Padden v Bevan Ashford Solicitors

A solicitor’s duty is governed by the retainer and the standard of the reasonably competent practitioner, but its content is fact-sensitive. Where an individual is advised about providing significant security for another person’s liabilities, the solicitor must explain the transaction, its risks and practical consequences, investigate relevant facts, and ensure that the client’s decision is informed and free from undue influence or misrepresentation. A certificate or confirmation given to the other party increases the importance of proper advice and questioning. The duty is not reduced because the meeting is short or free. A bare warning not to sign may be inadequate. Where the evidence does not establish breach or causation conclusively, the trial should proceed so that all relevant evidence can be heard.

The claimant alleged that the defendant solicitors negligently advised her before she charged her interest in the matrimonial home, shares, endowment policies and pension rights to secure liabilities arising from her husband’s dealings with a client. The High Court judge stopped the trial after the claimant’s evidence and dismissed the claim, holding that the solicitors had discharged any duty by warning her not to proceed at a short, free meeting and that the later solicitor had merely witnessed documents. The appeal concerned whether that conclusion on breach of duty was justified and whether causation could properly be decided without hearing the defendants’ evidence.

The Master of the Rolls, with Lord Justice Hughes and Lord Justice Sullivan agreeing, allowed the appeal and ordered a new trial before a different judge.

1. Applicable duty. The scope of a solicitor’s duty is governed by the express or implied retainer and the standard of the reasonably competent practitioner, as explained in Midland Bank Ltd v Hett, Stubbs & Kemp [1979] Ch 384. The guidance in Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44; [2002] 2 AC 773, paras 64–68, was a useful guide where a person provides substantial security for the financial benefit of someone in a close personal relationship.
2. The 10 April involvement. The judge was wrong to treat the solicitor as a mere witness. By signing a certificate that the claimant had received appropriate advice, understood the mortgage and had freely consented without undue influence or misrepresentation, the solicitor either had to give appropriate advice or take reasonable steps to ensure that it had been given. Reliance on the claimant’s husband, who was the potential source of pressure or misrepresentation, was insufficient. The solicitor also had a concomitant obligation to advise and question the claimant to the standard of a reasonably competent solicitor.
3. The 28 March meeting. The short duration and absence of a fee did not reduce the duty. A solicitor’s task was not discharged merely by advising the claimant not to sign. Consistently with Re Coomber [1911] 1 Ch 723, p 730, the purpose was to ensure that she understood the nature, effect and consequences of the transaction and was not acting under a misapprehension or undue influence. The solicitor should have explored why the claimant was risking her assets, investigated the extent of the husband’s defalcations, and explained that the proposed transaction was unlikely to prevent prosecution or imprisonment. If there was insufficient time, the claimant should have been told that a full meeting and factual investigation were necessary.
4. Causation and retrial. The judge made no proper causation finding. The defendants were entitled to call evidence, challenge the claimant’s account, and argue limitation, breach and causation. The claimant could not obtain judgment merely because her evidence established an arguable case.
5. Case management and costs. Stopping a trial after the claimant’s evidence may be appropriate in a clear case, but it is a high-risk course and should be used only where the correct conclusion is clear. The costs below were costs in the case; the claimant received her appeal costs.

• Court of Appeal (Civil Division): Allowed the claimant’s appeal, held that the breach-of-duty issue had been wrongly determined, and ordered a new trial before a different judge. The court made no final determination on limitation or causation.
• High Court of Justice, Queen’s Bench Division: His Honour Judge Denyer QC stopped the trial after the claimant’s evidence and dismissed the claim.