Frost v Wake Smith and Tofields Solicitors

A solicitor is not negligent merely because a complex mediation produces an agreement in principle rather than an immediately enforceable settlement. A solicitor cannot supply missing material terms or make an incomplete agreement binding without further agreement by the parties. An initial mediation may properly establish a framework, leaving detailed implementation to later work or a further mediation. Ordinarily, a solicitor should advise a client, particularly a lay client, about the nature of mediation and the status of any resulting agreement. However, an unpleaded failure-to-warn allegation cannot be introduced for the first time on appeal, especially where the claimant has not identified what action would have followed or proved resulting loss.

Mr David Frost appealed the dismissal by His Honour Judge Moore in the Sheffield County Court of his negligence claim against his solicitors. The claim concerned the first mediation of a complex dispute with his brother on 18 November 2003. The parties signed manuscript terms, but those terms left important matters unresolved, including property ownership, charges, tax consequences, third-party interests and implementation. A later mediation produced a detailed agreement, and the claim concerning that agreement was not appealed. The central issue was whether the solicitor owed a duty to ensure that the first mediation resulted in a final, legally enforceable settlement, or was negligent in recording the provisional agreement reached.

Appeal dismissed. Lord Justice Tomlinson delivered the judgment, with which Lord Justice Ryder agreed.

1. The first mediation produced no final and legally enforceable agreement. The manuscript terms contained material uncertainty and incompleteness concerning the properties, charges, tax treatment, Sentinel, third-party interests and the steps required for implementation. Advance, which owned several properties, was not a party, so the arrangement also failed to satisfy the requirements of the Law of Property (Miscellaneous Provisions) Act 1989.
2. A solicitor cannot record an enforceable agreement where the parties themselves have not reached agreement on the necessary terms. The solicitor cannot fill the gaps or create finality without further agreement. In a complex, multi-faceted dispute, it was legitimate and sensible to aim first for an agreement in principle and then to work through the practical consequences. The solicitor was not negligent in adopting that approach.
3. The allegations concerning tax advice and the attendance of an accountant were untenable. The experts agreed that the tax consequences could not have been advised upon at either mediation without detailed research and investigation of historical matters. The solicitor was not obliged to ensure beforehand that investigations on both sides had reached that stage, particularly where matters on the other party’s side were outside his control. The allegation concerning Sentinel also failed because both brothers’ understanding of its ownership was incorrect.
4. The suggested failure to warn the claimant that the first mediation had not produced a binding agreement was a materially different, unpleaded allegation. It was not pursued at trial, the claimant did not establish what he would have done if warned, and the potential loss was neither properly pleaded nor proved. A retrial was therefore inappropriate despite concerns about aspects of the first-instance judge’s conduct of the trial.
5. By way of general guidance, it will normally be part of a solicitor’s duty to advise a client, particularly a lay client, about the nature of mediation and the status of any agreement reached. That observation did not justify reopening this claim.

1. Court of Appeal (Civil Division) dismissed the appeal from the decision below: [2013] EWCA Civ 772.
2. Sheffield County Court, before His Honour Judge Moore, dismissed the negligence claim concerning the first mediation. The claim concerning the second mediation was also dismissed but was not appealed.