A law firm has been dragged to court in a dispute regarding development funding for a four-star hotel in Manchester.

Property developers and Directors of BPC Hotels Ltd, Bala Perampalam Chandra and Maria Perpetua Chandra, accused solicitor firm Brooke North of professional negligence in relation to advice given between 2000 and 2003.

However, it was alleged in the most recent hearing that their claims were bound to fail due to complications with evidencing their arguments.
   
In 1998, Mr and Mrs Chandra sold their successful nursing home business to buy a Grade II listed building known as Princess Court in Manchester for £1.5 million. They planned to develop it into a four-star hotel as part of the Holiday Inn franchise.

After obtaining a £10.65 million development loan from the Royal Bank of Scotland (RBS) and appointing a main contractor to the development, a Deed of Warranty was executed.

The claimants put in significant funds themselves. Also, the Chandra’s signed a personal guarantee secured on their residence, which was limited to the sum of £1.15 million.

After an alleged breach of contract by BPC Hotels Ltd- which was also a claimant in the case, the hotel was sold by receivers for £13.5 million in April 2004.

After RBS settled its claim with contractor Costain Ltd, it lodged a claim against Mr and Mrs Chandra for its £4 million losses. This led to repossession proceedings being launched for the couple’s home.

Mr and Mrs Chandra claim they were wrongly advised by Brooke North at almost every relevant stage in the proceedings.

However, within the hearing conducted in December, Mr Justice Edwards-Stuart told Mr and Mrs Chandra: “I have already said, the allegations of professional negligence made by the Claimants in this action are many years out of time and so this claim must fail unless the Claimants can show that the date from which time ordinarily starts to run under the Limitation Act 1980 has been postponed.

“In my view, there is not a single allegation made by the Claimants in the Particulars of Claim in relation to deliberate concealment that can be categorised as anything but wishful thinking. They do not establish anything approaching a case with a realistic prospect of success, for the reasons that I have given.”

Mr Justice Edwards-Stuart maintained that he doubted there would be any evidence to back up claims alleging that two solicitors conspired together to remove the traces of knowledge they had access to.  

“The new claims are in my view hopeless: they must be stopped in their tracks, and stopped now,” added Mr Justice Edwards-Stuart.

As a result, it was ruled there must be a summary judgement for the solicitors.

The next trial between Mr and Mrs Chandra and Brooke North will take place next month. This will discuss the determination of the claims if the law firm is unsuccessful with its summary judgement.