Joseph v Farrer & Co LLP

An implied solicitor-client retainer depends on an objective assessment of all the circumstances. A previous relationship with the solicitor is relevant but does not establish a retainer where the contemporary documents identify another client and the proposed beneficiary has no legal interest or bargaining position.

A solicitor retained by one party will ordinarily not owe the other party a duty of care where their interests may conflict. The exceptional duty recognised for intended beneficiaries in will cases does not extend generally to inter vivos gifts. A discretionary trust’s trustees remain free to change their minds, and a solicitor advising the donor is not required to prevent that occurring.

The claimant alleged that Farrer & Co LLP had acted for her, or owed her a duty of care, in arranging payments intended to be gifted to her by Mr Peter Cundill through a Bermudan discretionary trust. The firm had previously acted for the claimant in unrelated matters, but the contemporary retainer documents identified Mr Cundill as the client.

Two £500,000 payments were made before the trustees stopped further payments after concerns about the claimant’s involvement in Mr Cundill’s care and financial arrangements. The claimant claimed damages for breach of contract and negligence, arguing that the firm should have secured a binding commitment or warned her of the relevant concerns.

1. No implied retainer. The court applied the objective, all-the-circumstances approach in Dean v Allin & Watts [2001] EWCA Civ 758. Although the claimant had previously been a client of the firm, that factor was outweighed by the retainer letters, which identified Mr Cundill as the client, and by the fact that he instructed the firm and was liable for its fees. The claimant was the intended recipient of bounty, not a negotiating party with a legal interest requiring protection.
2. No duty of care. The court considered the authorities on assumption of responsibility and the need for caution where a solicitor is retained by one party while the interests of another may conflict. The rationale in White v Jones [1995] 2 AC 207, concerning a solicitor’s duty to intended beneficiaries under a will, did not justify extending the law to inter vivos gifts. The claimant’s and Mr Cundill’s interests diverged over the form and security of the proposed payments and over his care arrangements.
3. The letter of wishes did not create a legal obligation binding the trustees. Its effectiveness depended on the trustees continuing to exercise their discretion in the claimant’s favour. They were entitled to reconsider the proposed payments, and no solicitor’s duty required Farrers to prevent that.
4. Even if a narrow duty had arisen in relation to preparing the letter of wishes, there was no breach. The document was appropriate, and the trustees’ discretion, rather than any defect in the document, was the reason the payments ceased.
5. The negligence and contractual claims were unsustainable. The claim was dismissed. The limitation defence therefore did not need to be decided.