England and Wales Court of Appeal (Civil Division) Decisions

Case No: A2/2000/0595 & A2/2000/0597

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE QUEEN'S BENCH DIVISION

(HIS HONOUR JUDGE HICKS Q.C

Royal Courts of Justice

Strand, London, WC2A 2LL

Tuesday 12 December 2000

LORD JUSTICE MANTELL:

Introduction.

1. This is an appeal from a decision of His Honour Judge Hicks QC by which he reversed in part an order of Deputy Master Fontaine thus allowing Doulat Daryanani to continue his claim for damages for breach of contract and/or negligence against a firm of solicitors (D1) and counsel (D2) who had acted for him in earlier proceedings against his father.

2. The first and second defendants are dissatisfied with that decision. They consider that the whole of the claim should have been struck out and have appealed. There is no cross appeal by Mr Daryanani.

3. There has been an application on behalf of the second defendant that he should not be named in any report of the judgment of this court. That application is resisted by Mr Daryanani. I can see no reason why a member of the Bar should receive special treatment and every reason why he should not. I would refuse the application.

Background.

4. This is set out comprehensively and accurately in the judgment of His Honour Judge Hicks. I plagiarise. Mr Daryanani senior owned a shop with living accommodation at 200 Blythe Road, London W14. The premises had three floors. At ground floor level was the shop. The claimant occupied the second floor with his wife and children and his parents the first. A dispute arose between the claimant and his parents as to their respective interests. Broadly speaking the dispute revolved around what was alleged by the claimant to be an agreement between himself and his father that he would acquire a proprietary interest in the premises in return for moneys paid towards the rates, mortgage and other outgoings. On 3 September 1986 the claimant commenced proceedings against his father for damages or the return of moneys expended by him and for specific performance of the alleged agreement. The first defendant acted throughout as the claimant's solicitors and from sometime in the spring or early summer of 1988 the second defendant acted as his counsel.

5. The trial was set for 20th February 1989. On that date the action was compromised. The compromise took the form of a stay upon terms - a "Tomlin" Order. The terms were set out in a schedule. The relevant paragraphs were as follows:

"(1) The defendant will within 28 days... deliver to the plaintiffs solicitors a written acknowledgement and declaration that he holds the freehold property...200 Blythe Road...upon trust for himself for life and from and after his death for his wife Hari Padma Daryanani for life and from and after the death of the survivor of the defendant and his said wife for the plaintiff absolutely.

(2) The defendant will not without the consent in writing of the plaintiff create any charge or encumbrance on the said property or deposit the Land Certificate by way of security for any loan, debt or liability.

(3) The plaintiff will continue to pay and discharge the outgoings in respect of the said property."

6. The terms also provided for a declaration of trust to be executed by the claimant and his father and for the parties to take the necessary steps to ensure that the appropriate restriction was entered in the register of title at H M Land Registry. When this was attempted the Land Registry responded by saying that the declaration seemed to create a settlement within the Settled Land Act 1925 and was defective in not having appointed the necessary trustees and in lacking the necessary vesting deed. For present purposes it is sufficient to remark that if the view of the Land Registry is correct the compromise agreement as reflected in the Tomlin order did not achieve the result which the second defendant had intended and did not accord with the advice he had given to the claimant at the time and afterwards.

7. On 10th April 1991 the claimant commenced the present action by which he alleged beach of duty and negligence on the part of the first and second defendants in compromising the action against his father on terms to which he did not agree, failing to give him adequate advice concerning the terms or effect of the compromise and failing to give effect to the compromise in the drafting of the Tomlin order.

8. The first head of claim reflects an allegation that the claimant had been told in conference that he would be able to sell the property during his parent's lifetime provided that he was prepared to buy them a flat in which to live out of the proceeds. The second and third issues turn upon the proper construction of the terms of the Tomlin order and the Declaration of Trust rather than the recollections of what was said between the parties at the time.

The present action.

9. As I have remarked the action was commenced on 10 April 1991. The writ was endorsed with a statement of claim. The claimant obtained legal aid in August 1991 and it seems likely that the writ was served shortly thereafter. There was a request for further and better particulars of the statement of claim in December the same year. Nothing then happened until 20th August 1993 when the claimants then solicitors served a Notice of Intention to Proceed. That the claimant was anxious to get on with matters is apparent from a letter written by his solicitors on 3rd February 1993 and which the judge described as an extraordinary document. It advised the claimant to put the litigation on one side and to try to get on with his life. The following month the claimant wrote instructing his solicitors to proceed with the litigation and "to please work to the time limits". Desultory progress was made in the obtaining of an order for directions which included discovery by 3rd November 1993 and provision for exchange of expert evidence within specified time limits. The last step in the action until the present application for strike out appears to have been on 1st February 1994. In the mean time the claimant's legal aid certificate had been discharged.

10. The claimant has attributed these delays to the sloth or lack of interest of his legal advisors. The first set of solicitors had disappointed him and he had taken steps to recover the papers. The solicitors were loath to release them even after he had issued instructions to another firm. On 9th February 1999 the claimant had written to his new solicitors to say "the matter is almost ten years and may I draw attention to the fact that there is a direction order dated the 20th October 1993 for the case to be set down for trial within fifty-six days." Further time was taken in an abortive attempt by the claimant to have his legal aid certificate renewed.

11. The judge found that the very substantial delays had been the fault of the claimant's legal advisors rather than of the claimant himself. On the judge's findings I would find it difficult to disagree.

The appeal.

12. It is important to see what it was the judge decided and how that decision was made effective in his order.

13. In a careful, and if I may say so, well structured judgment he dismissed the defendant's claim for summary judgment under CPR Part 24. It is accepted that he was right to do so.

14. He then identified the issues raised in the pleadings. Broadly he divided them into two categories.

15. The first category was the claim for damages arising out of the translation of the compromise agreement into a declaration of trust in Mr Daryanani's favour as expressed by the terms of the Tomlin order.

16. The second category was the claim for damages arising from what Mr Daryanani alleges he was told about being able to sell the property upon provision of separate accommodation for his parents to be bought out of the proceeds of sale.

17. The judge considered that the two categories merited separate treatment because, as to the first, it was admitted that the Tomlin order as drafted was an inappropriate vehicle by which to secure the terms of the compromise agreement in that it had, or may have had, the effect of creating a strict settlement - an issue which would depend hardly if at all upon the recollection of individuals, whereas the resolution of the second issue depended very much on what had been said between the parties.

18. In the end he decided to allow the first head of claim to continue but struck out the second.

19. It may be helpful if I were to recite the relevant paragraphs of his order.

"2. The appeal against the Deputy Master's order striking out the claimant's claim is allowed.

3. The Claimant is debarred from pursuing any claim based on allegation:

(i) that the terms of settlement of his action against his father to which he agreed included an agreement by his father "to waive at any time in the future [the licences to reside for life in 200 Blythe Road in favour of the father and his wife] in exchange for a one-bedroom flat in the London Borough of Hammersmith, to be bought and owned by [the Claimant] for our occupation for life"; or

(ii) that he was told by the Defendants or either of them that the terms of settlement of the said action, whether as agreed with his father's lawyers or as set out in the Tomlin Order made therein, he would be entitled to sell 200 Blythe Road aforesaid in his parents' lifetime, provided that he bought them a suitable flat out of the proceeds; or

(iii) that but for breaches of duty on the part of the Defendants or either of them he would or could have settled the said action upon terms which include a term to the effect set out in (i) or (ii) above; or

(iv) to the like effect as those set out in (i), (ii) or (iii) above or to similar effect

4. Subject to paragraph 3 above the applications by the First and Second Defendant to strike out the Claimant's claim are dismissed."

20. So under appeal is simply that part of the order which allows the survival of those allegations which depend upon the manner in which the compromise agreement was expressed in the Tomlin order and the advice given as to its effect.

21. The attack is made on three fronts.

22. The first is that the judge was inclined to excuse the delay on the ground that the blame lay with solicitors rather than with Mr Daryanani. The second is that he did not give sufficient weight to the prejudice created by the delay. The third is that the claim for damages on the remaining issue is unsustainable.

Responsibility for delay.

23. It is apparent from the facts as summarised and to use the old but nevertheless appropriate language, that there had been inordinate and inexcusable delay in progressing the action. The judge so found.

24. It is equally plain that in deciding whether or not to strike out the judge had regard to the division of responsibility for the delay as between Mr Daryanani and his solicitors.

25. Having referred to the overriding objective of the Civil Procedure Rules at paragraph 42 he said:

"within that overriding objective it is proper to take a number of matters into account. Wholesale disregard of the rules or of court orders may amount to abuse of process and be a ground for striking out, but whether that is the chosen response remains discretionary; other measures may initially be appropriate. Where delay is relied upon material considerations include its length responsibility for it as between the parties and as between the claimant and his lawyers, and whether it was intentional - whether the claimant had any real intention of bringing the case to a conclusion. Delay may prejudice the defendant and make it difficult for the court to conduct a fair trial; that should be assessed and taken into account. The risk of unfairness to the defendant, the court or other litigants in allowing a trial to proceed in those circumstances may need to be balanced against the risk of unfairness to the claimant if an apparently meritorious claim is struck out."

26. At paragraph 64 and 65 he found that as between the parties the blame lay with Mr Daryanani but that "as between Mr Daryanani's personal fault and other causes, however, including the conduct of the lawyers concerned, I find no reason to conclude that Mr Daryanani was significantly to blame." He then reminded himself of the pre-CPR position, namely that the litigant and his lawyer were to be treated as a single unit at least when considering responsibility for delay. He had in mind what was said by Lord Diplock in Birkett -v- James (1978) AC 297 at 324A:

"If (the apportionment of blame) were a matter which the judge ought to take into account in deciding whether to dismiss the action the court, the court upon interlocutory application in an action between different parties would have to embark upon what would in effect be the trial of an action by the plaintiff against his actual or former solicitor for professional negligence. That, clearly, is impossible ...."

27. Then having noticed that in Hanif -v- Doggett (New Law Digest 6 December 1999) that Nelson J had refused to strike out a claim where the greater part of delay had been caused by the lawyers rather than by the claimant he said:

"I respectfully agree with Nelson J that it may now be relevant. It may impinge, as it does here, on the objectives of saving expense and dealing with the case expeditiously, on the need to balance the risk of unfairness to the claimant against that of unfairness to the defendant and on the need to take into account fairness to the court and other users of the system."

Was he right ?

28. The old cases may no longer be relevant under the new regime (see Biguzzi -v- Rank Leisure PLC (1999) 1WLR 1926 per Lord Woolf, MR at 1932) but that does not mean that the baby must be jettisoned with the bath water or as more elegantly expressed by Stuart Smith LJ in Walsh -v- Misseldine Unreported 29 February 2000 at transcript p.27:

"But some of the considerations which were relevant before are obviously relevant now. For example the length of, explanation for and responsibility for the delay; whether the defendant has suffered prejudice as a result and if so whether it can be compensated for by some order relating to costs or interest or it is so serious that it would be unjust to the defendant to require the case to be tried. Moreover the delay may be such that it is no longer possible to have a fair trial."

Since Stuart Smith LJ was referring to the previous regime there can be no doubt that by the phrase "responsibility for the delay" he was referring to the relative responsibility of the parties. We find the same sentiment expressed by May LJ in Purdy -v- Cambran Unreported 17 December 1999 at transcript p.15.

"...under the new procedural code of the Civil Procedure Rules the court takes into account all relevant circumstances and, in deciding what order to make, makes a broad judgment after considering available possibilities. There are no hard and fast theoretical circumstances in which the court will strike out a claim or decline to do so. The decision depends on the justice in all the circumstances of the individual case. As I read the judgments of Lord Lloyd of Berwick and Ward LJ in the UCB case, they are saying nothing different from this. As Ward LJ said in the UCB case, Lord Woolf, MR in Biguzzi was not saying that the underlying thought processes of previous decisions should be completely thrown overboard. It is clear, in my view, that what Lord Woolf was saying was that reference to authorities under the former rules is generally no longer relevant. Rather it is necessary to concentrate on the intrinsic justice of a particular case in the light of the overriding objective."

29. In the context of this appeal and concentrating on the particular issue, the underlying thought processes might well be those articulated by Lord Justice Ward in Hytec Information Systems Ltd -v- Coventry City Council (1997) WLR 1666 at 1675:

"Ordinarily this court should not distinguish between the litigant himself and his advisors. There are good reasons why the court should not: first if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent.... where this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other."

Is that way of thinking still valid? In my view it is. There does not seem to be any post CPR authority directly in point but in Burt -v- Montague Wells Unreported 26 July 1999 this court declined to distinguish between a claimant and his solicitors in what was described as an "unhappy wrangle about costs" Sedley LJ stating that "the acts of one are the acts of the other" and in Training in Compliance Ltd T/A Matthew Reid -v- Christopher Paul Dewse trading as T/A Data Research Company Unreported 10 July 2000, which was an appeal against a condition imposed that the defendant Mr Dewse should pay £100,000 into court as a condition of getting leave to amend, at p.66 of the transcript Peter Gibson LJ said this:

"There is no doubt that the Civil Procedure Rules give the court greater powers, enabling the court to choose between a wider range of remedies and sanctions, and that in the exercise of its powers the court must have regard to the overriding objective which recognises the principle of proportionality. The Civil Procedure Rules relate to the making of a wasted costs order against legal representatives, as had the Rules of the Supreme Court; but I see no justification for Mr Pooles' submissions on the Civil Procedure Rules requiring the court to draw distinctions between a party and his legal representatives. Of course, if there is evidence put before the court that a party was not consulted and did not give his consent to what the legal representatives had done in his name, the court may have regard to the fact, though it does not follow that that would necessarily, or even probably, lead to a limited order against the legal representatives. It seems to me that, in general, the action or inaction of a party's legal representatives must be treated under the Civil Procedure Rules as the action or inaction of the party himself. So far as the other party is concerned, it matters not what input the party himself has made into what the legal representatives have done or have not done. The other party is affected in the same way; and dealing with a case justly involves dealing with the other party justly. It would not in general be desirable that the time of the court should be taken up in considering separately the conduct of the legal representatives from that which the party himself must be treated as knowing, or encouraging, or permitting. However, in the present case there is in fact no evidence at all as to what the defendant knew of the action or inaction on his behalf taken by those representing him. In my judgment, therefore, in this case there is even less scope for making an order against the legal representatives which would leave the defendant himself without any sanction against them."

For obvious reasons that statement of principle was not available to His Honour Judge Hicks QC but it does seem to me to be of sufficiently general application to cover the facts of this case and clear authority that the thought processes of Lord Justice Ward as expressed in Hytec remain relevant in applying the Civil Procedure Rules. Of course, in the passage cited from the judgment of Peter Gibson LJ allowance is made for the exceptional circumstance an example of which may be found under CPR 3.9 (1) (f) which requires the court on an application for relief from sanctions to take into account, amongst other things, "whether the failure to comply was caused by the party or his legal representative."

30. Accordingly in the circumstances of this case I would hold that the judge was wrong to give weight to the fact that the delay was to be laid at the door of the solicitors rather than Mr Daryanani personally.

31. But that was only one of the matters which the learned judge took into consideration. He also considered prejudice and whether or not a fair trial was still possible. To the limited extent already explained he did hold that it was still possible to have a fair trial. That forms the basis of the second ground of appeal to which I now turn.

Prejudice.

32. At paragraph 68 the judge said this:

"As to prejudice to the defendants and the difficulty of conducting a fair trial, on most issues of liability the most relevant evidence as appears from paragraph 13 - 30 above does not depend upon memory but is documentary or derived from the defendant's own pleadings and statements. I take into account that oral evidence would also be called, including any evidence which the defendants might wish to give or call in explanation or qualification of the documents or their earlier accounts, and that the cogency of that oral evidence would inevitably suffer from the long delay since the relevant events, but any resulting prejudice to the defendants or difficulty for the trial court would not in my judgment be unusually great."

If it is remembered that the terms of the Tomlin order were such as did or might create a strict settlement which in turn had serious implications for the trust which it was intended to set up and that responsibility for the deficiency lay with one or other or both of the defendants and, moreover, that it is admitted that Mr Daryanani was badly advised as to the effect of the Tomlin order, it might appear that Mr Daryanani has a pretty solid case without recourse to any oral evidence at all. For my part I would have the greatest difficulty in reaching a different conclusion from that of the judge.

33. I would wish to take stock before turning to the final ground of appeal. In my view the judge misdirected himself with regard to the question of blame for the delay but was entirely right in his conclusion as to the possibility of a fair trial on the remaining issue. How does that leave his decision not to strike out? In my judgment unless the decision to strike out were to be by way of penalty the judge's order should stand. I am quite sure in my own mind that the judge would have reached the same conclusion absent the misdirection.

34. The leaves the third and final ground namely that the claim is valueless in its present limited form.

Damages.

35. I do not doubt that the scope of the Civil Procedure Rules is wide enough to allow the court to halt an action for breach of contract where loss and damage is incapable of proof. It is unnecessary to consider whether the relevant rule is to be found in part 3 or part 24. Of course, proof of damage is necessary to the claim in negligence. The judge dealt with the matter at paragraphs 70 - 72 of the transcript. I quote:

"70. As to quantum Mr McPherson submitted on the summary judgment application that even if breach of duty were established there was no evidence of loss and on the striking out application that there would be prejudice to the defendants and unfairness to the court in dealing with this issue at trial.

71. I did not discuss this aspect separately when dealing with the application for summary judgment, because it seems to me self evident that if the Tomlin Order had comprised the terms of the offer which the defendants say was made and accepted, instead of the terms it did contain, Mr Daryanani's resulting interest in the property would have been much more valuable than the one he obtained. The comparison is between outright ownership of the whole property in equity, subject only to a personal licence for the parents to occupy the first floor for life, on the one hand, and on the other hand reversionary interest only, expectant on the life interest of the parents in the whole property, without any right of occupation of any part meanwhile, and subject to the exercise of either parent at any time of a life tenants powers, including the power of sale, after the exercise of which the reversionary interest would be only in the proceeds.

72. For the same reason I see no difficulty in dealing with that issue at trial. It is essentially one for valuation evidence and a valuers report was indeed served by Mr Daryanani as long ago as 20 August 1993 and should have been served by the defendants by 29 December 1993. Mr Daryanani's other pleaded head of damage, for anxiety and distress, if recoverable, should also cause no significant prejudice or difficulty."

Again I find myself quite unable to disagree with either the approach or the conclusion of the learned judge.

36. For all those reasons I would uphold the decision of His Honour Judge Hicks QC and dismiss the appeal.

SIR RONALD WATERHOUSE:

37. I agree that the appeal should be dismissed for the reasons given by my Lord Justice Mantell.

LORD JUSTICE OTTON:

38. Unlike my Lord, Mantell LJ, I have experienced considerable difficulty in concurring with the conclusion of the Judge below that:

"As to prejudice to the defendants and the difficulty of conducting a fair trial, on most issues of liability the most relevant evidence as appears from paragraph 13 - 30 above does not depend upon memory but is documentary or derived from the defendant's own pleadings and statements. I take into account that oral evidence would also be called, including any evidence which the defendants might wish to give or call in explanation or qualification of the documents or their earlier accounts, and that the cogency of that oral evidence would inevitably suffer from the long delay since the relevant events, but any resulting prejudice to the defendants or difficulty for the trial court would not in my judgment be unusually great."

39. It seems to me that any Judge will find it difficult to do justice to both parties in respect of that part of the Claimant's case which depends upon the recollections of what was said in February 1989 in the course of this settlement negotiations which led to the terms of the `Tomlin Order'.

40. However, on reflection, I have come to the conclusion that the finding of the judge on this issue is one of fact. There was evidence upon which he could reasonably reach this conclusion. Consequently I am not persuaded that I should dissent from or that this Court should interfere with the finding.

41. This reservation apart I agree that the Appeal should be dismissed for the reasons given by Mantell LJ.