Matthews: No coherent case on causation
A law firm was not negligent in advice to settle £2m of claims brought by a businessman’s trustee in bankruptcy against his wife and daughter, the High Court has ruled.
His Honour Judge Paul Matthews, sitting as a High Court judge, said that even if advice provided by North London firm GH Canfields had been negligent, the claimant had set out “no coherent case on causation of loss”.
Sandra Blower brought the claim on behalf of herself and as an assignee of her daughter, Kelly.
John Blower had been a successful businessman but was adjudged bankrupt in 2014.
The trustee in bankruptcy issued proceedings against Mrs and Ms Blower over alleged transactions at an undervalue.
Mr Blower attended the mediation with solicitor Robert Whitehouse and confirmed that he could speak for the members of his family.
“I find that the family trusted Mr Blower to negotiate the best terms possible to settle the claims against them,” said the judge.
“The claimant’s own evidence was that she trusted her husband to look after her interests, and [Mr Blower’s other daughter’s husband] told Mr Blower on the telephone when asked about the potential settlement agreement that he must do whatever was best for the family.
“If any of them had wished to impose limits or ‘red lines’ on what could be agreed, they could have done so. But they did not.”
The judge also found that Mr Whitehouse’s clients impliedly authorised him to sign on their behalf “any deal which Mr Blower was satisfied was in their interests”.
Mr Blower was used to negotiating business deals involving large sums of money, HHJ Matthews noted. The family faced claims with an apparent money value of more than £2m, together with a potential costs liability already said to be £750,000.
The judge said that, during the course of the mediation in December 2015, offers and counter-offers were made but not accepted.
“Eventually the trustee agreed not to pursue any assets of the family in Spain. He further agreed to allow Mr Blower to obtain his immediate discharge from bankruptcy.” The settlement was for £1.5m and gave Mr Blower nine months to raise the money.
Mr Whitehouse read out the proposed terms over the telephone to barrister Jonathan Crystal, who “raised no objection to them, and said it would save trouble and expense for the family”.
The judge said: “In my judgment, bearing in mind the apparent weaknesses of the family’s defences to the claims, the lack of documentary support and the risks inherent in allowing Mr Blower to give evidence, the reasonably competent and diligent solicitor would also have advised settlement rather than trial of these claims.”
Mr Whitehouse “reasonably took” the barrister’s opinion as confirmation of his own view and advice, the judge went on.
“He was also not negligent in taking Mr Blower’s instructions as those of his clients. He had asked his clients to tell him of any ‘red lines’, and they had told him of none. They did not attend the mediation, and had left the negotiations to Mr Blower and Mr Whitehouse.”
Even if the law firm had been negligent, as things stood on the pleadings, there was “no coherent case on causation of loss”.
HHJ Matthews said: “The only thing that is pleaded is that the claimant would not have agreed to the settlement.
“But even if the reversal of the evidential burden meant that the defendant had to disprove that, on the evidence before me, I am satisfied that neither the claimant nor Kelly would have defied Mr Blower and refused to agree to the terms that he had negotiated.”
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