BPE Solicitors & Anor v Gabriel

Summary

Trinity Term
[2015] UKSC 39
On appeal from: [2013] EWCA Civ 1513

JUDGMENT

BPE Solicitors and another (Respondents) v Gabriel (Appellant)

before

Lord Mance
Lord Sumption
Lord Carnwath
Lord Toulson
Lord Hodge

JUDGMENT GIVEN ON

17 June 2015

Heard on 20 April 2015

Appellant
Adam Chichester-Clark
(Instructed by Ross & Co Solicitors LLP)

Respondents
Roger Stewart QC
Scott Allen
(Instructed by Beale & Company)

LORD SUMPTION: (with whom Lord Mance, Lord Carnwath, Lord Toulson and Lord Hodge agree)

Introduction

This is an application for directions in a pending appeal for which permission was granted by this court on 25 March 2014.

The appeal arises out of a transaction by which Mr Richard Gabriel, the claimant in the proceedings below, lent £200,000 to a company called Whiteshore Associates Ltd. The courts below have found that his solicitors, BPE Solicitors, were negligent in their handling of the transaction. For present purposes, all that need be said about the issues is that they relate mainly to damages. The trial judge awarded the full amount that Mr Gabriel would have recovered under the facility agreement if Whiteshore had been good for the money. The Court of Appeal held that this loss was not within the scope of the solicitors' duty. They accordingly reduced the award to a nominal £2. They also held, in the alternative, that even if substantive damages had been awarded, they would have been reduced by 75% on account of Mr Gabriel's contributory negligence.

The trial judge awarded the costs of the claim up to the conclusion of the trial to Mr Gabriel. The Court of Appeal set aside the judge's costs order and ordered Mr Gabriel to pay BPE's costs of the proceedings up to and including the appeal. The costs claimed by BPE under this head amount to £469,170.60. The Court of Appeal's order was pronounced on 22 November 2013. On 5 March 2014, Mr Gabriel was made bankrupt on his own petition by order of the Gloucester and Cheltenham County Court. On 25 March 2014, Mr Hughes-Holland was appointed as his trustee in bankruptcy. As a result, the right to pursue the appeal vests in the trustee. Mr Hughes-Holland has not yet decided whether to pursue it. The reason is the uncertainty, on the current state of the authorities, about the extent of his potential liability for costs if the appeal fails.

The ordinary rule is that a trustee in bankruptcy is treated as party to any legal proceedings which he commences or adopts, and is personally liable for any costs which may be awarded to the other side, subject to a right of indemnity against the insolvent estate to the full extent of the assets. Accordingly, Mr Hughes-Holland accepts that he is personally at risk for BPE's costs of the appeal to the Supreme Court. But he contends that he is not personally at risk by virtue of having adopted the appeal as trustee in bankruptcy for BPE's costs of the proceedings below in the event…