M.U.U v Wallace LLP (2018)
A company director who had been sued for legal fees incurred by his company and had been found personally liable to pay those fees, but had then brought a claim in negligence against the solicitors' firm should have raised his complaints about the firm in his defence and counterclaim during the first set of proceedings. The courts would not allow a multiplicity of claims where issues should have been raised and determined in earlier proceedings.
The claimant company director appealed against the striking out of his claim against the defendant solicitors' firm.
The claimant was the sole director and shareholder of a company and had asked the firm to provide legal services to it. The firm wrote a letter in November 2007 stating that the company would be treated as the client, and that the claimant agreed to be responsible for the firm's fees and disbursements. The claimant signed a statement agreeing to terms of business and terms and conditions. The firm provided various legal services to the company and some, but not all, bills were paid. The company then went into liquidation and £10,000 remained unpaid. The firm sued the claimant for the unpaid amount plus interest. The claimant's defence asserted that there had been a contract between the company and the firm, that he was not personally liable for fees and that he had not signed the statement in a personal capacity. At trial the claimant was found personally liable for the fees. He appealed that decision and the firm presented a bankruptcy petition against him. On appeal the judge found that it was plain from the November 2007 letter that the claimant had agreed to be personally responsible for the firm's fees, and that while the firm treated the company as its client, the actual client had been the claimant. The claimant applied for permission for a second appeal, but that was rejected on the papers and found to be totally without merit. The claimant then initiated the instant claim in which he argued that the firm had breached its duty of care to him and sought damages for the judgment debt, interest, costs and other sums paid during the bankruptcy proceedings. The firm successfully applied to strike out the claim and the judge dealing with that application held that the issues had already been litigated, that any negligence should have been raised in the earlier proceedings and that the claimant was not entitled to a second bite at the cherry with an alternative argument.
The initial proceedings were about whether the claimant had assumed personal responsibility for paying the fees incurred by the firm in assisting the company. In those proceedings, the claimant had not sought to advance the complaints about the firm which he advanced in the instant proceedings. The court was not persuaded by the claimant's argument that there had been no reason in the original proceedings to bring a counterclaim in negligence. Counterclaims came in many and varied forms. It had not been necessary for the claimant to ask himself whether he was the firm's client. All he had needed to consider was whether he had had any counterclaim against the firm for the events which had rendered him liable to pay the fees. The previous proceedings had been the obviously appropriate forum in which to tell the court about any complaint about the firm and resolve those issues. The obvious and practical way to look at the matter was that if the firm asserted that the claimant was personally liable to pay fees, then the claimant had to identify his complaints about the firm's actions and rely on them in answer to the firm's claim. Whether the letter of November 2007 had made the claimant or the company the firm's client was irrelevant to the substantive issue as to whether it made the claimant personally liable to pay the fees. The courts had to discourage a multiplicity of proceedings, as set out in the Senior Courts Act 1981 s.49(2). Parties should be estopped from pursuing in subsequent proceedings issues which should have been pursued and determined in earlier proceedings, Henderson v Henderson [1843-60] All E.R. Rep. 378 considered. The bringing of the instant claim amounted to harassment of the firm.