Law firm negligence claim over law firm negligence claim struck out

Sullivan: Abuse of process

The High Court has struck out a negligence claim against a law firm over its pursuit of a negligence claim against their clients’ previous lawyers.

Master Sullivan held that the claim against London and Brighton firm Healys had no real prospect of success and was also an abuse of process insofar as it duplicated issues currently before the Senior Courts Costs Office (SCCO).

In 2005, Michael and Suzette Patridge bought a property in Malaga for which they said they paid €8m, of which €5.6m was a loan provided by Barclays in Gibraltar. The valuer increased the value twice in subsequent years when the couple sought to extend the loan.

The claimants said they discovered in 2011 that the property was worth significantly less than they had paid for it in 2005 (about €4-4.5m) and retained Gibraltar firm Gomez & Co to investigate a claim against Barclays.

The retainer with Gomez & Co ended in 2012 and a Mr Maguire was instructed on a direct access basis, only to be replaced a few months later by a Mr Evans KC.

According to the claimants, after key parts of the claim were struck out in 2013, the proceedings became irretrievably lost.

They instructed Healys under a conditional fee agreement (CFA) in 2016 to sue the various lawyers for negligence on the basis that each formulated claims against Barclays which were bound to fail and failed to advise on claims that should have been prosecuted.

All three denied liability but at a mediation in 2019 made a global settlement offer of £575,000 – a drop-hands offer from Gomez, £75,000 from Mr McGuire and £500,000 from Mr Evans, the limit of his indemnity with Bar Mutual.

Healys and counsel, Mr Virgo, advised the claimants to accept the offer. They did not and the lawyers subsequently terminated their retainer.

The claimants then instructed BLM and Mr Evans settled for £475,615 on a global basis. BLM came off the record in mid-2020, a few months before the trial, in advance of which the claim settled against Mr Maguire for £50,000 and Gomez for £100,000, again on a global basis.

When it learned of the Evans settlement, Healys obtained a freezing injunction against the Partridges and issued a claim for its fees. This was transferred to the SCCO, where the claimants pleaded that termination of the CFA was a repudiatory breach of contract.

The case is unresolved; in April 2023, the claimants were told that, unless they paid outstanding costs of £94,000, they would be debarred from participating further. Master Sullivan said it appeared they were still unpaid.

The latest claim was issued in July 2022, arguing that Healys failed to advise on an additional claim for breach of tortious/contractual duties against Gomez over its advice on suing the valuer. Second, it said Healys failed to advise adequately on the claimants’ consequential loss claim.

Master Sullivan said she could not determine on a summary basis whether it was negligent to advise there was no duty of care owed by the valuer, “although I have significant doubts that it was”.

But she found that the claimants had not set out how the failure to plead the valuer claim against Gomez caused the loss complained of.

“On any view the claim against the valuers was not a certain claim, and Gomez had potential defences. Gomez did settle with the claimants. There is nothing pleaded as to how that extra claim affected the chance of bringing the claim to a more valuable conclusion…

“In my judgment it is fanciful to suggest that the valuation claim would have made any more than a negligible difference to the prospect of a greater settlement than that achieved.”

When it came to the consequential loss claim, the correspondence showed that the claimants were told they needed to provide evidence but they failed to do this before terminating the retainer.

“There is in my judgment no real prospect that the claimants will succeed in arguing that there was a loss of a chance of a more significant settlement than that achieved as a result of the consequential loss claim not being advanced because of anything the defendant did or did not do,” the master said.

“The contemporaneous documents indicate that the claimants failed to provide the requested evidence required in order to pursue the claim.”

The question of the CFA’s termination was before the SCCO and Master Sullivan said it would be an abuse to allow this part of the claim to proceed in the Kings Bench Division.

Before striking out the claim, she considered whether to allow the claimants to amend their pleaded case, but concluded the pleading the advice at mediation was deficient was not realistic.

“In addition to the above issues, the claimants have not really dealt with the issue that Evans’ indemnity limit was £500,000 and its effect on settlement… It is not clear what any such amended case would be.”

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