Neutral Citation no. [2001] NIQB 11

Ref:    

HIGF3363

 

 

 

Judgment: approved by the Court for handing down

Delivered:

16.03.2001

(subject to editorial corrections)

 

 

 

 

 

 
                                                                               

 

 

 

IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND

QUEEN’S BENCH DIVISION

 ________

 

BETWEEN:

BRENDAN MACMAHON

IMELDA MACMAHON

Plaintiff;

- and –

ROBERT G HAMILTON

JAMES G DORAN

JOHN D DORAN

PRACTISING AS JAMES DORAN & COMPANY, SOLICITORS

Defendant.

 ________

HIGGINS J

 

James Doran & Company are a firm of solicitors in which the first named defendant (hereafter referred to as the defendant) is the senior partner.  The second named plaintiff is his sister but played no active role in these proceedings.  The first named plaintiff ( hereafter referred to as the plaintiff ) is a businessman and the husband of the second named plaintiff and brother in law of the defendant.  Since his admission as a solicitor in 1977 the defendant has been the plaintiff’s solicitor in all his personal and business dealings.

In 1988 the Plaintiff purchased premises in Royal Avenue, Belfast, from Burtons PLC (Burtons ).  The purchase was completed on 18 March 1988. At that time part of the building was leased to three tenants who occupied different areas in it.  They were Accident General, Rand Services ( also referred to as Hestair ) and the Belfast Rape Crisis Centre.  Following completion the Plaintiff claimed (i) that Burtons received rents due to him, which were paid in advance for the second quarter by the tenants; (ii) that electrical fittings and conduits had been ripped out before handover; and (iii) that specialised mirrors, a circular stairway and banisters had been damaged.  Later a large part of the premises was let to Hoggs China and Crystal business ( Hoggs ).  The roof of the premises required repair.  This was carried out and paid for by the Plaintiff.  He looked to Hoggs for compensation for this expenditure.  After a period of time had elapsed the Plaintiff instructed his solicitor the defendant to issue proceedings in respect of all these claims. Time passed and nothing seemed to happen.  The plaintiff sought and received assurances that matters were in hand.  The defendant blamed the slowness of the legal system and his heavy workload, but assured the Plaintiff that the claims were and would be attended to.  Later still the Plaintiff was assured that proceedings had been issued and in the case of Burtons that judgment had been marked in the sum of £20,000 and that enforcement proceedings commenced.  The Plaintiff had an expectation that sizeable sums of money would be forthcoming as damages in these claims.  Sadly there was no truth in any of the assurances given that proceedings had been instituted or that any order had been obtained or that any enforcement proceedings had been commenced.  The discoverable documents disclose a draft civil bill dated 8 March 1996 and a Statutory Demand that was never served.  As time passed the claims became statute barred.  On 26 January 1992 the plaintiff wrote to the defendant “enclosing the final three cases of people whom I wish you to pursue for money owed”. In relation to Burtons he wrote –

“These people must now owe me about £20,000 when you take into account the interest on the rent owed and the compensation due as a result of the damage caused when they vacated the premises. I have already supplied you with a statement from the electrician.”

 

Later there is a reference to Accident & General and the letter concluded –

“If you were to add the amount of money the cases on the previous page come to , I don’t think it would fall short of £40,000.00.!  Since some of these cases are now over 5 years old, I would be obliged if a serious effort could be made to bring them to a conclusion.  I could do with the money.!”

 

As late as 1997 the defendant was claiming that the Plaintiff would have his money by Easter of that year. Hoggs went into liquidation.  This denied the Plaintiff a substantial part of his rental income from which he was servicing his mortgage and loans for the purchase and refurbishment of the building.  The plaintiff became stretched financially, so much so that he had to decide whether to sell the building or hold on, in the hope that a tenant would take up that part of the premises occupied previously by Hoggs.  In view of the size and location of the building the Plaintiff preferred to retain ownership of the property.  His Bank was pressing for  money or other arrangements to be made.  As the Plaintiff's solicitor for many years the defendant was aware of his financial position.  In addition they socialised and played golf once a week.  The defendant continued to assure the Plaintiff that his claims were being processed and the Plaintiff was led thereby to believe that he would be in receipt of cash when the claims were resolved. In January 1996 he approached a Bank Manager with the First Trust Bank for a temporary facility in respect of the Royal Avenue property. An account called the Property Account was opened. The plaintiff informed the manager that his solicitor had assured him that the monies due would be paid by the end of February.  On the strength of the assurances this account was permitted to operate in debit or overdraft. The manager asked for security and the Plaintiff suggested he telephone the defendant, which he did.  The defendant confirmed to the manager that all of the monies would be in by the end of March.  By June, of that year no monies had been paid and the manager not unreasonably asked for confirmation in writing about the claims.  The Plaintiff asked the defendant for a letter and the defendant duly obliged by writing a letter to the plaintiff which he then showed to his Bank Manager.  This letter dated 25 June 1996 stated, inter alia –

“Further to your request to us to report to you in writing in relation to matters upon which we have your instructions, we reply as follows:-

 

1.         You v Burtons PLC

 

In relation to claim for monies outstanding from Burtons PLC in relation to the premises at Royal Avenue, Belfast and in addition damage caused to the premises at the time of completion we confirm that legal proceedings were instituted against Burtons PLC for the sum of £10,000.00 plus interest and costs.  In the absence of a response from Burtons application was made to the Court and an Order obtained.  Enforcement proceedings have now been instituted in respect of this Order and we will keep you advised of developments.

 

2.         You –v- Robert Hogg & Co Ltd

 

Further to Robert Hogg & Co Ltd terminating the Lease at the Royal Avenue premises we confirm your instructions to institute Court proceedings against Robert Hogg & Co Ltd for roof repairs, dilapidations and unlawful removal of fixtures and fittings.  The total sum claimed is £146,000.00.  Legal proceedings have been instituted and we will keep your advised of all developments.

 

3.         Re letting of the Royal Avenue premises

 

We confirm our discussion with your Agent Mr Gordon Mawhinney FRICS when he confirmed his negotiations with the Training and Employment Agency who have expressed definite interest in taking a Lease of the premises.  We understand that this Lease will be for the entirety of the premises previously occupied by Robert Hogg & Co Ltd .  While the annual rent will have not been determined we understand that this will not be for substantially less than the rental previously paid by Robert Hogg & Co Ltd.  As a Government Agency the Training and Employment Agency is dependent for its funding on its subvention from Central Government and we understand the Training and Employment Agency is presently negotiating for its funding with Central Government and as soon as it receives confirmation that the funding is in place a final offer will be made by Training and Employment Agency to take a Lease of the premises.  We also understand that the Training and Employment Agency requires the premises urgently and that its interest  in these premises is extremely positive.”

 

This satisfied the bank manager.  The overdraft eventually rose to £48706.20 on the strength of the plaintiff’s assurances to his Bank Manager supported by the defendant’s confirmation of the position verbally and in writing. However by the autumn when no monies were forthcoming the manager requested that some arrangements be made to guarantee the bank's continuing overdraft facility.  At the same time the defendant was continuing to assure the Plaintiff that the cases were being processed and the plaintiff believed that monies would be paid.  The pressure from the Bank in relation to the Property Account resulted in the Plaintiff agreeing with the manager to remortgage the family home held in the joint names of the plaintiff and his wife and taking out a life policy to secure the increased element of the  mortgage.  The new mortgage was in the sum of £110,000, £50,400 of which was used to discharge the existing mortgage with the Ulster Bank Limited. The Plaintiff regarded this as a short term measure only.  The defendant acted as the Plaintiff's solicitor in this new arrangement and received the cheque for the balance monies.  This was the capital raiser element of the mortgage, which was in the sum of £59,600.  When the Plaintiff checked his bank statement for the Property Account he discovered that the defendant had lodged to his account the sum of £55,564.35 only.  When the Plaintiff queried this, he was informed the defendant required to pay the difference into the High Court in respect of redundancy awards which were the subject of appeal.  These related to McErlean's Bakery where the Plaintiff was at that time the managing director.  The Plaintiff gave no instructions for such a disposal of the remortgage monies, however he accepted what the defendant told him about these proceedings and the monies. He acknowledged in the course of his evidence that their relationship was flexible enough for the defendant to have acted independently in the way in which he did.  Thus the overdraft in the Property Account was reduced by the lodgment of the balance monies from the mortgage of the family home. The Plaintiff averred that if he had been told the truth about the proceedings against Burtons and Hogs at a much earlier stage, he would have acted differently and reorganised his financial affairs in such a way as not to have incurred financial penalties and in particular the large overdraft in the Property Account.  Especially, he would not have entered into a new mortgage of the family home.  In addition he would have engaged a different solicitor at a much earlier date, who would have taken the necessary steps to prosecute his claims.  By the end of 1997 he realised he had been seriously misled and engaged another firm of solicitors who required to enlist the assistance of the Law Society to retrieve his files.  As a result of a complaint made by his new solicitor the defendant appeared before a Law Society tribunal and was disciplined.  When the Plaintiff realised he would be receiving no monies relating to his claims he sold the property within six months for £850,000 from which he received £150,000 approximately.

At the commencement of the hearing Mr Good BL on behalf of the plaintiff sought and was granted leave to file an amended statement of claim in which the plaintiff abandoned a number of claims arising from the same complaints against the defendant.  These related to (i) the preparation, execution and enforcement of an agreement as to the extension of the lease between Burtons and Accident & General and its surrender value; and ii. the institution and prosecution of proceedings against Hoggs in respect of the removal of fixtures and fittings, making good dilapidations and its contribution  toward the cost of the repairs to the roof.  The total amount claimed in respect of these matters was £197,674. 26.  After the application to amend the statement of claim was made Mr Thompson QC, who with Mr O’Donoghue BL appeared on behalf of the defendant, applied for costs in respect of these two elements of the claim, which the plaintiff had abandoned.  He requested that I award the defendant his costs in respect of those matters before the case was opened.  I considered it more appropriate to decide that issue at the conclusion of the case and so ruled.  By letter dated the 23 November 2000, McIvor Magill, Solicitors on behalf of the plaintiff wrote to Agnew, Andress, Higgins, Solicitors on behalf of the defendant informing them that they had been instructed to withdraw those aspects of the claim relating to Accident & General and Hoggs to which I have referred.  In relation to the Hoggs claim the plaintiff stated that a witness upon whom he relied was no longer available.

Thus the case made by the plaintiff and set out in the amended statement of claims was as follows -

“At various stages as hereinafter appear, the Plaintiffs contracted with and retained for reward the Defendants in respect of three matters in which they instructed the Defendants, namely –

 

(b)       Matter B – In April 1989 to institute and prosecute proceedings against the Burton Group Plc (hereinafter referred to as ‘Burtons’) from whom the Plaintiffs purchased the building on 18 March 1988 in respect of:-

 

(i)        recovery of rentals from tenants of the building paid after 18 March 1988 and wrongfully retained by Burtons:

 

(ii)       physical damage caused to the building, in particular an electrical system at the time of completion of the sale to the Plaintiffs;

 

(iii)      redecoration costs incurred to rectify the physical damage caused to the building at the time of completion.

 

4.         It was a term of the Defendant’s said retainer with the Plaintiffs that the Defendants would at all material times exercise reasonable skill, care and diligence while acting as aforesaid.  Further or alternatively the Defendants owned the Plaintiffs a like duty of care in tort.

 

5.         By reason of the negligence, breach of contract, breach of agreement and trespass of Accident & General, Burtons and Hoggs, the Plaintiffs have suffered loss and damage as hereinafter specifically set out:-

 

(c)        Particulars of Breach of Contract, Breach of Agreement and Trespass of Burtons in Respect of Matter B:-

 

(i)        Failing to pay to the Plaintiff such rentals from tenants of the building paid to Burtons after the date of completion of the sale of the building to the Plaintiffs on 18 March 1988.

 

(ii)       Negligently and/or by reasons of its acts of trespass, causing physical damage to the building, in particular the electrical system at the time of completion.

 

(iii)      Causing physical damage to the building which required subsequent redecoration by the Plaintiffs.

 

(d)       Particulars of Loss and Damage in Respect of Matter B – (Burtons):-

 

(i)        Loss of rentals wrongfully paid to Burtons by tenants of the building and withheld by Burtons and relating to the period 18 March 1988 to 23 June 1998 being £2657.53.

 

(ii)       Cost of making good and rewiring the electrical system of the building being £14500.

 

(iii)      Costs of redecorating premises being £8000.00

 

6.         Negligently and by reason of the breach of retainer and breach of contract the Defendants failed to comply with the Plaintiff’s instructions whereby the Plaintiffs have suffered loss and damage –

 

(b)       Particulars of Negligence, Breach of Retainer and Breach of Contract of the Defendants in Respect of Matter B – (Burtons):-

 

(i)        Failing to issue proceedings against Burtons within the primary limitation period as prescribed by the Limitation Order (NI) 1989.

 

(ii)       Causing or permitting the said claim of the Plaintiffs as against Burtons to become statute barred.

 

(iii)      Advising the Plaintiffs that proceedings had been instituted against Burtons, a decree obtained in default of defence and that the same had been the subject of enforcement proceedings when such assertion was untrue.

 

(iv)      Failing to take sufficient care in the conduct of the proceedings against Burtons.

 

(v)       Failing to advise the Plaintiffs of the risk that their claim might by statute barred.

 

(vi)      Failing to properly and adequately comply with the duties, responsibilities and standard of care as Solicitors advising for an don behalf of the Plaintiffs.

 

7.         By reason of the circumstances aforesaid the Plaintiffs have suffered loss and damage:-

 

(b)       Particulars of Loss and Damage in Respect of Matter B – (Burtons):-

 

Loss of the opportunity of recovering damages from Burtons, being:-

 

(i)        Loss of rentals wrongfully withheld £2,657.53

 

(ii)       Cost of making good rewiring, being £14,500.00

 

(iii)      Cost of redecorating premises 8,000.00

 

8.         Further being 1996 the Defendants advised and represented to the Plaintiffs that judgment had been obtained in favour of the Plaintiff’s against Burtons group Plc in the sum of £10,000.00 and further that judgment was to be imminently obtained against Robert Hogg & Company Limited in the sum of £146,000.00 again in favour of the Plaintiffs.

 

And whereas such representations were untrue, false and constituted misrepresentations and the payment of the sums anticipated on foot of such judgments, were not received by the Plaintiffs whereby necessitating the Plaintiffs refinancing to their borrows with the First Trust Bank was by way of a second mortgage on their dwelling house at Park Road, Newtownabbey.

 

As a result of such misrepresentations and of refinancing, the Plaintiffs have suffered loss and damage:-

 

(a)        Mortgage Arrangement Fee                 £    400.00

 

(b)       Interest paid to the First Trust Bank   £  5670.08

 

(c)        Fees paid to the First Trust Bank        £    345.36

 

(d)       Cost of re-mortgaging being (monthly

repayments) and interest on loan         £26484.00

(e)        Life policy repayments                          £    790.74

(f)        Cost of Redemption of Mortgage

Loan                                                           £60000.00

            Total loss and damage sustained by

            Reason of such misrepresentation of the

            Defendants                                                           £93690.18

 

And the Plaintiffs claim damages for misrepresentation and interest thereon pursuant to Section 33A of the Judicature (NI) Act, 1978 at such rate and for “such period as the Court may think fit.”

 

It was not in dispute that the defendant misrepresented to the plaintiff the position relating to his intended claims nor was it in dispute that the plaintiff acted on foot of those representations. Rather the defendant disputed that the plaintiff suffered the loss claimed in the statement of claim. Four heads  of damage were alleged and disputed and I will deal with each in turn.

1.                  Burton’s rent.  There is no dispute that the plaintiff was entitled to rent on apportionment.  The case made on behalf of the defendant is that Burtons had a good claim to a set-off based on service charges for the relevant period.  This was put forward in correspondence by the solicitors acting on behalf of Burtons. The defendant submits that the test to be applied is – what would have been the likely outcome if the plaintiff had taken proceedings against Burtons for the rent outstanding.  In other words, would Burtons have claimed a right to set-off and would such a claim likely be successful.  That would be a strong argument if the defendant had advised the plaintiff in 1988 that Burtons had a winnable case for set-off.  The defendant did not do that.  Instead he led the plaintiff to believe that he was pursuing Burtons for the full amount.  Should the defendant be entitled to benefit from the case now made, which he did not make (but might have made) in 1988 and saved the plaintiff a lot of trouble.  The argument that it  would be inequitable to do so, has some merit.  How should the court approach this situation.  The defendant submits that the test to be applied is – what would the likely outcome have been.  This is based on the allegation made in the correspondence by Burtons solicitors and to some extent from the cross-examination of the plaintiff and the evidence of the defendant.  However the court is being asked to proceed on certain assumptions, namely that Burtons would in fact have claimed a set-off and that they would have been successful.  I have reservations that this is a proper basis on which this court should proceed, over 10 years later.  However, it seems likely that the plaintiff was entitled to his rent. The evidence about set-off and the documentation in support of it are not such as to lead me to conclude that it is likely that Burtons would have claimed a setoff nor and, perhaps more importantly, that they would have been successful.   That also appears to have been the view of the defendant at that time, though he did not pursue it.  Therefore the plaintiff is entitled to the full amount of rent which he claimed and for which the defendant did not issue proceedings, that is the sum  of £2673.58 together with interest from 1 January 1992.

2.                  The electrical fittings.  It is not disputed that electrical fittings were removed and required to be replaced.  The plaintiff claims that he engaged Mr J McElduff an electrical contractor to carry out electrical work and that included in this work were the extra fittings required as a result of the items which had been removed.  Mr McElduff estimated that the amount of extra electrical fittings was £14,500 and the plaintiff stated that he paid this as part of the £24,000 he paid Mr McElduff.  The defendant submits that in the absence of detailed accounts showing what extra work was carried out that the plaintiff is not entitled to this sum.  I was satisfied from the evidence of both the plaintiff and Mr McElduff that extra electrical work in the sum of £14,500 was carried out and therefore the plaintiff is entitled to damages in that amount together with interest from 1 January 1992.

3.                  Other damage requiring redecoration. It is suggested by the defendant that no such damage and redecoration ever took place.  The defendant averred that the first he heard of this damage and redecoration was on receipt of the statement of claim.  The plaintiff did not mention such a matter to him nor instruct him to deal with it.  I do not doubt that this is the defendant’s recollection  now.  However the plaintiff is certain that this damage did occur and that he required to repair it.  The document C2 shows clearly that the plaintiff was pursuing Burtons for the electrical refitting and “other matters”.  In addition the letter which the defendant wrote for the Bank refers to “ and in addition other damage caused to the premises at the time of completion”. That “damage” is not qualified in any way. The defendant was not giving the affairs of the plaintiff the attention which they required and in those circumstances it is easy to understand why he says now he has no recollection of being so informed.  Where the plaintiff asserts positively that this damage occurred and required redecoration and there is no reason to disbelieve him then the evidence of the plaintiff is to be preferred.  However the plaintiff is unable to produce any documentation relating to this other than a vague assertion that the redecoration was carried out by Nimmons.  He claims £8000 for this work.  In the absence of evidence to substantiate this figure I am unable to award such an amount.  However being satisfied that such redecoration work was carried out and mindful of the size of the premises I consider a nominal figure of £3,000 can be justified. Therefore the plaintiff is entitled to £3,000 for this head of damage plus interest from 1 January 1992.

4.         The remortgage of the family home. In 1992 or 1993 the Ulster Bank Limited obtained a judgment against the plaintiff for £300,000.  This related to a loan from the Ulster Bank for refurbishment of the premises.  The manager of the First Trust Bank who dealt with the plaintiff’s affairs was unaware of this judgment. In 1996 the plaintiff entered into a remortgage arrangement with the First Trust Bank.  It was the defendant’s case (and not without some substance) that the plaintiff was financially stretched and had been for some time and that the transactions in which the plaintiff was involved were not only beyond his financial capacity but also outwith his business and financial acumen and experience.  It was in those circumstances that he came to negotiate a further loan with the First Trust Bank.  This aspect of the claim, it was submitted by the defendant, was doomed to failure.  They made two submissions – firstly, that the breach of duty by the defendant was not the cause of the plaintiff’s need for a loan merely the occasion of it, and secondly that the acceptance of a loan was not a loss which could be recovered by way of damages.  Both submissions require consideration.

In late 1996 the manager of the First Trust Bank was pressing the plaintiff.  The plaintiff could have sold the premises at that time and paid off his debts.  Indeed there is some evidence that he was contemplating sale in 1996.  However he made a commercial decision to hold on and entered into an overdraft facility with the Bank, on the basis that money would be forthcoming from the ‘court cases’.  The verbal and written confirmations from the defendant to the Bank manager were part of that arrangement.  When the money from the ‘court cases’ had not materialised the Bank required other arrangements, namely the mortgage.  The defendant acted as the plaintiff’s solicitor in the mortgage.  He was aware the plaintiff was in financial difficulties.  He was also aware that he had provided confirmation to the Bank about the ‘court cases’.  More importantly, he was aware that there were no court cases and that no money would be forthcoming from such a source.  However at that time the plaintiff still believed that money would be forthcoming and entered into the mortgage as a temporary holding arrangement.  In those circumstances was the defendant’s breach of duty in failing to issue proceedings on his behalf and misrepresenting the true position to him, the cause of the plaintiff running up a sizeable overdraft with the Bank and then entering into the new mortgage arrangement.  In Pearson v. Witherspoon & Anor 2000 PNLR 110 at 122 Ward LJ, with whom the other members of the court agreed, upheld the trial judge’s decision that the answer to this question lies in the definition of the solicitor’s duty.  In acting as the plaintiff’s solicitor in the mortgage arrangement, with knowledge (i) that the plaintiff was financially stretched; (ii) that the plaintiff understood that proceedings had been issued on his behalf and in one instance judgment marked; (iii) that the plaintiff believed that he would receive some damages in those cases; and (iv) that no such proceedings had ever been issued or judgment marked, it was clearly the solicitor’s duty to inform the plaintiff of the true position.  That duty applied equally at the earlier overdraft stage when he verbally reassured the plaintiff about the court cases and confirmed that verbally and in writing to the Bank Manager. In failing to do so he aided and abetted the plaintiff in running up a sizeable overdraft with the Bank and  in consequence entering into the mortgage arrangement to pay it off.  In those circumstances the defendant’s breach of duty was a substantial cause of the plaintiff entering into those arrangements and not merely the occasion of them.  Equally it would have been foreseeable to him that the plaintiff was undertaking the repayment of the mortgage loan with considerable interest thereon.

I turn now to the second submission, namely that a loan is not a recoverable loss.  The defendant relied on the case of Galoo Ltd (in liq) and Others –v- Bright Grahame Murray (a firm) and Another 1995 1 AER 16 and passages in the judgment of Glidewell LJ at pages 21 and 24.  This was an action against auditors for negligence and breach of duty in contract and tort in relation to inaccuracies in audited and draft audited accounts.  The headnote states that claims were struck out by the district judge on the ground that the advance or acceptance of a loan did not amount to a loss causing damage which was recoverable in tort or contract.  It was alleged that if the auditors had acted with reasonable professional care and skill the accounts for the relevant years would have shown two companies, Galoo and Gamine, to have been insolvent, and they would have ceased to trade and that Galoo and Gamine would not have accepted or continued to accept advances from Hillsdown totalling over £30 million.  There was a similar claim that Hillsdown would not have made the advances.  Much of the judgment relating to the claims by Galloo and Gamine centred on the question of causation. That part of the judgment relating to Hillsdown focussed on  the question of economic loss  in tort. Neither of those issues are relevant to the present case except to note that Ward LJ in Pearson, supra, followed the principles and approach to the question of causation set out by Glidewell LJ in the principal judgment of the court.   The claims of Hillsdown relating to the advances were struck out, as it was not shown to have been pleaded that any particular loan was made in reliance upon  any particular set of accounts prepared by the auditors.  The acceptance of the loans by Galoo and Gamine were dealt with at page 24 of the judgment of Glidewell LJ where he stated –

“The first part of this claim is for damages for the loss allegedly incurred by Galoo and Gamine as a result of accepting and continuing to accept the loans from Hillsdown totalling over £30m.  This part of the claim is added by the amendment to the statement of claim.

 

The deputy judge dealt with this matter shortly but clearly.  He said:

 

‘As a matter of fact, I do not accept that accepting loans involving an obligation simpliciter to repay them can be described as damage.  At the moment of accepting the loan, the company which accepts the loan has available that amount of money and the obligation to repay that amount of money, and I simply fail to see how that can amount to damage.  If there is damage, it must consist of parting with those moneys in certain circumstances.’

 

I entirely agree with the deputy judge on this issue.  Like him, I do not understand know the acceptance of a loan can, of itself, be described as a loss causing damage.  If anything it is a benefit to the borrower.  Of course, a loss may result from the use to which the loan moneys are put, but no such resultant loss is pleaded, and even if it were it might very well be difficult to attribute it to BGM.  I therefore agree with the deputy judge on this issue.”

 

It seems to me that the important words from that passage are – “involving an obligation simpliciter to repay” and “how the acceptance of a loan can, of itself, be described as a loss causing damage”.  The case made by the plaintiff in the present case is that he incurred a debt, namely the overdraft. This overdraft was discharged from the monies lent by the Bank on foot of the new mortgage on the family home.  At the time when the plaintiff entered into this mortgage arrangement the overdraft stood at £48,706.20. He borrowed more than this sum, the balance of which was a genuine loan simpliciter. In the circumstances the court is entitled to looked behind the mortgage and see the purpose of it.  Here the plaintiff undertook as a result of the mortgage arrangement to repay the loan together with interest and at the same time to insure the amount to be repaid. It seems clear that the plaintiff ran up an overdraft of £48,706.20 and was permitted by the Bank to do so and that  both he and the Bank did so on foot of assurances given by the defendant relating to the plaintiff’s claims against Burtons and Hoggs. In those circumstances he is entitled to recover that part of the mortgage which discharged the overdraft (namely £48,706.20) and pro rata, that is, five sixths of the fees (£345.36)and insurance premiums (£1684.62) incurred and in respect of the mortgage repayments made to date (£545.31 per month).  In addition he is entitled to interest on those sums from 4 December 1996 to date. I will ask counsel to calculate the interest sums on all four heads of damage.

I turn now to the question of the costs of those parts of the plaintiff’s original claim which he sought and was granted leave to discontinue at the commencement of the trial of this action. Order 21 of the Rules of the Supreme Court states -

“3.-(1)Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular claim made by him therein, without the leave of the Court, and the Court hearing an application for the grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against all or any of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just.”

 

Thus leave may be granted on such terms as to costs which the Court thinks just. The defendant admits that he failed to carry out the plaintiff’s instructions to institute proceedings against Burtons and Hoggs. Those failures led to the proceedings before the court and to the discontinued part of the original claim. It does not appear to me to be just that the plaintiff should incur costs relating to those matters in the light of the admissions made by the defendant. In addition the failures relating to Hoggs were relevant to the overdraft with the First Trust Bank and the mortgage arrangements entered into with the Bank to discharge it. To penalise the plaintiff in costs relating to those two discontinued matters would in my opinion add injustice to that already caused in this sorry case.  Therefore in the exercise of my discretion the leave previously granted, shall be without any terms relating to costs of the two discontinued matters.


IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND

QUEEN’S BENCH DIVISION

 ________

 

BETWEEN:

BRENDAN MACMAHON

IMELDA MACMAHON

Plaintiff;

- and –

ROBERT G HAMILTON

JAMES G DORAN

JOHN D DORAN

PRACTISING AS JAMES DORAN & COMPANY, SOLICITORS

Defendant.

 ________

 

J U D G M E N T

O F

HIGGINS J

 ________