UK: Shot By Both Sides?

Solicitors who conduct litigation are usually mindful of their professional duties to their client and their obligations to the court. However, it is easy for them to lose sight of their additional duty to act in good faith towards the other party and its solicitors and that breaching this duty can give rise to disputes.

This article explores the problems that can arise with particular reference to the decisions in Thames Trains Ltd v Adams (2006) and The Law Society v Sephton & Co (2004).

The parties sought to settle following an admission of liability. Thames had paid US$9.3million into court and, following a representation by Thames' solicitor, Mr Rae-Reeves, that no further monies were available, Mr Adams' solicitor, Ms Christian, sent a fax offering to accept the monies in court subject to certain conditions. However, an error in Mr Rae-Reeves' fax system meant that there was a delay in the fax reaching him.

During a subsequent telephone conversation between the solicitors, Mr Rae-Reeves, having received further instructions, offered to pay an increased sum of US$9.8million. Ms Christian accepted that offer.

The parties acknowledged that Ms Christian's offer lapsed upon Mr Rae-Reeves putting forward the increased offer, so the issue for the court was whether Ms Christian was duty bound to inform her opponent of her fax. The court held that Ms Christian was not under such a duty. Crucially, it held there was no general duty upon one party to point out the mistakes of another party. That said, solicitors must "be scrupulously fair and not take unfair advantage of obvious mistakes" (Ernst & Young v Butte Mining plc (1996)). Here, however, Ms Christian did not know whether her fax had actually been sent and had she informed Mr Rae-Reeves of her faxed offer, she may have breached the duty she owed her client not to communicate privileged instructions. Furthermore, since Mr Rae-Reeves' statement that no more money was available was inaccurate, and since the fax had not been received because of his mistake (the systems failure at his office), Ms Christian was entitled to stay silent in her client's best interests.

Plainly, each situation will be judged on its facts and the court will look to ensure that the parties are on an equal footing, but Adams clearly demonstrates that a solicitor is not required to be the nursemaid of his or her opponent. However, it is worth noting that in Adams the issue was Ms Christian's silence regarding her fax. Had she been asked a specific question - i.e. whether the money in court was accepted - it would not have been acceptable for her to have stayed silent.

The defendant's solicitors (Barlow Lyde & Gilbert) in this case were found not to have behaved unconscionably but the decision highlights that solicitors may, depending on the circumstances, have a duty to take care when drafting correspondence to the other side to avoid misleading them or giving them an erroneous impression on a point on which they then rely to their detriment.

The Law Society's action was for damages in respect of monies paid out of its Compensation Fund as a result of allegedly negligent reporting by Sephton, the defendant accountancy firm. Sephton claimed that the Law Society's action was statute barred as the relevant limitation period had expired. In response (and as well as contesting that the limitation period had expired) the Law Society argued that Sephton's solicitors had estopped their client from relying on a limitation defence. It claimed they had done so by indicating (in pre-action without prejudice correspondence) that Sephton would be prepared to concede breach of duty, subject to certain conditions, in negotiations over quantum. The Law Society argued that this communication gave the impression that no limitation defence would be raised by the defendant and led to the Law Society delaying the commencement of proceedings.

After reviewing the facts in detail, the court concluded that the defendant's solicitors had not made 'a clear, unequivocal or unconditional promise not to rely on its right to plead limitation' and so were not estopped from raising the limitation defence. This element of the decision demonstrates the importance of precision in correspondence with the other side, so avoiding misunderstandings and the opportunity to take this type of point.

Solicitors may owe a duty not only to point out their opponents' mistakes but also to explain exactly how they have gone wrong. In Hertsmere Primary Care Trust v Estate of Balasubramanium (2005), the claimant made a defective Part 36 offer. The defendant's solicitors replied six weeks later noting the problem, but failed to explain why the offer was defective. Holding that the overriding objective required the defendant to explain the defect to enable its opponent to rectify it, the judge allowed the claimant the protection of Part 36 and warned that deliberately refusing to provide such an explanation could justify an indemnity costs order.

Duties to the other side may arise when privileged documents have been mistakenly disclosed, in which case the receiving party has a duty not to make use of them. This duty is underlined by the court's equitable jurisdiction to grant an injunction to prevent use of the documents (see International Business Machines Corp v Pheonix International (Computers Ltd)(1994)). Solicitors also have a duty to deal fairly with an opponent litigant in person. In Adams, the court stated that: "The difference [between a solicitor and litigant in person opponent] lies in what a solicitor can properly expect an experienced solicitor opponent to be aware of compared with that which a litigant in person might know. Whether or not a solicitor has taken unfair advantage of an opponent must be judged upon the facts, and relevant to that determination will be the experience and knowledge of his opponent."

This places a burden on solicitors to consider carefully the level of experience of their opponent litigant in person and act accordingly. However, the courts (see Fitzhugh Gates (A firm) v Claudia Louise Elaine Borden Sherman (2003)) recognise that the primary responsibility for protecting litigants in person rests with the court and a failure by an opposing solicitor to assist a litigant in person will not automatically be improper, unreasonable or negligent.

Rather unsatisfactorily, but perhaps understandably, the above cases show that what will and will not be regarded by the courts as acceptable behaviour to the other side is ultimately judged on each case's individual facts. Some comfort is to be gained from Adams that there is no general duty to point out another's mistakes, although the factual context in which one acts is critical in determining whether one's duties have been breached. Had Ms Christian been specifically asked about the fax, it would have been unacceptable for her to remain silent. See also the Hertsmere case where solicitors were held to be under a duty to explain why the other side's Part 36 letter was defective. Solicitors cannot always simply assume that their only duties are to their own clients and the courts. The best that solicitors can do is to analyse their duties to the other side in light of common sense, the overriding objective and current case law. At the same time, they must remain mindful of their obligation to protect their clients' interests to avoid breaching their duties to them. A careful balancing exercise of these (often competing) interests is required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.