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Cite as: Recovering Lost Legacies : <I>White</I> v <I>Jones</I> in the Lords
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Recovering Lost Legacies : White v. Jones in the Lords
by
Steve Hedley MA LLB
University Lecturer in Law, Christ's College Cambridge, swh10@cam.ac.uk.Copyright © 1995 Steve Hedley. First published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.
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Summary
White v Jones, [1995] 1 All ER 691, HL holds that a solicitor retained to draw up a will, but who fails to do so before the testator's sudden death, may owe a duty in tort to disappointed beneficiaries, with the result that they can claim the value of their lost legacies from the solicitor if they can establish fault. This result is significant for what it says about current judicial attitudes to liability in negligence. The points that the claim is for pure economic loss, or involves a tort liability in a sphere where contractual claims would be more usual, or that the precedents for the claim are poorly-argued or even non- existent, are today of no substantial weight, being mentioned by the lords only to dismiss them contemptuously. The question is no longer whether the courts are prepared to countenance novel claims of pure economic loss, but rather of how rapidly they are prepared to extend the class of plaintiffs.
Contents
- The Facts
- A test case, on duty alone.
- The recent history of pure economic loss
- The speeches themselves
- Relation to Henderson v. Merrett Syndicates (1994)
- The Competing Claims of Justice
- The relevance of the position in contract
- Transferred Loss?
- The Duty of Care
- Law or Equity?
- Lord Mustill's dissent
- "Assumption of Liability"
- The future: An expanding but confused law of negligence?
- What about other areas of law?
- Conclusion: What price Murphy v. Brentwood?
The Facts
On the death of his wife, Arthur Barratt fell out with the younger of his two daughters, Pauline Heath, over the removal from his house of a money box. His other daughter, Carol White, sided with her sister. So enraged did Mr Barratt become that he executed a will cutting both daughters out of his estate. However, within a few months the parties were reconciled, and Mr Barratt gave written instructions to his solicitor to draw up a new will, which would leave each daughter a legacy of stlg. 9,000. Unfortunately the solicitors waited several months before carrying out these instructions, and before any substantial work had been done Mr Barratt had died, as a result of a fall while on holiday. The daughters sued the solicitors, arguing that they were plainly foreseeable victims of the solicitors' lack of care, and that accordingly a duty was owed to them under the tort of negligence.
A test case, on duty alone.
It was an ideal case to determine the general question whether a duty is owed in these circumstances. The delay was clearly inexcusable. It was clear precisely what was expected of the solicitors, and neither the court of appeal nor the house of lords thought the claim too speculative. No point on the standard of care arose. The duty the daughters expected of the solicitors did not go beyond their duty to look after their own client's interests : in other words, the daughters' case was that a duty was owed to them but it would have been satisfied simply by acting on their father's instructions. The case is thus different from Clarke v. Bruce Lance [1988] 1 WLR 881, CA, where the duty contended for would arguably have been more extensive than that owed to the client, and assessment of causation more speculative.
The recent history of pure economic loss.
For something close to three decades now, the tort of negligence has been caught up in the dilemma of the recovery of pure economic loss. On the one hand, not every loss can or should be recovered. On the other, to restrict recovery drastically in cases of purely economic losses (as contrasted with physical losses) is admittedly an artificial device. In nearly all cases, physical or economic, the true complaint is that the plaintiff has lost out financially, and there is no obvious justice in restricting claims to cases where it can be shown that the defendant damaged the plaintiff's property.
How to handle this dilemma ? The slow steady increments of the tort of negligence in the 1960s and 1970s culminated in the path-breaking decisions of Anns v. Merton LBC [1978] AC 728, HL and Junior Books v. Vietchi Co [1983] 1 AC 520, HL. But these cases were too much for some tastes, and over the 1980s they were slowly whittled away. This development culminated in the overruling of the Anns decision in Murphy v. Brentwood DC [1991] 1 AC 398, HL. Reaction to Murphy v. Brentwood is now setting in. The tone of debate has changed out of all recognition; as Lord Goff put it, "No problem arises by reason of the loss being of a purely economic character" ([1995] 1 All ER 711a). Even the dissenting lords seemed to accept that the question is not whether the tort of negligence will be permitted to expand, but how fast and on what terms. But equally, the past has left its mark. The analysis in Anns and Junior Books is too sloppy for modern tastes; so while the issue in this case had come up before, in Ross v. Caunters [1980] Ch 297, ChD, it was accepted that Megarry VC's analysis of the issues (very full by the standards of his time) did not reach the really important questions. "It is better to start again" (Lord Mustill, [1995] 1 All ER 725a).
The speeches themselves
This case then comes at a time when the law of negligence appears to be taking a new turning. The enthusiasm for claims for purely economic loss manifested by the courts in the 1970s is returning, combined with a belief that courts not simply may but should develop the law in accordance with principle and justice - but also combined with greater analytical rigour. These conflicting concerns, with the high level of legal talent in the lords at present, have led to five very different approaches in this case.
It is fair to say that the quality varies. Lord Nolan's speech glosses over many of the problems, and adds little or nothing to the other majority judgements; while Lord Keith's dissent, a stout defence of acting only on principled analogy to existing law, has a rather futile air about it, as if he were running up the white flag. The juggernaut of Lords Goff and Browne-Wilkinson will not be delayed by considerations of this nature. It may however be slowed or even stopped by arguments of the type deployed by Lord Mustill. And it is in these three speeches that the meat of the reasoning will be found. Whether the difference between these three lords turns out to be of fundamental legal importance is at present an open question. Lord Mustill himself was quite open about the core reason for the disagreement here : Goff and Browne- Wilkinson thought the facts of the case cried out for a remedy, but he did not. This question of fairness, and the assumptions on which it is based "dominate the landscape within which the whole enquiry takes place" ([1995] 1 All ER 719b).
Relation to Henderson v. Merrett Syndicates (1994)
Moreover, we cannot view the case alone. To compare it with Henderson v. Merrett Syndicates [1994] 3 All ER 506, HL, is no mere exercise in abstract analysis. Henderson was argued before the same panel of law lords, slightly after the argument in White v. Jones. Judgement in Henderson was however delivered considerably earlier, perhaps because (as was rumoured in the legal press) the lords could not agree on the result of White v. Jones, whereas they were unanimous in Henderson.
The facts in Henderson are remote from those in White v. Jones: essentially, the question was whether Lloyds' "names" could sue the firms that had managed their assets, even though many of those agents were not directly liable to the "names" in contract, but only indirectly down a chain of contracts. But similar legal issues bubble under the surface of that case, and the ominous stillness of the unanimous judgement in favour of the "names" turns out to conceal major differences. Lord Goff gave the main judgement, finding liability in tort; Lord Browne-Wilkinson concurred, adding a brief explanation of why action also lay in equity; and the other three members of the court simply concur without further comment.
This particular bird has come home to roost with alarming rapidity. In White v. Jones, Lords Goff and Browne-Wilkinson repeat their double- act, though here it is even harder to see how the two routes to liability - Goff's route via negligence and contract, Browne-Wilkinson's via the law of fiduciaries - can both be right. And Lords Mustill and Keith, while distinguishing Henderson rather than dissenting from it, do so on grounds which suggest that they disapprove of most of what was said in the speeches in that case. This means war. A House of Lords that can disagree so radically over what they themselves decided six months previously are quite capable of re-writing the entire law of negligence within a decade - but are more likely to leave it a heap of rubble.
The Competing Claims of Justice
What of the justice of the claim, over which the lords disagreed so sharply ? The "simple justice" of the claim (Lord Nolan, [1995] 1 All ER 735a) was obvious; it was "unacceptable" that the solicitors should escape liability under "some technical rules of law" (Lord Browne-Wilkinson, [1995] 1 All ER 718d). It was of "cardinal importance" that solicitors should not be allowed to emperil family wealth without a remedy; liability was part of the price the legal profession must be prepared to pay if they want the public's trust (Lord Goff, [1995] 1 All ER 702c). "The impulse to do practical justice" gave a powerful motivation to deal with the merely "conceptual" problems that stood in the way of the plaintiffs (Lord Goff, [1995] 1 All ER 698e).
All this was powerfully disputed by Lord Mustill. It was not enough, he said, simply to lay at the door of the defendants "what is called 'fault'", a lazy phrase that obscured the question whether the plaintiffs had a right to complain about the quality of the services the defendant supplied to their father. "[L]egal fault cannot exist in a vacuum; the person who complains of it must do so by virtue of a legal right" ([1995] 1 All ER 720a).
In fact, there had been considerable contact between the daughters and the solicitors, and Lord Nolan at least was prepared to rely on this to rebut the argument that there was insufficient proximity ([1995] 1 All ER 736eg). But for the rest of the court, and certainly for the true defendants, the Solicitors' Indemnity Fund, the issue was of more general import. "The case has been conducted throughout on the basis of a stark choice between a duty of general application or no duty at all, and it cannot I believe be right to admit of an intermediate solution which has never been investigated on either the facts or the law" (Lord Mustill, [1995] 1 All ER 733gh).
The relevance of the position in contract
We are plainly long past the time when the mere invocation of contract was enough to make tort lawyers run for cover. An argument by Professor Jolowicz QC that there was an "exclusive contractual zone" into which tort should not enter was rejected on all sides. A contract would only exclude tort from the entire area if "the contractual framework [is] so strong, so complex and so detailed as to exclude the recognition of delictual duties between parties who are not already connected by contractual links" (Lord Mustill, [1995] 1 All ER 721f). As we shall see, the presence of a contract was central to Mustill's denial of a duty, but even he did not believe that this followed in any very simple way.
A large amount of space is devoted in the speeches of their lordships to the law of contract, which is surprising given that the plaintiffs had not relied on contract. Yet valuable points emerge from this. For Lord Mustill, if the claim was good at all it had to be contractual; after all, the solicitor had only become involved in the matter at all as a result of his contract, and no-one had argued that he was bound to do anything beyond what his contract specified ([1995] 1 All ER 721j). Lord Goff, noting that German law gives a remedy to such plaintiffs via a contractual route, noted that nonetheless in English law this route was firmly blocked by the common law notions of consideration and privity. "Attractive though this [contractual] solution is .. I myself do not consider that the present case provides a suitable occasion for reconsideration of doctrines so fundamental as these" ([1995] 1 All ER 708fh).
This sounds very unlike whole-hearted acceptance of these common law notions, and suspiciously like a covert declaration of war, induced by a prudent need to gather allies and resources against the day when the declaration can safely be made publicly. It is too often forgotten that in such a doctrinal battle a judge needs allies not simply on the bench but also from the bar; whether this coded plea for support bears fruit remains to be seen.
Transferred Loss?
Similar judicial sparring can be seen over the German notion of transferred loss (schadensverlagerung) and the related common law principle in The Albazero [1977] AC 774, HL, both of which combine a cause of action (held by a person whose has suffered no loss) with a loss (held by someone with no cause of action) to produce the desired result of a plaintiff who can sue for the loss. Lord Mustill dismissed both notions, pointing out that there was no loss to transfer - the loss suffered by the daughters did not correspond to any loss suffered by their father - and that this area had been thoroughly reviewed by the house in Leigh and Sillavan v. Aliakmon Shipping [1986] AC 785, HL. Clearly, on the basis of that case, no action lay.
Lord Goff conceded that the transferred loss claim in Leigh and Sillavan had failed, the lords so deciding contrary to Goff's own judgement in the Court of Appeal (at [1985] QB 350, 382). But then what had happened ? Legislative action was taken to correct the law; the newly-ennobled Lord Goff had the honour of introducing to the (legislative) House of Lords the bill which became the Carriage of Goods by Sea Act 1992. The consequence of the (judicial) lords' refusal to recognise the action, therefore, was merely that the lacuna in the law was filled by statute rather than common law ([1995] 1 All ER 707d). This obviously wasteful process of deciding wrongly and then having the legislature intervene, he seems to be saying, should be cut short. So while this case was not quite one of transferred loss, nor quite like The Albazero, nonetheless it was closely analogous, and the claims of justice were compelling.
The Duty of Care
We start from the central fact about the case, that the solicitors undertook to do certain work. The legal consequence of their undertaking to do the job in question placed them in a clear and obvious relationship to those who stood to gain from the work. And so, argued the majority, it is not unreasonable if the law, as one consequence of that undertaking, finds a duty of care owed to the parties who (as the defendants knew) stood to suffer if the job was poorly executed. None of the lords in the majority contended that the duty in this case was covered by any earlier precedent, other than the poorly-reasoned Ross v. Caunters. Nonetheless, the compelling justice of the case made it an appropriate one for analogical extension of the law.
Law or Equity?
The rather different backgrounds of the various law lords lead to differences of emphasis. Lord Goff emphasises commercial and common law principles. The simple Hedley Byrne situation (Hedley Byrne v. Heller and Partners [1964] AC 465, HL), where the loss was caused to the very same person whose reliance created the duty in the first place, was only the most simple example of the genus; as the more complex commercial situations showed, the loss frequently is recoverable by other parties who lose out. The lords should therefore not make the same mistake as they made in the Leigh and Sillavan case, but should find a duty to the plaintiffs by analogy with earlier cases.
Lord Browne-Wilkinson placed more emphasis on equitable aspects. The Hedley Byrne case, he claimed, could not be understood without realising that it concerned only one of two categories of "special relationship" giving rise to a duty of care; the other being the category of fiduciary duties. And it could not be said that duties were only owed to people you knew or had contact with, for many fiduciary duties are not so restricted - fiduciaries can owe duties to people who do not yet even exist, as where a trustee holds property for the children of X, who is so far childless. The true rule, said Browne-Wilkinson, is that where a duty exists, it is a duty to do a particular job, so a finding of liability here involved no great extension of the authorities. The defendants had assumed a duty to write Arthur Barratt's will, in the knowledge that the plaintiffs' economic well-being was under threat if they did not; and that was enough.
Lord Mustill's dissent
It is on this point that Mustill joins issue, though he has far more to say on the common law aspects than the equitable aspects. The ground on which the defendants are liable, if liable at all, is that they have assumed a duty. But to whom have they assumed a duty ? Why, to Arthur Barratt, and to no-one else. Any gain or loss to the plaintiffs was quite fortuitous from the defendants' point of view; their only duty was to their client. Henderson v. Merrett was quite consistent with this, he added : for the agents in that case had plainly undertaken to manage the affairs of the "names", despite the lack of a direct contract with them. "True it is that the solicitor undertook the task of drawing a will which would be for the advantage of the beneficiaries but he did not draw it for the beneficiaries, he drew it for the testator" ([1995] 1 All ER 732bc).
"Assumption of Liability"
So the main difference of opinion comes down to a rather narrow point : when we talk of a duty under Hedley Byrne being based on an "assumption of liability", what precisely do we mean ? Lords Goff and Browne-Wilkinson hold that this means the defendants undertake the task, and so no injustice is done in making them compensate people they know will lose out if the task is poorly done, or not done at all. Lord Mustill says the expression means that the defendants undertake legal liability for the task, a phrase which points to a much narrower class of plaintiffs. The majority's definition goes beyond what the defendants took on themselves, and imposes a legal duty which they never intended.
This is no narrow semantic point. It cuts straight to the crucial issue : Does tort have a role in defining and policing the duties that professionals owe ? Or should this be left to be hammered out between individuals firms, their clients, and the relevant professional bodies ? Lord Mustill plainly thinks the latter. "The purpose of the courts [is] not to act as second-line disciplinary tribunals imposing punishment in the shape of damages" ([1995] 1 All ER 720d). Whereas Lord Goff called attention to the considerable numbers of claims of this type, and emphasised the class of practice they seemed to affect : the typical case involved a relatively small amount of money, being claimed from a relatively small firm. So clients at the poorer end of the market are effectively being denied an effective means of leaving their property by will, and if solicitors wish to retain their high professional status in contemporary society, they should regard a willingness to compensate this class of plaintiffs as part of the price they have to pay for this status ([1995] 1 All ER 702eh). No-one seems to have thought it worth-while to argue that the less the clients pay, the lower the quality of service to which they are entitled. This is perfectly good contract law, but it is hardly a point that a dignified profession cares to emphasise, and on the facts it did not arise. Nonetheless, Lord Goff seems to be involved in a campaign to limit the damage such an argument might do.
The future: An expanding but confused law of negligence?
Where does this leave the law of negligence ? Firstly, it is plain that the law is set to expand, and expand considerably unless there are great changes in the composition of the house of lords. Any dangers implicit in this are being dismissed with the argument that the court will go a step at a time, and will not be deterred from any one step by the fear of what might happen at some later stage.
Secondly, the step-by-step approach is being combined with a relatively sophisticated enquiry into the consequences of the particular step in issue, but with little thought for the broader picture. This is good in the limited sense that each new extension of the law will receive careful consideration. But a further, almost inevitable consequence will be the appearance of turmoil, as the lords constantly reminded themselves that what makes sense in one context may make none in others.
The treatment of Henderson v. Merrett, I suggest, is a fair sample of what is to come. Within only a few months of the original decision, we find the very same panel of judges taking it to stand for very different propositions; and Lords Keith and Mustill, happy at the time simply to concur in the result, now seek to "explain" the case on grounds bearing little resemblance to those appearing in the law report.
There is nothing intrinsically wrong with this. But it makes a nonsense of the "principled" way in which the subject is expounded most of the time, and indeed makes the house of lords come to resemble a mini- Law Commission, reconsidering micro-portions of the common law and re-writing them to accord with current feeling - and all this without seeking Parliament's approval. Whether that is good or bad is rather a large question. But it is not at all what our language, our legal rhetoric and our law books say is going on.
What about other areas of law?
Yet it is a strange quirk of legal development that the lords only feel able to engage in this free-wheeling enquiry when the result can be dressed up as an example of the tort of negligence. Is our law of property, or our law of contract, really so satisfactory that it can be left alone without amendment ? Lord Goff's attitude speaks volumes : there is much that could be done to our law of contract, were it not for the assumption that certain doctrines are fundamental and that the world would come to an end if they were seriously called into question.
And whatever one thinks of the result, Lord Mustill certainly hit the nail on the head by calling attention to the position in property law ([1995] 1 All ER 720e) : if we are truly convinced that the will admitted to probate does not reflect Arthur Barratt's wishes at the time of his death, why admit it to probate at all? And as Lord Nolan mischievously noted, no-one quite knows what Arthur Barratt's will would have contained had he been disposing of not only his own assets, but also a further stlg.18,000 free of inheritance tax, courtesy of the Solicitors' Indemnity Fund ([1995] 1 All ER 734j).
Conclusion: What price Murphy v. Brentwood?
Despite the disagreements, it is the points on which the entire house was agreed that stand out. The tort of negligence is set for an expansion, to which no very obvious a priori limits can be set. Any suggested extension may be rejected by the courts if unjust, or if no principled route to liability can be found; but it will not be rejected on the ground that the claim is unprecedented, or seems to enter territory hitherto reserved for contract, or allows recovery for a loss which is purely economic.
That being so, the grounds so often urged against the decisions in Anns and Junior Books, and which have led to their currently low status, now seem rather tired and feeble. What could be said against either result that could not equally be said of Henderson, or of White? Or is the true view that solicitors have a higher status in society than do builders, and must accordingly be prepared to compensate a wider range of plaintiffs ? This question will no doubt be re-posed to their lordships in the not-too- distant future.