Spencer: Claimant let down
A City law firm has failed to strike out a £1.3m negligence claim arising from a discretionary trust it set up for a man described by a High Court judge as “serially let down” by the profession.
Mr Justice Martin Spencer said the claim arose from “admitted negligence” on the part of Wedlake Bell, as successor practice to Cumberland Ellis, instructed principally by James Lonsdale.
The “saga” of the Sparsholt Settlement Trust “does not, I fear, reflect well on the legal profession” and he could only have “the most profound sympathy” for Mr Lonsdale.
He set up the trust in 1987 to benefit his own children, but with his nieces/nephews as backstop beneficiaries should the trust in favour of his own children fail.
However, the terms of the trust, which gave the beneficiaries the right to income when they attained the age of 25, gave all the beneficiaries equal rights, whether his children or his nieces/nephews.
At this point, the judge said, the position was salvageable as the trustees had the power to vary the trust before the right of any beneficiary crystallised. In 2008, Mr Lonsdale raised a query about the terms of the trust but nothing was done at that stage.
“Realising that [14] June 2011 was a potentially critical day [when his eldest child turned 25], he again raised the issue, but was given advice which has been admitted to be negligent so that what had been salvageable became unsalvageable.
“When the error was realised, he was encouraged to wait before seeking alternative advice in circumstances where it is said that the three-year limitation period from his ‘date of knowledge’ was running.
“And then, when he instructed new solicitors who issued proceedings which were undoubtedly in time, he was again let down by a failure to serve those proceedings in time, meaning that he has had to instruct yet further solicitors and issue new proceedings.”
Delivering judgment in Lonsdale v Wedlake Bell [2024] EWHC 712 (KB), Spencer J said the professional negligence claim was brought by Mr Lonsdale, both in his individual capacity as settlor and as trustee, along with the other trustees and his four children.
Cumberland Ellis’s professional indemnity insurer, QBE, is a defendant as well and also sought the strike-out.
The judge said that, though the defendants argued that the trustees had suffered no loss, it was desirable they should be claimants, along with Mr Lonsdale’s four children, so that there was “no arguable gap” in recoverability of losses claimed.
Whether this was described as procedural or substantive was “of no moment, because it meant that, at the stage of strike-out or application for summary judgment, it was “not appropriate to strike them out as claimants or award the defendants summary judgment”.
The judge said that, contrary to their submissions, the solicitors owed the children “a direct duty of care in circumstances such as these, where the disposition was completed and where the effect of the solicitors’ negligence was to make the disposition irrevocable”.
In any event, in a case such as this where there were arguments both ways, and the law was in “a state of development”, he exercised his discretion to refuse to strike-out the claim or award summary judgment.
There was no argument that the children’s claims were statute-barred, while in the case of Mr Lonsdale, Spencer J said he “did not consider that it is sufficiently clear, or indeed clear at all” that Mr Lonsdale acquired sufficient knowledge before January 2019 – when Wedlake Bell provided him with an analysis of what had happened and he then sought independent legal advice – to start time running for the purposes of limitation to justify striking out the claims or granting summary judgment.
The judge concluded that both the trustees and children had “viable” claims.
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