High Court Case Highlights Importance of Causation in Professional Negligence Claims

Introduction

The High Court of Justice case, Stephen John Finnan v Charles Russell Speechlys LLP, offers a comprehensive exploration of professional negligence and the pivotal role of causation in a breach of contract and tort. Master McQuail’s judgment illuminates the procedural and substantive legal principles essential for establishing a valid claim. This article examines the key topics addressed in the case, distilling the legal principles applied and associating them with the relevant parts of the case summary.

Key Facts

Stephen Finnan, a retired professional footballer, initiated a professional negligence claim against his former solicitors, Charles Russell Speechlys LLP (CRS), alleging negligence in advice and representation related to a dispute with his brother, Sean Finnan, involving company assets and director’s loans. The core of Finnan’s complaint was the alleged misadvising to commence proceedings under section 994 of the Companies Act 2006. Finnan contended that as a result of CRS’s negligence, he incurred substantial losses exceeding £6 million. CRS responded by questioning the causation and asserting that Finnan’s claim did not establish how CRS’s alleged negligence resulted in actual loss.

Legal Principles

Causation

Causation is a cornerstone of both contract and tort law claims, with claimants required to demonstrate that the loss incurred was a direct result of the defendant’s actions or omissions. The judgment refers to the metaphysical “but for” test, which posits the need for a counterfactual scenario showing that, without the defendant’s wrongdoing, the claimant would be in a materially better position.

Scope of Duty

The claim also hinges on the scope of the professional’s duty of care, exploring whether the harm suffered by the claimant falls within the risks the law seeks to protect against. Master McQuail applied criteria aligned with the recent Supreme Court judgments in Manchester Building Society v Grant Thornton UK LLP and Kahn v Meadows, which simplified the established “SAAMCO” principle by clarifying the purpose of a professional’s duty of care.

Strike Out and Summary Judgment

The judgment utilizes CPR 3.4(2) and CPR 24.2 to consider a strike out and summary judgment, respectively. These procedural mechanisms require an examination of whether the claimant has shown real prospects of success or, conversely, whether the claim discloses no reasonable grounds for bringing it forward. A claim may be struck out if it is unarguably untenable or if allowing it to proceed would unjustifiably deplete both the court’s and the parties’ resources.

Permission to Amend

The judgment touches on when courts may grant permission to amend pleadings, emphasizing the need for such amendments to be coherent and carry a degree of conviction, thereby contributing to a case’s arguability and potential for success.

Outcomes

Master McQuail adjudicated that Finnan’s particulars of claim fail to establish the necessary causation element, thereby rendering his tort claim incomplete and his contract claim unable to confer any potential benefits. The demands for payment had, in fact, been made with no resultant repayment, undermining the counterfactual that CRS’s advice against s.994 proceedings would have led to a different outcome. Consequently, the claimant was not granted further opportunity to amend, and the particulars of claim and the overall claim were struck out.

Conclusion

The judgment in Stephen John Finnan v Charles Russell Speechlys LLP elucidates the indispensable legal principle of causation in establishing claims of professional negligence. Without a coherent, plausible counterfactual scenario demonstrating causation of loss, such claims are susceptible to being struck out or summarily dismissed, regardless of the alleged breaches of duty. The case reaffirms that claimants must not only articulate a clear breach of duty but also connect that breach unequivocally to the loss suffered to sustain a viable legal claim.