Rind v Theodore Goddard (a firm) & Ors

A claim by an intended or actual residuary beneficiary against solicitors for negligent estate-tax planning may disclose a duty of care where, without such a duty, the law may contain a lacuna. The question is fact-sensitive, particularly where the advice concerns lifetime transactions rather than preparation of a will.

A solicitor’s retainer may continue beyond an individual transaction in exceptional circumstances, but an ordinary retainer does not continue merely because a negligent omission could later be remedied. Where alleged negligence in a later transaction could have caused distinct damage, the limitation period under section 14B of the Limitation Act 1980 may run from that later act or omission. Summary judgment is inappropriate where the existence, scope and continuity of the relevant duties depend on detailed facts.

The claimant, a residuary beneficiary of his mother’s estate, claimed damages from a London firm of solicitors and partners of a Jersey firm. He alleged negligent advice and conduct concerning lifetime transfers, security arrangements and restructuring of a family settlement, which resulted in an inheritance tax liability.

The defendants sought summary judgment or strike-out. They argued that no duty was owed to the claimant, that the estate rather than the claimant suffered the loss, that the claim was statute-barred, and that the London firm had no relevant involvement in the later transactions. The central questions were whether the claim disclosed a realistic case on duty, loss and limitation, and whether those issues required trial.

1. Duty to the claimant. The authorities concerning intended beneficiaries, including White v Jones [1995] 2 AC 207 and Carr-Glynn v Frearsons [1999] Ch 326, showed that the existence of a duty may depend on whether otherwise there would be a lacuna in the law. Daniels v Thompson [2004] PNLR 638 made it arguable that the claimant could establish such a duty, although the extension of the White v Jones principle remained fact-sensitive.
2. The case was between the paradigm will-making case and the ordinary lifetime-transaction case exemplified by Clarke v Bruce Lance & Co [1988] 1 WLR 881. The claimant’s status, the solicitors’ knowledge of the family’s intentions and the nature of the estate-planning work required investigation at trial. The alleged duties in relation to the 1992 transactions were also properly arguable.
3. Continuing retainer. Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 and Bell v Peter Browne & Co [1990] 2 QB 495 established that an ordinary retainer is not continuing merely because a negligent omission remains capable of correction. Exceptional cases may arise where the contract requires continuing vigilance. Whether this case was such a case depended on the detailed evidence.
4. Loss. If a duty to the claimant were established, the reduction in the estate available for distribution could constitute loss suffered by him as a residuary beneficiary. His recovery could not exceed the reduction in his own share, accepted in argument to be no more than one half of the inheritance tax and interest paid.
5. Limitation. The claim was arguably brought within six years because the claimant’s loss might first have arisen on his mother’s death. Further, the 1992 omission was alleged to have caused distinct damage, namely the difference between no reservation of benefit and a partial reservation. Section 14B therefore ran, on the pleaded case against the Jersey defendants, from the 1992 transaction.
6. London firm. The evidence that the firms were legally separate did not justify summary disposal. Since Mr Lloyd was a partner in both firms and the claimant could argue that Mrs Rind believed she was instructing one firm, the capacity in which he was retained and the London firm’s responsibility required trial. The estoppel issue was left open.
7. The summary applications of all defendants were dismissed. The claims were to proceed to trial.

First-instance decision. The judgment records no prior appellate decision in this dispute.