UK: Is the House of Lords closing the door on contributions by the Bar?

Last Updated: 11 October 2005
Article by Peter Mansfield and Peter Maguire

In the recent case of Moy v Pettman Smith, the House of Lords held that there is no duty on a barrister to explain the reasons for advice given at the door of the court to reject a settlement offer.

The House of Lord’s decision seems to be making barristers an exception to the general rules of duty of care that apply to all other professions and raises important issues for solicitors and their professional indemnity insurers.

To view the article in full, please see below:


Full Article

Moy v Pettman Smith (a firm) (2005) UKHL7

Barrister’s duty when giving advice at the door of the court; obligation (or otherwise) to explain underlying reasons and assessment of risks; claim by solicitors for contribution.

Background

In 1992, Mr Moy, the Claimant, had an operation to fix an ankle he had broken playing football. The operation went wrong, causing complications that were substantially remedied by a further operation in 1996. Mr Moy sued the health authority, which admitted liability for damage up to the second operation, but denied it thereafter. Mr Moy’s solicitors were Pettman Smith and his barrister was Miss Perry.

Pettman Smith had difficulty obtaining a medical report. In November 1997, the health authority obtained an Unless Order that meant any medical evidence not served by 9 January 1998 could not be served without permission of the Court. Although Pettman Smith served some medical evidence before that date, it did not address all the issues.

In February 1998, Pettman Smith disclosed a further medical report. Pettman Smith asked the Court for permission to rely upon this medical evidence. The District Judge refused and a further appeal on 6 March was dismissed. Despite these adverse decisions, it was still open for Pettman Smith to ask the trial judge for permission to rely upon the medical evidence. This medical evidence was essential to Mr Moy’s case. If it was admitted as evidence, the quantum of the claim would exceed £200,000. If it was not, quantum would probably be less than £100,000.

In the meantime, the health authority had paid £120,000 into Court on 24 February 1998 and, on 12 March 1998, increased this to £150,000. On the advice of Mr Moy’s barrister, Miss Perry, these offers were rejected.

On the first morning of trial in April 1996, the health authority repeated their offer of £150,000, together with certain costs concessions, but said that the offer would expire at the start of the trial. Whether or not the offer was attractive depended upon whether or not the additional medical evidence could be used in the trial. Miss Perry’s analysis was that there was a 50/50 chance of persuading the trial Judge to accept the evidence. Even if he did not, Mr Moy would have a good claim against Pettman Smith for negligence in preparation of the case and this represented something of a "safety net" for him (albeit that it would involve further cost and anxiety). Whilst he could have accepted the offer of £150,000 and then pursued a claim against Pettman Smith for the irrecoverable balance, Mr Moy would then have been exposed to an argument that he should have proceeded with the application for leave to adduce the additional evidence and that, by declining to do so, he had failed to mitigate his loss.

Miss Perry did not explain this analysis to Mr Moy, but recommended that the offer should be rejected. Mr Moy accepted her advice and rejected the offer.

Miss Perry applied to the trial Judge for permission to rely upon the further expert evidence. However, before rising to read the papers and consider his decision, the Judge expressed his doubts about the application. In the light of the Judge’s remarks, the health authority said they would rely on their £120,000 payment into Court. Miss Perry advised Mr Moy to accept the offer, which he did. In doing so, he was, taking into account costs, very substantially worse off than if he had accepted the £150,000 offer at the commencement of trial.

Action against legal advisers

Mr Moy then sued Pettman Smith for the shortfall between the full value of his claim and the sum he received. The principal thrust of the claim was that they had failed to ensure that the necessary medical evidence was available at trial. Miss Perry was joined in Part 20 proceedings and subsequently named as a Second Defendant by Mr Moy.

At trial, he was given judgment against Pettman Smith in the sum of £210,000, but Miss Perry was held not to have been negligent. Pettman Smith appealed to the Court of Appeal, asking for a contribution from Miss Perry. They alleged that she was negligent in advising Mr Moy not to accept the £150,000 offer on the first day of trial.

The Court of Appeal accepted that Miss Perry was not negligent in her analysis that there was a 50/50 chance of persuading the trial Judge to accept the medical evidence. However, they went on to hold she had been negligent in the way in which she had advised Mr Moy,in particular, her failure to explain that the prospects of the application succeeding were about 50%. She was ordered to pay a 25% contribution.

Miss Perry appealed to the House of Lords.

House of Lords’ decision

The House of Lords unanimously allowed Miss Perry’s appeal.

They agreed with the trial Judge that Miss Perry’s assessment of the £150,000 offer was not negligent. As such, they agreed that her advice to reject the offer was reasonable. They highlighted, but did not over emphasize, the fact that the decision was taken at the door of the Court and that the pressures of advising in such circumstances "can be heavy". They quoted with approval from Lord Salmon’s speech in Saif Ali v Sydney Mitchell & Co (1980) AC 198: "Diametrically opposed views may [be] and not infrequently are taken by barristers… The fact that one of them turns out to be wrong certainly does not mean that he had been negligent." Accordingly, Miss Perry’s analysis and her advice were reasonable.

This had also been the Court of Appeal’s view. However, the Court of Appeal had gone on to hold that the way in which she had presented the advice was negligent. To coin a phrase, it’s not what she did but the way that she did it. This approach was criticised by the House of Lords. Lord Carswell’s view was that, if Miss Perry’s advice (to reject the offer) was not negligent, then "I have great difficulty in accepting that… she was negligent in failing to spell out the considerations which led her to give that advice." To coin another phrase, the end justifies the means. So long as the end advice was reasonable, the means by which she explained it were irrelevant.

This could have been expressed as a causation argument: even if the advice had been presented in full to Mr Moy, he would still have rejected the offer; accordingly, the failure to present it in full did not cause any loss. However, although they expressed doubts as to whether Mr Moy would have rejected his barrister’s advice, their Lordships based their opinions on Miss Perry’s duties. Baroness Hale stated that "the client pays for the advocate’s opinion, not her doubts" and Lord Carswell added "[Advocates] are … paid to express their opinions, but not necessarily their full reasons." Accordingly, the view of the House of Lords seems to have been that Miss Perry was not under a duty to explain her reasons to Mr Moy.

As such, they decided that Miss Perry had not breached her duty of care. They allowed her appeal.

Commentary

  • In the House of Lords, this case was purely a barrister’s negligence case. However, it had started out life as a solicitors’ negligence case, with Pettman Smith having failed to serve a medical report within the deadlines set by the court. The most obvious issue for solicitors, therefore, is the absolute necessity to comply with all orders, particularly "unless order". Where, as in this case, District Judges (who are charged with responsibility for effective case management) take a harsh view on applications for extensions of time, clients’ interests may be seriously prejudiced. In that event, the solicitor will be clearly exposed to a finding of liability.
  • Moy clearly shows that the Courts will be reluctant to hold a barrister (more accurately, an advocate) negligent for advice given under pressure at the doors of the Court. A claimant will need to prove that the decision was "one which no reasonably competent member of the relevant profession would have made", per Lord Hobhouse in Hall (Arthur JS) & Co v Simons (2002) 1 AC 615. This will be difficult for any claimant to achieve. In a Canadian case, quoted by the House of Lords, Anderson J stated: "I can think of few areas where the difficult question of what constitutes negligence, which gives rise to liability, and what at worst constitutes an error of judgment, which does not, is harder to answer."
  • This has two effects for solicitors. First, the same logic should apply to solicitors who have to make decisions at the doors of the Court. It can also extend to other pressurised decisions and judgments that a solicitor will need to take in both contentious and non-contentious work, although lack of time is not a licence to be negligent and the courts will be far less indulgent in other factual situations. Second, in a claim for negligence, a solicitor may be able to defend himself or herself by stating "I relied on counsel". Of course, a solicitor must use his or her own independent judgment, but unless counsel’s decision is glaringly wrong, a solicitor will be entitled to rely upon it provided that counsel was properly selected and instructed. Moy shows that it will be difficult to show that a barrister’s decision at the door of the Court will be glaringly wrong. Accordingly, Moy should also protect solicitors who rely upon barristers’ decisions at such times.
  • As explained above, the House of Lords stated that" [Advocates] are … paid to express their opinions, but not necessarily their full reasons." Further, "It would not be in the interests of those clients if [advocates] were compelled … to adopt a practice of defensive advocacy in the conduct of litigation or advising litigants about the course to be taken." There are, of necessity, practical limits to the extent to which advocates can explain the detailed reasons underlying their advice and judgments in time constrained circumstances. Be that as it may, if most clients were asked, they would probably say: "Of course, I am paying for my advocate’s doubts. Of course, I want their reasons." In light of the decision in Moy, however, these issues can no longer be treated as obvious and, in the absence of an express term, Moy suggests that advocates will not have a duty to explain their reasons and tactical judgments in certain circumstances. It may, therefore, be sensible for solicitors to state expressly when briefing a barrister for trial that they will require reasons for each major decision during trial, even if taken under pressure.
  • Does this case establish a general rule that, so long as advice is reasonable, the manner in which it is given does not matter? The answer is that it does not. In previous editions of the bulletin, we have discussed the extent of a solicitor’s duty to warn his clients of risks (see Issues 2 and 3). In this respect, the situation for solicitors in most circumstances will be very different from that of Miss Perry in Moy. In Moy, Miss Perry had no duty to explain the reasons for her decision. Solicitors, however, will almost always be under a duty to explain their advice and the risks attached to it. The most one can say is that, so long as the solicitor’s advice is reasonable, then it may be difficult for a client to prove that the failure to provide the underlying reasons for that advice has caused them loss. Nonetheless, the best strategy is, as always, to ensure that the advice is full and in writing wherever possible.
  • The House of Lords’ view that Miss Perry had no duty to explain her reasons to Mr Moy, raises a very interesting causation issue. Let us assume that Miss Perry had explained her reasons for rejecting the offer of £150,000. And let us assume that Mr Moy had listened carefully and had decided that he was not prepared to take that risk. Accordingly, he would decide to accept the £150,000. On that set of facts, Miss Perry’s failure to explain her decision would have caused Mr Moy loss. However, the House of Lords would still have decided in favour of Miss Perry. Why? Because they held that Miss Perry did not owe a duty to Mr Moy to explain her decision. If there was no duty, then there can be no breach of duty and any issues of causation are therefore irrelevant.
  • Can this be right? A barrister’s opinion will (quite rightly) be based on the law, the evidence and his or her assessment of the court’s likely attitude. On this basis, a barrister may decide that an offer should be rejected. This decision may be reasonable and will not be negligent. However, it will only be one factor amongst many for the client to consider. Accordingly, simply because the barrister recommends (on legal grounds) that an offer should be rejected, does not necessarily mean that a client (weighing up the legal grounds, together with a whole host of other issues) will accept that advice. In the circumstances, whilst there can be no hard and fast rules, should it not be incumbent upon any advocate – even under pressure at the doors of the Court – to articulate his or her assessment of the position and offer at least some reasons for it? If there is a 70% chance of success, a client may decide one thing; if it is 50%, he may decide another. Can it really be right that an advocate is not under any duty to explain his or her reasons, when it is precisely those reasons that may be highly relevant to the client?
  • Some of the broader statements of principle enunciated by their Lordships in Moy are, in certain respects, difficult to reconcile with the duty to qualify advice, where appropriate, so that clients are in a position to reach an informed decision as to what course of action to adopt. In the final analysis, however, a number of factors probably influenced the House of Lords in rejecting the claim for contribution. They included:

– the difficulties facing advocates in "court door" negotiations; – the existence of a claim against the solicitors if the application to adduce further evidence failed;

– a real doubt as to whether Mr Moy would have rejected his barrister’s advice had her reasoning been explained to him;

– a degree of judicial sympathy towards barristers generally; and

– the fact that the difficult situation in which Miss Perry found herself was not of her own making (but rather the fault of Pettman Smith).

  • Whilst the decision is, to a degree, fact specific, it is a favourable one for barristers and will doubtless be relied upon by them and Bar Mutual in resisting future claims by solicitors and their clients.
  • Although their Lordships commented upon the absence of any expert evidence before them, there was a recognition of the reasons for this. It is considered unlikely that the provision of expert evidence will become commonplace in lawyers’ negligence cases, save in specialist areas where judges may require assistance (eg tax, securitisation or certain areas of corporate finance etc).

A copy of this article appeared in CMS Cameron McKenna's Solicitors’ risk awareness bulletin issue 4, September 2005

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 11/10/2005.

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