Professional Indemnity - August 2013

Last year, the High Court awarded a bank substantial damages against a Dublin law firm for failing to ensure that proper security was in place before releasing loan monies in respect of a number of properties.  The law firm has now successfully appealed this decision to the Supreme Court on two grounds, namely on the issue of contributory negligence and the trial judge's implication of deception on the part of the solicitors.

In relation to the alleged deception, the Supreme Court stated that the High Court's judgment "cannot and should not be read as attributing any intentional dishonesty or deliberate misleading to any partners or officers of the appellant firm".

As regards the issue of contributory negligence, the Court highlighted that lending banks have a duty to assess the creditworthiness, soundness and - most importantly - trustworthiness of the borrowers when reviewing potential loan transactions.  The Court noted that this obligation is independent of