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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hemmingway & Anor v Roddam (a firm) & Ors [2003] EWCA Civ 1342 (18 September 2003) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2003/1342.html Cite as: [2003] EWCA Civ 1342 |
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
NEWCASTLE UPON TYNE DISTRICT REGISTRY
(HIS HONOUR JUDGE BEHRENS)
Strand London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE CLARKE
____________________
1. MARK HEMMINGWAY | ||
2. JANICE HEMMINGWAY | Claimants/Appellants | |
-v- | ||
1. SMITH RODDAM (A FIRM) | ||
2. A N FAIRCLOUGH | ||
3. G M CHISEM | ||
4. G JOHNSON | ||
5. D L HARRIS | Defendants/Respondents |
____________________
Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
MR M JACKSON (instructed by P I Brokerlink, London) Appeared on behalf of the Respondents
____________________
Crown Copyright ©
"The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."
"(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action."
"The court may allow an amendment whose effect will be to add a new claim, but only if the new claim arises out of the same facts or substantially the same facts as are already in issue on a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."
In that way the facts pleaded in the defence became a part of the facts in issue which enabled the court in that case to grant leave to amend. Reliance was also place on a dictum of Hobhouse LJ in Lloyds Bank v Rogers (unreported) when, in relation to section 35, he said:
"The policy of the section was that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon on any cause of action which substantially arises from those facts."
"3(A) At all material times it was known (or should have been known) to the First Defendant's partners, agents and employees that:
(a) the Claimants had no experience of purchasing or running any form of business;(b) the Claimants were unsophisticated and inexperienced clients;(c) the Claimants were unaware of what enquiries and investigations they should undertake or make before contemplating the purchase of a business of this nature, either in relation to the viability of the business or the price which they should pay;(d) the First Claimant had suffered severe personal injuries in a road traffic accident in the 1980s as a consequence of which he was blind;(e) as a consequence of these personal injuries, the First Claimant was a vulnerable client and/or was unable to make any of the enquiries which an able bodied client might made and/or was unable to acquire a great deal of relevant information by observation or otherwise which an able bodied client would otherwise acquire;(f) as a consequence of these personal injuries, the First Claimant had no realistic prospects of obtaining meaningful and/or remunerative employment unless he and his wife, the Second Claimant, could acquire a suitable and sufficiently profitable business in which they could both work together and earn a living;(g) this was the First and Second Claimants' once and only opportunity to acquire such a business.
3(B) In the premises, the Claimants retained the First Defendant, its partners, employees and agents to advise them about the commercial wisdom of their proposed purchase.
3(C) Further or in the alternative the First Defendant, its partners and employees by their Miss Smith, in a telephone conversation in or about October 1994 and/or a meeting dated 3 February 1995 undertook to advise the Claimants about the commercial wisdom of their proposed purchase.
[5 The First Defendant, its partners, agents and/or employees acted in breach of contract and/or negligently in]
5(c)(xxx) Failing to explain to the Claimants either adequately or within a reasonable time or at all the reasons why the Claimants should 'get out' or withdraw from the proposed transaction 'whilst the going was good,' 'if things were not going right'.5(c)(xxxi) Failing to explain to the Claimants on 3 February 1995 either adequately or within a reasonable time or at all the reasons why the Defendants and/or their Miss Smith did not like the figures relating to the Claimants' proposed purchase of the Vendors' business and/or the leasehold of the business premises and/or why the Defendants and/or Miss Smith were concerned about the Claimants' hefty outlay.5(c)(xxxii) Wrongly advising the Claimants on 3 February 1995 that, if they proceeded with the purchase and the business was not as successful as they expected, all they had to do was to re-sell the business and re-assign the leasehold of the business premises.5(d) Failing to explain to the Claimants either adequately or at all the reasons why they should not buy the business and/or the risks which they would assume if they proceeded with their proposed purchase of the business."
Paragraph 5(c)(xxx), 5(c)(xxxi) and 5(c)(xxxii) allege breaches of the duty to advise on the commercial wisdom of entering into the transactions by reference to certain statements made by Miss Smith. Paragraph 5(d) also alleges a breach of duty to advise on the commercial wisdom of entering into the transaction.
".... to act for [the claimants] as solicitor in and about the purchase of a business known as and situated at 'Newgate Mews', Unit 6, Newgate Centre, Bishop Aukland, County Durham, in and about the transfer of the leasehold interest at those premises from the vendors of the business to the claimants and in and about all matters incidental to the foregoing."
Paragraph 4 alleged a term of the retainer "to exercise reasonable skill and care". There followed the particulars of the breach of duty in paragraph 5. Paragraphs 5a, 5b and 5c related to failures to make inquiries about (i) the terms of the lease; (ii) the state of account between the vendors and the landlord; and (iii) the failure to make formal enquiries before contract in respect of those matters. Paragraph 5d is important:
"Failing to advise the claimants not to commit themselves to the purchase of the business prior to concluding the foregoing matters and/or failing to advise the claimants not to purchase the business." (My emphasis)
Paragraph 5e claimed:
"Failing in all circumstances to discover that the vendors of the business were subsequently in arrear in their payment of rent and would remain so until such arrears were cleared following completion of the business sale and purchase."
Paragraph 6 alleged the causative link between the failures alleged and the purchase of the business. It alleged that the claimants would not have purchased the business if the defendants had not been negligent. There followed the particulars of loss and damage.
"Save as aforesaid, paragraph 2 is denied. The scope of the Defendants' retainer was confined to the proposed purchase of the business and the proposed transfer of the leasehold interest in the premises."
That can only properly be understood to be saying that, if the claimants were going further in their particulars of claim alleging a broader retainer, the defendants say that it is not that broad.
"It is denied that the Defendants were under any obligation to advise the Claimants not to commit themselves to the purchase of the business, or not to purchase the business. The Defendants by their servant or agent, Miss Smith, gave a number of warnings to the Claimants during the course of the transaction, including
14.4.1 a warning, given verbally during a telephone conversation between Miss Smith and the Second Claimant in or about October 1994, that if things were not going right with the business, the Claimants should get out while the going was good;14.4.2 a warning, given verbally during a meeting between the Claimants and Miss Smith at the Defendants' offices on 3 February 1995, that she did not like the figures and the hefty outlay;1.4.4.3 a warning, given verbally during the same meeting between the Claimants and Miss Smith at the Defendants' offices on 3 February 1995, of the seriousness of the fact that Yorkshire Bank plc were taking the Claimant's home as 'backing security'; and14.4.4 a warning, given verbally during the same meeting between the Claimants and Miss Smith at the Defendants' offices on 3 February 1995, that if something went wrong the Claimant's home could be gone too.
The Claimants were determined to proceed with their proposed purchase, in spite of Miss Smith's warnings. They were clients who were or appeared to be in full command of their faculties and aware of what they were doing, and the Defendants were under no duty to go beyond the scope of their instructions by proffering unsought advice on the wisdom of the transaction."
"The policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts."
Paragraph 3(A) goes to the special factors which might broaden the duties of solicitors; 3(B) and 3(C), as it has now become, makes clear how broad that duty should be, or be taken to be; paragraph 5(c)(xxx) is a response to the warning pleaded in paragraph 14.4.1; 5(c)(xxxi) is a response to the warning of 14.4.2; and 5(c)(xxxii) is a response to all the warnings pleaded, alleging that warnings were not given to discourage the claimants but things were said which actually encouraged them; and 5(d) is a general assertion making the position clear.
"They [the appellants] were clients who were or appeared to be in full command of their faculties and aware of what they were doing, and the Defendants were under no duty to go beyond the scope of their instructions by proffering unsought advice on the wisdom of the transaction."
Order: Appeal allowed. Final formally pleaded version of the Particulars of Claim to be served with 14 days with reply to be served 28 days later. Claimants to have 60% of the costs below. Costs of appeal to be costs in the case.