Settling With A Concurrent Wrongdoer

• Published date: 28 September 2020
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Personal Injury, Professional Negligence
• Law Firm: Dillon Eustace
• Author: Mr John O'Riordan and Peter Bredin

This article will consider two significant recent judgments of the Irish Courts on the topic of concurrent liability - Defender Limited v HSBC France [2020] IESC 37 ("Defender") and Ulster Bank DAC & Ors v McDonagh & Ors [2020] IEHC 185 ("McDonagh")

Concurrent Liability

Concurrent liability is governed in Ireland by the Civil Liability Act 1961 (the "Act"). Section 11 of the Act defines a concurrent wrongdoer as "one of two or more people responsible to a plaintiff for the same damage". Damage in this regard includes loss of property (including money), loss of life and personal injury.

Section 17 of the Act deals with settlements between concurrent wrongdoers. Issues tend to arise where a settlement is agreed with one wrongdoer and not the other. For example, both the Defender and McDonagh decisions concern situations where the plaintiff ("P") settles with one wrongdoer ("D1"), and then subsequently attempts to obtain the remainder of their claim from a second concurrent wrongdoer ("D2"). See our previous briefing highlighting the potential pitfalls of such settlements here.

Section 17 (1) of the Act provides that a settlement agreement between P and D1 will discharge the other concurrent wrongdoers from liability for the same damage if it contains an intention to do so. However, this will rarely be the case so the majority of settlements will instead fall to be considered under section 17(2) of the Act. This provides that P and D1 are identified together such that any claim brought by P against D2 is reduced by the greater of:

• The amount of the settlement between P and D1; or
• Any amount stipulated in the settlement agreement between P and D1; or
• The extent by which it can be said that D1 was culpable for the entire claim.

The Defender Case

The starting point for this discussion is the 2018 High Court decision, which was analysed in our previous briefing here. This case involved a Ponzi scheme which was effected by Bernard Madoff's company Bernard L. Madoff Investment Securities LLC ("Madoff") This represented the largest Ponzi scheme of all time, with Defender Limited alone suffering approximately $540 million worth of losses. Defender settled with Madoff for roughly 75% of this sum, before bringing an application in the Irish courts to recover the remainder of its losses from HSBC. Defender alleged that HSBC were negligent in their role as custodian and that they had breached their duty in failing to properly monitor Madoff's company, despite...