Thorpe v Fellowes Solicitors LLP: is this decision of any help to us?

  • Author : Martyn Frost
  • Date : May 2011

This recent decision1 in Queen’s Bench Division has attracted attention, mainly because of a passage in the judgment about a solicitor’s duty generally when acting for the elderly:

‘I should add (since at least part of the Claimant’s case seemed to have suggested, at least implicitly, that this was the case) that there is plainly no duty upon solicitors in general to obtain medical evidence on every occasion upon which they are instructed by an elderly client just in case they lack capacity. Such a requirement would be insulting and unnecessary.’2

The question arises as to whether or not that passage is really of any significance for private client work.

Facts

Ms Alexander contacted a firm of solicitors on behalf of her 77-year-old mother, Mrs Hill. The solicitors were advised that Mrs Hill wanted to sell her property, without the assistance of an estate agent, to a commercial property company. Ms Alexander lived at the property with her mother.

The sale price was to be GBP145,000 and after repaying the mortgage (approximately GBP45,000) the balance was to be made available to Ms Alexander in order for her to purchase a property in her own name through other solicitors.

Mrs Hill was asked to call at the solicitor’s office to sign the contract for sale. The trainee solicitor handling the matter annotated the attendance note:

‘The reason why I wish to see the client to sign the Contract, is to check that she has agreed to the sale, etc. Although she has signed the client care letter, I do want to make sure that she does actually want to sell this property and she is not being forced to do so.’3

In evidence it was explained that:

‘…it was her normal practice to meet elderly clients face to face rather than simply accepting instructions from a relative or friend and she has no reason to doubt that she followed her normal practice in this case. At such a meeting she will ask the client a number of questions in an effort to assess whether they understand the transaction and are not being coerced. She will usually ask the client to confirm their name, address and date of birth to confirm they are aware of what is going on, and will then proceed to ask some basic questions regarding the transaction such as whether they know the sale price and why they wish to sell. [She] said if she has any reason to doubt their mental capacity she asks to see a letter from their doctor; if that is not forthcoming, then she refuses to act.’4

Mrs Hill duly attended the trainee solicitor’s office, the meeting having been arranged through her daughter, and the daughter remained present throughout. The attendance note records:

‘…fully understood what was going on and was adamant that she wants to sell this property and purchase another property with her daughter so that she does not have to deal with any maintenance of the house.
‘Her daughter was also there and she also signed the Contract to confirm that she will vacate the property on completion. She said to me that she is using different solicitors with regard to the purchase of 52 Carmonton Road. Walthamstow, E17, she told me she would contact me with her solicitors’ details.
‘The reason why I wanted to see the mother was because the property is in her name and I just wanted to check that she was not being forced to sell the property but she was adamant that she wanted it sold and wanted to live with her daughter. She also told me that she wants to put towards the purchase of her daughter’s property as well (sic), as she will be living in it.’5

This was followed up by the solicitor writing for confirmation that Mrs Hill wanted to use the sale proceeds towards the purchase of the Carmont Road property ‘which was being purchased in her daughter’s name, and that she wanted the money transferred to [her daughter’s solicitors]’6. Written confirmation was provided.

The sale did not proceed and approximately six months later Ms Alexander contacted the solicitor to explain that the sale could now proceed and that she and her mother were looking to move into council accommodation.

‘I said to her that I need confirmation of this in writing from her mother and I will also be doing a letter to her mother about this as well. She also confirmed that her mother is happy to continue at the price of GBP145,000. I said to her that she should obtain a valuation from an Estate Agent to make sure that this is the correct price she is selling the property at. I said, again, I will be writing to Ms Hill about this as well.’7

Written confirmation was sent to the trainee solicitor.

The sale proceeded and in due course Mrs Hill sent a letter giving details of ‘my account’ with Abbey National, to which the net proceeds were to be remitted. Payment was returned by the bank as the account details were those of Ms Alexander. The monies were later re-sent to the bank, this time for the credit of Ms Alexander. The trainee solicitor wrote to Mrs Hill that the monies had been paid to her daughter’s account ‘as requested’. Although the file did not reflect it, the solicitor’s evidence was that Mrs Hill, and not Ms Alexander, had requested this payment in a telephone call with the solicitor.

Mrs Hill and Ms Alexander moved into Council accommodation, but approximately 18 months later Mrs Hill moved into full-time residential care. The present action was brought by Mr Thorpe, Mrs Hill’s son, acting as her litigation friend8, seeking damages for professional negligence on the part of the defendant firm.

This summary is from the judgment’s passages dealing with the facts of the case. Mrs Hill was not capable of giving evidence and Ms Alexander declined to do so.

Conduct of case

The judgment, in paragraphs 24-63, was highly critical of the conduct of the case and in particular, the way in which the claimant’s advisors had approached the evidence of the jointly appointed expert. Discussion of this point would not be relevant to the subject of this article.

The Claim

‘The Claimant’s pleaded case was that Fellowes was negligent because the firm:

i) failed to appreciate that Mrs Hill was a vulnerable person and to make inquiries as to her capacity to understand the sale which represented a disposal of her only asset

ii) failed to appreciate that Ms Alexander had considerable influence over Mrs Hill, and only met with Mrs Hill briefly in Ms Alexander’s presence

iii) did not properly investigate the sale of the Property on 31 October 2003, satisfy itself that the sale was at market value, and that Mrs Hill understood the implications of selling her Property at GBP145,000

iv) failed to respond to the allegedly “highly suspicious” nature of the remission of proceeds to Ms Alexander, including the provision of written instructions from Mrs Hill written by different persons and which referred to Ms Alexander’s account as “my account’

and

v) did not appreciate that the remission of the sale proceeds to Ms Alexander was peculiar when Mrs Hill and Ms Alexander were to move into council housing.’9

The wording of the claim is curious in that it does not specify which of these alleged failings has given rise to a loss nor is any loss specified.

Finding on capacity

The finding of the Court as to Mrs Hill’s capacity was that she was, at the time in question, suffering from senile dementia:

‘Many patients with dementia actually come across as quite sociable and engaging and are able to … answer a number of questions reasonably coherently. This all depends on what type of dementia is occurring but I think it would be entirely plausible that someone with mild to moderate dementia, as Mrs Hill, was suffering from, would not be apparent to a solicitor who engages her in conversation for the first time.10
…From my reading of the case Mrs Hill was able to instruct a solicitor. The solicitor did not feel that there were any issues with her capacity. This to me means that she probably did have capacity and ability to make a perfectly valued opinion.’11

The expert made the quite understandable comment that dementia is not an all or nothing condition when it comes to capacity.12

There is reference in the judgment to Mrs Hill being able to give ‘unequivocal instructions’ to the solicitor. However, is that in itself sufficient to show that the instructions given were fully understood by the client or that her instructions were free from undue influence? It seems to me that giving unequivocal instructions is merely indicative of a mind made up, not that the mind is necessarily functioning rationally.

Unfortunately, the judgment does not, in its quotations from the expert evidence, make it wholly clear what capacity was being considered. It certainly appears that capacity was considered in the context of instructions to sell a property only and not in the wider context of other issues inherent in the transaction raised later in this article.

Examination of a solicitor’s duties

The Court considered that ‘a solicitor is generally required to make enquiries as to a person’s capacity to contract if there are circumstances such as to raise doubts as to this in the mind of a reasonably competent practitioner’13. In citing Jackson & Powell in support of this proposition, the Court does appear to have created a problem. A solicitor’s duty is set out in general terms in this judgment and yet the cited passage from Jackson & Powell is from a section of that work dealing specifically with the preparation of wills14 and not the ability to contract.

Practitioners will know that, in the context of wills, there is extensive authority for the so-called ‘Golden Rule’ applying to a solicitor when dealing with the elderly and their will instructions. The Golden Rule derives from Templeman J, as he then was, when observing in Kenward v Adams15 that:

‘In the case of an aged testator16 or a testator who has suffered a serious illness, there is one golden rule which should always be observed, however straightforward matters may appear and however difficult or tactless it may be to suggest that precautions be taken: the making of a will by such a testator ought to be witnessed or approved by a medical practitioner who satisfied himself of the capacity and understanding of the testator, and records and preserves his examination and finding. There are other precautions which should be taken. If the testator has made an earlier will this should be considered by the legal and medical advisers of the testator, and if appropriate, discussed with the testator. The instructions of the testator should be taken in the absence of anyone who may stand to benefit, or who may have influence over the testator. These are not counsels of perfection. If proper precautions are not taken injustice may result or be imagined and great expense and misery may be unnecessarily caused.’

Despite the fact that Jackson & Powell does not consider Kenward v Adams, we know that the passage in Jackson & Powell is incomplete17 and that for wills a solicitor must have regard to the Golden Rule when considering capacity in the elderly or infirm. In Sharp v Adam18, the solicitor who prepared the Will was praised by the Court of Appeal for her compliance with the Golden Rule. She complied fully with it and did ‘everything conceivably possible, short of submitting Mr Adam to a wholly impractical full-scale series of neurophysiological test and examinations, to satisfy herself that Mr Adam had testamentary capacity’. However, the Court held that such meticulous compliance was not determinative of testamentary capacity. The Golden Rule was a rule of solicitors’ practice, not a rule of law.

The opposite to Sharp v Adam is that non-compliance with the Rule is not determinative of invalidity, as was seen in Buckenham v Dickinson.19 Although the court has placed great value on this rule, it is worth bearing in mind:

The remarks of Peter Gibson LJ in Hoff v Atheron20 that Kenward v Adams21 was ‘too briefly reported to be of much assistance, contains prudent guidance for solicitors and does not purport to lay down the law’.

‘The golden rule is not itself a touchstone of validity and is not a substitute for the established tests of capacity and knowledge and approval.’ Norris J in Cattermole v Prisk22

‘It is undoubtedly a desirable precaution, and one which can save a great deal of trouble in the future, for a solicitor to observe the golden rule where there is the possibility of dispute as to testamentary capacity. Failure to do so, however, is not determinative; the rule is no more than prudent guidance for a solicitor…Ultimately capacity is a question of fact like any other which the court must decide on the evidence as a whole.’Allen v Emery23

In Scammell v Farmer24, the Court placed weight on ‘the unchallenged evidence of an experienced solicitor who witnessed the will and, appreciative of the need to ascertain that [the testatrix] had testamentary capacity, satisfied himself that she clearly did have that capacity. It would require some persuasive evidence to the contrary to undermine that opinion.’

A robust approach to the application of this Rule was also taken by Briggs J in the recent Key v Key25. In a passage excoriating the solicitor’s conduct he commented that:

‘a significant element of responsibility for this tragic state of affairs lies with [the solicitor who prepared the will]. Contrary to the clearest guidance in well-known cases, academic texts and from the Law Society [he] accepted instructions for the preparation of the 2006 will, from an 89 year-old testator whose wife of 65 years’ standing had been dead for only a week, without taking proper steps to satisfy himself of Mr Key’s testamentary capacity, and without even making an attendance note of [the meeting] at which the instructions were taken. [His] failure to comply with what has come to be well-known in the profession as the Golden Rule has greatly increased the difficulties to which this dispute has given rise and aggravated the depths of mistrust into which his client’s children have subsequently fallen.’

While therefore it may be overstating the case to call this a Rule, it is clearly to be regarded as a sound guide to standard practice and one where the court will not hesitate to condemn non-compliance, unless there is sound evidence (as in Scammell v Farmer) for the solicitor having carefully considered mental capacity and found it to be present26. Given that the Golden Rule has been approved by the Court of Appeal it is difficult to see that the broad statement in Fellowes could be considered as weakening or reducing the Golden Rule (however difficult it can often be to comply with).

Was the Court in Thorpe v Fellowes correct in taking a passage relating to wills and applying it to a disposal by gift without considering as well the additional weight that a court places on establishing capacity for the disposal of an estate by will that was not reflected in that passage? In other words, if the standards applicable to a will are being applied, can part of that standard be omitted?

In the circumstances of Mrs Hill’s estate, the gift that she was making appears to have been a substantial part of her estate. Can we really take it that where that is the case there is no duty for the solicitor to explore the reasons for the gift in order to gain more understanding of what the client is asking him to do and for what reasons?

The well-known passage from In Re Beaney27 gives some guidance:

‘In the circumstances, it seems to me that the law is this. The degree or extent of understanding required in respect of any instrument is relative to the particular transaction which it is to effect. In the case of a will the degree required is always high. In the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varies with the circumstances of the transaction. Thus, at one extreme, if the subject matter and value of a gift are trivial in relation to the donor’s other assets a low degree of understanding will suffice. But, at the other extreme, if its effect is to dispose of the donor’s only asset of value and thus, for practical purposes, to pre-empt the devolution of his estate under his will or on his intestacy, then the degree of understanding required is as high as that required for a will, and the donor understands the claims of all potential donees and the extent of the property to be disposed of.’

If, as appears to be the case, the proceeds of sale of the house were Mrs Hill’s main asset the approach set out in this quotation becomes highly relevant. Alongside the guidance from Re Beaney, there is the further guidance from the Court of Appeal in Royal Bank of Scotland Plc v Etridge (No 2)28:

‘A solicitor who is instructed to advise a person who may be subject to the undue influence of another must bear in mind that it is not sufficient that she understands the nature and effect of the transaction if she is so affected by the influence of the other that she cannot make an independent decision of her own. It is not sufficient to explain the documentation and ensure that she understands the nature of the transaction and wishes to carry it out: See Powell v Powell [1900] 1 Ch 243 at 247, approved in Wright v Carter [1903] 1 Ch 27. His duty is to satisfy himself that his client is free from improper influence, and the first step must be to ascertain whether it is one into which she could sensibly be advised to enter if free from such influence. If he is not so satisfied it is [his] duty to advise her not to enter into it and to refuse to act further for her in the implementation of the transaction if she persists…’

Whether or not there was sufficient evidence of undue influence in this case is impossible to tell, but it does seem odd that that the Court was satisfied with the trainee solicitor having explained the documentation alone and not gone any further to determine the undue influence point.

There is however the difficulty of what exactly the firm’s retainer was in this particular case. While clearly retained in order to effect the sale of the property, was it retained [a] to effect the gift by paying away the client’s funds to a third party or [b] to advise on the issues that such a course of action entailed as well as [a]? It seems inherently unlikely that that a retainer involving a gift can be construed so narrowly as [a] for a gift by an elderly person.

It is a point that is far from clear from the judgment, but where a retainer is expressed in vague, imprecise or unprofessional terms the solicitor engaged has a duty to clarify what is the full extent of the retainer29. This becomes pertinent if the contemplated gift will substantially deprive the donor of her financial security and, it could also be observed, was being made to the person who initiated the introduction to the solicitor, acted as an intermediary for instructions and sat in on the initial client/solicitor meeting.

I have referred so far to the payment to Ms Alexander as a gift, but it should be recognised that it is quite hard from the judgment to conclude safely that a gift was intended or even made– a point acknowledged in the judgment30 with the observation that ‘it may be that Ms Alexander continues to hold the sale proceeds for her mother’. Given that elsewhere (see next paragraph) there is a reference to unequivocal instructions for a gift, it seems most odd that more notice was not taken of what this transaction was, as it must affect how a solicitor’s duty is defined in respect of it.

The solicitor’s attendance note records that ‘[Mrs Hill] wants to put towards the purchase of her daughter’s property as well, as she will be living in it’ and also ‘purchase another property with her daughter’. The initial instructions were to pay the money to ‘my account’, although this was later corrected to the daughter’s account. The judgment later shows31 that the Court found that at the meeting with Mrs Hill (attended also by Ms Alexander) the solicitor was given unequivocal instructions to sell and ‘gift’ the proceeds to Ms Alexander. In considering this meeting, which lasted 12 minutes, the judge does not set out how an unequivocal direction to gift the proceeds was established, when clearly different words were used in attendance notes.

It was argued for the defendant that there was nothing suspicious in paying the net proceeds of sale to Ms Alexander ‘because at this time Ms Alexander dealt with her mother’s financial affairs’. There would be nothing suspicious in that, but if that was the reason then it argues strongly against any gift being made.

Certainly the attendance notes quoted exhibit an original intention to put money towards a house purchase and to this end to pay money to a particular account. But does it evidence a parting with beneficial ownership of the proceeds and not acquiring any equitable interest in the subsequent purchase, or does it take us into the realms of the (rebuttable) presumption of advancement?32 There is certainly enough lack of certainty, just on the face of what is recorded, to require further discussion with the client33.

If no gift was intended, and Mrs Hill had not parted with a beneficial interest in this money, it becomes somewhat puzzling exactly what the point of the second and third arms of the claim (set out earlier) was.

By not clarifying the instructions the trainee solicitor did not, apparently, see any need to explore:

  • Whether or not the gift should be effected by a solicitor with no further enquiry in the areas highlighted by Re Beaney or Etridge (No2)
  • What the nature of the donor’s interest was to be, if any, in the monies once they were paid to the daughter
  • What the nature of any interest acquired in the new home was to be after it was purchased

The reasons for the radical change in the nature of the gift after council accommodation was decided upon and the original declared purpose of the gift had dropped away

The financial consequences for the donor of the disposal of such a major asset (lack of financial security, deliberate deprivation of capital for the Charging for Residential Accommodation Guide (CRAG) Regulations purposes, the effect on the terms of her Will or intestacy etc.).

These points collectively appear to require a much closer consideration of the client’s understanding and motives and this in turn would normally need some further consideration of the client’s mental capacity and freedom from undue influence.

It seems that there are many unsatisfactory aspects of this case:

  • Ms Alexander would not give evidence
  • Her brother, acting as his mother’s litigation friend, was found by the Court to be neither a satisfactory nor credible witness
  • The claimant’s approach to the expert evidence was analysed at length and critically the Court was not in a position to establish if a gift was actually made
  • The negligence claim was brought in respect of a transaction where the full nature of that transaction had not been established and by implication the solicitor’s duties could not be accurately determined
  • No adequate evidence of the sale giving rise to a loss was produced
  • The claim did not specify that any loss was caused to the claimant by monies being transferred to Ms Alexander.

The Court seems to have taken a very narrow view of the solicitor’s position and restricted its analysis to that of a purely conveyancing transaction. On the basis of treating the retainer this narrowly it seems to me that this is a decision that is not really to be relied on as helping us with an understanding of the duties owed by a solicitor when instructed to act in sale and gift of the proceeds of sale by an elderly person.

Martyn Frost TEP is a consultant at Lane-Smith & Schindler LLP, Manchester

[2011] EWHC 61 (QB)]
Para 77 of the judgment
Para 10 of judgment
Para 11 of the judgment
Para 12 of the judgment
Para 14 of the judgment
Para 17 of the judgment – there was no evidence during this trial that any loss arose through the sale being made without the advice of a qualified estate agent
Authorised to act as such by the Court of Protection
Para 71 of the judgment
From the expert’s report quoted in para 65 of the judgment
From the expert’s evidence quoted in para 68 of the judgment – is this the expert inferring capacity was present because the solicitor thought it was?
See also Blackman v Man [2008] WTLR 389 on this point and the progressive nature of dementia
Para 75; citing Jackson & Powell On Professional Liability, edited by J. E. Powell et al ((6th edn, London, Thomson Reuters/Sweet & Maxwell, 2010) at 11-221 and Hall v Estate of Bruce Bennett [2003] WTLR 827
Advice on a will was not on the face of it part of the retainer
1975 CLY 1975
Mrs Hill certainly falls within that definition as used in cases relating to will preparation
With my apologies to the authors for saying so in respect of a work I greatly value
[2006] WTLR 1059
[2000] WTLR 1083
[2005] WTLR 99
unreported, The Times 29 November 1975
[2006] FLR 697
[2005] All ER D 175
[2008] WTLR 1261
[2010] WTLR 623
And in practice to have recorded his finding and be able to give satisfactory evidence as to how and why he reached his conclusions
[1978] 1 WLR 770
[1998] 4 All ER 705
Gray v Buss Murton [1999] PNLR 882; see also Pickersgill v Riley [2004] PNLR 31
Para 110 of the judgment
Para 80 of the judgment
Which can exist between mother and child, contrary to old authority – see Snell’s Equity, edited by John McGhee (32nd edn, London, Thomson Reuters/Sweet & Maxwell, 2010) at 25-009
In fairness it is possible that perhaps this point had been explored elsewhere between the parties in this dispute

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