Law Report: Claim against solicitor lost: Clark Boyce v Mouat - Privy Council. (Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Lowry, Lord Mustill and Lord Slynn of Hadley), 4 October 1993

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A solicitor is not under a duty to advise a client on the wisdom of a transaction if the client is in full command of his faculties, is aware of what he is doing and requires the solicitor only to ensure that the transaction is effected.

The Privy Council allowed an appeal by Clark Boyce, a firm of New Zealand solicitors, and dismissed a claim by the plaintiff, Dorothy Dean Mouat, against them.

The plaintiff's son, a chartered accountant and management consultant, wished to raise NZdollars 110,250 (pounds 40,500) and the plaintiff, a widow of 72, agreed to mortgage her house. The son's solicitor, who was also a family friend, refused to act in the matter. The son took the plaintiff to see Martin Boyce, a partner in Clark Boyce, who acted for both the son and the plaintiff. Mr Boyce advised her to obtain independent legal advice and pointed out that she would lose her house if her son failed to meet the mortgage payments. The plaintiff indicated she knew the consequences of non-payment and signed the mortgage.

The son became bankrupt and the plaintiff was liable to repay the dollars 110,250 and arrears of interest. She brought the action against the solicitors alleging they were in breach of contract, negligent and had breached their fiduciary obligations.

Rupert Jackson QC, of the English Bar, Austin Forbes and Shuna Lennon, both of the New Zealand Bar (Turner Kenneth Brown) for the solicitors; Peter Whiteside, of the New Zealand Bar (Alan Taylor & Co) for the plaintiff.

LORD JAUNCEY said that there was no general rule of law that a solicitor should never act for both parties in a transaction where their interests might conflict. The position was that he might act provided he had obtained the informed consent of both to his acting.

Informed consent meant consent given in the knowledge that there was a conflict between the parties and that as a result the solicitor might be disabled from disclosing to each party the full knowledge he possessed as to the transaction or might be disabled from giving advice to one party which conflicted with the interests of the other. If the parties were content to proceed on that basis the solicitor might properly act.

In this case the judge was satisfied that the plaintiff was not concerned about the wisdom of the transaction and sought the service of a solicitor to ensure that the transaction was effected by appropriate documentation. The plaintiff required of Mr Boyce no more than that he should carry out the necessary conveyancing on her behalf and explain to her the legal implications of the transaction.

Since the plaintiff was already aware of the consequences if her son defaulted, Mr Boyce did all that was reasonably required before accepting her instructions when he advised her to obtain, and offered to arrange, independent advice. There was no duty on Mr Boyce to refuse to act for her.

When a client in full command of his faculties and apparently aware of what he was doing sought the help of a solicitor in the carrying out of a particular transaction, that solicitor was under no duty, before or after accepting instructions, to go beyond those instructions by proffering unsought advice on the wisdom of the transaction. To hold otherwise could impose intolerable burdens on solicitoErs.

There being no contractual duty on Mr Boyce to adviseTHER write error the plaintiff on the wisdom of entering into the transaction, she could not claim that he nevertheless owed her a fiduciary duty to give that advice. Mr Boyce's failure to disclose that the family friend had declined to act for the son was not a failure to disclose information material to the transaction.

If Mr Boyce was in breach of contract in failing to disclose his lack of knowledge as to the son's ability to service the mortgage, there was no evidence that the plaintiff would have acted differently if she had been advised to investigate her son's financial affairs and she had therefore failed to establish any loss as a result of such breach. The appeal was allowed.