High Court judge castigates senior property partner “who cut corners all the time”

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30 November 2015


Proudman J: solicitor “regarded himself as a man of commerce”

A High Court judge has launched an extraordinary attack on a senior property partner, saying that although he was “on the whole” an honest witness, he “plainly cut corners all the time in his practice”.

However, although he had made a mistake in drafting a bank guarantee, she found that it did not cause any loss.

Mrs Justice Proudman said she suspected that Michael Parker, head of the real estate finance team at West End firm Bircham Dyson Bell, “regarded himself as a man of commerce rather than a typical solicitor” – although she acknowledged that she had no evidence of this.

Ruling on a negligence claim against the firm, Proudman J said Mr Parker was “ashamed of his mistake and thus sought to minimise it”.

She went on: “He did not take full notes of meetings. He was sloppy in dating documents. He did not explain documents, on the basis that the guarantors were ‘experienced investors/developers’, despite the fact that the claimants waived their right to independent legal advice by emails dated 11 May 2008.

“He saw nothing wrong in getting witnesses to sign only the signature page of documents, so that I can only assume this was habitual with him. He also saw nothing wrong in asking clients to sign documents subject to amendment.

“While this may be technically possible in circumstances where the solicitor has authority to amend the draft, it is obvious that such practice constitutes an accident waiting to happen and that the accident did in fact happen in this case.”

Proudman J said Mr Parker did not send out formal letters of engagement to all his clients, despite acknowledging that this was best practice, and “did not provide executed bibles of documents which his clients had signed”.

The judge was ruling on a negligence claim brought by a property developer and its three shareholders – builders Jason and Mark Harding, and Peter Williams.

Bircham Dyson Bell admitted that by mistake Mr Parker had included an ‘all monies’ clause in a guarantee to bank GMAC-RFC Property Finance Limited, which should have been limited to interest shortfall and cost overruns.

The firm also admitted that it owed duties to the other claimants as well as the claimant company, although it did not send a letter of engagement to them or indeed to any of the claimants.

The claimants argued that they had lost the opportunity to obtain a more favourable outcome from their negotiations with GMAC, both as to the sum to buy out the bank and the profit on the development. The law firm said its error had not made any difference.

Delivering judgment in Harding Homes (East Street) and others v Bircham Dyson Bell [2015] EWHC 3329 (Ch), the judge was even more scathing about the claimants in the case than she was about Mr Parker.

Proudman J said they “often misled”  GMAC and others, “regarding lies as part of the regular negotiation practice”.

She went on: “This meant that as untruths were such a part of the claimants’ lives I was not able to tell whether and when they were telling me the truth either.

“I have no doubt that they were so appalled by Mr Parker’s admitted mistake that they convinced themselves of various matters which did not happen.”

Proudman J concluded: “Although I do think that on the balance of probabilities the claimants would have acted differently if the error had not been made, I do not think that they have succeeded in demonstrating that they have lost a real and substantial chance to negotiate a different resolution with GMAC which would have resulted in more profit for the claimants.”

She ruled that judgment should be entered in favour of the claimants, but they should be awarded only nominal damages.

Bircham Dyson Bell was contacted by Legal Futures, but declined to comment.

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