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Blurred boundaries: just how far do solicitors’ duties extend?

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13 September 2022

There has been a recent spate of cases where claimants have attempted to argue that their solicitors owed them duties to go beyond the work which the solicitors believed they had been asked to do. In this article, Helen Evans KC considers why this has been happening, and what the recent authorities tell us about where the courts draw the line.

The backdrop

Nearly 6 years ago, in Minkin v Landsberg [2016] 1 WLR 1489, the Court of Appeal considered when a solicitor would be taken to have assumed duties for only a very limited task- such as merely executing an agreement rather than advising on its contents- and when a solicitor’s responsibilities would go wider than that. In the context of supporting the idea of lower cost “unbundled” legal services,  the Court of Appeal affirmed that:

  • A solicitor’s duty is limited to carrying out the tasks which the client has instructed him or her to do, and the solicitor has agreed to undertake;
  • The court must be wary of imposing on solicitors duties that go beyond the scope of what they had been requested and undertaken to do;
  • However, it was implicit in any retainer that a solicitor would proffer advice that was “reasonably incidental” to the work he had agreed to carry out;
  • What is “reasonably incidental” is an “elastic phrase”, but has its limits. Where the boundary lies will depend on factors such as:
    • The character, sophistication and experience of the client; and
    • The extent of the burden that he allegedly incidental task placed on the solicitor.

In Minkin, the Court of Appeal recognised that solicitors would be loathe to take on narrow tasks, which usually carry with them a low fee, if they feared that they might be assuming wider duties to a client than they had bargained for.  

However, this principle is not always easy to tally with the duty on a professional person to advise on a known risk. The classic example of this type of case is that of a dentist who examines a patient’s tooth and in the course of doing so becomes aware of another problem in the patient’s mouth. Such a person would be under an obligation to advise of the issue that he or she had spotted: see Credit Lyonnais v Russell Jones & Walker [2003] PNLR 2.

Numerous recent cases have grappled where the division lies between what is “reasonably incidental” to a retainer and what is not. Any generic statement of principle- such as the one in Minkin v Landsberg- can be expected to generate numerous subsequent cases as the courts apply the rules in practice. Furthermore, the question of what is “reasonably incidental” to a retainer has been lent fresh relevance by the Supreme Court’s judgment in Manchester Building Society v Grant Thornton [2021] 3 WLR 81.  The MBS case increased the focus on the link between scope of duty and the type of loss that has been suffered, which in turn tempts claimants to stretch their advisers’ responsibilities as far as they  can.

Identity checks and conveyancers

In Lennon v Englefield [2022] PNLR 3, HHJ Gosnell (sitting as a High Court Judge) considered when a solicitor owes a duty to warn a client not to trust money to his or her agent. The case arose out of a property transaction in which a woman named Ms Lennon had instructed Philip Moody Solicitors (“PM”) to act as her solicitors. Ms Lennon gave her instructions through a third party trusted agent called Mr Englefield. Neither Ms Lennon nor the fee earner at PM, Ms Bourne,  were aware that Mr Englefield was a fraudster and had been struck off as a solicitor (although either could have found it out through an internet search). Mr Englefield subsequently misappropriated some of the proceeds of sale of a property and Ms Lennon and her mother sued PM. Their claim that PM had owed them a duty of care in tort by reference to the SRA Code of Conduct and/or the Money Laundering Regulations failed (which was unsurprising in view of the Court of Appeal’s judgment in P&P Properties v Owen White & Catlin, Dreamvar v Mishcon De Reya [2018] PNLR 29).  Their alternative line of attack was to allege that it was “reasonably incidental” to PM’s retainer for it to advise Ms Lennon on the risk of paying money to her agent, Mr Englefield.  How did that line of argument fare?

PM disputed that it owed such an obligation, in reliance on Clark Boyce v Mouat [1994] 1 AC 428. This case made clear that:

when a client in full command of his faculties and apparently aware of what he is doing seeks the assistance of a solicitor in the carrying out of a particular transaction, that solicitor is under no duty whether before or after accepting instructions to go beyond those instructions by proffering unsought advice on the wisdom of the transaction. To hold otherwise could impose intolerable burdens on solicitors”.

The High Court accepted PM’s case and took a similar approach in Lennon. It pointed out that:

“In most conveyancing transactions where a solicitor acts for the vendor the proceeds of  sale are used on a concurrent purchase. Where this is no concurrent purchase the proceeds are disbursed to the order of the vendor, often to their own bank account. There are however occasions when the vendor’s solicitor is instructed to pay some or part of the proceeds to a third party like a creditor, a relative, a friend or some sort of financial advisor. If the vendor’s solicitor is given clear instructions where to send the proceeds of sale in my judgment it is not part of her retainer to proffer advice to the client about the commercial wisdom of the step they have instructed her to take”.

The judge acknowledged that Mr Englefield’s bank account would be unlikely to offer as much security to Ms Lennon as a solicitors’ client account but concluded that:

 “I do not however accept that this triggered a duty on her to advise her client that as Mr Englefield was not a qualified solicitor his client account would not be as secure as a solicitor’s client account…. It was outside of Ms Bourne’s retainer to ask her to advise about the commercial  wisdom of paying the proceeds of sale into Mr Englefield’s account. There would of course have been virtually no risk of doing this if Mr Englefield had been an honest man,…… It is unfair to invest Ms Bourne with the hindsight of what happened after the money was paid where it was directed to be paid”.

The Lennon case forms part of a line of case law where courts have expressed warnings against solicitors being transformed into general insurers’ for their clients’ problems. But to my mind it also demonstrates a desire to scrutinise with care claims that a professional person owes a client commercial duties- which would carry with it the prospect of recovering for potentially wide commercial losses. 

Another recent case with some similarities with Lennon is Ashraf v Lester Dominic Solicitors [2022] PNLR 18. That was another claim involving a  property fraud. The Claimants sued a firm of solicitors who had witnessed a signature in a property transaction, asserting that they had owed a duty to check the signatory’s identity. The court held that the solicitors had no such obligation- they were not acting for any party and were instead performing a limited witnessing function.  The case is another indication that courts are alert to keep solicitors’ tasks within reasonable bounds.

A problem emerges after a retainer ends – do solicitors have to find the solution?

In Spire Property Development LLP v Withers LLP [2022] EWCA Civ 970 the Court of Appeal considered whether a firm of solicitors which had acted on a conveyancing transaction and was asked questions about issues that had arisen, owed a duty merely to answer those questions or to go further and suggest what legal remedies the former client may have.

The Claimants bought a property in Fulham and the searches did not identify electrical apparatus or wayleaves. After they came to light, the Claimants contacted Withers to ask questions about whether the cables should have shown up on searches. At first instance, HHJ Pelling QC found that Withers ought to have advised the Claimants that they could require UK Power Networks to move the cables at their own expense. Withers appealed to the Court of Appeal.

The allegations were based on Withers having assumed responsibility to the Claimants following the end of the conveyancing transaction. Withers did not dispute that they had a duty to ensure accurate answers to the questions asked of them but disputed that their duty extended to advising on remedies. The Court of Appeal agreed with Withers. It repeated the statements of principle set out in Minkin v Landsberg and cited with approval the statement of Patten LJ in Lyons v Fox Williams [2018] EWCA Civ 2437 that neither Credit Lyonnais nor Minkin were authorities “for the proposition that a solicitor is required to carry out investigative tasks in areas that he has not been asked to deal with, however beneficial to the client that might in fact have turned out to be”.

In the specific context of a case where there was no retainer and any duty arose on an “assumption of responsibility” basis, the Court of Appeal made clear that the court would have to take an objective approach and focus on exchanges that “crossed the line” between the parties. Lady Justice Carr therefore held that on the facts of the case, Withers had not assumed a duty that extended to advising on remedies against UK Power Networks.

It was not necessary for her to decide what, if any, role was played by the concept of “reasonably incidental” tasks in the context of a duty not based on an express retainer. That issue has therefore been left for another case to untangle.

No retainer, no problem?

Going one step further than Spire is the recent case of McDonnell v Dass Legal Solutions [2022] Costs LR 855. That was a case in which a claimant sought to argue that there was an implied retainer between himself and a firm of solicitors, based on a conversation lasting a few minutes. In keeping with both prior authority on the point and recent trends, the court took a stringent view towards the tests that the claimant would have to satisfy in order to show that  a retainer had come into existence. It made clear that:

  • The test for implication is necessity;
  • The fact that the parties had chosen not to enter into an express retainer meant that it was unlikely that they had agreed to enter into an implied retainer;
  • A retainer would not be implied merely for convenience;
  • It was only if it was so clear, on an objective consideration of all the circumstances, that the solicitor ought to have realised that he was retained, that an implied retainer would be recognised.

Conclusions

Four recent cases from 2022 have shown a clear tendency on the part of courts to scrutinise with particular care attempts by claimants to assert that their professional advisers owed them implied or broad duties. The cases are helpful indication of how the general statements derived from authorities such as Minkin v Landsberg have been applied in practice.

© Helen Evans KC of 4 New Square Chambers

This article is not intended as a substitute for legal advice. Advice about a given set of facts should always be taken.

Helen Evans KC was appointed silk in March 2022. In November 2021 she was named “Professional Negligence Junior of the Year” and in April 2022 was named “Times Lawyer of the Week.” Her practice comprises professional liability, fraud, regulatory and insurance coverage work. Her professional liability practice often has a legal, accountancy, audit or company law slant. She practises from 4 New Square in London and is the co-author of the Solicitors’ and Barristers’ Chapters in Jackson & Powell, the leading textbook on Professional Liability. For more details see www.4newsquare.com or email hm.evans@4newsquare.com

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