(Trevor Alan) Smith v Eversheds (A Firm)
| Jurisdiction | England & Wales |
| Judge | Sir William Blackburne |
| Judgment Date | 12 June 2014 |
| Neutral Citation | [2014] EWHC 2622 (Ch) |
| Docket Number | Case No: HC13B03916 |
| Court | Chancery Division |
| Date | 12 June 2014 |
[2014] EWHC 2622 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane
London EC4A 1NL
Sir William Blackburne
Case No: HC13B03916
Mr J MacDonald QC and Mr A Butler (instructed by Harrison Clark incorporating Jordans) appeared on behalf of the Claimant
Mr M Harvey QC and Mr D Shapiro (instructed by CMS McKenna) appeared on behalf of the Defendant
Approved Judgment
In the year 2000, Eversheds, who are the defendants to these proceedings and are represented by Mr Michael Harvey QC and Mr Daniel Shapiro, were instructed by Eagle Star Insurance Co Limited, which I will refer to simply as Eagle Star, in a subrogated mortgage shortfall recovery action against Mrs Kim Smith. That action was separate from the present proceedings. Mrs Smith's husband, Trevor Smith, was then acting as Mrs Smith's litigation friend. Mr Smith, who is the claimant before me, appears by Mr John Macdonald QC and Mr Andrew Butler.
The present action arises out of a sentence of a letter from Eversheds dated 21 December 2000 sent in response to three letters from Mr Smith on 18 and 19 December 2000. Those three letters deal principally with other matters, but writing on behalf of Mrs Smith, Mr Smith asked in his first letter of 18 December (and I am omitting irrelevant parts):
"Will you please confirm … whether your client Eagle Star Insurance intends trying to avoid liability for any counterclaim awarded to myself in this action."
Eversheds replied to the three letters by a single letter dated 21 December 2000 which stated among other matters:
"We also note that you presume throughout your letter that our client 'intends to avoid any liability for any counterclaim awarded to [yourselves] in this action'. If, at trial, the Court is satisfied you have proved your counterclaim and accordingly grants you Judgment on the counterclaim, our client must honour the decision of the Court and certainly does not intend avoiding liability in that scenario, as you maintain."
Very sadly, Mrs Smith has since died. She died in 2002. In this action, which was issued in September 2013, Mr Smith, as trustee and sole beneficiary of his late wife's estate, makes claims against Eversheds arising out of the passage from their letter of 21 December which I have just read. It is alleged that the sentence was first and primarily a solicitor's undertaking made by the firm Eversheds. Second, it is alleged that the sentence amounts to a statement made in breach of Eversheds' warranty of authority. Third, it is alleged that the sentence was an offer of a contract by Eversheds which, by her subsequent conduct, Mrs Smith accepted. Mr Smith claims £783,189.86 plus interest; alternatively, damages in a like amount. Evershed disputes the claim. They contend, first, that no solicitor's undertaking was given and in the alternative, arguing that the enforcement of a solicitor's undertaking is an exercise of the court's disciplinary jurisdiction, that that jurisdiction should not be exercised in the present circumstances. Reference is then made, among other matters, to substantial delay and Mr Smith's conduct. Second, Eversheds contend that there was no breach of any warranty of authority, but even if there were, any claim would be long since statute-barred. Third, Evershed contend that there was no contract and equally that any claim arising for breach of contract would long since be statute-barred.
As amplified in its evidence in support of their application for, summary interim relief issued on 5 December 2013 (which is now before me) Eversheds seek an order: (1) that Mr Smith's claim be struck out under CPR 3.42(a) as disclosing no reasonable grounds to bring a claim and/or under CPR 3.42(b) as an abuse of the court's process and/or under the court's inherent jurisdiction; (2), and in the alternative, that there be summary judgment for Eversheds under CPR 24 on the basis that Mr Smith has no real prospect of succeeding on the claim.
The principles which the court must apply in exercising its jurisdiction under those rules are as follows. So far as CPR 3.4 and the court's inherent jurisdiction are concerned, the essential question is whether the claimant's pleading discloses any reasonable grounds for bringing a claim. So far as CPR 24.2 is concerned, the question is whether the claimant has any real prospect of succeeding on the claim. The jurisprudence in relation to CPR 24.2 is well-established. I was referred to various authorities. I need do no more than summarise the effect of them. The first is that the grounds under CPR 24.2 are wider than those under CPR 3.4. Second, the court can take account of the evidence filed. Third, the test is whether the claim has a realistic as opposed to a fanciful prospect of success. Fourth, a realistic claim is one that carries some degree of conviction, and this means the claim is more than merely arguable. Fifth, in reaching its conclusion the court must not conduct what is referred to sometimes as a so-called mini-trial. Under CPR 24.2 the court must also consider that there is no other compelling reason why the case or issue should be disposed of at a trial.
I now turn to the facts. The history is long and somewhat tortuous. I shall endeavour to confine myself to what are the essential matters. In so doing I am greatly indebted to the skeleton argument prepared by Mr Harvey and Mr Shapiro which sets out in some detail the material events.
In 1987 and 1988, Mr Smith and Mrs Smith borrowed £139,000 from ICB Mortgages Limited and they gave ICB a charge over their property, 34 Park Place in Cheltenham, to secure the loan. In 1990, ICB changed its name to First Mortgage Securities (No.9) Limited, which I shall refer to simply as FMS. On about 30 March 1995, FMS obtained an order for possession of 34 Park Place. Mr and Mrs Smith delivered up possesion in September 1995. On or about 27 October 1995, FMS sold the property to a Mr Russell for £149,000. As at that date, 27 October 1995, FMS alleged that the Smiths were indebted to it in about £209,920, such that, following the sale of the property, there was a shortfall of just under £60,000. FMS received an indemnity in respect of the shortfall from Eagle Star Insurance Co Ltd, which I shall refer to as Eagle Star. It did so pursuant to a Policy of Mortgage Indemnity Insurance, which I shall refer to simply as the MIG.
In November 1997, Eversheds were instructed by Eagle Star to bring a subrogated claim in the name of its insured (that is to say FMS) against Mr and Mrs Smith for their recovery of the shortfall. On 12 March 1998, proceedings were issued in the Chancery Division for the recovery of the shortfall. The claimant was named simply as First Mortgage Securities. On 6 May 1998, Mr and Mrs Smith filed a defence. On 8 July 1998 (so that is just two months later) Mr Smith was declared bankrupt on his own petition in respect of an unrelated debt. A formal stay of the claim against Mr Smith was not ordered. Eversheds nevertheless informed the Official Receiver that the claim against Mr Smith could not therefore be pursued, but that they were continuing, as they did, with the claim against Mrs Smith.
A year or so later in about October 1999, Eversheds issued an application for summary judgment against Mrs Smith. In about February 2000, Mrs Smith applied for and subsequently obtained permission to amend her defence to include a counterclaim against FMS in the sum of £129,000. In April 2000, Mrs Smith's legal aid certificate was discharged and thereafter Mr Smith acted as her litigation friend. On 1 June 2000, Mr Smith sought to argue that Eversheds were in fact acting for Eagle Star and not FMS. Eversheds replied to this in a letter of 8 June 2000 stating that whilst Eagle Star was their client, Eagle Star was exercising rights and subrogation under an MIG Policy, and was not a party to the action. They invited Mr Smith to obtain independent legal advice if he or his wife still had concerns.
Mr Smith also requested from Eversheds a copy of the MIG policy, but Eversheds explained in a letter of 26 June 2000 why Mrs Smith was not entitled to this. She then sought to re-amend her defence and counterclaim. On 4 October 2000 the district judge ordered by consent that Mrs Smith should file by 20 October 2000 and serve her re-amended defence and counterclaim together with a full supporting statement giving reasons for the amendment. Two days before that deadline, Mrs Smith sent to Eversheds the draft application notice seeking permission for the re-amended first counterclaim, a draft Part 20 Claim Form identifying Mrs Smith as the claimant and First Mortgage Securities as the Part 20 Defendant and a draft re-amended defence and counterclaim. Those events, which are, in a sense, peripheral to what I have to decide, gave rise to an unfortunate dispute. By a letter dated 24 October 2000 Eversheds consented to the re-amendment that Mr Smith requested and for their part sought an extension of 14 days for the service by FMS of an amended reply and defence to counterclaim. On 24 October 2000 Mr Smith, on behalf of his wife, consented to the extension although, in the event, the amended reply and defence to counterclaim were served one day late on 22 November and not, as they should have been, by 21 November.
There was then a dispute about the basis on which Mr Smith had given consent to the extension of time and whether therefore the amended reply had been duly and effectively...
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