contempt of court committal

Ulster Bank DAC and Ors v McDonagh and Ors: CA Holds That Civil Liability Act 1961 Inapplicable To Debt Recovery Cases

In the recent case of Ulster Bank DAC and Ors v McDonagh and Ors, the Court of Appeal confirmed that, as debt recovery cases are not considered actions for “damages”, the Civil Liability Act 1961 (CLA) does not apply to them.

The Background

The defendants were provided with a loan of over €21 million in 2008 by Ulster Bank Ireland Limited (“the Bank”). The loan was provided in order for the defendants to purchase a site, however the plans did not go ahead and the defendants were left unable to repay the loan. Prior to this, the Bank had settled a claim, receiving €5 million, against CBRE for their alleged negligent valuation of the site the defendants had planned to purchase.

The Claim

The compromise reached between the parties was allegedly breached and the Bank sought summary judgement (totalling €22,090,302.64) against the defaulting defendants. The defendants argued that, alongside CBRE, they were concurrent wrongdoers and thus no further money was owed to the Bank by virtue of sections 17(2) and 35(1)(h) of the CLA.

The Judgment

At first instance, the High Court found that the defendants and CBRE were concurrent wrongdoers. However, Section 17(1) was not applicable in this instance as the settlement reached between the Bank and CBRE did not refer to the defendants, nor did CBRE admit any liability. In spite of this, the Judge did note that the amount paid in the CBRE settlement should be taken into account and could reduce the settlement owed by the Defendants. The judgement was awarded to the Bank and the Defendants appealed.

The Court of Appeal ultimately dismissed all three of the Defendant’s appeals. The Court confirmed that the claim was not an action seeking to recover damages, but a claim seeking to recover debt. As such, the claim did not fall within the remit of the CLA.

The Implications

This case is significant as it highlights the inherent issues with parties attempting to rely on the CLA in debt recovery cases. In this instance, CBRE and the Defendants could not be seen as concurrent wrongdoers as they were never attempting to recover the same type of damage. Further, the Court noted that if the Defendants wished to include CBRE in their wrongdoing, expert evidence should have been adduced at trial in support of this. In spite of this, the case makes clear that for a debt recovery claim, the CLA is the wrong vehicle when trying to establish a concurrent wrongdoer.

Instruct Specialist Debt Recovery Lawyers

We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inns of Court adjacent to the Royal Courts of Justice.  We are experts in dealing with matters surrounding insolvency in particular issues.  Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding up petitions vigorously at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules. Call us on  ☎ 02071830529 or complete our online contact form.


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