England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL

		Royal Courts of Justice Strand London WC2 Friday 21st June 2002

1. LORD JUSTICE PILL: This is an application to appeal against a judgment of Mr Justice Garland given on 21st December 2001 whereby judgment was given for the defendants, the Office for the Supervision of Solicitors and Mrs Portes, against the claimant, Mr Sam Collins. In effect, summary judgment was given.
2. In order to appeal successfully the applicant Mr Collins would have to establish that he had a real prospect of succeeding in the action. On this application for permission to appeal he has to establish that it is arguable that a full court would say that there was a real prospect of success in the action.
3. The facts need not be set out in detail. The learned judge has recited them. The applicant became involved in a substantial business venture with two men, a Spaniard and an American, Mr Mendez and Mr Ibanez. A solicitor - Mr Brebner - was acting for him. Things went seriously wrong. Other proceedings were taken, but the applicant also made a complaint to the proposed respondents about the conduct of Mr Brebner as a solicitor. The nature of the complaint is set out in detail in a letter from the solicitors to the applicant, Robert Gore & Co, to the proposed respondents dated 12th May 1989. The case sought to be made is that the respondents owed a private law duty, as well as public law duties, to the applicant and because of the manner in which they dealt with the complaint in the course of 1999 they have been in breach of a private law duty to him. Reliance is placed in particular on the conduct of Mrs Portes who conducted the correspondence on the respondents' behalf. She is a qualified solicitor and holds a responsible position with the respondents.
4. Mr Hamer, on behalf of the applicant, acknowledges, as he has to, the difficulty of establishing a private law duty, in circumstances such as the present, in a regulatory body such as the respondents. His difficulty is evidenced by earlier decisions of the courts, to which I need not refer, and also in a recent decision of the House of Lords in R (Morgan Grenfell & Co Ltd) v The Special Commissioner of Income Tax and Another [2002] 2 WLR 1299. The point arose as to the power and duty of the regulatory body to disclose information. At paragraph 32, Lord Hoffmann referred to Parry-Jones v The Law Society [1969] 1 Ch 1. Lord Hoffmann stated:

"The Law Society were not entitled to use information disclosed by the solicitor for any purpose other than the investigation. Otherwise the confidentiality of the clients had to be maintained."

5. There is plainly a strong public interest in confidentiality in the OSS in the discharge of their important duties to the public. It should not come under a private law duty to individual complainants. They also have the difficult task of deciding on an issue which arose in this case as to the extent to which the solicitor's explanation of his conduct is disclosable to the complainant. The point has particular difficulty when the solicitor is also acting for other parties.
6. The point may arise, as it does in the present case, of litigation in existence or which may be in existence between the complainant to the OSS and those other parties. Mr Hamer relies on the statement of Lord Goff in Spring v Guardian Assurance Plc [1995] 2 AC 296 cited in this court by Lord Justice Rose in Welton v North Cornwall District Council [1997] 1 WLR 570 at 578:

"`It is, I consider, clear from the facts of Hedley Byrne itself that the `special skill' is to be understood in a broad sense, certainly broad enough to embrace special knowledge. Furthermore Lord Morris himself, when speaking of the provision of a statement in the form of information or advice, referred to the defendant's judgment or skill or ability to make careful inquiry, from which it appears that the principle may apply in a case in which the defendant has access to information and fails to exercise due care (and skill, to the extent that this is relevant) in drawing on that source of information for the purposes of communicating it to another.'"

7. Mr Hamer submits that while there is no general private law duty to a complainant a duty may arise upon particular facts. He submits that the conduct of Mrs Portes in the present case crossed the line and a private law duty arose.
8. It is common ground that unhappily Mrs Portes did make mistakes and errors of judgment in the manner in which she dealt with the complaint. The submission of Mr Dutton, on behalf of the proposed respondents, is that neither those mistakes nor any other factor present creates a duty of care in this case. Indeed, he strongly submits that such a duty cannot arise when the OSS are dealing with a complaint.
9. The application has been before the court on a previous occasion when Lord Justice Longmore was sitting with me. I took the view that if the application was to be considered properly, fuller submissions were required on two issues which I saw as critical; those are the assumption of responsibility and the question of causation of damage. Mr Hamer has helpfully provided a further skeleton argument which he has developed in the course of oral submissions today. It appears that those are the two critical issues. I come to what Mr Hamer puts as his "bull" point. It is that in the course of correspondence Mrs Portes was in default in the following respects (paragraph 12 of his skeleton argument):

(i) expressing her own opinions without due care as to Mr Brebner's duty to disclose the information being sought and his duty of confidentiality;

(ii) stating that there were no inconsistencies between Mr Brebner's explanation and the letter sent by Robert Gore & Co; (iii) stating that she "could not possibly forward" Mr Brebner's letter to Mr Collins and that the SCB - the former name of the OSS - have "no power whatsoever" to compel Mr Brebner to reveal the information required or to obtain his file;

(iv) determining the complaint herself without referring it to the Adjudication Committee, by effectively advising Mr Collins to take proceedings in the courts to find out the information.

10. It is submitted that Mrs Portes involved herself and carelessly strayed beyond what was required of her.
11. Mr Dutton makes the important point that one cannot create a duty of care out of acts of negligence. In my judgment, in certain respects that is what the applicant's case seeks to do. That is illustrated in several of the points put in that paragraph of the skeleton argument. I see no basis for concluding or finding it arguable that it arose from mistakes that Mrs Portes made; for example, by failing to report matters to a committee as, under the internal requirements of the OSS, she should probably have done, or by changing her mind as to whether or not certain matters Mr Brebner had disclosed were covered by the principle of confidentiality.
12. The point upon which Mr Hamer concentrated most attention was, however, that there was an obvious inconsistency between what Mr Brebner was telling the Law Society and what he was telling his then client. Mr Brebner was telling the client that the large sum of money paid by the applicant had gone to Mr Mendez; he was telling the Law Society it had gone to Mr Ibanez.
13. It is common ground that deadlock had arisen in the management of affairs for reasons spelt out in the Robert Gore & Co letter. That deadlock had a very considerable effect upon the position of the applicant. The submission is that Mrs Portes was aware of these inconsistencies and did not draw them to the attention of the applicant. Moreover, in at least one letter she went farther than that. On 29th June 1989, by which time she was in possession of a good deal of information, she wrote to Mr Etridge of Anthony Thomas & Co who, although not a solicitor, appeared to conduct correspondence on Mr Collins' behalf at that time with the Law Society:

"I can assure you, however, that on a factual basis, there are no inconsistencies between Mr Brebner's explanation and the letter sent by Messrs Robert Gore & Co."

14. It is submitted that there was at least a duty not to give assurances of that kind unless the assurances were true. The case should be permitted to proceed on that point; if not, on the broader basis for which the applicant has argued.
15. Mr Hamer says that if the material available to the respondents in 1989 had been disclosed there could have been no action against the OSS. The advantage of disclosure to the applicant would have been that with the additional information he would have been in a position sooner and more cheaply to break the deadlock which had occurred in the management of affairs. Mr Hamer further submits that this was not a case to be dealt with by way of striking out. He referes to the decision of this court in Douce v Staffordshire County Council (transcript, 19th April 2002), which was a case in a regulatory context, where Sir Denis Henry underlined the fact that where factual matters are open, the case was not an appropriate one for striking out. As to that, Mr Dutton makes the point that the judge was correct to say that all the relevant matters were known in this case. They emerge from the correspondence which the applicant relies on and the judge did come to - and was entitled to come to - the plain view that the action had no prospect of success.
16. In my judgment the OSS were entitled not to disclose a good deal of the information which came to them. I have already referred to the importance, if they are to perform their duties satisfactorily, that they should be able to deal in confidence with a solicitor about whom a complaint is made and, in doing so, to have appropriate regard to the interests of confidentiality as between the solicitor and other clients. I have expressed surprise that the appropriate code, to which we have been referred, does not spell out in more detail the procedure to be followed when difficulties such as the present do arise. That comment has no bearing at all on whether there is a real prospect of this action being successful.
17. Mr Brebner was entitled to raise the questions upon his conflict of interest in which he found himself and the OSS were entitled to have regard to them. That is not to say that Mr Brebner acted in a manner which was other than the judge found it to be. There is, on what is known, no justification for the assertions of fact which Mr Brebner was making in that correspondence. It is submitted that Mrs Portes knew the importance of the information at issue to the applicant and there should have been a fuller disclosure to him. She was under a duty to disclose on the particular facts of this case. Mr Hamer goes on to submit that the failure to disclose did have serious financial consequences for the applicant. He was challenged to particularise the losses which flowed, or could be argued to flow, from the alleged breach of duty. Mr Hamer was unable to be precise. He made the general submission that this was a matter for trial and that, if the information had been given, the deadlock could have been broken much sooner and a great deal of expense could have been saved. Asked to show how the connection occurred and what losses can be said to result from the alleged breach of duty rather than the conduct of those with whom the applicant was in contact and in association, he had difficulty. That is not surprising in the circumstances and would not, in itself, necessarily disqualify from proceeding.
18. It is significant however that this is not a case where the damage can plainly be said to flow from the breach of duty alleged. For example, the substantial sum of money was paid by the applicant in 1986, that is 3 years before the complaint. Whatever the complaint about the solicitor's conduct as a solicitor and whatever might result from that, the applicant was in very serious difficulties as his litigation has shown, quite apart from any failure of the OSS, to recuperate from his losses and stabilise his position.
19. Mr Dutton has relied upon the fact that in undertaking the investigation the OSS, by Miss Mannix, wrote a letter dated 22nd May 1989 explaining the position (page 234 of the bundle) which it is not necessary to read in full. One sentence provides:

"I would like to make it clear that the Solicitors Complaints Bureau is unable to become involved in any claim for negligence, as it does not have any statutory power to award or obtain any compensation or redress."

20. This was a difficult investigation for the OSS to conduct. As Mr Dutton concedes, in certain respects it was not well conducted and mistakes were made. I do accept however his basic submission that there was no duty of care upon the OSS in the circumstances of this case.
21. There is nothing which takes this case outside the general rule as established in the authorities that a private law duty does not arise in circumstances such as the present. I say that having borne in mind the numerous letters to which Mr Hamer has
22. properly referred in his argument and to the course of events in 1999. I would not exclude the possibility that a situation could arise upon the facts whereby, while there is no general duty of care, matters did occur in the course of the investigation from which it might be argued that the conduct of the OSS towards a complainant was such that a limited duty arose. In my judgment it is not arguable on the present facts that a duty, even a limited duty, of care in private law towards the applicant arose. Considering the general point, the judge stated at page 30 of his judgment:

"In my judgment, when the correspondence is looked as a whole, it is quite impossible to say that the second defendant undertook to give the claimant legal advice or that she did so. In any event, he had his own advisers. At the beginning of the correspondence, Miss Mannix['s] letter set the scene. What followed was a sorry muddle, but it was not advice. It was the second defendant informing the claimant of her view of the nature of the complaint and what the SCB could or could not do about it."

23. Mr Hamer submits that this is a developing branch of the law,a situation may arise in which the OSS are, for the first time, held to be in breach of a duty in a situation like this, and it is appropriate and in the interests of justice that this case be allowed to go forward to a hearing of the claim against the OSS.
24. I disagree with that view. For the reasons given, I have come to the conclusion it is not arguable that a duty of care arose.
25. Moreover the claim for damages, as I have already said, is speculative. It is, in my judgment, extremely speculative for the reasons given.
26. As to damages, the judge set out at pages 32 and 33 his view of each of teh heads of damage as then expressed. I agree with the judge's reasoning. Even if a duty of care were to be established in this case it would be extremely difficult to establish any loss as flowing from any action of Mrs Portes in the course of 1999. I have referred to one of her letters in terms - that is perhaps the strongest one from the applicant's point of view - but the applicant would have extreme difficulty in establishing a link between the contents of that letter and the specific loss which would have to be established if his claim were to succeed. Each of the heads of damage is, in my judgment, a speculative one. The prospects of his obtaining substantial damages are, in my view, remote. For those reasons I would refuse this application.
27. MR JUSTICE COLLINS: I agree. Mr Collins and his advisers suspected that Mr Brebner had wrongly paid £524,000 to Mr Ibanez instead of to Mr Mendez but were unable to obtain from Mr Brebner confirmation that this was so. Complaint was made to the Law Society as a means of trying to obtain that information. But the Law Society could only deal with it on the basis that there had been some misconduct on the part of Mr Brebner. There was alleged to be a conflict of interest - he had acted for Mr Ibanez at the same time as acting for Mr Collins and he had told lies about what had happened to this money. In those circumstances the duty of the Law Society was to appoint an individual - in this case Mrs Portes - who would decide whether the complaint should go forward to an appropriate body. She had to obtain explanations, which she did, from Mr Brebner. She was then faced with the problem that Mr Brebner said that confidentiality applied and she could not pass on the information contained in those letters, and she therefore did not do so. Secondly, it is complained that she received information which made it clear there was a discrepancy between what Mr Brebner had said to Mr Collins' solicitors and what he was telling Mrs Portes, but she wrongly and negligently decided that there was no such discrepancy.
28. All those failures, as it seems to me, were failures, if they are indeed established, which arose in the course of her considering the matter in the way she should have done for the purposes of determining whether a complaint had been properly made out and should go forward to the appropriate committee. I do not myself see how her failures could establish an acceptance of responsibility so that there was a duty of care owed in private law. It is plain from the authorities that unless there is some such assumption of responsibility no such duty of care can be owed because the duty of the Law Society is to investigate the matter and decide on the question of discipline of the solicitor concerned.
29. In those circumstances I entirely agree with my Lord that this application must be refused.
30. So far as the damage point is concerned, I would have been content to rely entirely upon the reasoning of Mr Justice Garland which, in my judgment, is entirely correct on that aspect.
Order: Application refused