Charlotte Pope-Williams and Daniel Goldblatt (instructed by McFaddens LLP) for the Appellant.
Lady Justice Asplin:
- This is an appeal from an order made by His Honour Judge Paul Matthews on 14 November 2024 dismissing the Appellant Mrs Sandra Blower’s claim in professional negligence against the Respondent firm of solicitors, GH Canfield LLP (“Canfields”). Mrs Blower brought the claim and brings the appeal in her own right and as assignee of her daughter, Kelly Blower’s rights, pursuant to a deed of assignment dated 31 January 2021. The judge dismissed the claim on the basis that Canfields had not been negligent and that even if he was wrong about that, causation and loss had not been adequately pleaded and, even on the basis set out in the closing submissions, there was no coherent claim for loss.
- Permission to appeal was granted by Zacaroli LJ on 6 February 2025 on two grounds. The first was whether the judge erred in failing to consider or apply the law and applicable regulatory standard on conflicts of interest in the context of Canfields’ alleged negligence, or at all. The second was that the judge erred in finding that even if Canfields had been negligent, the claimant (Mrs Blower) had failed to plead a coherent case in relation to causation and loss; and even if there were some deficiencies, in relation to causation, the Court should have considered the issue because it was just to do so.
Background, mediation and settlement agreement
- I take the background facts from the judgment below, the neutral citation of which is [2024] EWHC 2763 (Ch). Reference should be made to that judgment for the full details.
- The claim in professional negligence is said to arises from a settlement reached at a mediation conducted on 9 December 2015. A settlement agreement was drawn up and signed on the same date. The mediation took place because Mrs Blower’s husband, John Blower, had been adjudged bankrupt on 22 May 2014 and the trustee in bankruptcy, Mr Paul Allen, commenced proceedings against Mr Blower and members of the Blower family and intimated other claims against them.
i) in September 2014, Mr Allen commenced proceedings against Mr and Mrs Blower in relation to a property at 201 Park Gate, Upper College Street, Nottingham, NG1 5AP (“201 Park Gate”) which was registered in their joint names, on the basis that half of the beneficial interest (belonging to Mr Blower) vested in him as trustee in bankruptcy. The Blowers’ daughter, Kelly, claimed to be the beneficial owner of 201 Park Gate and in February 2015 she was joined as a party to the trustee’s application for an order for sale of the property;
ii) in April 2015, the trustee sent a letter before action to Canfields as Mrs Blower’s solicitors. It intimated claims in respect of: (i) the payment to Mrs Blower of Mr Blower’s half of the proceeds of sale of an apartment at Camino de Angel in Spain, as an unsanctioned post-petition disposition of the bankrupt’s property; (ii) a total of £107,263.86 in relation to three payments made to Mrs Blower from Mr Blower’s TorFX account in January and March 2012, as transactions at an undervalue at a relevant time; and (iii) €55,550.26 (then £39,829.50) being half of the balance of €111,100.52 in a joint account of Mrs Blower and her husband with Banco de Sabadell which on 24 March 2012 was changed to an account in Mrs Blower’s sole name, as a transaction at an undervalue at a relevant time. The trustee calculated the total value of all three claims as £616,762.36; and
iii) in September 2015, the trustee issued an application against Mr and Mrs Blower’s daughter and son in law, Natalie and Jason Turnbull for declarations in respect of payments totalling £1,517,634 which were alleged to be transactions at an undervalue made at a relevant time. They were: a £600,000 payment from Mr Blower’s TorFX currency trading account; a £400,000 payment from Mr Blower of 24 February 2011; a payment of £500,021 received from Mr Blower on 28 July 2010; and a payment of £17,613 of 29 July 2009 paid directly from RBS to the Turnbulls.
- In addition, on 30 January 2015, Mr Allen had applied for an order suspending Mr Blower’s automatic discharge from bankruptcy until certain conditions had been complied with including answering certain questions put by Mr Allen as trustee in bankruptcy.
- Mr Blower retained Canfields to resist the bankruptcy petition and was accompanied to meetings by Mr Robert Whitehouse, a solicitor employed by Canfields. By late November or early December 2014, Canfields were also instructed on behalf of: Mrs Blower in relation to all matters relating to the trustee in bankruptcy which affected her; and Kelly Blower in relation to her alleged beneficial ownership of 201 Park Gate. Canfields were retained by the Turnbulls in March 2015 in relation to the payments which had been made to them.
- In August 2015, Mr Crystal, a barrister, was instructed to represent the interests of the Blower family, at Mr Blower’s request. A conference with counsel took place on 28 October 2015, attended by Mr Blower, Mr Whitehouse and briefly by Kelly. The judge accepted Mr Whitehouse’s evidence that at the conference, Mr Crystal advised that a global settlement of all matters relating to the Blower family should be agreed. (Judgment at [79].)
- As a result a mediation was arranged. At the same time that the trustee in bankruptcy agreed to the mediation, his solicitors stated that they had been instructed to issue the threatened claims against Mrs Blower and a draft form of the application was attached. The mediation took place on 9 December 2015. As at that date, the trustee in bankruptcy considered that the debts and expenses of Mr Blower’s bankrupt estate amounted to £4,810,566.
- The mediation was attended by Mr Blower and Mr Whitehouse, Mr Allen and the trustee in bankruptcy’s solicitor. Mrs Blower, Kelly and Natalie were invited to attend if they wished to do so. Ultimately, none of them attended, although Kelly made herself available on the telephone. Mr Blower confirmed that he could speak for the members of his family and that he had authority to settle the litigation on the best terms available. Mr Whitehouse confirmed that he was authorised to sign any agreement on their behalf.
- Once the terms of an agreement were formulated, Mr Blower tried, unsuccessfully, to reach Kelly on the telephone in order to discuss it and was successful in speaking to Nathan Turnbull. The judge records that Nathan told Mr Blower that he should do whatever was best for the Blower family ([86] of the judgment).
- As I have already mentioned, the settlement agreement was dated 9 December 2015. It was signed by Mr Allen as trustee in bankruptcy, (without personal liability), by Mr Blower in his capacity as the bankrupt and by Mr Whitehouse “for and on behalf of each and all of the Respondents”. The “Respondents” were defined as Mrs Blower, Kelly, and the Turnbulls.
- By clause 1A, subject to the terms of the settlement agreement, the trustee accepted £1.5 million in full and final settlement of all claims known or unknown whether previously notified or not, including costs arising on the bankruptcy whether as against the Bankrupt, (Mr Blower), the Respondents or any other third party. By clause 1B the trustee in bankruptcy released the Respondents (Mrs Blower, Kelly and the Turnbulls) and the Bankrupt (Mr Blower) and any third parties “to the fullest extent possible from any liability in respect of any such claims.” Clause 2 provided that the sum of £1.5 million was to be paid to the trustee in bankruptcy in cleared funds by 4pm on 30 September 2016. There was a provision for interest if the sum was not paid by that date and clause 2 also provided that the Bankrupt (Mr Blower) and the Respondents (Mrs Blower, Kelly and the Turnbulls) would be jointly and severally liable in respect of the sum, albeit that Kelly’s liability was limited to £150,000.
- Mr Blower also agreed to use his best endeavours to procure the granting of charges over the property at 201 Park Gate, and three properties owned by the Turnbulls and the trustee in bankruptcy agreed not to oppose Mr Blower’s application for discharge from bankruptcy subject to certain conditions.
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