The recent decision in the High Court case of Miller v Irwin Mitchell (2022) EWHC 2252 (Ch) has provided a helpful guide to the often complex question of when a duty of care either in contract or tort arises – a question that often arises in professional negligence claims against solicitors.
As in all cases the decision turns on the key facts of the case which are worth considering, particularly since the initial contact (and the point at which the Claimant alleged a contractual relationship was formed) was as a result of the Claimant responding to an advertisement made by the Defendant firm – a not uncommon occurrence.
In brief, the Claimant and her husband booked an all inclusive holiday in Turkey through an online travel agent called Lowcost. During the trip, on 13 May 2014, the Claimant fell down some stairs and broke her leg badly. She had to have immediate hospital treatment and then returned to the UK for further treatment. The evidence shows that on 15 May 2014, the Claimant and her husband informed the hotel and a representative from LTS (an entity acting as the intermediary between the hotel and Lowcost) was made aware of the accident and notified it to Lowcost.
Whilst in hospital in the UK, the Claimant saw a television advertisement for the Defendant's legal helpline which she called on 19 May 2014.
She was asked some initial questions and then referred to the Defendant's Travel Legal Group who made further contact by letter and voicemail on 20 May 2014, requesting a number of documents including insurance documents and complaint forms before it could decide whether it could accept the case. The Defendant chased the documents on a number of occasions and, whilst it had occasional discussions with the Claimant's son-in-law, the relevant documents were not provided. The Defendant closed its file in February 2015 having not received the papers. It opened a new file in April 2015 when some of the requested papers were provided but the position remained unclear. Unfortunately, the Claimant's leg eventually had to be amputated in November 2015 at which time the Defendant transferred the matter to the Defendant's multi-track team.
On 25 January 2016, the Claimant was sent a CFA and the Defendant confirmed that it was ready to proceed to bring a claim against Lowcost for the personal injury. Unfortunately, although, on 22 February 2016, a letter of claim was finally sent to Lowcost who forwarded to its Insurers, HCC Insurance PLC, Insurers then rejected the claim for late notification in July 2016 by which time Lowcost had gone into administration. In March 2017, the Defendant advised the Claimant that there was no viable source of compensation for the claim.
Left with no ability to seek a remedy from Lowcost, the Claimant turned her focus on the Defendant firm. She alleged that it breached its duty by failing to advise her to notify Lowcost of her claim/ by failing to notify Lowcost direct. She argued that, had they done so, she would have notified Lowcost or instructed the Defendant to do so which would have led to a far earlier notification to HCC who would not then have been able to avoid cover.
The Defendant rejected the argument that it owed any duty of care to the Claimant until 25 January 2016 when it entered into a retainer with her and that in any event it could not have reasonably provided any advice prior to receiving documents in April 2015. It further raised issues on causation and on insurance cover.
The Judgment and analysis of duty
The matter came before the court by way of a trial of preliminary issues focussing primarily on the question of if and when a duty of care was owed either in contract or in tort.
The Judge carried out a very detailed analysis of the case law on the question of how a duty of care is established.
Perhaps the easiest point to reject was the suggestion that the television advert was an offer to provide legal services, accepted at the point when a customer made contact and further when the Defendant, at the end of the call, did not decline to act. The Judge found that the advert was no more than an invitation to treat and that the initial discussions were always intended to be exploratory in nature with no advice being provided and no retainer being entered into.
The Claimant further argued that a retainer was unarguably entered into when the CFA was created in January 2016 and such agreement was retrospective – again, an easy point for the Judge to dismiss given that there was nothing in the CFA to this effect and indeed which would have imposed a totally unrealistic situation requiring the Defendant to take steps which it had not in fact taken because there had been no retainer.
The Claimant suggested that if there was no express retainer then one could be implied. Whilst of course case law supports a contention that the existence of a retainer may be inferred from the acts of the parties (Dean v Allin & Watts  PNLR 921), 'such a retainer will only arise where on an objective consideration of all the circumstances an intention to enter into such a contractual relationship ought fairly and properly to be imputed to the parties'. The test was further summarised in Caliendo v Mishcon de Reya  EWHC 150, as to whether there was conduct by the parties which was consistent only with the solicitors being retained as solicitors for the claimants?
The Judge rejected the contention that there was evidence to support such a suggestion – whilst a file was opened (and closed) and whilst time was recorded, this was done solely for the solicitors' own internal purposes. There was no intent that she would be liable for fees at that stage – rather just that she might become liable in the future. The Defendant indicated that it needed significantly more information before it could decide whether to accept her case – the question remained an open one. The Defendant wrote to her several times chasing, and finally receiving some documentation, and thereafter highlighting that it had taken no action to establish a limitation period or to protect her right to take any legal action. The Judge found the Defendant's conduct to be consistent with seeking information with a view to deciding whether to enter into a retainer. Clearly in those circumstances no implied retainer arose.
It was accepted by the Defendant that it entered into an implied retainer on 25 January 2016.
The final question as to duty was whether the Defendant had entered into a tortious duty of care prior to 25 January 2016. The test applied by the Judge (as per Hedley Byrne v Heller  AC 465 and as considered in P&P Property Ltd v Owen White & Catlin LLP  3WLR 1244) was the question of whether there had been an assumption of responsibility, taking into account the proximity between the parties and balancing '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'. The Claimant relied on a number of specific facts to try to support its contention that the relevant relationship was in place – again commenting on the fact that she had been given a file reference with a supervising partner, was referred to internally as a client, the Defendant had obtained counsel's advice, updated the Claimant and logged fees as WIP. The Judge had already dismissed the relevance of the internal arrangements of the Defendant to the question of a duty and, whilst some limited high level and generic advice was given at the early stage during the initial helpline call, that did not mean that the Defendant had assumed a responsibility at that stage to give wider advice or could be found to be at fault for not giving such advice. Whilst the Claimant could potentially rely on any actual advice given, she could not argue that a duty was imposed to give wider advice in the circumstances of the case.
Other issues that arose
Whilst finding that there was no duty, the Judge did go on to consider some other points raised by the Claimant which may be of wider relevance:
- There was no duty to advise a client to ensure that it provided a warning to a potential defendant to notify its insurers until a retainer or similar duty was in place (and noted that the Pre-action Protocol for personal injury claims in 2021 recommends that an enquiry about insurance is made when the letter of claim is sent – as was the case here).
- Similarly, there was no duty to advise the Claimant to take steps to notify Lowcost or advise the Claimant to notify Lowcost until a duty of care was owed and at the point when the letter of claim was sent.
- There was a 100% chance that HCC would not have rejected the claim had they been notified in May 2014 but a 0% chance of cover being provided had HCC not been notified until April 2015 (when the Claimant eventually provided some documents to the Defendant) due to the likely prejudice caused to insurers in respect of investigating the accident.
- Any claim against Insurers direct (on the basis of Lowcost's administration and the wording of the policy) would fall to be dealt with under the Third Party (Rights Against Insurers) Act 1930 as the 2010 Act did not come into force until 1 August 2016. Since the wording had required that Lowcost pay the relevant excess of £553,234 before insurers were liable, it was clear that, due to its financial difficulties, it was never in a position to make any payment.
It is clear from this case that care needs to be taken when speaking to prospective clients and during the process of seeking to gain sufficient information to decide whether to take on their business, to ensure that no implied contractual or common law duty of care occurs before a formal retainer is put in place. A solicitor is vulnerable at that stage because it rarely has all the relevant information that it might need to ensure that it gives thorough advice. It is worth providing regular confirmation to the prospective client that it is not acting on the client's behalf and that no duty of care is owed until the retainer is confirmed.
From a professional indemnity perspective, this case provides a useful analysis of the circumstances and case law in respect of the varying duties of care and the requirements needed to satisfy the imposition of such a duty. It requires more than a claimant simply believing that the professional is acting for him or her because an implied retainer is subject to an objective test as to what can reasonably be implied from the circumstances and a tortious duty requires an assumption of responsibility and foreseeability that the client will rely on the professional – difficult to demonstrate when the professional is regularly indicating that it had not yet taken any steps whilst awaiting information to make such a key decision as to whether to act.