Paton v Rosesilver Group Corp

A solicitor is not automatically barred from acting for more than one party in a transaction. The key questions are the scope of the retainer, whether a real conflict exists, and whether informed consent was given where necessary. A limited conveyancing role may create no more than a theoretical conflict. A fiduciary-duty defence must be supported by credible evidence capable of establishing a triable issue. Fresh evidence on appeal is admitted only exceptionally, applying the Ladd v Marshall conditions and the overriding objective.

Rosesilver sought specific performance of a contract under which Ian Paton had agreed to sell a flat and parking space, as varied by a supplemental agreement. Mann J granted summary judgment and ordered specific performance: [2015] EWHC 1758 (Ch).

Mr Paton appealed on the grounds that his solicitor, Stephen Brook, had acted for both sides without informed consent and had an undisclosed personal interest in the transaction. He also sought to adduce fresh evidence concerning the alleged interest. The central issues were whether the evidence disclosed a triable fiduciary-duty or conflict case, and whether the fresh evidence should be admitted.

Appeal dismissed. Henderson LJ gave the reasons, and Sir Christopher Clarke agreed.

1. A solicitor is not subject to an absolute prohibition against acting for more than one party in a transaction. Where an actual or potential conflict exists, the solicitor may act if the clients give informed consent, knowing of the conflict and its possible effect on disclosure and advice. Henderson LJ applied the principles stated in Clark Boyce v Mouat [1994] AC 428.
2. The evidence permitted an inference that Brook Martin had acted for Mr Paton in at least the routine conveyancing aspects of the transaction. However, that inference did not establish a triable fiduciary-duty case. There was no credible evidence explaining the transaction’s origin, purpose, or the extent of Mr Brook’s retainer. Mr Brook was plainly acting for Rosesilver in agreeing the price, and any retainer by Mr Paton was limited. The court was not concerned with conflicts that were merely theoretical. Mr Paton was aware of and consented to the limited involvement, so he could not complain of breach of the double employment rule. The court relied on Boulting, Re Baron Investments, Marks & Spencer Plc v Freshfields and Bristol and West Building Society v Mothew.
3. The allegation that Mr Brook had an undisclosed interest in Sator was unparticularised and speculative. Rosesilver and Sator had separate legal personalities. An email suggesting that Mr Brook had later become responsible for part of the debt did not provide intelligible evidence of an interest at the date of the contract.
4. The court did not need to decide the respondent’s alternative arguments on affirmation, estoppel, or equitable compensation. Henderson LJ indicated that the estoppel argument would have succeeded, while the other arguments would have required a trial.
5. Under CPR rule 52.11(2), the appeal court will not ordinarily receive fresh evidence. The conditions in Ladd v Marshall [1954] 1 WLR 1489, as applied to appeals against summary judgment in Aylwen v Taylor Joynson Garrett [2001] EWCA Civ 1171, were not satisfied. The proposed material was irrelevant or speculative, could have been obtained earlier, and would not probably have influenced the result. The application to adduce fresh evidence was therefore refused, and the appeal was dismissed.

• Court of Appeal (Civil Division) dismissed Mr Paton’s appeal and refused permission to adduce fresh evidence.
• High Court of Justice, Chancery Division granted Rosesilver summary judgment and ordered specific performance: [2015] EWHC 1758 (Ch).