|
OUTER HOUSE, COURT OF SESSION
[2008] CSOH 159
|
|
|
OPINION OF LORD BRAILSFORD
in the cause
LILLIAN HENDERSON
FRASER & OTHERS
Pursuer;
against
McARTHUR STEWART
& OTHERS
Defender:
ญญญญญญญญญญญญญญญญญ________________
|
Pursuer: Mr Sutherland; Anderson Strathern
Defender: Miss Haldane; Dundas & Wilson
14 November 2008
[1] This
case appeared before me for discussion on the Procedure Roll. In that debate the defenders argued their
first plea in law, a plea to the relevancy and specification, but did not
insist on their second preliminary plea.
The defenders motion was that the case should be dismissed. The pursuers submitted that a proof before
answer of all pleadings should be allowed.
[2] As
a matter of averment the second and third pursuers are residuary beneficiaries
under a will of the late James Forbes Fraser (hereinafter referred to as "James
Fraser"). The first pursuer is the widow
of the late Alexander Fraser a brother of James Fraser. Alexander Fraser survived his brother and
died in 2005. Alexander Fraser was a
residuary beneficiary under the will of James Fraser. The first pursuer is, following the death of
her husband, a residuary beneficiary of James Fraser. The first defenders are a firm of solicitors
and the second to ninth defenders are past or present partners in that firm
said to be liable for the debts and liabilities of the first defenders. James Fraser was prior to his death, the
owner of Croft 19 and 20 North Ballachullish, Kilnallie,
Fort William
(hereinafter referred to as "the said croft").
It is averred that in or about 1997 James Fraser was in poor health and following
the death of a brother in July that year decided that he wanted to make a
will. He discussed his wishes and his
testamentary intentions with members of his family and thereafter "....contacted
the first defenders in or about October 1997 for the purpose of making a will
to give effect to his wishes". It is
further averred that "...he intended that, apart from special financial bequests
to a charity and the church, that Alexander Fraser, the second pursuer, the
third pursuer and Helen Fraser were to become the beneficiaries of an equal
share of the whole of the remainder of his free estate". Helen Fraser referred to in the passage of
the pleadings I have referred to is a fourth residuary beneficiary of James
Fraser. The present action has been
intimated to her but she has not entered the process. The first defenders accepted James Fraser
instructions in relation to the preparation of a will. It is averred that James Fraser was advised by
an employee of the first defender that "a croft could not be divided and that
in order to pass on the croft he would require to nominate an individual as the
tenant of the croft". James Fraser was
unhappy with this advice as it was contrary to his wishes for the disposal of
his estate on his death. He discussed
the matter with members of his family and delayed making any will because of
his "agitation" with the advice. Ultimately
however he followed the advice and instructed the first defenders to prepare a
will nominating an individual as tenant of the croft. A will was drafted giving effect to this
advice and nominating an individual as tenant of the said croft and this will
was signed on 4 February 1998. James Fraser died on 12 July 1998 leaving the will of 4 February 1998 as his final and
operative testamentary statement.
[3] The advice given by the first defenders
to James Fraser was wrong. I interject
to state that this point was accepted by counsel for the defenders. It would have been possible to have prepared
a will in a manner which gave effect to James Fraser's testamentary intentions. It is averred that as a result of the wrong
advice given to James Fraser, which is averred to be negligence on the part of
the defenders, each of the pursuers suffered loss, injury and damage. The loss which the pursuers are said to have
suffered as a result of this negligence is of a legacy of the said croft with
vacant possession.
[4] At
the outset of the debate Miss Haldane for the defenders presented an initial
argument submitting that certain passages in the pursuers' pleadings were
irrelevant. She identified in this
category averments in article 2 of condescendence commencing at page 9A of
the Closed Record (as amended) with the words "At the material...." and concluding
at 9D with the words "...., several weeks after the death of James Fraser." Regardless of the main argument she was
advancing Miss Haldane submitted that these averments should be excluded from
probation.
[5] Miss
Haldane's principal submission was the contention that as a matter of averment
this case fell into the category of claims by intended or disappointed
beneficiaries. She submitted that in
order relevantly to aver a case of negligence against solicitors it was
incumbent upon disappointed beneficiaries to offer to prove, (1) that they were
intended beneficiaries under a will (2) that the defenders, the solicitors,
were aware that the pursuers were intended beneficiaries under a will (3) that
the defenders failed to obtemper a testators instructions in that they failed
to create a testamentary document that gave effect to a testators intentions
and (4) that as a result of negligence by the defenders the pursuers had
reasonably foreseeably been denied of a specific legacy under a will. In formulating these submissions Miss Haldane
drew my attention to two passages in the pleadings. In the first place to an averment in Article
3 of condescendence at page 16B where it is averred that:
"James Fraser
discussed this matter at length and repeatedly on the telephone with his
siblings, and he eventually advised them and the first pursuer.... that he would
tell his solicitor that he would nominate his eldest nephew James Andrew
Fraser."
In the second place to an averment
in article 4 of condescendence at page 17C where it is averred that
"As a result of
the advice of Mr McAdam that James Fraser required to nominate an individual as
tenant of the croft, James Fraser instructed Mr McAdam that James Andrew
Fraser was to be nominated in the will as that individual."
In other words James Fraser gave instructions
for the preparation of a will in the manner advised by his solicitors. Miss Haldane submitted that these averments
were "central" and that this was therefore a case where a will had been
prepared in accordance with the testators instructions. The case was not an example of defenders
negligently failing to give effect to a testators instructions. The case accordingly, as a matter of averment,
failed to meet all the conditions she had desiderated as essential prerequisites
to establishment of a valid claim in a case in the category of the present. In these circumstances the pursuers' case was
fundamentally irrelevant and should be dismissed.
[6] In
developing this argument Miss Haldane founded upon the approach taken in the
case of White and another v Jones and another [1995] 2 AC 207. It was submitted that this decision of the
House of Lords in a English appeal whilst not binding upon me was highly
persuasive authority in support of the proposition advanced. In this regard my attention was drawn to Holmes v Bank of Scotland 2002 SLT 544, and to the view expressed by the
Lord Justice Clerk (Gill) in delivering the opinion of the Inner House (at
548L) that the "principle enunciated by the majority in White v Jones" would be
followed in Scotland. With reference to White (supra) reliance was placed upon passages in the speech of Lord Goff
at pages 252, 256B, 259G and 267H - 268E: Lord Brown Wilkinson at page 274E and
275F and Lord Nolan at page 295. It was
submitted that White (supra) established only a very limited
extension to the law. Prior to that case
it was accepted that solicitors did not owe a duty of care to third parties
affected by the services rendered by the solicitor. White
(supra) relaxed that strictness and established the existence of a duty of
care owed by a solicitor to intended beneficiaries when it was reasonably
foreseeable that as a result of the solicitors negligence the beneficiary lost
an intended legacy without either the testator or the estate having a claim
against the solicitor. It
was essentially a policy decision whereby the law was extended to allow claims
by disappointed beneficiaries only in strictly limited circumstances being
capable of expression and limitation in the four principles Miss Haldane
desiderated.
[7] My
attention was also drawn to two decisions of the English courts subsequent to White (supra): Carr-Glynn v Frearsons
[1999] Ch 327 and Trusted v Clifford Chance 2000 W.T.L.R 1219. These cases were said to be examples of the
English Courts developing the principle in White
(supra). It was however submitted
that in each of these cases solicitors had negligently failed to carry out a
testator's instructions in the preparation of a testamentary instrument and they
were therefore distinguishable from the present case where the testator's
instructions in relation to the preparation of the testamentary instrument, had
been given effect to.
[8] In
reply Mr Sutherland for the pursuers submitted that the present case should not
be characterised in the narrow way contended for by Miss Haldane. The case raised a point of principle, that
point being the extent of duty of care owed by solicitors to prospective
beneficiaries. He submitted that the
pursuers case was based on negligent advice given to a testator and that Miss
Haldane's categorisation of the cases was incorrect. Mr Sutherland further maintained that the
case law supported a wider interpretation of the case of White (supra) than had
been contended for by Miss Haldane. In
Mr Sutherland's submission the relevant factor was the point in time when
solicitors may be said, as a matter of law, to have assumed responsibility for
the affairs of a testator. As Mr
Sutherland characterised Miss Haldane's argument the defenders position was
that such point arose only when a will was made. Any negligence on the part of a solicitor
prior to that fell to be disregarded. He
submitted that that was an incorrect approach and the correct interpretation of
White (supra) was that responsibility
arose when the solicitor failed to give effect to the testators
intentions. If the effect of negligent
advice was to defeat a testators intention then, on the argument presented by
Mr Sutherland, the ratio of White
(supra) applied and there was a case in negligence available to
disappointed beneficiaries. This was
developed further by submitting that as a general principle a solicitor had a
duty of care to give effect to a testator's testamentary intentions. That duty arose when the testator has fixed an
intention to bequeath a benefit and instructed the solicitor to achieve the
desired result. If as a result of
tendering negligent advice the testator's intention was defeated then on an
application of the principle in White (supra), the disappointed beneficiary had
a right against the solicitor. In
support of those arguments my attention was drawn to passages in the speech of
Lord Goff in White (supra) between
pages 268C and 269D.
[9] The
arguments for the parties in this case effectively depended upon differing
interpretations of the scope of the ratio in the case of White v Jones (supra). In that case a solicitor negligently failed
to attend to a client's instructions to make a new will, the client died before
the new will was prepared with the effect that intended beneficiaries did not
receive their intended bequest. The
House of Lords decided, by a bare majority, that the disappointed beneficiaries
could recover notwithstanding that a solicitor performing duties for a client
will generally owe no duty of care to third parties. The principle by which the majority were able
to arrive at this result is expressed by Lord Goff of Chieveley at page 268D/E
in the following terms:
"In my opinion,
therefore, your Lordships House should in cases such as these extend to the
intended beneficiary a remedy under the Hedley Byrne principle by holding that
the assumption of responsibility by the solicitor towards his client should be
held in law to extend to the intended beneficiary who (as the solicitor can
reasonably foresee) may, as a result of the solicitors negligence, be deprived
of his intended legacy in circumstances in which the testator nor his estate
will have a remedy against the solicitor.
Such liability will not of course arise in cases in which the defect in
the will comes to light before the death of the testator, and the testator
either leaves the will as it is or otherwise continues to exclude the
previously intended beneficiary from the relevant benefit."
Lords Browne-Wilkinson and Nolan agreed
with the views expressed by Lord Goff. It
is, in my view, clear from the speeches of the majority in the House of Lords
that the majority decision was influenced by the perceived need to avoid an
injustice, namely that a party who had suffered loss would have no claim and
that the party who had a potential claim, the testator's estate, had no
loss. That outcome was plainly regarded as
undesirable. The problem that I perceive
as arising from the decision is in the context of the present case applying the
principle therein to the very different factual circumstances.
[10] It is clear that the present case is not factually identical to
White (supra). In that case the
negligent solicitor failed to give effect to his client's instructions with a
consequent, direct, loss by the beneficiaries.
In the present case there is no suggestion that the will prepared by the
defenders was other than a correct expression of the testators last stated
testamentary intentions. It is clear,
and is accepted by the defenders, that those intentions may well have been
formulated on the basis of negligent advice tendered by the defenders. Nonetheless that negligent act is, in my
view, of a different character to the negligent act in White (supra). The negligent act by the solicitor in the
present case was also perpetrated at a time when there was scope both for the
mistake to have been recognised and, importantly, when there was in any event
time for the testator to change his intentions.
There is a further distinction and that is
that, as a matter of averment, there is nothing in the present case to indicate
that the ultimate intention of the testator was not that expressed in the
will. For these reasons I am of the view
that White v Jones (supra) is not
directly in point with the present case and, accordingly, that the ratio is not
binding upon me.
[11] If I am correct and the ratio White (supra) is not binding upon me then the
question arises, as Mr Sutherland submitted, can that case be construed in a
wider way. I find nothing in the
decision which would enable me to treat that case in that way. On the contrary as I read the case the
majority were at pains to restrict the applicability of their decision to cases
within the same category, that is to cases where the solicitors negligently
prepare a will which does not reflect the testator's instructions. Whilst that might seem close to the situation
in the present case, it is, in my view, different. That difference, albeit narrow, is of
importance. Accordingly I feel unable to
agree with Mr Sutherland and adopt a wider interpretation to that case. If that is correct then, as I understand the
law, the position remains that solicitors do not in general owe a duty of care
to third parties. That would be the
position in the present case.
[12] In the circumstances I am of the view that the defenders in the
present case owed no duty of care to the pursuers. The case is accordingly irrelevant. I will uphold the defenders first plea in law
and dismiss the action. I should add
that I agree with the submission made by Miss Haldane in relation to the
averments in Article 2 of condescendence between 9A-D. Given my view that the case falls to be dismissed
as irrelevant it is not necessary for me to make a decision in relation to
those averments. I should, however,
indicate that had I otherwise been in favour of allowing a proof before answer,
I would have excluded these averments from probation as having no relevance to
the issue which the Court required to determine.
