New Appeal: Supreme Court grants third appeal relating to the CoA’s application of the principles from Hay v O’Grady

In this determination (Rosbeg Partners v LK Shields), the Supreme Court granted LK Shields leave to appeal the Court of Appeal’s judgment (here) that it could not overturn the High Court’s award of €11 million in damages to Rosbeg for professional negligence (here). It is LK Shields’ case that the Court of Appeal failed to distinguish between findings of fact and inferences of fact made by the trial judge, and that the Court of Appeal incorrectly held that the principles from Hay v O’Grady prevented it from interfering with the trial judge’s inferences of fact. The Supreme Court granted leave to appeal on four questions:

(i) Whether the Court of Appeal in reviewing the decision of the High Court, and in particular in considering that the test for reviewing inferences drawn by a trial court, from oral evidence or otherwise, is to consider whether there was evidence from which those inferences could be drawn, (paragraphs 41 and 52,53 judgment CA) applied a standard of appellate review which was too low;

(ii) Whether the concept of a completed transaction as discussed in Kelleher v O’Connor [2010] IEHC 313 is applicable in a case such as this, and if so whether it was properly applied;

(iii) Whether the High Court was correct in the manner it assessed the damages where the negligence involved a failure to do something within a reasonable time, but which remained capable of being done, and was done;

(iv) Whether the application of an objective standard to the question of causation and/or mitigation of damages required anything more than the conclusions of the High Court in this case.

Background

In 1994, LK Shields acted as solicitors for Rosbeg in its purchase of a number of parcels of land. LK Shields does not dispute that it failed to have Rosbeg registered as owner of one of those parcels of land, nor that it was negligent in that failing. In 2008, Rosbeg agreed to sell that parcel of land to a third party for €10 million. Due to delay caused by Rosbeg not being registered as owner, though, the sale could not proceed as anticipated. LK Shields later resolved the registration of ownership. However, by then the prospective purchaser had reduced its offer to €8 million and later to €6 million.

Rosbeg issued High Court proceedings against LK Shields seeking damages for loss suffered due to professional negligence. By the time of trial, the High Court accepted that the property had a value of €1.5 million. The trial judge (Peart J) found that Rosbeg was not foolhardy or irresponsible in its negotiations to mitigate its losses and awarded Rosbeg €11 million in damages (including consequential losses). LK Shields appealed that judgment to the Court of Appeal.

Dismissing the appeal, the Court of Appeal accepted that the trial judge’s finding that Rosbeg had an agreement to sell the property for €10 million was an inference of fact, but it determined that it was prevented by Hay v O’Grady from interfering with those findings, CoA [41]. LK Shields applied to the Supreme Court for leave to appeal that judgment.

In its determination, the Supreme Court expressed reservations about the application, including that it had recently granted an appeal relating to the Court of Appeal’s application of the principles from Hay v O’Grady, in Donegal Investment Group v Danbywiske & Ors (post). The Court had also previously granted leave to appeal on similar issues in Leopardstown Club v Templeville Developments (post). Granting leave though, the Court determined that this case did meet the constitutional threshold for a further appeal by raising issues of general public importance:

However it is also true to say that the award here is very substantial and the case raises important issues on the assessment of damages, the question of causation and mitigation, and the appropriate test for appellate review particularly of inferences from facts themselves dependent upon oral evidence.

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