Appeal court removes Peter Smith J from Mills & Reeve negligence case

The row centres over alleged negligent advice the firm gave to a company chief executive that allegedly resulted in the businessman’s daughters paying a £1.3m inheritance tax bill.

King’s Lynn-based Berry & Walton instructed New Square Chambers’ Robin Mathew QC to act for the claimants. Mills & Reeve instructed Fountain Court’s Mark Simpson QC directly.

It is alleged that the firm advised Christopher Swain on a management buyout of telecoms company Swains International when he was having surgery in Thailand.

Swain died while in hospital. His four daughters allege he believed that if he died his shareholding would transfer to them tax-free if the deal went through. They claim that the firm did not advise them that this was not the case.

The firm was originally notified of the claim in March 2008, but the case is yet to be heard in its entirety because of legal wranglings over late amendments added by the claimant.

Peter Smith J, who began hearing the case in November, was asked by the claimant to accept a late amendment to the claim by Mathew.

Simpson countered that to accept such a late amendment would alter the nature of the case that the firm was being forced to answer. In response, the firm applied for a summary judgment.

Peter Smith J, who initially identified problems with the claimant’s case on causation, accepted the late amendment on the basis that any trial would proceed on the wrong basis were it not included.

He stated: “It would be an affront to justice in my view to allow a trial to proceed on a false and artificial premise created by the refusal of the amendment.”

However, he refused to discuss the application for summary judgment in court and accused Mills & Reeve of abusing its position.

Peter Smith J’s judgment stated: “The applications were an abuse as they were designed to try to abort the trial date which had been refixed because they had objected to further delay caused by the granting of the reamendment on the second day of the trial. The application under Part 24 was much too late. There had been two trial days (April and November 2010), which were vacated in the teeth of the defendant’s resistance.”

The firm went to the CoA in a bid to have the late amendment put forward by the claimant struck out.  It also accused Peter Smith J of bias against it.

Setting out his decision Lord Justice Lloyd made it clear that any comments made about the firm’s alleged abuse of power were “altogether unjustified” and that the firm’s “application cannot fairly be regarded as having been launched only in order to delay the resumption of the trial”. However, he did not say that Peter Smith J had been biased.

Simpson argued that Peter Smith J granted permission to amend on a false basis because the case put forward in the amendment differed from that originally put forward.

Lloyd LJ responded: “I also consider that the judge was too relaxed as to what the claimants ought to have shown. They ought to have put forward a significantly clearer, fuller and more precise pleading, one which immediately satisfied all the obligations on a party as to proper pleading, without any need to be supplemented or clarified by evidence or by further information.”

When the trial resumes, Lloyd LJ stated, it should do so under a different judge and directions should be also provided by a chancery judge other than Peter Smith J.