he had not met: he accepted that Mr Richardson was acting on the authority of the group. However, as submitted on grounds 1 and 2 it is submitted that no loss flowed from this default.

5. That the learned trial judge erred in law and in fact in finding that had Ms Richardson been advised by Mr Hogan of the risks attendant upon the proceedings she would not have embarked upon such proceedings the finding not being supported by any or any adequate evidence in circumstances where Ms Richardson proceeded on the advice of and in reliance on Mr Richardson.

For the solicitors it is submitted that Ms Richardson did not in evidence say that had she been advised by Mr Hogan she would not have embarked upon the proceedings. Her evidence was that she did not know that she had been named in the proceedings although she was aware of the proceedings from what her husband told her. She was aware that there had been a meeting at which an indemnity had been given but that it was not in writing.

On behalf of the Richardsons it was suggested that in considering whether or not Ms Richardson would have acted upon any advice given the correct approach is that adopted by Kearns J. in Geoghegan v Harris [2000] 3 IR 536 at p.557:-

“It seems to this court that both approaches (the objective and subjective) are valuable in different ways and that both should be considered. In the first instance it seems to me that the court should consider the problem from an objective point of view. What would a reasonable person, properly informed, have done in the plaintiff’s position? This is the yardstick against which the particular plaintiff’s assertion must be tested. The plaintiff’s position can be taken as being the plaintiffs age, pre-existing health, family and financial circumstances, the nature of the surgery – in short, anything that can be objectively assessed though personal to the plaintiff…there may be many instances where there is a shortfall of subjective material or information in which case the court will have to decide a causation issue on its own best estimate from the evidence of what a reasonable person would have done in the particular circumstances. That is another good reason for starting with the objective test.”

It is submitted that applying the objective test to the evidence that was before the learned trial judge it was open to him to conclude as he did that had Ms Richardson been advised she would not have been a party to the proceedings. She was not communicated with by Mr Hogan to inform her that she was a party to the proceedings, or as to the progress of the proceedings, nor was she was given any advice by him.

6. That the learned trial judge erred in law and in fact in finding that Mr Hogan on behalf of the appellants was subject to a clear obligation to take measures to protect Mr Richardson from exposure to the risk of liability to costs in circumstances where Mr Richardson had been advised in respect of costs and entered into his own arrangement for and on behalf of the Richardsons with Mr Madden and to which the solicitors were not a party.

For the solicitors it is submitted that there was no need for the indemnity to be in writing as this is not required by the Statute of Frauds. No advice was sought from the solicitors by either Mr Richardson or Ms Richardson. The solicitors were not instructed in relation to any agreement between Mr Madden and the Richardsons. Reliance is placed on the evidence given by Mr Hogan that he had advised fully in relation to the risks in relation to costs in the event that the proceedings were unsuccessful.

For the Richardsons it is submitted that Mr Richardson’s evidence was equally clear, that there was no such advice given as to the risks inherent in the proceedings. There was a finding by the learned trial judge that it is unlikely that such advice was given.

9. That the learned trial judge erred in law and in fact in finding that the Richardsons had suffered damage by reason of the findings of negligence, breach of duty and breach of contract found against the solicitors in circumstances where the Richardsons were and are entitled to be indemnified by Gerard Madden in respect of the losses claimed in these proceedings.

For the solicitors the submission at grounds 1 and 2 is repeated – any loss sustained is by reason of the breach of agreement by Mr Madden not by any negligence, breach of duty or breach of contract on the part of the solicitors.

10. That the learned trial judge erred in fact and in law in holding that the solicitors are concurrent wrongdoers with Mr Madden.

In relation to this ground the solicitors made this concession: if the solicitors and Mr Madden are liable for the same damage then they will be concurrent wrongdoers for the purposes of the Civil Liability Act 1961 section 11. In short the argument advanced on behalf of the solicitors mirrors that in grounds 1, 2 and 9 above. The loss claimed flows from the breach of contract by Mr Madden and not from any default on the part of the solicitors. The quantum is different: the solicitors are liable, if at all, only for that part of the IRTC’s costs incurred after 29th April 1997. For the Richardsons it is submitted that the defaults of each of them, Mr Madden and the solicitors resulted in the same damage to them.

11. That the learned trial judge erred in law and in fact in holding that the solicitors were responsible for the loss and damage incurred by the Richardsons in the proceedings and entering judgment in respect of such loss and damage against the solicitors, where pending enforcement of the primary indemnity given by Mr Madden no such loss or damage had been incurred or alternatively was quantifiable.

This is essentially the same argument that was raised in grounds 1, 2 and 9 above. However in addition it is submitted that the costs due to the IRTC up to the 29th April 1997 when Mr Richardson delivered a letter to the solicitors seeking discontinuance of the proceedings in the names of the Richardsons amounted to €43,997.67. The total sum due for costs was €66,078.43. It is submitted that the only loss for which the solicitors are responsible is the costs incurred after 29th April 1997.

11. That the learned trial judge erred in law and in fact in awarding costs against the defendants to include costs of the High Court proceedings Record No. 4465P 1999 Between Michael Richardson and Wendi Ferris Richardson Plaintiffs and Gerard Madden Defendant in circumstances where the defendants were not parties to those proceedings.

The order made by the learned trial judge in respect of costs was as follows:-

“IT IS ORDERED that the plaintiffs do recover against the defendants jointly and severally the costs of these proceedings (costs of both actions up to the date of trial and from the date of trial costs of one action) when taxed and ascertained.”
Thus the order made is that in relation to pleadings and interlocutory matters each action should have the costs taxed separately but that the costs of the hearing should be the costs of a single action. The solicitors submit that this is inappropriate and that the costs of each action should be taxed separately.

For the Richardsons it is submitted that the order was appropriate and within the range of discretion of the learned trial judge. The plaintiff was awarded only one set of trial costs notwithstanding the two sets of proceedings.

12. The learned trial judge erred in law and in fact in awarding a sum of €119,000 general damage, such sum being excessive in all the circumstances.

For the Richardsons it was submitted that the award of damages is appropriate in the light of the evidence.


CONCLUSION ON APPEAL NO 402/2005
The first issue raised is that in grounds 1 and 2 and concerns the accrual of a cause of action in negligence. In short the solicitors contend that the cause of action against them had not accrued. The learned trial judge found that Ms Richardson would not have embarked on the litigation had she been properly advised, she not having been advised by the solicitors they were negligent. Mr Richardson was unwilling to participate in any proceedings which would expose him to a risk of costs or expense. The learned trial judge held that in those circumstances it was the duty of the solicitors to protect Mr Richardson from exposure and to comply with section 68 of the 1994 Act by advising him of the risk which he ran of an order for costs being made against him by a successful respondent. It follows from the finding of negligence made that had Mr Richardson been properly advised as to the risk he would not have embarked on the proceedings unless protected from the same. The Richardsons not having been advised of the risk there was at the time the proceedings were commenced a contingency that an order for costs in favour of a successful respondent in the proceedings could be made against them and also against the three limited liability companies named as applicants. However only the Richardsons and Mr Franks were personally exposed to a costs order. Once the contingency was fulfilled by a costs order being made the tort of negligence was complete. The error in the submission by the solicitors is that the contingency in this case was not, as they submit, the failure of Mr Madden to discharge his obligations to the Richardsons but the making of a costs order. See Law Society v Sephton and Co. [2006] 3 All E.R. 401 where the House of Lords reviewed extensively the accrual of causes of action in negligence.

In addition the learned trial judge found the solicitors to be in breach of their contract with both Mr Richardson and Ms Richardson. The cause of action in breach of contract accrues upon the breach.

Having regard to the concessions made in relation to ground 4 the only issue to arise on that ground is the issue on grounds 1 and 2 as to whether the cause of action in negligence had accrued or not.

Next it is submitted that the finding that Ms Richardson would not have embarked upon the proceedings had she been advised by Mr Hogan as to the risk she ran in relation to costs is unsupported by evidence. Certainly Ms Richardson did not say in evidence that in such circumstances she would not have embarked upon the proceedings. Nevertheless the learned trial judge was entitled to apply an objective test and the dicta of Kearns J. in Geoghegan v Harris [2000] 3 IR 536 at p. 557 relied upon by the Richardsons apply equally to the circumstances of the present case. Taking all the circumstances affecting Ms Richardson into account the question to be asked is what would a reasonable person properly informed have done in her position. This is the safest test: a court might well regard with suspicion and subject to scrutiny a self-serving declaration by a witness as to what he would have done. I am satisfied that on the evidence available to the learned trial judge it was open to him to reach the conclusion he did on an objective test. Of particular significance is the attitude adopted from the beginning by Mr Richardson to any risk of incurring costs or expense.

The next issue raised is that on ground 6. This ground is posited on the basis that Mr Richardson had been advised in respect of costs by Mr Hogan. However the learned trial judge made a finding as follows:-

“On the evidence it seems unlikely that he gave a warning in the terms contemplated by section 68 of the Solicitors (Amendment) Act 1994. He certainly failed (by his own admission) to furnish Mr Richardson ‘with particulars in writing of the circumstances in which the client may be required to pay costs to any other party or parties’.”
Section 68 of the Solicitors Amendment Act 1994 provides as follows:-
“68(1) On the taking of instructions to provide legal services to a client, or as soon as is practicable thereafter, a solicitor shall provide the client with particulars in writing…of the circumstances in which the client may be required to pay costs to any other party or parties…”
There is a finding of fact that Mr Richardson had not been advised as to the circumstances in which the applicants in the Judicial Review might be required to pay costs to any other party or parties. In any event where there was a conflict of evidence between Mr Hogan and Mr Richardson the one maintaining that such advice had been given and the other maintaining that it had not the determination of that conflict was a matter for the learned trial judge. The learned trial judge having found that no such advice was given then the duty to protect Mr Richardson arose.

Ground 9 is again a further submission in relation to the date of accrual of the cause of action in negligence and a repeat of that made at grounds 1 and 2. In short it is submitted that the loss was sustained not by reason of any negligence, breach of duty or breach of contract on the part of the solicitors but rather by reason of the breach of agreement by Mr Madden. For the reasons which I have set out in dealing with grounds 1 and 2 I am satisfied that the solicitors are in error: the contingency which existed at the time of the negligent act was the possibility that an award of costs would be made against the Richardsons and once this contingency was fulfilled the tort was complete. The contingency was not that Mr Madden would fail to honour his agreement.

The next ground, ground 10, relates to the question of whether the solicitors and Mr Madden are concurrent wrongdoers. The Civil Liability Act 1961 section 11 provides as follows:-

“11(1) For the purposes 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.

(2) Without prejudice to the generality of subsection (1) of this section –


(a) persons may become concurrent wrongdoers as a result of vicarious liability of one for another, breach of joint duty, conspiracy, concerted action to a common end or independent acts causing the same damage;

(b) the wrong on the part of one or both may be a tort, breach of contract or breach of trust, or any combination of them;

(c) it is immaterial whether the acts constituting concurrent wrongs are contemporaneous or successive.”

The solicitors being negligent, in breach of duty and in breach of contract caused damage. Mr Madden was in breach of contract and caused damage. But for the negligence, breach of duty and breach of contract of the solicitors the Richardsons would not have embarked upon the proceedings. But for the breach of contract on the part of Mr Madden the Richardsons would not have sustained damage. The same losses are attributable to each of them, the solicitors and Mr Madden. In these circumstances the solicitors correctly concede, and I am satisfied that it is the case, that they are concurrent wrongdoers.

The solicitors contend that insofar as they were negligent in not acting on foot of the letter of the 29th April 1997 and discontinuing the proceedings in the name of the Richardsons the only loss to flow from that was costs incurred by the IRTC after the 29th April 1997. This submission ignores the findings of the learned trial judge as to the nature of the negligence, breach of duty and breach of contract on the part of the solicitors other than the failing to act on the letter of the 29th April 1997 and from which breaches the totality of the costs awarded against the Richardsons flowed.

Ground 11 concerns the costs order made by the learned trial judge. In short the proceedings were treated as two separate actions in respect of pre-hearing costs and as a single action from the date of trial. The alternative was to tax the costs as the costs of two separate actions. The evidence was heard once only in the sense that each witness gave evidence and was available for cross-examination by each of the other parties. It is clear from the transcript that this was the most efficient way of proceeding. Mr Madden and the solicitors are concurrent wrongdoers and either on paying the Richardson’s costs will be entitled to a contribution of one half from the other. The learned High Court judge had a wide discretion in relation to costs and this court should be slow to interfere with the manner in which he exercised the same. It seems to me that the order in fact made here accords with good sense in that it reduces the difficulties on taxation of unravelling which part of the evidence was relevant to which action. It is a fair order in that it has not been suggested that separate costs orders in each action would be less onerous and indeed it is likely that the order made will result in a lower total sum for costs. It is not suggested that Mr Madden is not a mark: indeed a great deal of the solicitors submissions were implicitly, at least, on the basis that Mr Madden is a mark. I am satisfied that the discretion of the learned trial judge in the circumstances of this case was properly exercised and I would not interfere with the same.

Finally the quantum of damages is challenged by the solicitors. There was €59,500 awarded to each of them Mr Richardson and Ms Richardson and it is contended that this is excessive.

The Richardsons became aware of the award of costs against them by letter of the 14th July1998 from the solicitors to the IRTC. The amount is substantial - €66,078.43. The Richardsons were unable to pay. The judgment was published in Stubbs Gazette and elsewhere in a Sunday newspaper. This caused a rift between the Richardsons and Mr Franks who had been a friend and who likewise was taken by surprise. On the 22nd January 1999 a bankruptcy petition was presented against the Richardsons. As of the date of the hearing in this court both the judgment and the bankruptcy proceedings continue to hang over the Richardsons, that is for more than eleven years: at the date of the High Court hearing they had been hanging over the Richardsons for almost eight years. Mr Richardson gave evidence of the effect of the judgment, its publication and bankruptcy proceedings upon him. He was very upset at the effect the proceedings had on his friend Mr Franks. He was upset in that it caused tension within his marriage. When Ms Richardson’s parents heard of the trouble the Richardsons were in they were virtually asked to leave their house. He had lost his friends. He had a very difficult time getting any business in Limerick city. He started initially to get work from outside Limerick in a business dealing with digital security and CCTV cameras. He had what he described as “a very, very hard time”. His relationship with Ms Richardson was very fraught at the beginning, almost a break up. Ms Richardson described the effect upon her of the judgment and bankruptcy proceedings as devastating. The bankruptcy hanging over her for some seven years had effects on her life. She was upset by the whole ordeal and that had an effect on her marriage.

The learned trial judge arrived at the award of general damages on the basis of €8,500 for each year from becoming aware of the judgment. I do not think that viewed in the light of the serious effect upon the lives of Mr Richardson and Ms Richardson the awards are in any way excessive. I would not interfere with the same.

Having regard to the foregoing the Richardsons are entitled to the indemnity which they seek from the solicitors and to damages for negligence, breach of duty and breach of contract.


DISPOSITION
For the reasons hereinbefore set out I would dismiss the appeal in each case.

Richardson & Anor v Madden