Detailed notes on the solicitors' file, which supported the Courts approach in Moy v Pettman, were vital in the decision of Mr Justice Vos to strike out a claim against a barrister and solicitor. Kennedys acted for the solicitors.

The Claimant instructed the solicitors (DGB) and barrister (Macdonald) to defend him in a substantial action by Lloyds Bank for sums due under a corporate guarantee, which he signed whilst managing director of a (now) insolvent company. The Claimant had granted a legal charge over his interest in his home to the Lloyds. Lloyds demanded money due under the guarantee when the company went into voluntary liquidation. The Claimant entered into an Individual Voluntary Arrangement (IVA) with his creditors which did not include his home. The Bank issued a claim against the Claimant seeking possession of his home and claimed sums due to repay the sum due under the guarantee. Whilst Lloyds included its claim in the IVA for dividend purposes only, it also stated that it had not relinquished its right to rely on its security over the Claimant’s home.

The Claimant raised various defences including that the bank’s proof in the IVA amounted to a release of security over his home. Counsel advised that the IVA argument was unlikely to succeed at trial and the claim by Lloyds was eventually settled by negotiation immediately before trial. The Claimant subsequently commenced proceedings against DGB and Macdonald alleging that they had negligently advised him to settle with Lloyds at too high a level and, in particular, that Counsel had “negligently advised him” that he would withdraw from the case if he did not accept Lloyds' settlement offer. The Defendants applied for summary judgment (or strike out in old money).

CPR Part 24.2 provides that the court may grant summary judgment against a claimant on the whole or part of a claim if it considers that the claimant has no real prospect of succeeding on the claim or issue, and there is no other compelling reason why the case or issue should be disposed of at a trial. The inclusion of the word "real" means that the respondent has to have a case which is better than merely arguable. The test in Part 24.2 sets a high bar and is often difficult to overcome in document intensive and fact sensitive professional negligence claims.

Held: Vos J found that the allegations made against Macdonald and DBG were unsustainable and there was no real prospect of the claim succeeding. He specifically noted that the Defendants' advice and approach (backed by the solicitor's detailed file notes) was entirely prudent and realistic and had been given in a sensible and balanced way. He therefore held, following Lord Caswell in the leading case of Moy v Pettman, that the advice provided was such that no reasonably competent counsel of Macdonald's level of seniority, or for that matter a reasonably competent solicitor, could have given. Therefore, the Claimant's prospect of doing better than the deal negotiated with Lloyds was “small” – Note not non-existent. We should also add that DGB (as solicitors) had another layer of protection via a reasonable reliance upon Counsel defence, but this was not required due to the general finding in favour of the legal team.

Comment: This case highlights that:

  • Summary judgment can be successfully used in professional negligence claims which do not involve substantial dispute as to the facts. In this case the solicitor had made detailed attendance notes of all the meetings, discussions and conferences, which provided valuable contemporaneous evidence and the Claimant was drawn into admitting that the contents of the notes were not disputed in any essential respects; and  
  • Cases do not have to be simple to make them suitable for summary judgment. The underlying bank guarantee claim was extremely complex and involved volumes of documentation. However, the issue for determination on summary judgment in the professional negligence claim was whether the advice on settlement was such that no reasonably competent solicitor or barrister could have given. Negotiation is very much a matter for the solicitor and, as we all know, it is not an exact science, which is why it is encouraging to see Vos J conclude that the settlement was within a reasonable range of possible outcomes.