Gasztowicz: Deed was not meant to stop party suing its own solicitors
The High Court has overturned a master’s decision to strike out a claim against a London law firm because of a release clause in a previous settlement involving its clients.
Steven Gasztowicz KC, sitting as a deputy High Court judge, held that Deputy Master Lampert wrongly interpreted the deed in relation to RLS Law and that in fact it could be sued.
The underlying litigation saw the ‘ABNO parties’ and ‘KAH parties’ in dispute in relation to the beneficial ownership of properties in Manchester and Brighton. RLS, a boutique property law firm, had acted on a joint retainer on the acquisition of the properties.
The case, brought by the ABNO parties, settled during the trial in 2019, with the settlement deed saying that it “shall constitute full and final settlement of all claims against each of the other parties and their respective affiliates”.
The claimants then sued RLS for professional negligence and/or equitable compensation, accusing it of preferring the KAH parties in its work.
Deputy Master Lampert decided that the settlement deed operated to release RLS – as an affiliate of parties to the case – from claims brought by any of the ANBO parties arising from the previous proceedings, which this one clearly did.
But Judge Gasztowicz held that the aim of the wording “other parties and their respective affiliates” was to release affiliates like RLS from claims against them as the other party’s agents.
“It does not seem to me to have been intended to release claims any party might have against its own agent – such as for work charged for as having been carried out on its behalf but not actually done, to take a simple example, or giving it tax advice in relation to the arrangements, to take another – just because they were also an agent of another party.
“That is also consistent with the aim of the deed being, as stated at the start of it, to resolve the parties’ disputes in relation to the beneficial ownership of certain assets.
“This does not suggest it was intended to prevent actions between a party and its own professional advisers.”
The judge also rejected the master’s suggestion that it was difficult to see how an interpretation like this could work in practice.
“To take a very simple example by way of analogy with the present case, if a solicitor acts for two people, A and B, on the purchase of a house to be occupied by them and on the instructions of A fails to put B’s name on the deeds jointly with A despite B having provided half the purchase money and without confirming with her that this should be done, leading to A subsequently selling the house in which B had a joint share to a third party without her knowledge and disappearing, it is not clear why there should be any difficulty in practice in her bringing an action against the solicitor based on his breach of duties owed to her because there was joint retainer.
“Of course, there may be arguments on the facts as to whether, for example, the solicitor was entitled to act as he did but such a situation would not appear to present a practical difficulty.
“So, too, it seems to me in relation to the specific allegations of breach of duty and losses alleged by the claimants here.”
Judge Gasztowicz set aside Deputy Master Lampert’s decision to strike out the claimants’ statements of case and giving judgment for RLS on the claim, with costs.
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