There have been a number of recent cases of property companies, who have lost heavily in the property market, seeking to recover from solicitors (not necessarily always their own solicitors) for those losses. This trend can be seen – possibly at its most extreme – in the decision of Mr Justice Mann today in Mortgage Agency Services Number One Limited -v- Cripps Harries LLP  EWHC 2483 (Ch).
The reason this case is dealt with on this blog is that the judgment deals extensively with witness credibility. Further it shows the difficulties and dangers of alleging fraud.
The claimant property development company lost heavily on a property transaction. It pursued an action against the valuers but did not recover in full (it appears because of contributory negligence). It then pursued an action against the solicitors. However the action was not in negligence it was in misrepresentation and fraud. Very serious allegations against the lawyers involved. All of those allegations were rejected by the court.
In a thorough 474 paragraph judgment the allegations against the solicitor (and legal executive) involved were rejected. The judge rejected every one of the allegations about the lawyers.
By way of post-script I add one last observation. I am aware that I have dismissed a large number of allegations. Not all of them could be dismissed immediately, and [the lawyers] have had questions that they had to answer about certain things they did and said. One might wonder how a claim can be brought and sustained over so many points (some merely evidential, some going to the actual claim itself) and yet fail on all of them so comprehensively and it be found that there is nothing in the claim or allegations at all. The answer to that is twofold.
The first is that the prospects of establishing a fraud are not directly proportional to the number of adverse allegations made. The second lies in what I think seems to have happened in the genesis of this case. The claimant was anxious to maximise its recovery in what was a fairly disastrous loan. It did not recover in full from its valuers; having heard the evidence in this case, and without making findings on the inducement/causation part of this case, I will merely say that I am not surprised that contributory negligence was run by the surveyors, as I am told it was. When attention turned to CHH the claimant donned its fraud detection goggles, turned the sensitivity up to High and attributed a dishonest motive to every interesting feature in the landscape (in very delayed proceedings). That led to a large number of accusations of dishonesty being made. Some allegations came close to being allegations which should not have been made or sustained (though I acknowledge that the claimant did exercise sufficient judgment to abandon some allegations after the close of evidence). Whilst motive is not a necessary ingredient in the claim, as I have frequently said, it is obviously important and I doubt if sufficient attention was paid to the realities of that part of the case, especially once the defendant’s evidence was complete. The result is that [the lawyers] have had years of anxiety, culminating in a trial, which they should not have had. They should now be freed from that anxiety.”