Plaintiff offering to remortgage share in properties as security for partner’s investment – Plaintiff believing charges security for partner’s liability in investment only – Charges providing security for whole of partnership debt – Whether plaintiff retained defendant solicitor – Whether retainer could be implied – Judgment for plaintiff
The plaintiff and B were partners with a partnership account in the name of M&B and in that name bought two properties in Weymouth, (the Weymouth properties). The properties were charged to the Midland Bank. B was also in a partnership called Richard Biss & Partners which wanted to purchase two other properties in Weymouth, (the Melcombe properties). The plaintiff agreed that B could use the plaintiff’s share of the equity in the Weymouth properties as security to borrow for the purchase and development of the Melcombe properties. On May 18 1987 the plaintiff signed a letter to be given to the Midland Bank in the belief that the costs for the Melcombe properties would be about £40,000, which sum did not exceed B’s share in those properties. The defendant had acted for the plaintiff and B in relation to the leasing of the Weymouth properties and the purchase of other properties. Each time instructions had been given on the plaintiff’s behalf by B, and the defendant had written to the plaintiff via B.
The defendant was instructed by the Midland Bank to act for it in relation to the second mortgage over the Weymouth properties and the defendant was also instructed by B. Following receipt of the bank’s instructions, the defendant wrote to B and enclosed third party legal charge forms. The forms were signed by the plaintiff and the charges were registered. In fact the charges provided security of the Weymouth properties for all the money owing to the bank by Richard Biss & Partners. The plaintiff issued proceedings against the defendant claiming that the defendant had failed in its duty to advise. It was common ground that the plaintiff had signed the charges without any advice, that he had done so in the belief that they had not added to the burden which he thought he had accepted in the letter of May 18 1987, and that if the defendant had been retained by the plaintiff to act on his behalf, he ought to have advised on the effect of the charge. The issue whether or not the defendant had been retained by the plaintiff was heard as a preliminary issue.
Held Judgment was given for the plaintiff.
1. The defendant had not appreciated that there had been a conflict of interest in acting for both M&B, which was offering the security, and Richard Biss & Partners, for whose benefit the security had been offered. Therefore the defendant had been wrong to invite instructions by communicating only with B and not directly with the plaintiff.
2. The defendant, by delivering the third party charges to B for execution, had offered to act on behalf of both and each of them, and by sending the charges back, the plaintiff had accepted that offer. Accordingly, the defendant had been instructed by the plaintiff to act on his behalf.
3. In any event, a retainer could be implied by the parties’ conduct and relationship because the defendant had not suggested that the plaintiff should have sought independent professional advice and had not thought that he would.
Philip Mott QC and Michael Kolanko (instructed by Batten & Co, of Dorchester) appeared for the plaintiff; Richard Walford (instructed by Wansbroughs Willey Hargrave, of Bristol) for the defendant
