PROFESSIONAL NEGLIGENCE. Case up-date

Transcription

1 PROFESSIONAL NEGLIGENCE Case up-date John Meredith-Hardy 1

2 CASE UP-DATE SOLICITOR / BARRISTER 1. Dunhill v W Brook and Co QBD 01 February 2016 [2016] EWHC 165 (QB); Elisabeth Laing J Summary: A barrister had not been negligent in advising a personal injury claimant to accept a sum in full and final settlement. He had acted reasonably in relying on the medical evidence available to him at the time of settlement, notwithstanding that a report which had not been available to him indicated that the claimant's brain injury was more severe than it originally appeared. Although he had not negotiated for provisional damages, he had been entitled to take the view that the defendant's lawyers would only have agreed to settle the claim on a full and final basis. Abstract: The claimant brought proceedings for breach of contract and professional negligence against lawyers who had represented her in a personal injury claim. The claim arose from an accident in which the claimant was struck by a motorcycle while crossing the road. She sustained a fairly severe head injury resulting in an impairment to her cognitive function, but was described as making a good recovery over the next two years. Liability was in issue and a split trial was ordered. In the run-up to trial, it transpired that one of the key witnesses for the claimant was in prison and another could not be found. Both were taking drugs. Shortly before trial, a clinical psychologist reported that the claimant's brain injury was much more severe than had originally appeared to be the case and had resulted in a more significant, life-limiting impairment. However, that report had not been commissioned as part of the legal proceedings and did not appear to have been made available to the claimant's counsel. On the day of trial, a trainee solicitor and counsel attended for the claimant. She was advised to accept a settlement offer of 12,500. It was explained to her that the absence of her key witnesses affected her prospects of success and that there was likely to be a substantial reduction in any damages awarded due to contributory negligence. The claimant reluctantly accepted the settlement offer. She subsequently instructed new solicitors and sought to re-open the claim. The Supreme Court eventually held that she had lacked capacity on the date of settlement and should have had a litigation friend when the claim was commenced. It found that the settlement figure was a "gross undervaluation" of the claim. 2

3 In an effort to mitigate her loss, the claimant settled the personal injury claim on the basis that she would receive 55% of the value of her claim. She brought the instant claim in order to recover any shortfall in her recovery of damages caused by the lawyers' negligence and any damages arising from the cost of mitigating her loss. The issue was whether the lawyers had breached their duty to the claimant by advising her to settle on a full and final basis rather than on the basis of a percentage of the full value of the claim, or without any mechanism for provisional damages. Held: Claims dismissed. (1) If a firm of solicitors chose to use a trainee to act on a client's behalf, it was not the case that a lower standard of care applied than if the firm had used a qualified solicitor. That standard of care did not impose on practitioners any liability for damage resulting from what turned out to be errors of judgement, unless the error was such that no reasonably well-informed and competent member of that profession could have made it, Saif Ali v Sydney Mitchell & Co [1980] A.C. 198 followed. Although a solicitor had to exercise his own independent judgement, he was not liable in negligence if he acted reasonably on the advice of appropriate counsel who had been properly instructed, Locke v Camberwell HA [1991] 2 Med. L.R. 249 followed (see paras , 138 of judgment). (2) Counsel had acted reasonably in relying on the medical reports that were available to him. There was no basis for concluding that he had been negligent in his assessment of the available evidence. He had been entitled to consider that, without the key witness evidence, the claimant might have lost altogether. He had also been entitled to take into account that a significant finding of contributory negligence was likely. He was not negligent in failing to apply for an adjournment due to the absence of the main witness, since he had considered that option and decided that, in view of the reason for the absence, such an application was unlikely to succeed. Nor was he negligent in doing his best to assess quantum. On the balance of probabilities, the motorcyclist's lawyers would not have agreed to settle the claim on anything other than a full and final basis. Therefore, the claimant's counsel was not negligent in failing to negotiate for provisional damages (paras 115, , 151, ). (3) If counsel had been negligent, then the trainee solicitor sent to attend court to assist him would not have been knowledgeable or experienced enough to detect it. Accordingly, if counsel had been found negligent then the solicitors would also have been negligent (para.157). 3

4 2. Goldsmith Williams Solicitors v E. Surv Ltd Court of Appeal (Civil Division) 11 November 2015 [2015] EWCA Civ 1147 [2016] P.N.L.R. 11 Patten L.J. and Sir Stanley Burnton Summary In 2005 one G, who had a local property business, purchased a buyto-let property in Derbyshire for 390,000. He did this with the aid of a temporary bridging loan and immediately sought to refinance the transaction permanently. The present claimants, E Ltd, were initially instructed in November 2005 by a lender not involved in the present proceedings to produce a remortgage valuation. These instructions recorded the estimated value as 850,000 and the loan required as 500,000. On 15 November 2005 E s surveyor, having been told by G that he had purchased the property six months previously for 600,000, valued it at 725,000. In late December 2005 G applied to TMB Ltd for a 580,000 self-certified remortgage. He completed TMB s application form, stating that he had purchased the property in October 2005 for 450,000, giving its present value as 725,000, and saying that he intended to occupy it as his own residence, rather than holding it for business purposes. Despite the obvious discrepancy between the stated purchase price of 450,000 and the alleged value of 725,000 two of TMB s underwriters approved G s application in principle in January By 19 January 2006 E s valuation report was to hand; a third underwriter employed by TMB passed the application on 26 January 2006, and an offer of a loan was issued and accepted by G. The present defendant solicitors GWS were instructed by both TMB and G. TMB s letter of instruction, which enclosed copies of both L s mortgage offer and the valuation report, was expressly given on the basis of the then CML Lenders Handbook and L s own Pt 2 instructions. GWS in the course of their searches obtained office copy entries revealing that G had actually bought the property for 390,000 in September 2005, but never reported this information to TMB. Instead, on 3 February 2006 they certified title on TMB s standard form, stating: We the conveyancers named above give the certificate of title set out in the Appendix to Rule 6(3) of the Solicitors Practice Rules 1990 as if the same were set out in full, subject to the limitations set out in it. *189 Completion took place on 13 February G in due course defaulted. TMB sued E for negligence, and E settled the claim for 200,000. E now brought contribution proceedings against GWS alleging that it, if sued by TMB, would also have been liable in negligence. The judge held GWS liable to E for 100,000, and GWS appealed. Held: the appeal should be allowed. (1) Under the general law of negligence a solicitor was bound to report to a lender any matters coming to his attention which affected those interests of the lender which he was employed to safeguard, including the value and adequacy 4

5 of the security offered. (Mortgage Express Ltd v Bowerman & Partners [1996] 2 All E.R. 836 followed; National Home Loans Corporation Plc v Giffen Couch & Archer [1998] 1 W.L.R. 207 and Nationwide Building Society v Balmer Radmore [1999] P.N.L.R. 606 discussed). (2) Since a discrepancy such as the present clearly affected the adequacy of the lender s security, it followed that it had to be disclosed to TMB unless the terms of GWS s retainer were inconsistent with an obligation to make it known. (3) In the present case there was no such inconsistency. On the contrary: the continued existence of general duties was vouchsafed by cl.1.3 of the CML Handbook, preserving duties under the general law, and also by cl.5.1.2, requiring the retainer to be terminated in the event of information reaching the solicitor concerned whose disclosure was barred by the subsistence of contrary duties to third parties. Nor were the limited terms of the standard certificate of title relevant, nor the limited references in para.6(3)(c)(ii) of the Solicitors Practice Rules to the searches to be carried out and reported by a solicitor. It followed that, as the judge had held, GWS had indeed been at fault. (4) However, the judge had been wrong to infer that if GWS had brought the discrepancy to the notice of TMB the latter s decision would have been any different. The fact that the loan had been approved by three underwriters acting for GWS despite clear signs of a large difference between the purchase price and the stated value indicated the contrary: namely, that there was no proper evidential basis for inferring that any warning from GWS would have had any effect on TMB s decision. It followed that the claim failed on causation grounds. 3. Maharaj v Johnson Privy Council 15 June 2015 [2015] UKPC 28 [2015] P.N.L.R. 27 Lady Hale, Clarke, Wilson, Carnwath and Hodge LJJ Summary: In 1976 one PL died owning certain land in Arouca, Trinidad, which formed part of the Bonair Estate. Nine years later, in 1985, his widow, GL, obtained letters of administration. Previously in 1984 she had granted a power of attorney to one RI, including power to sell any real or personal property belonging to [her] or to which [she] may become entitled, in particular the freehold parcel of land at Bonair Estate, Arouca, comprising 56,464 Superficial Feet. In 1985 the claimants contracted to purchase the land from GL for $170,000, instructing the first defendant, a partner in the defendant solicitors and conveyancers, in the transaction. It was admitted that the contract was valid. By deed dated 6 February 1986 RI, acting under the 1984 power of attorney, purported to to convey the land to the claimants on behalf of GL, as personal representative of her husband s estate. The price was paid and the claimants took possession. 5

6 Much later, in February 2008, after the claimants had attempted to borrow against the land and subsequently to sell it for $20 million, they were informed that their title to it was doubtful. The reason was that the 1984 power of attorney might well not have empowered RI to convey land owned by GL as personal representative rather than in her own personal capacity. Shortly afterwards the first defendant arranged for GL to execute a subsequent deed herself conveying the land and thus rectifying any defect in the claimants title. No charge was made for this service. The claimants brought an action against the defendants in contract and tort, alleging negligence in having failed in 1986 to procure a good marketable title to the land or to advise that RI had had no power to execute a deed of conveyance in relation to property held by GL merely as personal representative. They alleged that, as a result of the negligence, they had lost the sale for $20 million and that, since the present value of the land was only about $4m, they had suffered loss and damage. The defendants, besides denying negligence, argued that the claim should be struck out as statute-barred under the Limitation of Personal Actions Ordinance 1844 since it had not been brought within four years of the accrual of the cause of action. Rajkumar J struck out the action, and the Court of Appeal of Trinidad and Tobago upheld his decision. The claimants appealed to the Privy Council. *554 Held: the appeal should be dismissed. (1) As regards the claim in tort, for the purposes of limitation law the present case fell to be regarded as a flawed transaction case rather than as a no transaction case, since the essence of the complaint was failure to ensure that the claimants got the title they were seeking. ( Axa Insurance Ltd v Akther & Darby [2009] EWCA Civ 1166, [2010] 1 W.L.R and Pegasus Management Holdings SCA v Ernst & Young [2010] EWCA Civ 181, [2010] P.N.L.R. 438 discussed). (2) It followed that the claimants cause of action had accrued for the relevant purposes at the moment when it could be shown that the value to them of the proceeds of the flawed transaction was measurably less than what would have been the value had the same transaction been flawlessly executed. (at [22]). (3) Since the contract of sale was valid, and the purchase price had been paid, the claimants had in 1986 obtained an equitable, although not a legal, title to the land ( Jerome v Kelly [2004] UKHL 25, [2004] 1 W.L.R and Wall v Bright (1820) 1 Jac. & W. 494 discussed). (at [17]). (4) The Court of Appeal had been correct to conclude that, in the circumstances, the claimants had in 1986 received an interest of measurably less value to them than they ought to have obtained, since the failure to obtain a full legal title made the land less marketable and this was not a defect curable by the actions of the claimants alone. It followed that the claim in tort was statute-barred. ( 6

7 Moore (DW) & Co Ltd v Ferrier [1988] 1 W.L.R. 267 and Knapp v Ecclesiastical Insurance Group Plc [1998] P.N.L.R. 172 followed). (at [27] [29]). (5) As regards liability in contract, the primary claim was clearly statute-barred, having arisen at the time of the alleged negligence in (6) (by Lords Wilson, Carnwath and Hodge and Lady Hale; Lord Clarke dissenting) It was unarguable that the defendants had remained under any continuing duty to look to the claimants interests or to advise them after completion of the sale in It followed that no later breach occurring within the limitation period had been shown, and hence that all claims in contract were statute-barred. ( Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] 1 Ch. 384 distinguished; Bell v Peter Browne & Co [1990] 2 Q.B. 495 and Nouri v Marvi [2009] EWCA Civ 1107, [2011] P.N.L.R. 100 followed). Per Lord Wilson at [26]: It was not the case that in every flawed transaction claim loss was ipso facto suffered as soon as the transaction was entered into. In all such cases the facts had to be investigated and the moment ascertained when appreciable loss had been suffered. (Observations in Baker v Ollard & Bentley, unreported, CA, 12 May 1982 and Pegasus Management Holdings SCA v Ernst & Young [2010] EWCA Civ 181, [2010] P.N.L.R. 438 disapproved). 4. Minkin v Landsberg Court of Appeal (Civil Division) 17 November 2015 [2015] EWCA Civ 1152; [2015] 6 Costs L.R. 1025; Judge: Jackson LJ; Tomlinson LJ; King LJ Summary: The court considered the extent of a solicitor's duty to advise a client in circumstances where the parties had reached agreement on the form of a consent order in financial remedy proceedings and the solicitor was being asked to put that agreement into proper form for court approval. Abstract: The appellant (M) appealed against the dismissal of her claim for negligence against the respondent solicitor (L). M and her husband had divorced and had negotiated a financial settlement. M consulted solicitors and was warned that the husband's offer did not seem satisfactory. She was advised of alternatives, including negotiation, mediation and litigation with full disclosure. However, M decided to adhere to the agreed settlement. She changed solicitors and instructed L to put the agreement into a form that the court could approve. She subsequently regretted signing the consent order and claimed damages for professional negligence on the basis that L had failed to advise or warn her against entering into the agreement. The district judge dismissed the claim on the basis that the retainer was limited and L had been under no duty to provide such further advice. The issue was the extent of the duty to advise in circumstances where the parties had reached agreement and solicitors were being asked to put that agreement into proper form for court approval. 7

8 Held: Appeal dismissed. (1) The extent of a solicitor's duty to their client was determined by the retainer. The starting point in every case was to ascertain what the client had engaged the solicitor to do or to advise on. A solicitor's contractual duty was to carry out the task the client had instructed and the solicitor had agreed to undertake, Midland Bank Trust Co Ltd v Hett Stubbs & Kemp [1979] Ch. 384 applied. It was implicit in the retainer that the solicitor would proffer advice which was reasonably incidental to the work being carried out, Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch), [2003] Lloyd's Rep. P.N. 7 applied. In determining what advice was reasonably incidental, it was necessary to have regard to all the circumstances of the case, including the client's character and experience, Carradine Properties Ltd v DJ Freeman & Co [1999] Lloyd's Rep. P.N. 483 and National Home Loans Corp Plc v Giffen Couch & Archer [1998] 1 W.L.R. 207 applied. In that respect, it was not possible to give definitive guidance. However, an experienced businessman would not wish to pay for being told that which he already knew; an impoverished client would not wish to pay for advice he could not afford; and an inexperienced client would expect to be warned of risks which were apparent to the solicitor but not to the client. The solicitor and client could, by agreement, limit the duties which would otherwise form part of the retainer. As a matter of good practice, the solicitor should confirm such agreement in writing. Otherwise, the court might not accept that any such restriction had been agreed, Hurlingham Estates Ltd v Wilde & Partners [1997] 1 Lloyd's Rep. 525 considered (see paras of judgment). (2) It would have been good practice for L to expressly confirm in correspondence the limited nature of her retainer. However, the district judge accepted that M's instructions had been limited, having heard the parties' oral evidence, and the court would not go behind that finding of fact. The provision of further advice or warning was not reasonably incidental to the work L was carrying out under the retainer. M was an intelligent woman who had qualified and practised as a chartered accountant. She had, as L knew, taken legal advice about the proposed consent order before instructing L, and had rejected L's warning about the difficulties of enforcement if the husband emigrated. M had made it plain that, despite the risks, she wished to conclude the consent order "as swiftly as possible". L was operating under a defined and limited retainer. Her task was to re-draft the consent order, so as to set out the 8

9 had to be drafted in proper form to be put before a district judge as a consent order. Such an order was a complex legal document which had to deal with all aspects of the parties' financial lives, present and future. There would be very serious consequences for both the courts and litigants in person generally if solicitors felt unable to accept instructions to act on a limited retainer basis for fear that what they anticipated to be a modest and relatively inexpensive drafting exercise, albeit complex to a lay person, might lead to a far broader duty of care being imposed on them. However, where a solicitor acted on a limited retainer, client care letters, attendance notes and formal written retainers had to be drafted with considerable care to reflect the client's specific instructions. Notwithstanding L's failure to set out with precision the limits of the retainer, she was acting under a limited retainer and had carried out the work M had instructed her to undertake (paras 65-77). 5. Wellesley Partners LLP v Withers LLP Court of Appeal (Civil Division) 11 November 2015 [2015] EWCA Civ 1146; [2016] C.I.L.L Judge: Longmore LJ; Floyd LJ; Roth J Summary: Where contractual and tortious duties to take care in carrying out instructions existed side by side, the test for recoverability of damage for economic loss should be the same, namely the contractual one. Abstract: A solicitors' firm appealed against the measure of damages awarded ([2014] EWHC 556 (Ch), [2014] P.N.L.R. 22) against them for professional negligence in drafting a partnership agreement. The partnership concerned appealed against the measure of damages and against a finding that the solicitors had not been negligent regarding a related matter. The partnership was a headhunting firm. It instructed the solicitors to draft a new agreement to admit new partners including an investor. The partnership agreed that the investor should have an option to withdraw half its capital after 42 months. As executed, the agreement gave the investor such an option exercisable any time within the first 41 months. The investor exercised that option and the drafting error was revealed. The solicitors initially advised that the investor had made the alteration; they later learned that the error was theirs, but did not immediately advise the partnership of that. The partnership sought damages for profits it would have made by opening a US office, arguing that it would have relied on the investment to achieve that, and that it had been unable to obtain mandates from a bank, Nomura, operating in the US. The judge held the solicitors negligent in the drafting but not in their advice, and awarded damages for the US loss of profits claim. He also awarded damages for one month of the partnership's founder's time spent negotiating with and litigating against the investor. 9

10 The solicitors argued that the judge had wrongly adopted the tortious test for remoteness regarding the US losses and should have adopted the contractual test. The partnership argued that the judge had wrongly categorised its loss of profits claim as a loss of chance claim; wrongly assessed its prospects of obtaining the Nomura mandates at only 60 per cent; and wrongly held that the solicitors had not been negligent in not informing it of the true source of the drafting error when they discovered it. Held: Appeals allowed in part. (1) The "reasonable contemplation" remoteness test applicable in contract was more restrictive than the "reasonable foreseeability" test in tort, Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48, [2009] 1 A.C. 61 followed. The first depended on the circumstances surrounding the making of a contract and the second on the purpose of the rule imposing the tortious duty. Where contractual and tortious duties to take care in carrying out instructions existed side by side, the test for recoverability of damage for economic loss should be the same, namely the contractual one. The basis of the contractual remoteness test was that the parties had opportunity to draw special circumstances to each other's attention at the time of contract formation; they were assumed to be contracting on the basis that liability would be confined to damage of the kind within their reasonable contemplation. It made no sense for the concurrent duty in tort to upset that consensus, Rubenstein v HSBC Bank Plc [2012] EWCA Civ 1184, [2013] 1 All E.R. (Comm) 915 applied (see paras of judgment). However, that did not result in the solicitors' appeal being allowed. The damages awarded were recoverable under the contractual remoteness test. The damage had been of a kind within the reasonable contemplation of the parties: the solicitors had known the partnership wished to expand into the US and that was a way in which the investment was to be used to make profits. Neither party had known at the time of contract formation any more about how profits would be made; a solicitor drafting the agreement would not have considered the Nomura opportunity to be different from the other contemplated opportunities (paras 81-89). (2) Whilst the partnership had to show that, but for the negligence, it would have opened a US office, the actual loss claimed was dependent on the hypothetical actions of Nomura, a third party, and the chances of Nomura awarding the mandates to the partnership would have to be reflected in the damages, Allied Maples Group Ltd v Simmons & Simmons [1995] 1 W.L.R applied. Case law the partnership relied on in the instant case did not disagree with that conclusion, Owners of the Front Ace v Owners of the Vicky 1 [2008] EWCA Civ 101, [2008] 2 All E.R. (Comm) 42, Parabola Investments Ltd v Browallia Cal Ltd (formerly Union Cal Ltd) [2010] EWCA Civ 486, [2011] Q.B. 10

11 477, Vasiliou v Hajigeorgiou [2010] EWCA Civ 1475 and AerCap Partners 1 Ltd v Avia Asset Management AB [2010] EWHC 2431 (Comm), [2010] 2 C.L.C. 578 considered (paras ). (3) The instant court was reluctant to interfere with evaluative judgments of the kind the judge had made in reaching the 60 per cent figure. The assessment was within the broad range of assessment which could reasonably be made on the evidence (paras ). (4) The solicitors had had reason to believe that the information as to the source of the error could be relevant to the course the partnership was contemplating. It was clearly important that the partnership should not negotiate with the investor on an incorrect basis. The solicitors should have corrected their explanation of the drafting error when they found it was erroneous. They had been negligent in not doing so (paras ). The damages awarded in respect of the founder's time was accordingly increased to four months (paras ). 6. Procter v Raleys Solicitors Court of Appeal (Civil Division) 28 April 2015 [2015] EWCA Civ 400 [2015] P.N.L.R. 24 Tomlinson, Kitchin and Gloster LJJ Summary: Between 1986 and 2004 the claimant P, who had no education beyond 16, worked as a miner. As a result of using vibratory tools he developed Vibration White Finger (VWF). In January 2000 he instructed the defendant solicitors R to pursue a claim for damages. In this connection there was a tariffbased compensation scheme for miners in P s position under which it was admitted that P could claim. Matters in respect of which claims could be made included not only loss of earnings, but also impairment in the carrying out of certain services and activities such as gardening and DIY. R handled many thousands of claims under the scheme and claimed expertise in doing so. R sent P a standard form which P filled out in January 2000, concerning the time at which he had become aware of VWF. P having had to be reminded to correct omissions in the information given, the form was sent to IRISC, the company handling scheme claims. In March 2001, it having been accepted by IRISC that P was entitled under the scheme, P underwent a medical examination, in which he stated that he found gardening difficult. The medical note stating this was incorporated in a file note in the defendants office dated 3 September, to which was added a reference to the possibility of a services claim. On 10 September 2001 R sent P a letter describing the various available heads of claim, including services claims, under the rubric Additional Investigations Other Financial Losses, ending with a series of tick-boxes corresponding to each category apart from pain and suffering and a form of authority to pursue a claim in respect of one or more of them. P returned this having ticked only the box stating I do not wish to claim for any additional elements. I wish to claim for general damages (pain and suffering) only. On 27 January 2003 a further letter 11

12 was sent referring to the possibility of compensation for the need for assistance in carrying out services. In October 2003, having received a settlement offer from IRISC for 11,141 in full and final settlement covering pain and suffering and handicap on the labour market, but not services claims, the defendants made a file note stating Stage 2V/late 2SN but mentions problems with DIY/Gardening and passed on the offer to P. The letter concerned mentioned the possibility of making a services claim as part of its standard wording and stated that the offer made was in respect of loss of earnings, *502 pain, suffering, loss of amenity and labour market handicap. It went on to say that the offer could not be accepted if P wished to claim in respect of anything else, and asked whether he did wish to make a further claim. P said that he did not; in November returned a form authorising R to accept the offer on his behalf, and in due course the claim was settled for 11,141. P brought proceedings against R alleging negligence in failing to advise him properly, or adequately to advert to the possibility of making a services claim. The judge held that in the circumstances of P no sufficient advice had been given, that no adequate attention had been drawn to the possibility of adding a services claim, and that it had been incumbent on R to attempt to speak to P to ascertain his true desires. He awarded damages of 5, representing the loss of the opportunity (put at 50 per cent) to pursue a services claim. R appealed. Held: the appeal should be dismissed. Merely to send a series of letters to someone of limited education and limited understanding of legal concepts did not satisfy the defendants duty to give adequate advice. Despite the need in cases like this of an element of commoditisation of legal services, a face-to-face meeting or at least a telephone advice had been strongly called for. ACCOUNTANTS 7. Swynson Ltd v Lowick Rose Llp (in liquidation) Court of Appeal (Civil Division) [2015] EWCA Civ 629 [2015] P.N.L.R. 28 Longmore, Davis and Sales LJJ Summary: H owned an investment vehicle S Ltd. In 2006 he caused S to invest in a management buyout of E Ltd, taking a 25 per cent stake for 15 million. In doing so he relied upon a due diligence report prepared by accountants HMT, the defendants predecessors, at the request of S. The performance of E did not progress according to the projections approved by HMT. The company required further funding, in 2007 and again in 2008, to prevent it collapsing. That funding was advanced by S. In 2008 H used personal 12

13 funds to allow E to repay to S both the original and 2007 loans, in a partial refinancing. The 2008 loan remained owing to S by E. In a collateral surrender agreement in 2011 the assests of E were transferred, at a stated value of 4.85 million, to another vehicle owned by H. The value was so stated to avoid any suggestion that H was acquiring them at an undervalue in the light of E s exposure to other creditors. In fact, the company assets produced no return. In 2013 both H and S sued the defendants, seeking damages on the basis of a lack of care and attention in the carrying out of the due diligence inquiry. The defendants admitted negligence, but averred that any duty had been owed only to S; that by reason of the partial refinancing S had suffered no loss; that the 2007 and 2008 loans were not made in reliance on the 2006 due diligence report, and that H s loss, if any, had been reduced by the acquisition of the company assets at the stated value. The judge held, giving judgment for S but not for H, that (1) the work undertaken by HMT had been to benefit the investor advancing the money, and that since that investor had been S and not H, no duty had been owed to H; that (2) additional loans provided by S to E in 2007 and 2008 were reasonable attempts to mitigate the loss flowing from the original investment, and would form part of the loss flowing from the original report even if not advanced in direct reliance on that report; that (3) the 2008 partial refinancing by H was res inter alios acta, and did not act to reduce S s damages; and that (4) as regards the notional value put on the *578 assets transferred under the collateral surrender agreement the court would look at the value actually obtained. The defendants appealed under (2) and (3). H and S cross-appealed, arguing that if the refinancing did go to reduce the damages payable by HMT, H and/or S would have a remedy by way of subrogation arising from the mistaken or inadvertent discharge of HMT s liability. Held, dismissing the appeal (Davis LJ dissenting): (1) (by Longmore and sales LJJ, Davis LJ dissenting) The judge had been correct to hold that the 2008 partial refinancing by H was res inter alios acta. It was not something that S had brought about in the ordinary course of business in order to mitigate the consequences of HMT s negligence, and so far as S was concerned, the repayment of the debt was mere good fortune. It followed that it did not act to reduce S s damages. (at [16] and [53] [56]). ( British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] A.C. 673 and The New Flamenco [2014] 2 Lloyd s Rep. 230 discussed). (2) (by Longmore and Davis LJJ, Sales LJ dissenting) As regards the crossappeal, any claim by H and S based on subrogation would have failed, since (a) as regards H, once HMT s debt to Page 1 13

14 S had been discharged there would have been no liability to which H could be subrogated, and (b) no question could arise of subrogation in favour of S itself. In addition it was doubtful whether the necessary element of mistake could be shown to have existed. (at [22] [25] and [46] [48]). SURVEYORS / VALUERS Titan Europe PLC v Colliers International UK PLC (In Liquidation) [2015] EWCA Civ 1083; [2016] P.N.L.R. 7; Official Transcript; Summary: A judge had been wrong to hold that a commercial property valuation had been negligent, but he had been correct to find that the buyer of a loan secured on the property as a result of the valuation had title to sue the valuer. The court held, obiter, that the relationship between the buyer of the loan as part of a securitisation, and the noteholders that became the ultimate beneficiaries of the loan, was analogous to that of a company and its shareholders. Abstract: The appellant valuer appealed against a decision (Titan Europe Plc v Colliers International UK Plc (In Liquidation) [2014] EWHC 3106 (Comm), [2015] 2 All E.R. (Comm) 479) that it had negligently valued a commercial property. The valuer had been instructed by a lender to value a tenanted commercial property for the purposes of a loan. The valuation provided that it could be relied on by any purchaser of the loan or investor. The valuation was 135 million and a loan of 110 million was made. The loan was sold to the respondent pursuant to a securitisation process whereby a number of loans were packaged together and a number of noteholders became the ultimate beneficiaries. The respondent claimed damages against the valuer on the ground it had negligently overvalued the property. The judge considered transactions and valuations in the five years preceding the valuation, including a sale of the property for million six months before. The judge decided that the property was sufficiently unusual to adopt 15 per cent as the acceptable margin of error, a valuation below 100 million would not have been credible in the market, and the appropriate yield to apply to the net rental income was 8.5 per cent, which led to a valuation of 103 million. As that figure was outside the 15 per cent margin of error he held that the valuation was negligent. The issues were whether the judge had been correct to hold that (i) the valuation was negligent; (ii) the respondent had title to sue the valuer. The valuer argued that the judge had been wrong to hold that the respondent had any cause of action against it, or that it if it did have a cause of action it had 14

15 suffered no loss because the risk of a negligent valuation had passed to the noteholders. Held: Appeal allowed. (1) If six months before the valuation there had been an actual sale at million and the market was still rising, it was inconceivable that the correct valuation could be as low as 103 million. The judge had not been justified in adopting an 8.5 per cent yield. The correct valuation was million, which was within the 15 per cent bracket for margin of error. The appeal was allowed (see paras 16, 18 of judgment). (2) (Obiter) A property owner had rights of suit for substantial damages in respect of any actionable negligence. The same applied to rights of suit in relation to loans and the securities underlying them. The choses in action owned by the respondent were just as much property as any other sort of property and the respondent's title to those choses in action entitled it to sue for substantial damages if it had a cause of action. The respondent clearly would have had a cause of action against the valuer as it had expressly assumed responsibility to a purchaser of the loan. Since the valuer had expressly assumed responsibility to any investor, the noteholders might be able to bring an action, but as they stood in much the same relation to the respondent as a shareholder stood in relation to a company, any action by a noteholder might be defeated by the doctrine of reflective loss. The position of the noteholders did not prevent the respondent from suffering any loss, Interallianz Finanz AG v Independent Insurance Co Ltd [1997] E.G. 91 (C.S.) considered. The decision in Interallianz was approved, but the primary emphasis in the instant case was that the respondent was owner of the loans and securities. The respondent's relationship with the noteholders was analogous to that of a company with its shareholders; no one suggested that because the shareholders might be the ultimate losers in a case of the instant kind the company had not suffered a loss (paras 30, 33, ). Judge: Longmore LJ; Lloyd Jones LJ; Briggs LJ CLINICAL NEGLIGENCE 8. Montgomery v Lanarkshire Health Board Supreme Court 11 March 2015 [2015] UKSC 11 Summary: A bench of seven Supreme Court Justices held that whether a particular treatment option ought to have been discussed with a claimant patient was not a question of negligence, but a question of patient autonomy. This was for determination by the courts, not experts. The test is in such a claim is whether the doctor has exercised reasonable care to ensure that the patient is 15

16 aware of material risks, and alternative treatments, when judged by the standard of whether a reasonable person in the patient s position would be likely to attach significance to the risk. Bolitho and Sidaway were overruled. Abstract: A pursuer whose child suffered serious injury at birth claimed that she ought to have had the option of caesarean section [ CS ] discussed with her as a valid treatment option, as well as vaginal birth. The child s delivery (vaginally) was impeded as a consequence of shoulder dystocia, resulting in traumatic birth leading to cerebral palsy. The small stature of the mother (who was diabetic) and the large size of the foetus were such that there was an elevated risk of shoulder dystocia, which was not communicated to the mother in clear terms or at all. It was accepted by the Defenders that if a planned CS had taken place, the injury to the child would not have occurred. At proof (viz trial) the Lord Ordinary (Lord Bannatyne) held that medical practice did not require that CS be discussed with the pursuer as the risk was such that it would not have been negligent of the doctor in question to advise of the risks of vaginal birth, and thus the doctor was under no obligation to discuss CS with the patient. Further, he held that had the pursuer been offered a CS, she would probably not have accepted it. On Appeal to the Inner House of the Court of Session, the Appeal was refused and the judgment of the Lord Ordinary adhered to. Both courts applied the law as stated in Bolitho v City and Hackney Health Authority [1998] AC 232 and Sidaway v The Board of Governors of Bethlem Royal Hospital and Maudsley Hospital [1985] AC 871. Held: (1) That the option of CS ought to have been discussed with the Pursuer as a treatment option; (2) That the issue of whether it ought to have been discussed with the patient was not one of negligence, but one of patient autonomy and for determination by the courts and the law, not medical practice [para 85]; (3) That (despite the views of the Lord Ordinary on the evidence) a review of the evidence was such that he (and the Inner House on appeal) had come to an incorrect conclusion; (4)That the true test is in such a case is whether the doctor exercised reasonable care to ensure that the patient was aware of material risks, and alternative treatments, when judged by the standard of whether a reasonable person in the patient s position would be likely to attach significance to the risk [para 87]; and (5) That the evidence in fact demonstrated that had the option of CS been discussed with the pursuer she would probably have accepted that course of treatment. 16

17 Accordingly, judgment for the agreed damages (of approximately 5.5m plus approximately 2m in interest) would be pronounced in the pursuer s favour. The cases of Bolitho and Sidaway overruled [para 86], the Supreme Court holding that they no longer reflected modern attitudes to patient centred treatment and failed to give due respect to the ability of patients to understand the treatment options, and resulted in unacceptable medical paternalism. 9. Connolly v Croydon Health Services NHS Trust; Queen's Bench Division 15 May 201 [2015] EWHC 1339 (QB); Judge: Collendar QC Summary: Although an information sheet given to a patient prior to undergoing an angiogram procedure was misleading, the weight of the evidence demonstrated that she had been provided with sufficient information to enable her to give her informed consent to the procedure. That consent had not been withdrawn when an emergency developed due to arterial dissection, and in any event the patient lacked capacity to withdraw her consent in the circumstances. It was reasonable for the medical staff to continue the procedure where the likelihood was that the patient would otherwise have died. Abstract: A patient (C) claimed damages for personal injuries and consequential loss arising from the allegedly negligent performance of a medical diagnostic procedure by the medical staff of an NHS Trust. C was referred to hospital to undergo an angiogram, which involved the insertion of a catheter under a local anaesthetic via either the radial or femoral artery. Before the procedure, C signed a consent form after having a consultation with a doctor and having been given an information sheet. The catheter was inserted into C's radial artery but that approach was abandoned when she began to suffer pain. It was decided that access would be attempted via the femoral artery. A catheter was inserted into her leg and C was given diazepam and morphine. During that procedure, C suffered a spasm in her right arm which the experts agreed was caused by the cathetorisation. She complained of pain in her arm as soon as the spasm developed. She also complained of severe pain across her back, chest and jaw but it was a matter of dispute when she first complained of those symptoms. The doctor performing the procedure saw that the left descending artery from C's heart was occluded, which was a serious and potentially life-threatening condition. He carried out an emergency angioplasty to re-open the artery by the insertion of stents. An X-ray showed that there had been a dissection of the left main stem artery (LAD), but it was disputed whether that occurred shortly after the beginning of the attempt via the radial route or only after the femoral route was begun. 17

18 C claimed that (i) she had not provided valid consent for the angiogram, as she had been given misleading information before it began; and (ii) the dissection had occurred only after the femoral route was undertaken, by which time she had withdrawn any consent she might have given. According to the Trust, C did not have capacity to withdraw consent because of the medication she had been given; in any event, the hospital staff would have been entitled to ignore any apparent withdrawal of consent due to the emergency situation that had developed. The experts agreed that, although the information sheet implied that major complications did not happen in patients who had normal coronary arteries, there had been no breach of duty in respect of obtaining informed consent and, in particular, no duty to inform of the risk of dissection or spasm. Held: Claim dismissed. (1) A failure to provide a patient with sufficient information to permit an informed choice as to whether to consent to a procedure was capable of giving rise to a cause of action in negligence. The giving of inaccurate or misleading information to a patient might vitiate their consent and amount to negligence, Sidaway v Board of Governors of the Bethlem Royal Hospital [1985] A.C. 871 and Montgomery v Lanarkshire Health Board [2015] UKSC 11, [2015] A.C followed. If a patient had capacity to refuse treatment, a doctor had no lawful entitlement to treat the patient even if the doctor considered that the treatment was reasonable or necessary to save life, T (Adult: Refusal of Treatment), Re [1993] Fam. 95 followed. In the instant case, the fact that the information sheet was misleading did not vitiate C's consent in view of the entirety of the information made available to her prior to her signing the form (see paras 31-32, 36, 44, 102 of judgment). (2) It would be unusual for the LAD to be in spasm with the other arteries still functioning normally. The weight of the evidence, including the record of drugs administered to C, favoured the conclusion that the pain she experienced, and therefore the dissection, occurred before the femoral route was undertaken (paras ). (3) Although C had become anxious and distressed as soon as she started to suffer from pain as a result of the dissection and occlusion of the LAD, there was insufficient evidence that she had withdrawn her consent to the continuance of the procedure. It was significant that she did not complain in the aftermath of that procedure that it had been continued without her consent. In any event, the weight of evidence showed that she lacked capacity to withdraw her consent. Moreover, it had been reasonable for the procedure to be continued once the occlusion had been detected. Had it not been remedied, C might have died or suffered permanent damage to her heart. Even if C had withdrawn her consent after the radial approach had been abandoned, she would have given her consent to continuance by the femoral route if the seriousness of the situation had been explained to her. The likelihood was that she would have died had the 18

19 procedure been halted at that time. It followed that the claim failed on breach of duty and causation (paras 116, 118, 120, 124, ). 10. A v East Kent Hospitals University NHS Foundation Trust Queen's Bench Division 31 March 2015 [2015] EWHC 1038 (QB); [2015] Med. L.R. 262; Judge: Dingemans J Summary: A claim for damages brought by a mother on the basis of the alleged failure by an NHS trust to detect a chromosomal abnormality in her pregnancy was dismissed where there was no evidence of the existence of a material risk to which the mother should have been alerted. Moreover, the evidence showed that the mother would not have opted for an amniocentesis if she had been told about the negligible risk of abnormality; and even if she had had such a test and the abnormality had been detected, she would not have terminated the pregnancy. Abstract: A mother brought a claim for damages against an NHS trust for the costs of caring for a disabled child, based on an alleged breach of duty to use reasonable care and skill in the management of her pregnancy. The mother had a scan on 13 May 2009, at 28 weeks' gestation, which showed that the baby was small. She saw a consultant who was concerned about the possibility of placental insufficiency and that the baby might be born imminently. The mother was shocked. A further scan was carried out on 3 June, which again noted growth restriction. At neither of those consultations was any mention made of the possibility of a chromosomal disorder. The child was born on 22 July suffering from a chromosomal abnormality which caused severe disabilities. The mother complained that the trust had failed to advise her at the consultations on 13 May 3 June of the possibility that the baby might be suffering from that condition. She claimed that, had she been advised of that possibility, she would have undergone an amniocentesis to prove the condition and would then have terminated her pregnancy. According to the trust, there was a risk of 1 in 1,000 as at 13 May and 3 June that the child was suffering from a chromosomal abnormality, whereas the evidence of the mother's expert was that such risk stood at one to three per cent. The mother sought an anonymity order pursuant to ECHR art.8, submitting that there was a risk that, if the child were identified, there was a risk that professionals involved in her treatment might not care for her properly, and that there were sensitivities if the child ever became capable of knowing that was being said about her parents' attitude to her birth. 19

20 Held: Claim dismissed. (1) There was no basis for making an order for anonymity or reporting restrictions based on the possibility that members of the medical profession might treat the child less well because her mother had brought proceedings. Such a concern was entirely speculative and would involve a deliberate and flagrant breach of professional duties on the part of the healthcare professionals. There was no basis for inferring that that would happen. To allow an anonymity order on that ground would undermine public confidence in the court process. However, in the particular circumstances of the case, and having regard to the particular disabilities suffered by the child, it was appropriate to grant an order anonymising the parents and the child. There was evidence that others might confront the mother and that the child reacted badly to confrontation (see paras of judgment). (2) There was no evidence of the existence of a material risk to which the mother should have been alerted that the child was suffering from a chromosomal abnormality. The trust's evidence was to be preferred, since very few foetuses with chromosomal abnormality carried to term; the tests that had been carried out had excluded the risk of the type of abnormality in issue to background level; and the ultrasound scans had not detected the kind of structural abnormalities that would normally be present in a foetus with a chromosomal abnormality. On that basis, any risk was theoretical or negligible and the medical staff had been entitled to conclude that placental insufficiency was the likeliest cause of the reduction in growth. There was no authority for the proposition that medical practitioners had to warn about risks which were theoretical and not material, Pearce v United Bristol Healthcare NHS Trust [1999] E.C.C. 167 and Wyatt v Curtis [2003] EWCA Civ 1779 followed. Moreover, the importance of patient autonomy was affirmed in Montgomery v Lanarkshire Health Board [2015] UKSC 11, [2015] A.C The test of materiality was determined in that case as being whether a reasonable person in the patient's position would be likely to attach significance to the risk, or whether the doctor should reasonably be aware that the particular patient would be likely to attach significance to it. The materiality of a risk could not be reduced to percentages, since the significance of a given risk was likely to reflect a variety of other factors such as the nature and effect of the risk and any alternatives available, Montgomery followed (paras 21-22, 84, 87, 90-91). (3) On the evidence, the mother would not have opted for an amniocentesis if she had been told about the negligible risk that the child might have a chromosomal abnormality because the risks of having a disabled baby would have been greater from amniocentesis than from continuing with the pregnancy. Even if she had had such a test and the abnormality had been detected, in the light of her reaction when told about the risks of imminent delivery on 13 May, she would not have terminated the pregnancy (paras ). 20