Mortgage Express v Abensons Solicitors (a firm)

An amendment should not be allowed where it may deprive the defendant of a reasonably arguable limitation defence. Under Limitation Act 1980, s 32(2), deliberate commission of a breach requires awareness that the conduct amounts to a breach of duty. A fiduciary’s conscious decision to prefer one client’s interests over another’s satisfies that requirement. The position may differ where an actual conflict arises through negligent failure to appreciate incompatible instructions. In that event, the proposed claim may include a non-deliberate breach and the limitation defence remains arguable. A court deciding an amendment application should not assume disputed facts in the claimant’s favour.

Mortgage Express claimed against its solicitors for failing to report matters concerning mortgage transactions. The claim was initially framed in contract and negligence. Master Price allowed amendments adding allegations of deliberate breach of fiduciary duty, including claims concerning loans made in 2004, notwithstanding a prima facie limitation issue.

The solicitors appealed. The central question was whether the amendments necessarily eliminated any reasonably arguable limitation defence by engaging s 32 of the Limitation Act 1980, or whether the claimant should issue separate proceedings so that limitation could be determined after factual findings.

1. Appeal allowed in part. The Master’s order was set aside insofar as it concerned the loans for Units 1–4. The amendments relating to later transactions remained undisturbed.
2. The court applied Cave v Robinson Jarvis & Rolf [2003] 1 AC 384. For s 32(2) of the Limitation Act 1980 to postpone limitation, the defendant must have known, or intended, that its conduct amounted to a breach of duty. Mere intentional conduct without that awareness is insufficient.
3. Under the fiduciary “duty of good faith” identified in Bristol & West Building Society v Mothew [1998] Ch 1, liability requires conscious awareness of an obligation to the lender together with inhibition caused by acting for the borrower. Ignorance, including negligent ignorance, would not establish that form of breach. Such a breach would nevertheless satisfy the mental element in s 32(2).
4. The “actual conflict rule” is distinct. It was arguable that a solicitor might breach that rule through negligent failure to appreciate that instructions from one client were incompatible with duties owed to another. The court therefore could not conclude that every possible breach pleaded was necessarily deliberate for s 32(2) purposes.
5. The pleading of deliberate breach did not necessarily confine the claim to deliberate breaches where deliberateness was not an essential ingredient of the cause of action. The claimant might establish a non-deliberate breach at trial, leaving an arguable limitation defence.
6. The alternative reasonable-diligence argument failed. There was no realistic basis for saying that the lender should have investigated information held by its solicitors before default, since no event had triggered such an investigation. Alleged actual concealment also depended on disputed proof that the solicitors knew of their disclosure obligation and knew the undisclosed matters were relevant to a claim.
7. A separate claim concerning Units 1–4 could be consolidated with the existing proceedings, with limitation determined at trial on the facts found.

• High Court (Chancery Division): On appeal from Master Price, the amendment order was set aside in relation to the loans concerning Units 1–4. The parties were invited to agree the consequential order, including consolidation of the separate claim.