Warner & Ors v

A solicitor who commences proceedings without the client’s authority breaches an implied warranty of authority. Liability is strict and does not depend on fraud or bad faith. The court may summarily determine the solicitor’s liability where the breach and recoverable loss are clear; disputed issues of fact or law should ordinarily be left to a separate claim. Where instructions come from a third party or one joint client purports to instruct for others, the solicitor must verify that every client agrees and, where appropriate, obtain written instructions. A settlor of a discretionary trust cannot ordinarily instruct the trustees on the trust’s behalf where the trust instrument requires independent decision-making.

The petition concerned alleged unfairly prejudicial conduct in relation to Microsulis Ltd. SMP Trustees Ltd was named as the second petitioner, but applied to rescind orders made against it and to have its name removed from the petition, asserting that Merriman White had commenced and continued the proceedings without SMP’s authority.

The respondents separately sought costs and related relief against Merriman White. The central issue was whether the solicitors had authority to act for SMP and, if not, whether the court should exercise its summary jurisdiction to order relief for the resulting costs.

The petition had subsequently been struck out by His Honour Judge Waksman, subject to the determination of these applications.

Applications granted. The court rescinded the orders made against SMP, struck SMP’s name from the petition ab initio, and ordered Merriman White to pay SMP’s and the relevant respondents’ costs.

1. The court applied the established rule that a solicitor commencing proceedings represents that he has authority to do so. The liability arising from that representation is strict and does not depend on fraud, dishonesty or bad faith, as explained in Yonge v Toynbee [1909] 1 KB 215 and S E B Trygg Liv AB v Manches [2006] 1 WLR 2276. The historical authorities, including Wright v Castle (1817) 3 Mer 12, established the need for special authority to institute proceedings.
2. The court accepted the caution in Skylight Maritime SA v Ascot Underwriting Ltd [2005] PNLR 25 that summary determination is appropriate in a clear case, but not where real issues of fact or law require a separate claim. On the evidence, there were no such unresolved issues. Merriman White had been given a full opportunity to respond.
3. The trust deed required SMP’s trustees to exercise their powers independently and gave no authority to Mr Warner, the settlor, to instruct them. The overwhelming evidence showed that Merriman White had acted on Mr Warner’s instructions without obtaining authority directly from SMP or its trustees.
4. The court also found that, even if the wasted-costs submissions were relevant, Merriman White had acted negligently and in clear breach of the applicable professional rules requiring confirmation of clients’ instructions. The court therefore ordered all costs and expenses occasioned by the wrongful institution and continuation of the proceedings.

The judgment records that the petition was struck out by His Honour Judge Waksman, sitting as a High Court judge, on 13 March 2008, with the order stayed pending determination of these applications. The present court then rescinded the orders against SMP and struck its name from the petition ab initio.