Summary of recent cases on Professional Negligence - first quarter 2016

Posted by Carina McFadden on
Summary of Recent Cases on Professional Negligence - February 2016

 

Case name

Facts

Judgment

Chief Land Registrar v Caffrey & Co

 

[2016] EWHC 161 (Ch)

 

Date of Judgment: 3 February 2016

 

Profession of Defendant: Solicitor

The Defendant ("D") acted for a couple in relation to the discharge of their mortgage in favour of a bank. The couple provided the D with a copy of the discharge form, Form DS1, purportedly signed by the bank. They also told D that the bank was represented by another firm of solicitors, but they were not. It also transpired that the Form DS1 was not signed by the bank.

 

D did not make any enquiries with the bank or their purported solicitors. D sent the Form DS1 to the Land Registry, who acted upon it and removed the charge from the title of the property.

 

The bank was indemnified by the Land Registry. The Claimant ("C") relied on two causes of action:

 

1) D owed a duty of care to the bank to take reasonable care and skill in dealing with the Form DS1; and

 

2) In making the application for the couple, D expressly or impliedly represented that it had taken sufficient steps or knew of sufficient facts to satisfy itself that the Form DS1 had been properly executed. Further, D owed a duty of care to take reasonable care and skill that all representations regarding the Form DS1 were true.

The Court found that D did not owe a duty of care. D was not asked to act on behalf of the bank and only acted for the couple. D was under no duty to a third party to take care of verify the genuineness of the Form DS1. Furthermore, the act that caused the loss was the act by the Land Registry of removing the charge, not the act of supplying the Form DS1.

 

In relation to the second cause of action, the Court found that it was right to treat D as having assumed a duty to take care in the representations which it made to C. Default judgment was therefore given in C's favour on the second cause of action. 

Sharon Minkin v Lesley Landsberg (Practising As Barnet Family Law)

 

[2015] EWCA Civ 1152

 

Date of Judgment: 17 November 2015

 

Profession of Defendant: Solicitor

A husband and wife divorced and negotiated a financial settlement. The wife was advised that her husband's offer was not satisfactory. She then changed solicitors and decided to adhere to the agreed settlement. She later claimed damages for professional negligence against her second solicitor for failing to advise her, even though the agreement had been reached before she instructed them.

The Court of First Instance dismissed the claim on the basis that the retainer was limited and her new solicitors had been under no duty to provide such further advice. The issue was the extent of the duty to advise in circumstances where the parties had reached agreement and solicitors were being asked to put that agreement into proper form for court approval.

In dismissing the claim, the Court summarised the position as follows:

i) A solicitor's contractual duty is to carry out the tasks which the client has instructed and the solicitor has agreed to undertake. 
ii) It is implicit in the solicitor's retainer that he/she will proffer advice which is reasonably incidental to the work that he/she is carrying out. 
iii) In determining what advice is reasonably incidental, it is necessary to have regard to all the circumstances of the case, including the character and experience of the client. 
iv) In relation to (iii), it is not possible to give definitive guidance, but one can give fairly bland illustrations. 
v) The solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor's retainer. As a matter of good practice the solicitor should confirm such agreement in writing.

Wellesley Partners LLP v Withers LLP [2015]

 

EWCA Civ 1146

 

Date of Judgment: 11 November 2015

 

Profession of Defendant: Solicitor

The Claimant, a recruitment firm ("C"), instructed the Defendant ("D") to draft a new LLP agreement adding new partners. C instructed D to include an option in the agreement that permitted a party to withdraw half its capital contribution at any time after 42 months from the date of execution of the agreement. D drafted the clause allowing the party to exercise the option at any time within the first 41 months from the date of execution of the agreement. The party then withdrew half of its investment 1 year after the date of execution, stopping the business from completing a planned expansion.

C brought a claim for loss of profit it would have earned from expansion into the USA and loss of profit it would have earned if it had employed more UK employees.

The Court of Appeal dismissed D's appeal on the facts, holding that the type of damage was in the reasonable contemplation of the parties as it was not unlikely to result from a breach. D knew that C was considering expansion into the USA and that this was how the capital raised through the investment round would be deployed. Although no further details were known at that time, the parties did have a common contemplation that they would exploit such opportunities as they arose.

 

Timothy Wright v Lewis Silkin LLP [2015]

 

EWHC 1897 (QB)

Date of Judgment: 3 July 2015

 

Profession of Defendant: Solicitor

The Claimant ("C") brought a claim against the Defendant ("D"), a firm who advised him on his employment contract. The claim arose when he failed to obtain a payment of a severance guarantee after he was constructively dismissed.  

 

C's employment contract with a company based in India allowed him a severance package of £10 million should he be constructively dismissed, but D did not ensure that it contained a clause specifying disputes to be dealt with under English jurisdiction. C made a claim and was awarded £10.3 million but he was unable to enforce it in India. Eventually his ex-employer became insolvent.


The employee submitted that the law firm had been negligent because it had breached its duty of skill and care by failing to (1) consider securing effective enforcement of the severance payment by obtaining a UK bank guarantee or performance bond in his favour; (2) advise him on jurisdiction.

The High Court held that D had not advised C in relation to jurisdiction matters and, if it had, it had not done so sufficiently clearly. It had thereby breached its duty. As to causation, had the C been properly informed, he would have insisted on an exclusive English jurisdiction clause. The value of C's lost chance of obtaining his severance pay was assessed at 20 per cent and he was awarded damages of £2 million against D.

Thornbridge Ltd v Barclays Bank Plc

 

[2015] EWHC 3430 (QB)

Date of Judgment: 27 November 2015

 

Profession of Defendant: Bank

 

 

A borrower claimed damages from the defendant bank for losses arising from alleged negligence, breach of contract and breach of statutory duty regarding information and advice given in respect of an interest rate swap the borrower had entered into in connection with a loan from the bank.

The High Court held that, on the evidence, the bank had not recommended the swap and had not assumed an advisory duty. Further, there was no board duty to provide information in the absence of an advisory relationship, although the bank still had no duty to mislead when providing break costs examples.

Maharaj v Johnson [2015]

 

UKPC 28

 

Date of Judgment: 15 June 2015

 

Profession of Defendant: Solicitor

The Claimant ("C") contracted to purchase some land from an estate and instructed the Defendant ("D") to perform the conveyancing. When C came to sell the land he found that the original Deed of Transfer was defective as it was executed by someone who acted outside their power of attorney. C sued D for their negligence.

The Privy Council held that if C would have suffered damage at the time of the original conveyance, it would be time barred. If he suffered damage at the time of the sale, it would not be time barred. The Court decided that there was a loss at the original conveyance and the negligence claim was therefore time barred. It was noted that, even though a claim can be brought within 3 years of date of knowledge, there is a longstop date of 15 years from the date of negligence to bring the claim. In this case the conveyance took place 22 years prior to the claim being brought.  

 

 

 

 

 

 

 

 

 

 

 

 

About the Author

Photograph of Carina McFadden

Carina is a Senior Solicitor in the Commercial Litigation team specialising in professional negligence disputes.

Carina McFadden
Email Carina
023 8085 7373

View profile