James Lonsdale v Wedlake Bell LLP
| Jurisdiction | England & Wales |
| Judge | John Kimbell |
| Judgment Date | 19 August 2022 |
| Neutral Citation | [2022] EWHC 2169 (QB) |
| Docket Number | Case No: QB/2021/2695 |
| Court | Queen's Bench Division |
[2022] EWHC 2169 (QB)
John Kimbell QC
(sitting as a Deputy High Court Judge)
Case No: QB/2021/2695
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Sarah Haren QC (instructed by Archer, Evrard & Sigurdsson LLP) for the Claimants
David Halpern QC (instructed by Reynolds Porter Chamberlain) for the Defendant
Hearing date: 29 June 2022
APPROVED JUDGMENT
This judgment was handed down remotely by circulation to the parties' representatives by email and will be released for publication on the National Archives caselaw website. The date and time for hand-down is deemed to be 10.30 a.m. on 19 August 2022
John Kimbell QC sitting as a Deputy High Court Judge:
Introduction
On 12 July 2021, the Claimants in these proceedings issued a claim form (‘ the July Claim Form’). They allege that in June 2011 the Third Defendant, a solicitor, gave negligent advice in relation to a trust created in 1987 by the First Claimant (‘ Mr Lonsdale’) for the benefit of his family (‘ the Sparsholt Settlement’).
The First to Fourth Claimants are the current trustees of the Sparsholt Settlement (‘ the Trustees’). The Fifth to Eighth Claimants are Mr Lonsdale's four children. The Claimants are represented by Archer, Evrard & Sigurdsson LLP (‘ AES’).
The Third Defendant (‘ Ms Stanyer’) was originally a partner in the Second Defendant firm (‘ Cumberland Ellis’). Ms Stanyer moved to the First Defendant (‘ Wedlake Bell’). Cumberland Ellis was dissolved on 19 August 2020. The Fourth Defendant is the indemnity insurer of Cumberland Ellis. Reynolds Porter Chamberlain LLP (‘ RPC’) act for the Defendants.
The July Claim Form was sent to RPC by AES by email on 20 July 2021. The email stated explicitly that the Claim Form was not being formally served. The parties agreed to a stay on any substantive steps in the litigation and began discussions about mediation.
The four-month window for service of the Claim Form under CPR r. 7.5 (1) was due to expire on 12 November 2021. In September 2021, the parties agreed an extension of time for service pursuant to CPR r 2.11. The revised deadline was 1 December 2021. However, the July Claim Form was not in fact served until 19 January 2022. A further claim form (‘ the December Claim Form’) was issued on 16 December 2021. The December Claim Form has the same parties and contains the same substantive claims as the July Claim Form.
The issue before the Court is essentially whether the Claimants should be confined to proceeding with the December Claim Form or whether they are entitled to rely on the July Claim Form.
The Applications
The fact that the July Claim Form was not served on or before 1 December 2021 has led to two applications being made. These are:
7.1 An application by the Defendants dated 9 February 2022. In this application, the Defendants seek a declaration pursuant to CPR r. 11.1 that the court does not have jurisdiction to hear the claim set out in the July Claim Form and/or that service of the July Claim Form be set aside. This application was supported by a witness statement by Caroline Shiffner of RPC dated 9 February 2022.
7.2 An application by the Claimants dated 23 March 2022. In this application, the Claimants seek the following relief:
(a) a declaration that a valid extension of time has been agreed between the parties (or that the Defendants were estopped from contending otherwise) such that the July Claim Form has been validly served; alternatively
(b) a declaration that pursuant CPR r. 6.15 (2) the July Claim Form is to be treated as, served in time; alternatively
(c) an order pursuant to CPR r. 6.16 that service of the July Claim Form be dispensed with.
The Claimants' application was supported by a witness statement by Maisie Sigurdsson of AES dated 23 March 2022. This witness statement also responded to the Defendants' application.
The Factual Background
The Sparsholt Settlement created an accumulation and maintenance trust. The class of beneficiaries is defined in clause 2(a). As originally drafted, the class of beneficiaries included not only Mr Lonsdale's own children but any children of either of his two sisters, Joanna and Emma. At the time the Settlement was signed, Mr Lonsdale had only one daughter, Leonora, who was born on 14 June 1986.
The Settlement contains a wide power to vary. However, clause 10(ii) of the Settlement provides that it is not possible to vary the share of any beneficiary who has already attained the age of 25.
By August 2008, Mr Lonsdale had three further children and his two sisters had a total of five children between them. Mr Lonsdale's first child, Leonora, was by now 22 years old. Mr Lonsdale sent an email to Ms Stanyer on 4 August 2006 in which he mentioned a “major concern” he had with the Sparsholt Settlement:
“The children of my sisters were always meant to only be a longstop beneficiary but the way [the Sparsholt Settlement] is written it appears to give them equal shares with my children. That was not my intention. Do we have to do anything to make this more clear. If so, by when?”
In her reply sent on 6 August 2008, Ms Stanyer, said that she agreed with Mr Lonsdale's interpretation of the definition of beneficiaries clause. She pointed out that under clause 10 the terms of the Settlement could be varied to reduce an individual beneficiary's presumptive shares down to an amount no lower than £100. She also referred to the cut off of 25 years for the exercise of the power. The first of the children of Mr Lonsdale's sisters was due to turn 25 in 2013.
The June 2011 email
Three years later, in June 2011, Mr Lonsdale appears to have telephoned Ms Stanyer. The reason for the call appears to have been the fact that his first daughter, Leonora, was about to turn 25 later that month. In response, Ms Stanyer sent an email on 2 June 2011. In that email, she advised when Leonora reached twenty-five, she would be entitled to a quarter share along with each of her brother and sisters. The email made no reference to the children of Mr Lonsdale's sisters as beneficiaries.
It is common ground that this advice was incorrect because it ignored the fact that, as previously advised in 2008, the class of beneficiaries in the Sparsholt Settlement included not just Mr Lonsdale's four children but those of his two sisters. It would appear that until July 2018, the Sparsholt Settlement was managed exclusively for the benefit of Mr Lonsdale's children and without regard to the interest of the other beneficiaries.
The 25 July 2018 letter
In a letter dated 25 July 2018, Ms Stanyer, now at Wedlake Bell, described how the accountants appointed by the trustees had recently pointed out that there were nine beneficiaries under the Sparsholt Settlement, not just four, but that it had not been managed in a way which reflected this. The same letter referred to the fact that five of the beneficiaries (two of Mr Lonsdale's children and three of his sister Joanna's) had already reached the age of 25 and that therefore their share could not now be varied. The same information was sent to remaining three Trustees by letters dated 9 August 2018.
Mr Lonsdale was not happy when he received Ms Stanyer's email. He responded as follows:
“ As legal advisor for many years to the Sparsholt Settlement, you were asked in 2011 to advise on what steps were necessary, before Leonora became 25 on 14 June 2011, to restrict the actual beneficiaries to my four children, in accordance with my original intent.
Your advice was given in the below email on 2 June 2011. Your advice, you are now reporting, was totally wrong.
At stake is my childrens' inheritance worth £2,000,000 in shares, cash & loans plus many million pounds in future receipts from several life insurance policies…
Cumberland Ellis and now under the name of Wedlake Bell have continuously looked after my family for five generations. I reserve the option to seek separate legal advice in a claim for both professional fees and damages on behalf of myself, my children and the Trustees of the Sparsholt Settlement.”
Wedlake Bell's designated “complaints partner” (Charles Hicks) responded to Mr Lonsdale's email on 21 September 2018. He explained that new accounts were being prepared for the Sparsholt Settlement for the period from 8 June 2008 to 5 April 2018 on two alternative bases: (a) that the beneficiaries were just the four children of Mr Lonsdale and (b) as per the Settlement Deed i.e. with nine children as beneficiaries.
Mr Hicks wrote again on 24 January 2019. He attached a table illustrating the two versions of the accounts referred to in his email of 21 September 2018. In that letter he also accepted that Ms Stanyer's advice in June 2011 had been incorrect and that the children of Mr Lonsdale's sister could have been excluded in 2011 leaving only Mr Londale's own children as beneficiaries, subject only to each receiving £100.
In February 2020, the Trustees exercised their power to vary the Settlement to reduce the interest of Mr Lonsdale's youngest nephews to a £10,000 lump sum each.
The procedural chronology
In October 2020, a firm of solicitors instructed by Mr Lonsdale sent a letter before action to Wedlake Bell. The letter alleged that the advice given on 2 June 2011 was negligent. The letter went on to say that in reliance on that advice the Trustees had taken no steps to vary the shares so as to make Mr Lonsdale's children the sole beneficiaries “as they could and would have done if properly advised”.
Mr Lonsdale's case was that the...
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