High Court close to striking out law firm’s indemnity claim against QC

Barclays: Failed claim against bank leads to action against solicitors

The High Court has struck out a law firm’s amended particulars of claim for an indemnity from a QC if the firm was successfully sued by claimants who took part in failed group litigation.

Failure to produce new particulars would inevitably lead to the part 20 claim failing.

Mr Justice Fancourt said former law firm RWP, based in Berkshire, argued that if it was liable for having failed to advise the claimants on better funding arrangements, David Lowe QC “must also have been in breach”.

Fancourt J said: “A barrister does not have the same duties as a litigation solicitor to advise generally on funding of litigation.”

He said RWP, which later became Messer Beg, could not “simply allege that Mr Lowe had a co-extensive duty of care” as pleaded in the firm’s particulars of claim.

Fancourt J said that even if a “properly arguable claim based on an assumption of responsibility to advise can be pleaded”, the amended particulars of claim disclosed “no properly arguable” claim.

“If RWP seeks to serve replacement particulars of claim for an indemnity or contribution, it must fully plead such matters and Mr Lowe can then consider whether or not any arguable claim is disclosed.”

Fancourt J rejected a further argument that Mr Lowe “did not delegate sufficiently”, leading to excessive spending on counsel’s fees. He said this “could not be allowed to stand” because “no particulars are given of what should have been delegated”.

The court heard in Andrews and another v Messer Beg [2018] EWHC 2692 (Ch) – handed down in April but only just published – that the main proceedings in the case were brought by numerous claimants for damages against RWP for losses caused by the failure of group litigation against subsidiaries of Barclays Bank and the Bank of Scotland.

Mr Lowe advised members of two action groups who took out shared appreciation mortgages in the 1990s on the validity of their claims.

“These underlying proceedings for relief under the Unfair Terms in Consumer Contract Regulations and the Consumer Credit Act were effectively abandoned by the claimants in 2010, when they had to give up their claims owing to lack of funding with which to progress them.

“The claimants’ claim against the defendants in these proceedings is based on an allegation that RWP should have advised the claimants to fund their claim against the banks on the basis of a conditional fee agreement (CFA) with the benefit of after-the-event (ATE) adverse costs insurance and, if necessary, some third-party funding for disbursements, instead of on the basis of each claimant contributing £5,000 to a fighting fund which was the strategy that RWP encouraged the claimants to adopt.

“Alternatively, it is alleged that RWP should have advised that the fighting fund strategy was doomed to fail.

“RWP deny liability to the claimants on the basis that non-negligent advice about funding the underlying proceedings was given and that it would not have been possible in the market in 2008/2009 for the underlying claim to have been financed by a CFA and ATE. RWP themselves would not have acted on a CFA basis.”

Fancourt J said RWP issued a part 20 claim against Mr Lowe “for an indemnity or for contribution towards any damages or costs awarded in the event that the claimants’ claim against them succeeded, contrary to their defence”.

The judge said the claimants alleged that, of the £1.3m raised by them and spent on the litigation, £800,000 was spent on Mr Lowe and his junior’s fees.

He said RWP’s claim against Mr Lowe was “a mirror of the claim brought against RWP”, which did not differentiate between the roles and responsibilities of a barrister and solicitor.

Fancourt J declined to rule on whether it was “fanciful” to argue that CFA and ATE could have been obtained for the claimants.

“RWP is, in my judgment, right to contend that that is an issue and, however sceptically they may regard it, can only properly be resolved at a trial.”

He upheld Mr Lowe’s application to strike out the amended particulars of claim in the part 20 claim.

“RWP must consider whether it will serve new particulars of claim pleading the claim against Mr Lowe as it emerged in the course of argument and to which I have referred in this judgment.

“I will hear parties on how long RWP should have to do so, but if it elects not to do so then clearly it must then serve notice withdrawing the part 20 claim.”

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