Karen Cornwell: To advise or not to advise – that is the question

Karen Cornwell: To advise or not to advise – that is the question

Karen Cornwell

Karen Cornwell analyses a case revolving around the scope of advice solicitors give to their clients.

In the recent case of Ronnie O’Neill Freight Solutions v Macroberts LLP, the burning query for the court was to what extent must a solicitor, when advising a client involved in a contentious situation, tender advice about all potential arguments that may be advanced, i.e. is it negligent not to give advice for arguments which a solicitor thinks could be advanced, but then later fail?

The pursuer, in this case, was involved in the parcels, pallets and freight business. During the course of that business it entered into an agreement with a haulier whereby the pursuer’s customers would place orders directly with the haulier for the uplift, transport and delivery of their pallets.

The haulier agreed to pay commission to the pursuer “for all pallets, business past … for the duration of which the customer shall trade based on the schedules below.” The pursuer and haulier traded for some 3½ years. In April 2020, the haulier emailed the pursuer purporting to terminate the agreement with immediate effect and stating that it intended to continue to trade with customers introduced by the pursuer. The haulier proceeded to contact two of the pursuer’s largest customers.

Naturally, and somewhat understandably, the pursuer sought legal advice. In particular, they sought legal advice from the defender firm of solicitors.

In summary, the advice, by the defender was that the agreement was terminable subject to reasonable notice being given and that rather than litigate immediately, the pursuer ought to pursue a commercial settlement while at the same time, trying to persuade its customers to engage an alternative hauler. After some months of negotiation, the parties settled at £40,000 (£10,000 of which was in relation to unpaid invoices). However, the pursuer was unsuccessful in persuading many of its customers to switch hauliers and ceased trading in 2021.

The pursuer was unhappy with the advice tendered by the defender and considered that the (net) £30,000 settlement was a poor return. In short, they were of the view that the advice was negligent in failing to:

  1. Seek interim remedies from the outset; and
  2. That the agreement was non-terminable.

As such, had non-negligent advice been tendered, there would have been a better outcome. The pursuer valued its loss at circa £232,500.

Liability, causation and quantum were all explored, by the court.

Expert evidence was led on behalf of each party. The solicitors of the defender who had tendered the alleged negligent advice also gave evidence. There was much non contentious evidence, e.g. there was no allegation of lies, for example. Yet there was dispute as to the nature of the client’s instructions and whether they had been adhered to or not, e.g. interdict proceedings, etc. The Judgment by Lord Braid reiterates the evidence, in great detail, which I do not intend reiterating here.

The “gravamen” of the pursuer’s complaint was that the defender had led him down the wrong path in failing to advise him properly as to:

  1. Terminable grounds of the agreement; and
  2. Interim interdict.

In reaching his decision, Lord Braid held as follows:

  1. Breach of duty – there was no rationale for stating that all ordinarily competent solicitors would advise a client about all arguments which were nearly statable;
  2. Causation – it followed that even if certain advice had been given, a failure to give that advice had not resulted in loss, because the defender to raise the same action as was raised which would still have had the same outcome. It was considered that any future court action would have resulted in around an award of the same or equal to the amount settled extra judicially, by the respective parties.
  3. Loss – Given Lord Braid’s views on causation, there was little to add on the issue of loss. He considered that the claim had been settled “extra judicially” for what it was worth. However, for completeness, he considered that valuing the claim on the basis the commission would have been paid for £3.5 years had the agreement not been terminated would have been a claim in the region of £250,000 and the maximum loss of chance claim would have, as a consequence, have been in the region of circa £37,500.

In conclusion, Lord Braid sustained the defender’s first plea in law and granted decree of absolvitor reserving all questions of expenses.

Karen Cornwell is a legal director at Thorntons LLP

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