LAW IN PRACTICE
damage in respect of which they are concurrent wrongdoers’, in essence, 27
the ‘1% rule”.
c. Section 38(1) provides that where there has been contributory negligence
c. Defender has suffered a deficiency in its recovery as a result of settling with the Trustee appointed as a result of Madoff’s insolvency – despite the 1961 Act requiring assumptions as to: (a) negligence on the part of
on the plaintiff’s part, he is to have a several judgment for such
HSBC; and, (b) that HSBC was liable for the whole of the damage, HSBC
apportioned from part of his total damages as the court thinks “just and
pays nothing to Defender; and,
equitable”, having regard to each defendant’s degree of fault. Sub-section 2 goes on to provide that if, after taking reasonable steps, the plaintiff
d. the outcome goes against the basic principle providing for an equitable division of the financial burden between wrongdoers.
has failed to obtain satisfaction of any judgment in whole or in part, he shall have liberty to apply for secondary judgments. This provision has the
The policy aims of the 1961 Act are referred to in the concluding paragraphs
effect of distributing the deficiency among the other defendants in such
of the judgment. Twomey J. did not accept that the result of the judgment
proportions as may be just and equitable.28
could be said to be unjust and inequitable to Defender.30 Instead, the Court
d. Section 17 seeks to avoid double recovery, but also to encourage out of court settlements.29
took the view that in entering the Settlement Agreement, Defender would, or should have been aware of the consequences of its settlement, namely, that it would be identified with Madoff.
The outcome of the judgment runs counter to certain principles underlying the 1961 Act as follows:
Should a plaintiff settle with a concurrent wrongdoer?
a. the injured party, Defender, has not recovered the entirety of its damage
A query arises as to whether a consequence of the judgment will be to
– despite the fact that there are two concurrent wrongdoers deemed
discourage plaintiffs settling with one concurrent wrongdoer. Only time will
responsible for the same damage, Madoff and HSBC, Defender is at a loss
tell. A plaintiff who refuses to engage with an offer of settlement by a
of US$141 million;
concurrent wrongdoer, may face a claim of failure to mitigate loss. Pending
b. section 17 is designed to avoid double recovery but also to promote
clarification on appeal, the view may be taken that the facts of Defender,
settlement – clearly there is no double recovery here – instead, Defender
including the criminal context, are relatively narrow and so the usual level of
is at a loss as a result of entering into a settlement with a concurrent
apprehension around settling with a concurrent wrongdoer will simply
wrongdoer;
continue.
References 1.
[2018] IEHC 706. The judgment is under appeal.
2.
Paragraph 41.
see the New Zealand Supreme Court judgment in Hotchin v New Zealand
3.
Paragraph 42.
Guardian Trust Co Ltd [2016] 1 NZLR 906.
4.
A significant issue addressed in the judgment was whether New York law
5.
17. The tenant was in arrears of rent and had received an incentive payment.
was applicable in determining the effect of the Settlement Agreement. That
18. The solicitor, Mr Burke, had been found guilty of negligence.
issue is not considered here.
19. At paragraph 59.
Paragraph 48. This aspect of the judgment has been cited by Barniville J. in
20. Unreported, High Court, Costello J., April 15, 1988.
AIB v O’Reilly [2019] IEHC 151.
21. Stevens & Sons Limited, 1951, as reprinted in 1998.
6.
[2012] IEHC 368.
22. The Tortfeasors Act 1951 was replaced and elaborated upon by the 1961
7.
[1992] ILRM 378.
8.
The Settlement Agreement specifically provided that the parties did not
9.
Act. 23. Kerr. The Civil Liability Acts (5th ed.). 2017: p3.
intend to provide any benefit by or under the agreement.
24. Hickey v McGowan [2017] 2 IR 196 at 238.
Paragraph 86.
25. Cafolla v O’Reilly [2017] 3 IR 209 at 233.
10. [1971] IR 275.
26. [1996] 3 IR 321.
11. [1975] IR 221.
27. A similar principle is reflected in section 14, which deals with judgments
12. Paragraph 99 of the judgment. However, Kenny J. in Carroll v Clare County Council noted that a jury was “to apportion the fault according to their view of the blameworthiness of the causative contributions to the accident and that it is to be measured and judged by the standards of conduct and care to be expected from a reasonable person in the circumstances”.
against concurrent wrongdoers. 28. As recognised by O’Flaherty J. in Iarnród Eireann. Section 38(2) was not referred to in the judgment. 29. As discussed by Charleton J. in Haughey v J & E Davy [2014] 2 IR 549; and Sheehan v Talos Capital Limited [2018] IEHC 361. That principle has been
13. Paragraph 102.
recognised by various authors, including Williams, McMahon and Binchy,
14. Paragraph 105.
and Kerr.
15. Paragraph 105.
102
16. [2002] HCA 17. That judgment has not been followed in other jurisdictions:
THE BAR REVIEW : Volume 24; Number 4 – July 2019
30. Paragraph 135.