London's High Court

The High Court has rejected an application by Addleshaw Goddard to strike out a professional negligence claim made against it.

The City firm sought to throw out a claim brought by a now-insolvent Scottish company, which accused the firm of failing to perform its duties in a case the company brought against Barclays seven years ago. The company accused Addleshaws of being influenced by the bank and suffering a conflict of interests, leaving it unable to act independently.

The original claim against Addleshaws for breach of contract and breach of fiduciary duty was brought by the claimant Arthur Holgate & Sons – a now-liquidated family business based in Scotland – which became embroiled in a dispute with Barclays in 2012.

The company alleged that the bank missold it an "interest rate hedging" product back in 2007, and subsequently sought advice from legacy HBJ Gateley – now a part of Addleshaws.

But the company alleged that Barclays had "informal control" over Addleshaws, which allowed the bank "to influence the actions and matters" related to its claim.

The judgment document details that this informal control was "expressly acknowledged in an email" between the Addleshaws partner overseeing the matter, Tim Cooper, and people at Deloitte who acted as joint administrators of the company after it became insolvent.

In its particulars of claim, the company cited Addleshaws' place on Barclays legal panel, as well as its motivation to "build and maintain a close relationship with the bank" as factors contributing to the bank's informal control over the firm.

In light of these and other factors, the company asserted that Addleshaws "would not have been able to pursue a claim against the bank without fear or favour", nor without the "requisite independence", and that it suffered a "conflict of interests" preventing it from effectively acting in the company's interests as it pursued its claim against the bank.

Addleshaws, however, attempted to get the professional negligence claim thrown out on the basis that "Scotland was the more convenient forum" and that courts in England and Wales did not have jurisdiction. It further argued that, while the case may not be time-barred in England and Wales, it may "at least in part" be time-barred in Scotland, where there is a five-year limitation period.

The High Court rejected this argument, siding with the claimant company, which asserted among other things that the place of performance of the contract was England.

Addleshaws declined to comment.