Melbourne Mortgages Limited and Cavenham Financial Services Limited v Turtle and others pratising as Carson and McDowell Solicitors
| Jurisdiction | Northern Ireland |
| Judge | Deeny J |
| Judgment Date | 30 November 2004 |
| Neutral Citation | [2004] NIQB 82 |
| Date | 30 November 2004 |
| Court | Queen's Bench Division (Northern Ireland) |
| Year | 2004 |
1
Neutral Citation no. [2004] NIQB 82
Ref:
DEEC5082
Judgment: approved by the Court for handing down
Delivered:
30.11.04
(subject to editorial corrections)
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
________
QUEEN’S BENCH DIVISION
________
MELBOURNE MORTGAGES LIMITED
First Plaintiff
And
CAVENHAM FINANCIAL SERVICES LIMITED
Second Plaintiff
-v-
TURTLE AND OTHERS PRACTISING AS CARSON AND MCDOWELL
SOLICITORS
Defendants
________
DEENY J
[1] This action raises interesting questions relating to the duties owed by a
firm of solicitors to a business client. The plaintiff lenders contend that the
defendants were negligent and in breach of their contract for services in
failing to draw to the attention of the plaintiffs, at the beginning of their
relationship, a flaw in their documentation which would render it
unenforceable, or, at least, to have drawn that to their attention after the
Court of Appeal in England had elucidated this error in loan agreements.
The facts
[2] The first plaintiff Melbourne Mortgages Limited is a company which
lends money to people, normally by way of second mortgages secured on
their homes. The second plaintiff, Cavenham Financial Services Limited is
part of a group which manages the arrangement of these loans for a number
of companies including the plaintiff. The principal company in the group
2
appears to be Sheldon and Stern Management Services Limited which is
owned by members of the Sheldon and Stern families. In the course of the
hearing the plaintiffs were referred to as “Shern”, the name of one of the
companies of the group and I so refer to them hereafter.
[3] The defendants are a well known firm of solicitors in Belfast and
experienced in commercial matters. Mr John Thompson QC and Mr Robert
Miller appeared for them, and Mr David Hunter QC and Mr Michael
Humphreys for the plaintiffs.
[4] Mr Simon Stern is one of the Directors of Shern. They had been doing
business in Northern Ireland for some years through mortgage brokers who
would be approached by borrowers who wished to borrow money on the
security of their homes. As indicated above this was normally by way of a
second mortgage on those homes, the first mortgage being held by a bank or
building society. The business expanded as house prices in Northern Ireland
increased resulting in the value of property exceeding the first mortgages
upon it.
[5] Mr Stern readily described the particular business of his group of
companies as “sub prime second mortgage business”. It was “sub prime”
because a high proportion of the borrowers to whom they lent money had
already encountered difficulties which rendered their credit rating poor.
[6] Between 1997 and 2000 Shern used a firm of solicitors in Belfast to
whom I shall refer as M and Company. Shern became dissatisfied with the
quality of service they received and decided to seek a different firm of
solicitors to conduct their work. However M and Company continued to
enforce any agreements about which they had instructions prior to the
appointment of the present defendants.
[7] The plaintiffs obtained from the Law Society of Northern Ireland a
magazine article describing what was said to be the “Top 30 Northern Ireland
law firms” among which the defendants were ranked second. Mr Shern then
interviewed them and two other firms of solicitors on 30 March 2000. He met
Thomas Adair and Patricia Rooney of the defendants, having previously
furnished them with samples of the sort of loan agreements which he wished
to use and enforce in Northern Ireland. He had a good discussion with them
from which it emerged that they were willing and apparently able to conduct
the sort of work that was required. He was very impressed. The first limb of
the plaintiff’s case in this action is that the defendant’s solicitors ought to have
detected and reported to the plaintiffs a flaw in the enforceability of the
agreements which they were instructed to execute and, if necessary, enforce.
In regard to that the defendants admitted that they had been provided with
sample documentation relating to regulated consumer credit agreements.
However at paragraph 4 of the drafted defence, they allege that Mr Adair had
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2 cases
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Swift Advances PLC v Maguire (Conor) and McManus (Martina)
...as they are inherently more likely to have to enforce their charge. See my judgment in Melbourne Mortgages Ltd v Carson & McDowell [2004] NIQB 82 at [11], where a sub-prime lender’s evidence was that 30 % of charges on such loans were enforced. [11] The plaintiff relied on a document of its......
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EDEN (NI) Limited and Mallaghan Engineering Limited v Mills Selig, A Firm
...a number of the cases cited therein. I was also referred to my own judgment in Melbourne Mortgages Limited v Carson and McDowell, A Firm [2004] NIQB 82 and to the judgment of Weatherup J in Baird v Hastings [2014] NIQB 77. [99] A solicitor in this capacity is acting as an agent of his princ......