Family Law Hub

Ahmad v Wood & Anor [2018] EWHC 996 (QB)

In this financial remedy case, the Claimant showed that there was sufficient evidence to show that further material should have been before the District Judge and that there was a substantial chance that such material would have led to a materially different order. In respect of his damages claim, the court ruled that the alleged consequential losses set out in the Particulars of Claim were outside the scope of the Defendants' duty and as such are irrecoverable; the damages claim would therefore need to be reformulated.

  • Neutral Citation Number: [2018] EWHC 996 (QB)

    Case No: C40MA070

    IN THE HIGH COURT OF JUSTICE

    THE BUSINESS AND PROPERTY COURTS IN MANCHESTER

    CIRCUIT COMMERCIAL COURT (QBD)

    Manchester Civil Justice Centre

    1 Bridge Street West

    Manchester M60 9DJ

    Date: 11th May 2018

    Before:

    HIS HONOUR JUDGE EYRE QC

    (sitting as a Judge of the High Court)

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    Between:

    RIAZ AHMAD (Claimant)

    - and -

    1) CLIVE GRAHAM WOOD

    2) CLIVE G WOOD & CO (A FIRM) (Defendants)

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    Mr. Daniel Metcalfe (instructed by Schofield Sweeney LLP) for the Claimant

    Miss. Siân Mirchandani (instructed by Mills & Reeve LLP) for the Defendants

    Hearing dates: 26th March 2018

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    JUDGMENT

    HH Judge Eyre QC:

    Introduction.

    1. In 2010 the Claimant was engaged in matrimonial proceedings with his former wife, Farzana Riaz. The Claimant was resisting the claims for financial and ancillary relief being made by Mrs. Riaz. The First Defendant is a solicitor and the Second Defendant was a solicitors' firm consisting of the First Defendant and Mark Higgins. From May 2010 the First Defendant and, potentially the Second Defendant, acted for the Claimant in the matrimonial proceedings. Those proceedings concluded with a hearing before District Judge Khan on 5th – 7th October 2010. District Judge Khan handed down judgment on 1st November 2010 and on that date he ordered, inter alia, that the Claimant pay Mrs. Riaz a lump sum of £465,000.

    2. The Claimant says that the Defendants' conduct of those proceedings and their advice to him in respect of them were negligent and/or in breach of the terms of their engagement. He says this negligence and/or breach caused District Judge Khan to award the lump sum of £465,000 and that but for the Defendants' default the lump sum award would have been no more than £150,000 (the amount which the Claimant had offered to pay Mrs. Riaz). The Claimant seeks damages of £1,174,204.71 being the difference between £150,000 and £465,000 together with various amounts which the Claimant seeks to recover as consequential losses caused by the Defendants' failings.

    3. The Defendants have applied for the striking out of the claim pursuant to CPR Pt 3.4 (2)(b) on the footing that it is an abuse of process by reason of being a collateral attack on the decision of District Judge Khan or (in respect of the damages claim) as not disclosing reasonable grounds for bringing the claim. Alternatively, they seek summary judgment pursuant to CPR Pt 24.2 on the footing that the Claimant has no real prospect of success.

    The Matrimonial Proceedings and the Claim now made by the Claimant.

    4. The proceedings between the Claimant and Mrs. Riaz were acrimonious and vigorously contested. In the course of the marriage a portfolio of over 30 properties had been acquired. District Judge Khan had to decide issues such as the ownership of shares in a company; whether the Claimant was in a partnership with his brother; the assets of any such partnership; and the ownership (as between the Claimant and his brothers) of two further properties. There were further questions and the Claimant says that it was these which were ultimately the most important ones. In that regard the District Judge had to determine the level of equity in the property portfolio; the income generated by that portfolio; and the funds available to the Claimant from which provision could be made for Mrs. Riaz.

    5. The Claimant and Mrs. Riaz were both cross-examined at the hearing in front of District Judge Khan. In his judgment the District Judge explained that he had found Mrs. Riaz to be "an honest and straightforward woman doing her best to assist the court". His conclusions in respect the Claimant's evidence were rather different. At [13] District Judge Khan said that:

    "…When giving his evidence [the Claimant] was evasive [and] argumentative. His evidence was inconsistent and contradictory and sometimes simply improbable and, at other times, incoherent. His litigation conduct was consistent with a litigant who wished to hide his assets, to obfuscate and attempt to confuse. In terms of his relationship with Mrs. Riaz the impression that I informed (sic) of [the Claimant] was that he is, frankly, a bully seeking to control or dominate Mrs. Riaz…."

    6. The District Judge set out, at [14] – [26], a "number of examples" which had led him to that conclusion in respect of the Claimant's credibility stating that the examples were "illustrative and not exhaustive". At [15] – [22] District Judge Khan identified a number of apparent inconsistencies or improbabilities in the account given by the Claimant. At [23] he referred to the absence of supporting evidence from those family members and friends to whom the Claimant had asserted that he owed money. At [24] the District Judge listed seven aspects of the way in which the Claimant had given his evidence which caused him to form the view that the Claimant was being evasive in that evidence. At [25] he listed five matters which he regarded as "litigation conduct" indicative of such evasiveness. Finally, at [26] the District Judge listed seven matters on which he relied in reaching his conclusion that the Claimant was a bully seeking to control Mrs. Riaz.

    7. It was in the light of those findings as to the credibility of the respective parties that the District Judge made further findings as to the assets available and their value. He concluded, at [37], that the portfolio had a net equity of £369,732. At [42] the District Judge found that a surplus annual income of £142,325 available to the Claimant was generated by the portfolio. That finding followed from his acceptance of the submission from Mrs. Riaz's counsel that the annual rent receivable was £272,000 (with some further expenses to be deducted) with an annual cost by way of mortgage payments of £115,200. At [46], District Judge Khan found that the Claimant had further resources available to him which had not been disclosed to the court. The District Judge based that finding in part on his conclusion that the Claimant had been obstructive in his approach to the court and also by reference to the discovery of a bank account which had not been disclosed by the Claimant. The finding appears, however, to have been substantially based on the District Judge's prior finding that the property portfolio generated a substantial income surplus. Thus he said "I infer, therefore, that the surplus I have identified above [a reference to the finding at [42]] has been available to him for some time and I infer that he will have deposited that surplus somewhere".

    8. Earlier in his judgment the District Judge had recited his analysis of the matters set out in Section 25 of the Matrimonial Causes Act 1973. It was in the light of that analysis and his conclusions as to the parties' assets that District Judge Khan concluded that the Claimant should pay a lump sum of £465,000 together with paying the school fees and reasonable expenses of the parties' three children until each child concluded his or her secondary education.

    9. The Claimant's case in the current proceedings is that the true financial position is that there was no equity (or at least no significant equity) in the property portfolio nor any significant surplus income let alone any hidden resources. He says that in those circumstances his offer of a payment of £150,000 to Mrs. Riaz was an appropriate, indeed a generous, one and that but for the negligence of the Defendants that was the sum which would have been awarded.

    10. The Particulars of Breach on which the Claimant relies are set out at paragraph 32 of the Particulars of Claim. There are sixteen respects in which the First Defendant and/or the Second Defendant (acting by the First Defendant) are said to have been negligent and/or in breach of the terms of the engagement. Those particulars can be grouped into three broad categories although there is considerable overlap between those categories. First, there are alleged failures of advice with the First Defendant negligently having stated that the matter was straightforward; that a lump sum was unlikely to be awarded because the Claimant's liabilities exceeded his assets; that a witness statement was not needed; and that there was no need to engage counsel to represent the Claimant. Second, there are failures of preparation with the First Defendant being alleged to have been at fault in failing to cause the Claimant to obtain further detailed evidence of his assets and liabilities and supporting evidence from his creditors. Additionally, in this regard, the witness statement prepared by the First Defendant is said to have included inaccuracies originating from the First Defendant and not from the Claimant. Third, the First Defendant's advocacy on behalf of the Claimant is said to have been negligent. It is alleged that he failed to explain to the District Judge that the procedural breaches were the result of his inaction and/or advice to the Claimant rather than being the responsibility of the Claimant. The Claimant's case is that the "litigation conduct" which had been a factor in the District Judge's conclusions as to the Claimant's credibility had been the result of the First Defendant's actions and not voluntary conduct on the part of the Claimant. It is also said that at the hearing the First Defendant failed to ensure that the District Judge appreciated the true reason for the reduction in mortgage payments which occurred in 2009. The reduction occurred because the arrangements for some of the properties changed to interest-only payments on the mortgages in place of repayment mortgage arrangements.

    11. In his witness statement in opposition to the current application the Claimant has said that the witness statement which was put forward on his behalf at the hearing had been drafted by the First Defendant and that he, the Claimant, had not been given any proper time to check or correct it. He says that although his written and spoken English are "relatively good" English is not his first language and that he needs time to process English. Moreover, the Claimant says that he had not been told that he would be cross-examined at the hearing in front of District Judge Khan. The effect of this was, the Claimant says, that he was cross-examined at length in circumstances where he had not expected to be; where the cross-examination was in English; and where he was being cross-examined in part by reference to a witness statement which he had not been able properly to check. The Claimant contends that this state of affairs had been caused by the First Defendant's failings and that it explains the poor impression which his oral evidence made upon the District Judge.

    12. At paragraph 33 of the Particulars of Claim the Claimant avers that but for the Defendants' breaches an order in excess of £150,000 would not have been made. He says that the breaches "operated contrary to the interests of the Claimant" in three respects:

    "33 (i) They contributed to an erroneous impression in the mind of District Judge Khan that the Claimant was dishonest, obstructive, obfuscating, attempting to confuse and hiding assets.

    "33 (ii) They caused District Judge Khan to arrive at factual conclusions in the judgment that were at odds with the documentary evidence before him, particularly in finding that the Claimant had had a surplus rental income in the region of £142,325.17

    "33 (iii) They caused District Judge Khan to arrive at factual conclusions that were at odds with the actual position as follows [the Claimant then sets out seven respects in which he says that the District Judge's factual conclusions differed from the position which would have been shown if fuller material had been put before him. These include the contention that it could have been shown that there had not been a surplus of rental income over mortgage liabilities in the period leading up to 2010]."

    13. The Claimant then sets out the loss which he says has been caused by the alleged breaches. The total is said to be £1,174,204.71. That figure is made up of various elements. There is the difference between the sum of £408,794.11 actually paid to Mrs. Riaz and the £150,000 which the Claimant says would have been ordered. There are costs of £48,910.60 incurred in respect of an enforcement application by Mrs. Riaz. The sum of £657,000 is said to have been the equity in a property transferred to Mrs. Riaz in order to settle enforcement proceedings. £11,500 relates to sale costs and £10,000 to interest on a bridging loan taken out in order to fund the payments to Mrs. Riaz. The balance of £170,000 is said to be the total of losses suffered by reason of having to sell properties urgently and for less than the open market value which would have been obtained if the sales had not been effected urgently.

    The Defendants' Application.

    14. The Application Notice set out the relief sought in broad and general terms. The Defendants' contentions were refined and explained in the accompanying witness statement and in Miss. Mirchandani's skeleton argument with some further and helpful refinement in the course of oral submissions.

    15. The alleged abuse of process is said to lie in paragraphs 33 (i) and 33 (ii) of the Particulars of Claim. It is said that these are an abuse because they amount to a collateral attack on District Judge Khan's judgment and are contending that but for the Defendants' negligence or breach the District Judge would or should have reached a different conclusion on the material which was before him. Miss. Mirchandani accepted that the contention made in paragraph 33 (iii) was not abuse of process. This was because Miss. Mirchandani accepted the sub-paragraph could be seen as contending not that a different result should have been reached on the material before District Judge Khan but that different and additional material should have been put before the judge and that it was the absence of that material which had caused the allegedly erroneous conclusion.

    16. It is said that the damages claim falls to be struck out as being wrong in law by reason of being asserted on a legally untenable basis. The Defendants say that the Claimant seeks to make them liable for losses alleged to have been caused by District Judge Khan's order rather than for the difference between the order made and the value of the best order reasonably likely to have been achieved by the Claimant before the District Judge.

    17. Summary judgment is sought on the footing that to the extent that any part of the claim remains in being then there is no real prospect of the Claimant being able to show that he had a substantial chance of District Judge Khan making an order materially different from that which in fact was made and that he had been deprived of that chance by the negligence or breach of the Defendants. The Defendants rely on the decision of Morgan J in Thomas v Albutt [2015] EWHC 2187 (Ch) as authority for the propositions that a negligible prospect of a better outcome having been achieved is to be disregarded and that prospects of 10% or less are to be regarded as negligible. The Defendants say that to the extent that the Claimant can show that he had a chance of achieving a better outcome (and they do not accept that he can) that chance is to be seen as negligible and accordingly disregarded.

    18. The Claimant filed a witness statement (and statements from others) in opposition to the application. Considerable portions of the Claimant's witness statement and of Mr. Metcalfe's skeleton argument address questions of the breaches alleged against the Defendants and seek to demonstrate the Claimant's prospects of establishing the alleged breaches. This was a response to paragraphs 25 - 56 of the witness statement of Niall Innes filed in support of the Defendants' application. In those paragraphs Mr. Innes addressed each of the sixteen particulars of breach contending that "none of them has any real prospect of success". Not only were large portions of the witness statements taken up with those questions but a very considerable number of documents were exhibited. I did not need to refer to this material to determine this application. The Defendants accepted that neither summary judgment nor striking out would be appropriate in respect of those matters standing alone. It is not accepted that the Defendants were either negligent or in breach of any duty owed to the Claimant but it is accepted that in those regards the Claimant is putting forward contentions which have a real prospect of success. In short terms it cannot be said that the Claimant does not have a real prospect of establishing that the First Defendant acted in the way he alleges. If the Claimant's factual allegations as to the First Defendant's advice, actions, and omissions were to be accepted then there would be a real prospect of a finding of breach of duty.

    Abuse of Process.

    19. The Defendants say that paragraphs 33 (i) and (ii) of the Particulars of Claim are an abuse because they are an improper collateral attack on the decision of the District Judge.

    20. It is not automatically or inevitably an abuse of process for a party to say that a lawyer's negligence caused a court to come to a different conclusion from that to which it would have come if there had been no negligence. A claim in negligence is not automatically precluded in cases where that is the nature of the claimant's allegations. Many cases in which counsel or solicitors are said to have been negligent in the conduct of litigation will require consideration of the argument that the result of the litigation would have been different if there had been no negligence.

    21. It remains an abuse of process to bring professional negligence proceedings where doing so involves a collateral attack on a court decision. Where is the dividing line between those claims which are abuses of process by reason of being such a collateral attack and those where a party is permitted to contend that the outcome of the litigation would have been different but for the negligence of the lawyers in question? The approach to be taken is that which was adopted by the Court of Appeal in Laing v Taylor Walton [2007] EWCA Civ 1146; [2008] PNLR 11. The Defendants contended that the approach laid down there was that which was to be followed as a matter of law and also relied on the conclusion on the facts in that case. The Claimant accepted that the decision enunciated the applicable principles but argued that the case was distinguishable on its facts from the current one.

    22. It follows that I have "to consider, by an intense focus on the facts of the particular case, whether in broad terms the proceedings that it is sought to strike out can be characterised as falling under one or other, or both, of the broad rubrics of unfairness or the bringing of the administration of justice into disrepute" (per Buxton LJ at [12]).

    23. In Laing v Taylor Walton there was an abuse of process because the relevant claim amounted to "a relitigation of the first case on the basis of exactly the same material as was or could have been before [the judge at the earlier trial]" (per Buxton LJ at [22]). In those circumstances the second claim was in substance an attempt to reverse the decision of the earlier judge and was an abuse on that footing (see [22] – [26]) as bringing the administration of justice into disrepute. For Moses LJ a significant factor in Laing v Taylor Walton was that inherent in the claim was an attack on the findings which had been made as to the claimant's credibility in the earlier action. Thus at [37] he explained that one of the reasons why the claim fell to be struck out as an abuse of process was that:

    "the claimant cannot establish that his adviser's drafting of the agreements was negligent without challenging the judge's findings as to credibility and fact. To make good the allegations of negligence, Mr Laing must show that his account of the agreements is the truth. He must demonstrate that [the earlier judge]'s judgment of his credibility was wrong."

    24. The position here is that the allegations in paragraphs 33 (i) and (ii) do amount to a collateral attack on District Judge Khan's decision and as such are an abuse of process. They amount to saying that the District Judge was in error on the material before him. It is said that the District Judge should not have made the findings which he did as to the Claimant's dishonesty and obfuscation. It is also said that the decision as to the surplus income was incorrect on the material before the District Judge. If the current claim were to proceed the trial judge could only make a finding in the Claimant's favour if that judge were to conclude that the District Judge's conclusions in that regard had been wrong. The judge would have to consider the material which had been before the District Judge and the evidence put before him and assess whether the District Judge's decision was correct on that material and in the light of that evidence. In order for the trial judge to find in the Claimant's favour that judge would have to find that the District Judge's conclusions in respect of the Claimant's honesty and the surplus income were wrong. There would be the prospect of different courts coming to different conclusions on the same material. The Claimant would be inviting the court in the current proceedings to make a finding that District Judge Khan was in error in his assessment of the material before him and of the evidence given orally by the Claimant. That is an impermissible collateral attack on District Judge Khan's decision and is to be struck out as an abuse of process. In my judgment rather than Laing v Taylor Walton being distinguishable on the facts the existence of an abuse of process by way of a collateral attack on District Judge Khan's decision is clearer in the current case than was the position there. In that case the relevant negligence was said to relate to the drafting of agreements and the claimant sought a finding as to the drafting of the documents. The abuse was present there because such a finding would entail the conclusion that the earlier judge's decision was incorrect. In the current case the attack is made more directly and it is said in terms that the impression formed by the District Judge was "erroneous" (paragraph 33 (i)) and that he reached factual conclusions which were "at odds with the documentary evidence before him" (paragraph 33 (ii)).

    25. Mr. Metcalfe argued that the Claimant was not engaging in a collateral attack on District Judge Khan's judgment but was seeking redress for the Defendants' negligence. He said that this necessarily required the court to consider the effects of the negligence and in particular the effects which it had on the District Judge's judgment. Those points are correct so far as they go but they do not prevent these parts of the claim being an abuse of process. Indeed, they demonstrate the respects in which it is an abuse of process. These parts of the claim directly challenge the correctness of District Judge Khan's judgment in his assessment of the Claimant's oral evidence and in his interpretation of the documents before him. That is a collateral attack on the decision and is impermissible. The fact that such an attack is necessary in order to establish particular aspects of the Claimant's claim does not prevent those aspects being an abuse of process but shows the respects in which they are an abuse of process.

    26. In those circumstances paragraphs 33 (i) and (ii) of the Particulars of Claim are to be struck out as an abuse of process.

    27. As Miss. Mirchandani accepted paragraph 33 (iii) is not an abuse of process. The distinction between the allegation being made there and those in paragraphs 33 (i) and (ii) demonstrates why the latter are an abuse of process whereas 33 (iii) is not. In 33 (iii) the Claimant is not saying that District Judge Khan's decision was incorrect on the material before him. Rather he is saying that but for the negligence of the Defendants fuller material would have been before the District Judge and that there is a prospect that there would have been a different decision in the light of that fuller material. Determination of that allegation does not require the Court to go back over precisely the same ground as was covered by District Judge Khan and consider whether that judge's decision was correct. Instead it requires the court to consider whether fuller material should have been before the District Judge and whether there was a prospect of a different outcome in those circumstances.

    The Pleading of the Claimant's Case against the separate Defendants.

    28. The Defendants assert that the Claimant has failed properly to plead the case separately against the two defendants. They say that the Second Defendant was dissolved in September 2010 and so cannot have been negligent or in breach of duty in respect of actions or omissions after that date. In his skeleton argument Mr. Metcalfe says that the Claimant's case is that the Second Defendant was liable for the First Defendant's conduct at least until the date of dissolution and that the First Defendant was liable both thereafter and for his own earlier actions. Mr. Metcalfe also argues that the Claimant does not know the date on which the dissolution took place and was only informed of it after the hearing before District Judge Khan. Accordingly, the Claimant cannot be confident that dissolution had in fact taken place before that hearing. In addition he invokes Section 38 of the Partnership Act 1890 to say that it is arguable that the Second Defendant remained liable for the First Defendant's actions after the dissolution to the extent that they were the performance of the pre-dissolution engagement of the Second Defendant by the Claimant.

    29. There is some scope for criticism of the pleading of the Claimant's Particulars of Claim. It could be said that since the Claimant was aware that it was being said that the Second Defendant had been dissolved the pleading should have identified the dates of the breaches being alleged and the consequences of each and also should have set out the basis on which it was being said that the Second Defendant remained liable for the post-dissolution acts and omissions of the First Defendant. However, that might have been regarded as being a rather artificial approach and there is force in Mr. Metcalfe's point that the Claimant's case is that the conduct during the course of the engagement and up to the hearing operated cumulatively and gave rise to his losses when seen as a whole.

    30. It cannot be said that the Particulars of Claim fail to disclose a claim which is good in law against both Defendants. Nor can it be said that it is a pleading which is embarrassing or likely to obstruct the just disposal of the case by reason of any ambiguity or lack of precision. To the extent that the Defendants are genuinely in doubt as to the case against them or are genuinely seeking to contend that the Second Defendant is not liable for the acts or omissions in the period between dissolution and the hearing of 5th – 7th October 2010 then their remedy lies in requesting Further Information as to the particularisation of the dates of the alleged breaches and of the way in which the post-dissolution liability of the Second Defendant is said to arise.

    31. It follows that the pleading of the claim is not in those respects a ground for a striking out or for summary judgment.

    The Measure of Damages.

    32. I have set out at [13] above the way in which the Claimant's damages claim is put. The Defendants say that the claim formulated in that way is incorrect as a matter of law and falls to be struck out as failing to disclose a claim which is potentially recoverable.

    33. The Defendants say that the measure of damages in professional negligence cases of this kind is the extent to which the Claimant has lost a real chance of doing better in the litigation than he did. They say the approach to be taken is that which was adopted in Channon v Lindley Johnstone [2002] EWCA Civ 353; [2002] PNLR 41. There it was common ground that the damages for the alleged negligence of the solicitors in question was to be assessed on the "loss of chance" basis (see per Potter LJ at [32]). At [42] Potter LJ explained that the first part of the exercise of assessing the value of the lost chance was "to consider the value of the best order reasonably likely to have been achieved by the claimant, before the District Judge, had he been properly informed". In this case the claim for damages is not pleaded by reference to the loss of a chance calculated by reference to the best order reasonably likely to have been achieved before District Judge Khan. Instead the Claimant seeks to recover substantial sums by way of consequential losses saying those losses flow as a matter of causation from the Defendants' negligence or breach of contract.

    34. Channon v Lindley Johnstone sets out the application of the approach which the Defendants say is the correct one to apply to the determination of damages. The court in that case applied the loss of chance approach but did not expressly say that this was the only permissible approach. The parties in that case were agreed that the "loss of chance" approach was the correct one. The Court of Appeal proceeded on that basis but did not have to determine the legitimacy or otherwise of a different approach.

    35. It follows that Channon v Lindley Johnstone is authority (if authority is needed) for the legitimacy of the loss of chance approach to claims such as this and for the way in which the lost chance is to be evaluated. It is not authority for the proposition that consequential losses in the form claimed by the Claimant are irrecoverable. That was not a question which the Court of Appeal had to or did consider in that case.

    36. In her oral submissions Miss. Mirchandani contended that the conclusion that the Claimant's approach is impermissible as a matter of law flows from first principles. She argued that the sums claimed fall outside the scope of the Defendants' duty to the Claimant. That was a duty in relation to obtaining the best reasonably achievable result before the District Judge but extending no further than that. Accordingly, and by reference to the decisions in South Australia Asset Management Corp v York Montague Ltd [1997] A.C. 191 ("SAAMCO") and BPE Solicitors v Hughes-Holland [2017] UKSC 21; [2017] 2 WLR 1029 she argued that it was not open to the Claimant to formulate his claim in the way set out in the Particulars of Claim.

    37. The Claimant also says that the matter is to be decided by reference to first principles. Mr. Metcalfe accepted that the assessment of the value of the lost chance was the correct approach to the quantification of the direct losses flowing from the Defendants' negligence. However, he says that is not the totality of the claim. He says that in addition the Claimant is seeking to recover damages for the indirect or consequential losses flowing from the Defendants' negligence. Mr. Metcalfe argued that the recoverability of such losses was not precluded by Channon v Lindley Johnstone. Mr. Metcalfe then proceeded to contend that it is trite law that consequential losses are recoverable subject to questions of foreseeability and to say that as a matter of first principles damages would be recoverable for such losses provided the Claimant could show that they had been caused by the Defendants' negligence.

    38. In my judgment the Defendants are right in saying that the claim as currently formulated seeks damages which are not recoverable as a matter of law. The effect of SAAMCO and of BPE Solicitors is to require a court addressing a claim for damages for professional negligence to give careful consideration to the scope of the relevant duty. Losses falling outside the scope of the duty of the relevant professional will not be recoverable. It is not open to the Claimant, through Mr. Metcalfe, to say that the matter is simply one of causation with the consequence that the Claimant is entitled to recover such losses as he can prove to have been caused by the Defendants' negligence. Lord Sumption explained in BPE Solicitors that the principle that damages falling outside the scope of the relevant duty are not recoverable is not a matter of causation and that the principle operates independently of the rules as to causation: see at [36] and [38]. Indeed, the principle operates to preclude the recovery of damages for certain losses which were caused by the relevant default. Certain losses are irrecoverable not because they were not caused by the default but because losses falling outside the scope of the relevant duty are irrecoverable as a matter of law even if caused by a default on the part of the other party. The extent of any potential liability is to be limited by reference to the scope of the duty to which the professional in question was subject and the breach of which is said to have given rise to the loss. The question is whether the loss claimed is "the kind of loss in respect of which the duty is owed" (per Lord Hoffmann in SAAMCO at 212C) or in Lord Sumption's words, in BPE Solicitors at [38], "whether the loss flowed from the right thing, ie from the particular feature of the defendant's conduct which made it wrongful. That turns on analysis of what did make it wrongful"

    39. The duty on the Defendants here related to the proceedings before the District Judge. The scope of their duty was to exercise reasonable care to obtain the best reasonably achievable result in those proceedings. That result related to the award to be made by the District Judge. A loss calculated by reference to the difference between the actual result and that which had been reasonably achievable would fall within the scope of that duty (actual recoverability would be subject to arguments about the evaluation of the chance lost). However, consequential losses flowing from the effects of the award actually made fall outside the scope of that duty. They are not the kind of loss in respect of which the duty was owed nor did they result from the aspect of the Defendants' conduct which made that conduct wrongful, namely the failure to exercise reasonable care to obtain the best reasonably achievable result. It follows that the alleged consequential losses set out in the Particulars of Claim are outside the scope of the Defendants' duty and as such are irrecoverable.

    40. The damages claim as currently formulated is incorrect in law and falls to be struck out. What is to be done in that regard?

    41. The Defendants referred me to the decision of Tugendhat J in the case of In Soo Kim v Youg Geun Park & others [2011] EWHC 1781 (QB). At [40] and [41] Tugendhat J said:

    "40 However, where the court holds that there is a defect in a pleading, it is normal for the court to refrain from striking out that pleading unless the court has given the party concerned an opportunity of putting right the defect, provided that there is reason to believe that he will be in a position to put the defect right. In para 19 of his Judgment the Master recorded that the Claimant had informed him that he already had witnesses. On 17 January 2011 the Claimant demonstrated that that was not wishful thinking, or a bluff, by submitting the statements that he did submit.

    41 In those circumstances I conclude that it was wrong in principle for the Master to strike out the claim without giving the Claimant an opportunity of rectifying the defect in his case. Accordingly, this appeal will be allowed."

    42. The Defendants say that in the current case the Claimant has been given an opportunity of remedying the defect in his Particulars of Claim but has declined to do so. In that regard the Defendants rely on the letter dated 6th October 2017 in which their solicitors explained in detail the deficiencies in the pleading of the alleged losses and invited the Claimant to revise the claim as pleaded. On 4th December 2017 the Claimant's solicitors replied disagreeing with the Defendants' assertions about the measure of damages and saying that the Claimant had "no intention" of amending the Particulars of Claim. The Claimant declined to recast the claim and persisted in the argument which I have rejected. The Defendants say that this means that the claim now falls to be struck out and that the Claimant is to be regarded as having declined an opportunity to put matters right.

    43. Miss. Mirchandani was right to say the Claimant had rejected the Defendants' suggestion that he should amend his claim. However, it does not, in my judgment, follow from that fact that the claim should be struck out without the Claimant being given an opportunity by the court to remedy the defect. Such a conclusion does not follow from In Soo Kim v Youg Geun Park & others. Indeed the approach of Tugendhat J indicates that there should not be striking out without such an opportunity. In that case the claimant's Particulars of Claim had failed to identify the persons to whom the allegedly defamatory articles had been published. The defendant's solicitors had invited the claimant to remedy that defect by identifying the persons to whom there had been publication and that invitation had been declined (see [22]). The Master subsequently struck out the claim on the footing that the publishees had not been identified in the pleading. It was this striking out which Tugendhat J concluded was wrong in principle. It follows that the circumstances in In Soo Kim v Youg Geun Park & others were akin to those in the present case: there was a defect in the pleadings; the claimant had declined an invitation from the defendant to remedy the defect; and the defendant had relied on the defect as the basis for striking out at the hearing. Tugendhat J held that in those circumstances and even though it was apparent that the claimant had been informed of the defect and had failed to remedy it striking out was wrong in principle and that the claimant should have been given an opportunity to remedy the defect. I respectfully agree with and adopt that approach. There is a very considerable difference between the situation where a party rejects a suggestion from another party that a statement of case should be recast and the situation where a party fails to act on an opportunity given by the court to recast a statement of case once that party's argument as to the adequacy of the pleading has been rejected. A refusal by a party to revise his claim in response to a suggestion from the other side does not for these purposes amount to the party having rejected an opportunity to put matters right even when the other party's contention as to the deficiency in the pleading is subsequently found to have been correct. In short a proposal made in correspondence by an opposing party and the rejection of that proposal are not to be equated to the declining of an opportunity given by the court.

    44. It follows that the damages claim as currently formulated is untenable but that the Claimant is to be given an opportunity to remedy the deficiencies before any striking out takes effect. I will hear submissions at the handing down of this judgment as to the appropriate order in that regard. Subject to those submissions I intend to make an order providing that the claim be struck out unless an application is made within a set period to amend paragraph 34 of the Particulars of Claim by deleting the Particulars of Loss and Damage as currently formulated and substituting a claim formulated by reference to the loss of the chance of having obtained a different order from District Judge Khan.

    Summary Judgment.

    45. The effect of the foregoing is that the assertions that the Defendants' negligence or breach of contract caused District Judge Khan to conclude incorrectly that the Claimant was being obfuscatory or dishonest and that it caused him to reach incorrect conclusions on the material before him have been struck out as an abuse of process. The assertion that the Defendants' failings caused the District Judge to come to an erroneous conclusion because they meant that the material before him was deficient remains open to the Claimant. The damages claim as currently formulated is not open to the Claimant but there is provision for that claim to be recast to seek damages by reference to the value of the chance lost by the Claimant.

    46. The Defendants seek summary judgment. They argue that even in the slimmed down and recast form the claim has no real prospect of success. There is, they say, no real prospect of the Claimant being able to show that he was deprived of a real and substantial chance of doing better than the order which was actually made by District Judge Khan. Miss. Mirchandani referred to the District Judge's judgment and emphasised the fact that he had undertaken a detailed analysis of the factors which Section 25 required him to take into account. The conclusion he reached was predicated upon and dictated by that analysis. The effect of the judgment was to allow the Claimant to retain the property portfolio in return for the lump sum of £465,000 and payment of the children's school fees and reasonable expenses. The Defendants' position is that the Claimant cannot show that the outcome would have been materially different if further material had been before the District Judge. This is particularly so, the Defendants say, as by reason of the striking out of paragraphs 33 (i) and (ii) it is not open to the Claimant to say that the District Judge erred in finding that the Claimant had been dishonest in his evidence or in finding that the documents before him showed a surplus income.

    47. In response the Claimant's position is that the alleged breaches are clearly arguable and that there is a real prospect of his claim succeeding in those regards. If his case is accepted as to the existence of the breaches then there will be a real prospect of a finding that further and different material should have been before the District Judge. He says that there is a real prospect of establishing that if such fuller material had been before the District Judge then there was a real chance of a different order having been made.

    48. In considering District Judge Khan's judgment it is apparent to me that his conclusions as to the appropriate order were very much influenced by his conclusions as to the figures and as to the assets available. Thus at [42] the District Judge identified the surplus available to the Claimant and at [55] the existence of that surplus was taken into account in the District Judge's determination of the resources available to the Claimant from which provision could be made for Mrs. Riaz. If further material would have caused the District Judge to conclude that there was no surplus or no surplus at that level then there is a real prospect that the outcome of his analysis would have been different. In those circumstances there is a real prospect that the District Judge's application of the Section 25 factors in the light of his conclusions as to the figures would have led to a different result.

    49. In my judgment the Claimant will have very real obstacles to overcome in establishing his case. However, it is not possible to say that his claim does not have a real prospect of success. If the alleged breaches are established then the court is likely to accept that further and different material should have been before the District Judge. At that stage there will need to be a careful assessment of precisely what that material would have been. That assessment will depend on the extent to which the particular breaches are established. There will then need to be consideration of the extent to which, if at all, there was a prospect that the further material would have brought about a different result. However, the Claimant has established a claim which has a real prospect of success because on the current evidence there is sufficient to show a claim with real prospects of showing that further material should have been before the District Judge and that there was a substantial chance that such material would have led to a materially different order.

    Conclusion.

    50. It follows that parts of the claim are to be struck out and that the damages claim must be reformulated but there remains a claim which has a real prospect of success and in respect of that the summary judgment application fails.


Judgment, published: 15/05/2018

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Published: 15/05/2018

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