Sandra Blower v GH Canfields LLP

A solicitor advising on settlement must exercise the care and skill of a reasonably competent and diligent practitioner specialising in the relevant litigation. In assessing negligence, the merits and evidential risks of the underlying claims remain relevant, although the court is deciding the quality of the advice rather than the underlying claims themselves.

A claimant alleging negligent settlement advice must plead a coherent counterfactual showing what would have happened without the breach and how that would have produced a better outcome. Pleading only that the claimant would not have accepted the settlement does not establish causation of loss.

The claimant brought a professional-negligence claim against her former solicitors in her own right and as assignee of her daughter Kelly’s claim. The retainer concerned advice and representation during mediation of claims brought, or threatened, by a trustee in bankruptcy against members of the Blower family.

The claimant alleged that the defendant negligently acted for persons with potentially conflicting interests, failed properly to advise her and Kelly, and negligently entered into a global settlement requiring payment of £1.5 million secured against family properties. The central issues were whether the advice and conduct fell below the professional standard and, if so, whether the pleaded case established loss caused by the alleged breach.

1. Claim dismissed. The defendant was not negligent in advising on or implementing the settlement.
2. The applicable standard was that of a reasonably competent and diligent solicitor specialising in the relevant litigation. The court assessed the apparent strengths and weaknesses of the trustee’s claims, the lack of documentary support for the family’s defences, and the risks of relying on Mr Blower as a witness.
3. The trustee’s claims concerned, among other matters, flat 201, payments from bank deposits and the TorFX account, and assets allegedly transferred at an undervalue. The family’s evidence was materially vulnerable. The claimant’s alleged trust fund was also an uncertain basis for resistance: the court did not decide whether the trust deed was genuine, but found that the trustee could have exploited substantial issues concerning its creation, the use of the deposits as security, and the dissipation of the funds.
4. The reasonably competent solicitor would have advised settlement rather than trial. The settlement substantially reduced the potential claims, allowed time to raise the settlement sum, preserved the family’s Spanish assets, and facilitated Mr Blower’s discharge from bankruptcy. Mr Whitehouse was entitled to take Mr Blower’s instructions as representing the family’s wishes because the family trusted him, gave no red lines, and authorised the negotiations.
5. Even if the advice had been negligent, the pleaded case did not establish causation. The pleading stated only that the claimant would not have agreed to the settlement. It did not state whether she would have obtained a better settlement or succeeded at trial, or what the result would have been. The principle concerning an evidential burden in Levicom International Holdings BV v Linklaters did not cure that deficiency.
6. The claimant’s proposed arguments that the trust fund could be restored from other assets, or that the trustee’s claims could be set off under section 323 of the Insolvency Act 1986, failed. Restoration would have been a personal remedy against the defaulting trustee, not an automatic proprietary trust over other assets, and the trustee’s undervalue claims lacked the required mutuality.