Shaw v Leigh Day (a firm)

On an application to strike out or obtain summary judgment, the court must assess whether the pleaded claim has a realistic prospect of success, assuming the pleaded facts can be proved. A claim is not devoid of reasonable grounds merely because the likely damages are small or may be nominal. Proportionality concerns the availability of a proportionate procedure, particularly in an abuse-of-process application, and does not determine whether a reasonable cause of action exists. Damages for distress may be recoverable for breach of a legal-services retainer where peace of mind is arguably a major object of the contract. A claim for diminished value of negligently performed services may also be arguable even where the retainer is not severable.

The appellant instructed the respondent solicitors in connection with an inquest into her father’s death and related clinical-negligence proceedings. She alleged negligent failure to investigate and obtain evidence. Her personal professional-negligence claim was struck out, or made subject to summary judgment, on the basis that she could not recover loss beyond nominal damages. Claims brought in her capacity as personal representative were permitted to continue. The appeal concerned the arguability of damages for distress, recovery of part of the fees paid or wasted expenditure, and the relevance of proportionality to an application under the rules governing reasonable causes of action and summary judgment.

1. Appeal allowed. The order striking out the appellant’s personal claim and granting summary judgment was set aside. The matter was remitted to the District Judge for case management.
2. For the purposes of strike-out and summary-judgment applications, the court was required to assume that the pleaded facts could be established and ask whether the claim had a realistic, rather than fanciful, prospect of success. The District Judge had correctly identified the contractual test for distress damages, derived from Watts v Morrow [1991] 1 WLR 1421 and Farley v Skinner [2001] UKHL 49, but had failed to apply it.
3. A contract for legal services is not automatically outside the exceptional category in which damages for distress may be recovered. The relevant question is whether peace of mind was at least one major object of the retainer. It was sufficiently arguable that a retainer concerning representation at an inquest into the death of a close family member had that object. A particular verdict need not have been promised; the relevant object was a proper investigation capable of providing an answer about the death.
4. A claim for loss measured by the difference between the value of the services contracted for and the lesser value of the services actually provided was also arguable. The absence of a severable contract and the compromise of the solicitors’ fees did not conclusively defeat that claim at the interlocutory stage.
5. The tests under CPR 3.4(2)(a), concerning a statement of case disclosing no reasonable cause of action, and CPR 3.4(2)(b), concerning abuse of process, were separate. The principles discussed in Tony Sullivan (aka Rudey Solomon) v Bristol Film Studios Ltd [2012] EWCA Civ 570 concerned proportionality and abuse of process. They did not justify treating the value of an otherwise arguable claim as determining whether it disclosed a reasonable cause of action. The claim was not an abuse and was suitable to proceed, subject to case management and a possible stay pending related costs proceedings.

• High Court (Queen's Bench Division) — The appeal from the order of District Judge Hovington dated 18 May 2015 was allowed. The matter was remitted for case management.
• Manchester County Court — The appellant’s personal professional-negligence claim had been struck out, or made subject to summary judgment, while claims brought as personal representative of the estate were allowed to continue.