Mount v Barker Austin (A Firm)

In a professional-negligence claim for loss of a litigation opportunity, the claimant must show that the lost claim or defence had a real and substantial, rather than merely negligible, prospect of success. If that threshold is met, the court must assess the prospects realistically. The legal burden lies on the claimant, while the evidential burden may fall heavily on negligent solicitors to show that the litigation had no value. No damages are recoverable where the underlying claim was legally hopeless. A guarantee may permit a creditor to deal with co-sureties and release security without creating an inconsistent duty of care. The appeal was dismissed because the claim against the bank and the defence to its counterclaim had no real prospect of success.

The appellant had brought proceedings against a bank concerning the release of security given by a co-surety. Those proceedings were struck out after negligence by his solicitors. A subsequent negligence action against the first solicitors was also dismissed for want of prosecution. The appellant then sued Barker Austin, who obtained summary judgment, leaving damages to be assessed.

The High Court held that the claim against the bank was bound to fail, but awarded damages for wasted costs and interest. The appeal concerned the value of the lost claim against the bank, the construction of the guarantee, the appellant’s alleged entitlement to the co-surety’s security, and his defence to the bank’s interest counterclaim.

The appeal was unanimously dismissed. The order for damages for wasted costs and interest was not challenged effectively and stood.

1. Loss of litigation opportunity. The claimant bears the legal burden of showing that the lost claim or defence had a real and substantial, rather than negligible, prospect of success. If that threshold is met, the court must make a realistic assessment of the prospects. Simon Brown LJ added that the evidential burden lies on negligent solicitors to show that the litigation was valueless, particularly where they failed to advise on its merits. Any difficulty caused by delay should generally operate against the negligent solicitors, subject to the stated qualifications for claims turning on law or documents, or where delay prejudiced only the opposing party.
2. The claim against the bank. Ordinarily, a surety who pays the principal debt may benefit from securities held for that debt, and a co-surety who pays more than his share may claim contribution. Those principles can be modified by contract. Clauses 7(c) and 7(j) authorised the bank to release a co-surety and deal with or release securities without affecting the liability of the other surety. Clause 7(k) also allowed the bank to choose which remedy or surety to pursue. The contractual powers left no room for the alleged duty of care. [1982] 1 W.L.R. 1410 was distinguishable because it concerned the general duty in realising security, not the exercise of an express contractual power. The reasoning was supported by [1990] 1 AC 536.
3. Subrogation and security. Clause 10 gave the bank a right, not a duty, to retain security for seven months after payment. Clause 11 postponed the surety’s benefit of securities held for the customer’s liabilities, but did not cover security securing the surety’s own guarantee liability. Any entitlement to that security nevertheless remained subject to clause 7, which permitted its release at any time.
4. Interest. Waiver by equitable estoppel required a clear representation, reliance, and circumstances making reliance on strict rights inequitable. The correspondence and surrounding circumstances gave the appellant no real prospect of proving an agreement by the bank manager to waive interest. The defence to the counterclaim therefore had no value.

1. Court of Appeal (Civil Division): The appeal from the High Court was dismissed. The appellant was ordered to pay the appeal costs, subject to the respondents’ undertaking concerning enforcement.
2. High Court, Queen’s Bench Division: His Honour Judge Astill, sitting as a High Court judge, assessed damages at £22,074.53, comprising wasted costs and interest, but held that the underlying claim against the bank was bound to fail.