Smith v Eversheds

Permission to appeal requires a real prospect of success or another compelling reason. An appellate court may uphold a first-instance construction where the judgment, read as a whole, applied the objective question of how correspondence would reasonably have been understood in its context. A solicitor’s statement about a client honouring a court decision does not, without more, amount to a personal undertaking or contractual promise by the solicitor. Claims based on an unauthorised statement may be statute-barred when brought outside the applicable limitation period. Complaints about litigation conduct or case complexity do not themselves provide a compelling reason where they do not undermine the lower court’s reasoning.

Mr Smith applied for permission to appeal the decision of Sir William Blackburne in the Chancery Division dated 12 June 2014. The judge had given judgment for Eversheds and ordered Mr Smith to pay its costs, holding that correspondence concerning Eagle Star’s liability for a counterclaim was not a personal undertaking or contractual promise by Eversheds. Any claim for breach of warranty of authority or breach of unilateral contract was also held to be statute-barred.

The application raised the proper construction of the correspondence, the effect of the objective approach identified in Reddy v Lachlan (Gunter) Third Party, and whether there was a real prospect of success or another compelling reason for permission to appeal.

Application dismissed.

1. Lady Justice Gloster applied the permission threshold requiring a real prospect of success on appeal or some other compelling reason. Neither requirement was satisfied.
2. The absence of an express reference to Reddy v Lachlan (Gunter) Third Party Lloyd’s Rep PN85823 did not disclose an arguable error. Read in the round, the first-instance judgment construed the correspondence objectively and in context, applying the question of how the solicitor’s letter would reasonably have been understood when received. The judge had also taken account of the fact that the Smiths were litigants in person.
3. The critical issue was whether Eversheds had personally undertaken, as solicitors, that Eagle Star would honour any counterclaim. The Court of Appeal held that there was no reasonable prospect of concluding that the statement was a personal undertaking or any other contractual promise by Eversheds. The first-instance construction was sound.
4. The alternative claims for breach of warranty of authority and damages for breach of unilateral contract were statute-barred. The proceedings had been issued more than 12 years after the alleged undertaking.
5. Allegations concerning Eversheds’ conduct, the striking off of FMS9, and the complexity or limited consideration of the case did not provide a compelling reason for permission. Those matters did not show that the judge had erred in construing the undertaking.

• Court of Appeal (Civil Division): on 23 April 2015, Lady Justice Gloster dismissed the application for permission to appeal.
• High Court, Chancery Division: on 12 June 2014, Sir William Blackburne gave judgment for Eversheds and ordered Mr Smith to pay its costs.