Bircham Dyson Bell has successfully defended a professional negligence claim brought against it by a property developer client despite the firm admitting breach of duty in the High Court.
The ruling, handed down by Mrs Justice Proudman on Tuesday (24 November), said the firm must pay nominal damages to Harding Homes after a partner admitted giving bad advice on a loan guarantee. However Proudman J otherwise found in favour of the firm.
The judgment follows a 10-day trial in July. The claimant accused Bircham Dyson Bell, through property partner Michael Parker, of including an all monies clause in its client’s loan guarantee with a bank, GMAC-RFC Property Financial Limited, which it said led to millions of pounds of lost funds.
Harding Homes had previously borrowed around £9.5m from the lender to sell property in Colchester.
The claimant alleged it lost a “real and substantial” chance of settling with the lender to sell the site for £2m due to the mistake. GMAC subsequently demanded repayment of the owed sum from the claimant under the all monies clause.
Parker was also accused of being “sloppy” in dating documents for its client and of waiting six months before notifying the client about the guarantee issue.
Bircham Dyson Bell through Parker admitted breach of duty but denied the all monies element of the guarantee has “any material effect on the claimants’ negotiating position or on the profits earned from the development”.
In the judgment Proudman J said Parker was “ashamed of his mistake and thus sought to minimise it” and “he plainly cut corners all the time in his practice”.
She added: “I suspect, although there was no evidence about this, that he regarded himself as a man of commerce rather than a typical solicitor,” although she added he was “on the whole an honest witness”.
The judgment continued: “[Parker] also saw nothing wrong in getting witnesses to sign only the signature page of documents, so that I can only assume this was habitual with him. He also saw nothing wrong in asking clients to sign documents subject to amendment.
“While this may be technically possible in circumstances where the solicitor has authority to amend the draft, it is obvious that such practice constitutes an accident waiting to happen and that the accident did in fact happen in this case.”
Bircham Dyson Bell instructed RPC partner Nick Bird to lead its defence, who turned to Hailsham Chambers’ William Flenley QC and Niamh O’Reilly.
Shakespeare Martineau partner Barry Jervis was engaged by Harding Homes, instructing 4 New Square’s Justin Fenwick QC and Ben Wood.
The case is the latest in a string of solicitors’ liability claims this year. Gateley’s insurers instructed BLM to defend a professional negligence claim brought by property developer client Empirical Property Group in June; Bird & Bird lost a £1.8m claim by a former client over Elisabeth Murdoch’s home, also in June; and Watson Farley & Williams successfully batted off a £10m claim for the second time in the Court of Appeal.
The legal lineup:
For the claimant, Harding Homes
4 New Square’s Justin Fenwick QC and Ben Wood, instructed by Shakespeare Martineau partner Barry Jervis
For the defendant, Bircham Dyson Bell
Hailsham Chambers’ William Flenley QC and Niamh O’Reilly, instructed by RPC partner Nick Bird