Holt v Holley & Steer Solicitors: When negligent loss occurs in financial remedy proceedings
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Holt v Holley & Steer Solicitors may be a civil, rather than family, judgment, but it is clearly one that should be of interest to all financial remedies practitioners.
It is probably not an uncommon occurrence that a client may feel aggrieved that the settlement they were awarded in financial remedy proceedings was less than it should have been, due to a failure of their solicitors in the conduct of the case.
Any claim in tort for professional negligence must of course be made within the six year limitation period, which runs from the date on which the cause of action accrued. The question therefore arises: when did the cause of action accrue?
The Court of Appeal's judgment in Holt provides some answers.
Lord Justice McCombe, giving the leading judgment, explains what the case was about:
"The proceedings are brought in respect of Ms Holt's claim for alleged professional negligence against the Firm in the course of their acting for her in financial relief proceedings on her divorce from her husband ... Her complaint, in essence, is that, in the course of those proceedings, the Firm negligently failed to obtain expert evidence as to the value of certain real properties and jewellery, and to secure permission to admit such evidence at the financial remedies hearing."
As also explained by McCombe LJ, the relevant timing of the stages of the financial remedy proceedings was as follows:
1. The proceedings were initiated by the Husband on 15 February 2011.
2. The FDA was held on 1 July 2011. The court ordered a valuation of the family home, and of some adjoining land, by a joint expert. No directions were given for the valuation of some nine "buy-to-let" properties held by Ms Holt and the Husband in their separate names.
3. The FDR took place on 11 October 2011. Further orders were made for the Husband to provide evidence as to the existence and value of items of jewellery that he was claiming that Ms Holt had. No further orders for valuation evidence were sought by the Firm on Ms Holt's behalf. The final hearing of the financial relief proceedings was fixed, at or shortly after the FDR, for a date in mid-February 2012.
4. On 19 January 2012, a solicitor at the Firm wrote to a firm of estate agents asking them to provide up-date valuations of the "buy-to-let" properties in Ms Holt's name on a "drive-by" basis, saying that "… the previous values we have given to the court were estimates by [Ms Holt] herself". The agents produced such a valuation on 24 January 2012 and a copy was sent to the Husband's solicitors on 10 February 2012, asking them to agree that the valuation should be admitted in evidence in the proceedings. This new material set the value of Ms Holt's investment properties at £84,500. The Husband's solicitors responded that the values of the properties had been agreed at the FDA and it was impermissible to seek to adduce new, unilateral valuations a matter of days before the hearing. It seems that the matter was not taken further by the Firm by way of application to the court to admit the additional evidence.
5. The hearing before a District Judge duly took place on 4 days between 16 February and 16 March 2012. He circulated his draft judgment to the parties on 10 April 2012; he handed the judgment down formally on 30 May 2012 and made his order on that day.
On 5 April 2018 Ms Holt issued her negligence claim against the firm. Essentially, she claimed that she received a lower settlement because the District Judge used valuations of her assets that were significantly higher than they actually were, as a result of the Firm's failure to secure the admission into evidence of up to date expert valuations. The discrepancy in valuations was said to have been somewhere in the region of £90,000.
So when did the cause of action accrue? Was it the date of the FDA, when directions should have been obtained for up to date valuations? Was it the date of the FDR, when such directions could still have been requested? Was it when the Firm failed to react to the Husband's solicitors' objection to the admission of new evidence? Was it the end of the hearing, the 16th March, as that was when the District Judge made his decision? Or was it the 30th May, when the order was made, as it was theoretically possible up until then to apply to the court to adduce further evidence, as argued on behalf of Ms Holt?
In order to keep this post to a reasonable length (after all, it is intended to be a summary, and therefore substantially shorter than the judgment it is summarising!), I will forego the detail of the litigation history of the negligence claim, prior to it reaching the Court of Appeal. Suffice to say that the critical issue was when Ms Holt suffered "measurable damage" and was "financially worse off". At first instance, the District Judge agreed with Ms Holt that it was the 30th May 2012. However, the Firm appealed, and Judge Ralton, hearing the appeal, found that:
"...the latest possible date of quantifiable damage must be 16th March 2012 – the last day of the final hearing – because the parties would know without doubt on that date that [the District Judge] would make his mind up on the basis of the values presented. The loss to the Claimant at that date was measurable as the difference between the value of her properties and jewellery as presented and their true value albeit it was known that the value to be given to the jewellery was contentious and required a discrete factual finding."
The Firm's appeal was therefore allowed. Ms Holt herself appealed that decision, to the Court of Appeal.
Lord Justice McCombe, after considering the authorities, stated:
"In the present case, judged by these standards, it is clear that after the FDR, or at latest after the Husband's solicitors made it clear in January 2012 that they would object to new valuation evidence, there was a real risk (indeed perhaps a near certainty on the present facts) that the base line value of Ms Holt's assets would be taken at what she says was an inflated value for the purpose of the financial relief proceedings. That inevitably meant that the value of her rights vis-à-vis the Husband were diminished ... If one postponed that inevitability to 16 March 2012 (the end of the hearing), as Judge Ralton did, it makes no difference to the outcome: damage was still suffered more than six years before the commencement of this action.
"I do not ignore the theoretical possibility of a judge in divorce proceedings, of his/her own motion, taking the view that the evidence before the court is unsatisfactory and requires improvement or clarification. Authority shows that a judge can change his/her mind as to the outcome of a case, before an order is drawn up, even after delivering a draft judgment: see Re L and anor. (Children) (Preliminary Finding: Power to Reverse). However, in a case like the present the reality is that the expert evidence of values upon which a party may rely, and upon which proceedings will be resolved, will be settled well prior to the date of the hearing. If one party, owing to a solicitor's negligence, loses the opportunity to adduce the expert evidence that puts his/her case in the best possible light then the value of that party's claim is inevitably diminished."
"In the result, I consider that, on her case, Ms Holt suffered "measurable damage" and was "financially worse off" at the latest by the end of the hearing on 16 March 2012, as Judge Ralton held, and in all probability much earlier than that. Therefore, her claim for damages in tort was barred by s.2 of the 1980 Act before the claim form was issued on 5 April 2018."
Lady Justice King and Mr Justice Keehan gave consenting judgments. Accordingly, the appeal was dismissed.
You can read the full judgment here.