Andrew Avison & Anor v Harold Bell Infields & Co (A Firm)

On an application to strike out or obtain summary judgment in a professional negligence claim, the court must assess the pleaded loss in the counterfactual world in which the alleged negligence did not occur. A claim against solicitors is not an abusive collateral attack merely because determining loss requires consideration of what would have happened in earlier litigation. The relevant question is different from the issue decided previously.

Where the alleged negligence caused uncertainty or loss of evidence, the trial court may draw appropriate inferences. An alternative counterfactual need not be specifically pleaded where the pleaded alternatives are either the transaction with reliable identification evidence or no transaction. Whether post-default interest would have been agreed, whether mitigation steps were reasonable, and whether consequential financial losses fell within the solicitor’s duty and were foreseeable were matters for trial.

The claimants lent money to two borrowers on the intended security of a charge over a flat. The defendant solicitors prepared the loan documentation. The claimants alleged failures concerning identity verification, the terms of the loan agreement and compliance with their instructions.

One borrower later disputed signing the documentation. Earlier litigation concerning the validity of the signatures had proceeded to trial and appeal, and the claimants subsequently recovered money from that borrower and obtained judgment against the other. They brought this professional negligence claim for losses including post-default interest, the costs of pursuing the second borrower and costs associated with selling their home.

The defendant sought strike-out or summary judgment, arguing that the claim was an abusive collateral attack and that the challenged heads of loss had no reasonable prospect of recovery.

1. Application dismissed. Assuming the alleged negligence for present purposes, the claim disclosed reasonable grounds and had a real prospect of success.
2. The loss inquiry in a professional negligence claim is conducted in the counterfactual world in which the negligence did not occur. The relevant question was what would have happened if the claimants had reliable evidence that the borrower signed the documentation, or if they would never have made the loan. That inquiry was not a re-trial of the earlier signature dispute and was not an attack on, or disguised appeal from, the earlier judgment.
3. The absence of a specific pleading of the alternative counterfactual did not justify strike-out. The pleaded alternatives were sufficiently clear, and the defendant’s own pleading recognised the possibility that no loan would have been made. A different transaction would have required proper particularisation.
4. The claim that the borrower would have agreed to the loan, including a provision for post-default interest at at least the pre-default rate, raised factual issues with a real prospect of success. The contemporaneous material did not demonstrate fundamental disagreement with the loan or its interest terms.
5. Mitigation losses were not required, at this stage, to satisfy a separate foreseeability or scope-of-duty test in the manner submitted by the defendant. The proper question was whether it was reasonable to pursue the second borrower. His lack of enforceable assets might inform that assessment, but did not make the claim unsustainable as a matter of law.
6. The claims for losses associated with selling the claimants’ home raised factual questions about their financial circumstances, the defendant’s knowledge, foreseeability and scope of duty. They were unsuitable for summary determination.