Zurich Professional Ltd v Brown & Anor

Whether a solicitor acted in private legal practice is determined objectively from all admissible evidence, taking account of the regulatory background. The beneficiaries’ understanding, the nature of the work, remuneration, or the fact that some tasks are ordinarily performed by solicitors are relevant factors, but none is conclusive. A solicitor is not presumed to have acted in private practice merely because the services resembled legal work or were provided by someone qualified as a solicitor.

Professional indemnity cover tied to a specified firm’s practice does not extend to earlier work merely because the insured was a sole practitioner and later adopted a new trading name. The insured must establish both that the liability arose from private legal practice and that it arose in connection with the practice identified in the policy.

Zurich sought declarations concerning the scope of professional indemnity cover issued to Malcolm Brown, who practised as CS Law. Brown had acted as personal representative of the estates of Robert and Phyllis Whitehead and was later removed from that office. Rachel Barnes, appointed in his place, obtained default judgment against him for accounts on the footing of wilful default.

The estates sought to establish that Brown’s liabilities were covered by Zurich’s policy, relying on the Third Party (Rights Against Insurers) Act 1930. The central issues were whether Brown had administered the estates as a solicitor in private legal practice and, if so, whether the work was connected with CS Law’s practice or any qualifying prior practice.

1. Qualifying conditions. The policy required the insured to establish two conditions: that the liability arose from services provided in private legal practice as a solicitor, and that it arose in connection with the practice of CS Law, a qualifying prior practice or a successor practice.
2. Capacity in which Brown acted. The court determined that capacity objectively by reference to all admissible documentary and other evidence, while taking account of the regulatory framework. The beneficiaries’ understanding was relevant only insofar as it was founded on reliable evidence. The provisions of the Solicitors’ Indemnity Insurance Rules 2004, the Solicitors’ Separate Business Code 1994 and the Guide to the Professional Conduct of Solicitors 1999 were factors, not conclusive rules.
3. The evidence showed that Brown generally corresponded as a consultant to Wychwood Consultancy Company Ltd, did not state that he was administering the estates as a solicitor, had sometimes expressly stated that he did not practise as a solicitor, and had used other solicitors for tasks requiring a practising solicitor. A few letters in which he described himself as a solicitor did not establish that he acted in that capacity throughout the administrations. The giving of advice of a kind commonly given by solicitors was likewise only a factor.
4. Brown therefore did not provide the relevant services as a solicitor in private legal practice. The first qualifying condition failed. Consequently, the second condition also failed because liability could not arise in connection with the firm’s practice unless it first arose from private legal practice.
5. Alternative ground. Even if Brown had acted in private legal practice, his earlier activities were not a qualifying “Prior Practice”. The establishment of CS Law in 2002 was a wholly new debt-collection venture, not a transition or seamless continuation of an earlier practice. The policy therefore did not connect the estate administration work with CS Law’s practice.
6. Declarations were made in Zurich’s favour and Ms Barnes’s counterclaim was dismissed.