Ratiu & Ors v Conway

A solicitor’s fiduciary duty of loyalty is not determined solely by the formal identity of the corporate retainer. It may extend to those who, in reality, placed trust and confidence in the solicitor, including those acting through a nominee company. Whether that relationship exists is fact-sensitive.

A conflict need not concern the identical transaction. It may arise in reasonably related matters where there is a real, rather than theoretical, apprehension that the solicitor’s personal interest could conflict with the client’s interests. In defamation proceedings, qualified privilege is defeated only by proof of malice. The objective meaning of the publication must be kept distinct from the defendant’s subjective belief in what was intended.

The appellants had instructed the respondent solicitor in connection with the acquisition and sale of a development site, using a nominee company, Pristbrook Ltd, as the vehicle for the transaction. While acting on the sale, the solicitor competed personally with the appellants to acquire a nearby site.

After the appellants told him that their offer for the second site had been accepted and asked him to act, he sought to outbid them. They complained to the vendor’s agents that he had used confidential information obtained through a solicitor-client relationship. A jury before Tugendhat J found the letter defamatory, unjustified and malicious, and awarded the solicitor £96,000.

The appellants appealed, principally disputing the directions on fiduciary duty, conflict, confidentiality, justification and malice.

1. Appeal allowed unanimously. The jury’s findings that the defamatory allegation was unjustified and malicious were set aside. Laws and Sedley LJJ agreed with Auld LJ; Sedley LJ considered that the absence of sufficient evidence of malice made a retrial unnecessary.

2. The judge wrongly directed the jury that Pristbrook alone was the solicitor’s client and that he therefore owed no duty of loyalty to Regent. A fiduciary relationship depends on the reality of trust, confidence and reliance, not simply the formal corporate vehicle or the terms of a retainer. There was evidence from which a jury could find that Regent was the real client in the No 32 transaction and that the solicitor owed it a fiduciary duty when bidding for No 24.

3. The judge also took an unduly narrow view of conflict. A conflict is not confined to the same transaction. The two nearby properties were capable of being found to be reasonably related, and the jury could find a real apprehension that acting for Regent on one while bidding against it for the other created a conflict of duty and interest.

4. The judge was entitled to leave informed consent to the jury. The evidence, if accepted, was capable of showing that Regent knew of the solicitor’s personal interest and intended bid. The directions on confidential information were generally adequate. The sting of the letter was an allegation of actual misuse of the information conveyed on 5 December, rather than merely exposure to a risk of misuse.

5. Qualified privilege was not defeated. Malice required evidence from which a properly directed jury could infer that Regent did not honestly believe its intended allegation. There was no sufficient evidence of the alleged “dirty trick”, nor did the inaccurate statement that the Law Society had been contacted supply such evidence. The judge also failed adequately to distinguish the objective meaning relevant to justification from Regent’s subjective intended meaning relevant to malice.

• Court of Appeal (Civil Division): Allowed Regent’s appeal and set aside the jury’s findings on justification and malice.
• High Court: Before Tugendhat J, a jury found for Mr Conway on his libel and malicious-falsehood claims and awarded £96,000 damages.