TWO INSURANCE companies have initiated a court action to have insurance policies taken out with them in relation to the practice and property company of missing solicitor Michael Lynn declared fully void on grounds of alleged fraudulent misrepresentation and non-disclosure of material facts.
More than 250 multi-million euro claims against the policies have been made to date by banks and others owed vast sums by Mr Lynn, who has estimated liabilities of some €80 million, and the insurance companies claim they are entitled to refuse to pay out on foot of those claims.
The companies say the vast majority of claims they have received relate to alleged breach of residential mortgage solicitors' undertakings. They claim that investigations by them in relation to a number of properties had suggested there was a practice in Mr Lynn's firm from at least 2003 of providing multiple undertakings relating to the same property, but that this was not disclosed to them. The proceedings came before Ms Justice Mary Finlay Geoghegan at the Commercial Court yesterday.
Chubb Insurance Company of Europ SA and WR Berkley Insurance Europe Ltd have taken the action against Michael Lynn and Fiona McAleenan, practising as Michael Lynn Company, and Overseas Legal and Tax Services Ltd trading as Overseas Property Law.
John O'Donnell SC, for Ms McAleenan, with an address at Betaghstown Wood, Bettystown, Co Meath, said his side was busy preparing for proceedings brought by Permanent TSB against Ms McAleenan. He intended to bring a motion to stay the insurance companies' proceedings.
Ms Justice Finlay Geoghegan said the case was aimed at having insurance policies declared void, with implications for persons who had made claims on foot of those policies. Those parties would have to be notified, she said.
The judge admitted the proceedings to the list and adjourned them to July 21st next and said any motion for a stay on the proceedings must be issued and served by that date.
In their action, the insurance companies claim they are entitled to have declared void two particular policies taken out with them for alleged non-disclosure of material fact by the defendants. They also argue the policies should be declared void for fraudulent misrepresentation on the proposal form. It is claimed the defendants must have been aware they would not be able to comply with undertakings given on foot of the policies.
The proceedings arise after the two companies agreed to provide cover for Michael Lynn Company, the practice set up by Mr Lynn, and Overseas Property Law, which provided legal services for people investing in overseas property. The insurance sought was professional indemnity cover in excess of the €2.5 million primary cover to be provided by AIG Insurance Company Ltd.
Chubb claims that, in reliance on representations of the defendants, it agreed to provide €4.5 million cover for each claim in excess of €2.5 million for the period from January 1st, 2007 to January 1st, 2008, while WR Berkley claims it agreed, also in reliance on the representations of the defendants, to provide, over the period May 18th, 2007 to December 31st, 2007, €4 million cover for claims in excess of a €7 million cover already in place.
The companies claim the vast majority of claims they have received relate to alleged breach of residential mortgage solicitors' undertakings. They claim their investigations suggested there was a practice from at least 2003 of providing multiple undertakings relating to the same property.
