Scottish Court of Session Decisions

[1] The pursuer in this action, which was debated on the procedure roll, seeks reparation in respect of certain financial losses said to have been sustained by reason of professional negligence on the part of the defenders, a firm of solicitors who acted for the pursuer in the defence of divorce proceedings brought against the present pursuer by his now former wife.

[2] It appears that the marriage which was the subject of the action of divorce took place in 1956. The pursuer and his wife eventually separated in June 1988. At the time of the separation the pursuer held office as a civil servant. By a minute of agreement executed in March 1989 the pursuer agreed to pay his wife an alimentary payment - though in fact described as "periodical allowance" - of £500 per month variable on the occurrence of a change in circumstances. The present defenders did not act for the pursuer in connection with the drawing up of that agreement.

[3] In September 1993 the wife raised the action of divorce in the Court of Session. In addition to seeking decree of divorce on the grounds of five years' separation, the wife concluded for a property transfer order in respect of the matrimonial home in Aberdour which belonged wholly to the husband (the present pursuer). She also sought in addition a capital sum of £38,500 and a periodical allowance of £500 per month payable until her remarriage or death.

[4] When the action was raised the present pursuer instructed the present defenders to act for him in defending the proceedings in relation to his wife's financial claims. It is averred by the pursuer that, in particular, Mr Mair a partner of the defenders was instructed and that "at all material times said Mr Mair held himself out as an expert in the field of family law and in particular as an expert in financial provision on divorce". A meeting is averred to have taken place between the pursuer and the defenders on 16 September 1993 at which the pursuer gave information concerning his financial circumstances. It appears that apart from the house and contents the only other significant item of matrimonial property was the pursuer's pension entitlements, which also provided for certain pension benefits to his widow. On 23 September 1993 the defenders instructed junior counsel (Miss Sherren Smith) to prepare defences and it is admitted by the pursuer that Miss Smith continued thereafter to represent the pursuer in the divorce proceedings at first instance, senior counsel being also instructed subsequently at an appellate stage.

[5] The subsequent course of the proceedings in the divorce action and the communings between those acting for each spouse respectively are the subject of relatively detailed averment in the pleadings. For present purposes it is unnecessary to rehearse them in full. It is I think sufficient to note the following. First, in October 1993 the pursuer retired from the Civil Service and in light of his only receiving a pension of an amount much reduced by comparison with his former salary, the defenders enrolled in the divorce process a motion to vary the amount of the monthly payment provided for under the March 1989 agreement. That motion was refused by the Lord Ordinary as incompetent on the basis that a separate process would be necessary. Subsequent sheriff court proceedings were brought in Edinburgh Sheriff Court but it is averred that that Court had no jurisdiction and the proceedings were abandoned. (See Article 4 of Condescendence). Secondly, during late 1993 and early 1994 various discussions took place between the parties' respective solicitors with a view to resolving the financial issues dividing the spouses. In particular, and importantly for present purposes, it is averred by the pursuer that on 20 May 1994 the wife's solicitors offered to settle her claims, with no expenses due to or by either party, on either of two alternative bases namely (a) transfer of the house and contents, together with a capital payment to her of £18,500 and a periodical allowance of £250 per month, payable for two years from the date of decree of divorce or (b) transfer of the house and contents and payment of a capital sum of £25,000 with no periodical allowance. It is averred by the pursuer that the defenders wrote to him saying that this offer from his wife was unacceptable. The offer was accordingly not accepted and although further discussions took place the action eventually proceeded to proof in April and June 1995 before a temporary Lord Ordinary who, by interlocutor of 29 September 1995, ordered the transfer to the wife of the house in Aberdour and payment by the husband of a capital sum of £12,000. He refused the wife's claim for a periodical allowance.

[6] The wife reclaimed that interlocutor. No cross grounds of appeal were lodged on behalf of the husband. The Extra Division before whom the reclaiming motion came on the Summar Roll allowed the reclaiming motion to the extent of increasing the capital sum payable by the husband from £12,000 to £33,239. The Opinion of the Extra Division is reported at 1997 SLT 787. Put shortly, it appears that the basis whereon the Extra Division increased the amount of the capital sum to be paid by the husband in addition to the conveyance to the wife of his house, was largely that the Temporary Lord Ordinary had erred in treating the matrimonial home as having a contemporary value of £83,000 in place of its agreed net value at the "relevant date" of the separation in 1988, namely £59,000. It may also be observed at this point that the Division interpreted the Temporary Lord Ordinary's opinion as meaning that he had intended an unequal division of the matrimonial property in the proportions of 60% to the wife and 40% to the husband, although no such division was expressly enunciated by him. In erroneously proceeding on the basis of the contemporary value of the matrimonial home, rather than its lesser historical value at the date of separation, the Temporary Lord Ordinary had misapplied the decision of the House of Lords in Wallis v Wallis 1993 SC ( HL) 49.

[7] A similar failure to appreciate the import of the decision in Wallis is largely central to the pursuer's case against the present defenders. Put shortly, and as explained by Mr Macnair for the present pursuer, the defenders' advice to the husband to reject the wife's offer of 20 May 1994 proceeded upon the erroneous view that, if the house were the subject of a property transfer order, in arriving at an equal or fair distribution of the matrimonial property its value would be taken to be the higher contemporary value of £80,000 and not the lower value of approximately £60,000 which it had at the date of the separation in 1988. Whilst the precise figures may not be agreed in the pleading, I did not understand there to be any substantial question but that, as seen by the spouses and their advisors in May 1994, the value of the matrimonial home at the date of separation was indeed about £60,000 and in 1994 £80,000.

[8] The case made against the defenders is pled in both contract and in delict but for present purposes there is no material distinction to be made between those bases. The averments pled in contract are found in Article 5 of Condescendence in which, having narrated the reporting of the House of Lords decision in Wallis the pleader continues as follows :

[9] In challenging the relevancy of the action and seeking its dismissal, Mr Brodie who appeared for the defenders, identified the three principal complaints made by the pursuer, namely:

In regard to complaint (b) - variation of the aliment - Mr Brodie intimated in the course of his submissions that he had come to the view that this aspect of the case could not be decided without inquiry and that accordingly the averments relating to this issue, contained principally in Condescendence 8 and Answer 8, should on any view proceed to proof before answer.

[10] In relation to the first complaint of professional negligence - the failure to advise acceptance of either branch of the wife's offer of 20 May 1994 - counsel for the defenders advanced two principal submissions.

[11] First, counsel submitted that while with hindsight it was evident that the wife's agents were not to offer a settlement more favourable to the husband than the offer made on 20 May 1994 and while with similar retrospection one can see that the offer of 20 May 1994 was more favourable than the result eventually ordered by the Court, there was no clear averment that it would have been reasonably foreseeable in May 1994 to a solicitor of ordinary competence exercising reasonable care that failure to accept the wife's offer would result in adverse consequences for the husband. Negotiation of a settlement was an ongoing process and it was not sufficient that the decision not to accept an offer turned out to have adverse consequences. The adverse consequences had to be reasonably foreseeable at the time. Counsel referred to the well known speech of Lord McMillan in Muir v Glasgow Corporation 1943 SC (HL3,10).

[12] The other principal submission was based on the acceptance in averment by the pursuer that, the divorce action being in the Court of Session, junior counsel had previously been instructed and was representing the pursuer. It was submitted by Mr Brodie that where a solicitor had instructed counsel, the choice of counsel not being said to be inappropriate, and where it was not said that the solicitor had ignored or departed from counsel's advice, very particular circumstances require to be averred before any liability on the part of the instructing solicitor could arise. Counsel referred extensively to the authorities on the respective responsibilities of agent and counsel starting with the Scottish authorities of Bachelor v Pattison and Mackersy (1876) 3 R. 914; Begg on Law Agents, 90-95, 247, 341; Stair Encyclopaedia Vol.30 1188, the last of which referred to Davy-Chiesman 1984 Fam 45, 64 (also reported [1984] 1 All E.R. 321). Counsel then referred to Locke v Camberwell Health Authority [1991] 2 Med L.R. 249, 254 where, in the judgment of Taylor L.J., the relevant principles were conveniently summarised. That summary had been repeated in other English cases - Matrix Securities Limited v Theodore Goddard [1998] PNLR 290, 322; Reaveley v Safeway Stores Plc [1998] PNLR 526, 532. From these counsel derived the proposition that while a solicitor had no absolute indemnity if he acted in accordance with the advice of counsel, liability could only begin to arise where it was clear that counsel's advice was "seriously wrong". Since counsel had been instructed in the case, and since counsel had subsequently advised the making of a tender at a lower value, to have advised acceptance of the wife's offer in May 1994 would be inconsistent with counsel's advice. The averments of breach of duty did not address the "seriously wrong" test and the complaint of professional negligence was thus irrelevant.

[13] In his response to this branch of the defenders' argument Mr Macnair for the pursuer did not take any substantial issue with Mr Brodie's presentation of the law on the respective responsibilities of solicitor and counsel where a solicitor was acting on the advice or instruction of counsel and for completeness Mr Macnair referred additionally to Reid v Edinburgh Acoustics 1995 SLT 982. He submitted however that the question of the extent to which a solicitor might rely on the advice of counsel did not really arise for decision on the pleadings in this case respecting the complaint that the pursuer was wrongly advised by the defenders to reject the compromise put forward by his wife's solicitors on 20 May 1994. The reason for that submission was simply that it was not admitted or accepted on behalf of the pursuer that the solicitors' advice to reject that offer proceeded on the basis of prior advice or instruction from counsel. While counsel had been instructed previously in regard to defences and, on 25 May 1994, produced a note indicating further information which she wished to be obtained, she did not give any advice on the offer contained in the wife's solicitor's letter of 20 May 1994 - see Closed Record16B - C. Negotiation and advice on settlement offers was commonly a matter undertaken by solicitors without direct reference to counsel. A solicitor might of course seek counsel's express advice on the acceptability of a compromise offer and if he did so the "seriously wrong" test might come into to play. But in the absence of express advice on the offer the solicitor would normally be acting on his own responsibility in advising acceptance or rejection. Allowance of proof, before answer, would therefore be necessary to establish whether the defenders were acting on the instruction or advice of counsel in advising the pursuer in the present action to reject his wife's offer of 20 May 1994.

[14] In regard to the submission by counsel for the defenders to the effect that it was necessary for the pursuer to aver that it was reasonably foreseeable that rejection of the wife's offer of 20 May 1994 would result in loss to the pursuer, Mr Macnair stressed that the factor vitiating the advice to reject the offer was the defenders' failure to understand the proper import of the decision in Wallis and thus a failure to understand the essential ground rules or framework, rather than a simple misjudgement of the strength of the parties' cases in a negotiation process. Had the fundamental error under which the defenders were labouring been appreciated by them, it would have been plain that rejection of the offer would be likely to result in loss.

[15] It may also be added, in relation to a concern by Mr Brodie to the effect that while it was averred by the pursuer that the defenders' Mr Mair had expertise in family law matters that concept was not carried through in the averments of duty relating to the offer of 20 May 1994, that counsel for the pursuer made plain that, in relation to this branch of the pursuer's case - the giving of advice on the offer - the only test which he applied was that of the ordinary solicitor exercising reasonable care.

[16] I find it convenient to consider first Mr Brodie's submission related broadly to the relationship between solicitor and counsel. While it is true that it is admitted on the pursuer's behalf that junior counsel was instructed to prepare draft defences in September 1993; that she continued to represent the pursuer in the divorce litigation and that in January 1995 she produced a note setting out certain proposed tender figures, it appears to me on a consideration of the pleadings that it is not admitted by the pursuer that the advice given to him to reject the compromise put forward by the wife's solicitors of 20 May 1994 was a recommendation which proceeded in turn on the basis of advice or instruction given by counsel. On the contrary, the averment for the pursuer at Closed Record 16B - C is in these terms -

Mr Brodie's submission on this matter, namely that the pursuer had not relevantly averred fault on the part of the defenders since the defenders were acting on the advice and the instructions of counsel and it was not averred that counsel's advice was "seriously wrong", therefore appears to me to proceed upon a factual basis which is disputed to a material extent and upon which inquiry would be necessary as a proper pre-requisite to consideration of the respective responsibilities of counsel and agents in this particular action.

[17] In relation to the first branch of Mr Brodie's argument, while it is no doubt necessary for the pursuer to establish that a competent solicitor exercising reasonable care would have appreciated that advising rejection rather than acceptance of the compromise of 20 May 1994 would be likely to have adverse consequences (which I did not understand Mr Macnair to dispute as a general proposition) in the particular circumstances of this case where the alleged negligence consists in the alleged failure to comprehend the important implication of Wallis in the computation of the division of matrimonial property in the context of a property transfer order and where proper comprehension of the implications of Wallis would have shed on the wife's offer a very different light from that in which it is alleged to have been viewed at the time by the defenders, I consider that sufficient has been set forth in averment to justify at least an inquiry before answer.

[18] I therefore consider that proof before answer should be allowed respecting the allegation of professional negligence concerning the defenders' advice on the response to the offer of 20 May 1994.

[19] In relation to the third principal complaint of professional negligence - failure to instruct counsel to consider lodging cross grounds of appeal - Mr Brodie made two short points. Firstly, he pointed to the absence of any averment as to what counsel's response would have been. Nor, he added, was there any averment of the precise terms of the proposed cross grounds of appeal which counsel would have framed. Secondly, there was no averment explanatory of the basis whereon it might be said that a different and more favourable outcome would have been achieved before the Extra Division had the Division been presented with cross grounds of appeal.

[20] Additionally, Mr Brodie stressed that the conduct of the appellate process was largely within the direction of counsel.

[21] I have to say at the outset that this third branch of the pursuer's case - which I comprehend may really only arise were the first branch to fail - is attended with greater difficulty.

[22] It is in relation to this branch that Mr Macnair involves the particular expertise attributed in averment to Mr Mair, as a response to the point that counsel were involved in the appellate stage.

[23] So far as the first point taken by Mr Brodie is concerned, it is indeed the case that, strictly speaking, all that is averred is a duty on the defenders to instruct counsel to consider drafting cross grounds of appeal and it is not expressly averred that counsel would have responded positively to that invitation. However it appears to me that it is possible to imply that any counsel exercising proper care and prudence would have acceded to the instruction if, as contended for by the pursuer, once the clear misapplication of Wallis by the Temporary Lord Ordinary is appreciated the necessity for cross grounds of appeal relating to the equal division of the matrimonial property becomes so clamant that the duty contended for then arises. To an extent therefore this point may perhaps be seen as a pleading point.

[24] The second complaint advanced by counsel for the defenders, namely the absence of specific averment as to what would have happened in the Division had there been cross grounds of appeal, raises the often difficult matter of how a court of first instance estimates the likely conduct of a court of superior instance if it had been presented with a particular ground of appeal. However, notwithstanding that difficulty, in my view it cannot be said that a failure to appeal a judgment can never be a ground of professional negligence on the part of a legal advisor. Similarly the same must apply in respect of presenting cross grounds of appeal. Further, the contention that failure to lodge a ground of appeal constitutes negligence is, to my mind, bound up with an assessment of the prospects of success of the ground of appeal for which it is contended.

[25] In the present case it is averred on behalf of the pursuer that the Temporary Lord Ordinary did not make any specific findings that there were particular grounds upon which an unequal division of the matrimonial property might be justified. That he had so intended was treated as a matter of implication and it may be that, had the need for identification of those circumstances been more sharply focussed by a cross ground of appeal, the litigation might possibly have proceeded otherwise.

[26] In these circumstances, while I am conscious that this branch of the pursuer's case presents certain difficulties, I am not satisfied at this stage that it must necessarily fail. I would add that since inquiry is necessary on the other branches of this action, I think it also expedient that the inquiry embrace the whole course of the litigation and the advice given in connexion with it.

[27] I shall therefore allow parties a proof before answer of their whole averments.