The High Court has dismissed a claim for damages of £2.5m against a firm of solicitors for breaches of duties relating to a property transaction in McDonnell v DASS Legal Solutions (MK) Law Ltd (t/a DLS Law) [2022] EWHC 991 (Admin) and has reviewed the law on solicitors’ retainers.
The claimant alleged that the defendant firm failed to protect him against the loss of opportunity to benefit from a contract to buy land – a scrap and storage yard – in Aylesbury, Buckinghamshire. The land was to be acquired by Arc Holdings and Investments Ltd, in which the claimant asserted a 70% beneficial interest, although the shares were registered to an associate. The sale fell through when the associate agreed for the land to be transferred to a third party at what the claimant argued was a significant undervalue. He claimed that he had instructed the defendant to draw up a deed of trust to protect his interest, which it failed to do; nor did it advise him on how to protect his beneficial interest.
It was not disputed that there had been previous and were ongoing relationships between the parties, nor that there were a series of signed client care letters where the claimant had chosen to be a client. However, the defendant denied that, at the relevant time, the claimant was its client, that any express instruction was given or that there was any suggestion that the claimant’s interests were other than coterminous with those of Arc, with whom there was a signed letter of engagement. It also denied any request or duty to protect the claimant’s personal interests.
Where a client provides an instruction to a solicitor, an express retainer results, whether or not the instruction is reduced to writing: see Jackson and Powell on Professional Liability, 8th edition, para 11-006. An implied retainer can arise through conduct where the parties act as if the relationship of solicitor and client exists, but there are clear principles to be applied:
- The test for implication is necessity. Is there conduct by the parties which is only consistent with the firm being retained? Caliendo v Mishcon de Reya [2016] EWCH 150;
- Choosing not to enter an express retainer indicates an implied retainer is unlikely. In such circumstances the court should be slow to find such a contract by conduct;
- An objective consideration of all the circumstances is necessary to ascertain whether an intention to enter into a contractual relationship ought fairly and properly to be imputed to the parties;
- An implied retainer will not be imposed for convenience.
The court found the claimant to be an astute, intelligent and experienced businessman who often preferred to operate “off-book”, through a nominee, remaining undetectable to the casual observer. He had directed that Arc would be the defendant’s client in relation to the land purchase and that instructions should be taken from his associate. He had chosen not to be a client so there was no implied retainer. Even if there had been, the defendant would not have been in breach because the claimant, at all times, knew precisely what he was doing.
Louise Clark is a property law consultant and mediator
