An SCCO master was entitled to stay a consent order relating to detailed assessment proceedings because the clients were planning professional negligence proceedings against the solicitors, the High Court has ruled.
Riordan and Ors v Moon Beevor Solicitors (a firm) [2018] EWHC 1452 (QB) followed on from a case that reached the Supreme Court in 2015 and went against the claimants. The net effect was that the claimants were liable to pay just over £2.2m in damages and costs of nearly £3.5m.
The claimants blame both their original solicitors and the defendant for that outcome and claim that they lost millions of pounds as a result of their combined negligence. At the time of the ruling, however, no proceedings had yet been issued.
Moon Beevor billed the claimants for £1.2m but no payment had been made. The firm had accounted for VAT of more than £200,000 and there was £582,000 (plus VAT) owing to counsel.
The claimants sought a Solicitors Act assessment but, after missing the deadline to file and serve evidence, Master Haworth struck it out. The claimants applied for relief from sanctions and this led to a consent order where the detailed assessment could go ahead if the claimants paid £650,000 “in cleared funds without set-off or deduction” by 2 February 2018 unless they made an application for an extension of time by 5 January 2018.
The claimants sought such an extension, but also applied for a “variation, revocation or stay” of the consent order before the hearing.
This was because “there has been a material change in circumstances in that the [claimants] have only recently come to appreciate that they are in a position to articulate a substantial claim for professional negligence… against the [defendant] and that such claim, if successful, may eclipse any costs due to the defendant”.
Master Haworth ruled that this was a material change in circumstances and stayed the order.
However, he was not made aware that the claimants had written to the defendant in October 2015 to say that they were considering a potential claim for negligence, so the question before Mr Justice Foskett was whether there had indeed been a material change in circumstances.
He said: “The master, who is very experienced in these matters, was of the clear view that, given the assertion of this professional negligence case, it would not be appropriate at this stage to shut out a detailed assessment of the defendant’s bill of costs: it is possible that the issues raised in the forthcoming litigation may have a bearing on the detailed assessment in due course.
“In my view, it was not strictly necessary to look for a ‘material change in circumstances’ since the consent order was made to justify such a decision. It was sufficient to say that the order should not be implemented in the situation prevailing at the time the court was invited to consider the issue.
“However, if it was necessary to look for a ‘material change in circumstances’, on the material before him, the master was certainly entitled to come to that decision. He did not have the letter of 9 October 2015 before him and so it is impossible to know what influence that might have had on his decision.
“For my part, had I been considering the issue, I might have been less persuaded that there was such a change of circumstances (in the sense of a supervening event) for the reasons mentioned by [the defendant’s counsel], although, at the end of the day, the difference between the position taken in the 9 October 2015 letter and the most recent letter is stark: in the former, there is a wholly unspecific and general allegation of negligence; in the latter there is a fully particularised case. That could well be seen as a significantly changed position.”
As a result, he ruled that the master’s decision “was well within his powers and, indeed, I respectfully consider it to have been correct”.
He added that he would have been “strongly minded to impose a time limit on the stay by reference to an appropriate date for the commencement of the proposed action”, rather than the master’s order for an indefinite stay, but it was not the subject of the appeal “and, in any event, should be seen as a case-management decision which could not said to be wrong”.
He concluded: “With some reluctance, I accept those contentions. The defendants’ protection in this regard must come from the ‘liberty to apply’ provision.”
Joshua Munro (instructed by Moon Beevor Solicitors) for the defendant; Roger Mallalieu (instructed by Cubism Law) for the claimants.