James Lonsdale & Ors v Wedlake Bell LLP & Ors

On an application to strike out or obtain summary judgment, claims arising from negligent trust advice should not be dismissed where the law concerning duties to intended beneficiaries is developing and the pleaded facts disclose an arguable duty of care.

Trustees may properly remain parties where this avoids a gap in recovery, provided the court prevents double recovery. A continuing retainer may generate fresh breaches where solicitors continue to advise and act on an erroneous basis.

For Limitation Act 1980, section 14A knowledge may not arise merely because a claimant knows advice was wrong. The claimant must also know enough about the damage and its remediability for proceedings to be sufficiently justified. Whether knowledge can be attributed between trustees was left open.

The claim concerns admitted professional negligence in advising on the Sparsholt Settlement, a discretionary trust intended primarily for the first claimant’s children. The negligent advice was given shortly before the eldest child attained 25, when the trustees could still have varied the beneficiaries’ shares. The claimants comprise the settlor, the trustees and the intended beneficiaries.

The first and third defendants applied under CPR 3.4 and CPR 24.3 to strike out the claims or obtain summary judgment. They argued that the trustees had suffered no loss, that no duty was owed to the children, and that the settlor’s and trustees’ claims were statute-barred. The central issues were whether those claims were legally viable and whether limitation was suitable for summary determination.

1. Applications dismissed. The trustees and children had viable claims which should proceed to trial. The court was required to avoid double recovery, but that did not justify striking out the trustees as claimants. Their position was analogous to the executrix in Chappell v Somers & Blake, because retaining them helped ensure that all legitimate interests were represented.
2. It was arguable that the solicitors owed the children a direct duty of care. The settlement had been completed, the children’s interests were specifically intended to be protected, and the negligent advice made the disposition effectively irrevocable. The reasoning in White v Jones, Carr-Glynn v Frearsons and Yudt v Leonard Ross & Craig supported that conclusion. The court also accepted that the law remained sufficiently uncertain and developing that summary disposal would be inappropriate.
3. It was arguable that the solicitors’ continuing retainer created continuing obligations. Their later advice, accounts and transactions proceeded on the erroneous assumption that the children had equal quarter shares. Those acts could constitute fresh breaches producing fresh loss when beneficiaries successively attained 25. The question required full evidence at trial.
4. Although the first six-year limitation periods had generally expired, the claim concerning additional loss when Patrick Shipp attained 25 was arguably in time. For section 14A, knowledge that advice was wrong did not necessarily establish knowledge of sufficiently serious and irretrievable damage. The September 2018 assurance that matters might be put right meant that proceedings could reasonably have appeared premature. It was arguable that the necessary knowledge arose only after the January 2019 letter.
5. The court did not decide whether the settlor’s knowledge was attributable to the other trustees. Any conclusion on that issue would have been obiter, although the judge indicated a provisional inclination that ostensible agency might establish attribution.