Citation: Shepherd Construction Limited v Pinsent Masons LLP  EWHC 43 (TCC)
Keywords: Standard Form Contracts, Drafting, Allegations of Solicitors’ Negligence, Scope of Retainer, "General" or "Single" Retainer with Longstanding Client or Series of Specific Retainers?
Whether parts of the Claimant’s claim alleging a “Single Contract” retainer with the Defendant, embracing numerous specific instructions over several years on a variety of matters, were liable to be struck out.
The Claimant (“Shepherd”) had a longstanding relationship with the Defendant (PMLLP) and its predecessor practises. In particular, in 1998 Shepherd had obtained advice and certain drafting services from Masons, in connection with draft amendments to DOM/1 and DOM/2 standard form JCT 1998 edition contracts. This was at the time when the provisions of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”) were coming into force, which effectively outlawed "pay when paid” clauses in construction contracts, save in the case of insolvency as defined in the 1996 Act. The definition of when a company becomes insolvent, provided by section 113 (2) of the 1996 Act as it then was, was included verbatim in the drafts that Masons produced. Changes were then made to that definition four years later upon the enactment of the Enterprise Act 2002, widening the definition to include a situation where directors passed a resolution to go into voluntary administration. The drafts that Masons had produced were not, it was alleged, revisited and amended to take account of this change to the law.
In 2007, Trinity Walk Wakefield Limited engaged Shepherd as main contractor on a shopping centre development in Wakefield. Trinity’s directors resolved on 19 March 2009 to appoint administrators, by which time Shepherd had already engaged several sub-contractors. Those sub-contractors sued on unpaid invoices and Shepherd tried to set up in defence the “pay when paid” clauses which Masons had previously drafted for use in Shepherd’s amended standard form contracts. Shepherd failed in this attempt, before two adjudicators and in Court before Coulson J ( EWHC 1603 TCC).
Shepherd commenced proceedings against PMLLP arguing that there had been “Single Contract” retainers between Shepherd and each of PMLLP, its predecessor Pinsent Masons, and its predecessor Masons. These Single Contracts were, it was argued, to be implied from the facts and circumstances surrounding the relationship between Shepherd and those entities. It was then argued that there was to be implied into each Single Contract an on-going duty upon the successive firms to review the suitability of drafting amendments and/or drafting advice previously provided to the Shepherd, in light inter alia of legislative and other legal developments.
Held (Akenhead J)
The argument that there was a Single Contract with any of the firms was unsustainable. A solicitor’s functions and responsibilities must primarily be determined by his or her retainer. There was no evidence of any express agreement to a Single Retainer by any firm, and indeed the provision of and billing for successive pieces of individual work was inconsistent with this. The fact that instructions were often given informally, were numerous, were often attended to by the same personnel, and that as part of the relationship ‘briefings’ and other training or seminars were provided at no charge, did not give rise to any necessary implication that there was some overarching general retainer by which the solicitor was required to keep under review all advice and drafting previously done. It was also not alleged, save in one immaterial respect, that anyone from the respective solicitor firms actually knew that advice previously given (in this case in 1998) had become in the light of the Enterprise Act 2002 not only obsolete but commercially imprudent. Whilst it might (arguably) be possible to imply into the obligation within the 1998 retainer to exercise reasonable care and skill that, if Masons had actually become aware at a later stage that the advice given earlier had become redundant and gave rise to potential commercial problems, it should so have advised the client, that was not the allegation here.
In general terms, it would be commercially and professionally worrying if professional people were to be held responsible for reviewing all previous advice or indeed services provided. There is a difference to be drawn between a specific retainer or commission which imposes a continuing duty on a professional to keep earlier advice or services under review and some sort of obligation which requires the professional to review and revise previous advice given or services provided on commissions or retainers which are complete. If the professional actually knows or becomes aware that his or her earlier work is or has become in some way deficient, he may be under an obligation to inform his client, but even that may be subject to time constraints and may not be an indefinite responsibility.
This was a difficult argument for Shepherd to attempt. Solicitors and professionals more widely will welcome the confirmation that they will not be required to keep previous work effectively under rolling review in the absence of a clear agreement to do so.
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