Practice and Procedure


PUBLISHED August 29, 2003

Summary judgment against the claimant in respect of claims for breach of fiduciary duty and/or breach of contract against: (i) the former partners of a law firm; and (ii) a firm of quantity surveyors and construction consultants concerning an alleged failure to advise and alleged concealment of that failure.Applications by defendants in proceedings brought by the claimant ('MML') seeking damages for breach of fiduciary duty and/or breach of contract. The 1st to 13th defendants were former partners of a dissolved law firm ('Edward Lewis'). They applied to have a judgment in default made against them set aside. Together with the 15th defendants ('JWA'), a firm of quantity surveyors and construction consultants, the former partners also applied for the claims against them to be struck out or for summary judgment to be given. MML owned a block of flats. In 1993 MML contracted with a building contractor for the refurbishment of the block. In 1994 JWA agreed to act on behalf of MML as architectural and technical consultants. By a letter dated 9 May 1994 JWA purported to lift the suspension of the contract on behalf of MML. However, the contractor judged the purported lifting of the suspension to be invalid and consequently terminated the contract pursuant to a contractual term. It was common ground that for the purposes of the present applications, an instruction by the contract administrator was required to validly lift the suspension. MML claimed that: (i) Edward Lewis and JWA breached a fiduciary duty owed to MML in failing to advise that notice lifting the suspension had to be given by the contract administrator; (ii) two of the solicitors at Edward Lewis had deliberately concealed the failure to advise on that issue; and (iii) the former partners were liable for breach of fiduciary duty and/or breach of contract arising from the formation of a sub-committee of MML's board of directors. On 29 November 2002 judgment in default was entered against the former partners. The former partners argued that the default judgment should be set aside because: (a) it was irregular because they had filed a defence on 28 November when they posted a defence to the court; and (b) they had a real prospect of successfully defending the claim. On the strike out or summary judgment application, the former partners and JWA submitted that MML's claims could have been raised in the original proceedings for damages in negligence and/or contract, and that they were an abuse of process and were fatally flawed.HELD: (1) The default judgment was not irregular. The filing of the defence did not take place on its posting. (2) The area of law on the imposition of a fiduciary duty on solicitors or others to advise that they have previously been negligent was a developing one. If the allegation that two of the solicitors at Edward Lewis had deliberately concealed the failure to advise from MML was both pleaded and supported by evidence, it was arguable that each thereafter owed a fiduciary duty to MML. (3) The claims based on alleged breaches of fiduciary duty were not simply reformulated versions of the claims in the original action. If MML could establish both a breach of fiduciary duty and overcome the limitation defence it would be because they discovered their cause of action as a result of disclosure in the original action. In that case it would not be an abuse of process to bring the present claims. (4) There was no arguable case that Edward Lewis or JWA deliberately and knowingly agreed to conceal any failure to advise from MML. The court would not impose a fiduciary duty in the absence of a deliberate agreement or decision to conceal a failure. Even if there was a breach of fiduciary duty as alleged, MML would face considerable difficulties in establishing any losses that flowed from that breach alone. (5) MML's claim in relation to the formation of the sub-committee was flawed. There was no real evidence that Edward Lewis knew of any improper motive behind the formation of the sub-committee. It was difficult to see a logical connection between the alleged actions of the sub-committee and the losses claimed by MML. Moreover MML's allegation of concealment to defeat the limitation defence was problematic. (6) The judgment against the former partners of Edward Lewis was set aside because they had a real prospect of defending the claim and there was no significant delay in bringing the application to set aside. (7) Summary judgment should be entered against the claimants in respect of the claims against the former partners and against JWA since those claims had no real prospect of success.Judgment accordingly.

[2003] EWHC 2023