Solicitors negligence lawyer, Emma Slade, looks at a solicitor's duty to give cautionary advice.
Q: What’s the difference between God and a doctor?
A: God only thinks he’s a doctor!
Apologies to all doctors out there, but in its awkward way this Christmas cracker joke makes my point for me: as much as we would like it to be otherwise, professionals are not as infallible as we, or they, would like to think. Mistakes can be made, particularly when advice is sought on issues which are finely balanced. In those instances, should a professional warn you that he could be wrong? It would seem so.
The leading case on this is the 2001 Court of Appeal decision in Queen Elizabeth’s School Blackburn Ltd –v- Banks Wilson Solicitors (a firm). In that case, the school (QES) had purchased property from their neighbour, C, that they intended to develop. A clause was included in the contract that any new development was not to be “greater in height than the buildings now existing”. Unfortunately, QES did not inform their architect of this clause and the drawings showed a building taller than C cared for.
In October 1994, one of the school governors (W) asked the school's solicitor about the height restriction. W told the solicitor that C had been querying it and had even attended the site for a meeting with QES. The solicitor told W that he felt that the height restriction wasn’t to the roofline but to the height of the chimney pots. In February 1995, he confirmed his view in writing and at a later meeting on site, the solicitor told W that there was a “strong argument” that the ridge line was not the height marker. He was apparently asked whether he could “guarantee that his advice was correct” but the solicitor – as all good lawyers are wont to do – said that whilst “he had confidence in his advice… nothing was certain in litigation and he could give no guarantee as to how the court might view the matter.”
Unfortunately, discussions with C did not go well and to avoid any possibility of a breach, QES instructed their architects to amend their plans. In so doing, QES incurred more expense, significantly more than they would have had done if, they argued, the solicitor had been more circumspect in his advice in October 1994.
QES therefore made a solicitors negligence claim for compensation.
At first instance, the judge dismissed the solicitors negligence claim on the basis that the solicitor's advice was correct in law (although the Court accepted there was a risk that other courts might have taken a different view) and as a result the solicitor had not been negligent.
The decision was successfully appealed. Not only did QES disagree with the judge’s interpretation, it was clear from his remarks that the decision about the meaning of the height covenant was ambiguous, which even the solicitor seems to have accepted by the fact that he could not guarantee that his advice was correct. Importantly, the Court of Appeal concluded that the solicitor knew there was likely to be a dispute with C over the clause and that there was a risk about the construction of the clause. He should have been more circumspect in his advice in October 1994 and warned of the risk. Because he didn't do this the solicitors negligence claim was successful..
There have been other cases dealing with this point, but the most recent one has been the Court of Appeal decision in Barker –v- Baxendale Walker Solicitors (a firm) which affirms its previous decisions. In this case, the claimant (B) placed his company shares into a trust so that upon his death, the trust monies could be used for the benefit of his children. The scheme was intended to avoid payment of Capital Gains Tax and Inheritance Tax but unfortunately, it failed in its intentions as it turned on the interpretation of a specific clause under the Inheritance Tax Act 1984: to avoid paying IHT, his children could not be “connected” with B but at what date was the connection to be taken? The date the shares were transferred into the trust or the date of B’s death? The defendants who had been promoting the scheme to B, argued that it was the latter. They were wrong.
The Court took the view that the defendants had been marketing an aggressive tax avoidance scheme which ran contrary to the purpose of the Act. Given that there has been a long history of litigation where courts have been reluctant to uphold artificial tax avoidance transactions such as this, BW should have given a significant health warning when promoting this scheme and to warn B that there was always a risk the scheme wouldn’t work they way they had hoped.
But should such health warnings be given all the time? Surely it would undermine a client’s faith in their adviser if all advice given came with cautious caveats? Lord Justice Sedley summed it up best:
“Clients, I know, want two inconsistent things. They want confident advice on which they can act, and they want cautionary advice about the risks of doing so. It is a solicitor's unhappy lot to have to try to satisfy both requirements simultaneously"
However, what is clear from the cases dealing with this is that all of them are fact specific and dependent on the facts of the individual case.
Secondly, the arguments for each side were very finely balanced and open to interpretation and the client should have been made aware of this. It seems to me therefore that when giving advice, a solicitor (or other professional) should point out risks to any client and to urge caution.
Lawyer: If you want my honest opinion…
Client: I don’t want your honest opinion, I want your professional advice.