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The Mortgage Corporation v Solicitors Indemnity Fund (1997)

Summary

Indemnity provided under the Solicitors' Indemnity (Enactment) Rules 1992 extended to any loss incurred arising directly from any claim against a solicitors' firm founded on negligence attributable to that firm.

Facts

The Mortgage Corporation Ltd ('MCL') claimed against the Solicitors Indemnity Fund Ltd ('SIF') for sums due under judgment obtained against a firm of solicitors who were unable to satisfy the judgment debt. Although no bankruptcy petitions had been presented, the SIF were willing that their liability under the Third Party (Rights Against Insurers) Act 1930 should be determined on the footing that the solicitors involved were, or would be made bankrupt and on the assumption that SIF was an insurer within the meaning of the Act. The issue raised was whether the Solicitors' Indemnity (Enactment) Rules 1992, made under s.37 of the Solicitors Act 1974, provided MCL with the right to claim from the SIF the amount of the judgment debt plus the cost of the action.

Held

(1) The court was of the opinion that the indemnity provided under the 1992 rules extended to any loss incurred arising directly from any claim against the firm founded on negligence attributable to the firm. The language of r.26 pointed to the amount of a claim for damages established against the firm, not to the ultimate consequence to the firm of its liability under the judgment after taking into account other transactions entered into by the firm. (2) To the extent that there was a doubt as to the meaning and scope of the indemnity the court had regard to the policy of s.37 of the 1974 Act. It was plainly important, for the protection of the public and to ensure that the public continued to have confidence in the integrity and standing of solicitors, that claims founded on negligence of a solicitor should be met, and if the solicitor was unable to meet his liabilities following the bankruptcy order met by the SIF.
Order accordingly.

Chancery Division
Sir John Vinelott
Judgment date
15 May 1997
References

LTL 18/9/98 : [1998] PNLR 73