James Richard Scott Brearley v Higgs & Sons (A Firm)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 07 October 2021 |
| Neutral Citation | [2021] EWHC 2635 (Ch) |
| Docket Number | Case No: BL-2018-000016 |
| Court | Chancery Division |
[2021] EWHC 2635 (Ch)
Mrs Justice Falk
Case No: BL-2018-000016
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
David Turner QC and Joseph Sullivan (instructed by Freeths LLP) for the Claimants
Michael Pooles QC and Helen Evans (instructed by Reynolds Porter Chamberlain LLP) for the Defendant
Hearing dates: 11, 14–17, 21–23, 25, 28–30 June, 2, 5–7, 9, 14–15 July 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
| CONTENTS | Paragraph |
| Introduction | 1 |
| The evidence | 16 |
| Documentary evidence | 16 |
| Witness evidence (factual): claimants | 19 |
| Witness evidence (factual): defendant | 48 |
| Expert evidence | 77 |
| Factual findings | 78 |
| Mr Brearley's employment at Pendragon | 78 |
| Pendragon and JLR | 94 |
| Claimants' pursuit of Wolverhampton Opportunity: to October 2014 | 138 |
| Claimants' pursuit of Wolverhampton Opportunity: from October 2014 | 172 |
| Interactions with Higgs prior to the Pendragon proceedings | 191 |
| The Pendragon proceedings | 249 |
| Legal principles | 333 |
| Mr Brearley's duties to Pendragon | 334 |
| Solicitors' duties: existence, scope and standard | 342 |
| Primary and secondary causation | 351 |
| The requirement for honesty in primary causation | 356 |
| Assessment of evidence | 363 |
| Liability – Discussion | 365 |
| Whether there was a breach of duty by Higgs | 365 |
| To whom duties were owed | 382 |
| Causation | 393 |
| Quantum | 437 |
| Motor industry expert evidence | 439 |
| Accountancy evidence | 451 |
| Conclusions | 456 |
| Appendix: Dramatis Personae |
INTRODUCTION
This is my judgment following the trial of a professional negligence claim brought against Higgs & Sons, a firm of solicitors (“Higgs”). The claim relates to an opportunity to develop a Jaguar Land Rover (“JLR”) dealership in Wolverhampton (the “Wolverhampton Opportunity”), which the claimants say was lost as a result of Higgs' negligent advice.
There are four claimants. The first, James Brearley, has at all material times been engaged in the automotive retail business. From 2008 he led the Stratstone division of Pendragon plc. Pendragon is a substantial automotive dealership group. Stratstone is the division of Pendragon that is engaged in the “premium” market, covering brands that include Jaguar, Land Rover, Mercedes-Benz, Porsche, Ferrari and Aston Martin. Mr Brearley left Pendragon on 31 August 2015 with the intention of pursuing the Wolverhampton Opportunity, having tendered his resignation in April of that year. Since 2016 Mr Brearley has been employed by the Inchcape group, another substantial automotive retailer. He became the CEO of Inchcape UK in January 2017.
The second claimant, JRB Automotive Ltd (“JRBA”), is a company that was incorporated on behalf of Mr Brearley as a vehicle through which the Wolverhampton Opportunity would be pursued.
The third claimant, Rodger Danks, is a property developer who was also engaged in the pursuit of the Wolverhampton Opportunity. At the time he acted with another investor, Steven (Steve) Smith, who has not participated in these proceedings. Mr Smith was the founder of Poundland and has since developed a number of other business interests.
The fourth claimant, Blue Square Penn Road Ltd (“BSPR”), was incorporated on behalf of Mr Danks. It acquired land intended to be used for the Wolverhampton Opportunity.
In broad terms, the intention was that BSPR would act as the property owning company (“Propco”) and would develop the land by constructing the required buildings with a view to a disposal of the completed development to an investor. JRBA would act as the operating company (“Opco”). It would operate the dealership once the development was completed, under a lease of the property from Propco or its successor in title.
Mr Brearley involved another senior Pendragon employee, Stephen (Steve) Venables, in the proposal. At the relevant time Mr Venables was the financial director of Stratstone and worked closely with Mr Brearley, sharing an office with him in Wolverhampton.
The claimants say that they entered into a retainer with Higgs in late January 2015 pursuant to which Higgs would provide all necessary legal advice in connection with the Wolverhampton Opportunity. Higgs dispute the scope of the retainer, and also deny that they owed any duties to Mr Danks individually.
Prior to instructing Higgs, preparatory steps had been taken by the claimants in connection with the Wolverhampton Opportunity. The precise extent of those steps has been a matter of significant dispute. The claimants' case is that they only started to pursue the Wolverhampton Opportunity in early October 2014, after Pendragon had decided not to do so itself.
In September 2015 Mr Brearley received a “cease and desist” letter from Pendragon regarding his pursuit of the Wolverhampton Opportunity, threatening proceedings unless undertakings were provided. Pendragon alleged that Mr Brearley had taken steps to pursue the Wolverhampton Opportunity for his own benefit. Pendragon further alleged that Mr Brearley took steps to dissuade it from pursuing the Wolverhampton Opportunity itself.
Mr Brearley sought advice from Higgs. No undertakings were provided at that stage and Pendragon commenced proceedings against Mr Brearley, JRBA and also Mr Venables (who became separately advised). Interim undertakings were subsequently provided. Higgs continued to represent Mr Brearley and JRBA until February 2016, at which point Higgs terminated the retainer and another firm, The Wilkes Partnership LLP (“Wilkes”), was instructed. A settlement was agreed with Pendragon in March 2016 in which, among other things, Mr Brearley agreed not to pursue the Wolverhampton Opportunity. A JLR dealership was eventually developed on the proposed site by another dealership chain, Jardines, and opened in October 2018. For ease of reference, references to the “Pendragon proceedings” in this judgment encompass both the litigation initiated by Pendragon and the preceding correspondence commencing with the cease and desist letter.
The claimants allege that Higgs was negligent in a number of respects, including failing to advise that Mr Brearley's contractual obligations and other duties to Pendragon could preclude him from pursuing the Wolverhampton Opportunity, and wrongly advising him not to give the undertakings requested in the cease and desist letter. Higgs denies acting negligently and (as already mentioned) disputes the scope of the retainer. It further alleges that Mr Brearley failed to provide complete and accurate instructions about his activities. In particular, Higgs asserts the truth of allegations made in the Pendragon proceedings that Mr Brearley was involved in Pendragon's own assessment of the Wolverhampton Opportunity and took steps to dissuade Pendragon from pursuing it. Higgs also maintains that Mr Brearley was not concerned about the provisions of his service contract and took the view that JLR would exert pressure on Pendragon to ensure that he was permitted to pursue the Wolverhampton Opportunity.
The claimants maintain that, but for Higgs' breaches, they would have successfully pursued the Wolverhampton Opportunity. They claim substantial lost profits and wasted costs in respect of the Pendragon proceedings. (An additional claim for costs in respect of the Wolverhampton Opportunity was not pursued in closing submissions.) Higgs' position is essentially that, even if a breach of duty were established, the chain of causation is broken. The claimants have failed to establish on a balance of probabilities that a different course of action would have been adopted if different advice had been given, or that in that event there would have been a real and substantial chance of the Wolverhampton Opportunity coming to fruition. There is also a significant dispute about the potential returns available from the Wolverhampton Opportunity.
The trial was conducted during the Covid-19 pandemic largely on a “hybrid” basis (having been delayed from 2020 for pandemic related reasons), with the advocates and a limited number of additional members of the legal teams present in court, and the parties and their other legal representatives participating remotely. The most significant witnesses, Mr Brearley and Mr Danks for the claimants, and Adrian Cutler and Damian Kelly for Higgs, gave evidence in person. Other witnesses generally gave evidence remotely. Identified members of the public and press were able to access the proceedings via a link provided by my clerk, use of which was monitored. I am grateful to the legal teams, led by David Turner QC for the claimants and Michael Pooles QC for Higgs, for their assistance throughout.
The Appendix to this decision sets out a dramatis personae, to assist the reader.
THE EVIDENCE
Documentary evidence
In broad terms there were two main categories of significant documentary evidence. The first was evidence relating to the advice that Higgs provided, or allegedly failed to provide, including material indicating what information was available to them for that purpose. The second, most of which predated the first chronologically, was evidence on which...
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