Niprose Investments Ltd and 34 Other Claimants v Vincents Solicitors Ltd
| Jurisdiction | England & Wales |
| Judge | Hodge |
| Judgment Date | 17 April 2024 |
| Neutral Citation | [2024] EWHC 801 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2022-MAN-000036 |
[2024] EWHC 801 (Ch)
HIS HONOUR JUDGE Hodge KC
Sitting as a Judge of the High Court
Case No: BL-2022-MAN-000036
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
IN MANCHESTER
BUSINESS LIST (ChD)
Manchester Civil Justice Centre
1 Bridge Street West
Manchester M60 9DJ
Professional negligence — Solicitors — Defendants' application for strike out or summary judgment — Defendants acted for purchasers of 50 residential units in a buyer-funded, off-plan development scheme — Purchasers losing their substantial up-front payments on failure of development and suing their conveyancing solicitors for breach of duty — Extent of duty on purchasers' solicitors — Whether duty to advise that deposit-holding machinery offered no meaningful protection — Whether duty to advise purchasers against risks of investing in development — Whether duty to ensure advice fully understood — Whether solicitors in breach of duty — Whether loss of purchasers' investments legally attributable to any breach of duty — Whether claim sufficiently pleaded — Whether purchasers' claims should be struck out or summary judgment entered for defendant solicitors
The following cases are referred to in the judgment:
BDW Trading Ltd v URS Corpn Ltd [2023] EWCA Civ 772, [2024] 2 WLR 181
Carradine Properties Ltd v DJ Freeman & Co [1999] Lloyd's Rep. P.N. 48
Dutfield v Gilbert H Stephens & Sons [1988] Fam Law 473
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
In Soo Kim v Youg Geun Park [2011] EWHC 1781 (QB)
Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch), [2015] P.N.L.R. 19
Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20, [2022] AC 783
Mr Simon Wilton KC (instructed by RPC, London) for the 10 th Defendant/Applicant
Mr Laurie Scher (instructed by Walker Morris LLP, Leeds) for the 60 th to 94 th Claimants/Respondents
Hearing date: 20 March 2024
Date judgment circulated: 10 April 2024
Hand down date: 17 April 2024
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 Hodge KC
His Honour Judge Hodge KC:
I: Introduction
This is my considered judgment on an application by the 10 th defendant (‘ Vincents’), issued on 21 February 2024, to strike out a claim in professional negligence brought against them by 35 separate claimants (numbered 60 to 94) arising out of their purchase of 50 residential units in a buyer-funded, off-plan development scheme in Liverpool 6, or for summary judgment against the claimants under CPR 24. Each of the purchasers lost substantial up-front payments on the failure of the development and they are suing Vincents, who acted as their conveyancing solicitors, for breach of duty. The issues raised on this application include the nature and extent of the duties owed by Vincents to advise the purchasers against the risks of investing in this particular development; whether Vincents are in breach of such duties; what are the risks of harm to the claimants against which the law imposed on Vincents a duty to take care (the scope of duty question); whether the loss for which the claimants seek damages is the consequence of Vincents' acts or omissions (the factual causation question); whether there is a sufficient nexus between a particular element of the harm for which the claimants seek damages and the subject matter of Vincents' duty of care (the duty nexus question); and whether the claims against Vincents are sufficiently pleaded. Vincents are represented by Mr Simon Wilton KC, instructed by RPC, whilst the 35 purchasers who had instructed Vincents on their respective purchases are represented by Mr Laurie Scher (of counsel), instructed by Walker Morris LLP. Save where the context otherwise requires, in this judgment references to ‘the claimants’ are to Mr Scher's lay clients.
The application is supported by the witness statement, dated 21 February 2024, of Mr Graham Matthew Reid, a solicitor and partner in RPC which is instructed by Vincents (or its insurers). Evidence in answer is provided by the witness statement, dated 12 March 2024, of Mr Paul Douglas Hargreaves, a solicitor and partner in Walker Morris LLP, instructed by the claimants, to which Mr Reid replies by way of a second witness statement dated 14 March 2024. The hearing bundle extends to some 595 pages, and the bundle of authorities (with minor additions made during the course of the hearing) comprises some 400 pages. I have also received detailed written skeleton arguments from both counsel. With the benefit of my pre-reading, the hearing was comfortably completed within its time estimate of one day on Wednesday 20 March 2024.
For structural reasons only, this judgment is divided into the following sections (although these are not self-contained, and the contents of each part have informed the others):
I: Introduction
II: Background
III: Pleadings
IV: Submissions
V: Analysis and conclusions
VI: Disposal
II: Background
By a claim form, issued on 20 April 2022, 94 claimants who, between 2017 and 2019, entered into contracts to purchase one or more individual units off-plan in a proposed residential development to be known as The Rise in Liverpool 6 have brought professional negligence claims against the ten conveyancing practices whom they instructed in connection with their respective purchases. On exchange of contracts, each claimant paid a substantial, upfront initial payment which, together, added up to over £6,000,000 in deposits across over 100 apartments. The claimants also paid reservation fees to reserve the units and, in some cases, paid further instalments of the purchase price. These sums were used to finance the marketing and construction of the development, which was to comprise 409 units, including student accommodation and residential studio, one-bedroom and two-bedroom apartments. It appears that construction work ceased around March/April 2019, by which time the works consisted only of a steel-frame structure. The developer went into compulsory liquidation on 10 June 2020. According to the liquidator's progress report for the year ending 18 June 2023, receivers appointed by the administrators of the developer's secured lender sold the uncompleted development for only £4 million. This was despite the fact that the value of work completed and approved by the developer's employer's agent was over £7.25 million. The claimants allege that they have derived no value from their investments, and have lost the substantial up-front payments and, in some cases, further instalments paid to the developer's solicitors as ‘stakeholder’. All the claimants allege that these losses were their respective conveyancer's fault because they were not properly advised of the risks of investing in this development. The claimants seek damages for losses resulting from the defendants' alleged breaches of duty.
Most of the claims have been stayed as the relevant defendant is in insolvent liquidation or has settled. Only the claims against the second and seventh defendants, and against Vincents, remain actively contested. The majority of the live claims are those which are proceeding against Vincents, who acted for 35 clients on the purchase of a total of 50 units, with deposits paid totalling some £2.7 million. Some of these claimants were purchasing more than one unit, with the 60 th claimant purchasing eight, and the 79 th claimant (a Turkish company based in Istanbul) purchasing ten, units. The pleaded defence alleges that Vincents' clients exchanged contracts “on divers dates between 23 November 2017 and 16 August 2018”, although at paragraph 4 of their reply the claimants assert “that the last exchange of the claimants' contracts was later than 16 August 2018. C92 (Soneh Medical Limited) exchanged contracts (on Vincents' case) on 11 January 2019.”
CPR 7.3 permits a claimant to use a single claim form to start all claims which can be “conveniently disposed of in the same proceedings”. In terms, neither the rule, nor its related practice direction, provide any further test beyond that of “convenience”. The commentary at paragraph 7.3.5 of the current (2024) edition of Volume 1 of Civil Procedure points out that even if it may be inconvenient to attempt to try several claims together, there is no need to impugn the validity of the initial joinder of the claims in the one claim form; instead reliance may be placed on the court's powers to order separate trials to mitigate any inconvenience. However, it is my experience that the court is increasingly being confronted with extreme attempts to bring claims on behalf of multiple claimants, or to sue multiple defendants, in one action. In such cases, in my judgment the court should not hesitate to use its general powers of case management (under CPR 3.1) to direct that specific parts of the proceedings should be dealt with as separate proceedings. Whilst it may be convenient to join in one claim all the purchasers of units in a single development who wish to sue a single firm of solicitors or licensed conveyancers, who used the same, standard-form documentation in connection with their respective purchases, in my judgment it is stretching the limits of the ‘convenient disposal’ test to join claims against different conveyancers — some solicitors and other licensed conveyancers — who used very different forms...
To continue reading
Request your trial