In Ashraf v Lester Dominic Solicitors & Ors [2023] EWCA Civ 4 (13 January 2023), the Court of Appeal of England and Wales – on a successful appeal by a plaintiff executor from a first instance order striking out the plaintiff’s proceeding – concluded, on the facts, that it was arguable a duty of care was owed to the testator mortgagor, Mr Ul Haq, by the solicitor for the outgoing mortgagee of land. The solicitor was a Mr Kilvert, who was a consultant to a firm of solicitors, Rees Page, one of the defendants. Following earlier general conduct acting upon his firm’s retainer with the mortgagee, the critical conduct consisted in Mr Kilvert completing a Land Registry “AP1” form with information which enabled the mortgaged land to be transferred, albeit (in the circumstances) without the full mortgage debt being discharged. The facts pertaining to the accuracy of the information was contentious and a matter for trial (there being no suggestion of professional misconduct on Mr Kilvert’s part), but the application below and on appeal was dealt with (conventionally) on the assumption of the facts being proved at trial.
Nugee LJ – with whom Arnold LJ and Sir Christopher Floyd agreed – wrote:
53. It is well established that the general rule is that a solicitor acting on behalf of his client owes a duty of care only to his client. A convenient statement to this effect can be found in White v Jones [1995] 2 AC 207 at 256B per Lord Goff. As he there points out, it has accordingly been held that in normal conveyancing transactions a solicitor acting for the seller does not generally owe a duty of care to the buyer (Gran Gelato Ltd v Richcliff Group Ltd [1992] Ch 560 (“Gran Gelato”) per Sir Donald Nicholls V-C); and that a solicitor acting for a party in adversarial litigation does not as a general rule owe a duty of care to his opponent (Al-Kandari v J R Brown & Co [1988] QB 665 (“Al-Kandari”) at 672 per Lord Donaldson MR). A more recent statement to very similar effect can be found in the judgment of Lord Wilson JSC in NRAM Ltd v Steel [2018] UKSC 13 (“NRAM”) at [25], referring to Ross v Caunters [1980] Ch 297 at 322 per Megarry V-C for the proposition that a solicitor generally owes no duty to the opposite party, and to Jain v Trent Strategic Health Authority [2009] AC 853 for the proposition that a litigant does not owe a general duty of care to his opponent. (NRAM was a Scottish appeal but it is not suggested that there is any relevant difference between the law of Scotland and that of England and Wales).
54. None of this is surprising. Where a solicitor is acting for a client, there will almost always be a contract of retainer under which the solicitor agrees to act for the client in pursuit of some end for the client, whether it be non-contentious business such as conveyancing or making a will, or contentious business such as litigation. Like anyone else providing a professional service, the solicitor prima facie impliedly agrees to carry out that service with reasonable care and skill. (This implication is now, and has for a long time been, statutory: see s. 12 of the Supply of Goods and Services Act 1982 (“there is an implied term that the supplier will carry out the service with reasonable care and skill”) and s. 49 of the Consumer Rights Act 2015 for consumer contracts (“… treated as including a term that the trader must perform the service with reasonable care and skill”). Although a solicitor generally owes his client a concurrent liability in tort, it therefore remains the case that the source of the duty of care owed by a solicitor to a client is the contract of retainer, and as the statutory formulations show, the core content of the duty of care is to carry out the service he has agreed to carry out with skill and care. Indeed I find it helpful to regard the core content of the duty of care owed to a client as a duty of competence: a solicitor who has agreed to do something for a client has to attain a minimum level of competence in doing what he has agreed to do. I should make it clear that I am not seeking to define the outer limits of a solicitor’s duty to his client: there may be cases where his obligation to promote and safeguard his client’s interests (cf Ross v Caunters at 322A per Megarry V-C: “a solicitor’s duty to his client is to do for him all he properly can”) requires him to do things that he has not been specifically instructed to do. But the core duty owed by a solicitor to his client is to carry out the services he has agreed to carry out with reasonable care and skill, that is reasonable competence.
55. Seen in this light it is obvious why in general the solicitor owes no similar duty to those who are not his clients. He does not owe them any obligation to perform his services with competence for the simple reason that he has not agreed to provide any service to them at all. It is sometimes said that one of the reasons why a solicitor does not owe duties to the other party to a conveyancing transaction, or the other party to litigation, is because their interests diverge from those of his client. This may very often be the case, and is a good illustration of the practical difficulties that can arise if such a duty is held to be owed, but I do not myself think this is the main reason why no such duty is owed. In my view the main reason is because a solicitor acting for a seller is not providing a service to the buyer, and this is so even if it is in the buyer’s interests as much as the seller’s for the transaction to be completed competently. Equally a solicitor acting for a party in litigation has not agreed to provide a service to any other party in the litigation (and this includes not only those on the other side but also those whose interests are aligned with his client but for whom he does not act). In each case the solicitor has not agreed to act for other parties, and has not agreed to provide a service to them, and it follows that he owes them no obligation to perform his services with care and skill.
56. But it is recognised that there are special cases which are exceptions to the general rule. They seem to me to fall into a number of different groups, and I think it is helpful to keep them distinct. One group of cases is where the very purpose of the solicitor’s retainer by his client A is to confer a benefit on a particular third party B, the classic example being where a testator engages a solicitor to make a will in favour of a beneficiary. Here the solicitor by agreeing to act for A is agreeing to provide a service for the benefit of B, and there seems to me little conceptual difficulty in the conclusion that the solicitor owes a duty not only to the client A who retains him to provide that service but also to the intended beneficiary B for whose benefit he has agreed to provide the service. That that is indeed the law was finally established by the decision of the House of Lords in White v Jones (approving the decision of Megarry V-C in Ross v Caunters), although the speeches in that case, which was only decided by a majority of three to two, show that even this modest extension of the law was regarded as far from straightforward. This type of case plainly has no relevance here: the Bank did not on any view engage Mr Kilvert to confer a benefit on Mr Ul Haq.
57. A second group of cases is where the solicitor for one party makes representations to the other party on which the other party relies. Here the general principle that no duty of care is owed usually applies. That was decided by Sir Donald Nicholls V-C in Gran Gelato in relation to ordinary conveyancing transactions, and the whole question was re-examined more recently by the Supreme Court in NRAM. Lord Wilson identified the general principle at [25], considered six particular cases, including Gran Gelato, at [26]-[31], and concluded at [32] that they demonstrated that a solicitor will not assume responsibility towards the opposing party unless it was reasonable for the latter to rely on what the solicitor said, and reasonably foreseeable by the solicitor that he would do so. This will not normally be the case as such reliance by an opposing party is “presumptively inappropriate”. In NRAM itself the solicitor for a borrower who was selling part of a charged property and intending to use the proceeds to redeem a part of the loan secured on it sent an e-mail to the lender, who was unrepresented, saying (quite inaccurately) that the whole loan was being discharged. The Supreme Court held that no duty was owed.
58. But Lord Wilson recognised that there were cases where it was reasonable and foreseeable that representations would be relied on by the other party. One example was Allied Finance and Investments Ltd & Haddow & Co [1983] NZLR 22. Here the solicitor for a borrower certified to the lender that an instrument of security over the borrower’s yacht was binding on him. It was the giving of the certificate that made it foreseeable that the lender would be likely to rely on it. To similar effect are Connell v Odlum [1993] 2 NZLR 257 where a solicitor certified that he had explained a pre-nuptial agreement to an intending wife, and it was held to be highly arguable that in giving the certificate the solicitor owed a duty of care to her future husband; and Dean v Allin & Watts [2001] 2 Ll Rep 249 where solicitors acting for borrowers were held to owe a duty of care to the lender in relation to third party security, where the solicitors knew or should have known that the lender was relying on them in that regard. (Dean v Allin is a bit different as it was not a representation case, but it was one of reliance: see per Robert Walker LJ at [69]). Again I do not think that this group of cases has any relevance to the present case. Mr Kilvert did not give any certificates, or make any other representations, to Mr Ul Haq on which Mr Ul Haq relied, nor is this pleaded as a reliance case.
59. A third type of case is exemplified by another of Lord Wilson’s six cases, namely Al-Kandari. Here in litigation between wife and husband a consent order was agreed under which the husband surrendered his passport (which also included the children on it) to his solicitors. They agreed that their London agents could take it to the Kuwaiti embassy to have the children’s names removed, where the husband succeeded in deceiving the embassy into letting it into his possession. This Court, upholding French J although for slightly different reasons, held that the husband’s solicitors were in breach of a duty of care to the wife. On the question of whether a duty of care was owed, Lord Donaldson MR said this (at 672D):
“In voluntarily agreeing to hold the passport to the order of the court, the solicitors had stepped outside their role as solicitors for their client and accepted responsibilities towards both their client and Mrs Al-Kandari and the children.”
60. Bingham LJ gave a concurring judgment in which he also referred to the solicitors stepping aside from their role as solicitor for one party, as follows (at 675H to 676D):
“Ordinarily … in contested civil litigation a solicitor’s proper concern is to do what is best for his client without regard to the interests of his opponent.
It may nevertheless happen, even in the course of contested civil litigation, that a solicitor for a limited purpose steps aside from his role as solicitor and agent of one party and assumes a different role, either independent of both parties or as agent of both. The most common example is where he is deputed to hold a fund pending a decision on its ownership or application. The solicitor is selected for such a role, not because he is one party’s solicitor, but despite that fact; he is selected because the parties know they can rely on him as a solicitor to act with probity and in accordance with the terms of the trust he has undertaken.
… It was not necessary for the plaintiff’s protection that it should have been the defendants who held the passport. The court or a bank or an entirely independent firm of solicitors could have done it. But the plaintiff and her advisers were content that the defendants should hold the passport because they were confident that the passport would be as safe with them as in any other independent hands.
In so holding the passport the defendants were not acting as solicitors and agents of Mr Al-Kandari, their client, but as independent custodians subject to the directions of the court and the joint directions of the parties. I have no doubt that in this situation the defendants owed the plaintiff a duty of care, since the purpose of holding the passport at all was to protect her lawful rights.”
61. The principle that solicitors can owe a duty of care when they have stepped outside their normal role (which I will call the Al-Kandari principle) was accepted by Lord Wilson in NRAM at [32]. There is a question in the present case whether it applies to the filling in and lodging of the AP1 form by Mr Kilvert on 21 June 2011. That is a point I will come back to below. But up until that date I do not see that the Al-Kandari principle has any arguable application to the present case. Mr Kilvert did nothing between being first instructed and 21 June 2011 which could arguably be regarded as stepping outside his role as solicitor for the Bank, and taking on a role as acting for all parties or as acting also for Mr Ul Haq.
62. It can be seen that the circumstances that generate the duty of care in these three types of case (instructions to solicitors by A to confer a benefit on B, representations or actions by solicitors reasonably and foreseeably relied on by other parties, and solicitors stepping outside their role) are all rather different. Beyond these three types of case there is scant authority for solicitors owing duties of care to those that are not their clients.
63. That brings me to P&P Property Ltd v Owen, White and Catlin LLP [2018] ESCA Civ 1082, where appeals in two unrelated cases were heard together. In both cases solicitors had innocently acted for a fraudster who posed as the owner of a registered property and instructed the solicitors to act for him in a sale of the property to a genuine purchaser. The purchaser in each case paid the purchase money on completion, but the fraud was discovered before registration of title and they acquired no interest in the property. In each case the defrauded purchaser sought to make the solicitors liable for, among other things, breach of a duty of care owed to them. The suggested duty was a duty to take reasonable care to carry out anti-money laundering (AML) checks to verify their client’s identity. Patten LJ (with whom Floyd and Gloster LJJ agreed) held that no such duty was owed.
64. At [72] Patten LJ pointed out that the claims in negligence were not based on misrepresentations. At [74] he said that the imposition of liability in negligence towards a third party who is not the solicitor’s client clearly requires something more than it being foreseeable that loss will be caused to the third party by a lack of care in carrying out the relevant task. Nor is proximity sufficient. The incremental approach approved in Caparo Industries plc v Dickman [1990] 2 AC 605 required all these and any other relevant factors to be taken into account, including any relevant policy considerations. At [75] he said that the Supreme Court in NRAM had recently affirmed the assumption of responsibility as the foundation of liability in negligence in such cases, continuing at [76] as follows:
“As Lord Wilson JSC explains in his judgment, the requirement that there should be an assumption of responsibility is to some extent a legal construct in the sense that in many cases the defendant solicitor or other professional will be treated as having assumed responsibility to the third party for his actions by virtue of the proximity between them and the obvious effect which any failure on his part would have on the third party. There will rarely be an actual, conscious and voluntary assumption of responsibility not least because the solicitor or other professional will have a client to whom he is contractually bound. But, on the basis that the court is deciding whether to treat the defendant as having assumed legal responsibility to the third party, non-client, for his actions, it will be necessary to balance the foreseeability that the third party will rely on the professional to perform their task in a competent manner against any other factors which would make such an imposition of liability unreasonable or unfair.”
65. He then proceeded to consider the factors in the cases under appeal, namely: there was no actual assumption of responsibility [77]; the AML requirements were not imposed for the benefit of any particular class of persons, such as the purchasers, but for the benefit of society at large, the principal purpose being to deter money laundering and terrorism rather than to combat identity fraud [78]; unlike cases such as White v Jones and Dean v Allin where the instructions the solicitors received were intended to benefit both their clients and the third party, in the present cases the vendors and purchasers were very much at arm’s length and the AML checks were carried out to satisfy the regulations and not as part of a transaction designed to benefit the purchasers [79]-[80]; the solicitors could have been asked for undertakings or assurances, but were not [81]; it was not objectively reasonable to assume that the AML checks would be complete and the solicitors legally accountable to the purchasers [81]; and Parliament had not intended breach of the regulations to confer a right of action on the purchasers [81]. Taking all these factors into account, it would not be fair and reasonable to treat the solicitors as having assumed responsibility to the purchasers for the adequacy of the due diligence performed in relation to their client’s identity [82].
(emphasis added)
It is submitted what is canvassed in Ashraf mirrors Australian law.
As to the first category of case referred to by Nugee LJ, the seminal decision is that of the High Court of Australia in Hill v Van Erp (1997) 188 CLR 159. As to qualification of that decision – turning on the principal obligation owed by the solicitor to the testator, despite a posited secondary obligation owed to the beneficiary – see Queensland Art Gallery v Henderson Trout [2000] QCA 93, Howe v Fischer [2014] NSWCA 286 and Badenach v Calvert (2016) 257 CLR 440. As to complications arising from a testator’s incapacity, see McFee v Reilly [2018] NSWCA 322.
The other categories adverted to in Ashraf are canvassed at length – in respect of both non-contentious business and litigation – in Abadee & Ors “Professional Liability in Australia” (Fourth Edition, 2023, Thomson Reuters) at [3.625] and [3.630]. Those learned authors opine, also, at [4.190], that a barrister may owe a duty of care to a non-client in circumstances where there is “a coincidence of interest between client and a third party”.
