John Mowlem Construction Plc v Neil F Jones & Co

A solicitor’s duty is governed by the retainer and the conduct expected of a reasonably competent practitioner. A solicitor is not generally obliged to investigate matters outside that retainer. The solicitor must, however, warn the client of a material risk noticed, or which ought to be noticed, while carrying out the retained work where it is reasonable to assume that the client is unaware of it.

Whether that duty requires enquiry or advice about insurance is fact-sensitive. Relevant circumstances include the client’s competence in insurance matters, the apparent character of the threatened claim and the information reasonably available to the solicitor at the time. A claimant must also prove that competent advice would have prevented the loss. Although causation may ordinarily be inferred, contrary evidence may displace that inference.

John Mowlem Construction Plc sued the defendant solicitors as assignee of their former client, Commissioning South West Ltd. The solicitors had represented that company in an arbitration. The claim alleged that, when a substantial counterclaim was threatened, they should have advised their client to notify its professional indemnity insurers before the applicable policy expired.

The Technology and Construction Court dismissed the claim. It held that the solicitors owed no such duty and that, even if advice had been given, the claimant had not proved that the client would have notified its insurers. The judge therefore did not determine contributory negligence or whether the assignment entitled the claimant to sue.

The central issues on appeal were whether the retainer required the solicitors to enquire about insurance and advise notification, and whether their alleged omission caused the uninsured loss.

1. The appeal was dismissed unanimously. The trial judge had applied the correct professional standard. A solicitor’s duties are directly related to the retainer, judged by what a reasonably competent practitioner would do according to standards normally adopted in the profession. A solicitor is not a general insurer against the client’s legal problems. If, while performing the retained work, the solicitor notices or ought to notice a risk of which the client may reasonably be assumed to be unaware, the solicitor must warn the client.

2. The existence of a duty to enquire into or advise about insurance was fact-sensitive. The solicitors had not been retained to advise on insurance. Their client’s commercial and finance director was competent to manage professional indemnity insurance and had repeatedly received clear notification guidance from its brokers. The threatened counterclaim appeared unexpectedly and was reasonably regarded as a tactical device. The trial judge was entitled to find that a reasonably competent solicitor would not immediately have asked about insurance or advised notification.

3. Carradine Properties Ltd v DJ Freeman & Co was a useful factual illustration rather than a source of general rules. It showed that solicitors may sometimes owe insurance-related duties despite the absence of an express retainer. Whether such a duty arises, and the consequences of any breach, depend on the facts of the individual case.

4. The claimant also failed on causation. It bore the burden of proving that appropriate advice would have led to timely notification. An ordinary causal chain may readily be inferred, but the evidence displaced that inference. The director already knew the importance of notification, gave an inaccurate answer on the renewal proposal and later delayed notification despite advice. The trial judge’s inability to find that earlier advice would have produced notification was a factual conclusion for which there was no ground of appellate interference.

5. The court did not determine the assignment or contributory-negligence issues. The appellant was ordered to pay the respondent’s costs.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously: [2004] EWCA Civ 768. The findings that no relevant duty arose and that causation was unproved were upheld.

2. Technology and Construction Court: His Honour Judge Richard Havery QC dismissed the professional-negligence claim. He held that the solicitors owed no duty to advise notification of the threatened claim and that the claimant had not proved that such advice would have caused timely notification. No citation is stated in the judgment.