A lesson in false economy

Wednesday 13 February 2013

A recent Court of Appeal decision has provided a word of warning to those who shy away from the cost of instructing a solicitor and attempt to ‘go it alone’. Often this approach results in solicitors being instructed later on in the proceedings as the matter gets too complicated to manage. The case of Bank of Scotland v Watson [2013] highlights the importance of seeking legal advice as early as possible.

Mrs Watson was subject to possession proceedings by the bank and issued a counterclaim together with her defence claiming, very briefly, that the bank was liable to her for dishonest assistance in breach of trust. Mrs Watson was not represented at this point. The circumstances of her complaint were that the bank loaned her money for an investment which turned out to be a fraud, resulting in loss of her investment, for which she accused the bank of a conspiracy.

The bank applied for Mrs Watson’s counterclaim to be struck out on the basis that it raised no valid cause of action, as it had been very poorly pleaded. At first instance Mrs Watson’s claim was not struck out. The Court of Appeal then gave Mrs Watson the opportunity to amend her counterclaim to allow her to clarify her claim otherwise, unless Mrs Watson could plead a viable claim, her counterclaim would be struck out.

Mrs Watson was now represented and her representatives duly sought to cure the omissions in her counterclaim. However, no permission to amend a counterclaim may be given if such amendments introduce a new, previously unpleaded, claim which would otherwise be statute-barred (no legal action being available, for example because the claim is out of time). By this point in the proceedings Mrs Watson’s professed claim was statute-barred. The result was that Mrs Watson’s representatives were restricted in the rectification that they could make to her counterclaim.

Mrs Watson’s original pleading had been so brief and legally uncertain that any amendment to construct a viable cause of action would constitute a new claim.

No viable claim was able to be produced by way of amendment to Mrs Watson’s poorly drafted counterclaim and her claim was therefore struck out.

The lesson to be learned from Mrs Watson’s case is that it is essential to seek advice as early as possible otherwise you may find yourself in an incurable position. Had Mrs Watson sought legal advice at the outset her representatives would have been able to advise her on the merits of her case and could have drafted a properly pleaded counterclaim from the start, prior to the statute-barring of her claim. A decision to save on the cost of legal advice may just cost you your case.