Allsop v Banner Jones Ltd (t/a Banner Jones Solicitors)

A professional-negligence claim arising from earlier civil litigation is not automatically an abusive collateral attack merely because it requires the court to assess whether the earlier outcome would have differed. The question is whether re-litigation would be manifestly unfair to a party to the later proceedings or would bring the administration of justice into disrepute. The stringent fresh-evidence rule in Phosphate Sewage Company Ltd v Molleson does not supply the test for such claims.

A claimant must nevertheless plead a real or substantial, rather than speculative, chance of a better outcome. At a summary stage, an allegation that advisers failed to advance a straightforward argument for a commercial interest rate may be arguable under section 23(6) of the Matrimonial Causes Act 1973.

The claimant sued his former solicitors and counsel in contract and negligence following financial-remedy proceedings on his divorce. He alleged that their preparation, advocacy and advice had deprived him of a better financial outcome.

His Honour Judge Pearce, sitting as a judge of the High Court, struck out a number of pleaded allegations and gave summary judgment. He treated some allegations as abusive collateral attacks on the earlier financial-remedies judgment by applying the fresh-evidence test derived from Phosphate Sewage Company Ltd v Molleson.

The claimant appealed the treatment of allegations concerning preparation of evidence about a Barclays claim, interest and maintenance, advice on appeal, and the valuation of his business shares. The central issue was the proper approach to alleged collateral challenges to an earlier civil judgment in litigation against legal advisers.

1. Appeal allowed in part. The judge had applied the wrong test to collateral challenge. In later civil proceedings between different parties, a challenge to factual findings or conclusions in an earlier civil case is abusive only if it would be manifestly unfair to a party to the later proceedings, or would bring the administration of justice into disrepute. The Phosphate Sewage Company Ltd v Molleson (1879) 4 App Cas 801 test concerns an exceptional route for revisiting a res judicata. It is not a general test for professional-negligence claims arising from earlier civil litigation.
2. A claim against legal advisers may require assessment of what would have occurred had the case been properly prepared or argued. That exercise is not, without more, abusive. The claimant had a reasonably arguable case that inadequate preparation of evidence about his Barclays claim deprived him of a real or substantial chance of a more favourable reattribution decision. That allegation could proceed, subject to properly pleaded amended particulars identifying the material and its likely effect.
3. The allegations that the advisers failed to argue for a commercial, rather than 8%, rate of interest were reasonably arguable. Section 23(6) of the Matrimonial Causes Act 1973 gave the financial-remedies court a discretion to specify the rate. It was arguable that the advisers should have advanced a straightforward reason to depart from the apparent default rate and that this might have improved the outcome. These allegations did not collaterally attack the earlier judgment.
4. The alleged double recovery or double penalty was not arguable. Enhanced maintenance pending payment of capital and interest on overdue capital addressed distinct matters. The financial-remedies order was within the judge’s discretion. Nor was there an arguable basis for alleging that advice to appeal that point, or the business-valuation point, caused a real or substantial loss.
5. The appeal against striking out the remaining allegations, including those concerning disclosure compliance and late instruction of counsel, was dismissed. Grounds 1 and 2 succeeded; Ground 3 succeeded subject to amendment; Ground 4 succeeded only as to the interest-rate allegations; and Ground 5 was dismissed.

• Court of Appeal (Civil Division): [2021] EWCA Civ 7. Allowed the appeal in part and varied the strike-out outcome.
• High Court, Business and Property Courts in Manchester: His Honour Judge Pearce, sitting as a judge of the High Court, by order dated 19 July 2019, struck out or gave summary judgment on a number of allegations in the claimant’s proposed professional-negligence claim.