26 January 2011 | By Katy Dowell
14 October 2013
11 November 2013
2 April 2014
30 July 2014
8 November 2013
This month’s decision to remove Mr Justice Peter Smith from the bench presiding over a professional negligence claim brought against Mills & Reeve is a considerable show of strength from the Court of Appeal (CoA).
The events leading up to the highly unusual decision, taken on 20 January, bear detailed retelling. Certainly, when the four daughters of businessman Christopher Swain first notified Mills & Reeve of the proceedings back in March 2008 they could not have envisaged the convoluted route they were setting out on - or the ultimate impact on Peter Smith J.
Now, almost three years later, their case is yet to be heard. This is despite two outings in the High Court and an appearance in the CoA as well as the removal of a High Court judge and some harsh words for the claimant’s counsel - New Square Chambers’ Robin Mathew - from the appellate judges.
Mills & Reeve was accused of failing to provide adequate advice to Swain on the management buyout of telecoms company Swains International, which took place while he was having heart surgery in Thailand.
Swain died while in hospital shortly after the MBO completed and his daughters claim that Mills & Reeve had a duty to advise on the tax consequences of Swain’s potential death. It was claimed that if such advice had been given, the inheritance and capital gains tax incurred on Swain’s death would have been avoided as the sale would have been deferred until after his surgery.
Mills & Reeve’s position is that it was never instructed to give tax advice and therefore the claim is void.
In a statement the firm said: “This claim is bad at every level. In particular, at no point was Mills & Reeve retained to advise the Swains on any personal tax issues other than those directly related to the structure of the transaction. The scope of Mills & Reeve’s retainer was absolutely clear and specifically excluded personal tax planning.”
Things started badly at the first High Court hearing, which took place before His Honour Judge Kaye QC last April, when a key claimant witness failed to make it to court due to travel disruption caused by the volcanic ash situation that gripped Europe.
When the case returned to court in November, this time before Peter Smith J, New Square’s Mathew put forward a case unrelated to the health of Swain. He was duly told by the judge to amend the particulars of the claim to match his case and the trial was again delayed.
Fountain Court’s Mark Simpson QC, who was instructed directly to act for Mills & Reeve, argued that to accept such a late amendment would alter the nature of the case that the firm was there to answer. In response, the firm applied for a summary judgment.
Peter Smith J stated that not to accept a late amendment, “would be an affront to justice” and would allow the case to proceed to trial on the wrong basis.
Responding to the summary judgment request, he accused the firm of abusing its position: “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.”
This appears to have been the killer blow for Peter Smith J on this case.
At the CoA, Mills & Reeve applied to have any late amendments to the claim thrown out and openly accused Peter Smith J of bias against it.
Lord Justice Lloyd, who chaired a three-strong panel that also featured Lord Justices Elias and Patten, upheld the firm’s appeal on the late amendment but rejected its claim of bias.
Lloyd LJ acknowledged that claimant counsel Mathew had limited time to amend the particulars of the claim and was without an expert opinion, but the pleading was, he said, “embarrassing”.
“It is in any event too compressed so that it is very difficult to work out, just by reading it, what the case is,” the judge stated.
As to Peter Smith J’s behaviour, the court said he did not show bias but assertions that the firm had abused its position were “altogether unjustified”.
The CoA said the High Court judge delivered his ruling without allowing counsel to make an application to dismiss; he took the “wrong view” about the detail needed in the claimant’s pleadings; and was “too relaxed” about the minimum level of required detail in setting out a claim.
When the trial resumes later this month, the CoA concluded, it should do so under another judge.
Mills & Reeve states: “It is most unfortunate that Peter Smith J’s approach to the management of this case has caused delay and substantial additional and unnecessary costs.”
All this dallying means costs have shot up at a time when the judiciary is striving to take a proactive stance on case management. That said, the CoA’s decision sends a clear message to the bench that it can and will act if it feels the stance of individual judges is unjustified.