Lane v Cullens Solicitors & Ors

A negligence claim accrues when negligent advice causes actual damage, rather than when a later third-party claim is pursued or proved. A personal representative who has notice of a claim but retains estate assets is materially worse off when funds are distributed and are no longer available to meet that claim. This is so, at least where money is paid to a beneficiary and cannot confidently be recovered.

A claim founded on facts which have already occurred is not a relevant contingency merely because it remains disputed or requires proof. The discretionary form of relief potentially available for proprietary estoppel does not alter that conclusion where there is no real prospect that the court would grant no relief.

The claimant, as administrator of his late sister’s estate, instructed the defendant solicitors. A relative had asserted a claim to the estate based on proprietary estoppel or trust. Despite that notice, £40,000 was distributed to the claimant and his brother.

The relative later obtained orders declaring that the estate was held for her and requiring repayment. The claimant alleged that the solicitors negligently failed to advise against distribution. The High Court struck out the negligence claim as time-barred, holding that damage arose when the payments were made: [2010] EWHC 2066 (Comm).

The appeal concerned whether the claim remained contingent until the relative established her entitlement, or whether the distribution itself had caused actionable loss.

1. Appeal dismissed unanimously. Lord Justice Lloyd held, with Mr Justice Lewison and Lord Justice Ward agreeing, that the negligence claim was already time-barred because actionable damage occurred when estate money was distributed in February and March 2001.
2. Before distribution, the claimant held the net estate as personal representative. He had notice of the relative’s unwithdrawn claim, but he also held the funds from which any successful claim could be met. By paying £20,000 to his brother, he remained answerable to the notified claim but no longer held funds available to satisfy it. That detrimental alteration of position was actual loss, and completed the cause of action in tort.
3. The possibility that the relative might not pursue or establish her claim was not a relevant contingency. The court applied the equitable principle in Guardian Trust & Executors Co of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115: a fiduciary who deals with a fund despite notice of a claim is liable if the claim is well founded. Law Society v Sephton [2006] 2 AC 543 did not assist the claimant, because there the relevant fund had not been paid away.
4. As an additional basis, the relative’s claim rested on events before the deceased’s death and was capable of being framed as a constructive-trust claim. Its proof, and any dispute about it, did not make it contingent. Although proprietary-estoppel relief can take different forms, that feature was immaterial unless there was a real prospect that no relief at all would be granted. The informal assurance was not a binding contract under section 2 of the Law Reform (Miscellaneous Provisions) Act 1989, but the court regarded the alleged facts as close to a contractual or constructive-trust claim.

• Court of Appeal (Civil Division) — dismissed the claimant’s appeal and upheld the conclusion that the negligence claim accrued when estate funds were distributed: [2011] EWCA Civ 547.
• High Court, Queen’s Bench Division, London Mercantile Court — His Honour Judge Mackie QC struck out the negligence claim as brought more than six years after accrual: [2010] EWHC 2066 (Comm).