White v Conyers, Dill & Pearman 1993 Civil Appeal No. 31

• Jurisdiction: Bermuda
• Judgment Date: 29 September 1993
• Date: 29 September 1993
• Docket Number: Civil Jurisdiction 1993 No. 323
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Ground, J

Civil Jurisdiction 1993 No. 323

BETWEEN:

Arthur White

Plaintiff

-and-

Conyers, Dill & Pearman (Sued as a firm of attorneys practising law in Bermuda)

Defendants

Mr. McMillan for the plaintiff; and

Mr. Riihiluoma for the defendant.

Foster v Outred & Co.UNK [1982] 2 All ER 753

Bell v Peter Browne & Co.ELR [1990] 2 QB 495

Tito v Waddell (No.2)UNK [1977] 3 All ER 129

Bermuda Bar Rules of Professional Conduct

Limitation Act 1984, s. 33(1)

Application to strike out — Security for loan agreement — Plaintiff made loan to York Hanover — Attorneys were to adequately secure the loan — Borrower defaulted — No enforceable security — Action to recover loss from attorneys — Limitation of actions — Continuing duty of barrister — Barrister representing both parties — Fiduciary duty — Mistake — Failure to disclose — Novation

REASONS FOR ORDER

(In Chambers)

This matter came before me on the defendants' summon under Order 18, rule 19 and under the inherent jurisdiction, to strike out the writ and the Statement of Claim. Three grounds for this were set out in the summons, being that the Statement of Claim is frivolous and vexatious and an abuse in that—

(i) it fails to state a cause of action which is not time-barred;

(ii) it complains about the way the defendants acted in respect of a loan agreement dated 12th July 1981, when the plaintiff had in July 1989 novated the said loan agreement; and

(iii) the plaintiff has no standing to bring the claim.

There was also a fourth, wrap-up head that the action is otherwise an abuse of process, which really adds nothing. At the hearing the defendant did not persist with the third ground.

The Statement of Claim, which was served with the writ, alleges that in or about 1980 the plaintiff first retained the services of a partner of the defendant firm (“CD&P”). In 1981 the plaintiff wished to make a loan of $200,000 to York Hannover (Bermuda) Ltd. (“the borrower”) upon the security of inter alia a lease of land from Government upon which the St. George's Club time-share development was to be built. The plaintiff asked CD&P to arrange for ‘adequately and comprehensively documented security’ in order to protect the loan. Some time thereafter the loan agreement of 12th July 1981 was executed. The agreement does not show the loan as made by the plaintiff, but by a company Anjli Realty NV (“Anjli”), who, I am told, was to act as trustee or agent for the plaintiff. The written loan agreement referred to a pledge of shares in the company, and there was also a promissory note attached as a schedule, but it made no mention of any security, by way of mortgage or otherwise, over any real property of the borrower. Nevertheless the plaintiff asserts in the Statement of Claim that he made it clear to CD&P that the pledging of shares, the promissory note and ‘the safeguarding of the lease as the continuing property and asset of York Hannover (Bermuda) Ltd’ were all, independently and collectively, the securities to be established in respect of the loan, and he gave instructions that suitable arrangements be made accordingly.

The plaintiff's complaint is that, despite his instructions, no properly enforceable security was ever arranged or provided. Moreover the lease of the St. George's Club property was at some time unknown to the plaintiff, and without his knowledge, either granted or transferred to another member of the York Hannover group that was not a party to the loan agreement. Eventually the borrower defaulted on the loan, whereupon the plaintiff found that he had no enforceable security in respect of it. The borrower is now in liquidation, and the lender therefore sues CD&P to recover his loss.

(1) LIMITATION

Were the above history the whole extent of the matter I think that it is plain that the action would indeed be statute barred. There was some argument before me as to whether the cause of action was in Tort (in negligence) or in Contract, and whether the time when the cause of action accrued was different as between the two. I think that the authorities sufficiently establish that the cause of action for negligence by a legal advisor is properly in Contract, but even if it were in Tort it makes no difference, as the cause of action in negligence accrues when the damage occurs, and in the case of negligent legal advice that is when the injured party acted upon it to his detriment: see Foster v Outred & Co.[1982] 2 All ER 753, CA; and Bell v Peter Browne & Co.[1990] 2 QB 495, CA. In the case before me that would mean that the cause of action arose when CD&P failed to put in place some security over the lease, or, at the latest, allowed their client to make the loan without such security being established. In other words the cause of action on which the plaintiff sues arose at the time of the loan agreement of 12th July 1981, and the time for bringing an action in respect of it would have exp'ired on 12th July 1987.

However, the plaintiff says that that is not the whole picture. He alleges that without his knowledge and consent the partner at CD&P who dealt with this transaction also represented the York Hannover group throughout the said transaction. For the purposes of this hearing that...