Mathiesen v Clintons (A Firm)

A solicitor is negligent if, in the particular circumstances, he fails to explain a significant contractual provision clearly enough for the client to understand its effect. Written advice is prudent but is not invariably required. A solicitor need not obtain every document referred to in an agreement where he is entitled reasonably to rely on reliable representations about the document’s existence and operation.

For limitation purposes, deliberate concealment requires a conscious decision involving knowledge of wrongdoing. A later retainer does not generally revive a statute-barred claim. The exceptional principle in Gold v Mincoff requires later negligence to conceal earlier negligence; on the facts, that principle did not apply.

The claimant alleged that her former solicitors negligently advised her when negotiating and executing a shareholders’ agreement concerning a family company. She alleged that the agreement should have restricted her husband’s salary to £250,000 per annum, with limited increases, and required other remuneration to be paid into a joint account.

She also alleged negligence during a later retainer to monitor compliance with the agreement, deliberate concealment under section 32 of the Limitation Act 1980, and a lost opportunity to bring an earlier claim or divorce proceedings. The central issues were whether the retainers had been performed negligently, whether limitation was postponed, and whether any recoverable loss had been proved.

1. First retainer. On the evidence, no agreement had been reached that the husband’s salary was limited to £250,000 plus 5% annual increases. The claimant understood that salary was treated separately from bonuses and dividends, which were to be paid into the joint account.
2. The solicitor was not negligent merely because he failed to establish and record the existing salary, obtain the executive profit sharing scheme, or negotiate a mechanism permitting salary to fall as well as rise. A reasonably competent solicitor could proceed on the information available and on the assumption that the company’s directors would comply with their fiduciary duties.
3. However, the solicitor was negligent in failing to explain the operation of clause 3.2 before execution of the agreement. The clause was important, and the client had not previously entered into such an arrangement. Written advice would have been prudent, although it was not an absolute legal requirement.
4. Second retainer. The instruction was to establish whether salary increases complied with clause 3.2. The solicitor obtained relevant financial information, schedules and calculations from the company’s finance director and accountant, and was entitled to rely on that material. His performance was not negligent.
5. Limitation. Section 32 of the Limitation Act 1980 requires deliberate concealment. A negligent failure to advise is insufficient without a conscious decision involving knowledge of wrongdoing. The evidence did not establish such knowledge or concealment. The claimant knew that detailed advice on clause 3.2 had not been given and knew the level and basis of her husband’s remuneration.
6. The Gold v Mincoff principle did not apply because there was no negligence under the second retainer and no concealment preventing the earlier claim from being brought in time. The court considered obiter that the principle should be confined to cases involving actual knowledge of the earlier error.
7. The claimant failed to prove that she would have renegotiated the agreement, that her husband would have accepted the proposed terms, or that she would have divorced earlier. The loss-of-chance claim therefore failed. The claim was dismissed.