Hellard & Anor v Irwin Mitchell

A solicitor is not negligent merely because a limitation argument later fails. Where the issue is genuinely arguable, the solicitor must exercise independent judgment but may reasonably rely on competent, experienced counsel unless the advice is obviously and glaringly wrong. The client must be told of material risks, but remains entitled to decide whether to litigate where the claim is not hopeless. Advice on settlement must reflect the actual prospects and available evidence. Section 14A of the Limitation Act 1980 involves a fact-sensitive evaluation of the claimant’s knowledge, including whether loss was sufficiently serious to justify proceedings. Reassurances by the alleged tortfeasor may be relevant to that assessment. The claim failed because the limitation arguments were not hopeless, the risks were adequately explained, and the claimant would not have acted differently.

The claimants, trustees in bankruptcy of Clifford Jude Shore, sued Irwin Mitchell for professional negligence. The firm had acted for Mr Shore in proceedings against financial advisers concerning the transfer of his occupational pension benefits and the subsequent drawdown arrangements.

The underlying claim was dismissed at first instance by Beatson J and the appeal was dismissed in part and allowed on a limitation issue by the Court of Appeal. The present claim alleged that Irwin Mitchell should have advised Mr Shore that the underlying claim was statute-barred or carried such a poor prospect of success that he should not have issued it, or should have settled or discontinued it. The central questions were whether the limitation case was hopeless, whether the advice was negligent, and whether different advice would have altered Mr Shore’s decisions.

1. The claim was dismissed. Irwin Mitchell had not been negligent in advising Mr Shore on limitation, settlement, or funding.
2. The limitation arguments were not hopeless. The argument based on Law Society v Sephton [2006] 2 AC 543 was genuinely arguable on the primary claim. The secondary claim also raised an arguable issue under section 14A, because the restriction on income might have appeared temporary or reversible and the reassurances given by the advisers could bear on whether the loss was sufficiently serious to justify proceedings.
3. Although a solicitor must exercise independent judgment, a solicitor who reasonably relies on competent and experienced counsel is not negligent unless the advice is obviously and glaringly wrong. Both counsel were experienced, properly instructed, and aware of the material limitation issues. Neither considered the claim bound to fail.
4. The advice given adequately explained that limitation presented a substantial risk, while also identifying reasonable arguments in response. The court rejected the suggestion that Irwin Mitchell had materially watered down counsel’s advice or that isolated comments affected Mr Shore’s decisions.
5. The claimant remained entitled to make his own assessment of risk and reward where the claim was not hopeless. The evidence showed that Mr Shore understood the risks, considered them repeatedly with counsel, and was determined to proceed. There was no real likelihood that he would have accepted the low settlement offers or discontinued unless advised that success was virtually impossible.
6. The criticism concerning after-the-event insurance could not have affected the decisions in question. Mr Shore knew of his costs exposure, and the evidence did not show that insurance would have been available at another stage.

The judgment records that the underlying claim against the financial advisers was dismissed by Beatson J. The Court of Appeal later dismissed the appeal on the principal issues but held that Beatson J had erred in his approach to loss and limitation, as summarised in the judgment by reference to [2008] EWCA Civ 863. The present claim against Irwin Mitchell was dismissed.