Solicitor acting for borrower and lender – Lender claiming damages against solicitor for breach of terms of retainer – Inordinate and inexcusable delay in prosecution – Whether defendant prejudiced – Judge striking out plaintiff’s claim – Appeal allowed
In 1989 the plaintiff building society agreed to make a loan to a self-build housing association amounting to 100% of both the acquisition price and development cost of a site in Suffolk. The defendant solicitor was retained by the plaintiff to arrange a mortgage to secure the loan. The defendant also acted on behalf of the housing association. Completion of the transaction took place on 20 February 1989. Subsequently, the plaintiff discovered that the defendant had not informed it of a reduction of £27,500 in the price of the site, which had led the plaintiff to make an advance to the housing association in excess of the purchase price. The plaintiff claimed that the defendant had been under a clear duty to report the price reduction both by virtue of the express contractual requirement to report material matters and in accordance with the common law principles explained in Mortgage Express Ltd v Bowerman & Partners [1996] 1 EGLR 126.
In 1991 the plaintiff disinstructed the defendant, whose files were handed over to the plaintiff’s new solicitors. The plaintiff issued proceedings on 8 February 1995, a mere 12 days within the limitation period. However, the writ was not served. A letter outlining the plaintiff’s claim was sent to the defendant on 22 March 1995. The writ was eventually served just within the four-month limitation period. The defendant acknowledged service on 28 June 1995 and the statement of claim was served immediately. In early July 1995 the plaintiff indicated that it intended to proceed in the matter by way of a summary judgment application. On 15 July 1997, two years after the plaintiff’s indication to apply for summary judgment and eight-and-a-half years after the events complained of, the summons for summary judgment was served. In October 1997 the defendant issued an application to dismiss the action for want of prosecution. The master struck out the action and the judge dismissed an appeal against that decision. The plaintiff appealed contending that the judge was wrong to find that the plaintiff’s delay had caused prejudice to the defendant. The plaintiff conceded that its delay in prosecution was inordinate and inexcusable, but disputed that more than minimal prejudice had been caused.
Held The appeal was allowed.
The defendant was required to show that more than minimal prejudice had been caused by the plaintiff’s two-year delay between July 1995 and July 1997. The prejudice upon which he was relying was the fading memory of one of the plaintiff’s witnesses. However, this witness’s evidence only related to the plaintiff’s commercial procedure in relation to loans to housing associations and not to the transaction itself. She claimed that her memory of the procedure had been undiminished by the delay between July 1995 and July 1997, and there was no reason to believe otherwise. Although it was unusual to interfere with the decision of a judge when it had been similarly decided in both courts below, the judge had been wrong. It could not be concluded that the defendant had discharged his burden of showing that more than minimal prejudice had been caused. The trial judge could come to a conclusion as to whether the witnesse’s evidence was correct, and it was for the defendant to say at trial that it was not the best evidence that was capable of being put before the court.
Lawrence Cohen QC and Christopher Russell (instructed by Berwin Leighton) appeared for the plaintiff; John Martin QC and Jonathan Evans (instructed by Wansbroughs Willey Hargrave) appeared for the defendant.
Thomas Elliott, barrister
