Accident Assistance Ltd. v Hammonds Suddards Edge (a firm) Rev 1

In a professional-negligence claim concerning legal advice, the claimant must prove that the circumstances required the solicitor to explain the implications of advice, that the client failed to understand them, and that the solicitor ought reasonably to have appreciated that failure. The client’s knowledge, experience and sophistication are material. A solicitor is not negligent for failing to state what should have been obvious to that client.

The claimant must also prove that any failure caused loss. Where a material witness is not called, the court may assess the case without drawing an adverse inference where the evidence is otherwise sufficient. On the facts, the claimant failed to establish breach or causation.

Accident Assistance claimed damages from its former solicitors, alleging negligence in failing to explain the implications of advice concerning the Consumer Credit Act 1974 and its credit-hire agreements. The agreements were non-compliant and potentially exposed the business to arguments that hire charges could not be recovered from third-party insurers.

The central issues were whether the claimant’s principal understood the advice, whether the defendant should have appreciated any misunderstanding, and whether further explanation would have led to timely changes in the agreements. The trial concerned liability only.

1. Claim dismissed. The claimant failed to prove that the defendant firm was in breach of duty or that any breach caused loss.
2. The burden lay on the claimant to show that the circumstances required the implications of counsel’s advice to be explained. That required proof that Mr Evans did not understand those implications and that the defendant firm ought to have appreciated that he might not have understood them. The court applied the approach in Robins v National Trust Company Ltd [1927] AC 515 and Yager v Fishman & Co [1944] 1 All ER 552.
3. The scope of the retainer did not relieve the solicitors of an independent duty to ensure that advice was properly understood. Whether that duty was breached depended on the client’s experience and the circumstances in which the advice was given. Mr Evans was an experienced and sophisticated credit-hire operator who understood the link between Consumer Credit Act compliance, enforceability and recoverability.
4. The court treated the absence of Mr Evans’s evidence cautiously. Both parties were entitled not to call him, and the court approached the factual issues as if his evidence were unavailable through no fault of either party. It therefore declined to draw an adverse inference against either side.
5. Causation remained for the claimant to prove. It had to establish that further advice would have caused timely steps sufficient to avoid all or some of the losses. Applying Boateng v Hughmans [2002] PN 449 and White v Paul Davidson & Taylor [2004] EWCA Civ 1511, the court was not satisfied that events would have taken a different course.
6. Even if the implications had been spelled out, Mr Evans would probably have treated the issue as theoretical and deferred changes until other contractual and procedural matters had been resolved. The necessary causal link was therefore absent.

First-instance decision. No earlier appellate decision in the same proceedings was stated in the judgment.