Hodge: Claim may be an abuse of the rules on court fees
A High Court judge has used a case where 10 law firms are being sued to warn about “extreme attempts” to bring such claims in one action.
His Honour Judge Hodge KC in Manchester said this could amount to an “abuse of the rules” on the payment of court fees.
He gave the warning as he refused an application by Vincent Solicitors to strike out a negligence claim brought by 35 clients it acted for on the purchase of 50 flats in a buyer-funded, off-plan development in Liverpool.
HHJ Hodge said the claim against Vincents was part of larger claim, in which a single court fee of £10,000 was paid on the issue of claims in excess of £6m by 94 claimants against 10 different conveyancing firms.
The judge said the courts were “increasingly being confronted” by “extreme attempts” of this kind.
Whilst it “may be convenient” to join in one claim all the purchasers of units in the same development who used the same firm of solicitors or licensed conveyancers and the same standard-form documents, it was “stretching the limits of the ‘convenient disposal’ test to join claims against different conveyancers – some solicitors and other licensed conveyancers – who used very different forms of documentation in a single set of proceedings”.
HHJ Hodge said he was also concerned that it “may constitute an abuse of the rules governing the payment of court fees on starting court proceedings”.
The High Court heard that the purchasers lost “substantial up-front payments on the failure of the development”. HHJ Hodge said that, in the case of Vincents, the deposits paid totalled around £2.7m. The claimants also paid reservation fees and in some cases further instalments of the purchase price.
The development went into compulsory liquidation in June 2020, and the uncompleted development sold for only £4m.
“The claimants allege that they have derived no value from their investments, and have lost the substantial up-front payments and, in some cases, further instalments paid to the developer’s solicitors as ‘stakeholder’.
“All the claimants allege that these losses were their respective conveyancer’s fault because they were not properly advised of the risks of investing in this development. The claimants seek damages for losses resulting from the defendants’ alleged breaches of duty.”
HHJ Hodge most of the claims had been stayed because “the relevant defendant is in insolvent liquidation or has settled”. Only the claims against the second, seventh and tenth defendants – Vincents was the latter – remained live and most were against Vincents.
One of the difficulties, he said, was that the allegations by all 94 claimants against all 10 defendants were set out in a single particulars of claim, supplemented by a spreadsheet setting out any particular material facts distinguishing the claimants.
“However, this spreadsheet does not address, or identify, any particular characteristics, or vulnerabilities, of individual claimants. Nor does it condescend to particulars about any discussions with particular clients of Vincents.”
The judge said “substantial clarification, and amplification” of the claimants’ case was required.
“Vincents need to know the particular facts and matters upon which these 35 claimants found their claims against them, so that Vincents can identify, and seek to address, the particular facts in dispute, and focus upon the matters relevant to these claims.
“At the moment, this exercise is clouded by the use of generic, and ‘scatter-gun’, particulars of claim, which divert Vincents’ attention away from what is strictly relevant to the case against them, as distinct from other of the defendants, which leave some matters to be inferred, and which leave other facts and matters unpleaded.”
However, HHJ Hodge said the law firm’s strike out application should not be decided on “at the present time” and the claimants should be given an opportunity to amend their statements of case.
On at least a “preliminary, and provisional” basis, there “may be some traction in at least some of the claimants’ allegations that Vincents was under a duty to advise that there was no “meaningful protection” under the deposit-holding machinery, to advise “against entering into these purchase contracts” and to ensure the clients “properly understood” their legal advice.
The judge adjourned further hearing of the strike-out application to allow the claimants to amend their pleadings.
We reported last week that the Court of Appeal has allowed 134 claimants to start a similar action arising from a different development against a law firm with a single claim form.
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