the professional negligence blog

A collaboration between Rebmark Legal Solutions and 1 Chancery Lane

Solicitor’s Negligence Cases in the Court of Appeal in 2012

As we look towards 2013 and back to all-but the last weeks of 2012, my attention is drawn to three interesting cases heard in the Court of Appeal regarding different allegations of professional negligence against solicitors:   ·                in Langsam v Beachcroft LLP, it was held that a solicitors’ “excessively cautious advice as to settlement of a claim”, was not in itself professionally negligent where it was premised upon non-negligent advice given by leading counsel. The case also held that in the circumstances, a six-month delay in delivering judgment had not affected the judge's findings of fact or law;   ·                in Swain Mason v Mills & Reeve, it was held that a firm of solicitors was not under a duty to advise on the adverse tax consequences that would arise on the death of a client, in circumstances  where he had not asked for any such advice, and the death occurred during a routine medical procedure and which the solicitors only knew of by chance. Also it was held that a decision not to accept an offer to mediate does not automatically have adverse costs consequences; and   ·                in Lloyds TSB Bank Plc v Markandan & Uddin, a firm of solicitors, when acting on behalf of a mortgage lender on the sale and purchase of a property, had committed a breach of trust when it transferred a mortgage advance to the vendors' purported solicitors without receiving the requisite documentation or a solicitor's undertaking. Whilst the solicitors were themselves a victim of the fraud, and thus relief could be afforded to a solicitor in such cases pursuant to section 61 of the Trustee Act 1925, it was right not to order it in the instant case due to inexcusable failings by the solicitors.   This article is a précis of a much longer article by Thomas Crockett in a 2012 Professional Negligence Case Review published by 1 Chancery Lane Chambers, which can be found at    

Why is a Quistclose trust like the tooth fairy?

If you objectively believe in its purpose it can provide a little prompt comfort during painful times.   The conjunction of festive films and Raymond Bieber v Teathers Ltd (In Liquidation) [2012] EWCA Civ 1466 brought that analogy to mind. Unfortunately the court found that the claimants did not objectively believe in the tooth fairy. The claimants invested in a scheme promoted to take advantage of tax reliefs available for expenditure on films or TV productions. T issued an Information Memorandum which summarised the scheme, its advantages and some of the risks. Each investor completed a subscription agreement, a power of attorney and provided a minimum investment of £25K. The investment was carried out through an unlimited partnership with T as the managing partner and was not successful. T is in liquidation and the only coin that could be put under the pillow is an insurance policy with a limit of £10m. The investors argued that the subscription monies were held by T on a Quistclose trust to apply the monies only in accordance with the investment criteria. Why didn’t the investors believe in the tooth fairy? Patten LJ when dismissing the investors’ appeal emphasised that the court must be satisfied that the parties intended that the transferred monies should continue to belong to the investors until the conditions attached to the release were complied with. So because the investors did not believe in the tooth fairy, even though they put their investments under the pillow, no money was left for them… and even worse their investments had gone. Although they still have an equitable claim against T… so perhaps Santa Clause will leave them a present.