Author: Gurpreet Dhillon

Solicitor’s Duties – Liability Capped?

Posted on by Gurpreet Dhillon

Solicitor’s Duties – Liability Capped?

The Supreme Court has recently deliberated on a professional negligence case against a firm of solicitors in the matter of BPE Solicitors and Anor –v- Hughes –Holland (in substitution for Gabriel). The Court considered limitation of liability and recoverable losses in accordance with the SAAMCO test (South Australia Asset Management Corp v York Montague Ltd).

Background

The Claimant in this matter instructed his solicitors in relation to a loan he intended to make to his friend’s company Whiteshore Ltd. The loan was for £200,000.00 for a period of 2 years and interest at 28% per annum. The loan was secured by way of first legal charge against the company’s development property which was due to be converted into offices. The company used £150,000.00 to pay off a loan secured on the property. It came to light once the Claimant enforced against the company and took possession of the property, that it was in fact worth only £13,000.00. The Claimant sued the firm for breach of duty in drawing up the relevant documents, namely the facility agreement.

SAAMCO Test

The SAAMCO test distinguishes between the duty of the solicitor to provide information to allow the client to decide a course of action (information duty) and the duty to advise the client on the relevant course of action (advice duty).

Advice Duty: the solicitor assumes full responsibility and owes a duty to the client to consider all the relevant factors involved in the transaction. In the event, there has been any negligent advice then the solicitor will be liable for all the foreseeable consequences of the transaction entered into.

Information Duty: this is where the solicitor provides a limited part of the material on which the client relies on before entering into the transaction. The overall assessment of the commercial viability of the transaction is solely at the discretion of the client. In the event, negligent information has been provided; the solicitor will only be liable for the financial consequence of the incorrect information and not for all of the losses.

Findings

The Judge at the first instance held that the solicitors had been in breach of their duty as they failed to inform their client of the intended purpose of the loan to the company. Therefore, the Judge awarded the Claimant all of his losses.

BPE appealed the decision; the Court of Appeal overturned the decision by applying the SAAMCO test. The Court of Appeal held that the solicitors had provided information only and did not advise the client on the course of action to take. As a result of the client entering into an information retainer the Court of Appeal held they would only consider losses attributable to the information being incorrect.

The Supreme Court confirmed the Court of Appeal’s position, as the solicitor’s had only provided the Claimant with information regarding one of many issues. The Claimant had failed to investigate the commercial risk involved in providing the loan, as he did not obtain a proper valuation of the property or assess the company’s financial situation. The Court held that in any event the Claimant would have suffered losses as they arose from commercial misjudgements and such misjudgements were not in the remit of the solicitor’s control.

This case has provided further clarity on liability and recoverable losses from solicitors when providing wrong information. It has removed any doubts that solicitors are liable for full transactional losses and that their costs are only capped to consequences of the information being incorrect.

Enforcing A Money Judgment

Posted on by Gurpreet Dhillon

Enforcing A Money Judgment

After spending vast amounts of time and money in obtaining a favourable Judgment, your opponent simply does not pay your damages and/or costs? What can you do? Well not to worry as there are various steps that you can take in enforcing a money Judgment, they are as follows:-

Order the Debtor to Attend Court

The debtor will be summoned to attend Court either in front of an officer of the court or a Judge to disclose all of their income and expenditure. This will allow you to ascertain whether it is appropriate to pursue enforcing a money judgment action against the debtor following discovery of their financial position. It will save a lot of time and more importantly money to ascertain the debtor’s means, especially if the debtor has no assets or disposable income. If the debtor does have disposable assets then this will allow you to target those assets that are worth pursuing.

Third Party Debt Order (‘TPDO’)

You can apply for an ex-parte (without notice) application for the Court to freeze the money in the debtor’s bank account. This will be particularly useful as the debtor will be unaware of your actions. Upon obtaining an interim TPDO the Court will decide how the money from the account can be used towards clearing the Judgment debt.

Attachment of Earnings Order

You can request for the Court to deduct money from the debtor’s wages to contribute to the debt until it is cleared. If the application is successful, a copy of the Order will be sent to the employer, who will deduct the amount from the wages prior to the debtor receiving them. This is usually taken from any surplus income the debtor may have.

Send Bailiffs to Recover the Debt

You can instruct the court bailiffs to recover the debt from the debtor. They will provide the debtor with 7 days’ notice to clear the debt, and if the debtor fails to do so, the bailiffs will attend the debtor’s property and repossess the debtor’s items which they consider to be valuable. These items will then be placed into auction with the proceeds going to the creditor.

Obtain a Charging Order on the Debtor’s Property

If you believe the debtor has equity in their Property, you can make an application to Court to register a charge over the Property for the Judgment amount. Thereafter, if the debtor stills refuses to clear the debt you can apply to the Court for an order of sale of the Property.  

Summary

The relevant Court fees are listed in Form Ex50. All of the above methods of enforcement can be used in conjunction with one another. Therefore, it is dependent on the material facts of each individual case before deciding which method is most appropriate. Please bear in mind, you cannot commence enforcement proceedings until 14 days after Judgment or unless the Court Orders otherwise.

If you are considering enforcing your money Judgment, contact our experienced litigation department today. Our dynamic team think outside the box to assist you in finding the best solution based on your needs and circumstances.

Sanctions for Delaying Detailed Assessment Proceedings

Posted on by Gurpreet Dhillon

Costs: Sanctions for Delaying Detailed Assessment Proceedings

Detailed Assessment is the process where parties costs are assessed, normally by a Cost officer at the conclusion of proceedings unless otherwise ordered by the Court. The Cost officer will determine the costs payable by the paying party to the receiving party. The Civil Procedure Rules (CPR) provides a breakdown of the time limits and procedures for commencing Detailed Assessment.

CPR Time Limits

In accordance with CPR 47.7 Detailed Assessment is to be commenced within 3 months of any Judgment, direction, orders, discontinuance under Part 38 or an acceptance of a part 36 offer. Furthermore, once the Detailed Assessment has been commenced and the receiving party receives the points of dispute, the receiving party must request for a Detailed Assessment hearing within a 3 month period (CPR 47.14(1)).

Sanctions for not complying with Time Limits

The general rule is if the receiving party does not comply the above deadlines the Court will only disallow part or all of the interest payable, CPR 47.8(3) and 47.14(4). However, in more serious circumstances, the Court has the powers to make an order for the disallowance of part or all of the receiving party’s cost pursuant to CPR 47.8(2) and CPR 47.14(3).

For the latter sanction, the Court may make such an order if the paying party makes an application under CPR 47.8(1) or 47.14(3) and (4) to the Court requesting the receiving party to commence Detailed Assessment or request for a hearing within a set time period. If, then the receiving party fail to comply with the deadlines following the paying party’s application, then they are subject to disallowance of part or all of their costs.

The Court will also take into consideration other factors when determining the sanctions to impose on the receiving party, namely their conduct and reasons for their delay in commencing Detailed Assessment or requesting a Detailed Assessment hearing. The Court will look at all the facts of each individual case before making such determination.

Summary

The Court in most instances will only apply a disallowance of interest if the receiving party have failed to comply with the deadlines, however, if the paying party takes advantage of the mechanism in 47.8(1) or 47.14(3) and (4), the Court may allow for disallowance of costs.

Therefore, it is imperative that the receiving party commences proceedings within the above time limit as they may face sanctions, and similarly if there is a delay, the paying party is strongly encouraged to make the relevant application. Failing to make an application the Court will be minded to disallow only interest, unless there are exceptional circumstances for the Court to impose further sanctions.

– Gurpreet Dhillon

Feel free to contact us and get in touch with our experienced dispute resolution department today. Our dynamic team think outside the box to assist you in finding the best solution based on your needs and circumstances.

Interpretations of Exclusion Clauses

Posted on by Gurpreet Dhillon

Contracts: Update on Interpretations of Exclusion Clauses between Commercial Parties

Exclusion clauses are contractual provisions restricting or excluding liability for a specific event. The Court of Appeal has recently deliberated on the construction of exclusion clauses and more particularly how the principal of ‘contra proferentem’ should apply. Contra proferentem is the principle were ambiguous clauses in a contract should be interpreted against the interests of the party seeking the clause to be included in the contract.

Background

In the case of Transocean Drilling UK –v- Providence Resources PLC [2016] EWCA Civ 372, Transocean hired a semi-submersible drilling rig to Providence. After initiating the work, it came to Providence attention that the rig was faulty, namely a misalignment of part of a blowout preventer. As a result of the faulty rig, work was suspended for a period of five weeks.  Providence refused to pay the hiring fees of the rig, Transocean brought an action for the hire costs, and consequently Providence sought to set off the hire costs against their losses plus $10,000,000.00 paid for goods and services which were wasted (spread costs). The contract between the parties had various exclusion and indemnity clauses. The main clause in dispute in this case, was the clause excluding ‘consequential losses’. The consequential losses in this matter referred to the spread costs. The High Court Judge, Popplewell J, took the view that contra proferentem should apply to the construction of the exclusion clause at the first instance, therefore, deciding with Providence. Transocean appealed the matter, and the Court overruled the Judge’s decision and applied three distinct principles.

New Principles

  1. Contra proferentem should only be used as a last method and only apply to cases dealing with ambiguous clauses.
  2. Secondly, that this is a separate principle to the principle that there is a presumption that neither party intends to abandon any remedies for its breach in the absence of clear words [Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689]. Therefore, parties if they wish to do so can abandon remedies, but the language used in the construction of the clause must be clear and unambiguous.
  3. Contra proferentem principle has no part to play if the clause affects both parties equally and more importantly were both parties have equal bargaining power. Therefore, the Court will place weight to the individual facts of each case depending on how the clause affects the parties and how much bargaining power the parties have.

The findings of the above case place extra burden on the parties to agree to robust exclusion clauses, as the Court are minded to take the literal meaning of the clause rather than use their own interpretation for commercial purposes. Therefore, it is imperative that the each and every exclusion clause is constructed carefully and precisely to demonstrate each party’s intentions, as it will be difficult to escape from liability if any unfavourable exclusion clause is agreed.

– Gurpreet Dhillon

Feel free to contact us and get in touch with our experienced dispute resolution department today. Our dynamic team think outside the box to assist you in finding the best solution based on your needs and circumstances.