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GAZETTE
SEPTEMBER 1979
The Perils of Destruction
B. S. RUSSELL, M.A., Barrister
[Reproduced from English Law Society's Gazette 28.11.1979]
It is not often that one has the pleasure of reading such
an elegant and comprehensive judgment as that of Oliver
J. in
Midland Bank Trustee Co. v. Hett Stubbs and Kemp
[1978] 3 All ER 571. It deals in masterly fashion with an
important aspect of the duty of a solicitor and, indeed of
the duties of all professional men who have to advise
other persons.
This case (and to understand it in full you should also
read its immediate predecessor in the reports,
Midland
Bank Trustee Co. v. Green
[ 19781 3 All ER 555) sets out
a simple, but sorry, story. The profession does not come
out of it very well. A small error by a very experienced
conveyancer has taken a total of twelve days in court, ten
years of litigation and the citing of 93 cases; the costs in-
volved must be stupendous. However, it has at least
produced a judgment that, if it can evade the Scylla of the
Court of Appeal and the Charybdis of the House of
Lords, could properly be described as the leading case on
negligence of solicitors and, by inference, of other pro-
fessional persons as well. It is no longer safe to rely upon
the Limitation Act 1939; six years from the time of the
advice being given is no longer the time to destroy files. It
is clear that no papers should be destroyed until the poss-
ibility of any action for negligence arising has passed. The
only safe course is to microfilm such records before they
go to destruction; or else keep them for many years. (A
comprehensive schedule of suggested document retention
periods, together with a detailed brochure for solicitors
How Microfilm Can Help Me,
is available free from Oyez
Services Ltd., Microfilm Division, 70-74 City road,
London ECI 2DX, Tel: 01-253 0444).
What led to all this
sturm und drang?
Walter Green
owned a farm, Gravel Hill Farm, in Lincolnshire. He also
appears to have owned a number of other farms, one of
which had the name (which would have pleased P. G.
Wodehouse) of 'Shifty Nocking'. He had sold one to his
younger son, but when his elder son, Geoffrey, wished to
purchase Gravel Hill, Walter was reminded of the death
duty advantage of the possession of agricultural property
and, instead, Geoffrey was given an option for a period of
ten years, in consideration of the payment of £ 1 on 24
March 1961, to purchase the farm at .a set price of £75
an acre. During the next few years Geoffrey occasionally
consulted the defendant firm of solicitors about the desir-
ability of exercising the option, but nobody noticed that
the option had not been registered as an estate contract.
The result was that, after Geoffrey had seriously
quarrelled with his father in 1967, Walter went to an-
other firm of solicitors seeking to defeat the option and
they advised him to sell the farm to his wife, which he did
for £500. They ought also to have advised him that this
would have been a breach of the contractual option, but,
as they said rather primly in a letter ' . .. Whether he
should have done so or not was a matter upon which we
were not asked to advise'. The client on the Clapham
omnibus might have a different view as to the propriety of
that inaction. Anyway, the die was now cast; the farm
was sold, with the startling inclusion of the usual certi-
ficate in the conveyance that the amount or value of the
consideration did not exceed £5500 (the judge took a
merciful view of this palpable undervalue), on 17 August
2 14
1967 and Geoffrey heard about it in September. An
attempt was then made to register the option and to
exercise it; but it was too late.
Proceedings were started on 25 November 1968 and
were subsequently complicated by the deaths of
practically all those concerned in the matter. In the first
case, the
Green
case, Oliver J. gave judgment against
Walter's estate for damages for conspiracy (to be
assessed) but the action against that of his late wife failed
because it had not been commenced within the limitation
period and she was a purchaser for valuable, if not
adequate, consideration.
There followed the action against the defendant firm of
solicitors for damages for negligence or breach of con-
tract. These were parallel claims. The solicitors con-
tended that their failure to register within a reasonable
time was a breach of contract only, and so statute-
barred. The judge's view of that was 'the plea of limita-
tion is an unattractive plea at the best of times ...'. How-
ever, he went on ' . . . it is the familiar experience in cases
such as this that solicitor defendants are not, practically,
entirely free agents in the matter of the defences which
may be raised on their behalf. The inference is obvious
and led to a majestic and complete review of the cases,
which had to include consideration of whether the court
was bound by
Groom v. Crocker
[1938] 1 KB 194
(where the Court of Appeal held that the relationship of
solicitor and client was purely contractual) or whether
there was a general, supervening duty of care under the
principle of
Hedley Byrne v. Heller & Partners
[1964]
AC 465. Having held that there was such a duty, it there-
fore followed that its breach took place when the farm
was sold to Mrs. Green in 1967.
It was also held that there is no general duty on a
solicitor to consider all aspects of his client's interest
generally when consulted on a particular problem, so the
defendant solicitors were not under a duty to consider the
option's registration and enforceability when consulted
about its exercise (a ruling that might surprise the client
on the Clapham omnibus or even, as the judge put it, in
the company car.). Secondly, if the duty owed was purely
contractual, the duty to register was continuous until it
became impossible to perform on the day that the farm
was sold.
Thus, having neatly rolled up all the possible loose
ends, we are left with the situation that almost any
mistake now lies in wait until damage results from it. This
will not only apply to solicitors, but also to any person,
primarily professionals, upon whose advice or action
people rely. It will, equally, not matter whether the advice
or action is gratuitous or paid. It is therefore very
important that insurances cover this in full (even purely
formal advice given at parties!) And that such insurances
cover the personal estates of the solicitors who are partners
in the firm, salaried solicitors and legal executives; and
there should be cover for advisers, whether lawyers or
otherwise, in business. But it is even more important that
full records should be kept of all advice given and that these
should be retained either in their original form, or, if space
is lacking or too expensive, in microfilm form acceptable to
the courts.