PNBA

BPC Hotels Limited v Brooke North (A firm)

BPC Hotels Limited v Brooke North (A firm)
Technology and Construction Court (Edwards-Stuart J)
16 January 2015
[2015] EWHC 27

Subject: Professional Negligence—Solicitors—Limitation and Summary Judgment—Advice given in relation to a Deed of Warranty—Section 32 of the Limitation Act 1980—Deliberate Concealment under section 32(1)(b) and 32 (2)—Claimants had no real prospect of establishing that solicitors had deliberately concealed documents which would have supported a negligence claim against them.

Summary: The Claimants could not rely upon section 32 of the Limitation Act 1980 and the Defendant was granted summary judgment. There was no real prospect of the Claimants establishing that the Defendant had conspired to remove certain documents from their files. Summary judgment was given even though the Claimants wished to attempt to adduce further evidence at trial, by cross examination of the Defendant’s witnesses upon factual matters.

Abstract
The Claimants were a company, BPC Hotels Limited, and two private individuals, Mr and Mrs Chandra, who were the directors and shareholders in that company. The Defendant was a firm of solicitors.

In 1998, BPC purchased a property in Manchester within the intention of developing it into a hotel under the Holiday Inn Franchise. Funding for this development was provided by the Royal Bank of Scotland (“RBS”). The main contractor was Costain Limited (“Costain”).

In July 2001 a Deed of Warranty was entered into by BPC, Costain and RBS (“the Deed”). Importantly, the Deed contained a provision whereby, if Costain became entitled to and did terminate the building contract as against BPC, then RBS could step in as the employer under the building contract. This was known as the ‘step-in’ provision. BPC was advised in relation to the Deed by the Defendant.

In May 2003 BPC got into financial difficulties and, in August 2003, RBS put BPC into administrative receivership and, pursuant to the terms of the Deed, RBS through a nominee stepped in as the employer under the building contract. The following year the development was sold leaving RBS with a shortfall of about £4million, which they claimed from the Chandras under personal guarantees which they had given previously.

The Claimants issued two claims against the Defendant arising out of the advice given in respect of the Deed. The first claim was issued in 2009 (“the First Claim”). The second claim, which was the subject of this judgment, was issued in November 2014 (“the Second Claim”).

The allegations made in the Second Claim arose out of what was perceived by the Claimants to be the onerous effect of the step in provision. In short, the Claimants alleged that the Defendant should have advised them in 2001 to enter into a further Deed which would have nullified the effect of the step in provision. Alternatively, it was alleged that in May 2003 the Defendant should have negotiated an exit route for the Claimants, the effect of which would have been to nullify the step in provision.

Plainly the Second Claim gave rise to limitation issues. The Claimants sought to overcome these by alleging that three partners in the Defendant had, between November 2000 and May 2003, conspired to destroy or remove documents which indicated or might have indicated that they had given the Claimants negligent advice. The Claimants further alleged that they did not know about the destruction of the documents until they read a witness statement which was served by the Defendant in September 2014 in the course of the First Claim.

The Claimants, therefore, sought to rely upon section 32 of the Limitation Act 1980, the relevant parts of which provide:

(1)     …. where in the case of any action for which a period of limitation is prescribed by this Act…
          (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant…
          the period of limitation shall not begin to run until the plaintiff has discovered the… concealment… or could with reasonable diligence have discovered it.
(2)     For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty…

The Defendant made an application for summary judgment in respect of the Second Claim. As Edwards-Stuart J recognised, the usual practice in applications of this nature is to make assumptions in favour of the party opposing the application – in this case, the Claimants. However, that did not preclude the Court from considering and determining whether the Claimants’ prospects of success were any more than fanciful. In this case that meant that the Court could and would consider the Claimants’ prospects of establishing that the solicitors employed by the Defendant had, knowing that negligent advice had been given, conspired to remove certain documents from their files.

The Judge, having analysed the evidence before him, found against the Claimants on both points. First, he found that there was no evidence that the solicitors knew that they had given incorrect advice to the Claimants (it being assumed for the purposes of this hearing that inadequate advice had been given). Second, he found that the allegation that the solicitors had removed certain documents was “at best, fanciful speculation”.

Comment

It is apparent from the judgment that the Judge was acutely aware that he was determining the application without giving the Claimants the opportunity to cross examine the Defendant’s witnesses and so to adduce further evidence at trial. However, the Judge was satisfied that given the weight of the evidence against the Claimants, and in view of the fact that any trial would be likely to take place 14 or 15 years after the events giving rise to the alleged conspiracy, that there was no prospect of evidence in support of the Claimants’ case being adduced. He therefore decided that the Second Claim was hopeless and, in his words, should be stopped in its tracks and “stopped now”.

This decision underlines the readiness of the Court, in appropriate circumstances, to deal summarily with cases where the preponderance of the evidence adduced is contrary to the respondent’s and where there is no cogent basis for suggesting that the evidence adduced at trial will lead to a different outcome. This is, perhaps, even more likely where the allegations made are tantamount to fraud and, consequently, the trial judge will require commensurately cogent evidence to make such a finding.

Clare Dixon
4 New Square