Webster v Sanderson Solicitors
| Jurisdiction | England & Wales |
| Judge | Lord Clarke of Stone-cum-Ebony MR |
| Judgment Date | 31 July 2009 |
| Neutral Citation | [2009] EWCA Civ 830 |
| Docket Number | Case No: A3/2009/0156 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 2009 |
[2009] EWCA Civ 830
Lord Clarke of Stone-cum-ebony Mr
Lady Justice Arden and
Lord Justice Lloyd
Case No: A3/2009/0156
Claim No 8ls40315
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Mercantile List
Mr James Allen QC
QUEEN'S BENCH DIVISION
LEEDS DISTRICT REGISTRY
William Flenley (instructed by Browns Solicitors Limited) for the Respondent
Graeme McPherson QC (instructed by Mills & Reeve LLP) for the Appellants
Hearing dates: 29 April 2009
Introduction
This is the judgment of the court, to which all its members have contributed. It is given on an appeal against part of an order dated 6 January 2009 made by Mr James Allen QC, sitting as a Deputy High Court Judge ('the judge'), in which he granted the claimant permission to amend his particulars of claim and schedule of loss in certain respects. He refused the defendants permission to appeal but permission was subsequently granted by Longmore LJ. The flavour of the appeal can be seen from the terms in which Longmore LJ granted permission. He said that an application to amend a claim for £1.9 million to make a claim for over £30 million in relation to events which occurred in 1993 and 1994 was, on the face of it, unattractive. He added that, although the judge's decision to allow the amendment could be said to be a discretionary decision, the fact that the majority of the new claim was arguably not the claimant's own loss but reflected the losses of his company and/or his pension fund did raise a point of principle, namely whether the claim comes within the Giles v Rhind [2003] Ch 618 exception to the principle in Johnson v Gore Wood & Co [2000] UKHL 65, [2002] 2 AC 1. Longmore LJ also added that the defendants must recognise that this court will regard itself as bound by Giles v Rhind, whatever the Hong Kong Final Court of Appeal may have said in Waddington v Chan Chun Hoo Thomas [2008] HK CU 1381 about not following it in Hong Kong.
The development of the claimant's claims
We can take the background largely from the judgment. The underlying subject matter of the action concerns investments made in 1993 and early 1994 in a project for purposes which were said to be the extraction of coal from spoil at mines in the USA. The claimant's case is that the monies invested amounted to over £1 million and that they were all lost. The claimant's case is further that advice and encouragement to invest in the project was given in 1993 and thereafter by Walker Morris, solicitors, and that the monies were lost as a result of a breach of duty owed by Walker Morris to the claimant.
The claimant instructed the defendant solicitors ('Sandersons') to act on his behalf in making a claim against Walker Morris. Proceedings ('the original proceedings') were issued in the name of the claimant against Walker Morris on 31 January 2001. On 30 May 2001 Sandersons sought and obtained an order extending time for the service of the original proceedings on Walker Morris until 31 July 2001. They were served on 30 July. However, Walker Morris subsequently succeeded in having the order set aside on 21 September 2001 and an appeal from that decision failed on 5 November 2001. This had the effect that service of the original proceedings was deemed to have taken place after the period for service of the claim form lapsed, with the result that the original proceedings could not be pursued.
The claimant's case is that Sandersons, in failing to serve the claim form in time, were in breach of a duty owed to him and that he has suffered loss in consequence. The loss alleged is the amount that he would have recovered from Walker Morris in the original proceedings. The basis of the claim against Walker Morris was, in part, that they advised the claimant that Guy Cramer, whose project it was, was honest and trustworthy, that there was no reason to doubt that the project was a good investment and that sufficient security would be forthcoming for the monies advanced. It is alleged that that advice was given negligently in breach of contract or duty. As against Sandersons it is alleged that, by reason of their breach of contract or duty, the claimant lost all chance, alternatively a significant chance, of recovering his loss from Walker Morris.
As pleaded before the amendments the loss alleged was as follows: (1) £1,904,193.60, which was the total sum said to have been invested by the claimant in the project; (2) £700, which he paid to Sandersons in respect of the original proceedings; and (3) £6,341.30 in respect of his liability to Walker Morris in respect of the costs of those proceedings. Sandersons did not say that he should not be permitted to claim those sums from them. No separate schedule of loss was annexed to the original particulars of claim, which are dated 11 September 2007.
The appeal has been argued on the basis that the relevant limitation period expired on 6 November 2007. During 2008 the claimant produced draft amended particulars of claim which, in place of the sum of £1,904,193.60, claimed the amounts set out in a draft schedule of loss. The claimant made an application for permission to amend the particulars of claim which was opposed on a number of grounds. At least one of the objections succeeded. It related to a new cause of action which did not arise out of the same or substantially the same facts as before and thus fell outside section 35 of the Limitation Act 1980. Most, if not all, of the other objections failed. Before the judge they ranged over a wide area, including (apart from limitation) abuse of process, remoteness, causation and unfair prejudice.
The appeal is brought only in relation to quantum and relates to parts of the schedule of loss which are said to be losses, not of the claimant himself but of his company and his pension fund. In the original particulars of claim there was no mention of a company or a pension fund. By contrast, in the draft amended particulars they play an important part. The claimant and his mother owned and controlled a company called Sterling Construction (Yorkshire) Ltd ('SCYL'), of which the claimant was the managing director. It is said that the claimant owned 99 per cent of the shares and his mother 1 per cent, but that is not alleged in terms, nor is it formally in evidence. We do not know the defendants' position in that regard, but we will assume the facts in the claimant's favour as if they had been pleaded.
SCYL is said to have made the investments in question in 1993 and 1994. The evidence is incomplete and unclear as to its history after that. It is said that a winding-up petition was presented on 13 November 1995 and a winding-up order made on 19 December 1995. (A receiver is said to have been appointed in 22 January 1996. We have disregarded that fact as this appointment would make no material difference to our analysis.) On 23 December 1996 Walker Morris issued proceedings to recover some £18,000 due in respect of fees. SCYL defended and counterclaimed, acting by the claimant's present solicitors, Browns, the defence and counterclaim being served on 15 January 1997. We will say a little more about the course of that litigation later. On 28 April 1998 a further winding-up petition was issued and on a date in November 1998 a winding-up order was made. It seems likely that the first winding-up order was rescinded or otherwise set aside. The appointment of a receiver is not necessarily inconsistent with a continuing liquidation, but the documents relating to the proceedings show no sign that there was then a liquidator in place, and a second winding-up order could not have been made if there was already one in force. The defendants' evidence in opposition to the claimant's application to amend also states that it is believed that SCYL may have been struck off the register. The claimant's evidence does not confirm or otherwise comment on that.
SCYL operated a pension scheme of which the claimant and his mother are said to have been the beneficiaries, until his mother's death in February 2002, and since then he is said to be the only beneficiary. It seems that the claimant has always been one of the trustees of the pension fund, and that his mother was during her life, but that there has always been another trustee, a corporate body. Currently it is said to be Hornbuckle Mitchell Trustees Ltd.
The claimant's case as pleaded in the draft amendment before the judge was that Walker Morris acted for the claimant, SCYL and the pension fund in relation to substantial payments made to the project in 1993 and 1994. The schedule of loss is divided into 11 sections from A to K. In each case the basis of the claim is that the amount included is calculated on the basis that, but for Sandersons' negligence or breach of duty, the action against Walker Morris would have been tried in about May 2002. A further claim for interest at 1 per cent above base rate is made on top. After the hearing of the appeal counsel were asked to prepare schedules showing the nature of the claims as they stand now. We attach to our judgment as Appendices A and B the very helpful schedules that were produced. Appendix A was prepared by Mr McPherson Q.C., acting for the defendants, and Appendix B by Mr Flenley, for the claimant. We have no reason to believe that they are not both an accurate reflection of the position as at the time they were prepared and before the subsequent...
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