Harris v Manahan

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE WARD,LORD JUSTICE EVANS
Judgment Date24 May 1996
Judgment citation (vLex)[1996] EWCA Civ J0524-8
Date24 May 1996
Docket NumberFAFMI 95/1784/F

[1996] EWCA Civ J0524-8

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE FAMILY DIVISION

(MR JUSTICE CONNELL)

Royal Courts of Justice

Strand

London WC2

Before:

The Master of the Rolls

(Sir Thomas Bingham)

Lord Justice Evans

Lord Justice Ward

FAFMI 95/1784/F

Kathleen Harris
Petitioner/Appellant
and
Winston Michael Manahan
Respondent

MR N CARDEN (Instructed by Wynne Baxter Godfree, Brighton BN1 1GF)) appeared on behalf of the Appellant

The Respondent appeared in person (not on 24.5.96)

LORD JUSTICE WARD
1

This is an appeal with the leave of Connell J. against his order dismissing the appellant's application which was to set aside an order dated 17th November 1993 "on the ground that it is vitiated by the bad legal advice given to her by her then legal advisors."

2

That November 1993 order was a consent order made in the ancillary relief proceedings following the dissolution of the marriage of the appellant and her husband, the respondent. They had married in 1962 and separated 30 years later in September 1992. They have 5 adult children. Decree nisi of divorce was pronounced in February 1993 on the wife's petition and she pursued her claim for ancillary relief. Affidavits of means were exchanged. The court appointed 17th November 1993 as a date for a pre-trial review, the main purpose of which was, we were told, to give the parties an opportunity to explore the possibility of settling the dispute. Both parties attended, the wife being represented by her solicitor and the husband by solicitor and counsel. Negotiations took place leading to an agreement which was approved by the District Judge who then made the order by consent, the material elements of which were:—

3

1. The former matrimonial home was to be sold forthwith and:—

"The net proceeds of sale (defined as gross sale price less the outstanding charges to Woolwich Building Society and Barclays Bank Plc and the reasonable costs of estate agents and solicitors incurred in the sale) be divided as follows:—

(a). In the event that said matrimonial home be sold for more than £185,000 the respondent to receive £25,000 with the balance to the petitioner;

or

(b). In the event that the said matrimonial home is sold for £185,000 or less, the respondent to receive a sum calculated as 12.82% of the gross sale price, and the petitioner to receive the balance."

4

2. The division of the proceeds of sale was to effect a clean break between the parties and there were, accordingly, further provisions in the order for the dismissal of their respective claims for ancillary relief, which included the wife's claim for periodical payments, and further provision for the dismissal of their claims under the Inheritance (Provision for Family and Dependants) Act 1975, with no order for costs.

5

The background to the making of that order is very shortly this: At the time of the separation in September 1992 the matrimonial home was thought to be worth £240,000 and was subject to a first charge in favour of the building society, approximately £87,000 being outstanding on the mortgage at that time. Following the separation, the respondent husband ceased to make any further mortgage repayments notwithstanding his employment on the Channel Tunnel earning £500.00 per week. The parties owed about £7,000 to Barclays Bank and in June 1993 voluntarily charged the property to secure that joint loan. She owed Lloyds Bank about £10,000, and he owed them nearly £8,000. In November 1993 the bank obtained charging orders against the property in respect of those debts.

6

As Connell J. observed, "from late 1992 onwards the story becomes somewhat familiar." It was not possible to sell the property for £240,000. By April 1993 the wife had reduced the asking price to £200,000, which substantially reduced the net capital which would have become available on any sale. In June 1993 an offer was in fact received to purchase the property for £195,000, completion being sought by October 1993. The husband did not object to that sale. The wife's solicitors were, however, advising that contracts could not be exchanged until there was agreement between husband and wife resolving the claims for ancillary relief. The offerors became impatient and set a deadline of 8th November 1993 but notwithstanding this ultimatum, the wife's solicitors continued to advise her that she should not sell until the ancillary relief proceedings had been concluded. The prospective purchasers withdrew. A week or so later, the consent order was made.

7

Had it been possible to sell for £195,000, then the husband would have received his £25,000 leaving, it is said, some £36,500 available to the wife, about £3,000 of which would have been needed to discharge miscellaneous debts. Taking her costs of £4,500 into account, she would have been left with a net sum of about £29,000. After payment of his bank borrowing, his debts and costs, the husband would have had between £10,000 and £15,000 net. But he had his income and although a man presumably in his 50's, he still had a good earning capacity. She was 51 and had no earnings of any significance nor any prospect of any. It would not appear to me ever to have been an appropriate case for a clean break and it is no surprise at all that she has commenced proceedings against her former solicitors seeking damages for their negligently advising her to agree to the dismissal of her claim for periodical payments when she had no obvious sources of income or means of support and was receiving no significant capital sum to compensate her for the dismissal of her maintenance claims. She also alleges that negligent advice cost her the chance of concluding a sale at £195,000. In the events that have occurred, the loss of that sale was significant. Despite all her best endeavours the wife was unable to secure any other purchaser. Meanwhile the mortgage arrears which had been mounting for over a year continued to rise and the building society foreclosed in April 1994 and a possession order was made on 3rd August 1994. The mortgagees remained sympathetic and agreed a stay on the order for possession until February 1995. They granted a further indulgence because there was some prospect in the spring of last year that the property might sell for £170,000. It was not to be. We were informed by counsel that the building society have now taken possession. They have marketed the property for £150,000 but a sale at that price has fallen through. Even if that price is achieved today there would be a deficit because there would fall to be deducted legal and estate agents' costs, say £5,000, the mortgage redemption figure of about £117,000, the Barclays Bank charge of about £11,000 and the Lloyds Bank loans of about £21,000. There will be no lump sum for either party. The effect of the order would be that the wife would have nowhere to live and would be dependent on income support. Her claim for damages for negligence is being met with the not very attractive defence that the solicitor was entitled to an advocate's immunity from suit in respect of any incompetence he displayed in the conduct of the proceedings at court. It is an altogether sorry tale indeed.

8

One approaches this appeal, therefore, with considerable sympathy for the petitioner but sympathy may not be enough.

9

It was not until 4th April 1995 that the appellant instituted these proceedings by a notice of application issued in the County Court of her intention to apply to the District Judge for orders that the consent order be set aside on the ground I have set out and also for an order that the application be transferred to the High Court to be heard by a judge thereof. That was duly ordered by the District Judge who transferred the application to the Divorce Registry for listing before a High Court Judge "for argument on the preliminary point as to whether the ground pleaded in the application is within the classes entitling a party to seek to re-open a consent order of this nature." In that way it came before Connell J.

10

Bearing in mind the pending negligence action, Connell J. held:—

"Naturally, it would not be appropriate for me to venture an opinion as to whether or not the advice given was negligent, because I had not heard any submission on behalf of the solicitors in that respect and I do not know what their defence to the charge may be. However, I can say, to put it at its lowest, that the advice given to the wife, on the basis of the facts as described herein, was plainly bad advice."

11

I agree. The learned judge found, and again I entirely agree, that:—

"The compromise of the claim for periodical payments after a 30 year marriage is a compromise which should only be agreed to by a wife who is confident that she will be left with sufficient resources to house and maintain herself in the future. Likewise, advice to reject an offer for £195,000, i.e. close to the asking price, in a volatile market, has, in the result, been shown to be bad advice."

12

The volatile market conditions prevailing at that time created risks which have now become realities that:—

(a) The slump in the property market would further depress property prices thereby reducing the amount upon which the wife was to be dependent for establishing her home and/or for her support.

(b) Mortgage arrears would continue to accrue through the husband's continuing default but, since the husband took his share either as the fixed price of £25,000 or as a percentage of the gross selling price, the mounting debts would be borne by the wife alone.

13

It was, therefore, on any view an improvident and ill-advised bargain for the wife to have struck.

14

The question in the appeal is whether bad legal advice...

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