City law firm Rosenblatt was in breach of duty and negligent in advice it gave to the sacked chairman of the AA but this did not cause him any loss, the High Court has ruled.
Mr Justice Fancourt held that Bob Mckenzie (BM) would have pressed ahead with his ultimately unsuccessful claim for loss caused by an unlawful means conspiracy against the breakdown business and its directors even if he had been properly advised.
He abandoned the claim in November 2018, shortly before a hearing of applications by all the defendants to strike it out, and just a few weeks after he had replaced Rosenblatt as his solicitors. He then sued them for the various costs he said this caused.
BM had also been the AA’s chief executive when he was sacked for gross misconduct on 1 August 2017. This left him vulnerable to losing bonuses paid in previous years and shares that had the potential value of tens of millions of pounds.
At the heart of the case was whether the solicitors told him that he had a “good” or “strong” claim, or conversely failed to advise that the claim was weak and vulnerable to being struck out
Fancourt J said he was clear that the former did not happen “in the sense that it was likely to succeed or should succeed at a trial”, and that the latter did not happen before June 2018 – Rosenblatt was instructed in August 2017 and the claim was issued in March 2018.
There were two reasons why the merits of the claim and the chances of success at trial were not the focus “in the way that one might expect of a large claim”, the judge said.
First, at least in 2017, it was difficult to express a reasoned view on the merits as BM was ill at the time, meaning the firm could not take detailed instructions.
“Second, and most importantly, the main purpose of the claim was not to win at a trial: it was to advance an arguable claim that would cause such anxiety to the directors of AA that they would reach a generous financial settlement with BM.”
This meant “it was never part of the strategy” agreed between BM and Rosenblatt that only a strong or good claim would be issued.
Nonetheless, Fancourt J went on to find proved four of 13 alleged breaches of duty: firstly failing to advise before the claim form was issued that the claim appeared weak – making the strategy harder to maintain – and secondly that the strategy had been adversely affected by developments since August 2017.
Third, Rosenblatt failed to advise before (or after) the issue of the claim form that it was at risk of a strike-out application which might succeed; and finally did not inform BM of Adam Solomon QC’s provisional advice in August 2018 that there was a significant risk of the claim being struck out.
But Fancourt J also found that “BM has remained absolutely clear that there was a conspiracy to oust him” and wanted to continue to pursue the claim after being told in June 2018 that it was weak.
“I do not consider that BM would have been deterred by advice that an application to strike out might be made and that it might succeed. To achieve what he wanted to, BM needed to bring the conspiracy claim…
“In the final analysis, I consider it more likely than not that, in the no-negligence world, a conspiracy claim would have been issued against the officer defendants.”
As a result, none of the breaches of duty caused BM loss.