Joel v Langley & Partners

An appellate court may reverse a trial judge’s assessment of a witness’s truthfulness in rare cases where plain considerations demonstrate that the assessment was wrong. The assessment must be tested against the witness’s whole evidence and all relevant documents. Where documentary evidence and common sense make a retrial futile, the appellate court may make its own finding of fact.

An accountant retained to advise a client on personal tax matters must warn that retirement relief depends on a binding share-sale agreement being made before the client ceases to be a full-time working officer or employee. Failure to give that advice is negligent. Causation in negligent-advice cases requires separate consideration of whether the advice caused entry into the transaction and what loss is attributable to the negligence.

The claimant alleged that an accountancy firm negligently advised him in connection with his departure from a private company and the proposed purchase of his shares. He claimed that the resulting loss of retirement relief caused a capital gains tax liability.

The trial judge found that the firm had not been retained to advise on the transaction and dismissed the claim without deciding negligence or the remaining issues. The claimant appealed. The central questions were whether the retainer existed, whether the advice was negligent, whether the negligence caused entry into the transaction and what further issues should be determined by the appellate court.

1. Appeal allowed. The trial judge’s finding that the defendants were not retained to advise the claimant on his tax affairs was set aside. The judge had misstated the documentary evidence, failed to review the conflicting evidence adequately and relied on an unexplained assessment of credibility.
2. An impression of a witness’s demeanour must be tested against the whole of that witness’s evidence and against documents bearing directly or indirectly on the issue. Applying the approach in Yuill v Yuill [1945] P. 15, as approved in Watt or Thomas v Thomas [1947] AC 484, the documentary evidence and surrounding circumstances established the retainer.
3. The possible conflict arising from advising on the terms of the claimant’s departure did not prevent the firm advising him on his personal claim for retirement relief, in which the Company had no interest.
4. Mr Langley gave negligent advice. He should have advised the claimant not to sign the letter recording only a request for the Company to purchase his shares, and should have explained that retirement relief depended on a binding agreement for sale being entered into before the claimant ceased full-time employment.
5. The negligence caused the claimant to enter into the transaction represented by the letters signed on 31 January. The court applied the distinction identified in Bristol and West Building Society v Mothew [1998] Ch 1 between causing entry into a transaction and establishing what part of the resulting loss is attributable to the negligence.
6. There was no binding agreement on 27 January. The agreement in principle remained conditional, and the binding agreement arose only on the exchange of signed letters on 31 January. Liability was therefore established, but the amount of loss required an inquiry as to damages.

Judgment was entered for the claimant on liability. The matter was remitted for an inquiry as to damages, including additional professional fees. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): allowed the appeal from the decision of His Honour Judge Hutton, sitting as a judge of the Queen’s Bench Division, entered judgment for the claimant on liability and directed an inquiry as to damages.
• High Court of Justice, Queen’s Bench Division: dismissed the claim after finding that the defendants had not been retained to advise the claimant in relation to the share sale.