McCarroll v Statham Gill Davies (A Firm)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Pill,Lord Justice Latham,Mr Justice Morland |
| Judgment Date | 01 April 2003 |
| Neutral Citation | [2003] EWCA Civ 425 |
| Docket Number | Case No: A2/2002/2538 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 April 2003 |
[2003] EWCA Civ 425
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(MR JUSTICE GRAY)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
Lord Justice Pill
Lord Justice Latham and
Mr Justice Morland
Case No: A2/2002/2538
Richard Arnold QC and Richard Southall (instructed by Jens Hills) for the Appellant
Andrew Sutcliffe QC and David Turner (instructed by Kennedys) for the Respondents
This is an appeal, with the permission of the judge, against the decision of Gray J dated 28 November 2002 granting Statham Gill Davies (a firm) ("the respondents") summary judgment against Mr Anthony McCarroll ("the appellant") on their limitation defence.
The facts
The appellant was formerly drummer with the band Oasis. I gratefully adopt the learned judge's description of the nature of the claim:
"… 3. The claim is for damages for negligence on the part of Mr Statham of the defendant firm in his capacity as solicitor acting for the claimant [that is, the appellant]. He was also acting for the other members of the band. In that capacity Mr Statham negotiated the terms of a recording contract between the band and Sony which was signed on 22 October 1993 ("the Sony Agreement"). The essence of the claim is that, whether by his acts or his omissions or both, Mr Statham brought about a conflict of interest between the various members of the band because the Sony Agreement wrongly favoured Noel and Liam Gallagher over the other members of the band including the claimant. It is asserted that Mr Statham acted negligently in failing to ascertain from the members of the band whether or not the agreement properly reflected their position; failed to advise the claimant to seek independent legal advice in relation to the conflict of interest which had arisen and failed to point out that the effect of the Sony Agreement was that the name "Oasis" was owned by the Gallagher brothers and left the claimant vulnerable to instant dismissal without compensation. It is further contended that Mr Statham should have advised the claimant of the need for a partnership agreement to regulate the relationship between the members of the band.
4. Although not relevant for the purposes of the present application, I should record the fact that Mr Statham repudiates the suggestion that he was negligent in the above or any other respects.
5. The nature of the case advanced on behalf of the claimant as to the damage suffered is that, but for the negligence of Mr Statham, he would not have signed the Sony Agreement but would have obtained independent legal advice and secured written terms of partnership which would have protected him from the risk of being summarily expelled from the band without compensation. The terms which the claimant contends would have been agreed with Sony are pleaded in his Response to the Request for Further Information."
Material allegations of negligence against the respondents are strongly and comprehensively included in the pleadings. If the action were to proceed, arguments would plainly arise upon causation as well as upon the issue, strongly contested, as to whether breaches of duty had occurred.
Oasis were formed in 1991 and Mr Noel Gallagher instructed Mr Statham to act on their behalf in the preparation of a recording contract. The group's manager was Mr Russell assisted by Mr McKinlay. In July 1993, Mr Statham asked Mr McKinlay whether there were any key members of the group and he replied that the Gallaghers were the key members. Early negotiations for a recording contract were with Creation Records, an independent record company, but it was later agreed that the group should enter into a recording agreement with Sony, with Sony licensing the UK rights to Creation Records. On 20 October 1993, Mr Statham told Sony's solicitor that "his clients" did not want the appellant to sign the agreement because he was not a full member of Oasis and the agreement was prepared with the appellant's name omitted.
However, on 22 October all members of the group, including the appellant, were present at a meeting and agreed to the appellant also signing, whereupon his name was added to the agreement. The appellant claims that it was not brought home to him that the combined effect of the absence of a written partnership agreement and the leaving member and group name ownership provisions in clauses 22 and 23 of the agreement meant that he was vulnerable to the agreement being construed as a partnership-at-will so that he could be expelled without notice or compensation. It was provided that the name Oasis was jointly owned by Noel and Liam Gallagher. Its use by the appellant depended on his remaining with them as a member of the group.
The agreement was signed and the first album recorded by Oasis under it was released in August 1994 and was very successful. Sony called for a second album but, before recording began, the appellant was, on 28 April 1995, summarily expelled from the group.
The appellant first brought an action against the other four members of Oasis who contended that the group was a partnership-at-will. They relied on clauses 22 and 23 of the recording agreement The action was settled shortly before trial, the appellant receiving only a modest lump sum payment in respect of his future rights to royalties upon recordings made before his expulsion from the group. He issued a claim against the respondents on 24 April 2001, that is just within a period of six years from his expulsion but considerably more than six years from the signing of the Sony Agreement on 22 October 1993. The defence denied liability and also relied on the provisions of the Limitation Act.
Section 2
Section 2 of the Limitation Act 1980 ("the 1980 Act") provides that "an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued". Lord Nicholls stated in Nykredit Plc v Edward Erdman Ltd [1997] 1 WLR 1627 at 1630C:
"In cases in tort the cause of action arises, not when the culpable conduct occurs, but when the plaintiff first sustains damage. Thus the question which has to be addressed is what is meant by 'damage' in the context of claims for loss which is purely financial (or economic, as it is sometimes described)."
The first issue in the present appeal is when the appellant first sustained damage; he contends that it was when he was expelled from the group and the respondents contend that it was when the recording agreement with Sony was made.
In Nykredit, Lord Nicholls expressed agreement with Stephenson LJ who in Forster v Outred & Co [1982] 1 WLR 86 had, at p 98, accepted the submission of Mr Stuart-Smith QC recorded at p 94:
"What is meant by actual damage? Mr Stuart-Smith says that it is any detriment, liability or loss capable of assessment in money terms and it includes liabilities which may arise on a contingency, particularly a contingency over which the plaintiff has no control; things like loss of earning capacity, loss of a chance or bargain, loss of profit, losses incurred from onerous provisions or covenants in leases. They are all illustrations of a kind of loss which is meant by 'actual' damage. It was also suggested in argument … that 'actual' is really used in contrast to 'presumed' or 'assumed.' Whereas damage is presumed in trespass and libel, it is not presumed in negligence and has to be proved. There has to be some actual damage."
Having considered the authorities, the judge's conclusion, at paragraph 39, was that the appellant "did suffer relevant and measurable damage at the date when the Sony Agreement was executed. I am not persuaded that the appellant has a real prospect of establishing the contrary at any trial. It follows that by virtue of section 2 of the 1980 Act, the cause of action accrued more than six years before these proceedings were issued".
Nykredit was an action by lenders following a negligent valuation of property on the strength of which they had advanced money. In considering whether damage had been suffered, a comparison was to be made between the incorrect value ascribed to the property by the valuers and the true value of the property at the date of valuation. Having considered the facts, Lord Nicholls stated, at p 1632C: "The basic comparison gives rise to issues of fact. The moment at which the comparison first revealed a loss will depend on the facts of each case. Such difficulties as there may be are evidential difficulties, not difficulties in principle".
Lord Nicholls also distinguished between a decision as to when damage is first sustained and decisions involving its assessment. He stated at p 1633C:
"The amount of a plaintiff's loss frequently becomes clearer after court proceedings have been started and while awaiting trial. This is an everyday experience. There is no reason to think that the approach I have spelled out will give rise to any insuperable difficulties in practice. In their practical conduct of litigation courts are well able to ensure that assessments of damages are made in a sensible way. It is not necessary, in order to achieve a sensible and fair result, to go so far as asserting that the plaintiff has no cause of action, and hence may not issue a writ, until the assessment can be made with the degree of precision that accompanies a realisation of the security. Further, within the bounds of sense and reasonableness the policy of the law should be to advance, rather than retard, the accrual of a cause of action."
For the appellant, Mr...
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