Dunhill v (1) W Brook & Co and Crossley [2016] EWHC 165 (QB)

The professional negligence claim arising from long-running litigation about capacity and settlement will give some comfort to lawyers concerned about negligence claims arising from personal injury work – but not too much.

Background facts

Ms Dunhill was injured in a road traffic accident in June 1999, in which she received a head injury.

Ms Dunhill was represented by the First Defendant solicitors throughout: although there was a fully qualified solicitor (Mr Brooks) acting as file handler, in practice a relatively new trainee (Mr Marsh) performed the larger share of the work on the case.

Conduct of the original claim

Medical reports were sought. Counsel valued the claim at £40,000 on a full-liability basis but said that a finding of significant contributory negligence (67-75%) was probable.

The case was listed for a split trial. New medical evidence came to light from neuropsychologist Mr Morton – not commissioned by the instructing solicitor, but known by them and counsel to exist – suggesting that Ms Dunhill’s brain injuries were significantly worse than previously thought.

In the meantime other difficulties arose for Ms Dunhill. Her mental state deteriorated. Her main witness – her son, Mr Tasker – was arrested, and it was not known whether he would be able to attend court to give evidence.

Ms Dunhill was very anxious about being cross examined and told her solicitors she would prefer that the case was settled without her having to give evidence. She gave W Brook and Co authority to obtain documents to show that she was unfit to attend, in the event that the hearing went ahead.

An offer to settle liability at 50-50 subject to quantum was rejected, so the liability-only hearing was to go ahead as listed on 7 January 2003. New counsel – the Second Defendant, Mr Crossley –was instructed to take this hearing.

Mr Morton’s new report was sent to W Brook and Co the afternoon before the hearing. It had been referred to in passing in previous counsel’s advice and quoted briefly in other medical reports – both of which Mr Crossley had –but the report itself never reached him.

The hearing and the settlement

Ms Dunhill came to court with Mr Marsh, the trainee solicitor, and Mr Burton, a mental health advocate. Her son did not attend, and gave no reason. Mr Crossley considered that his absence made their claim significantly weaker.

He advised Ms Dunhill in conference that since their prospects of succeeding were now imperilled, they had two options: ask for an adjournment, which the judge would be unlikely to give; or settle the claim with the Defendant. Ms Dunhill authorised settlement discussions.

Mr Crossley came back with an offer of £10,000. Eventually this was upped to £12,500, in full and final settlement of the claim. Ms Dunhill was unhappy to accept so little for her claim, but accepted the settlement. A consent order was drawn up and shown to the judge.

The related litigation: Dunhill (Tasker) v Burgin (No 2) [2014] UKSC 18

Eventually Ms Dunhill obtained further evidence on her brain injury, which led a new solicitor’s firm to conclude two things: first, that the case had been settled at a gross underestimate; and second, that she had lacked capacity to settle the case on 7 January 2003.

In February 2009 Ms Dunhill issued two sets of proceedings. The first was an application in the original action seeking a declaration that she lacked capacity, and that the consent order be set aside and directions given for the further conduct of the claim (a Masterman-Lister order: Masterman-Lister v Brutton & Co (Nos 1 and 2) [2002] EWCA Civ 1889, [2003] 1 WLR 1511). The second was the professional negligence claim against counsel and solicitors in the original case.

The first proceedings bounced through the senior courts on the issue of capacity and the application of CPR r21.10 when the party lacking capacity has conducted proceedings without a litigation friend, and the other parties and the court are in ignorance that there is a capacity issue.

The Defendant (Mr Burgin, whose motorcycle had hit Ms Dunhill all those years ago) argued that the rule in Imperial Loan Co Ltd v Stone [1892] 1 QB 599 applied to agreements to compromise claims on terms, and meant that the contract would not be void ab initio, but rather voidable when one party’s lack of capacity became known to the other.

Lady Hale, for a unanimous Supreme Court, decided that CPR Part 21 was incorporated into every settlement agreement: on its construction it applies to all “proceedings”, including managing a claim pre-issue, whether lack of capacity is known or not. The decision by Bean J to set aside the consent order and re-open the claim was upheld.

Eventually the original parties settled liability shares, with Ms Dunhill accepting 45% contributory negligence against her. This was approved by Swift J on 5 March 2015.

By the time of the Supreme Court’s judgment was valued at between £800,000 (by the original Defendant) and £2 million (by the Claimant) gross: at the time of the professional negligence claim the value of quantum in that case had still to be decided.

The professional negligence claim: in court

The standard of care for a barrister was accepted to be that set out by Lord Diplock in Said Ali v Sidney Mitchell & Co [1980] AC 198, 220D: errors of judgment do not breach the standard of care unless they are such that no reasonably well-informed and competent barrister would have made them.

There was no dispute that a solicitor is not negligent in acting reasonably on the advice of appropriate counsel, properly instructed, so long as the solicitor exercises independent judgment and rejects that advice if it is obviously or glaringly wrong (Locke v Camberwell Health Authority [1991] 2 Med LR 249, CA).

Lang J accepted the submission on behalf of the First Defendant solicitors’ firm that the effect of Locke was that Mr Crossley’s conduct should be assessed first, and that if he was found not to be negligent, then the solicitors could not be negligent so long as they were reasonably entitled to rely on Mr Crossley’s advice, and had discharged their duty by sending Mr Marsh to court.

Mr Crossley’s duty

Mr Crossley was said to have overestimated the risks in the claim, and to have been negligent in advising acceptance of an offer in full and final settlement of the claim when he had not considered any quantum evidence.

Lang J reviewed the evidence she had heard, and concluded that Mr Crossley had reviewed the evidence reasonably, and correctly: there was a real risk that the Defendant’s witnesses would come up to proof, and without Mr Tasker, there was an obvious risk that Ms Dunhill would leave court with her claim dismissed.

Mr Crossley was also found to have acted reasonably in advising acceptance of the settlement. He did not have access to full quantum evidence, but did have the advice of previous counsel: given her valuation of the claim at £40,000, settlement of a claim where 67-75% contributory negligence was likely seemed, at the time, to be “exactly right”.

Since Mr Crossley’s advice was found to be reasonable, the solicitors were entitled to rely on it. Mr Crossley did not know that Mr Marsh was a junior trainee, Lang J accepted that Mr Crossley was the one who was there to exercise judgment. On that basis the solicitors had discharged their duty and were also not negligent.

The claim against both Defendants was therefore dismissed.

Analysis

There are two curious points arising from this case.

The first is: why was the claim brought at all?

Originally, the claim against counsel and the solicitors had been a “fall back” claim to protect Ms Dunhill’s position in the event that she failed against the original defendant – but she did not. After the Supreme Court’s decision in 2014 she was on the way to an approved final settlement when this claim was heard.

Lang J’s judgment does not shed much light on the answer to this question. She notes at [131] that by Ms Dunhill’s amended defence she was claiming “for any shortfall in [her] recovery of damages against Burgin that the court considers [is] caused by the Defendants’ negligence, any damages arising out of the cost of mitigation of her loss and any irrecoverable damages forever lost as a result of the Defendants’ negligence”.

It is hard to see what losses she would be able to prove when Swift J had already approved the apportionment of liability against Mr Burgin.

It is submitted that it would have been better for the case to have remained stayed – as it had done since April 2010 – until damages were finally assessed and approved in the original claim. But the stay was lifted two weeks after the apportionment was approved, also by Swift J. The reasons are unstated in Lang J’s judgment, and remain difficult to fathom.

The second curious point is: how was the issue of negligence determined so narrowly?

Lang J’s judgment traverses the whole history of the conduct of the case, but all of the focus of the ratio is on the reasonableness of the advice given at court. This is as a direct result of her decision at [138] to make the question of the solicitors’ negligence almost wholly consequent on the outcome of the assessment of the barrister’s negligence, and the fact that Mr Crossley was only instructed as counsel on 18 December 2002, less than three weeks before the hearing.

It is submitted that the reason lies in some of the particular facts of the case. First, the antiquity of the case means that it was legally aided. Modern PI practitioners are as likely to come across legally aided claimants as they are to encounter Dodo’s eggs.

The process – described at length in the judgment – was of incremental effort by the solicitors towards small milestones, followed by efforts to extend the Legal Aid Certificate to cover the next tranche of work. The solicitors therefore prepared for the trial on liability, and work on quantum evidence being “preliminary”: the gaps would be filled in later.

Lang J notes this at [149], and notes also that the Claimant did not criticize the decision to agree to a split trial. There is an implicit finding that where a split trial is accepted, then this was a reasonable way to run a legally-aided claim where funds were obtained gradually.

The second particular fact goes to capacity, and also arises from the case’s age. In reviewing the witness evidence Lang J notes that the (then) trainee solicitor Mr Marsh accepted that he had been aware of the need to assess Ms Dunhill’s capacity, but that he had no concerns. The issue of capacity was not returned to in her judgment.

To a modern practitioner the lack of continuing assessment of a brain-injured client’s capacity to conduct proceedings appears self-evidently negligent. But the modern statement of this duty, and the idea that capacity must be specifically decision-based, comes from Masterman-Lister. The Court of Appeal gave judgment in that case on 19 December 2002 – the day after W Brook and Co instructed Mr Crossley, and only 19 days before the hearing.

Conclusion

The case gives a (welcome?) margin of appreciation for lawyers – particularly barristers – in making judgments about the conduct of a case. But all lawyers, and particularly solicitors, should not breathe too heavy a sigh of relief because of this case.

With the version of the CPR currently in force (which, per the Mental Capacity Act 2005, largely codifies the decision in Masterman-Lister), and in cases where solicitors are spared the vicissitudes of public funding, this case could be very easily distinguished.

It is hard to see a court deciding that a firm acting for a privately paying client, or on a CFA, would have acted reasonably if they deferred the gathering of quantum evidence in the same way, the more so for a brain-injured Claimant where capacity is in issue.