The plaintiffs initially sued Clifford, a building company, in contract and tort, seeking damages arising from defective building work in the erection of semi-detached dwelling houses on land they had acquired from Clifford. Both parties retained solicitors to act for them. Clifford instructed its solicitors to propose settlement of the proceedings to the plaintiffs. It suggested that in lieu of paying damages, Clifford would purchase the defective dwellings from the plaintiffs. Negotiations to achieve this end took place between the solicitors. One of the matters being negotiated was the manner in which the price at which Clifford would purchase the properties from the plaintiffs should be determined. A suggested solution was that agreement be reached on a valuer. Prior to agreement being reached for settlement of the proceedings, Clifford advised an employee of the firm of solicitors retained by it that it would not agree to the nomination of the particular valuer who had been proposed by the plaintiffs. That instruction was not received by the principal in the firm who was negotiating on behalf of Clifford prior to agreement being reached. Clifford’s solicitor agreed with the plaintiff’s solicitor that the proceedings be resolved on the basis that the dwellings would be acquired by Clifford at a price determined by the valuer who Clifford had instructed was not acceptable to it.
In a suit brought by the plaintiffs for specific performance of the agreement evidenced by the exchange of letters between solicitors in the original proceedings, Clifford defended the proceedings on the basis that no agreement had been entered into by it, as its solicitors had no authority to make that agreement on its behalf. Clifford was unsuccessful in its defence of the specific performance suit, notwithstanding a finding that its solicitors did not have express authority to agree in the terms which they did.
Held: A lawyer may have ostensible authority to enter into a contract that compromises an action so long as the contract does not contain terms which are ‘collateral to the action’. He said: ‘The law thus became well established that the solicitor or counsel retained in an action has an implied authority as between himself and his client to compromise the suit without reference to the client, provided that the compromise does not involve matter ‘collateral to the action’; and ostensible authority, as between himself and the opposing litigant, to compromise the suit without actual proof of authority, subject to the same limitation; and that a compromise does not involve ‘collateral matter’ merely because it contains terms which the Court could not have ordered by way of judgment in the action . .’
After considering the implied authority as between the legal advocate and his or her client, he continued: ‘It follows in my view that a solicitor (or counsel) may in a particular case have ostensible authority vis-?a-vis the opposing litigant where he has no implied authority vis-?a-vis his client. I see no objection to that. All that the opposing litigant need ask himself when testing the ostensible authority of the solicitor or counsel is the question whether the compromise contains matter ‘collateral to the suit’. The magnitude of the compromise, or the burden which its terms impose on the other party, is irrelevant.’ He set out the justification for the principle: ‘I think it would be regrettable if this Court were to place too restrictive a limitation on the ostensible authority of solicitors to bind their clients to a compromise . . So many compromises are made in court or in counsel’s chambers, in the presence of a solicitor but not the client. This is almost inevitable where a corporation is involved. It is highly undesirable that the Court should place any unnecessary impediments in the way of that convenient procedure. A party on one side of the record and his solicitor ought usually to be able to rely without question on the existence of the authority of the solicitor on the other side of the record, without demanding that the seal of the corporation be affixed; or that a director should sign who can show that the articles confer the requisite power upon him; or that the solicitor’s correspondence with his client be produced to prove the authority of the solicitor.’
Judges:
Brightman LJ
Citations:
[1982] Ch 374
Jurisdiction:
England and Wales
Cited by:
Cited – Newell, Regina v CACD 30-Mar-2012
The appellant challenged the introduction in evidence of a previous inconsistent statement lodged on his behalf by counsel on a Plea and Case Management Form at a directions hearing.
Held: The appeal was allowed. An advocate plainly has . .
Lists of cited by and citing cases may be incomplete.
Legal Professions
Updated: 08 May 2022; Ref: scu.452401
