Hurst v BDO Stoy Hayward Llp

An appeal court considering permission to appeal must assess whether the proposed appeal has a real prospect of success. Correspondence and a request for cooperation do not create a contract or a general duty to advise where the documents state the professional’s limited role and invite independent legal advice. Any duty that might arise is confined to taking reasonable care in representations actually made. A renewed application for a stay may be an abuse of process where an earlier application was refused without material change. On indemnity costs, proportionality does not apply and doubts about reasonableness favour the receiving party.

Mrs Hurst sought permission to appeal the striking out of her negligence claim against BDO Stoy Hayward LLP. The claim concerned a 2001 letter and undertaking relating to her husband’s proposed individual voluntary arrangement and alleged representations about equal ownership of the matrimonial home.

She also appealed the refusal of a stay of a possession order made in her husband’s bankruptcy proceedings and challenged an indemnity costs order. The issues were whether the documents created contractual or tortious obligations, whether the stay application was abusive or justified on its merits, and whether the costs assessment was permissible.

1. Permission to appeal. Permission to appeal the strike-out was refused. The test under CPR 52.3(6)(a) was not met because the proposed appeal had no real prospect of success.
2. No contract. The letter explaining that BDO had been instructed by Mr Hurst to assist with his proposed IVA was not an offer to Mrs Hurst. The undertaking was a confirmation sought in the context of Mr Hurst’s proposal, with no contractual retainer or fee arrangement.
3. No actionable representations. The documents represented only that BDO was instructed by Mr Hurst, that Mr Supperstone understood the property to be owned equally, that Mr Hurst’s share would be applied under the proposal, and that Mrs Hurst’s cooperation was required for a sale. They did not represent that the undertaking was necessarily factually correct or necessary, that BDO acted in the best interests of Mrs Hurst or her family, or that no potentially incorrect document would be requested.
4. Negligence. The court assumed, without deciding, that proximity, foreseeability and the requirement that imposing a duty be just and reasonable were satisfied. Any duty would be confined to taking reasonable care in representations actually made. There was no breach because the pleaded representations were not made. The invitation to obtain independent legal advice also prevented reliance on any contrary representation on these facts.
5. Stay and costs. A renewed stay application after an earlier refusal, without material change of circumstance, may be an abuse of process. The refusal of a stay was in any event within the reasonable range of discretion. The indemnity costs order was upheld. Under CPR 44.4(1) and CPR 44.4(2), unreasonable costs are excluded, doubts about reasonableness favour the receiving party, and proportionality is not a criterion on the indemnity basis.

Mrs Hurst sought permission to appeal Master Bragge’s order of 12 July 2006 striking out her claim against BDO. She separately appealed Registrar Jaques’s order of 17 May 2006 refusing a stay of the possession order and awarding indemnity costs. The High Court refused permission and dismissed the appeal.