The solicitor defendant knew that the company was a family company effectively run by Mr Witchell from whom they received their instructions. The question raised was as to the duty of the solicitor to company and director.
Held: There is no necessary legal impediment to a professional adviser owing concurrent duties both to a company and to its members or to its directors. The solicitor owed a duty to exercise all reasonable care and skill in connection with his client’s business, the precise nature of his duty would depend inter alia upon the experience of his client and therefore an inexperienced client was entitled to expect a solicitor to take this into consideration in giving advice. The defendant was negligent in omitting to remind the plaintiffs of the need to initiate an application to the County Court in order to obtain the protection of the Landlord and Tenant Act 1954.
Staughton J said: ‘In my judgment, in the circumstances of this case, Mr Witchell as well as the company was the client of Mr Mason. That seems to me to reflect the reality of the situation. Mr Mason knew that Mr Witchell . . was the company. He probably knew that Mr Witchell derived his livelihood and some profit from the company, and was vitally concerned in its well-being. Mr Witchell had first been his personal friend, and had then come to him in connection with other matters for legal advice, both as the representative of the company and in a personal capacity. When Mr Witchell sought his advice on . . [a matter concerning the company] Mr Mason owed a contractual duty of care both to the company and to Mr Witchell.’
Judges:
Staughton J
Citations:
[1983] BCLC 117, [1983] QB 117
Cited by:
Cited – Johnson v Gore Wood and Co (a Firm) CA 12-Nov-1998
The claimant had previously issued a claim against the defendant solicitors through his company. He now sought to pursue a claim in his own name. It was resisted as an abuse of process, and on the basis that no personal duty of care was owed to the . .
Cited – Ratiu, Karmel, Regent House Properties Ltd v Conway CA 22-Nov-2005
The claimant sought damages for defamation. The defendant through their company had accused him acting in such a way as to allow a conflict of interest to arise. They said that he had been invited to act on a proposed purchase but had used the . .
Approved – Johnson v Gore Wood and Co HL 14-Dec-2000
Shareholder May Sue for Additional Personal Losses
A company brought a claim of negligence against its solicitors, and, after that claim was settled, the company’s owner brought a separate claim in respect of the same subject-matter.
Held: It need not be an abuse of the court for a shareholder . .
Cited – Pegasus Management Holdings Sca and Another v Ernst and Young (A Firm) and Another ChD 11-Nov-2008
The claimants alleged professional negligence in advice given by the defendant on a share purchase, saying that it should have been structured to reduce Capital Gains Tax. The defendants denied negligence and said the claim was statute barred.
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant, Legal Professions, Professional Negligence
Updated: 08 May 2022; Ref: scu.183150