English and Welsh Courts - Miscellaneous

IN THE COUNTY COURT sitting at LEEDS
CHANCERY BUSINESS

		The Court House Oxford Row Leeds LS1 3BG
		16/06/2016

Judge Behrens:

1. Introduction

1. This is a professional negligence action against a firm of solicitors. It arises out of a Declaration of Trust which was executed on 9 December 2005 by Ms Turner and Mr Millington. At that time Mr Millington and Ms Turner had been cohabiting at 23 Burns Way, Clifford, Wetherby LS23 6TA ("23 Burns Way") since about 2002. 23 Burns Way had been purchased in Mr Millington's sole name in late 2001. Ms Turner was proposing to invest £20,000 in 23 Burns Way. As a result the ownership of 23 Burns Way was to be transferred into joint names, it was to be re-mortgaged and the Declaration of Trust was to be executed to reflect the beneficial interests.
2. In 2005 Bromet & Sons ("Bromets") was a firm of solicitors practising in Tadcaster. Mr Millington instructed Bromets to deal with the matter on behalf of both himself and Ms Turner. Bromets duly prepared the relevant documents and the transaction completed on 9 December 2005.
3. The Declaration of Trust calculates the value of Mr Millington's equity at £160,486.58 and the value of Ms Turner's equity at £20,000. It contains a declaration that on the sale of 23 Burns Way the net proceeds will be divided as to £160,486.58 for Mr Millington, £20,000 for Ms Turner with any further sums being shared equally between them. Thus Ms Turner would receive half of any increase in value after the date of the transaction.
4. Ms Turner complains that Bromets was negligent. She has two main allegations. First she contends that there was no explanation of the Declaration of Trust before she signed it. She would not have signed it if she had understood its terms. Second she contends that Bromets should have appreciated that there was a significant risk of a conflict of interest between herself and Mr Millington and should have advised her to seek separate advice. If that had happened she would have sought such advice and not have signed the Declaration of Trust.
5. The relationship between Ms Turner and Mr Millington broke down in 2012. Following the breakdown she negotiated a settlement with Mr Millington involving the return of the £20,000 and some other sums reflecting moneys that had been spent by her. She contends that she would have achieved a better settlement if she had not executed the Declaration of Trust.
6. Bromets has raised a number of defences to the claim. First it contends that the terms of the Declaration of Trust were fully explained to Ms Turner (and Mr Millington) at a meeting with Mrs Natkus (a Conveyancer employed by Bromets) on 6 December 2005. Second it contends that both Mrs Natkus and Miss Alden (the Conveyancer employed by Bromets who originally had conduct of the matter but who was ill) formed the view that there was no significant risk of a conflict of interest. Ms Turner has not established that Bromets was negligent in forming that view. If, contrary to the primary position, Bromets is held to be negligent there are a number of issues on both causation and loss. Bromets' primary position is that if Ms Turner had sought advice elsewhere she would have been advised that she had no realistic prospect of a successful claim based on constructive trust and that she ought to sign the Declaration of Trust. It also contends that the actual settlement achieved was as favourable as Ms Turner might have achieved if she had not signed the Declaration of Trust and the transaction had not proceeded.
7. At one time there was a further defence based on limitation. However following a ruling at the beginning of the trial which permitted Ms Turner to plead reliance on s 14A Limitation Act 1980 the defence was not pursued. Accordingly I shall not mention it further.
8. Four witnesses gave oral evidence at the trial. Ms Turner gave evidence on her own behalf. Mr Millington, Miss Alden and Mrs Natkus gave evidence on behalf of Bromets. There were a number of conflicts of evidence between the accounts given by Ms Turner and those given by Mr Millington and Mrs Natkus. It will be necessary to resolve some of those conflicts in the course of this judgment.
9. It will be observed that there are three Defendants other than Bromets named in the claim. Mr Harbottle and Mr Creasey were the two partners of Bromets at the time. They are accordingly properly joined as Defendants. On 15 May 2007 Jackson Heath LLP was incorporated as a limited partnership. Subsequently, on 10 March 2009 it changed its name to Bromets Jackson Heath LLP ("BJH"). It is accordingly clear that BJH can have no responsibility for any negligence that occurred in 2005. In the course of his opening Mr McCue made it clear that no claim was pursued against BJH and it is not necessary to refer to BJH further.
10. Before dealing with the matter in more detail it is right to acknowledge the considerable assistance I received from the detailed skeleton arguments, concise cross-examination and helpful closing submissions I received in this case. They were of considerable assistance in the preparation of this judgment. I am most grateful to Counsel and the solicitors involved for their help.

2. The facts

Background

Mr Millington

11. Mr Millington separated from his former wife in December 1999. He was divorced in 2000. As part of the divorce settlement he had to sell the previous matrimonial home and the office from which he worked. It was common ground that he found the divorce a stressful experience.
12. Mr Millington was the proprietor of 3 chauffeur hire companies – Yorkshire Chauffeur Co, Minster Ltd and Sovereign Chauffeur Ltd. It emerged in evidence that there were 3 cars and that self-employed drivers were used to drive the cars when necessary.

Ms Turner

13. Ms Turner was born in 1961. By 2000 she had been married twice. Between 1980 and 1984 she was married to an RAF officer. They grew apart and she divorced in 1984. In 1990 she married again to a "high flyer" who worked in the money markets in London. Although he was a high earner he incurred a lot of debts. Ms Turner had the unfortunate experience of debt collectors knocking on her door in respect of his debts. They divorced in 1994. Ms Turner received very little from the divorce as the house was in negative equity.
14. Ms Turner returned home to live with her parents in Doncaster. She appears to have been the proprietor of a number of small businesses at various times – Smart Dog Co, Bearability and Poultry Garden. None of these businesses provided substantial income – always below the tax threshold.
15. By 2000 she was employed part time on a self-employed (agency) basis for the NHS in Doncaster. She described her duties as clerical. It was not clear quite how much she was working. She started working 2 days a week but this gradually increased to 5 days a week. She earned about £25 per day when she worked. She was probably working 4 or 5 days a week by 2000.

The relationship and the acquisition of 23 Burns Way

16. Ms Turner and Mr Millington met in April 2000. In paragraphs 5 to 10 of her witness statement Ms Turner describes how the relationship increased and how she supported him emotionally through his divorce. As already noted Mr Millington found the divorce and resulting sale of his former home stressful.
17. In 2001 Mr Millington started to look for a new house. There is a minor dispute between them as to whether he or Ms Turner found 23 Burns Way. It is not necessary to resolve it. Mr Millington accepted that he discussed the acquisition with Ms Turner and that he valued her opinion.
18. It is common ground that in October 2001 Mr Millington purchased 23 Burns Way for £139,500. This was provided as to a deposit of approximately £50,000 which he had received as part of the divorce settlement and a mortgage of £90,000 from Halifax plc ("Halifax"). Mr Millington instructed Bromets to act for him in the transaction. The conveyancing was carried out by Miss Alden. Mr Millington was registered as the sole proprietor. It is common ground that at all times Mr Millington paid the mortgage instalments and all of the outgoings such as utility bills.
19. At the time of the acquisition Ms Turner was still working for the NHS and staying with her parents in Doncaster. She said that she used to stay with Mr Millington at 23 Burns Way at weekends and possibly one night during the week.
20. Sometime, probably in 2002, Ms Turner left the job with the NHS and commenced full time cohabitation with Mr Millington. There was a dispute as to whether she left her job because Mr Millington asked her to or because she was bored with it. I do not need to resolve the dispute. It is common ground that once she moved into 23 Burns Way she helped part time with Mr Millington chauffeur business and also her own small businesses. There was a dispute as to the number of hours she worked for Mr Millington but it was common ground that she was paid about £5,000 per year. She did not contribute to the mortgage or the outgoings of 23 Burns Way but she did contribute to the food and other household expenses. She said she spent all her income on such expenses. Mr Millington said that some of her income was spent on herself.
21. Ms Turner said that she had a ring of commitment to each other. However she agreed that she was never engaged and that there was never any intention that they should get married. They were quite happy as they were.
22. In so far as there were discussions as to ownership the highest Ms Turner put her case was that prior to 2005 Mr Millington described 23 Burns Way as "our home". At no time did he refer to her as an owner. However in re-examination she said that Mr Millington described her as an owner after she had invested the £20,000. When Mr Millington gave evidence he accepted that in conversations he may have described 23 Burns Way as "our home". However he denied a suggestion (in paragraph 21 of Ms Turner's witness statement) that he ever said "It does not matter who pays the mortgage". He made the point that they had both been through divorces and wanted to protect their material assets.
23. It was not in dispute that Ms Turner made some payments towards the household in the period to December 2005. At page 827 in the bundle is a list she has prepared of receipted payments totalling some £11,167.47. The period up to December 2005 comprises the following items:

28/01/2003	Dyson	135.00
07/08/2003	Tile depot	6.27
04/09/2003	Tile depot	269.45
15/07/2003	New Headboard	189.00
01/09/2003	Bathroom En suite	484.20
01/09/2003	Wetherby Builders En Suite	757.00
26/10/2003	B & Q	115.97
04/09/2003	B & Q radiator	133.75
22/10/2003	Allders - bathrm lighting	28.00
19/10/2002	Hardacres gas fire	830.00
	Total	2,948.64

 It will be seen that the total is just less than £3,000. It will also be seen that some of the items appear to be chattels. When she gave evidence Ms Turner stated that she had spent more than the moneys set out in the list. She estimated that she had spent between £5,000 and £6,000. Mr Millington did not accept this. He pointed out that she had provided no details of any additional expenditure despite being requested to do so on a number of occasions.

The investment of £20,000

24. Sometime in the spring of 2005 Ms Turner was offered £20,000 by her parents. Following discussions with Mr Millington there was a proposal that the moneys be invested in 23 Burns Way. There is a dispute whether the suggestion was made by Mr Millington or Ms Turner. I do not need to resolve the dispute.
25. It is common ground that there were discussions between Ms Turner, her parents and Mr Millington though the precise details of what was discussed with her parents was not agreed. It was agreed that Ms Turner's investment would need some form of protection. In cross-examination Ms Turner said that she understood that she would get a share of the house if it went up in value but does not remember being told that she would get half any increase. Mr Millington, on the other hand said that Ms Turner was fully aware that she would be entitled to 50% of any increase in value.

Dealings with Bromets

Initial Conversations

26. On about 11 April 2005 Mr Millington had a conversation with Mr Harbottle about the proposal that Ms Turner invest £20,000 in 23 Burns Way. In the course of the conversation Mr Harbottle suggested a Declaration of Trust. There is no file note on the conveyancing file but Mr Millington made his own file note of the conversation. The typed up version file note reads:

To carry out a transfer of equity into joint names, I require consent from H/fax for Kim to become party to the mortgage. This is known as Transfer of Mortgage Property, which is a form to be sent, best dealt with by solicitor, apparently. Fee for Transfer is £150.

Transfer of Equity >Tenants in common in unequal shares

As to H/fax being the mortgagee.

As to first £20k Kim

As to balance H

Plus a share in any uplift in the value of the house to be shared

27. As already noted Mr Millington discussed the matter both with Ms Turner and her parents who were providing the £20,000. He said that they were in favour of a Declaration of Trust but this was not specifically put to Ms Turner in cross-examination. It was also decided to apply for a new mortgage to UCB Home Loans ("UCB") as the favourable rate charged by Halifax was due to end in December 2005. The amount due under the Halifax mortgage was approximately £90,000. Thus the amount to be borrowed from UCB was £70,100 (£20,000 less).
28. In May 2005 Mr Millington had a brief conversation with Miss Alden, a conveyancer employed by Bromets in which the matter was described in very general terms.

Events up to Meeting on 6 December 2005

29. On about 20 October 2005 Mr Millington instructed Miss Alden to act for himself and Ms Turner in the transaction. Miss Alden had acted for him in the purchase of 23 Burns Way and was thus known to him. At about the same time Ms Turner and Mr Millington submitted the remortgage application to UCB. Following an inspection on 2 November 2015 23 Burns Way was valued for mortgage purposes at £250,000. On 8 November 2005 UCB made a mortgage offer of £70,100. On 11 November 2005 UCB instructed Bromets to act for it in the transaction.
30. At some stage probably before the mortgage valuation Miss Alden made a manuscript file note of a conversation with Mr Millington. The relevant part reads:

As to £20k to Kim

As to

£260,000

Sept £94,000

£20,000

Balance 50/50%

31. There was a short email exchange between Miss Alden and Mr Millington between 13 and 15 November 2005. Mr Millington asked if it was possible to complete before 1 December so as to avoid the increase in the Halifax rate; Miss Alden replied that she would aim to complete by the end of November.
32. On 16 November 2005 Halifax sent a redemption statement giving a figure of £90,110.20 as due on 30 November 2005.
33. On 29 November 2005 Miss Alden sent a letter to Mr Millington and Ms Turner at 23 Burns Way. In the letter Miss Alden thanked them for the instructions and gave an estimate of the fees. The letter continued:

I have received your Mortgage Offer and am preparing the Transfer and Trust Deed. I will be in touch shortly to make an appointment to go through the documents and mortgage offer. As mentioned I am working towards a possible completion on 9 December 2005.

34. Both Miss Alden and Mrs Natkus (another Conveyancer employed by Bromets) told me that it was their practice to have meetings with clients to explain all documents before they were executed. Thus this letter is consistent with that practice. When she gave evidence Ms Turner said she did not recall seeing this letter. She said that Mr Millington dealt with letters unless addressed to her personally.
35. Miss Alden fell ill on or about 29 November 2005 with shingles. It is possible she was back in the office for a short period on 2 December 2005. She was then off sick for the best part of two weeks.
36. On 30 November 2005 Mrs Natkus sent a letter to Mr Millington and Ms Turner. After explaining Miss Alden's illness the letter continues:

I enclose a draft Trust Deed for your consideration. Please peruse the document then kindly telephone me to confirm your approval or otherwise when I will prepare an engrossment for signature by you both. At the same time we can arrange an appointment for you to call in the Office to sign the Transfer, Trust and Mortgage Deeds.

I am working towards possible completion on 9 November.

37. It is not completely clear what document was sent with that letter. The Trust Deed was drafted by Mr Harbottle who did not give evidence. Bromets's conveyancing file contains 3 different drafts none of which are dated. The initial draft appears to be taken from a precedent and appears to provide that Mr Millington and Ms Turner are each to have 50% of the equity. The second draft (on p 448) accurately records that 23 Burns Way is worth £250,000 and that there was £90,110 due under the mortgage. It accordingly recites that Mr Millington has contributed £159,890 and Ms Turner £20,000 to the value. It contains a Declaration that Mr Millington and Ms Turner hold 23 Burns Way on trust as to £159,890 for Mr Millington, as to £20,000 for Ms Turner and as to the remainder in equal shares. It may be thought that that Declaration was in accordance with both Mr Millington's and Miss Alden's file notes. That draft Declaration contains a number of minor manuscript grammatical alterations written on top of it. Those minor alterations are incorporated and typed into a third draft (p 439). Apart from those alterations there is no difference between the second and the third draft. On balance of probabilities I am satisfied that it was this third draft which was sent with the letter of 30 November 2005.
38. It is to be noted that the letter is consistent with Mrs Natkus's practice in relation to the execution of Deeds.
39. There is in the conveyancing file a carbon of a letter sent to Mr Millington and Ms Turner dated 1 December 2005 under Miss Alden's name. The letter reads:

I enclose herewith an amended Trust Deed for signature by you both. Please sign the same in the presence of an independent witness who should also sign …

40. Miss Alden denies sending that letter on that date. It is inconsistent with her practice as explained in her letter of 29 November 2005. She was sure that she was not in the office on 1 December 2005. She suggests that the most likely explanation is that the letter was sent on 7 (not 1) December 2005. It is clear from an email timed at 9.45 on 7 December 2005 that the amended Trust Deed was sent by post to Ms Turner and Mr Millington on 7 December 2005. There is no other document on the file which purports to send the amended Trust Deed. Miss Alden also suggests that the letter bore her name because she was the conveyancer dealing with the matter. I accept this suggestion as the most likely explanation for the letter.
41. On 1 December 2005 Halifax sent Bromets a new redemption statement which reduced the amount due under the mortgage from £90,110 to £89,513.42. On the final page of the letter there is a handwritten file note which reads:

Deb – amend T Deed. Figures wrong. New red st.

Meeting on 6 December 2005

42. On 6 December 2005 there was a meeting at Bromets's office between Mr Millington, Ms Turner and Mrs Natkus. There are no detailed file notes of the meeting although Mrs Natkus made a brief note for Miss Alden which I will mention later.
43. It is common ground that the meeting took between 20 minutes and half an hour. It is common ground that at the meeting Ms Turner and Mr Millington executed the TR1 transferring 23 Burns Way into their joint names "as tenants in common in unequal shares" and the Mortgage Deed in favour of UCB. In each case their signature was witnessed by Mrs Natkus. It is also common ground that the Declaration of Trust was not signed at the meeting. There is, however, a substantial conflict of evidence as to what happened at the meeting.
44. Ms Turner said that the meeting was about the TR1 and the Mortgage Deed. She said that her name was spelt wrong on either the Deed or the TR1 and she would not sign it until it was altered. Mrs Natkus arranged for it to be altered and she thereupon signed the two deeds. She has no recollection of any discussion about the figures in the Declaration of Trust being incorrect. Indeed she is sure that there was no discussion about the Declaration of Trust at all.
45. Mr Millington's evidence is contained in paragraph 19 of his witness statement. In summary he said that Mrs Natkus was very thorough. She explained that the property was to be transferred to joint names and was to be held in trust in accordance with the Declaration of Trust. She went through the Declaration of Trust and explained that as there was a new redemption figure it would have to be altered. She agreed to alter the Declaration of Trust. In cross examination Mr Millington said that the explanation was very clear. He had no recollection of a mistake about the spelling of Ms Turner's name. The mistake was as to the redemption figure in the mortgage.
46. In her witness statement Mrs Natkus said that she could not specifically remember every detail of the meeting but she had an established procedure and she was sure she had followed it in this case. She would have discussed the transfer, the mortgage offer, the mortgage deed and trust deed in summary before reading through each document in detail explaining each one fully. It was pointed out that the redemption figure in the Declaration of Trust was incorrect. Mrs Natkus agreed to have the Declaration of Trust rectified and arranged for it to be sent out for signature.
47. When she gave evidence she accepted that she could not remember every detail but was satisfied she followed her standard procedure. She would have started with the Transfer fully explaining that they were tenants in common in unequal shares. She went through the main parts of the mortgage offer explaining that they were jointly liable on the mortgage. She read through the whole of the Declaration of Trust and showed them the document. She said that Ms Turner asked a lot of questions out of order and she found that difficult. She told them that if they sold Mr Millington would get back the sum referred to, Ms Turner would get back the £20,000 and that any surplus would be divided equally. She did remember the occasion though she could not now remember every word used.
48. The Declaration of Trust was duly amended so that the value of the outstanding mortgage was shown to be £89,513.42 and the value of Mr Millington's interest was shown as £160,486.58. No other alterations were made. On 7 December 2005 Mrs Natkus sent an email to Mr Millington informing him:

New Trust Deed in the post to-day. Please both sign, have your signatures witnessed and return to me before Friday.

49. The Declaration of Trust was duly sent to Mr Millington and Ms Turner under cover of the letter (wrongly) dated 1 December 2005 referred to above.
50. Mrs Natkus prepared a file note for Miss Alden which reads:

All set for Comp Fri 9 Dec

Kim to transfer to our Bank £20,000

Trust deed sent for signing

Mr M lovely

Kim - B ___ D

51. When asked about the note and the final comment, Mrs Natkus said that she found Ms Turner quite difficult to deal with as she asked questions out of the order in which they were being dealt with and was quite aggressive. She went through everything with Ms Turner. She never felt that Ms Turner did not agree with what she was saying. If she had she would have told her to get independent advice.

Completion

52. The Declaration of Trust was duly received on 8 December 2005 and signed by Ms Turner and Mr Millington on that day. It was witnessed by a neighbour. In her witness statement Ms Turner said that she did not read it before she signed it. In evidence she said she had read it before she signed but could not remember when. The Deed was duly returned to Bromets and the matter completed on 9 December 2005.
53. Although Ms Turner was asked to explain what was wrong with the Declaration of Trust her complaint related to the fact that she was jointly liable on the mortgage with Mr Millington. She never suggested that it was agreed that she would be entitled to a half share in the whole of the equity in 23 Burns Way.

Other Events mostly following Completion

54. Following completion Mr Millington continued to pay all the mortgage instalments and outgoings. Ms Turner continued to make some contributions for food and other household expenses out of her earnings.
55. It is common ground that the remainder of the items on Ms Turner's list were spent between 2006 and 2011. The total comes to £8,218.83. Some of these relate to chattels such as a freezer and a TV. A substantial number were paid for by Ms Turner's father.
56. In April 2004 Ms Turner agreed with Mr Millington that her Renault Clio could be sold as a part exchange vehicle for a new X Type Jaguar. The value of the Clio was agreed at £3,203.69. Thereafter Ms Turner had the use of the new Jaguar although there is a dispute as to the extent to which she used it.
57. In 2011 Mr Millington placed £5,300 in an ISA in Ms Turner's name. Ms Turner asserts this was a gift.
58. The relationship broke down in 2012. There were fairly protracted negotiations between the parties prior to the settlement that was reached. In the course of those negotiations Mr Millington obtained 3 valuations of 23 Burns Way in the sums of £220,000, £235,000 and £250,000. It thus seems clear that 23 Burns Way had not increased in value since 2005. In any event settlement was ultimately achieved on the basis that Ms Turner received a total of £25,500 from Mr Millington. In addition she kept the £5,300 that had been placed in the ISA in 2011. There is a debate between the parties as to whether it is right to treat this as part of the compromise. The reality of the situation is that Mr Millington abandoned any claim he might have had to the return of the £5,300. The value of that claim is part of the compromise.

3. Findings of fact

59. As noted above there are a number of disputes where it is unnecessary for me to make findings of fact. However it is plainly necessary for me to make findings in relation to the meeting on 6 December 2005, the discussions between Ms Turner and Mr Millington relating to the agreement and (to a lesser extent) the moneys spent by Ms Turner on 23 Burns Way.
60. On these issues I prefer the evidence of Mrs Natkus and Mr Millington to that of Ms Turner. Both gave evidence clearly and in a restrained manner. Furthermore their evidence was far more consistent with the documentary evidence than that of Ms Turner. Thus:

1. The letters of 29 and 30 November 2005 corroborate the intention of Mrs Natkus and Miss Alden to hold a meeting before all 3 documents are signed.

2. There is no apparent reason why Mrs Natkus should go through and explain the Mortgage Deed and the TR1 and ignore the Declaration of Trust

3. It is clear that the Declaration of Trust needed amendment in the light of the amended redemption figure that was sent by Halifax on 1 December 2005. It is clear that the Declaration of Trust was in fact amended before 9.45 on 7 December 2005. It seems to me highly likely that the amendment was made as a result of discussions at the meeting.

4. There is no evidence on the conveyancing file that any of the draft documents contained a mis-spelling of Ms Turner's name. If there had been such a mis-spelling I would have expected this to appear in a draft. All of the drafts on the file show her name spelt correctly.

5. Whilst some might regard the comment made by Mrs Natkus about Ms Turner as unprofessional it does to my mind show that Ms Turner was taking an active part in the meeting even if Mrs Natkus found her difficult.

61. I accordingly find as a fact:

1. That there was a full explanation given by Mrs Natkus at the meeting of all of the documents including the Declaration of Trust. I am satisfied that she made clear that Ms Turner was jointly liable on the mortgage, and that on a sale of 23 Burns Way Ms Turner would be entitled to half any increase in the value of 23 Burns Way after paying off the sums due under the mortgage, and the sums in respect of Mr Millington's equity and her £20,000.

2. That Ms Turner understood that that was the position and agreed to it. I am also satisfied that she had agreed to it in discussions with her parents and Mr Millington between April and December 2005.

3. That Ms Turner and/or her father made the payments set out in the list she provided. She has not satisfied me, on the balance of probabilities that she made any other payments.

62. It follows that Ms Turner's first allegation of negligence – that is to say that Bromets failed to give an adequate explanation of the Declaration of Trust fails.

4. Conflict of Interest

63. Mr McCue referred me to Chapter 15 of the Guide to the Professional Conduct of Solicitors (1999 Edition) where the following appears:

A solicitor or firm of solicitors should not accept instructions to act for two or more clients where there is a conflict or a significant risk of a conflict between the interests of those clients.

64. He also referred me to the passage on cohabitees in the Law Society Conveyancing Handbook – 2005 Edition where the following guidance appears:

9.8.1 All co-habitees whether they are spouses, civil partners, co-habitees or joint purchasers may need to be advised independently about their respective rights in the property to be purchased. Solicitors should be alert to the possibility of a conflict of interests arising in this situation.

9.8.2 It is advisable for cohabitees who are to be co-owners to enter into a separate deed of trust …which sets out their respective interests in the property …

9.8.4 In Oxley v Hiscock [2004] EWCA 546 the Court of Appeal provided guidance on the steps to be taken when acting for cohabitees:

the solicitor should always enquire about the source of funds for the purchase and the future liability for the mortgage.

If there is evidence that the purchase is actually a joint acquisition or that others may be acquiring rights under a potential constructive trust, the client(s) should be advised either to purchase the property as legal co-owners and/or to record their arrangement in a trust deed

When drafting the transfer and/or trust deed decisions have to be made as to whether the equitable interest is to be held as joint tenants or tenants in common

65. Mr McCue submitted that this was a case where Bromets should appreciated that there was a risk of such a conflict of interest.
66. Ms O'Reilly submitted that this was a case where there was a limited retainer where Bromets were simply instructed to give effect to the agreement that had been reached between Ms Turner and Mr Millington. She referred me to the very recent case of Minkin v Landsberg [2015] EWCA Civ 1152 which concerned a solicitor's duty when instructed by divorcing couples to put into an acceptable form the terms of a consent order agreed between the husband and the wife following divorce. The main thrust of the claimant's case was that the defendant was negligent in the advice that she gave and the advice she failed to give during the period leading up to the consent order. If the defendant had given competent advice, the claimant would not have submitted to the consent order. Instead she would have obtained a much more favourable outcome of her claim for financial relief and property adjustment.
67. It is obvious that such a case is factually different from this one. As Jackson LJ pointed out in paragraph 3 of his judgment:

Although the underlying matrimonial proceedings were in progress at a time when legal aid was available, the issues thrown up by this case have now assumed wider importance. That is because legal aid is no longer available for divorcing couples seeking to resolve their financial disputes. As King LJ explains in her judgment, it is now commonplace for the parties to negotiate their own agreements and then to instruct solicitors for limited purposes, such as drawing up a consent order for the court's approval under section 25 of the Matrimonial Causes Act 1973. Therefore it is now often the case in the matrimonial context that solicitors undertake a limited retainer of the kind which is in issue in the present case.

68. In paragraphs 32 to 38 of his judgment Jackson LJ considered the authorities relating to the scope of a solicitor's retainer. In paragraph 38 he summarised the relevant principles:

38. Let me now stand back from the authorities and summarise the relevant principles:

i) A solicitor's contractual duty is to carry out the tasks which the client has instructed and the solicitor has agreed to undertake.

ii) It is implicit in the solicitor's retainer that he/she will proffer advice which is reasonably incidental to the work that he/she is carrying out.

iii) In determining what advice is reasonably incidental, it is necessary to have regard to all the circumstances of the case, including the character and experience of the client.

iv) In relation to (iii), it is not possible to give definitive guidance, but one can give fairly bland illustrations. An experienced businessman will not wish to pay for being told that which he/she already knows. An impoverished client will not wish to pay for advice which he/she cannot afford. An inexperienced client will expect to be warned of risks which are (or should be) apparent to the solicitor but not to the client.

v) The solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor's retainer. As a matter of good practice the solicitor should confirm such agreement in writing. If the solicitor does not do so, the court may not accept that any such restriction was agreed.

69. Ms O'Reilly submitted that this was a case where the retainer was limited to giving effect to the agreement reached between Ms Turner and Mr Millington in relation to their respective shares in 23 Burns Way. It was not reasonably incidental to that work for Bromets to advise Ms Turner on the merits of that agreement. There was no conflict of evidence here.

Discussion.

70. I agree with Mr McCue that the decision in Minkin is distinguishable from this case. There is plainly a difference between putting into effect the terms of a consent order in matrimonial proceedings and drawing up a Declaration of Trust as between cohabitees. I also accept that the absence of legal aid in matrimonial proceedings played an important part in the decision and there was an element of policy in the result. There were other important factual differences between that case and this. It is not necessary for me to set them all out in this judgment.
71. I also consider that it is not possible to give definitive guidance as to whether there is a duty to advise the clients on the merits of an agreement relating to the beneficial ownership of a home occupied by cohabiting couples. The agreement may be so one sided or contrary to what might be considered to be fair that one or other of the parties needs to be advised as to this and to take separate independent advice. All will depend on the facts of the individual case.
72. In the autumn of 2005 the facts available to Bromets would have included:

1. Both Ms Turner and Mr Millington had been property owners in the past.

2. 23 Burns Way was acquired in October 2001. It was vested in the sole name of Mr Millington. The mortgage was in his sole name. All of the mortgage instalments had been made Mr Millington. Ms Turner did not cohabit with Mr Millington at that time. Cohabitation started sometime after that. Thus, if Bromets considered the guidance given by Chadwick LJ in Oxley referred to in the Conveyancing Handbook there would have been nothing to alert it to a possible interest by Ms Turner at the time of the acquisition.

3. Apart from the discussions relating to the investment of £20,000 there were no express discussions between Ms Turner and Mr Millington as to the ownership of a share in 23 Burns Way by Ms Turner. References to 23 Burns Way as "our home" fall well short of such discussions.

4. There had been some expenditure by Ms Turner. However the sums involved were modest. Some of the expenditure might have improved the value of 23 Burns Way but much of it related to chattels or decoration. Any increase in the value of 23 Burns Way as a result of the expenditure was likely to be extremely modest.

5. There had been discussions in relation to the investment of £20,000 resulting in an agreement between them as to Ms Turner's future interest in 23 Burns Way. The agreement was by no means unfair to Ms Turner. Some might consider it favourable to her. As at the date of the Declaration of Trust the net equity in 23 Burns Way amounted to £180,486.58 of which Ms Turner had invested £20,000. Both parties expected the value of 23 Burns Way to continue to rise. The agreement provided for any increase to be shared equally rather than in proportion to their beneficial shares. Even if Ms Turner is taken to have provided half the mortgage funds of £70,100 her investment only rises to £55,050 against Mr Millington's £195,536.58.

6. Both parties attended the meeting with Mrs Natkus. Ms Turner took an active part in that meeting leading to the comment in Mrs Natkus's note to Miss Alden. All 3 documents were discussed and explained at that meeting. Ms Turner was willing to go ahead on the basis of those discussions and explanations.

73. It is important to bear in mind that the law relating to the rights of cohabitees has developed very considerably since December 2005. The seminal decisions of the House of Lords in Stack v Dowden [2007] UKHL 17 and the Supreme Court in Jones v Kernott [2011] UKSC 53 had not been delivered. At that time the leading authorities included the decisions in Pettit v Pettit, Lloyds Bank v Rosset and Oxley. The well-known passage in the speech of Lord Bridge in Rosset [1991] 1 AC 132 – 133 was of particular importance in a case where there was no express agreement between the parties even though in paragraph 26 of Stack Lord Walker took the view that the law had moved on.
74. I accept the evidence of both Mrs Natkus and Miss Alden that they did not consider that there was a conflict of interest between Ms Turner and Mr Millington. In the light of the matters set out above that was, in my view, an opinion they were entitled to hold.
75. To put the matter another way Ms Turner has failed to establish that in forming that opinion either Miss Alden or Mrs Natkus was negligent or fell below the standards of a reasonably competent solicitor.
76. In my view therefore the claim based on conflict of interest also fails. There was no duty on Bromets to advise Ms Turner to seek separate advice or to advise her not to enter the agreement.

5. Loss of Chance

77. If contrary to my view there was a duty on Bromets to advise Ms Turner to seek independent advice Ms Turner has to establish on balance of probabilities that she would have accepted that advice. It would, of course, have involved her in additional expense. However Ms Turner struck me as an intelligent woman who had had at least one unfortunate experience in the property market with her second husband. I am prepared to accept on balance of probabilities that she would have taken independent advice if advised to do so.
78. Whether Ms Turner would then have entered into the Declaration of Trust would, of course have depended on the advice she would have received from that advisor. Thus I have to assess the question of whether she would have entered in the Declaration of Trust on the basis of a "loss of a chance". This involves considering the advice that Ms Turner is likely to have received in 2005.
79. The matters that I have set out in the previous section of this judgment are highly relevant to the advice she is likely to have received. In my view the only proper advice based on the law in 2005 would have been:

1. Apart from the interest that she would acquire under the Declaration of Trust Ms Turner was most unlikely to have any beneficial interest in 23 Burns Way because:

1) 23 Burns Way was vested in Mr Millington's sole name. Ms Turner had not cohabited at the time of the acquisition. She had not contributed to the purchase price or to the mortgage instalments.

2) There was no express agreement between the parties that Ms Turner should have any beneficial interest in 23 Burns Way. References to it as "our home" were not sufficient.

3) The modest expenditure by Ms Turner was unlikely to throw any light on their joint intentions with regard to the beneficial ownership of 23 Burns Way.

2. The agreement reflected in the Declaration of Trust was perfectly fair and reasonable from Ms Turner's point of view. It is true that she was incurring a potential liability under the UCB mortgage. However the mortgage represented only 28% of the value of 23 Burns Way. The attractive feature of the agreement was that Ms Turner would get a return of 50% of any increase in value above £250,000 when she was investing only £20,000.

3. There was, accordingly, no reason not to execute the Declaration of Trust and other documents necessary to enable the transaction to proceed.

80. If Ms Turner had received advice along these lines I am satisfied that she would have signed the Declaration of Trust and the transaction would have proceeded as it did.
81. In my view there is no substantial chance that if Ms Turner had been advised to take separate legal advice that she would not have signed the Declaration of Trust and other documents necessary for the transaction to proceed.
82. It follows that even if (contrary to my view) Bromets was under a duty to advise Ms Turner to take independent advice Ms Turner suffered no loss.

5. Conclusion

83. For all these reasons Ms Turner's action against Bromets fails.