TOO MANY PARTIES CAN INCUR THE COURT’S WRATH: THE DIFFICULTIES IN PLEADING A CASE WHERE THERE ARE MULTIPLE CLAIMANTS

In Niprose Investments Ltd & Ors v Vincents Solicitors Ltd (Professional negligence) [2024] EWHC 801 (Ch) HHJ Hodge KC (sitting as a High Court Judge) considered some of the issues where 35 claimants attempted to plead their claim on one claim form.  The judge found that the claimants’ pleaded case was inadequate and that amendments needed to be made before the court could properly consider the defendants’ application to strike out the claim.

“.. in my judgment it is stretching the limits of the ‘convenient disposal’ test to join claims against different conveyancers – some solicitors and other licensed conveyancers – who used very different forms of documentation in a single set of proceedings. I am also concerned that it may constitute an abuse of the rules governing the payment of court fees on starting court proceedings. In the instant case, a single court fee of £10,000 has been paid on the issue of a single Part 7 claim form initiating claims in excess of £6 million being brought by no less than 94 claimants who are suing ten entirely separate defendants.”

THE CASE

This was a professional negligence relating to the purchase of residential units in a development scheme. Each of the purchasers lost up front payments when the scheme failed.  The claimants brought actions against a number of defendants. One of the defendants was a firm of solicitors that had acted for 35 of the claimants who had purchased 50 of the units. The claims were all issued on one claim form and the particulars of claim were somewhat generic.  The defendants applied to strike out the claim.

THE JOINDER OF MULTIPLE PARTIES IN ONE ACTION: CAN CAUSE PROBLEMS

The judge identified the difficulties of joining multiple parties into one action.

1. 1. Most of the claims have been stayed as the relevant defendant is in insolvent liquidation or has settled. Only the claims against the second and seventh defendants, and against Vincents, remain actively contested. The majority of the live claims are those which are proceeding against Vincents, who acted for 35 clients on the purchase of a total of 50 units, with deposits paid totalling some £2.7 million. Some of these claimants were purchasing more than one unit, with the 60^th claimant purchasing eight, and the 79^th claimant (a Turkish company based in Istanbul) purchasing ten, units. The pleaded defence alleges that Vincents’ clients exchanged contracts “on divers dates between 23 November 2017 and 16 August 2018”, although at paragraph 4 of their reply the claimants assert “that the last exchange of the claimants’ contracts was later than 16 August 2018. C92 (Soneh Medical Limited) exchanged contracts (on Vincents’ case) on 11 January 2019.”

1. 1. CPR 7.3 permits a claimant to use a single claim form to start all claims which can be “conveniently disposed of in the same proceedings”. In terms, neither the rule, nor its related practice direction, provide any further test beyond that of “convenience“. The commentary at paragraph 7.3.5 of the current (2024) edition of Volume 1 of Civil Procedure points out that even if it may be inconvenient to attempt to try several claims together, there is no need to impugn the validity of the initial joinder of the claims in the one claim form; instead reliance may be placed on the court’s powers to order separate trials to mitigate any inconvenience. However, it is my experience that the court is increasingly being confronted with extreme attempts to bring claims on behalf of multiple claimants, or to sue multiple defendants, in one action. In such cases, in my judgment the court should not hesitate to use its general powers of case management (under CPR 3.1) to direct that specific parts of the proceedings should be dealt with as separate proceedings. Whilst it may be convenient to join in one claim all the purchasers of units in a single development who wish to sue a single firm of solicitors or licensed conveyancers, who used the same, standard-form documentation in connection with their respective purchases, in my judgment it is stretching the limits of the ‘convenient disposal’ test to join claims against different conveyancers – some solicitors and other licensed conveyancers – who used very different forms of documentation in a single set of proceedings. I am also concerned that it may constitute an abuse of the rules governing the payment of court fees on starting court proceedings. In the instant case, a single court fee of £10,000 has been paid on the issue of a single Part 7 claim form initiating claims in excess of £6 million being brought by no less than 94 claimants who are suing ten entirely separate defendants.

1. One of the difficulties arising on the present application (to which I shall need to return in section V below) is that the allegations by all 94 claimants against all ten defendants have been set out in a single document entitled ‘Particulars of Claim’, albeit this is supplemented by an appended spreadsheet which is said to set out any particular material facts distinguishing claimants from one another. Vincents emphasise that the particulars of breach of duty and negligence in paragraph 45 of the particulars of claim are for the most part directed at all ten defendants, save that three of the ten allegations are not maintained against Vincents. Mr Wilton points out that this is perhaps not surprising as even the claimants acknowledge (at paragraphs 29.10.1 and 29.10.4 of the particulars of claim) that Vincents’ report on title was “a long and detailed report with 17 substantive pages“, and that within the report “paragraphs 3.6 and 3.7 provided some advice about the risks of the transaction“. I shall set out the relevant allegations in the following section of this judgment.

GIVING THE CLAIMANTS AN OPPORTUNITY TO AMEND THEIR PLEADINGS

One of the problems with a number of claimants and defendants is that the pleadings tend to be generic.  The judge held that the claimants’ pleaded case  against Vincents was inadequate. Rather than strike out the claims he gave the claimants an opportunity to respond.

1. Having carefully considered the parties’ submissions (as summarised in section IV of this judgment), I am entirely satisfied that it would be premature for me to strike out the claim against Vincents, or to enter summary judgment in its favour, without giving Mr Scher an opportunity to amend the particulars of claim. The dispute about the precise nature, and extent, of the duty of care owed by Vincents to each of its purchaser clients is highly fact-sensitive, and some, at least, of their claims may be suitable for trial. I have already observed that the allegations by all 94 of the claimants against all ten defendants have been set out in a single statement of case, supplemented by a spreadsheet purporting to set out any particular material facts distinguishing individual claimants from each other. However, this spreadsheet does not address, or identify, any particular characteristics, or vulnerabilities, of individual claimants. Nor does it condescend to particulars about any discussions with particular clients of Vincents.

1. 1. In my judgment, the court should not strike out a statement of case, or enter summary judgment against a party, without giving the party concerned an opportunity of curing any defects or omissions in their pleaded case, provided, of course, that there is good reason to believe that they will be in a position to do so, and they invite the court to take that course. Although his primary submission was that no amendments were required to his clients’ pleadings, Mr Scher indicated that, if any amendments were needed to the claimants’ statements of case, he would wish to make them. I do consider that substantial clarification, and amplification, of the claimants’ case is required. Vincents need to know the particular facts and matters upon which these 35 claimants found their claims against them, so that Vincents can identify, and seek to address, the particular facts in dispute, and focus upon the matters relevant to these claims. At the moment, this exercise is clouded by the use of generic, and ‘scatter-gun’, particulars of claim, which divert Vincents’ attention away from what is strictly relevant to the case against them, as distinct from other of the defendants, which leave some matters to be inferred, and which leave other facts and matters unpleaded.

1. 1. I have already articulated my concern (at paragraph 53 above) that I should be careful about what I say in this judgment, lest I trigger any further complaints of breach of duty on the part of the claimants. However, it is appropriate that I should set out at least some of my concerns.

1. 1. First, the claimants plead (at paragraph 45.1 of the particulars of claim) that Vincents failed to advise the claimants that the terms on which the ‘deposits’ were to be held and released “offered no meaningful security or protection”. However, the facts and matters relied upon in support of this plea, at paragraphs 31 and 32 of Mr Scher’s skeleton argument, are far more extensive than those pleaded in the particulars of claim (which are principally confined to the matters set out at paragraph 29.10.3). Second, the claimants allege that if and to the extent that such advice was given, Vincents nevertheless “failed to ensure, alternatively failed to take reasonable steps to ensure, that the claimants fully understood the advice”. However, the claimants set out no particular facts and matters, whether general to all 35 claimants, or specific to only some of them, upon which they rely in support of any duty along these lines. At paragraph 45.2 of the defence Vincents explains why it says it was entitled to suppose that the claimants fully understood its advice; yet in their response, at paragraph 13 of the reply, the claimants do not even begin to engage with this explanation. Third, there is the claimants’ case that Vincents failed to advise the claimants against entering into these transactions. This is of particular relevance and importance, not only to the issue of breach of duty, but also to the duty nexus question, where it may prove to be of crucial significance. As Mr Scher observes (at paragraph 35 (a) of his written skeleton argument), if the court considers there to be a real prospect of that duty existing, Vincents’ present application is not at all assisted by Mr Wilton’s duty nexus argument. Mr Scher acknowledges that any duty to advise a client against entering into a particular transaction is unusual; but so, he says, were these investments. He contends that there is a real prospect of establishing the existence of such a duty, founded upon the SRA warning notice and all the other ‘red flags’. However, these red flags, though they were highlighted in Mr Scher’s oral submissions, are not set out in the claimants’ statements of case. Indeed, they are not even highlighted in his skeleton argument.

1. 1. I accept Mr Wilton’s submissions that Dutfield is a very different case from the present. It concerned negotiations leading to a consent order settling financial arrangements between husband and wife following upon their divorce. The brief report is not a full, verbatim transcript of the judgment, but only a short summary. The trial judge’s observations about the duty resting on a solicitor to ensure that information and advice are understood by the client were made in the context of a decision that it was no part of a solicitor’s duty to force their advice upon their client; and they were, in any event, obiter because the trial judge concluded that the solicitor had satisfied all the requirements of his retainer, so negligence was not established, and the claim was dismissed. However, all of this merely serves to emphasise the fact-sensitive nature of the duties, both to inform and to advise, and to ensure that such information and advice is understood by the particular client. The facts underlying such a duty are for determination at trial, and not on a paper application for strike out or summary disposal. However, Mr Wilton is right to submit that they must first be properly pleaded. For the reasons I have already given, it is not enough to leave them for the witness statements. That is particularly so in a case where there are 35 clients who were purchasing a total of 50 units, as to whom different considerations may apply.

1. 1. Mr Scher submits that it is clear to Vincents what the case against it is. Vincents has requested no further information about, or clarification of, the claimants’ pleaded case under CPR 18. It has considered that case to be sufficiently clear to be able to plead to it by way of defence. These are said to be powerful indications that the issues between the parties are sufficiently clear from the existing statements of case. However, Vincents is entitled to know precisely how the case against it is put. It should not be left to conjecture. Mr Scher suggests that the allegation that Vincents’ advice was in fact misunderstood is “perhaps so obvious as to go without saying, and will of course feature in some claimants’ evidence as appropriate” (with my emphasis supplied). Apart from the fact that it is not appropriate to leave allegations such as this to be made only by implication and inference, therein lies the difficulty: each separate purchase constitutes a separate claim. Vincents are entitled to know precisely how each claim is put against it, for purposes of settlement as well as defence. If it is to be alleged that particular claimants misunderstood Vincents’ advice, then this should be properly pleaded, with full particulars. Any difficulties there may be in doing so, because of the number of individual claimants, particular properties, and individual defendants, is the result of joining all such claims in a single set of proceedings; but this cannot justify denying Vincents the proper procedural protections to which they would otherwise have been entitled.

1. 1. In my judgment, I should not finally determine these applications at the present time, but should afford the claimants an opportunity to amend their existing statements of case. At least on a preliminary, and provisional, basis, I have formed the view that there may be some traction in at least some of the claimants’ allegations of duties: (1) to advise that the deposit-holding machinery afforded no meaningful protection to the claimants, (2) to advise against entering into these purchase contracts, and (3) to ensure that individual claimants properly understood Vincents’ advice. However, the factual bases for such duties needs to be properly pleaded out, both at a generic, and also at a granular, and individual, level.

1. 1. I have considered whether I should identify the precise respects in which the pleading of these claims is presently deficient and should be amended; but, on mature reflection, I do not consider that it is for the court to prescribe such matters, at least in the first instance, because to do so would be to risk entering into the forensic arena of combat. It is for the court to assess the adequacy of any amendments when they have been fully formulated, and are presented to it for its approval. If any prescription is required, at least in the first instance this should come from Vincents, and not from the court. If Vincents wish to do so, it may seek to identify particular respects in which the existing statements of case are inadequate, and need to be supplemented; and, if necessary, I can rule on the propriety of such asserted deficiencies on the further consideration of this application, either on the papers, or, if matters are hotly contested, at a consequentials hearing, when considering the appropriate form of order. I would, however, venture to suggest that it may be beneficial for the common understanding of all concerned – the parties and the court – for any amended statements of case to be confined to the claims brought by their clients against Vincents alone.

1. 1. It does not seem to me that I should venture upon any consideration of the duty nexus question at the present time since this is closely linked to the existence of any duty to advise the claimants, whether collectively, or in particular instances, against entering into these particular purchase contracts. As at present advised, my preliminary, and provisional, view is that if the court considers there to be a real prospect of that duty existing, Vincents’ present application is not at all assisted by Mr Wilton’s duty nexus argument. That is because if Vincents owed a duty to advise against entering into these transactions, then there would seem to be a sufficiently clear nexus between the breach of that duty and the loss of the claimants’ deposits. If that is correct, then this case must go to trial; and it would not be right for me to seek to impose any fetter upon the freedom of the trial judge to determine the duty nexus question insofar as it may arise in relation to other alleged breaches of duty.

VI: Disposal

1. For the reasons I have given, I would adjourn the further hearing of this application to give the claimants the opportunity to amend their pleadings in the light of this judgment. The application should then be brought back before me, at a date convenient to the parties and the court, with a new time estimate. I would urge the parties to attempt to agree a sensible timetable to lead to this adjourned hearing, and to liaise with Manchester BPC Listing to that end as soon as possible so as to achieve the earliest possible return date.