Supporting Documents:
27-2019 Defender Ltd v HSBC Institutional Trust.Web.AFL.docx 27-2019 Defender Ltd v HSBC Institutional Trust.Resp Notice.docx

THE SUPREME COURT

DETERMINATION

BETWEEN

RESULT: The Court adjourns consideration of this application for leave pending the filing of further submissions by the parties arising out of the fact that an appeal in the same proceedings is pending before the Court of Appeal.

REASONS GIVEN:

ORDER SOUGHT TO BE APPEALED

COURT: High Court

DATE OF JUDGMENT OR RULING: 4th December, 2018 and 22 January 2019

DATE OF ORDER:22nd January, 2019

DATE OF PERFECTION OF ORDER: 28th January, 2019

THE APPLICATION FOR LEAVE TO APPEAL WAS MADE ON 14th February, 2019 AND WAS IN TIME.

Application
1. The applicant (“Defender”) seeks leave to appeal from an order of the High Court (Twomey J.) made on 22 January 2019, and perfected on 28 January 2019, which held, in a preliminary ruling in relation to Defender’s claim for damages in professional negligence and breach of contract against the respondent, HSBC Institutional Trust Services (Ireland) DAC (“HSBC”), that, amongst other things, under s. 17(2) of the Civil Liability Act 1961 (“the 1961 Act”), Defender’s total claim against HSBC was to be reduced by 100%, for the reasons set out in two written judgments of the Court, delivered on 4 December 2018 ([2018] IHEC 706) and 22 January 2019 ([2019] IEHC 32).

Jurisdiction
2. The general principles applied by this Court in determining whether to grant or refuse leave to appeal having regard to the criteria incorporated into the Constitution as a result of the Thirty Third Amendment have now been considered in a large number of determinations and are fully addressed in both a determination issued by a panel consisting of all of the members of this Court in B.S. v. Director of Public Prosecutions [2017] IESCDET 134 and in a unanimous judgment of a full Court delivered by O’Donnell J. in Price Waterhouse Coopers (A Firm) v. Quinn Insurance Ltd. (Under Administration) [2017] IESC 73. The additional criteria required to be met in order that a so-called ‘leapfrog appeal’ direct from the High Court to this Court can be permitted were addressed by a full panel of the Court in Wansboro v. Director of Public Prosecutions [2017] IESCDET 115. It follows that it is unnecessary to revisit the new constitutional architecture for the purposes of this determination.
3. Furthermore, the application for leave filed and the respondent’s notice are published along with this determination (subject only to any redaction required by law) and it is therefore unnecessary to set out the position of the parties.

4. In that context, it should be noted that HSBC does not oppose the grant of leave and that in the respondent’s notice, leave to cross appeal is sought.

Background Facts
5. The underlying proceedings involve a claim made by Defender Limited against HSBC for $141 million in damages for professional negligence and breach of contract. Under the terms of a custodian agreement between Defender and HSBC, Defender invested $540 million in a Ponzi scheme operated by a third party, Bernard L. Madoff Investment Securities LLC (“BLMIS”), which is not a party to these proceedings. Having subsequently incurred significant losses as a result of the fraud, Defender settled with the trustee of BLMIS for approximately 75% of its losses and brought these proceedings against HSBC in order to recover the balance of its loss. HSBC relied on the provisions of the 1961 Act, and in particular s. 17(2), to argue that it had a complete defence to the damages claim.
6. The High Court (Twomey J.) ordered that a preliminary legal issue, as to whether a full defence could be sustained by HSBC in reliance on the provisions of the 1961 Act, be determined in advance of the hearing of the substantive proceedings. In the first judgment on this matter, delivered on 22 December 2018, it was held that, for the purposes of the preliminary determination, Defender’s case had to be taken at its height and that the Court had to assume that HSBC was guilty of negligence and, therefore, that both HSBC and BLMIS were concurrent wrongdoers, for the purposes of s. 11 of the 1961 Act.

7. The Court then considered, amongst other things, the effect which Defender’s settlement with the first concurrent wrongdoer, BLMIS, had on the liability of HSBC, as the second concurrent wrongdoer. Under s. 17(2) of the 1961 Act, it was determined that, as a result of the settlement, Defender is “identified with” BLMIS. Construed in reference to s. 35(1)(h) of the 1961 Act, it was held that the burden of being identified with the first concurrent wrongdoer means that Defender is hypothetically deemed to be contributorily negligent in its action against HSBC.

8. Thereafter, the Court determined that it would be just and equitable that HSBC be entitled to 100% contribution from BLMIS because of the qualitative difference between the respective wrongdoing of the two concurrent wrongdoers. As a result, Defender’s claim against HSBC was held to be reduced by 100% by virtue of the operation of s. 17(2) of the 1961 Act.

9. On 22 January 2019, a second judgment was delivered by Twomey J., which determined, amongst other things, the form of the order which was to be issued arising from the earlier judgment of the Court of 4 December 2018, and that costs of the preliminary hearing were to be paid by Defender. It was further held that it was premature for the Court to make an order in relation to the costs for the substantive proceedings against HSBC, which were effectively dismissed as a result of the order.

Decision
10. As appears from the notices filed, the issue which arises in these proceedings and which, it is suggested, meets the constitutional threshold of being a matter of general public importance, arises out of the proper interpretation of certain provisions of the Civil Liability Act 1961 dealing with concurrent wrongdoers and the practical operation of those and other provisions of the same legislation in the particular context of circumstances where there has been a settlement entered into between certain parties.

11. As is noted in the application for leave to appeal, there have been a number of recent judicial observations which draw attention to the potential difficulties in the proper interpretation and application of those sections. It is clear, therefore, that the issues which arise in these proceedings have the potential to apply in many more cases.

12. The Court also notes that HSBC have, quite responsibly, conceded that the issues raised do meet the general constitutional threshold of representing matters of general public importance.

13. The Court is, therefore, satisfied that the general matter of public importance threshold has been met. In that context, the Court does not feel it necessary to express any view on the question of whether the alternative basis of “interests of justice” put forward on behalf of Defender has also been met.

14. There remains the question of whether the additional exceptional circumstances which are required to be present in order for “leapfrog” leave to be granted are present. The Court notes that Defender has also brought an appeal to the Court of Appeal. There is, of course, nothing wrong with adopting such a course of action. Indeed, it is often necessary for a party who intends to seek leave to appeal to this Court to also file an appeal in the Court of Appeal to provide cover in the event that this Court declines leave to appeal. The fact, therefore, that an applicant has also brought an appeal before the Court of Appeal is not in and of itself, a factor to be taken into account in determining whether to grant leapfrog leave.

15. In that context, it is appropriate to refer to s. 44 of the Court of Appeal Act 2014, which inserted s. 7(16) in the Courts (Supplemental Provisions) Act 1961. That subsection provides as follows:-

“Where, upon application to it in that behalf by any party to an appeal against a decision of the High Court, the Supreme Court grants leave to appeal against the decision of the High Court, such grant of leave to appeal shall operate –

(a) where an appeal has also been made to the Court of Appeal, to discontinue the appeal proceedings before the Court of Appeal in respect of the grounds on which the Supreme Court has granted leave to appeal, or

(b) where no appeal has, at the time of the grant of the leave to appeal, been made to the Court of Appeal, to preclude such an appeal being made to the Court of Appeal on those grounds.”

17. In that context, it is also necessary to consider the application set out in the respondent’s notice filed by HSBC in which leave is sought to cross appeal the finding of the High Court in relation to the costs of the substantive proceedings. The Court is satisfied that the interests of justice would require that leave to appeal that part of the High Court order to this Court be granted in the event that similar leave is granted to Defender to appeal directly to this Court. However similar considerations apply to the logistics of the application for leave to cross appeal as apply in respect of the application for leave to appeal.

18. The Court is, therefore, satisfied that the general constitutional threshold is met both in respect of the application for leave to appeal and the application for leave to cross appeal.

19. Subject to one matter, the Court is also satisfied that it would be appropriate to grant leapfrog leave. However, the Court does have a concern in relation to the risk that it may not be appropriate in the circumstances of any particular case to grant leapfrog leave in circumstances where that may lead to complications deriving from the fact that different aspects of the case may come to be heard on appeal by two different courts. There may be appeals where that complication is of little or no weight, but there may also be cases where the exigencies of the effective use of judicial resources and the orderly conduct of litigation may weigh heavily against the prospect of dual appeals against the same decision of the High Court being taken to different courts.

20. The Court is not in a position, on the basis of the materials currently before it, to reach a final view on whether, therefore, it would be inappropriate to grant leapfrog leave because of the complications that the grant of such leave might bring to the orderly conduct of this litigation. There will certainly be many cases where it will be appropriate for this Court to hold that leapfrog leave should be refused if there is going to be an appeal to the Court of Appeal in any event, even if there might be some issues which might justify a direct appeal to this Court.

21. For present purposes, the Court will determine that the general constitutional threshold has been met both in respect of the application for leave to appeal and for leave to cross appeal, and that there is, subject to one matter, an appropriate basis for considering that the exceptional circumstances justifying leapfrog leave have been made out. The Court will, however, require the parties to file additional submissions (together with any appropriate materials) to enable the Court to assess what the consequences, in the particular circumstances of this case, will be for the orderly conduct of this litigation and the effective use of judicial resources as a result of the potential for two appeals against the same decision of the High Court to be brought to two different courts. Defender will be required to file such submissions within two weeks of today’s date with HSBC having a further two weeks to reply. If it is considered necessary, the Court may then direct an oral hearing.

And it is hereby so ordered accordingly.