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No duty, no negligence!

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28/09/2017

High stakes can encourage parties to pursue claims in the most strained of circumstances. Professionals can often find themselves in the firing line in such cases.  The recent case of Joseph v Farrer & Co [1] will be a welcome example for defendants and their professional indemnity insurers, of the High Court reiterating that the existence of a clear duty is fundamental to a finding of negligence.

High profile, high value

The facts are somewhat sensational. The claimant, Ms Joseph, was the “close and intimate” friend of Mr Cundill, a multi-millionaire many years her senior, whose wealth was in a discretionary trust. Mr Cundill was diagnosed with a terminal illness and initially wanted £10 million be paid to Ms Joseph.  The trustees refused, but instead complied with Mr Cundill’s subsequent written request for periodic payments of £500,000 to be made to Ms Joseph if she remained within him for the duration of his illness, up to a total of £5 million. Mr Cundill passed away and £1 million had been paid to Ms Joseph when it was alleged that she had interfered with Mr Cundill’s care arrangements (with which, he had made clear to his lawyers and trustees, he was happy).  The trustees therefore stopped the payments.  Ms Joseph sued Mr Cundill’s solicitors for the remaining £4 million, alleging that they owed her a duty either under an implied retainer or because they had assumed a duty of care in tort.

Claimant could not demonstrate duty

In accordance with the authorities on implying terms into contracts generally, and those on implying terms into professionals’ retainers specifically, the High Court undertook an objective consideration of the evidence. It found that the solicitors had been acting for Mr Cundill alone.  The court took into account all of the circumstances of the case and found that the express retainer was addressed to Mr Cundill alone; and there was no need at all to imply that Ms Joseph was a party to that, or to any implied, retainer.

The court also gave detailed consideration to the facts of the case in light of relevant authorities on the finding of a duty of care in tort. There were significant tensions (or conflicts) in this case between the interests of Ms Joseph and those of Mr Cundill (in which the trustees and the solicitor were bound to act).  In Bank of Credit and Commerce International (Overseas) Ltd v. Price Waterhouse No. 2 [2] the court ruled that, “where… a solicitor is retained by one party and there is a conflict of interest between the client and [another person], the court should be slow to find that the solicitor has assumed a duty of care to the other.” Here, the court found that Farrer & Co had not assumed any duty of care towards the claimant – indeed all indications were against that.

(A further fatal flaw in Ms Joseph’s particular claim was the fact that the trustees of a discretionary trust are, of course, entitled to exercise their discretion. Even if the solicitors had owed any contractual or tortious duty, there was nothing that they could have done to prevent the trustees from acting as they saw fit.  There could therefore have been no breach on which to found a negligence claim in any event.)

WM Comment

This case is a welcome restatement of the fact that if there is no duty owed by a professional, then there can be no negligence. The judgment also contains a helpful summary of the key considerations when it comes to ascertaining the existence of implied contracts and/or terms, or of assumed duties.

However, whilst on the facts of this particular case there was no duty and not even any breach, the claim still reached the High Court. Farrer & Co were fully vindicated in this judgment, but nevertheless Ms Joseph’s claim will, inevitably, have put the professionals to wasted time, stress, costs and publicity that they would probably have preferred to avoid.  The case is therefore also a reminder that the law cannot protect against the situation where a person is determined to pursue a claim, regardless of its legal merits.  The judgment is silent on the question of costs.

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[1] Tina Chantale Joseph v Farrer & Co [2017] EWHC 2072 (Ch)
[2] [1998] PNLR 564

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