Aqeel Khan v Woodhead Sharpes Limited

A professional-negligence claim must identify the specific acts or omissions relied on, what would have happened without them, and the resulting loss. Summary judgment is appropriate where the claim has no realistic prospect of success and no compelling reason requires a trial. A failure to pay mortgage instalments does not, without evidence connecting that failure to the later decision to sell, establish causation of a distressed-sale loss. A claimant cannot recover loss arising from a sale which he arranged at a price he considered fair. Pleadings which fail to identify the relevant payments and dates may also be struck out.

The claimant sought more than £3 million from a property-management company. He alleged that, after its appointment under a variation of a Crown Court restraint order, the defendant failed to collect rents, pay mortgage instalments, let vacant properties and comply with reporting obligations. He claimed that the alleged breaches caused lenders to appoint receivers and sell five properties below open-market value.

The defendant applied to strike out the claim or obtain summary judgment. The proceedings were at an advanced stage, with trial evidence substantially complete. The central issues were whether the pleaded breaches disclosed a viable claim, whether they had any real prospect of establishing recoverable loss, and whether the pleadings complied with an earlier case-management order.

1. Application granted. The claimant had no real prospect of succeeding on the claim and no compelling reason for a trial. Summary judgment was therefore entered for the defendant.
2. Under CPR r. 3.4(2)(a), a statement of case may be struck out where, assuming its pleaded facts to be true, it discloses no legally recognised cause of action. In a professional-negligence claim, the claimant must plead what the defendant did or failed to do, what would have happened but for that conduct, and the loss which resulted. The pleading must enable the defendant to know the case it must meet.
3. The court applied the summary-judgment test in CPR r. 24.2. The claim must have a realistic, rather than fanciful, prospect of success. The court must avoid a mini-trial, but may reject a case contradicted by contemporaneous documents or determine a short point of law where the evidence is sufficient.
4. The defendant’s duty, arising from its appointment under the restraint-order variation, arguably extended to paying mortgage instalments from funds held. It was also arguable that non-payment could foreseeably lead to enforcement of security. However, the evidence did not show that the later decisions to sell were caused by the non-payment. The appointment of receivers and subsequent sale decisions were distinct events, and the basis for the sale decisions was largely unsupported by evidence.
5. The evidence gave the alleged distressed-sale differential a more than fanciful prospect in relation to domestic properties if causation were established. That did not save the claim. The rent-collection and failure-to-market allegations had no real prospect of causing the loss pleaded. The claim was for loss of property value, not lost rent. In relation to 1394, the claimant arranged the sale and had described the price as fair, so he could not realistically claim loss caused by that sale.
6. The court rejected, on the evidence then available, the broad illegality argument, although 1392 stood differently because the sentencing judge had said it was partly funded with criminally obtained money. The court also considered that diverted funds might defeat recovery by failure to mitigate, and that equity remaining subject to the confiscation order might have been recoverable, but speculation about what the authorities would have done with later proceeds was insufficient.
7. Alternatively, the claims would have been struck out under CPR r. 3.4(2)(c) for failure to comply with the earlier order requiring property-specific pleading of breach, causation and loss.

The judgment describes an earlier strike-out application heard by District Judge Geddes on 20 April 2021. That order struck out several heads of claim and required amended particulars concerning five properties. The present court entertained the renewed application because the amended pleading and later-disclosed possession-proceedings material represented a sufficient change of circumstances.