A law firm has failed in its bid to strike out claims alleging that it concealed the true purchase prices for properties its clients bought and paid away the surplus without instructions.
Teeside firm Punch Robson is accused of acting in breach of its retainer and/or negligently and/or in breach of fiduciary duty by paying away an uplift or commission from the purchases in 2005.
The firm argued that the claims were time-barred and should either be struck out or summarily dismissed.
Each of the claimants – who are all from Ireland – has a specific claim against the firm but they have a common cause of action.
In the second half of 2005 they bought, as investments, properties that were part of a development in Sunderland called River View. Punch Robson acted for them, as it did at the same time on another development in Leeds, Carr Mills. Both were marketed by the same broker.
An action brought by 46 claimants over the Carr Mills development settled in July 2017 – 10 of them also invested in River View.
The present claim was issued in June 2020 as a protective measure for limitation purposes, with 15 years nearly up.
The claimants argued that, even though their causes of action arose in 2005, they were entitled to bring their claims because the law firm “deliberately concealed” from them the true purchase prices and the surplus and/or secret profits which the claimants were actually paying, and also failed to send them true completion statements.
The firm is also accused of failing to tell the claimants that it also acted for the broker and paid it, or intended to pay, a commission.
The claimants said they did not discover the concealment, and could not have done so with reasonable diligence, until partial disclosure of the transaction files in 2018 and 2019.
In its defence, Punch Robson said the Carr Mills claimants discovered similar concealment in 2011 and so, with reasonable diligence, they could have discovered the alleged concealment in relation to River View soon after and told the other River View claimants.
Under section 32(1)(b) of the Limitation Act 1980, limitation in cases involving concealment does not start running until it is discovered or could have been with ‘reasonable diligence’.
Deputy Master Nurse first rejected the argument that there had only been “passive concealment” on the part of the solicitors, which was insufficient for the purposes of section 32(1)(b).
“It is clearly a matter for debate as to the extent that mere silence can amount to ‘deliberate concealment’.
“Furthermore, in the present case, we are not concerned merely with the duty of a solicitor to disclose his own negligence, or even breach of fiduciary duty, but also the duty to inform his client of all material facts and to disclose all relevant documents in his possession.
“To do nothing may be described as being ‘passive’, but I am satisfied that the particulars of the alleged concealment are not only sufficiently pleaded but also that, having regard both to the statements of case and the additional evidence that has been adduced, there is a real prospect of success.”
Deputy Master Nurse then considered whether the limitation period had actually been triggered in 2011, ruling there was real prospect that, at trial, a court would find that information had been concealed from the Carr Mills claimants who also invested in River View such that “there had been no ‘trigger’ in respect of a potential claim” over the latter.
As for the claimants who only invested in River View, the suggestion it was likely they would have been told what happened with Carr Mills by those claimants was “far from sufficient to be a ‘trigger’ and so to start time running”.
The deputy master went on: “If the non Carr Mills claimants are entitled to rely on section 32(1)(b), then, in my view, it could not be argued that there was a ‘trigger’ before 16 June 2014. Accordingly, the issue of the claim form was within the limitation period.”
If section 32(1)(b) did not apply, the claimants would have to rely on section 14A, under which limitation only runs from the date of knowledge of the breach.
The judge said it was “clear at this stage” that the non Carr Mills claimants have “at least a real prospect of establishing” that they did not have the knowledge required more than three years before the claim form was issued.
In relation to the Carr Mills claimants, it would be going “too far”, at a summary judgment stage, to reject their evidence that their knowledge only dated from 2018.
Deputy Master Nurse concluded: “Accordingly I am not satisfied that, even if it were held that any of the claimants were not entitled to rely on section 32(1)(b), there is no real prospect of them succeeding in their reliance on section 14A.”