Firm Has Real Prospect Of Defence Despite ‘Disastrous Consequences’ Of Action

A Liverpool firm has convinced a judge they have a real prospect of a defence in a summary judgment for exacerbated costs, despite the ‘disastrous consequences’ for the claimant following their breach.

Liverpool firm, EAD Solicitors is now in administration, however following the purchase of a property in October 2016, from 199 Molyneux Road Ltd, the firm failed to register the new ownership within the priority period of 30 days.  This mistake allowed the previous owner, and sole director of Molyneux, Robert Ware, to borrow £552,00 against the property.  The lender has been described as being ‘ignorant of the sale and innocent of any wrongdoing’ in the matter.

Upon being served the claim in December 2017, EAD admitted the facts and the sum required to redeem the charge, however contended the incident did not amount to a breach of duty until March 2020, just before the hearing.

Mr Anderson QC, sitting as a High Court Judge stated that EAD has not put forth the reasons for the delay or why it finally admitted liability.

“So far as I can see, the facts known to EAD were the same in March 2020 as they had been throughout the litigation, and it is difficult to imagine a more obvious breach of duty by a conveyancing solicitor than that committed by EAD.”

A default judgment in Protea’s favour against Molyneux in February 2019 did not satisfy the amount Protea were seeking, and further pursuit against third parties who had been identified as receiving some of the proceeds from the second transaction, ‘yielded no financial benefit’.

A summary judgment application against EAD remains in disagreement concerning £202,000 in costs from Protea pursuing Molyneux and third parties.  EAD submitted that it had a real prospect of establishing a defence that it was not reasonable for Protea to pursue the litigation against Molyneux.

Mr Anderson observed that the litigation against Molyneux had exacerbated instead of mitigated Protea’s losses, and he had been persuaded that EAD had a real defence, despite the fact he had been left ‘unimpressed’ by EAD’s responses.

“This is based on the simple fact that the claimant spent so much money in pursuing defendants who had nothing with which to satisfy a judgment.

“It is not for me to say whether I think a defence based on that single feature has much prospect. I conclude that it is not fanciful or imaginary. It is real and merits a trial.”

In bringing action Protea had failed to comply with pre-action protocols, but Mr Anderson felt that there was ‘no basis’ for arguing that compliance would have saved costs.  He felt that the summary judgement application was a ‘direct result’ of EAD and its insurers, to accept liability or to ‘engage with the claimant about its decision whether to pursue Molyneux’.  Anderston felt that t it was understandable Protea wanted to pursue Molyneux:s.

“But it would not have been reasonable, or at least arguably not so, for the claimant to prosecute this expensive litigation without keeping under careful review whether a judgment might go unsatisfied, nor to persist in running up costs if such a review would have suggested that the prospects of recovery did not justify it.”

The application for summary judgment was acceded but “only to the extent already conceded by EAD”.