Adrian Alan Ltd. v Fuglers (a Firm)

Where a client contracts for legal services to be provided by a solicitor, and a firm supplies an unqualified adviser without disclosing that status, the contract may be treated as wholly unperformed. Fees paid under the resulting mistake may be recoverable restitutionarily, subject to any properly pleaded change-of-position defence. Such a defence must be raised in the statement of case so that its factual merits can be investigated at trial. Damages for the loss of a chance caused by a solicitor’s failure to prosecute an appeal are an evaluative, jury-like assessment. An appellate court should not interfere absent an error of principle or a plainly wrong assessment.

Adrian Alan Ltd. appealed against findings of the Brighton County Court that Fuglers were liable to repay fees paid while the client mistakenly believed that an unqualified former solicitor was acting as its solicitor, and liable in negligence for failing to prosecute an appeal in candelabra litigation. Fuglers challenged both awards. AAL cross-appealed against the rejection of its claim for £3,000 paid towards costs of the abandoned appeal and sought more than £10,000 for the lost appeal opportunity. The central issues were the restitutionary consequences of the undisclosed status of the adviser, the adequacy of the pleaded defence, the valuation of the lost chance, and liability for costs relating to an appeal that had never been pursued.

The appeal was dismissed. The cross-appeal was allowed in part, and AAL recovered £3,000 with interest.

1. Repayment of fees. The court followed Pilbrow v Pearless De Rougemont & Co [1999] 3 All ER 355. The client had contracted for legal services by a solicitor, not merely for competent legal services by anyone. Supplying an adviser who was not a solicitor, without disclosure, amounted to non-performance. The fact that the present case involved deliberate deceit rather than an internal mistake did not alter the result.
2. A defence of change of position to a restitutionary claim must be fairly and squarely pleaded. It must be included in the statement of case so that its factual merits can be explored at trial. Fuglers had not pleaded the defence, and it was too late to introduce it on appeal. The court declined to speculate on its possible merits, although it noted the guidance concerning restitutionary justice in Lipkin Gorman v Karpnale Ltd [1991] AC 549.
3. Negligent failure to prosecute the appeal. The county court judge’s award of £10,000 represented his assessment of a 50 per cent chance that a properly pursued appeal would have improved the claimant’s position in settlement. The valuation was essentially a jury question. There was no sufficient basis for appellate interference, and both parties’ challenges to that award failed.
4. The £3,000 costs payment. The unappealed finding was that no steps had been taken to pursue the proposed appeal. The solicitor therefore had no authority to agree liability for appeal costs, and AAL had no legal liability for those costs. The payment was recoverable and was ordered to be returned with interest.

• Court of Appeal (Civil Division): dismissed Fuglers’ appeal against repayment of fees and the £10,000 negligence award; allowed AAL’s cross-appeal concerning the £3,000 payment.
• Brighton County Court: awarded AAL £23,911.25 in repayment of fees and £10,000 damages, but dismissed the £3,000 claim.