Lillo Sciortino v Marc Beaumont

JurisdictionEngland & Wales
JudgeJarman
Judgment Date07 February 2020
Neutral Citation[2020] EWHC 189 (Ch)
CourtChancery Division
Docket NumberCase No: CH-2019-000134
Date07 February 2020

[2020] EWHC 189 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

CHANCERY DIVISION (APPEALS)

On appeal from the order of Master Teverson dated 29 April 2019

The Rolls Building

Fetter Lane, London, EC4 1NL

Before:

HIS HONOUR JUDGE Jarman QC

Case No: CH-2019-000134

Between:
Lillo Sciortino
Appellant
and
Marc Beaumont
Respondent

Mr Alexander Hill-Smith (instructed by Osmond & Osmond Solicitors) for the claimant

Mr Nicholas Davidson QC (instructed by Clyde & Co) for the defendant

Hearing date: 15 January 2020

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

HIS HONOUR JUDGE Jarman QC

JUDGE Jarman QC:

1

For ease of reference I shall refer to the parties to this appeal as claimant and defendant respectively, as they are in the claim. By a claim form issued on 25 October 2017, the claimant alleges that the defendant, a barrister, was negligent in representing him in bankruptcy proceedings in 2011. One of the allegations is that the defendant's written advice dated 26 October 2011 that a proposed appeal by the claimant had a good (55% to 60%) chance of success was negligent as it is alleged that such an appeal was hopeless. The subsequent application for permission to appeal was dismissed, which led to an increase in the amount payable to discharge the bankruptcy. On 29 April 2019, Master Teverson struck out this allegation on the basis that it was statute barred, as although the advice was given within six years of the issue of the claim, the master took the view that it was merely confirmatory of advice given in May and earlier in October 2011.

2

The claimant accepts that any claim in respect of those earlier advices is statute barred, but now appeals against the striking out, and says that it is arguable that the 26 October 2011 advice gave rise to a new and separate cause of action and should be permitted to proceed to trial. The defendant has filed a respondent's notice, seeking to support the strike out on the alternative basis that even apart from the limitation point, the allegation that no reasonably competent barrister would have given such advice has no real prospect of success. The master did not strike out the allegation on this basis, saying that that issue was not purely about the merits of a legal argument, but about the appropriateness of the advice in context.

3

The background is that the claimant was made bankrupt in June 2007 on a petition by HMRC. At the time he owned his home in Woodham Lane, New Haw, Surrey (the property). In June 2010 the trustee in bankruptcy applied for possession and sale of that property.

4

Section 283A of the Insolvency Act 1986 (the 1986 Act) requires that such applications in respect of the bankrupt's principal dwelling are made within a reasonable timescale. The relevant provisions are as follows:

“(1) This section applies where a property comprised in the bankrupt's estate consists of an interest in a dwelling house which at the date of the bankruptcy was the sole or principal residence of –(a) the bankrupt…

(2) At the end of the period of three years beginning with the date of the bankruptcy the interest mentioned in subsection (1) shall —

(a) cease to be comprised in the bankrupt's estate, and

(b) vest in the bankrupt (without conveyance, assignment or transfer).

(3) Subsection (2) shall not apply if during the period mentioned in that subsection —

(a) the trustee realises the interest mentioned in subsection (1),

(b) the trustee applies for an order for sale in respect of the dwelling house,

(c) the trustee applies for an order for possession of the dwelling house,

(4) Where an application of a kind described in subsection (3)(b) to (d) is made during the period mentioned in subsection (2) and is dismissed, unless the court orders otherwise the interest to which the application relates shall on the dismissal of the application —

(a) cease to be comprised in the bankrupt's estate, and

(b) vest in the bankrupt (without conveyance, assignment or transfer).

(6) The court may substitute for the period of three years mentioned in subsection (2) a longer period —

(a) in prescribed circumstances, and

(b) in such other circumstances as the court thinks appropriate.”

5

The trustee's application was listed before District Judge Stewart on 19 July 2010. On 6 July, the trustee's solicitors wrote to the court saying that both parties had agreed that the application should be adjourned because the claimant was challenging the HMRC debt. They requested that the hearing should be vacated. Due to an oversight, a copy of that letter was not put before the district judge before the application was called on. The district judge ordered that the application be “…hereby struck out upon the non-attendance of the parties.”

6

Upon being served with that order, the trustee's solicitors wrote again to the court on 22 July referring to their earlier letter. District Judge Stewart was made aware of this correspondence, and on 29 July 2010 made a further order as follows:

“1. The hearing on 19 July 2010 be vacated.

2. The order made on 19 July is set aside.

3. The matter be relisted on …11 October 2010…”

7

The application was not heard until 7 March 2011, by which time a further insolvency practitioner had been appointed as joint trustee. The application was successful and an order for possession and sale of the property was made. The claimant, who until then had not been represented by lawyers, instructed a solicitor, Rachel Bastin, at Kingston and Richmond Law Centre. She applied for legal aid to instruct a barrister, which was granted by the Legal Services Commission (LSC) on an emergency basis with a cost limitation on 7 April 2011. She then arranged a conference with the defendant on 20 April 2011.

8

In that conference, of which there is full attendance note, the defendant said that he thought the order made on 19 July 2010 was caught by section 283A (4), and that upon striking out, the property vested in the claimant. He considered the 29 July 2010 order but pointed out that at no stage had the court said that the property was not to revest in the claimant. The defendant also said that an appeal against the March 2011 order was out of time, but that an application could be made to extend time. He said that if the trustee fought the appeal and it was lost, then the equity in the property would be eroded away, but that an appeal could be launched, and the parties could then negotiate. There was discussion that the trustee's own costs were over £20,000 plus solicitor's costs, and about what sort of offers should be made and how the claimant could raise the money. It was agreed that there would be an immediate application for permission to appeal, which the defendant would draft. The defendant said a fight would be risky, but it was winnable.

9

By email dated 4 May, the defendant informed Ms Bastin that he had settled the papers for an appeal, including a skeleton argument. In the email, the defendant said this:

“I have now settled the papers for an appeal. This raises a novel point of law. It has reasonable prospects of success in my view. However, the other side will fight this appeal. They will be upset by it. I strongly advise that we try to settle with them.”

10

He asked for breakdowns of costs and a figure which the claimant could raise. He ended the email as follows:

“Please remember that if we fight this case and do not succeed, there is a real risk that this will drive up the costs of the bankruptcy and that the Trustee will seek to get a costs order enforced against the proceeds of the sale of the house. The best time to settle this case is if and when permission to appeal is granted.”

11

On 23 May 2011 Ms Bastin wrote to the claimant to confirm the advice given in conference, in which she repeated that the defendant had referred to the litigation risk, although an appeal was winnable, and had encouraged the claimant to do a deal.

12

The application for an extension of time came before Vos J, as he then was, who considered that matter on the papers and granted the extension on 14 July 2011. He listed the application for permission to appeal for a hearing and gave directions for the trustees to file evidence. He stayed the order of March 2011 pending the determination of the appeal. In his written reasons he said this:

“The points made in the Appellant's skeleton argument require a detailed response and explanation from the Respondent. In particular, the Respondent must explain (a) why his solicitors did not apparently contemporaneously copy to the Appellant their letters dated 22 nd and 27 th July 2010 to the Court, and (b) why they did not think it appropriate to draw the significance of section 283A(4) of the Insolvency Act 1986 to the attention of the Appellant before the hearing on 7 th March 2011, bearing in mind that he was acting in person.

The stay is appropriate since there appears, in the absence of an explanation from the Respondent, to be a properly arguable point to found the appeal.

I have not granted permission to appeal at this stage in case there is some answer to the Appellant's point, either in fact or law, that does not appear from the materials placed before the court by the Appellant. In particular, I can see that it may be arguable that it was open to the District Judge to withdraw his order of [19 th] July 2010, and that the effect of his doing so was to reverse the effect of section 283A(4). This will, if the Respondent wishes, need to be argued at the hearing.”

13

In September 2011 a respondent's notice was served in which the trustees stated that the March 2011 order should be upheld, but alternatively asked the court to review the order of 19 July 2010 under ...

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