Royal Courts of Justice
Strand, London, WC2A 2LL
Before:
THE HONOURABLE MRS JUSTICE McGOWAN
Between:
GONUL GUNEY | Claimant |
- and - | |
KINGSLEY NAPLEY and another | Defendant |
Augustus Ullstein QC and Hannah McCarthy
(instructed by Khakhar & Co) for the Claimant
Ben Hubble QC and Benjamin Fowler (instructed by Bond Dickinson) for the Defendant
Hearing date: 6 September 2016
Judgment
Mrs Justice McGowan:
This litigation arises from a professional liability claim based on the Claimant’s retainer of the solicitors, Kingsley Napley (“the Defendants”). There is a long history to the litigation which concerns the estate of the late Mr Ramadan Guney (“the Deceased”). The Claimants are his children and this action is brought by Gonul Guney, (“the Claimant”) who sues on behalf of herself and for and as representing all the children of Ramadan and Suheyla Guney. Ramadan Guney died on 2 November 2006. His estate was subject to a claim for financial provision brought by his former partner Diane Holliday. That claim was brought under the Inheritance (Provision for Family and Dependants) Act 1975on her own behalf and on behalf of a child of their relationship. The Deceased was married to Suheyla Guney, the Claimant’s mother, she died on 1 January 1992. The Defendants were retained by the Claimant and continued to represent her and her family in the financial provision claim.
In very simple terms that action is based on the Defendants’ alleged negligence. It is alleged that had she been properly advised the Claimant would have settled the claim brought by Diane Holliday at a much earlier date and thereby avoided liability for the Defendants’ costs after that date as well as those of Diane Holliday following a number of costs orders made against the Claimant. There is much detail in the conduct of the core litigation which does not need to be outlined or investigated in order to resolve the current applications.
The claim was issued in 2014 and the matter is currently set down to be tried in a ten-day hearing to be listed in the second half of January 2017. The litigation was stayed by consent pending an unsuccessful attempt to mediate and settle. The stay has been lifted and preparation for trial is underway.
The Competing Applications
The Defendants have applied for summary judgment against and/or to strike out of parts of the claim in relation to various heads of loss which they submit have no reasonable prospect of success and in respect of which there is no other good reason why the disposal of these claims should await trial. That application was issued on 12 April 2016.
As late as 31 August 2016 the Claimant served an application for permission to re-amend the Particulars of Claim. By this new application she seeks to introduce two new aspects to the claim namely:
A new allegation that the Deceased did not die intestate but a Will made in 1994 remained valid. The original is said to have been lost by the Defendants and the copy (exhibited) has “cancelled” across each page, and
A new claim for £5.7m in respect of a lost chance to settle on better terms and thereby retain properties which were sold or transferred as a result of orders made in the 1975 Act claim, namely the cemetery property held by Brookwood Park Ltd, (“the Company”) and 58 and 60 Green Lanes, London. It is argued that she would have subsequently achieved greater sums for the properties and the Defendants are liable for the difference.
The Defendants’ applications seek to obtain summary judgment and/or to strike out parts of the claim under five separate heads of loss identified as follows:
Losses claimed in the sum of £504,540 arising out of a claim brought by the Company against the Claimant alleging breach of fiduciary duty,
A claim for £469,000 said to arise from the disposal of the property at 58, Green Lanes which formed part of the estate of the Deceased,
A claim for £465,000 said to arise from the disposal of the property at 60, Green Lanes which formed part of the estate of the Deceased,
Claims for lost profits allegedly suffered by the Claimant who is a solicitor and
General damages for inconvenience and stress.
Claimant’s Applications to Amend
The Claimant contends that these are not truly late amendments in the sense that they would not, on their submission, derail the trial. She argues that there is more than four months to the trial date and that the timetable for the exchange of witness statements has not yet been completed. The ultimate question they submit is, “is it going to derail the trial process?” Unless the amendments would definitely affect the trial date they should be allowed. She disagrees with the Defendants’ pessimism and submits that any new evidence required could be obtained in time.
In relation to the first proposed amendment the Claimant submits that to allow the amendment in respect of the Will would have only a limited impact on the case. It would not be a re-formulation of the case as the only consequential effect is that the administrators would have had to stand down. She also claims that the question of the validity of the Will was foreshadowed in the pleadings in that the particulars of negligence allege that the Defendants lost the original Will and failed to put it (or a copy) before counsel in good time. She accepts that it has never before actually been suggested that there was a valid Will. As to the second proposed amendment she argues that it would be largely a question of factual evidence to be given by the Claimant and members of the family.
Mr Ullstein QC submits that the amendments are necessary to ensure that justice is done between the parties. He argues that, if required to achieve a just outcome, amendments can be allowed as late as the date of trial. This application is made four months before trial and a timetable can be laid down to accommodate the exchange of evidence and disclosure which will not jeopardise the trial date.
On behalf of the Defendants, Mr Hubble QC relies on the chronology of this litigation to demonstrate the unreasonableness of the proposed amendments.
2/11/06 Ramadan Guney dies
18/3/09 1st judgment of HHJ Kushner QC on Deceased’s domicile at time of death
11/11/11 2nd judgment of HHJ Kushner QC on Inheritance Act claim.
1/10/13 these Proceedings commenced by Protective Claim Form
May 2014 Defendants delivered their files to the Claimants
26/9/14 Particulars of Claim
20/2/15 Schedule of Loss
3/6/15 Defendants seek information on costs etc
22/7/15 Claimant answers, first mention of breach of fiduciary duty claim
24/7/15 Defendants seek information re heads of loss
August 2015 Amended Particulars of Claim, basis of claim not amended
7/9/15 Claimant responds
18/9/15 Amended defence
16/11/15 Defendants say claims outside retainer or too remote and request case be set out
7/12/15 CMC Master Yoxall orders disclosure by 11/3/16 (recently completed) and exchange of witness statements (not yet completed)
12/4/16 Defendants issue application for strike out
9/5/16 Stay by agreement until 15/7/16
Defendants’ application listed for 5 or 6/9/16
31/8/16 Claimant applies to re-amend
The Defendants contend that the proposed amendments are both fundamental and too late. In addition, they submit that there are entirely at odds with the pleaded case. This litigation, in different forms, has always proceeded on the basis that the Deceased died intestate in 2006. In August 2016 it is now proposed for the first time that the 1994 Will is or may be valid. They criticise the proposed amendment, not simply on the basis of delay, but also because they argue that it is inconsistent with the case pleaded by the Claimant. They draw attention to the terms of the 1994 Will in which paragraph 4 reads as follows;
“MY TRUSTEES shall stand possessed of the residue of the said money the property for the time being representing the same and such part of my estate as shall for the time being remain unsold (all of which are hereinafter referred to as ‘my Residuary Estate’) as to both capital and income UPON THE TRUSTS hereinafter declared concerning the same:
UPON TRUST in equal shares to pay the income thereof for the lives of my following children
(a)Mrs ALEV KANLI of 16, Andrew Road, High Brooms, Tunbridge Wells, Kent 9DN TN4
(b)Mr ONDER GUNEY of 60, Green Lanes, Newington Green, London N16 9NH
(c)Mr ERKIN RAMADAN GUNEY of 58, Green Lanes, Newington Green, London N16 9NH
(d)Miss GONUL SEMA GUNEY of 58, Green Lanes, Newington Green, London N16 9NH
The Defendants point out that the terms of the Will mean that four of his six children would have received only an income for life with further provision for grandchildren and great-grandchildren. They say that this is at odds with the rest of the claim that they have lost a chance to share in the increased value in properties, particularly the cemetery owned by the Company. If the point that the Will is or might be valid had been raised earlier the litigation would have taken an entirely different route. It would have been necessary to determine if the Will applied and the matter would have been further complicated by the issue of property in Cyprus, which has never formed any part of this litigation.
The second proposed amendment seeks to argue that if the Family Inheritance claim had been settled earlier, on proper advice, funds could have been paid to Miss Holliday without the need to sell the cemetery and the other properties at 58 and 60 Green Lanes, accordingly the Claimant would not have lost any subsequent increase in value. This is an additional layer of claim beyond the existing claim for costs incurred in pursuing the litigation for longer than was appropriate.
The Defendants rely heavily on the chronology of the litigation. They say that the proposed amendment raises a factual issue as to whether there would have been a settlement at an earlier time and on what terms. This would require an investigation of the financial affairs of the Claimant’s family members at the dates it is claimed they might have settled to see if they could have raised the money without the sale of some or all of the properties. The valuation of the cemetery would be a very contentious issue. It was in the interests of the Claimant for the value to be as low as possible during the Family Inheritance litigation, it appears that she was surprised by the order that Miss Holliday’s claim should be met by shares in the cemetery rather than a financial sum. Even on these papers there are a number of vastly different valuations given; differing by millions of pounds. There would also be the need for expert evidence as to the value of the other properties at 58 and 60 Green Lanes. They say that, in addition to new witness statements of fact, expert valuations would be required and the trial date would inevitably be lost if these matters were to be litigated.
Defendants’ Application for Summary Judgment or Strike-out
The Defendants seek summary judgment on the first three of their five points (listed above in paragraph 6) and strike out on the fourth and fifth. They accept that it is not for this court to conduct a mini-trial at this stage and that if further evidence could alter the position they should not succeed. They submit that these parts of the claim are incomprehensible in fact and/or unworkable in law, some of which they argue is demonstrated by the Claimant’s desire to amend.
Breach of fiduciary duty. The Claimant’s family was apparently spending funds that belonged to the Company. Some of this money was spent on general items and some on paying fees owed to the Defendants. They faced a claim from the company for breach of their fiduciary duty. The Claimant seeks to argue in this claim that the Defendants were negligent in not telling them that they should not spend company money as through it was their own. The Defendants dispute that there was any such duty placed upon them under their retainer. In any event, they point to the fact that they did enquire of the Claimant as to the origin of the funds for their own money laundering purposes and were told in terms by the Claimant, herself a solicitor, that everything was “above board”. They say that there is no basis upon which this part of the claim can succeed and there is no good reason why resolution should wait until the trial date.
58, Green Lanes. The Claimant claims the sum of £469,000 as loss as a result of 58 Green Lanes being included in the estate of the Deceased. The Defendants argue that this is entirely misconceived and wrong in fact as HH J Kushner QC held that this property was actually held in the estate of the Claimant’s mother. Accordingly, this property fell to be divided between the six Claimants and they have achieved what they seek. In any event the claim ignores the fact that the Claimant herself bought this property after the case. Accordingly, the Defendants say that there is no prospect of success under this head of loss and no good reason why resolution should wait until the date of trial.
60 Green Lanes. The Defendants submit that the pleaded case is far from clear. The loss claimed relates to the proceeds of sale but it is impossible to see to which, if any, pleaded allegation this relates. It is argued by the Defendants that the Claimant accepts that this part of the claim is misconceived in so far as she seeks to amend it in her application. Again the Defendants say there is no prospect of success under this head and no good reason why resolution should wait until the date of trial.
Loss of profits. The original Particulars of Claim stated that losses under this head would be identified in the schedule of loss. That has not happened. As of today’s date this claim has never been particularised. It is said that the Defendants must have been aware that by devoting time to this litigation the Claimant’s own practice as a solicitor would suffer and accordingly her profit share in her partnership would be reduced. The Defendants argue that this loss is not recoverable in any event, even if particularised. In any event it would require expert evidence as to the consequence of external factors, such as changes in legal aid rates, to be called. They say it is not within the scope of the duty the Defendants owed to ensure that a client does not divert their attention from their own livelihood in order to concentrate on the litigation in process. They submit it should be struck out.
Inconvenience and stress. Damages for inconvenience and stress are irrecoverable in the submission of the Defendants. This was not a contract for the provision of some form of pleasurable activity such as a holiday. If the Claimant suffered stress the Defendants say this is an inherent feature of litigation, particularly within a family. It cannot be said to have been caused by the Defendants or their conduct of litigation. In any event it is only now, in part of the proposed amended claim, that it is said that the Claimant was made ill by the stress of the litigation and will in due course produce medical evidence. This, say the Defendants, is to alter the basis of the claim under this head of loss and to seek damages for personal injury. In any event they argue that it is too late now to make such assertions and seek to pursue them without any medical evidence ever having been disclosed let alone served. They submit this particular should be struck out.
The Claimant argues that these are matters of evidence and as such should not be determined at this stage. She repeats the general submission that there is time left before trial to serve new evidence and that the issues should be decided as part of the whole case.
Breach of Fiduciary Duty. It is submitted that the Defendants were aware of the source of the funds from the company and that they had a duty to raise that with the Claimant. In addition, it is said that a query from Miss Holliday put them on notice as to possible “misappropriation” of company funds and they were under a duty to challenge the Claimant on this. It is said, notwithstanding the Claimant’s statement that the funds were “above board”, they should “have sat the Claimant down and warned her of the consequences”.
58, Green Lanes. It is conceded, on behalf of the Claimant, that there is an element of double counting under this head. It is submitted that if the case had been settled then the sum required could have been raised from another source, the property would have been retained and any subsequent increase in value that might have accrued was lost to the Claimant’s family.
60, Green Lanes. This submission is in similar terms, if the matter had been settled earlier, the property would not have been disposed of and the putative loss is the liability of the Defendants.
Lost Profits. It is not accepted that this is a new claim. It is said to be plain and obvious that the Claimant would not have been able to apply herself to her practice as long as the litigation continued. Therefore, it is said, the Defendants are liable for any loss of profits that might be identified and related to her lack of attention to her own practice. It is denied that expert evidence would be required.
Inconvenience and Stress. It is submitted that there is no attempt to construct a claim for personal injury under this head. Rather, it is submitted that this is a claim for physical consequences arising out of a breach of contract. It is denied that expert evidence would be required under this head. It is submitted that a Doctor would give factual evidence of his findings and that his diagnosis as to cause of any symptoms would also be factual rather than expert evidence.
Discussion
The imperative of strict adherence to the rules of procedure governing the conduct of litigation has changed substantially in recent years. It is now part of the scheme of things that regard must be had to the proper management of a case both intrinsically to the case and extrinsically in its effect of the progress of litigation generally. Inaction or flawed action can now be penalised even without proof of serious consequential effect on the litigation: Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, Denton v TH White [2014] EWCA Civ 906. The obligation to comply with the rules of practice and procedure will be enforced with greater rigour than before. Delay will meet with less tolerance and intervention to ensure that only those matters which should be litigated are actually litigated will increase. The Civil Procedure Rules seek to reinforce this position and the line of recent authorities is familiar. The rules are not inflexible but will be enforced strictly, more strictly than before, Swain-Mason v Mills & Reeve LLP [2011] EWCA Civ 14.
It is a balancing act between competing factors and is a matter of discretion. There is no timetable which weighs the significance of an amendment against a time scale of preparedness for trial. It is no longer acceptable to use the test advanced by the Claimant in this case that if the trial date can withstand the amendments, they should be allowed without more. If the date fixed for trial is to be lost, then the factors would need to be extremely compelling. The fundamental principle of seeking to achieve justice in the case stands and if the onus on the applicant to show that the justice of the case would be detrimentally affected then that could be dispositive. It may also be the case that the reason for a late amendment has an influential bearing on its reception. Hague Plant Ltd v Hague and ors [2014] EWCA Civ 1609.
In this application there is no reason given for the lateness of the proposed amendments. Nothing is raised in the application that could not have been pleaded in the original or amended Particulars of Claim. No explanation is given for the omissions or the delay. The proposed claim that the 1994 Will was or might have been valid is of great significance. It goes much further than the appointment, identity or removal of particular administrators. The entire nature of the litigation would have been different. Miss Holliday could still have brought her claim but the financial positon of the Claimant and her family would have been entirely different. Only four of them would have had an income for life. The estate and its resolution would have involved a determination of the property issues in Cyprus. It would have been a different piece of litigation and any settlement that might have been advised or reached would have been equally different.
Evidence will have to be obtained to deal with the second proposed amendment and whilst I accept Mr Ullstein’s submission that that would not be a serial exercise and the Defendants’ predictions of sequential service are too pessimistic, I do not accept his assertion that all evidence, factual and expert can be obtained and exchanged within a timeframe that does not imperil the trial date. The ramifications that the first proposed amendment would have on this aspect of the case are also very difficult to determine. The proposed amendments cannot be viewed in isolation, if the issue of the validity of the 1994 Will is live, it is impossible to imagine that that would not have significant consequential effects of the issues relating to the other properties.
In considering the justice of the issue it is necessary to look at the merits. If the amendments were “knock out blows” that would obviously have a bearing on the exercise of discretion. A compelling factor, capable of determining the outcome is much more likely to be admitted that a “kite being flown” in forensic terms. There is nothing compelling in the amended claims that would be pursued if these amendments were allowed. They are factually inconsistent with many other aspects of the Claimant’s case and in part are inconsistent with logic.
The Defendants’ applications for summary judgment and/or strike out are made in good time. CPR 24.2 governs the grant of summary judgment and requires some investigation of the evidence. To grant summary judgment the court must consider that there is no real prospect of success on the issue and there is no other compelling reason why the issue should be disposed of at trial.
On the first issue of the breach of the fiduciary duty, there is no basis upon which to assert that the defendant solicitor owed a duty to the claimant to investigate that the funds she claimed were hers to use were in fact the property of the Company. Even if that was not right, he did ask her about the source of the money and she said it was all “above board”. For this part of the claim to succeed not only would there have to be a duty to investigate the funding but there would have to be a duty to challenge a client and go behind an assertion that all was well. Any duties under money laundering legislation are not owed to the client and cannot be said to transfer across. There is no real prospect of success on this issue and no reason why this should have to wait to be disposed of at trial.
The claim in relation to 58 Green Lanes has an inherent lack of logic. The claim is that this property should not have fallen into the Deceased’s estate and should have stayed in the mother’s estate. In fact, HHJ Kushner QC found that it did fall into the mother’s estate. The claim is based on the loss of an opportunity to share in an increase in value but that cannot flow from a breach of professional duty by the solicitor and in any event it ignores the fact that the property was actually bought by the Claimant herself. There is no real prospect of success and this does not need to wait until trial for disposal.
The same is true of 60, Green Lanes. The claim at the core of the case is for the costs paid as a result of the settlement being later than it should. It is too remote to claim that property sold to settle the claim would not have been sold and the possible increase in value has been lost. In fact, on the basis of a late settlement the Claimant actually held on to the property for longer and if any increase in value is always linear she made more than she would if it had been sold to match the settlement earlier. It has no real prospect of success and there is no reason why it should wait for trial for disposal.
CPR 3.4.2 governs the strike out which should not be granted unless the court is sure that the claim is bound to fail.
The court may strike out a statement of case if it appears to the court—
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
(c) That there has been a failure to comply with a rule, practice direction or order.
The Claimant is a solicitor, she volunteered to assist in the gathering of evidence for the case. She seeks loss of profits in her own practice. At no point were the Defendants put on notice that this was having a detrimental effect on her own practice and it was never in the contemplation of the parties that they had assumed such a risk. Even if they had been made aware of such a risk it is too remote from the duties they assumed to include this. In any event this has never been particularised and still remains an assertion without evidence. There is no reasonable ground for bringing this claim, it should be struck out.
The Claimant seeks damages for stress and inconvenience. Such general damages are irrecoverable. This was a not a contract for the provision of a holiday, a pleasurable activity relaxation or peace of mind. Johnson v Gore Wood [2002] 2 AC 1. This was a contract to act in relation to a family dispute over inheritance matters. It is too remote to say that solicitors conducting litigation assume liability for the stresses that that imposes on the litigants involved. It is difficult to imagine what would happen to litigation if there was such a general duty. The Claimant denies that this is a personal injury claim and relies on Malyon v Lawrance, Messer & Co [1968] QBD 2 539 but that was a case in which the litigant claimed damages for the aggravation of his injuries by the solicitors’ negligent delay when those injuries were the cause of action in the case. This claim discloses no reasonable ground and has never been particularised.
The amendments which the Claimant seeks to make are misconceived and much too late in the protracted history of this litigation. They appear to have been made as a reaction to the Defendants’ application for summary judgment and strike out. Those applications for summary judgment are a proper application of the Civil Procedure Rules to ensure that only essential pieces of proposed litigation are actually litigated. The central issue of whether there was negligence on the part of the Defendants is not a platform for remote and unforeseen claims and they should not be allowed to pad out the simple issue to be determined.
Accordingly the Claimant’s applications to amend are refused. The Defendants’ application for summary judgment is granted under the first three heads and for strike out under the fourth and fifth. It is regrettable that a good deal of time and money has had to be spent in resolving these issues. There is no reason why costs should not follow the event.