Can you be sued for free advice?

There was an interesting Court of Appeal decision just before Chistmas in a case involving a claim against a firm of solicitors - Padden v Bevan Ashford Solicitors [2011] EWCA Civ 1616.

According to the Court of Appeal judgment, Mrs Padden "visited the defendant's Tiverton branch and told a receptionist that she needed to see a solicitor urgently, not least because she needed to get back home to see her children.  She then was introduced to Rebecca Shinner, who, it transpires had only very recently qualified as a solicitor.  Ms Shinner, who no longer works for the defendant, was described by the claimant as being 'very gentle' and 'young'.  The meeting which then ensued was short.  The claimant's evidence was that it may only have lasted 5 minutes, although she also suggested that it may have been as long as 15 minutes.  A significant, and possibly the main or even only, reason why it was so short is that the claimant wanted to get away to see her children."

During that visit Mrs Padden explained that she had been asked to sign some documents by her husband's solicitor and he had told her that she must get independent legal advice before doing so.  Mrs Padden explained the background to this request - her husband had stolen some money from a client of his and the documents would give the victim security over various assets (including the matrimonial home) so that the victim could ultimately be repaid and Mrs Padden's husband would not go to prison.  Mrs Padden felt it important for her children's sake that their father should not go to prison.

Ms Shinner's advice was blunt.  Again quoting from the judgment, "Ms Shinner advised the claimant not to proceed with the projected transaction. When the claimant made it clear that she was going to proceed, Ms Shinner said 'I hope your husband is worth it'. The claimant replied that it was the children she was concerned about, not her husband. At the end of this short meeting, Ms Shinner explained that the defendants' policy was that the first half-hour given over to a client was free of charge."

Subsequently a partner in the firm attended a further meeting involving Mrs Padden and her husband at which both of them signed various documents and the partner signed to certify that Mrs Padden had 'had the consequences of this deed and the obligations which it imposes on her explained by a solicitor/ legal executive' and that he was 'satisfied' that she 'understands the nature of this deed and its meaning and effect' and that 'to the best of [his] knowledge [she] has freely consented to it without undue influence or … in reliance upon any misrepresentation…'.

The firm never billed Mrs Padden for the work done or advice given.

To cut a long story short, matters went from bad to worse for Mrs Padden.  She lost a lot of money as a result of signing the documents because the victim relied upon them to claim repayment of stolen monies.  Her husband was indeed prosecuted and went to prison.  It transpired he had stolen from others as well (unknown to Mrs Padden at the time she signed the documents).  Mrs Padden subsequently sued the solicitors for negligence - notwithstanding that they had advised her not to sign and had made no charge for their work or advice.

Her claim was thrown out by a High Court judge.

But the Court of Appeal ruled that the High Court judge had been wrong to throw the claim out and that there should be a fresh High Court hearing before a different judge.  The Court of Appeal ruled that the (undisputed) facts that no charge had been made and that Mrs Padden had been clearly advised not to go ahead were not sufficient to make her claim against the solicitors bound to fail.  Whilst she had dropped in to the solicitors without an appointment (not having previously been a client) and had stayed only a few minutes that did not absolve the solicitors of their duty to advise her properly.  The solicitors had a duty to advise Mrs Padden of the potential consequences of signing the documents and the simple recommendation not to sign them did not fulfil their duty to her.  If time was short they should have advised Mrs Padden to make a further appointment to discuss matters more fully - and they did not do that.

The moral is - beware giving free advice off the cuff !

David

Comments
Locutus's picture

Contract law    1 thanks

Locutus | | Permalink

My legal knowledge extends only as far as studying one paper for my professional accountancy exams many years ago.  However, one point that was drummed in at the time was that for a valid contract to exist there must be consideration (i.e. payment).  Since the solicitors made no charge for their work then it sounds bizarre to me that they can be sued for giving "bad" advice - especially when the client decided to ignore the free advice given.

I suppose solicitors and (probably other professionals) will have to get into the habit of getting those "clients" that seek free advice to sign some sort of negligence waiver for any advice freely given.

 

ShirleyM's picture

Clarification, please

ShirleyM | | Permalink

If the solicitor providing the free advice had NOT been a witness declaring that this lady had received full and proper advice, then this problem would not have arisen. Have I understood this correctly?

In any hurried meeting, or even where the client does not give all the relevant facts, it could be a recipe for disaster. I state in my engagement letters that any 'adhoc' advice must not be relied upon, and if reliance is placed upon advice given by us, then this advice must be given in writing. Would this prevent the possibility of being sued?

There are a number of factors

uktaxpal | | Permalink

There are a number of factors to consider.This case was an example of judicial review and deals with the essense of a fair trial i.e.both sides must be heard.

The other point to consider is that it involved undue influence and the matrimonial home.There is an established procedure to be usd by Solicitors when asking innocent spouses to enter into mortgages or loans and a long list of prevoius cases discussing the point.

There will be a re-trial and will discuss breach of duty,causation,foreseeability and resulting damage.

 

The case is sad as the husband died.

stepurhan's picture

When does duty arise?

stepurhan | | Permalink

It would seem to me that, in this case, the failure of the duty hinges on the subsequent meeting where the documents were signed, not the initial brief meeting. Based on the facts it would appeat that at this meeting the partner of the firm ratified the original advice by signing off on the wife having been fully informed of the consequences of her actions.  Surely it is this confirmation by a partner that such advice had been given (when the advice given was insufficient for these purposes) that creates the problem.

That aside, would a verbal disclaimer at free meetings that advice cannot be relied on unless put in writing (in a similar line to such disclaimers often appearing in engagement letters) be enough to address this problem?

 

memyself-eye's picture

I'm confused also

memyself-eye | | Permalink

The initial advice appears sound - the fact that the lady solicitor was 'recently qualified' is a red herring.

The flaw is in the advice given (or not, we're not told) by the partner?

 

stepurhan's picture

Sound but incomplete

stepurhan | | Permalink

My understanding is that the initial advice, while sound, was incomplete. Simply telling the client they should not do something is not enough. They also need to be told the full consequences of ignoring that advice and going ahead with signing the documents. The client would then have full understanding why the solicitor thinks signing is a bad idea and can make an informed decision whether they still want to do it anyway.

As I've said, it is the fact the partner appears to have signed off on this more detailed advice being given (when it was not) that seems to have created the problem.

wifes knowledge of husbands

uktaxpal | | Permalink

wifes knowledge of husbands frauds?Confiscation orders?

I think the free advice dicussion is a red herring--undue influence isthe ratio?

ShirleyM's picture

Mixed feelings!    2 thanks

ShirleyM | | Permalink

Was the wife really a victim? Would she have had half ownership of a valuable house if her husband had not stolen the money in the first place?

Like most verdicts .. it raises more questions than the answers it provides.

Clarification    1 thanks

Mouse007 | | Permalink

5690420 I’m not sure that contract law is relevant. Negligence falls under the law of “tort” which I always understood to be separate to the law of contract. It is highly unlikely that any contract existed, that does not however preclude the “duty of care” requirement. I’m not sure if I have a contract when I go to see my doctor, but I am sure he owes me a duty of care.

I think Shirley and stepurhan are correct - the partner signed to certify that the wife had “had the consequences of this deed and the obligations which it imposes on her explained ...”.He certified something which was not actually true, he owed her a duty of care, breached that duty and she suffered financial loss as a consequence... well, we shall see at the retrial.

The interim result does not actually surprise me - they at least have a case to answer. Perhaps they will use the Chelsea hospital case defence - she would have signed anyway.

Reading the actual judgement (after drafting above) the killer punch is in para 36

“Mr Mackay was crucially more involved in the transaction than as a mere witness. By signing the certificate Mr Mackay confirmed that the claimant (i) had been given appropriate legal advice about the mortgage, and (ii) to the best of his knowledge, understood the effect of the mortgage, and was not acting under undue influence or pursuant to a misrepresentation. The effect of (i) must be that Mr Mackay either had given appropriate advice himself or had taken reasonable care to ensure that the claimant had received such advice. On the evidence before the Judge, unless he was relying on the 28 March meeting, Mr Mackay did not give the claimant any advice, and the only reason he had for thinking that the claimant had had any advice was that he was told that she had by the claimant's husband, the very source of any potential undue influence or misrepresentation, which was plainly not enough to discharge his duty.”

Para 58    1 thanks

Mouse007 | | Permalink

There you go, the Master of the Rolls states

“the conclusion and the reasoning on which it is based relate only to the breach of duty point:”

The key word is “ONLY”. A breach of duty occurred, that is the only conclusion so far.

The original High Court Judge was wrong to throw the case out and accordingly this matter must go back for retrial.

The Master of the Rolls goes on to advise

“On any retrial, it will, at least in principle, be open to the defendants” ... “to contend that they complied with any duty they owed the claimant, and, if they did not, that the claimant would have acted no differently if they had done so.

Hint: That's the Chelsea defence.

 

PS, thanks for the post David, nice case.

One thing that strikes me is

MARKJET | | Permalink

One thing that strikes me is a solicitor giving FREE advice ! Unheard of in my experience

Law of tort

Laurence52 | | Permalink

Some years one of my clients have some help to a contact on a no-charge basis. The help he gave was in his line of work. A couple of years later the contact was sued for damages for breach of contract by the customer. My client's company was also sued for damages by the customer but for breach of tort. The amount involved was in the order of a million. The company went out of business.

 

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