Asplin: Appeal dismissed
The Court of Appeal has rejected a challenge to a High Court ruling that a law firm was not negligent in its advice to settle £2m of claims brought by a businessman’s trustee in bankruptcy against his wife and daughter.
Lady Justice Asplin said [1] His Honour Judge Paul Matthews “dealt with the issue of conflicts of interest in the way in which it had been pleaded and presented to him” and “cannot be criticised for doing so”.
John Blower had been a successful businessman but was adjudged bankrupt in 2014. The trustee in bankruptcy issued proceedings against his wife, Sandra, and daughter, Kelly, over alleged transactions at an undervalue.
Mr Blower attended a mediation on behalf of the family with Robert Whitehouse, a solicitor at GH Canfield, which resulted in a settlement.
The settlement released the family from existing and future claims in return for £1.5m, which Mr Blower had nine months to raise. The money was not paid on time and as a result Sandra Blower said she was forced to sell a villa in Spain.
Mrs Blower brought both the negligence claim and the appeal on behalf of herself and as an assignee of her daughter, Kelly.
The claim alleged that there was a potential conflict of interest in the law firm acting for both husband and wife, where Mrs Blower had a claim against Mr Blower’s bankrupt estate for up to £2m that had been in a trust fund.
HHJ Matthews, sitting as a High Court judge, found [2] that “the reasonably competent and diligent solicitor would also have advised settlement” of the claims.
Further, even if the law firm had been negligent, as things stood on the pleadings, there was “no coherent case on causation of loss”.
The main ground of appeal was that HHJ Matthews had erred in failing to consider or apply the law or regulatory standards properly on conflicts of interest.
Asplin LJ said she found the conflicts of interest ground “somewhat curious”.
There was no appeal against the judge’s findings of fact in relation to the trustee in bankruptcy’s various claims against Mrs Blower and her daughter, nor was there any challenge to the judge’s findings that the family trusted Mr Blower to negotiate the best deal for them.
Neither Mrs Blower nor her daughter “would have defied Mr Blower and refused to agree to the terms he had negotiated”, and “a reasonably competent litigation solicitor would have advised settlement on terms similar to those actually achieved”.
Asplin LJ went on: “It seems to me therefore, that the judge’s unchallenged findings of fact result in a situation in which even if there is a conflict of interest, it would not have caused loss. It would have made no difference.”
She also rejected attempts to plead the issue more broadly than it had been at trial, and went on to upheld HHJ Matthews’ finding on causation.
“I cannot see that there is any basis for suggesting that the judge should have proceeded on the basis that this was a loss of chance case. That was not pleaded.
“Furthermore, the possibility that this was a loss of a chance case was expressly disavowed in unequivocal terms by counsel on behalf of Mrs Blower and Kelly in closing.”