Forster v Outred & Company

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE STEPHENSON,LORD JUSTICE DUNN,SIR DAVID CAIRNS
Judgment Date11 Mar 1981
Judgment citation (vLex)[1981] EWCA Civ J0311-3
Docket Number81/0108

[1981] EWCA Civ J0311-3

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

(Mr. Justice Pain)

Royal Courts of Justice

Before:

Lord Justice Stephenson

Lord Justice Dunn

and

Sir David Cairns

81/0108

1977 F 33

Eileen Betty Forster
Appellant (Plaintiff)
and
Outred & Co. (A Firm)
Respondents (Defendants)

MR. M. STUART-SMITH, QC. and MR. A. LAYTON (instructed by Messrs Barlow, Lyde and Gilbert, solicitors, London) appeared on behalf of the Respondents (Defendants).

MR. A. F. SCRIVENER, QC. and MR. J. HOOPER (instructed by Messrs Randall Rose & Phillips, solicitors, London) appeared on behalf of the Appellant (Plaintiff).

LORD JUSTICE STEPHENSON
1

On 7th January 1977 the plaintiff, Mrs. Forster, issued a writ endorsed with a statement of claim against the defendant firm Outred & Company, a firm of solicitors, claiming damages for their negligence as her solicitors. Her present solicitors served that writ and statement of claim on 24th January 1977.

2

On 9th March 1977 the defendants' solicitors served a defence and a request for particulars of the statement of claim. No step was taken in the action for two years and nine months.

3

On 14th December 1979 the plaintiff's present solicitors gave notice of intention to proceed.

4

On 27th February last year, the defendants' solicitors applied to strike out the action for want of prosecution. The Master refused to do so, but on appeal Mr. Justice Pain dismissed the action with costs on 30th July 1980 and gave the plaintiff leave to appeal to this court. It is the plaintiff's appeal that has occupied us over the last two days.

5

We have a note of the learned judge's judgment at page 18 of our bundle, which begins in this way:

"In deference to the arguments of Counsel, I should say that this matter is a good deal more difficult than the usual cases of striking out."

6

The note has been prepared by the plaintiff's solicitors but has not been submitted to the judge for approval, though it had been sent to the defendants' solicitors for agreement last September and they had suggested minor amendments to it. I am unable to understand why the correct procedure has not been followed, or why the judge has been deprived of the opportunity of correcting or approving this note. However, it has been agreed in this court by counsel, we have admitted it and it appears to be a good note which gives us a reliable idea of what the learned judge said in coming to the conclusion to which he did.

7

The learned judge had no difficulty in finding the plaintiff's (or her solicitors') delay inordinate because it was very properly conceded on behalf of the plaintiff: and the judge had no difficulty in finding it inexcusable, since the only excuse put forward was that, since the plaintiff's present solicitors were first instructed in November 1975, they had been so busy principally with four other actions which she was bringing, two of them against other firms of solicitors, that they had not had time to get on with this one.

8

The learned judge had more difficulty, but not much more, about the question of prejudice. There would seem to be little difficulty in accepting that there was real prejudice to the defendants here, additional to the prejudice that might have resulted from the lapse of over three years between the vital interview in February 1973 and the letter before action in March 1976, because the claim is based on what the defendants said or did not say to the plaintiff at a meeting in their office on 8th February 1973. The judge said that he would have struck out the action were it not for the fact that a second writ was issued on 25th March 1980. That is what has caused the unusual difficulty presented by this case, both for the judge and for this court. If the March 1980 writ was effectively issued within the limitation period, it would be an almost conclusive ground for refusing to dismiss the action: see Birkett v. James 1978 AC. 297. For where there is, or could be, a second action begun in time, it is a waste of time and money not to let the first action go on, and to dismiss it merely causes further delay and expense and increases any prejudice to the defendant and reduces the chances of a fair trial still further. The judge had real doubt whether the second writ was issued in time. At page 22 of our bundle he said:

"The real point of this is that if Mr. Phillips" (counsel then appearing for the defendants) "is right, then he has a Defence under the Limitation Act. If I strike out this action, the Plaintiff can proceed on her new writ and the defendants can argue a defence under the Limitation Act.

If I dismiss the appeal, the defendant is shut out from taking the Limitation Act defence. There is therefore no need to decide whether Mr. Phillips is right or wrong. If I were to decide which argument is correct, I would want to go into the matter a lot further. It is very much an arguable point as a matter of law.

In those circumstances, justice requires that I should strike out the existing writ and let the plaintiff proceed if she is so advised with her new writ."

9

The plaintiff is a divorced lady in her sixties, with a mother and children to house and one unfortunately improvident son. The sad story of her woes and why she holds the defendants responsible for them are set out in her statement of claim.

10

That alleges:

1. At all material times the plaintiff was the freehold owner of a property known as Home Farm, Fox Warren Park, Surrey, and the Defendants practised as Solicitors in Guildford and Weybridge.

2. On or about the 8th day of February, 1973 the Plaintiff signed a mortgage deed in respect of the said property in favour of the Hume Corporation Limited. The purpose of the said mortgage was to enable the Plaintiff's son, John Forster to borrow money from the Hume Corporation Limited to complete the purchase of an hotel known as "The Sheffield Arms".

3. The Plaintiff signed the said deed at the Defendants' office in Weybridge and one Simon Outred, a servant or agent of the Defendants, signed a deed as a witness in his capacity of the Plaintiff's Solicitor. At all material times the said Simon Outred knew that the Hume Corporation Limited required that the mortgage deed should be executed by the Plaintiff in the presence of her Solicitor and his signature followed the words "after the contents had been explained to her". The said John Forster was present when the deed was signed and the said Simon Outred had, for some time, acted as his Solicitor.

4. In the premises, the said Simon Outred was under a duty to explain fully the contents of the mortgage deed including the full implications of signing the same and should, in particular, have pointed out in such a way that the Plaintiff could understand, the fact that;

  • (a) No other long-term mortgage had been arranged by the said John Forster to replace the monies lent or to be lent by the Hume Corporation Limited in consideration of the mortgage on Home Farm.

  • (b) The mortgage covered all present and future liabilities of the said John Forster and there was a real danger that she would be liable in respect of any liability already or subsequently incurred by the said John Forster.

  • (c) No arrangements or no adequate arrangements had been made to discharge the liability of the said John Forster to the Hume Corporation Limited and/or to relieve the Plaintiff of liability under the mortgage.

  • (d) There was no safeguard to prevent the subsequent release of the charge on the "Sheffield Arms" so that Home Farm remained the only security in respect of John Forster's indebtedness to the Hume Corporation Limited.

  • (e) The Defendant was acting not only for John Forster, but also for one Benavidos, who was a joint purchaser of the "Sheffield Arms".

  • (f) The Hume Corporation Limited had agreed with the said John Forster that if he obtained a mortgage of £50,000 so that his indebtedness to them would be reduced, they were prepared to make further loans up to a total indebtedness of £40,000.

5. Alternatively, on account of the fact that the said Simon Outred had for some time acted as the Solicitor for John Forster and that there was a clear conflict of interest between him and the Plaintiff, the said Simon Outred was under a duty to send the Plaintiff to another Solicitor and/or to advise her to seek completely independent advice before signing the mortgage. The said Simon Outred knew that another firm of Solicitors, L. Dawson & Company, acted for the Plaintiff in respect of other transactions relating to Home Farm.

6. The said Simon Outred failed to explain to the Plaintiff fully or at all the matters set out in Paragraph 4" (which I have read) "including the real dangers of signing the mortgage and/or failed to advise her to seek independent legal advice as a result of which the plaintiff signed the mortgage deed in the belief that the mortgage was going to provide only temporary security for a bridging loan from the Hume Corporation Limited and that as soon as the permanent mortgage had been obtained the whole indebtedness of John Forster to the Hume Corporation Limited would be paid off and she would be released from any further liability under the mortgage.

7. Had the Plaintiff been advised by the said Simon Outred or by an independent Solicitor of the true position, she would never have granted the mortgage over "Home Farm" but by reason of the Defendants said negligence and/or breach of contract the Plaintiff became liable to and did pay to the Hume Corporation Limited the total sum of £69,281.52."

11

There is then a further reference to what she might have been told by a careful solicitor.

12

From what I...

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