The recent Court of Appeal judgment in Swain Mason & Others v Mills & Reeve shows that, in professional negligence claims, it is important to be clear on what your case against the solicitor is, particularly in relation to whether in all the circumstances the solicitor’s retainer or duty covers the alleged negligence complained of.
The claimants were the daughters and executors of a businessman Mr Swain (“Mr S”) who owned the majority of a successful business with two of his daughters also having a small shareholding. The defendant solicitors were retained by Mr S and the shareholder daughters to advise in a management buy out (MBO). Shortly after the MBO Mr S died whilst undergoing a routine heart procedure. His death, so soon after the buyout ,gave rise to adverse inheritance capital gains tax consequences of over £1million. The defendant had not given advice on the tax consequences should Mr S die, which may well have involved deferring the deal until after the operation or possibly some other mechanism for saving inheritance tax (IHT). Mr S had not asked for such advice, the expert evidence was that the operation was a routine procedure and the defendant solicitors essentially only knew of the operation from being copied in on an email chain.
The trial was adjourned for a number of reasons and the claimants indicated that they wished to amend their case to say that the solicitors should have advised Mr S on estate planning for inheritance purposes arising from the MBO should he die bearing in mind their knowledge of the operation. The trial was refixed for 23 November 2010. At that trial the Judge indicated that there appeared to be real difficulties with the case as it was set out and the claimants indicated an intention to re-amend their case to include a claim that there was a duty to advise as to the tax consequences including for estate planning on death even before the solicitors knew of the proposed heart procedure.
What followed was a procedural battle where the Court of Appeal eventually disallowed the re-amended case because it was still not sufficiently well pleaded, it had come far too late in the day and could have been put forward much earlier. The Court of Appeal’s ruling meant that the only case then open to the claimants was one which was dependent on the defendant’s knowledge of the heart procedure. The matter then proceeded to trial in February 2011. The Judge ruled in favour of the defendant and the claimants appealed. The Claimants appealed and in April 2012 the Court of Appeal dismissed the appeal upholding the Judge’s findings that there had been no negligence.
Understanding your negligence case
The case highlights the importance of understanding exactly what your case for negligence is. It is essential to identify what the scope of the duty owed to you is. Once the scope of duty has been established you must identify the breaches and show that those breaches caused the losses you complain of. With complex cases such factors may not be immediately apparent but ensuring that you are arguing your claim on the correct basis as soon as practicable and before the case comes to trial is essential if you are to avoid a potentially disastrous failure.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.