Gold v Mincoff Science & Gold
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON,Lady Justice Arden,LADY JUSTICE ARDEN,MR JUSTICE BUCKLEY |
| Judgment Date | 19 July 2002 |
| Neutral Citation | [2002] EWCA Civ 1157 |
| Docket Number | A3/2001/0264 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 July 2002 |
[2002] EWCA Civ 1157
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Neuberger)
Royal Courts of Justice
Strand
London WC2
Lord Justice Peter Gibson
Lady Justice Arden
Mr Justice Buckley
A3/2001/0264
MR NICHOLAS DAVIDSON QC and MR ANTHONY DEFREITAS (Instructed by Crutes, 7 Osborne Terrace, Newcastle on Tyne NE2 1RQ) appeared on behalf of the Appellant.
MR LEOLIN PRICE QC and MR DAVID AINGER (Instructed by Narj Gilbert Morse, 53 Grey Street, Newcastle on Tyne, NE1 6EE) appeared on behalf of the Respondent.
Friday, 19th July 2002
I will ask Lady Justice Arden to give the first judgment.
This is an appeal by the defendant's solicitors in this action (whom I will call "MSG") against a ruling made by Neuberger J on 30 November 2000 at the start of the trial of this action, and against certain issues of principle and fact decided by him in his written judgment at the end of the trial dated 21 December 2000. The judge's judgment is now reported at [2001] Lloyds PNLR 423. The ruling to which I have referred was a ruling giving the respondent to this appeal and claimant in the action, Mr Gold, permission to amend his particulars of claim and to serve a reply.
Background
In this action Mr Gold seeks damages for professional negligence against MSG. In 1984, Mr Gold, his sister-in-law, Mrs Pamela Gold, and a Mr Martin entered into a partnership for the purposes of investing in and developing property. The partnership borrowed money from a bank now known as AIB Group (UK) Plc (whom I shall call "the Bank"). From time to time Mr Gold and Mr Martin entered into mortgages with the Bank and in 1993 these mortgages were restructured. At all material times the mortgages contained an unusual clause which rendered Mr Gold jointly and severally liable with Mr Martin to the Bank, not only for the debts of the partnership but also Mr Martin's indebtedness personally. (This clause has been referred to as "the liability clause"). MSG advised Mr Gold in relation to these mortgages and the restructuring but did not draw his attention to the liability clause.
In 1996 the Bank brought proceedings against Mr Gold and Mr Martin seeking repayment of all amounts due by them to the Bank, including sums owed personally by Mr Martin. On 15 March 1999, Jacob J gave judgment for the Bank. An appeal was dismissed by this court on 27 June 2000 (see AIB Group (UK) Ltd v Martin [2000] 2 All E.R. (Comm) 686). A further appeal was dismissed by the House of Lords in December 2001 (see AIB Group (UK) Ltd v Martin [2002] 1 WLR 94). The present proceedings against MSG were started on 31 March 1999. In effect, Mr Gold seeks an indemnity against the judgment which has been entered against him in favour of AIB.
MSG admits liability. However, each transaction on which they advised gave rise to a separate cause of action, and accordingly they contended before Neuberger J that all causes of action arising prior to 31 March 1993 were statute barred. They further contended, with respect to the causes of action arising after the 1993 restructuring, that Mr Gold had suffered no loss because he was already liable under the liability clause. That applied also to the 1993 restructuring itself.
The only issues which arise on this appeal are the judge's "amendment" ruling (to which I have referred above) and his decision on section 14A of the Limitation Act 1980, a defence added as a result of that ruling. Section 14A of the Limitation Act 1980 enables Mr Gold to rely on events occurring more than six years prior to the commencement of the proceedings against MSG if he can show that the earliest date on which he had the knowledge required for bringing an action in respect of the relevant damage and the right to bring such action occurred within the three years immediately prior to the commencement of the action. Section 14A defines the requisite knowledge for this purpose.
The judge decided the section 14A point against MSG and held that in all the circumstances Mr Gold's claim in respect of the pre-restructuring mortgages was not statute-barred. He proceeded to value at 55% the loss of the chance of negotiating an arrangement with AIB that he should be liable only for the partnership debts. But as Mr Davidson QC, for MSG, has properly pointed out to us on this appeal, it would not avail MSG to succeed in upsetting the judge's decision on the application of section 14A to the facts of this case unless he is able to disturb another conclusion of the judge. Mr Leolin Price QC, for Mr Gold, did not object to Mr Davidson challenging that conclusion, and we gave leave for the point to be taken although not contained in the Notice of Appeal.
The conclusion in question is at paragraph 104 of the judge's judgment. The judge concluded that, had MSG not been negligent in failing to advise Mr Gold as to the effect of the liability clause at the time of the 1993 restructuring, they would have been under a duty to advise Mr Gold that they had been negligent in respect of the earlier mortgages. Mr Gold, therefore, had a new cause of action based on the earlier mortgages, which arose at the time of the 1993 restructuring; and the damages which would result from the breach of that duty were effectively the same as if he succeeded under section 14A.
We indicated at the end of the argument on the amendment ruling that we were not in the appellant's favour. Mr Davidson then presented his argument on the "paragraph 104" issue. We also indicated at the end of that argument that we were not in the appellant's favour. This judgment contains my reasons for those conclusions. The court then proceeded to hear a cross-appeal brought by Mr Gold which challenged the judge's finding that Mr Gold was entitled to a 25% interest in the partnership. This conclusion is relevant for the assessment of damages. Accordingly, I will deal with the three issues in turn: the amendment ruling, the paragraph 104 point and then the partnership share.
The amendment ruling
At the outset of the trial Mr Gold sought leave to amend the claim and leave to serve a reply for three purposes:
(i)to assert reliance on section 14A of the Limitation Act 1980;
(ii)to assert reliance on section 32 of the Limitation Act 1980;
(iii)to assert a separate cause of action in regard to the failure to advise Mr Gold that he arguably had a cause of action in relation to MSG's failure to advise on the liability clause in the earlier mortgages. He said that that should have occurred in 1993.
In his judgment at the end of the trial, the judge ruled in Mr Gold's favour on section 32 of the Limitation Act 1980, and MSG have appealed against his judgment on that point. However, the parties are agreed about the outcome of their appeal against that ruling in the light of the subsequent decision of the House of Lords in Cave v Robinson Jarvis and Rolfe [2002] UKHL 18. Accordingly, we have not been concerned with that issue and nothing turns on the amendment ruling as regards the new defence raised under section 32.
The application was made at the outset of the trial and dealt with in the course of the opening statement by Mr Davidson on behalf of MSG. In his submissions, MSG very properly accepted that while these new defences should have been pleaded, they required no new evidence that would not otherwise have been called at the trial and would not involve any prejudice to MSG in the conduct of the trial. However, Mr Davidson on behalf of MSG went on to submit that the amendments would change the whole shape of the case. He added:
"So far, if anyone has been giving … and I say nothing about this … any consideration to what commercially might be done about this litigation in the round, that will have been done on the basis of the existing pleadings rather than the basis of the new pleadings. It may be that your Lordship will take the view that this is merely a matter which can be sorted out in relation to costs after the event … [However] it does not follow in any particular case that the court can ever be sure that it knows everything that will have happened. Again, I am being very careful to say nothing about this case."
The judge's reply to that submission makes it clear that the judge understood that there had been without prejudice negotiations because his next observation was that:
"One expects that there might have been negotiations, the nature of which it is extremely difficult to think about … and I should not be thinking about any way … but I take the point that everybody has been proceeding not merely on the stage but behind the scenes on the basis of the claimant's case as pleaded."
Discussion then proceeded between counsel and the judge on the various complexities that might arise on the new limitation defences. Mr Davidson also submitted that the only real beneficiary of the amendment at the end of the day would be the Bank. The judge's response to that point was that a very substantial judgment had been entered against Mr Gold. Mr Davidson tells us, however, that the Bank has not proceeded to enforce that judgment by starting bankruptcy proceedings against Mr Gold. Nonetheless, as the judge said, it is a very substantial judgment. Mr Davidson also pointed out to the judge that MSG had not been a party to the action brought by the Bank and so had been unable to influence the course of that action, in particular by causing consideration to be given to a claim for rectification of the liability clause.
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