Contents
Introduction |
1 |
The main issues at
trial |
6 |
The
Facts |
10 |
Mr Conway's
involvement as a solicitor in the acquisition and sale of No
32 |
14 |
Regent's proposed
purchase of No 24 |
19 |
The issues on
appeal |
54 |
Breach of fiduciary
duty and breach of duty of confidence |
56 |
Issues arising as to
the existence of and breach of fiduciary duty |
|
i) Whether Mr
Conway owed a fiduciary duty to Regent |
61 |
ii) Conflict of
interest |
88 |
iii) Informed
consent |
99 |
Duty of
Confidence |
|
iv)a) The extent
of relevant confidential information imparted to Mr
Conway |
103 |
iv)b) Burden of
proof as to misuse of confidential information |
116 |
Meaning and
Justification |
|
vi) The possible
meanings of the letter of 6th December for
justification |
132 |
Malice |
147 |
vii)b) The
Judge's directions on the application of the subjective test of malice
|
163 |
Damages |
|
vi) Whether the
Judge misdirected the jury on damages or whether their award was
perverse |
175 |
Lord Justice Auld :
Introduction
- This is an appeal of Mr Nicolae Ratiu, Mr Simon
Karmel and Regent House Properties Ltd (all of whom I shall collectively call
"Regent" unless otherwise indicated) against a jury's finding of liability and
award of damages of £96,000 on 31st March 2004 in favour of Mr
David Conway, a practising solicitor with the London firm, David Conway &
Co., in his claims against Regent for damages for libel and malicious
falsehood in a trial presided over by Tugendhat J.
- The claims arose out of a letter of complaint by
Regent to the agent for the Trustees of the Eyre Estate ("Eyre"), owners and
vendors of a development site in St John's Wood. Regent complained that Mr
Conway, whom they had instructed through a nominee company called Pristbrook
Limited ("Pristbrook") to act for them as their solicitor in the purchase and,
then, sale of a development site at No. 32 Elm Tree Road ("No.32") in St
John's Wood, had, in his personal capacity, competed with them in bidding for
another nearby and closely related site, Nos. 24-26 Elm Tree Road ("No. 24").
In particular, Regent complained that he sought to re-open the bidding after
Mr Karmel had informed him that Eyre had accepted Regent's offer. Before
making his rival bid, Mr Conway had contemplated that he might accept
instructions from Regent to act for them on the acquisition of the site or
that he might enter into a business deal with them for the purpose of such
acquisition.
- The letter, which was written by Mr Ratiu on behalf
of Regent to Mr Julian Briant of the firm of Cluttons, chartered surveyors,
acting as agents for Eyre, read as follows:
"Further to your fax of earlier today, we are extremely
concerned that we are being asked to bid against Mr Conway.
We have reached agreement with you on two separate occasions. We
informed Mr Conway that you had accepted an unconditional offer for the
property from us and asked him to act for us in the purchase.
He then used this confidential information to put in a higher
offer.
We are aware of your duty as trustees to obtain the highest
price for the property. The trustees will however want to complete the
purchase. If you proceed with the sale to a person who used confidential
information obtained through a solicitor/client relationship, we will do all
in our power to prevent the formalisation of a contract in breach of the
duties owed by the solicitor.
We will do everything in our power to prevent Mr Conway using
this information to our detriment.
We have already contacted the Law Society on this matter and are
awaiting their response. We are ready and willing to exchange and complete
on the basis of the offer that you have already accepted and have confirmed
our meeting tomorrow morning at the offices of Pemberton Greenish together
with our solicitors Clifford Chance."
- It should be noted that the core allegation in the
letter is that Mr Conway, in his capacity as solicitor for Regent, had misused
confidential information imparted to him by Regent that Eyre had accepted its
unconditional offer for No 24. There is no express reference in the letter to
the amount of the offer. I should also record at this stage that, on
the same day, Mr Ratiu also wrote letters to Mr Conway and the Law Society
complaining in similar terms, though, contrary to the assertion in his letter
to Mr Briant, he had not contacted the Law Society.
- The nub of Regent's complaint, as expressed in that
letter to Eyre's agent, Cluttons, was that that Mr Conway should not have bid
for No 24 or sought to re-open the bidding once Regent had informed him that
Eyre had accepted its offer. Regent maintain that he thereby put himself in a
position of conflict between his duty as a solicitor to them as his clients
and his personal interest in which he would inevitably (consciously or
subconsciously) misuse his clients' confidential information.
The main issues at trial
- Regent accepted at trial that the letter was
defamatory in that it contained an allegation of unprofessional conduct of Mr
Conway as a solicitor. The Judge, Tugendhat J, ruled that the letter was
protected by qualified privilege, a ruling that Mr Conway does not challenge.
The main issues for the Jury were (i) the meaning of the defamatory words and
whether such meaning was justified (ii) if not, whether Regent had lost the
protection of qualified privilege because they had been actuated by malice and
(iii) damages. If Regent established justification or Mr Conway failed to
establish malice, the claim would fail. However, the jury found that the
defamatory letter on its true meaning was not justified and that, in writing
it, Regent had been actuated by malice.
- The issues of justification and malice both turned
on the duties, if any, of trust, loyalty and confidence, owed by Mr Conway as
a solicitor to Regent, whether viewed as a past, existing and/or prospective
client. Regent maintain that the Judge's directions to the Jury on the law and
on its application to the facts of the case were wrong and/or contradictory
and that, as a result, the Jury's verdict is unsafe and ought to be set aside.
They argue that if the Judge had properly directed the jury on these aspects
of duty, they could not reasonably have found, as they did, in Mr Conway's
favour.
- Regent's case, in summary is that when Mr Conway
made his bid for No 24 he owed them a fiduciary duty of loyalty and, in any
event, a duty of confidence, and was in breach of both duties. They contend
that the Judge erred as a matter of law and fact in a number of important
directions to the jury on the issues of justification and malice, withdrew
from them an essential part of Regent's case on both issues, namely that Mr
Conway had a fiduciary duty to Regent, and, in any event, wrongly left the
issue of malice to them when there was insufficient evidence of it. In the
result, Regent ask the Court to enter judgment for them, alternatively to
order a re-trial.
- Mr. Conway's case is that he was never, whether as a
solicitor or otherwise, at any stage under a fiduciary duty to Regent, and
certainly not in relation to Nos 32 or 24, because such retainer as he had had
was from Pristbrook, not Regent, and then only in relation to the purchase and
sale of No. 32. He contends that the Judge's rulings and directions were sound
in law and in fact.
The Facts
Mr Conway and Regent
- Mr Conway was admitted as a solicitor in 1970 and
has since been in private practice, initially in partnership with others and
more recently as a sole practitioner in the West End of London. His main
fields of practice are commercial and residential property transactions and
company and commercial work. He has particular expertise in leasehold
enfranchisement. Much of his practice involves transactions in residential
properties in and around St John's Wood, where he has lived for over 30 years,
and acting in enfranchisement claims by tenants of major residential property
owners in that area, including Eyre.
- Mr Ratiu and Mr Karmel are friends and business
partners. Regent House Properties Ltd is a property investment company,
ultimately controlled by Mr Ratiu's family and of which Mr Ratiu, but not Mr
Karmel, was a director. It owned and controlled a company called Warleggan
Group Limited ("Warleggan"), of which Mr Ratiu and Mr Karmel were directors.
Warleggan, in turn, owned Pristbrook, of which they were also directors. The
Judge directed the jury not to distinguish between Mr Ratiu and Mr Karmel on
the one hand and Regent on the other for the purposes of the case, a direction
not challenged in the appeal. But, as will appear, he directed them as a
matter of law to distinguish between Pristbrook and Regent, a direction that
is challenged in the appeal and goes to the heart of the issue between the
parties on justification and, to a lesser extent, on malice.
- Regent had had a long history with Elm Tree Road.
Mr Karmel had lived at No 20 Elm Tree Road ('No 20') since 1987. From July
1994 to September 1999, Mr Ratiu, on behalf of Regent, corresponded with Eyre
with a view to purchasing Nos. 32 and/or 24, together with Mr Karmel. No 32
was a semi-detached house on a development site in a prime residential area
subject to a compulsory purchase order ('CPO') by Westminster Council ('the
Council'). By 1999 it had become derelict. No 24, situated virtually opposite
Mr Karmel's house at No 20, was a cleared development site approximately three
times the size of No 32, which was suitable for building up to three houses,
but which was also under threat from a CPO. Building on both sites required
the consent of the Council and Eyre.
- In November 1999, Mr Ratiu, on behalf of Regent,
participated in a tender process to purchase No 32 from Eyre. He offered
£1.2m, in the name of "Regent
or its nominee", an offer that Eyre accepted.
Mr Ratiu's evidence was that the purchase of No 32, although it had to stand
on its own as a commercial proposition, was intended to convince Eyre of
Regent's credentials as a serious purchaser for the larger plot at No 24.
Mr Conway's involvement as a solicitor in the acquisition and sale of
No. 32
- On 19th November 1999, following the
success of Regent's bid for No 32, Mr Karmel orally retained Mr Conway on
behalf of Regent, to act as their solicitor in respect of their intended
purchase of that property and, so Mr Karmel maintained, also its re-sale. At
the time, Mr Conway was already acting for Mr Karmel in the enfranchisement of
the lease on No 20, having been instructed for the purpose three years earlier
in August 1996. In the course of that retainer Mr Conway had inevitably
learned something of Mr Karmel's business affairs and his finances. By letter
of 24th November 1999 Mr Conway confirmed to Regent his acceptance
of their retainer to act for them on the purchase of No 32 and also, in his
quotation of his charges for both purchase and re-sale, his expectation that
he would be instructed and would accept instructions on the re-sale when the
time came. Mr Conway's first attendance note in relation to the property
records that the purchase was to be made in the name of "Regent or its
nominee" and that a special purpose vehicle ('SPV') might be set up to acquire
the site. On 2nd December, on Regent's instruction, Mr Conway
acquired Pristbrook, an off-the-shelf company that became a subsidiary of
Warleggan, to act as the nominee of Regent in the purchase and holding of No.
32.
- On 14th December 1999 contracts for the
purchase of No. 32 were exchanged in the name of Pristbrook. The purchase was
financed partly by a mortgage taken out in Pristbrook's name, partly
guaranteed by Mr Karmel and Regent. Mr Conway sent confirmation of exchange to
Regent not Pristbrook. Completion took place on 12 January 2000.
- Whether or not Regent at this early stage had
formally instructed Mr Conway and whether Mr Conway had accepted instructions
to act on the re-sale of No 32, it is plain that both parties proceeded in the
confident expectation that he would act on the re-sale, and Regent took care
to keep him informed of their plans and progress in connection with the
property and to involve him in them from time to time. In February 2000, Mr
Karmel instructed him to seek information from Eyre in connection with
Regent's application for planning permission. He also kept Mr Conway informed
on progress in relation to matters bearing on the re-sale, of No 32, including
securing the Council's agreement not to implement the CPO and obtaining
planning permission, and in its move to secure an undertaking from Eyre that
it would not attempt to enforce its standard restrictive covenants.
- Prospective purchasers immediately began to show
an interest in purchasing No 32. Mr Conway, in his evidence at the trial, said
that he had understood that the disposal of the property might take the form
of transfer of the shares in Pristbrook rather than sale of the land itself,
so as to avoid stamp duty. In April 2000 he advised Mr Karmel on that as a
possible course.
- In June 2000 the price paid by Pristbrook for No
32 was referred to in expert evidence before a Leasehold Valuation Tribunal on
the hearing of an application for enfranchisement of another property in St
John's Wood, a matter which, as will appear, has some relevance to an issue
canvassed at trial as to whether Mr Conway's knowledge of the purchase price,
derived from his involvement in the purchase as Regent's/Pristbrook's
solicitor, imposed on him a duty of confidence in respect of it. In August
2000 planning permission for the redevelopment of No 32 was granted to
Pristbrook. And, on 11th and 14th September 2000, Mr
Karmel and Mr Conway discussed a possible legal problem concerning the
validity of that permission.
Regent's proposed purchase of No. 24
- Returning to Regent's proposed acquisition of No.
24, on 11th September 2000 they made successive offers of £3.6m and
£3.75m to Eyre to purchase it in the name of "Regent
or its nominee (most
probably Pristbrook)", the latter offer being conditional on Eyre withdrawing
the property from the market. Eyre, which appears to have been looking at that
stage for an unconditional offer at a figure closer to £4m, refused both
offers.
- On 20th September, Mr Karmel telephoned
Mr Conway to bring him up to date on the planning position in relation to No
32. Mr Conway's evidence was that, at that time, he considered he was still
under retainer in respect of No 32. In the course of the call, Mr Karmel
informed him that Regent were also negotiating to acquire No 24. Mr Conway's
evidence was that he had an interest in acquiring part of if Mr Karmel was
successful in his negotiations. His evidence was that he had also "hoped", or
expected that Regent would instruct him as the solicitor on its purchase if
the negotiations for it were successful.
- On 21st September 2000, Mr Karmel wrote
to Mr Conway on Pristbrook headed writing paper about No 32, enclosing
correspondence with the Council about the threat of compulsory purchase of the
site, a copy of the planning permission relating to it and correspondence with
Eyre on the matter. Mr Karmel concluded the letter by stating: "We are now
planning to actively market the site and doubtless will be in touch in due
course"; and he added "We are still progressing matters with
[Eyre] in
respect of the larger plot [No 24] and I will let you know the outcome".
- Mr Conway immediately began preparing his own
plans for No 24. On the same day he contacted Ms Emma Poyser and Mr Briant of
Cluttons, and he wrote to his architect. In his evidence he claimed that he
had learned from Ms Poyser that the best offer received for No 24 thus far had
been £3.75m.
- On 22nd September Mr Conway telephoned
Mr Karmel, who indicated to him that the £3.75m bid had probably been "his"
bid. He maintained in evidence that he had told Mr Karmel he intended to bid
for the whole of the site, and produced two attendance notes of that telephone
call, one in the name of Pristbrook but under the Regent file reference in his
filing system, and one without any file reference. Neither attendance note
records that Mr Conway told Mr Karmel of his intention to bid against Regent
for the whole of the site, as distinct from a suggestion that he should be a
party with Regent to some sort of joint venture in relation to it. In
cross-examination, Mr Conway said that, if he had not made clear in the
telephone call that he intended to bid for the whole site, or if Mr Karmel had
not understood that, he had made it clear in a telephone call the following
week. But there is no attendance note or other record of such a conversation.
- On the weekend of 23rd and
24th September 2000, Mr Karmel and Mr Conway met twice. They
discussed, on Mr Karmel's recollection, a proposal from Mr Conway that he
should purchase part of No 24 from Regent should they succeed in the bidding,
or, on Mr Conway's account, that he should enter into some other form of joint
venture with Regent for the site. Mr Ratiu also acknowledged in evidence, as
he did in the unsent letter to the Law Society of 6th December 2000
(see paragraph 4 above), that Mr Conway had at one stage approached Regent
with a proposition for joint purchase with them of No 24. But he and Mr Karmel
emphatically denied in their evidence that Mr Conway had ever told them he
intended to compete against them by seeking to purchase the whole of the site.
Mr Karmel's evidence was that at about that time, 29th September
2000, Mr Conway told him that he could not afford to buy the whole site.
- It is common ground that in the course of the
meetings over the weekend of 23rd-24th September, Mr
Karmel spoke to Mr Conway of his development ideas for No 24 and left him,
overnight, copies of architects' plans and drawings relating to existing
planning permission for the site. Mr Conway photocopied part of one of the
plans, which had features he liked.
- It is also common ground that Mr Conway did not
suggest at this stage or later that Regent should seek legal advice about
dealing with him personally in connection with No 24. However, on 25th
September he drafted a letter to Pristbrook under the Regent file reference as
a proposed response to Mr Karmel's letter of 21st September (see
paragraph 21 above), in which he stated, "we, of course, have met twice over
the weekend and clearly in the prevailing circumstances my firm could not act
whilst there remained a conflict of interest". But he never sent the letter to
Regent or Pristbrook. In evidence, he explained that he had drafted it to make
clear that he could not act for and against Pristbrook in relation to No 24 at
the same time.
- Mr Conway's evidence at trial was that, shortly
after the weekend of 23rd-24th September, in a
conversation with Mr Karmel of which there is no record, Mr Karmel suggested
to him that he should pay Regent £500,000 to drop out of the bidding for No
24. Mr Conway asserted that, in the same conversation, he made clear to Mr
Karmel that he would bid for the site, and warned that, as he was acting for
Regent on the sale of No 32, Mr Karmel should not discuss with him any
information relating to Regent's bidding intentions for No. 24. Mr Karmel, in
his evidence, denied any such conversation, or that he had ever suggested to
Mr Conway that he should pay Regent £500,000 not to bid. Although there is no
record of the alleged conversation, Mr Conway's wife and his secretary, Ms
Coulson, gave evidence that he had informed them of the alleged £500,000 offer
at around that time.
- According to Mr Conway, from about that time, the
end of September 2000, neither Mr Ratiu nor Mr Karmel said any more to him
until November 2000 about their interest in purchasing No 24.
- Returning for a moment to the progress towards
sale of No 32, on 4th October 2000, Regent/Pristbrook agreed its
sale by private treaty to a Mr and Mrs Richard Green at a price of £1.65m. On
the same day Mr Karmel instructed Mr Conway over the telephone to undertake
the conveyance to them, which instruction Mr Conway accepted by a letter
addressed to Pristbrook of 5th October.
- The apparent sale by Regent/Pristbrook of No 32 at
such price appears to have given Mr Conway some encouragement and impetus to
pursue his own plans for No 24. A day or so later, on 6th October
2000, he wrote to his bank requesting a loan to enable him to acquire No 24,
indicating a purchase price of at least £4m. In his letter to the bank, he
cited No 32 as one of three comparables giving a good indication as to value.
Mr Conway attached a plan of Elm Tree Road on which he had shaded No 32. The
Bank appears to have agreed in principle to consider a loan facility of some
£4m for the purchase.
- However, Mr Conway's reliance on the sale of No 32
was premature, for it fell through on about 10th October 2000
because of the compulsory purchase order to which the property was subject.
This led, on 1st November 2000, to Mr Karmel seeking advice from Mr
Conway on the course recommended by a firm of local estate agents, of sale of
the property by tender. On the 8th November, Mr Conway took part in
a three-way telephone call with Mr Karmel and a representative of those agents
to finalise arrangements for the tender on No 32.
- On the same day, 8th November, Mr
Conway and Regent were separately invited to take part in a tender to purchase
No 24 set for late November.
- On the 10th November, according to Mr
Conway in his evidence at trial, he telephoned the Law Society's Professional
Guidance Section, seeking guidance on (i) money laundering concerns relating
to Regent (a wholly unfounded and unsupported suggestion not previously
raised) and (ii) being involved in tenders for and against the same clients on
different and proximate properties at the same time, with specific reference
to the impending transactions relating to Nos. 32 and 24. On his account, this
is what he said to the official to whom he spoke at the Law Society:
"
I explained that I was acting for clients
I told the person
I spoke to that I was proposing I was acting for people that were
preparing to sell this site by tender; that I was acting for them; I had
prepared the tender documents; and that I was also competing with them to
buy another property."
It is plain that, in seeking advice as to his professional position in that
way, he was not at that time distinguishing between Regent and Pristbrook or
between those corporate clients and Mr Ratiu and Mr Karmel. He said that the
official advised that he should not be the collection point for tenders for
the purchase of No 32 and that he should not become privy to the details of
its sale until after the bidding had closed on No 24. As will appear, Mr
Conway did not follow that guidance.
- On 13th November 2000, Mr Conway sent
Regent's/Pristbrook's estate agents, Aston Chase, the tender documentation for
the sale of No 32, seeking bids in excess of £1.5m. In his covering letter he
stated that the letter of invitation to tender was to come from his firm,
David Conway & Co, acting on behalf of Pristbrook and that the agents
should notify his firm of the names of the interested parties. Although Mr
Conway suggested in evidence that he had instructed a change in the tender
documentation so as to substitute the agents for his firm as the recipient of
the tenders, no amended documents to that effect have ever been disclosed.
- On the 16th November, a private buyer
was found for No 32 at a price of £1.6m, on the basis of quick exchange. On Mr
Karmel's instructions, Mr Conway offered to transfer the property to the
purchasers by selling them Pristbrook, but the purchasers declined, and
contracts were prepared for exchange with Pristbrook shown as the vendor.
- The next day, Mr Conway wrote to his bank in
connection with his request of 6th October for a loan facility of
£4m to enable him to bid for No. 24, citing the invitation to tender for No.
32 of offers in excess of £1.5m. as further market evidence to support higher
gross sale prices.
- On 20th November, four days before the
deadline for submission of tenders for No. 24, Mr Conway's firm exchanged
contracts with the solicitors for the purchasers of No 32, the contracts still
showing Pristbrook as the vendor. As a result, Mr Conway knew the re-sale
price for No 32 and thus the gross profit margin of £400,000 that Regent,
through Pristbrook, had achieved on their short-term investment in No. 32.
Completion and redemption of the mortgage on that property were scheduled to
take place on 21st December 2000.
- However, as to No. 24, neither Regent nor Mr
Conway took part in the November tender, which, seemingly, did not produce any
bids acceptable to Eyre. On 28th November 2000, Eyre issued a
further invitation to interested parties, including both of them, to take part
in a second tender exercise for the property, with a closing date for tenders
of 4th December.
- Mr Conway telephoned Mr Karmel on 30th
November 2000 to find out, according to Mr Karmel, whether Regent had taken
part in the first tender exercise and whether they intended to take part in
this one. Mr Conway did not produce any attendance note of that discussion,
but said in evidence that they had discussed why neither of them had bid in
the 24th November tender. And he said he had told Mr Karmel that he
intended to bid in the forthcoming tender. He also said that he had told Mr
Karmel not to discuss his bidding intention with him. Mr Karmel's evidence was
that Mr Conway said nothing about his intention to bid and did not advise him
not to discuss Regent's bidding intentions with him on the contrary, he
said, the purpose of Mr Conway's call was to discover what Regent intended to
do about No 24.
- At about that time Mr Briant of Cluttons told Mr
Conway that Eyre would prefer an unconditional bid of £3.5m to the
highest conditional offer in the November tender, which had been just
over £3.750m. Mr Conway thereupon arranged with his bank to revise the
facility agreed of £4m to £3.5 or £3.75m, based on a maximum purchase price of
£3.75m.
- In the mid-afternoon of 4th December
2000 Mr Conway telephoned Mr Karmel again. He produced in evidence an
attendance note for this conversation, but he acknowledged that he may not
have made it until after a further telephone conversation with Mr Karmel on
the morning of the 5th. By reference to the note, he said that he
had again indicated to Mr Karmel that he intended to bid for No 24. The note
read:
"I told him that having talked matters over, I did not feel I
could agree a deal at this stage with him but that we could talk if either
he or us were successful in the re-tender.
I asked him if he was intending to re-tender. He said he thought
they probably would."
Mr Karmel, in his evidence, denied that Mr Conway gave him any more
indication in that conversation than in earlier conversations as to his
bidding intentions for No 24.
- The second tender exercise attracted 11 bids by
the closing time of 5 p.m. on the 4th. Regent made an unconditional
offer of £3.75m in the name of "Regent
or its nominee (most probably
Pristbrook)", namely the same amount that it had bid in September 2000
conditionally on the property being removed from the market. And Mr Conway
made an unconditional offer of £3.5m. On the evening of the 4th, Mr
Briant informed Mr Ratiu that he intended to recommend Eyre to accept Regent's
bid.
- On the morning of the 5th December, Mr
Briant confirmed to Mr Ratiu that Eyre had accepted his recommendation, had
agreed with him to exchange contracts two weeks after receipt of documents and
had asked for the name of Regent's solicitor. Within a short time of that
call, Mr Karmel telephoned Mr Conway and informed him Eyre's acceptance of
Regent's offer. Mr Conway did not respond that he had been a competing bidder
or that Mr Karmel should not disclose to him any further confidential
information. Rather, he asked when the deal had been done, to which Mr Karmel
replied that Regent's bid had been accepted on the previous evening and that
they had been informed of the Eyre Trustees' approval that morning. He then
asked Mr Conway to act for Regent in the purchase of the site. Mr Conway did
not say he could not act. He said that he needed to make a telephone call
first. Mr Karmel said that he hoped that the call was not to Eyre. Mr Conway
repeated that he needed to make a telephone call and hung up abruptly. It is
common ground that, until that conversation, there had been no invitation to
Mr Conway to accept a retainer to act for Regent or Pristbrook or any other
associated company in the purchase of No 24 and that the conversation itself
did not amount to acceptance by Mr Conway of such a retainer.
- On his own evidence, Mr Conway immediately
telephoned Mr Johnson, the Chief Executive of Eyre (rather than Mr Briant) and
sought to re-open the bidding for No 24 by putting in a higher unconditional
offer of £3.8m and offering to exchange contracts within 48 hours. Mr Johnson
then telephoned Mr Ratiu and told him that someone had made a higher bid than
that of Regent, to which Mr Ratiu responded that, if the bid was from Mr
Conway, Eyre should know that he was Regent's solicitor.
- Eyre then informed Mr Conway that his bid of £3.8m
was rejected, whereupon he faxed a further offer of £4m and contacted his bank
to raise his loan facility back up to £4m
- On the following day, 6th December,
Eyre re-opened the bidding by inviting final offers in excess of £4m from Mr
Conway and Regent. Mr Conway responded immediately by faxing a further
increased bid of £4.12m. Regent's response was to seek urgent legal advice
from Clifford Chance, solicitors, and then to write the fateful letter, the
subject of these proceedings, to Mr Briant, in his capacity as Eyre's agent,
complaining about Mr Conway's behaviour. The letter, the terms of which I have
set out in paragraph 3 above, was drafted by Clifford Chance on the
instructions of Mr Ratiu and Mr Karmel, and was written on Regent's headed
writing paper.
- As I have said, Mr Ratiu wrote two further letters
on 6th December, both on Pristbrook headed writing paper. One was
to Mr Conway, which he sent. The other was to the Law Society, which he did
not send. Mr Ratiu's explanation in evidence for not sending the latter was
that they had intended to send the letters in a different order but were
overtaken by events, and he added, as was the case , that Regent informed Eyre
the next day that they had not sent it.
- The letter to Mr Conway throws some light on
Regent's attitude at the time to his behaviour. It read as follows:
"Further to telephone conversations of yesterday in which you
were informed that Pristbrook Limited had made an offer for the above
property which had been accepted, I am extremely concerned to learn that you
have also made an offer for the property.
We informed you of our offer, and invited you to act for us on
the purchase. After a certain delay you declined to accept our instructions.
We believe that is wholly inappropriate for you to then use this information
that we disclosed to you, by way of a confidential conversation between
ourselves as your respective [sic] client, and our legal adviser.
We do not believe that this is appropriate conduct for a
professional person.
We would take this opportunity to inform you that if you
continue to pursue your interest in the property, we will inform the Law
Society of the recent events.
In actuality your making an offer for the property may cause us
to raise the price that we are paying for the property.
Please confirm by return that you will desist from your interest
in the premises, you will withdraw any existing offers and will not make any
further offers.
"
- The letter which Mr Ratiu, with the assistance of
Clifford Chance, wrote to the Law Society, but which he did not send, also
throws some light on Regent's attitude at the time towards Mr Conway's
conduct:
"We are writing to inform you of our concerns regarding the
conduct of a solicitor.
We made an offer to purchase a house. This was an unconditional
offer which was accepted by the vendor. We then spoke with our solicitor and
asked him to act for us on the purchase. The solicitor approached us some
time previously with regard to purchasing the property jointly with him but
these discussions did not come to fruition. This had emanated from an
existing client/solicitor relationship between us on an almost adjacent
property with the same vendor. When we contacted him to ask him to act for
us on this purchase, we explained that we had reached agreement with the
vendor. He responded by saying only that he needed to make a telephone call.
He did not expressly state that he would not act. He certainly did not
indicate that he would be making an offer for the property.
The solicitor was then able to make a higher offer for the
premises solely on the basis of the information disclosed in our telephone
conversation. This was disclosed solely on the basis that it was a
conversation between ourselves as a prospective client and him as a
lawyer.
We assume that this is a practice which the Law Society would
find unacceptable. The solicitor has clearly acted against the best
interests of ourselves as a prospective client. This must bring into
disrepute the solicitor's profession, and we would ask for your urgent
assistance on what action the Law Society might be able to take in this
situation.
We believe that it cannot be in the public interest for a
solicitor to use information obtained in this manner to outbid his client
when acting on a personal level."
- In the event, Mr Johnson, who was called as a
witness by Mr Conway, gave evidence that Eyre resolved to adhere to its
acceptance of Regent's offer of £3.75m regardless of Regent's letter to it of
6th December. Exchange of contracts took place the following day,
7th December 2000, and the transaction was concluded with a
transfer to a further nominee of Regent, Hoolway Limited.
- Before leaving the evidence and turning to the
issues, I should mention two matters.
- The first is that in none of the three letters
written by Mr Ratiu on 6th December 2000, did he complain that Mr
Conway had not been entitled to bid because he had been or was acting for
Regent or Pristbrook in relation to No 32. His complaint was of a specific
breach of confidence in relation to the telephone conversation of Mr Karmel
and Mr Conway of 5th December 2000 in relation to No 24.
- The second is that Mr Conway's case before the
jury included an allegation of a "dirty trick" by Regent. He maintained that
Regent wrote and sent the letter of 6th December 2000 to Eyre's
agent with the intention of securing No 24 at £3.75m without having to raise
their bid in response to Mr Conway's renewed bid and, for the purpose, to
blacken his name.
The issues on appeal
- The two principal issues at trial were, as I have
said, justification and malice. As to both, a great deal of time was spent on
the meaning of the defamatory letter, going to two important sub-issues raised
by Regent's defence, namely: 1) whether Mr Conway, by competing with Regent in
the bidding for No 24, had put himself in a position in which their respective
interests conflicted so as to put him in breach of fiduciary duty to Regent;
and/or 2) whether, in his conduct leading up to and including his competition
with Regent in the bidding for No 24 he had breached a duty of confidence to
Regent.
- The main issues on the appeal were whether the
Judge:
i) wrongly directed the jury that Mr Conway was not in breach of fiduciary
duty in bidding for No 24, as his only duty of loyalty was to Pristbrook,
Regent's wholly-owned and controlled SPV, thereby, so Regent contend, wrongly
withdrawing the issue of breach of fiduciary duty to Regent from the jury;
ii) wrongly directed the jury that there could be no conflict of interest
unless Mr Conway was acting for and against his clients on the "same matter"
in the sense that it could adversely affect Pristbrook's interests in relation
to No 32, whereas Regent contend that the Judge should have directed the jury
that Mr Conway had put himself in an inevitable position of conflict between
his interest and his duty in acting for them on the sale of No 32 and bidding
against them on No 24;
iii) wrongly directed the jury that it was open to them to find that Regent
had given their informed consent to Mr Conway acting for them on No 32 and
against them on No 24, an option for which Regent maintain there was no
evidential support;
iv) on the issue of breach of duty of confidence, wrongly directed the
jury: (a) that Mr Conway was in possession of only minimal, if any, relevant
confidential information and that it was for Regent to prove that he had
misused it; whereas Regent maintain that there was evidence for the jury's
consideration of possession of more than minimal relevant confidential
information, and that proof of his misuse of it was not a necessary ingredient
of the breach of duty;
v) wrongly directed the jury on the law and approach to the meaning of
justification;
vi) should have withdrawn the question of malice from the jury on the
grounds that there was insufficient evidence on which a reasonably minded
jury, properly directed, could find it, and wrongly directed them on the law
and approach to malice; and
vii) wrongly directed the jury on the law and approach to damages (or
whether the jury's award of £96,000 was perverse).
Breach of fiduciary duty and breach of duty of confidence
- Before considering each of the matters of which
Regent complain, it may be helpful to set out some basic and uncontroversial
general propositions of law as to a solicitor's fiduciary obligations and his
overlapping, but sometimes distinct, duty of confidence to his client.
- As to fiduciary obligation, where better to start
than the following treatment by Millett LJ (as he then was) in Bristol
& West v Mothew [1998] Ch 1, at 18A-C:
. "
A fiduciary is someone who has undertaken to act for or on
behalf of another in a particular matter in circumstances which give rise to
a relationship of trust and confidence. The distinguishing obligation of a
fiduciary is the obligation of loyalty. The principal is entitled to the
single-minded loyalty of his fiduciary. The core liability has several
facets. A fiduciary must act in good faith; he must not place himself in a
position where his duty and his interest may conflict; he may not act for
his own benefit or the benefit of a third person without the informed
consent of his principal. This is not intended to be an exhaustive list but
it is sufficient to indicate the nature of fiduciary obligations. They are
the defining characteristics of the fiduciary. As Dr Finn pointed out in his
classic work Fiduciary Obligations (1977), p 2, he is not subject to
fiduciary obligations because he is a fiduciary; it is because he is subject
to them that he is a fiduciary."
- In short, as he was later to put it in Bolkiah
v KMPG [1999] 2 AC 222
at pp 234H-235A, a fiduciary must not put himself in position of actual or
potential conflict with his client without the latter's fully informed
consent.
- As to "possible" or potential conflict, as
Lawrence Collins J observed at paragraph 9 of his judgment in Marks &
Spencer PLC v Freshfields Bruckhaus Deringer [2004] EWHC 1337 (Ch), a
judgment upheld by the Court of Appeal [2004] EWCA Civ 741, "The cases establish that the potential conflict must be a reasonable
apprehension of a potential conflict, not a mere theoretical possibility". A
common instance of such conflict, whether actual or potential, is where a
solicitor acts so as to make or attempt to make an unauthorised profit; see
Boardman v Phipps [1967] 2 AC 46, HL.
- As to a solicitor's duty of confidentiality, it
can come into its own as a separate obligation from that of a fiduciary when
the fiduciary relationship has come to an end with the end of the
solicitor/client relationship. Lord Millett, in Bolkiah v KPMG, which
was a breach of confidence, not a breach of fiduciary duty, case, sought to
emphasise this distinction at 235C:
"Where the court's intervention is sought by a former client,
however, the position is entirely different. The court's jurisdiction cannot
be based on any conflict of interest, real or perceived, for there is none.
The fiduciary relationship which subsists between solicitor and client comes
to an end with the termination of the retainer. Thereafter the solicitor has
no obligation to defend and advance the interests of his former client. The
only duty to the former client which survives the termination of the client
relationship is a continuing duty to preserve the confidentiality of
information imparted during its subsistence."
Issues arising as to the existence of and breach of fiduciary
duty
i) Whether Mr Conway owed a fiduciary duty to Regent
- The first matter for consideration by the jury, on
a proper direction of law, was the nature of the relationship of Regent and Mr
Conway at the material time, namely from late November 1999 to 6th
December 2000. Was there, throughout, a solicitor/client relationship between
Regent and Mr Conway in respect of the purchase and sale of No. 32, as Regent
maintains, or was it broken with Regent's introduction on 2nd
December 1999 of its sub-subsidiary, Pristbrook, as its nominee for the
purchase, as Mr Conway maintains? And, in either event, what, if any, duty did
it impose upon Mr Conway towards Regent in his competition with Regent for the
purchase of No.24?
- The first issue for the Court arises out of the
Judge's direction that that Mr Conway was not in breach of fiduciary duty to
Regent in bidding for No. 24 because his only duty of loyalty was to
Pristbrook. This affects, not only Regent's defence of justification, but also
their plea of qualified privilege in the face of Mr Conway's allegation of
malice.
- Regent maintain that they, not Pristbrook, were
the true clients of Mr Conway in respect of the purchase and sale of No 32,
that he was their prospective solicitor on the purchase of No 24 and that, as
a result of one or both of those relationships, he owed them a fiduciary duty
in relation to the latter purchase of which he was in breach.
- Mr Conway's case is that he owed no fiduciary duty
to Regent in the purchase of No 24 and did not, therefore, put himself in a
position of actual or potential conflict with Regent, or for that matter with
Pristbrook. His stance was that Pristbrook, not Regent, instructed him on the
sale of No 32, that the telephone conversation between him and Mr Karmel on
5th December 2000 about the purchase of No 24, and/or the
circumstances leading up to it, did not make him the prospective solicitor for
Regent for that purchase and, that, even if it had done, it would have imposed
no fiduciary duty, only a possible duty of confidence, and that, in any event
it would have created no actual or potential conflict of interests as the two
transactions were unrelated.
- There were thus two main questions for the jury
under this head, namely: 1) whether Mr Conway owed a fiduciary duty to Regent,
as distinct from Pristbrook, and, if so, 2) whether his conduct in relation to
No. 24 put him in breach of it, namely, whether it arose in the context of the
same matter giving rise to a potential conflict of interest.
- The Judge directed the jury as a matter of law
that Mr Conway was not in breach of fiduciary duty to Regent in bidding for
No. 24 because his only duty of loyalty was to Pristbrook. This is how he put
it:
"In relation to number 32, Mr Conway's client was Pristbrook
Limited, they were the owner of number 32 and they were selling it.
Normally, when a solicitor acts for a company, his duty is to that company
and not to the shareholders or owners of that company. It is a matter of
fact for you but you may think that Mr Conway would not have expected
Pristbrook Limited to be the bidder for number 24. As you remember,
Pristbrook Limited is what is called a special purpose vehicle: its special
purpose was to own that one property, number 32. Pristbrook never actually
did bid for number 24. It is true that its name was mentioned by Mr Ratiu as
a possible owner
[in the letter of Regent to Eyre of 4th
December 2000; see paragraph 42 above]
As a matter of law, the existing client of Mr Conway at
the relevant time in December was Pristbrook Limited and it was to
Pristbrook Limited that he owed his duties of loyalty under the retainer in
respect of number 32.
So, Mr Conway did not owe a duty of loyalty to Regent
in
November and December 2000. He was not in breach of his solicitor's duty of
loyalty by bidding for number 24.
" (my emphases)
- The effect of the direction was to remove from the
jury the responsibility of deciding to whom, if anyone and in what respect, he
owed a fiduciary duty. Also, as will appear, it largely undermined Regent's
defence of justification, regardless of the meaning to be attributed to the
6th December letter. If, as a matter of law, Pristbrook, not
Regent, was the client at all material times, then Mr Conway owed no fiduciary
duty to Regent, including Mr Ratiu or Mr Karmel, of which he could be in
breach or in respect of which they could rely upon the defence of
justification for the undoubtedly defamatory letter. Nevertheless, as will
appear, the Judge went on to direct the jury in great detail on the defence of
justification with reference to a number of different possible meanings to be
attributed to the allegation in the letter.
- Sir Sydney Kentridge QC, on behalf of Regent,
submitted that the direction effectively withdrew from the jury essential
parts of Regent's case and was sufficiently serious to render the decision of
the jury unsafe in the words of Lord Halsbury LC in Bray v Ford
[1986] AC 44, HL, at 47, HL, amounting to "a substantial wrong" in which "the
defendant was not permitted to present his case to the jury with the argument
that his original complaint was true". He maintained that, as a matter of law
and/or fact, Regent was Mr Conway's client in material respects and that, in
any event, a solicitor instructed on behalf of a company may also owe a duty
to others for, example, its controlling shareholder or shareholders; it all
depends on the facts.
- Mr Romie Tager QC, on the other hand, submitted
that Mr Conway owed no fiduciary duty to Regent, since, apart from a brief
period at the start of the move to purchase No 32, Pristbrook, not Regent, was
the client for both the purchase and the sale. As to the purchase,
Pristbrook's retainer had been substituted for that of Regent on
2nd December 1999 and, he maintained, terminated with the
completion of the purchase in early January 2000. As to the sale, although the
parties had apparently contemplated throughout that he would be instructed on
that transaction when the time came, he submitted that he was not formally
retained until 4th October 2000 and then, by Pristbrook, not
Regent. Accordingly, he maintained that, because such a duty can only arise
out of a fiduciary relationship, Mr Conway owed no fiduciary duty to Regent.
Drawing on Lord Millett's distinction in Bolkiah, he submitted that, as
distinct from a duty of confidence, it does not extend to a potential
retainer, for example to a solicitor who is consulted by a potential client,
but who declines to accept instructions or, as happened here in relation to No
24, does not accept them. Similarly, once the transaction in respect of which
the solicitor was retained is completed, he submitted, the retainer comes to
an end, and with it the fiduciary relationship, citing Donsland v Van
Hoogstraten [2002] EWCA Civ 253, per Tuckey LJ at para 18, applying
Underwood, Son & Piper v Lewis [1894] 2 QB 306.
- Mr Tager added that there is no authority for the
proposition that a solicitor acting for one company in a group cannot act
contrary to the interest of another company in that group or to the personal
interests of directors or shareholders of his client company unless it or they
were a party to the retainer. Accordingly, he submitted, the Judge correctly
directed the jury that there was no conflict of interest, or duty or breach of
duty on the part of Mr Conway to Regent in bidding for No 24 because
Pristbrook, not Regent, had been his client on the sale of No 32.
- Before looking at this issue in a little more
detail, it is important to keep in mind that the reason for a solicitor's
fiduciary duty to his client, though engendered by the retainer, is distinct
from the contractual obligations arising under it. It arises from the
relationship of trust and confidence that is an important consequence and
feature of the retainer. But the solicitor/client retainer is not the only
form of association between two or more persons that carries with it such a
duty. It has a separate and more broadly based jurisprudential justification.
In his analysis in Bolkiah, Lord Millett focused on the
solicitor/client relationship for the purpose of contrasting a duty of
confidence with a fiduciary duty. As I have noted, he concluded as part of
that analysis, that the latter, when arising out of such a relationship, is
coterminous with it, but that matters of confidence imparted to a solicitor in
anticipation of or flowing from it, may create a duty of confidence that is
not coterminous with it.
- With respect, Lord Millett, in drawing that
distinction in a breach of confidence case, may have tied more tightly than he
intended the principle of fiduciary duty to contractual duty, something that
he had been at pains not to do in giving his broader and non-exhaustive
description of a fiduciary in the passage from his judgment in Bristol
& West Building Society that I have set out in paragraph 57 above.
Lord Walker of Gestingthorpe made much the same point in Hilton v Barker
Booth & Eastwood [2005] 1 WLR 567,
HL, at paras 28 - 30, that a solicitor's fiduciary duty to his client
is not necessarily to be found in or confined to the terms of the contractual
retainer:
"28. A solicitor's duty to his client is primarily
contractual and its scope depends on the express and implied terms of his
retainer.
29. The relationship between a solicitor and his client is one
in which the client reposes trust and confidence in the solicitor. It is a
fiduciary relationship.
30. A solicitor's duty of single-minded loyalty to his client's
interest, and his duty to respect his client's confidences, do have their
roots in the fiduciary nature of the solicitor-client relationship. But they
may have to be moulded and informed by the terms of the contractual
relationship."
- Where there is a contractual retainer and where it
provides expressly or by implication obligations of a fiduciary nature, such
obligations must clearly prevail, or "mould" or "inform" the fiduciary nature
of the contractual relationship. But where there is a relationship involving,
say, a transaction or transactions between a solicitor and a person who,
having regard to that relationship and the solicitor's profession, reposes
trust and confidence in him, a fiduciary duty may arise without a retainer. So
much seems to be clear from the historic development and continued separate
existence of the notion of a fiduciary relationship and one created purely by
contract. It is clearly acknowledged in the following passage from the
judgment of Mason J in Hospital Products Ltd v United States Surgical Corpn
(1984) 156 CLR, 41, at 97, cited with approval by Lord Browne-Wilkinson,
giving the judgment of the Privy Council in Kelly v Cooper [1993] AC
205, at 215:
"That contractual and fiduciary relationships may co-exist
between the same parties has never been doubted. Indeed, the existence of a
basic contractual relationship has in many situations provided a foundation
for the erection of a fiduciary relationship. In these situations it is the
contractual foundation which is all important because it is the contract
that regulates the basic rights and liabilities of the parties. The
fiduciary relationship, if it is to exist at all, must accommodate itself to
the terms of the contract so that it is consistent with, and conforms to
them. The fiduciary relationship cannot be superimposed upon the contract in
such a way as to alter the operation which the contract was intended to have
according to its construction."
- Mason J's approach is instructive in that, whilst
it subordinates the effect of a fiduciary relationship to the terms of any
concurrent contract, it also acknowledges depending upon the circumstances -
the potential coming into being and continuation of a fiduciary obligation
without or regardless of any contract.
- Illustrative of such an approach is Longstaff v
Birtles [2002] 1 WLR 470, in which this Court held on the facts, that the defendant's
solicitors' fiduciary duty extended beyond the termination of the retainer. In
that case solicitors who had acted for a couple in an abortive negotiation to
purchase a public house and whose retainer had been terminated, persuaded the
couple to join with them, without advising them to seek independent legal
advice, in what turned out to be a disastrous commercial venture. In allowing
the couple's appeal against the first instance judge's dismissal because the
solicitors' retainer had been terminated before the matters of which the
couple complained, Mummery LJ, with whom Laws LJ and Sir Anthony Evans agreed,
said at paragraphs 1 and 35 of his judgment:
"1.
The source of the [fiduciary] duty is not the retainer
itself, but all the circumstances (including the retainer) creating a
relationship of trust and confidence, from which flow obligations of loyalty
and transparency. As long as that confidential relationship exists the
solicitor must not place himself in a position where his duty to act in the
interests of the confiding party and his personal interest may conflict.
35. This case can and, in my judgment, should be decided on the
simple ground that there was a relationship of trust and confidence between
the Longstaffs and the solicitors; that the relationship did not cease on
the termination of the retainer in respect of the intended purchase
; that
during the course of that relationship a personal business opportunity
presented itself to the solicitors; that the solicitors took advantage of
that opportunity to propose that the Longstaffs buy into the
[solicitors'
business venture]; that in the context of the relationship the proposal gave
rise to a situation in which the duty of solicitors might conflict with
their interest; and that they acted in breach of a fiduciary duty in
continuing to deal with Longstaffs, in a situation of a conflict of duty and
interest, without insisting they obtain independent advice."
Mr Tager suggested that the decision in that case was incorrect and arrived
at per incuriam, as Bolkiah was not cited to the Court, it had not been
argued at first instance or, initially, on appeal by reference to fiduciary
duty but on the common law duty of care, and it was a special case on the
facts. However, it is an authoritative illustration of the readiness of the
courts, regardless of the precise issue involved, to draw back the corporate
veil to do justice when common-sense and reality demand it.
- Moreover, it is of interest to note that the
Judge, contrary to his direction to the jury that Mr Conway owed no fiduciary
duty to Regent because Pristbrook, not Regent, retained him for the purchase
and sale of No 32, in a later passage of his directions to them, slipped into
the same sort of reasoning as Mummery LJ in that case. When dealing, in the
context of breach of confidence, with Mr Conway's own anxieties in September
2000 about possible conflict of interest between his and Regent's interest in
the purchase of No 24 (see paragraph 26 above), he observed:
"There was undoubtedly, you may think, a potential confusion at
that point. As well as a potential business role Mr Conway was also the
potential or prospective solicitor for the sale of number 32 by Pristbrook
Limited and indeed he became the solicitor for Pristbrook Limited some days,
a week or two, or ten days later.
As a matter of law at that point even if there were no formal
relationship of solicitor and client between Mr Conway and the defendants
there had been a relationship of solicitor and client between Mr Conway and
Regent
in the past, and there had been a relationship between Mr Conway as
solicitor and Mr Karmel as client in the past; and even if there was not
formally such a relationship in the second half of September you may think
that there, nevertheless, was a relationship of trust and confidence arising
out the past solicitor relationship with Regent
and Mr Karmel and the past
retainer from Regent
and from Pristbrook
in relation to 32, and the
potential retainer or prospective retainer on 32.
But that does not
resolve the question whether there was any confidential information because
information does not become confidential simply because you tell it to your
solicitor. It has to be confidential in the first place."
- In short, I see strong jurisprudential support for
the proposition that the answer to the question whether a fiduciary duty,
which has its start in a solicitor/client relationship, may outlive it is
highly fact-sensitive. Lord Millett's distinction between fiduciary duty and a
duty of confidence in Bolkiah arose, as I have said in a much narrower
focus and one that was primarily concerned with the extent of the latter duty.
- There is, it seems to me, a powerful argument of
principle, in this intensely personal context of considerations of trust,
confidence and loyalty, for lifting the corporate veil where the facts require
it to include those in or behind the company who are in reality the persons
whose trust in and reliance upon the fiduciary may be confounded.
- Such was the approach of this Court in Johnson
v Gore Wood [1999] BCC 474, at 485, where the issue was whether it was
arguable so as to defeat an abuse of process application that solicitors to a
company alleged to have been negligent in its advice to the company, also owed
a duty of care to its controlling shareholder, Ward LJ, giving the judgment of
the Court, held, at page 485C-E, that it was arguable, citing with approval
the reasoning of Staughton J (as he then was) on a similar issue in R P
Howard Ltd v Woodman Matthews & Co (a firm) [1983] QB 117:
"
arguments of a very similar nature prevailed in the judgment
of Staughton J in
Howard v Woodman Matthews
where the solicitor
knew that the company was a family company effectively run by Mr Witchell
from whom they received their instructions. He held at p. 121A:
'In my judgment, in the circumstances of this case, Mr
Witchell as well as the company was the client of Mr Mason. That seems to
me to reflect the reality of the situation. Mr Mason knew that Mr Witchell
was the company. He probably knew that Mr Witchell derived his
livelihood and some profit from the company, and was vitally concerned in
its well-being. Mr Witchell had first been his personal friend, and had
then come to him in connection with other matters for legal advice, both
as the representative of the company and in a personal capacity. When Mr
Witchell sought his advice on
[a matter concerning the company] Mr Mason
owed a contractual duty of care both to the company and to Mr
Witchell."
- Nor, in my view, should it matter in principle,
where a fiduciary duty is engendered by a contractual relationship, whether
the client has entered into a direct contractual relationship with the
fiduciary or through an agent or, in the case of a corporate client, through
the use of a nominee company, as Regent used Pristbrook in this case.
- It is also important to remember that the issue of
fiduciary relationship is usually tried by a chancery judge in direct claims
of breach of trust or other fiduciary duty as a mixed question of law and
fact. In the context of defamation it is in this instance transposed into a
supposed issue of objective fact for a jury as to whether a defendant can
justify not only his understanding of his relationship with the other party,
but also the validity of the complaint of a violation of that relationship. In
such a context there may well be a greater imperative, already signposted in
some of the authorities to which I have referred, for allowing reality to
prevail over technical aspects of corporate law.
- With all those considerations in mind, I return
briefly to the facts of this case. The evidence before the jury showed, as I
have summarised it in paragraphs 10 to 53 above, that, between November 1999
and December 2000, Regent, acting on its own and then through its nominee,
Pristbrook, retained Mr Conway as its solicitor for the purpose of its
purchase and then re-sale of No. 32. Both before and after completion of the
purchase of No 32 in January 2000, he provided legal advice and assistance to
Regent, in particular in connection with planning permission in February and
September 2000 and the anticipated sale of Pristbrook (instead of No 32
itself) in April and November 2000. Provision for disposal of Pristbrook as a
proxy for the property, as an encouragement to its ready and profitable
disposal for Regent, is hardly consistent with the suggestion made by Mr
Conway at trial that Pristbrook, not Regent, was his sole client in respect of
No. 32.
- It is also apparent from Mr Conway's call to the
Law Society on 10th November 2000, seeking guidance as to his
potential conflict of interest with Regent over No. 24 arising out of his
involvement with No. 32 (see paragraph 33 above), that he did not at the
material time distinguish between Pristbrook and Regent for this purpose. Mr
Karmel's letter to Mr Conway of 21st September 2000 (see paragraph
21 above) on Pristbrook headed writing paper about Nos 32 and 24, attaching as
it did correspondence of Regent with the Council as to the former and stating
"we are still progressing matters with
[Eyre] in respect of the larger plot
[No 24] and I will let you know the outcome", made plain that the moving
spirit in relation to the proposed sale of the former and purchase of the
latter was Regent. So much is clear from Mr Conway's unsent letter to Mr
Karmel of 25th September 2000 (see paragraph 26 above), in which,
under his Regent file reference, he observed as to No 24, "we, of course, have
met twice over the weekend and clearly in the prevailing circumstances my firm
could not act whilst there remained a conflict of interest". He, therefore,
knew by 20th November 2000 that Pristbrook had not been sold
together with No 32, so that it was still available to be used as a nominee
for the purchase by Regent of No 24. As Sir Sydney observed, in such
circumstances, Mr Conway could not realistically maintain that the
continuation of such conflict of interest depended upon his uncertainty as to
which company would be used for the purchase of No 24. In the event, as must
have been within his contemplation, Regent's offer for No 24 was made in the
name of "Regent
or its nominee, most probably Pristbrook".
- The reality of the case here, as Mr Conway well
knew, was that his client in relation to No 32 was Regent, not Pristbrook, and
that Pristbrook was effectively a vehicle controlled by Regent.
- In such circumstances, the Judge's direction to
the jury that, as a matter of law, Mr Conway's only "client" was Pristbrook
and that, therefore, he owed no duty of loyalty to Regent in respect of No 32
of which his bid for No 24 could put him in breach was a serious error
serious in that, on that aspect alone, it effectively withdrew the issue of
breach of fiduciary duty from the jury.
- Given: 1) the partial dependence of Regent's
defence of justification on the existence of a fiduciary relationship between
Mr Conway and Regent; 2) the legal and factual complexity of that notion
involving, as it did here, relationships between companies as well as
individuals; and 3) the various possible meanings of the acknowledged libel as
candidates for justification; it would have been better for the Judge, with
the agreement of the parties, to have dealt with this issue himself as one of
mixed law and fact.
- However, once embarked on the process of
directing, and leaving to, the jury the whole issue of justification the Judge
should at least have directed them that there was evidence on which they
should consider whether Regent had retained Mr Conway in respect of the No 32
transactions and that, as a result of those retainers and their discussions
with him of their interest in purchasing No 24, he had a fiduciary duty to
Regent at the time of his bidding for No 24. In giving such a direction, he
should, of course, have given them some guidance on the law and their
application of it to the primary and secondary facts that they found proved.
That guidance, in my view, should have included a reminder that Pristbrook was
simply a nominee and as to the legal and possible factual implications of
that. And, after rehearsing the evidence going to the relevant facts, he
should have left them to determine as a matter of fact whether and to whom at
the time of the bidding for No 24 Mr Conway owed a fiduciary duty. As it was,
removing half their task in the way that he did denied the defendants a
verdict on a crucial issue. It follows that I am of the view that he erred in
directing the jury that, as a matter of law, at the material time Pristbrook,
not Regent, was Mr Conway's client, and that Mr Conway did not, therefore, owe
a duty of loyalty to Regent of which he could be in breach by bidding for No
24. For reasons that will become more apparent in the remainder of this
judgment, I am of the view that this error of the Judge alone amounted to a
substantial wrong to Regent, effectively depriving them of presenting their
defence of justification to the jury.
ii) Conflict of interest
- Regent maintain that the Judge made a further
error in his direction to the jury on the issue of Mr Conway's fiduciary duty
to Regent and of his breach of it, in directing them that there could only be
a conflict of interest in relation to one matter the same matter and that
the sale of No 32 and the purchase of No 24 were different matters. This is
how he put it to the jury:
"
When a solicitor agrees to act for a client in a particular
matter, that gives rise to a relationship which lawyers refer to as a
relationship of trust and confidence. The client is then entitled to the
single minded loyalty of the solicitor.
he must not put himself in a
position where his duty to the client and his own interests conflict. He may
not act for his own benefit or for the benefit of the third party in
relation to that matter without the informed consent of his client.
A clear example of a conflict of interest is where a solicitor
buys or sells something from or to his own client. You will recall that both
Mr Conway and Mr Karmel agree that a possibility of that happening was
discussed in September 2000, namely the possibility of
[Regent] selling
half the site of number 24 to Mr Conway if they succeeded in buying it.
if Mr Conway were to have entered into a joint venture like
that with
[Regent] or if he were to have bought the site from
[Regent],
then there would have been a glaring conflict of interest.
It is equally clear that if and so long as Mr Conway was
contemplating bidding for number 24 in competition with
[Regent], then Mr
Conway could not advise
[Regent] in relation to number 24.
Neither side suggests that Mr Conway was ever actually
instructed by
[Regent] in relation to number 24. Mr Ratiu specifically
explained he did not want to instruct a solicitor in relation to number 24
before
Eyre
had agreed to sell it to him.
That is, I hope, a comprehensible outline of the relevant law.
"
- The Judge gave associated directions to the jury
that there was no complaint or evidence that Mr Conway, in bidding for No 24,
had an adverse interest so as to cause him to act in conflict with his
retainers on the purchase or sale of No 32. He correctly identified Regent's
case, albeit interspersing his directions with their case on breach of
confidence, "that
[Mr Conway] acted in breach of his duty of loyalty" in
that he put himself in a position where "his own interest conflicted with
those of
Regent who, they allege, were existing clients who had instructed
him in relation to 32." However, he made plain in his directions that Regent's
proposed purchase of No 24, on which it had not instructed Mr Conway, was to
be regarded as a quite separate matter.
- Regent maintain that the Judge, in those
directions, took too narrow an approach in instructing the jury that there
could be no conflict of interest unless Mr Conway was acting for and against
his clients on the 'same matter' in the sense that it could adversely affect
Pristbrook's interests strictly in relation to No 32. They maintain that he
should have directed the jury that Mr Conway had put himself in an inevitable
position of conflict between his interest and his duty in acting for Regent on
the sale of No 32 and bidding against it on No 24.
- Sir Sydney submitted that "no conflict rule" is
not limited to dealings or advice in relation to the same matter, but also
applies to reasonably related matters. He submitted that in the present case
there was clearly a reasonable relationship between the purchase and sale of
No. 32 in which Mr Conway acted for Regent, acting through its nominee,
Pristbrook, and the purchase of No. 24 in which he acted against Regent's
interest.
- Mr Conway's case is that the fiduciary duty, and
for that matter the duty of confidence, of a solicitor to avoid a conflict of
duty and/or interest with his client arises directly from his duty to protect
and advance that client's interests in the matter, or any linked matter, in
which he is retained by that client. He maintains that it does not extend to
other matters unrelated to the retainer in respect of which he may have a
personal interest or in respect of which he may be instructed by another
client.
- Mr Tager, in support of that case referred to
formulations of the Court, when articulating the conflict of interest rule, of
such terms as "in a particular matter" (see Bristol & West Building
Society v Mothew, CA, per Millett LJ, as he then was, at 18A), "in the
transaction in hand" (see Hilton v Barker Booth, per Lord Walker of
Gestingthorpe at para 31) and to the period of the retainer (see Bolkiah,
per Lord Millett at 235C). In summary, he submitted that when considering
whether a solicitor is acting in breach of his fiduciary duty, there is no
such thing as "a general retainer" so as to impose on the solicitor a duty to
advance or protect the interests of the client in all matters affecting or
potentially affecting the client; see per Oliver J (as he then was) in
Midland Bank Trust Co Ltd v Hett Stubbs & Kemp (a firm) [1979] Ch
384, at 402H-G.
- Applying those propositions to the evidence in the
case, and putting aside for this purpose the issue of a duty of confidence and
its breach, Mr Tager submitted that Mr Conway owed no fiduciary duty to Regent
or was not in breach of any such duty because: 1) the sale by Pristbrook of No
32 and the proposed purchase by Regent of No 24 were different matters
involving respectively different clients and prospective clients; 2) even if
they were so inter-linked as to be capable of creating a conflict or risk of a
conflict of interest if the clients and prospective clients had been the same,
no such conflict of interest arose because when, in early October 2000,
Pristbrook retained Mr Conway for the sale of No 32, he had not been
instructed by either in respect of the proposed bid for No 24; 3) Regent knew
by that time that he had a personal interest in No 24 and nevertheless,
through Pristbrook, instructed him on the sale of No 32; and 4) when, on
5th December Regent approached him as a prospective client for the
purchase of No 24, it did so with full knowledge of what he had learned
through his retainer and otherwise of Regent's financial position and the
purchase and sale price of No 32 and of his interest to date in No 24 as a
personal investment.
- The point was recently considered in Marks
& Spencer PLC v Freshfields Bruckhaus Deringer, in which Marks &
Spencer successfully secured an injunction against Freshfields restraining
them from acting on behalf of a consortium seeking to take it over, on the
ground that they had an actual or potential conflict of interest arising from
past and continuing retainers for Marks & Spencer in respect of certain
matters, in particular its contractual arrangements in relation to one of its
most successful lines. Lawrence Collins J, whose judgment was specifically
upheld on this issue by a two - judge Court of Appeal, consisting of Pill and
Kay LJJ, in refusing an application for permission to appeal, (in which both
parties were represented by leading counsel), observed, with Bolkiah
firmly in mind, at paragraph 16 of his judgment:
"Most of the cases refer to the problem in the context of
conflicting interests in the same transaction, but it seems to me clear that
it goes somewhat beyond that. Although Bolkiah is not directly in
point because it is a former client conflict and not, therefore
an
application of the double employment rule, the way in which Lord Millett
expresses himself is wholly inconsistent with the double employment rule
being limited to same matter conflicts."
In the Court of Appeal, Pill LJ, in agreeing with that approach and
specifically rejecting the notion that it was outlawed by Lord Millett's
language in Bolkiah, said at paragraphs 10 and 11 of his judgment:
"10 Mr Brindle [QC, for the applicants] submits that the
[Bolkiah] principle cannot extend beyond the same transaction
situation. He gave examples which indicate situations with no possible
conflict of interest arising from the fact that a solicitor's firm, which
may of course have a number of branches spread around the country and
abroad, is in one transaction acting contrary to a client for whom it acts
on another. I would accept that there must be a degree of relationship
between the two transactions, but I am quite unable to accept that the
language used by Lord Millett in Bolkiah and the comparative
strictness, with respect, with which he has stated the principles in this
area of the law is confined to same transaction cases.
11. Moreover, while there must be limits upon the application of
the principle, it is, in my judgment, a sound one and I accept the
submission of Mr MacLean [QC], for the proposed respondents] on that point.
The court must consider what the relationship is between the two
transactions concerned. "
Kay LJ, in his concurring judgment, put the reality of the potential
conflict of interest for Freshfields very clearly in terms which have even
greater application to the circumstances in this case, involving as it does
two rival bidders. At paragraph 33, he said:
"Mr Brindle argues that all attempts to define the circumstances
in which conflict might arise have failed and as such any potential risk is
no more than a theoretical one. That argument, in my judgment, fails to
recognise the reality of the situation. If the defendant is to act for those
making the bid its partners may be called upon at various stages to give
advice as to the tactical approach to be adopted by the bidders in the
circumstances of the bid becoming hostile. The claimant company is entitled
to know that any such advice cannot possibly be influenced in any way by the
knowledge that the defendant has of its affairs as a result of its
relationship with the defendant as its client, even if the defendant does
not directly reveal the information to the bidders. Where there is a matter
which may feature prominently in any attempt to win over the shareholders of
the claimant company, it seems to me wholly impossible to have the necessary
degree of confidence that the claimant company will not be adversely
affected by the bidders having the benefit of the defendant as their
solicitors with the solicitors having previously acted for the claimant
company on the very subject matter which may come to prominence in the bid.
This, in my judgment, precludes the defendant from acting for the bidders."
- In my view, in the present case, the
near-contemporaneous sales of Nos. 32 and 24, the former by Regent and the
latter by Eyre to Regent, and Mr Conway's involvement in both, albeit in
different roles, were reasonably capable of being found by the jury to be
related matters in two respects. First, on Regent's case and evidence, they
had told Mr Conway that the No 32 transaction was a precursor to the No 24
transaction. And, second, as Sir Sydney pointed out, the two sites were
comparable properties in the same road that were being marketed and offered
for sale at the same time, at one point both by private tender. The particular
features of No 32, namely the threat of compulsory purchase, the planning
environment and the impact on Eyre's restrictive covenants, which Mr Conway
himself described as distinguishing it from other transactions, were shared
with No 24. Being on the market at the same time, it was possible that the
fact that, or the price at which, one site was offered or sold would have an
impact on the other. It will be remembered that Mr Conway, in his letters to
his bank of 6th October and 17th November 2000 (see
paragraphs 30 and 36), cited No 32 as a "comparable" in relation to No 24.
- It was also possible that, whilst acting for
Regent on No 32 and against it on No 24, Mr Conway would come into possession
of relevant confidential information that would put him in a position of
actual or potential conflict between his interest and his duty. That the
potential for conflict was not merely theoretical is clear from Mr Conway's
own conduct in November 2000 when he telephoned the Law Society to seek advice
on the possibility of conflict inherent in being involved in tenders for and
against the same clients on proximate properties at the same time, followed by
his decision not to follow the advice received. Mr Conway did not deny that Mr
Karmel told him of the appellants' bidding intentions in relation to No 24 and
that they had made an offer of £3.75m for the site in September 2000. It was
clearly a matter for the jury whether Mr Conway was entitled to disregard the
inevitable conflict of interests and put himself in a position whereby he
might gain an unfair advantage over Regent in relation to No 24. This is
particularly so given that, on Mr Conway's own evidence, it was always
contemplated that he might be instructed to act as a solicitor in relation to
the acquisition by Regent of No 24.
- As Sir Sydney observed, the facts going to a
reasonable apprehension of conflict in the Marks & Spencer case,
rehearsed by Lawrence Collins J in paragraphs 8 and 19-14 of his judgment, are
an instructive comparison and support Regent's argument on this issue, namely
that Mr Conway should have disclosed to Regent the full extent of his personal
interest and/or intentions in respect of No 24 and should have advised
it to take independent legal advice if he was to continue acting for it on the
sale of No 32. Properly directed, it would, in my view, have been open to the
jury to take the view that Mr Conway was not entitled to ignore that
information and Regent's interests in that transaction, thereby enabling him,
as a trusted confidant and adviser in relation to the sale of No 32 to put
himself in a position where he stood to gain an unfair advantage over Regent
in relation to No 24.
iii) Informed consent
- Regent contend that the Judge wrongly left to the
jury the issue of informed consent and that he should have directed them that
he had put himself in a position of inevitable conflict between his interest
and duty in bidding against Regent for No 24 whilst acting for them on No 32.
This is a complaint that goes both to issues of breach of fiduciary duty and
of a duty of confidence. Sir Sydney submitted that it was plain on the
evidence that Regent had not given fully informed consent to Mr Conway acting
for them in relation to No 32 and against them in relation to No 24.
- Mr Conway's case is that Regent had known from
at least September that he had a personal interest in acquiring some interest
in No 24 and that if and to the extent that that he had a fiduciary duty or
one of confidence to Regent in respect of No 32 and/or in respect of No 24,
Regent by their conduct consented to his bidding regardless of such duty. He
relied principally upon his account, which Mr Karmel denied, of having told
him in a telephone conversation shortly after the weekend of
23rd/24th September 2000 that he intended to bid for No
24 and that, as he was acting for Regent on the sale of No 32, Mr Karmel
should not talk to him of Regent's intentions for No 24 (see paragraph 27
above).
- Sir Sydney referred to the absence of any
attendance note of Mr Conway in respect of that conversation or of any other
direct evidence to support Mr Conway's account of it. And he argued that, even
if that account was true, it fell far short of information on which a jury
could find that Regent, by their inaction in the matter, gave fully informed
consent to Mr Conway bidding against them. He referred the Court to the words
of Upjohn LJ in Boulting v ACTAT [1963] 2 QB 606, CA, at 636, that, to
give fully informed consent, the person entitled to the benefit of the rule
must:
"fully understand
not only what he is doing but also what his
legal rights are, and that he is in part surrendering them."
He mentioned, by way of example, that it was no part of Mr Conway's case
that he had explained to them: 1) the impact his competing bidding on No 24
might have on the existing retainer for No 32; 2) the risk that he would come
into possession of confidential information in the course of his retainer on
No 32 which was or might be relevant to his own bid for No 24; 3) the risk
that he might otherwise put himself in a position of actual or potential
conflict between his duty and his interest; and 4) what Regent's legal rights
were and whether they should seek independent legal advice. In short, Sir
Sydney maintained that Mr Conway should have disclosed his personal interest
in No 24 with complete frankness and should have advised Regent to take
independent legal advice if he was to continue acting for them on No 32.
- All of those comments were no doubt valid points
to make to the jury, and I have no doubt that they were made. However, in the
light, particularly of Mr Conway's account of his conversation with Mr Karmel
in September 2000 and, if true, its undoubted significance to men of Mr
Karmel's and Mr Ratiu's experience in property dealing in the area, I cannot
say that the Judge was not entitled to leave this issue to the jury. Nor can I
say, having considered the Judge's various directions on the issue, that they
were deficient or so deficient as to amount to material misdirections. On the
contrary, in my view, the Judge's directions on the law and respective cases
of the parties on this issue were correct and appropriate.
Duty of confidence
iv) a) The extent of relevant confidential information imparted to Mr
Conway
- The fourth main issue is two-fold, namely
whether the Judge wrongly directed the jury: (a) that Mr Conway had only
minimal, if any, relevant confidential information and (b) that it was for
Regent to prove that he had misused it.
- The main thrust of Regent's case is that they
imparted information to Mr Conway in the course of their solicitor-client
relationship that included confidential information, and that he actually
misused it. Their concern was about his response, in seeking to re-open his
bidding for No 24, to Mr Karmel's information to him on 5th
December of Eyre's acceptance of Regent's unconditional offer. However, they
also complained that he had other confidential information that was or might
have been relevant to his bidding tactics for No 24, namely: as to Mr Karmel's
personal finances and those of Regent, in particular as to when and the amount
in respect of which its borrowing would be redeemed and funds released on
Pristbrook's sale of No 32; as to the particular characteristics and
development potential of No 32 that were similar to those of No 24; as to the
extent of the market interest in No 32 and of the price and profit margin on
its re-sale; and as to information given by Mr Karmel in September 2000 of
Regent's £3.75m offer for No 24 (see paragraph 23 above) and as to Regent's
plans for it.
- Mr Conway's case is that there was no substance
in Regent's complaint about the Judge's directions, whether in relation to
Regent's or Pristbrook's interests in relation to No 32 or to Regent's
interests in relation to No 24. Mr Tager, on his behalf, acknowledged that
there could conceivably have been a risk of his having come into possession of
confidential information in the course of his retainer on No 32 that might
have given him an unfair advantage in his bidding tactics for No 24, but none
was apparent on the evidence. And he maintained that the Judge directed the
jury correctly on the law and on its application to each piece of information
alleged by Regent to have been confidential and imparted to Mr Conway in
circumstances imposing a duty of confidentiality and on the issue of his
alleged misuse of it.
- The scope of the solicitor's duty not to use his
client's or prospective (Minter v Priest [1930] AC 558, HL, per Lord
Atkin at 581 and 584) or former client's, confidential information for his own
benefit is included in the following proposition of Lord Millett in Bolkiah
at 235G-236A:
"Whether founded on contract or equity, the duty to preserve
confidentiality is unqualified. It is a duty to keep the information
confidential, not merely to take all reasonable steps to do so. Moreover, it
is not merely a duty not to communicate the information to a third party. It
is a duty not to misuse it, that is to say, without the consent of the
former client to make any use of it or to cause any use to be made of it by
others otherwise than for his benefit. The former client cannot be protected
completely from accidental or inadvertent disclosure. But he is entitled to
prevent his former solicitor from exposing him to any avoidable risk;
..".
- The Judge correctly directed the jury that a
duty of confidence arises when the information is confidential, as distinct
from being a matter of public knowledge or record or generally accessible, and
imparted in circumstances in which the recipient knows or agrees that it is
confidential. He also told the jury that such a duty is only breached where
the recipient of the information makes some unauthorised use or disclosure of
it for the benefit of another client or for himself that either does or might
harm the client. He said:
"Information which is confidential and which a client or
prospective client gives to a solicitor will almost always be given in
circumstances where a duty of confidence arises. If the solicitor agrees to
act for the client, that duty of confidence will be part of the agreement,
even if nothing is actually said about it.
But suppose the solicitor does not agree to act for the client,
what then?
Normally, it makes no difference at all if the solicitor does
not agree to act for the client; the circumstances will normally still give
rise to a duty of confidence on the part of the solicitor.
. I say
'normally' because I am referring to the situation when a person speaks to a
solicitor in order to obtain the solicitor's assistance on a professional
matter. The defendants say that that is this case. But Mr Conway says that
that is not this case.
Mr Conway says that when Mr Karmel rang him up, on
5th December, Mr Karmel already knew that Mr Conway could not
possibly act as the defendant's solicitor because of his conflict of
interest as a rival bidder
What Mr Karmel knew and what he intended are matters of fact
which are strictly for you, the jury, to decide. So far as the law is
concerned, I can best express it in this way: the test is what a reasonable
person in the position of Mr Conway would have understood. If the
circumstances on 5th December were that any reasonable person
standing in the shoes of Mr Conway would have realised that Mr Karmel was
giving him information in confidence, then that would suffice to impose on
Mr Conway an obligation of confidence."
- As to unauthorised mis-use of confidential
information, the Judge directed the jury as follows:
"
Mr Conway's expertise was built up by acting for many
different clients over a number of years. The law permitted Mr Conway to use
information from various clients to add to his general stock of knowledge
and experience.
Some confidential information remains confidential for a
lifetime or more but other confidential information is only confidential for
a very short period. So, what Mr Karmel told Mr Conway in September may
perhaps have been confidential when Mr Karmel told it Mr Conway in
September; it does not necessarily follow that that it was still
confidential in December.
Of course, the mere fact that other people might know of the
information by December does not automatically mean that Mr Conway would be
released from any obligation of confidence. A solicitor cannot use
confidential information to get a head start over other members of the
public but, if there was something that Mr Karmel told Mr Conway in
confidence in September, but which was all over the papers in December,
then, in December, it will have lost its character of confidential
information.
On the other hand, if some members of the public would know the
information in December, the fact that Mr Conway learnt it from Mr Karmel in
September could still mean that Mr Conway is or was prevented from using it
the information, even though other members of the public, who were not
solicitors, were free to use it.
In this case, it is not just what was in the Estates Gazette, or
in some other newspaper or what was used in a Valuation Tribunal, that might
prevent certain information being confidential in December. As you have
heard, there are official registers relating to land matters, it is also
possible to get certain information from planning authorities if you ask.
if there is any information, whether it be about compulsory
purchase orders or planning or sale prices of property which is being sold,
which appears in any of these official records or registers or other sources
of information which solicitors normally consult when they act for a
prospective buyer, then none of that information can continue to count as
confidential information, for the purposes of the present case, once it
becomes accessible on the public register or from the Planning Authority as
the case may be."
- As to the early passage in that direction that
confidential information acquired by Mr Conway could be added to his general
stock of knowledge and experience, which he was free to use, Mr Karmel and Mr
Ratiu both accepted in evidence that one of the reasons for their instruction
of Mr Conway on the purchase and sale of No 32 was his experience and
knowledge gained of property transactions in the area.
- Sir Sydney submitted that principles developed
in cases involving employees, where there is a real interest in ensuring that
there is no restraint on trade, cannot be applied in the same way in the
context of information acquired during a solicitor-client relationship. He
maintained that, whilst Mr Conway was entitled to add confidential information
to his general stock of knowledge and experience, he was not entitled to use
specific information acquired in the course of his professional relationship
with the appellants against their interests.
- Similarly, in relation to the Judge's direction
that information, which is or becomes a matter of public record would not be
considered 'confidential', he submitted that the courts will not allow a
person to use information given to him in confidence as a "spring-board" for
activity detrimental to the person who imparted it, and then excuse his breach
of confidence by simply finding other ways to discover what he has already
learnt from the client in confidence, citing Lord Denning in Seager v
Copydex [1967] 1 WLR 923, CA, at 931, and Shaw LJ in Schering Chemicals
v Falkman [1983] QB 1, CA, at 28. However, as is apparent from the third
paragraph of the Judge's direction, he made that important qualification.
- Later in the Judge's summing-up, when dealing
with the evidence going to a continuing relationship of trust and confidence
after September 2000 arising from the past solicitor relationship with Regent,
he repeated what he had already indicated:
"But that does not resolve the question whether there was any
confidential information because as I say information does not become
confidential simply because you tell it to your solicitor. It has to be
confidential in the first place.
Sir Sydney cited that remark in support of his general complaint that the
Judge did not have sufficient regard to the special features of the
solicitor-client relationship here. He maintained that the Judge should have
directed the jury that Mr Conway was under a duty to keep confidential
all information that he acquired in the course of his relationship of
trust and confidence with Regent, which was more than merely trivial, untrue
or obviously public knowledge.
- Mr Tager submitted that Sir Sydney had cast the
notion of confidentiality too widely in his submissions and that on the facts
of this case there was no evidence that Mr Conway had received any relevant
confidential information when acting initially for Regent and then for
Pristbrook on the purchase of No 32. He noted, in particular, that the
purchase price of £1.2 m for No 32 had been in the public domain from June
2000 (see paragraph 18 above). And he argued by reference to the history of
the matter that there was no evidence of any information imparted by Regent to
Mr Conway of a confidential nature in relation to No 32 or otherwise that
could have had any bearing on his bidding tactics for No 24, certainly before
Mr Karmel's telephone call to Mr Conway on 5th December 2000.
- The critical question, which is essentially one
of fact in each case, is, as Lord Denning MR put it in Seager v
Copydex, at 931E-F, whether the information is used for the purpose of
taking unfair advantage.
- I need not detail Mr Tager's submissions as to
the presence or absence of confidentiality of information imparted to Mr
Conway and as to the adequacy of the Judge's directions to the jury on it. In
my view, in the passages from the his directions that I have set out, he
correctly and adequately identified their task. And in his treatment of the
evidence going to Regent's evidential candidates for relevant confidential
information that they alleged Mr Conway had misused or had been at risk of
misusing, I consider his directions to have been realistic and, where critical
of Regent's case, not to have been unfair.
iv) b) Burden of proof as to misuse of confidential information
- The Judge directed the jury that, even if Regent
established that Mr Conway had been in possession of relevant confidential
information, they could only succeed if they also established that he had in
fact used it for his own benefit. He said:
"There is nothing wrong in Mr Conway having confidential
information if he did not, in fact, use it for his own benefit. It is the
use for his own benefit without
[Regent's] consent which is the first
unlawful act which he is accused of having committed."
- Sir Sydney submitted that this direction was
wrong in law for two overlapping reasons.
- The first was that, absent informed consent,
possession of relevant confidential information was an absolute bar to Mr
Conway competing personally against Regent on the purchase of No 24. He
maintained that proof by Regent of Mr Conway's unauthorised use of such
information was not required; risk of it was sufficient to establish Regent's
defence of justification. He said that Mr Conway could not assert that that
there was no real risk of unauthorised use, since the information was in his
personal possession, and he could not put it out of his mind. He prayed in aid
the reasoning of Lord Millett in Bolkiah, at 235G 236A, 236F-H and
237A, that the duty encompassed the avoidance of risk or perception of risk
that a former professional confidence may be abused:
"Whether founded on contract or equity, the duty to preserve
confidentiality is unqualified. It is a duty to keep the information
confidential, not merely to take all reasonable steps to do so. Moreover, it
is not merely a duty not communicate the information to a third party. It is
a duty not to misuse it, that is to say, without the consent of the former
client to make any use of it or to cause any use to be made of it by others
otherwise than for his benefit. The former client cannot be protected
completely from accidental or inadvertent disclosure. But he is entitled to
prevent his former solicitor from exposing him to any avoidable risk; and
this includes the increased risk of the use of the information to his
prejudice arising from the acceptance of instructions to act for another
client with an adverse interest in a matter to which the information is or
may be relevant."
"It is
difficult to discern any justification in principle for
a rule which exposes a former client without his consent to any avoidable
risk, however slight, that information which he has imparted in confidence
in the course of a fiduciary relationship may come into the possession of a
third party and be used to his disadvantage.
the risk must be a real one, and not merely fanciful or
theoretical. But it need not be substantial.
"
- As Sir Sydney submitted, adverting to an earlier
passage in Lord Millett's reasoning in Bolkiah, at 234 F G, the
essential issue was whether there was a real risk of the two transactions
having an impact on one another and/or whether there was a real risk that Mr
Conway would acquire relevant confidential information:
"
In the course of argument, however,
[counsel for Prince
Jeffri] modified his position, accepting that there was no ground on which
the court could properly intervene unless two conditions were satisfied: (i)
that the solicitor was in possession information which was confidential to
the former client and (ii) that such information was or might be relevant to
the matter on which he was instructed by the second client. This makes the
possession of relevant confidential information the test of what is
comprehended within the expression 'the same or a connected matter'. On this
footing the court's intervention is founded not on the avoidance of any
perception of possible impropriety but on the protection of confidential
information.
My Lords, I would affirm this as the basis of the court's
jurisdiction to intervene on behalf of a former client.
"
- Sir Sydney added that, in circumstances where
the evidence showed that Mr Conway had recurring doubts as to his professional
position, a conflict of interest could not be dismissed as a mere "fanciful or
theoretical possibility". The duty, as Lord Millett went on to emphasise in
Bolkiah, at 235D-236A, is strict and the burden of proof on the party
complaining of breach is not heavy.
- Sir Sydney's second criticism of the Judge's
direction on this issue, which is really a corollary of the first, is the rule
derived from a broader, but clearly applicable, proposition of Lord Penzance
in Erlanger v New Sombrero Phosphate (1878) LR 3 App Cas 1218, at
1229-1230, and recently applied by Morritt LJ (as he then was) to alleged
misuse of confidential information in United Pan-Europe Communications NV v
Deutsche Bank AG [2000] 2 BCLC 461, at para 34, that, where a fiduciary
relationship between parties may be the occasion of unfair advantage to one of
them, the burden of proof lies on that party to show that he has not used that
advantage for his own benefit. Sir Sydney espoused that approach, as affording
the client protection against the unfair advantage inherent in, or derived
from a former, fiduciary relationship, and because, in practice, there is no
way of the client telling what may or may not have carried weight in the
solicitor's mind.
- The matter is one of perception as well as
substance; per Megarry J in Specot v Ageda [1973] Ch 30, at 47, and per
Lord Millett in Bolkiah, at 236. This is particularly so where the
solicitor is confronted by the potential conflict between his personal
interest and his duty to his client; per Lord Walker of Gestingthorpe in
Hilton v Barker Booth, at para 41:
"
if a solicitor puts himself in a position of having two
irreconcilable duties
it is his own fault. If he has a personal financial
interest which conflicts with his duty, he is even more obviously at fault.
"
- Sir Sydney, on the strength of those
authorities, submitted that not only had the Judge wrongly reversed the burden
of proof in directing the jury that, unless Regent proved actual misuse, Mr
Conway had done nothing wrong, but he had also wrongly imposed on Regent an
obligation to prove actual misuse in order to succeed in their defence of
substantial justification. As to the burden of proof or lack of it - he drew
from Lord Millett's observations in Bolkiah at 235C-236A and 237A and
F-G and those of Lord Hope at 226H-227A, the proposition that where
confidentiality of information obtained in a fiduciary relationship, say by a
solicitor, is at risk of misuse after the termination of that relationship by
the former fiduciary, it is a breach of his duty of confidentiality to put his
former client at risk of the confidential information being used against him
by himself or another.
- However, it should be borne in mind that those
observations of high judicial authority, however generally expressed on the
duty of confidentiality, arose in the context of injunctive relief. The issue
before the jury was not whether Regent needed protection against Mr Conway's
misuse or possible misuse of their confidential information or a remedy, say
in the form of damages or an account against his having done so; it was
whether Regent's libellous defamatory allegation of misuse, could be
justified.
- Mr Tager acknowledged that, if Mr Conway had
been in possession of relevant confidential information, Regent might be able
to justify what would otherwise be a libel on its facts in Bolkiah
terms as a case of breach of confidentiality by the solicitors. But, he
submitted, such an avenue was not open to Regent in this case, because their
letter of 6th December 2000 did not accuse Mr Conway of having had
confidential information where there was a risk of misuse, but that he had
misused confidential information. On that aspect, to which I return in
paragraph 131 of this judgment, he maintained, it seems to me with appropriate
focus on the issue arising on the appeal, that the Judge's direction was
correct.
- Secondly, and in any event, Mr Tager argued
that, as Mr Conway had not been retained by Regent at the time of his bid for
No 24, he owed no fiduciary duty to Regent in relation to that property, and,
therefore, there could be no presumption of misuse in the absence of proof to
the contrary. The rule in Erlanger, he submitted, was predicated on the
existence of a fiduciary relationship. It was, of course, for the jury to
determine whether there had been a fiduciary relationship between Mr Conway
and Regent at the material time and whether he had received any confidential
information in the course of that relationship.
- In most instances litigation involving the
giving and possible misuse of confidential information is likely to arise out
of a fiduciary, or alleged fiduciary, relationship, whether or not continuing
- and that is the context of the issue arising in this case. In the course of
his directions the Judge dealt with both fiduciary and non-fiduciary
confidences, not always differentiating between the two circumstances. In his
directions giving rise to this complaint, he was focusing on the duty of
confidence. But he had earlier given them the direction that I have set out at
paragraph 76 of this judgment of what might be described as a continuing
"free-standing fiduciary relationship" as a back-drop for considering the
existence of a duty of a breach of confidence and its breach, so as to attract
the Erlanger principle. Given that direction, it may be that he should
have gone on to direct the jury in the manner suggested by Sir Sydney.
- However, as I have said the main thrust of the
allegation in the letter of 6th December 2000 was that Mr Conway
had "used confidential information obtained through a solicitor/client
relationship", not that he put himself in a position where he might have used
it or was at risk of using it, conduct which, in my view, the Judge was
entitled to put to the jury as possibly more serious than putting himself at
risk of misusing it.
- Nevertheless, Sir Sydney submitted that the
Judge should have directed the Jury that, on the undisputed evidence, Mr
Conway was precluded from bidding on No 24 by possession of confidential
information obtained in the course of his solicitor/client relationship with
Regent, which was or might have been relevant to his bidding for No 24 and
which: (i) he could not put out of his mind or (ii) which it was impossible
for him to rebut the presumption that he had made some use of it. The
information to which he referred was of: Regent's finances; characteristics of
No 32 similar to those No 24; the re-sale value of No 32, in particular the
price and profit margin on its re-sale and the extent of market interest in
it; Regent's September 2000 offer for No 24 of £3.75m; Regent's plans for No
24 conveyed by Mr Karmel to Mr Conway in September 2000; and Mr Karmel's
information to Mr Conway on 5th December 2000 of Regent's
successful bid for No 24.
- Mr Tager submitted that none of those matters
was truly confidential information in the context of this case and that there
was, in any event, no evidence that Mr Conway had in his bidding for No 24
misused it or, if it is the test, was at risk of misusing it. As to evidence
of actual misuse, he added that, even if Mr Conway had such or other relevant
confidential information, whether the jury could infer his misuse of it in the
absence of evidence to the contrary was a matter of fact for them whether each
item relied upon was confidential and, if so, whether Mr Conway misused it. He
relied upon the Judge's reminder to the jury of each item of information
relied on by Regent as confidential.
- In my view, on the issue of misuse that Regent
seeks to justify, it was not critical to the outcome that the Judge did not
direct the jury in broader terms as to the risk of misuse arising from
possible confidences imparted in relation to No 32 and other earlier matters.
The true sting of the libel was of finer focus, namely that on 5th
December 2000 Mr Conway, by seeking to outbid Regent for No 24, actually
misused confidential information imparted to him by Mr Karmel on the telephone
that day of Eyre's acceptance of Regent's bid.
Meaning and Justification
vi) the possible meanings of the letter of 6th December for
justification
- Regent accepted at trial that the letter of
6th December 2000 was defamatory in its allegation of breach of
duty by Mr Conway to Regent, but sought to justify it. One of the important
issues was the meaning or the meanings of the allegation which it sought to
justify. But, regardless of the possible meanings, since they all related to
breach of duty to Regent, the Judge, as I have said, effectively destroyed
Regent's defence of justification to the extent that it depended on a
fiduciary relationship with Regent, by directing the jury that, as a matter of
law, the only fiduciary duty he had had was to Pristbrook, not Regent.
Similarly, his associated direction that Mr Conway was entitled to use
Regent's relevant confidential information provided it was not likely to cause
any harm to his client's, namely Pristbrook's, interests and that there had
been no suggestion of any harm to Pristbrook's interests in relation to No 32,
all but destroyed Regent's defence of justification insofar as it depended on
breach of confidence. It follows that the considerable debate before the jury
as to precisely what meaning or meanings were to be attributed to the letter
for the purpose of considering Regent's defence of justification was, given
those directions, largely academic.
- However, as so much time was given to the
question in the appeal, I shall, in deference to the arguments, examine it in
this judgment, albeit shortly.
- The Judge left to the Jury three possible
meanings of the allegation in the letter of 6th December 2000, the
first two of which Regent accepted, the third of which they did not seek to
justify. They were:
i) breach of Mr Conway's legal and professional duties to Regent ("the
broad meaning");
ii) misuse for his own benefit of confidential information arising out of a
solicitor-client relationship with Regent in respect of No 24 ("the narrow
meaning"); and
iii) misuse of confidential information arising out of a solicitor-client
relationship with Regent on No 24 established on 5th December,
relating to the amount of Regent's successful offer for No 24 ("the
very narrow meaning"), pleaded by Mr Conway in his amended particulars of
claim in the following terms:
"the
words in their natural and ordinary meaning meant and
were understood to mean that the Claimant had been informed by or on behalf
of Regent that the Trustees had accepted an unconditional offer for the Site
from Regent and of the amount of the offer, and had agreed to act for Regent
in relation to Regent's purchase of the Site from the Trustees; that he had
then used that information to put in a higher offer than that made by Regent
and accepted by the Trustees; and that by so doing he had acted in breach of
confidence and/or in breach of his professional duty as a solicitor and/or
in breach of fiduciary duty in bidding for the Site
"
- The Judge, in his guidance to the jury on the
issue of meaning took his line from the analysis of Eady J, approved by this
Court in Gillick v Brook Advisory Centres [2001] EWCA Civ 1263, at para 7. He said:
"
The meaning you have to decide upon is the meaning that a
reasonable person in the position of the person receiving the letter would
have understood.
The meaning of the words depends
partly on their context. You
have to take the context into account whenever you try and understand what
somebody is saying. It is not just the literal meaning of what a person
says; the meaning includes what an ordinary reasonable reader would conclude
as he reads the letter.
Of course, the ordinary reasonable reader of this letter would
be, and no doubt was, a busy person with a job to do. A man like Mr Briant,
or Mr Johnson for that matter, would not spend days discussing the letter as
we have. The ordinary reasonable reader might not even go through the letter
sentence by sentence as you have heard both counsel doing in this case more
than once. But you may think that the reasonable reader would probably read
this particular letter once or twice or more. You may think that he might
pay more attention to it than he might pay to other business letters because
the letter makes serious accusations against a solicitor who the reader knew
personally; and also because the letter might affect the sale of some very
valuable property which the reader was attempting sell to the highest
bidder.
You are a jury, have special expertise here that we lawyers do
not have.
reasonable readers
are ordinary members of society. They will
use their common sense. They will not be unduly suspicious, but they will
not be naοve either. They will be fair-minded, but they will not be treating
the letter as an exam question. They may just absorb the gist or message of
the letter in general terms. They may get the broad impression which may not
be the same as the result of a line by line analysis assisted by
lawyers.
They will not be avid for scandal, but neither will they be
looking for the most charitable interpretation they can find. "
- Regent maintain, that the Judge wrongly left to
the jury the question whether the letter had the very narrow meaning, namely
breach of confidence arising out of a solicitor-client relationship as to the
amount of Regent's December 2000 offer - the meaning that Regent did
not seek to justify. This is how the Judge put the matter to the jury:
"One of the main differences between the two sides in this case
is: did the words complained of accuse Mr Conway of misusing information
about the price which Regent
had bid on 5th December?
[Regent]
say the letter does not mean that. Whether or not the letter does mean that
of course is crucial to what you have to decide.
It is important because
Regent accept they cannot prove,
indeed have never alleged, that Mr Conway ever knew or misused information
as to the amount which
[they] had bid on 5th December,
communicated to him on 5th December by Mr Karmel. Mr Karmel
accepts and says that on 5th December he did not tell Mr Conway
the figure at which they had put in their bid.
You have to ask yourselves: does the letter mean that Mr
Conway had been told a figure by
[Regent] at all? What happens if you
think the letter means that Mr Conway did know and misuse confidential
information about the figure that
Regent had bid on 5th
December? Would it help
[Regent] if they could prove that he had misused a
figure given in September?
What a defendant has to prove is that the gist of the libel is
true. The law allows some leeway for exaggeration and inaccuracy of detail
but the leeway for exaggeration and inaccuracy of detail is limited. If you
think that
[Regent's] letter means something more than what
Regent can
prove, it is for you to decide whether or not that difference is an
unimportant detail or whether what
[Regent] cannot prove is a further
allegation of much more gravity than what they can prove."
- Regent maintain that the letter, which is in
plain terms, did not state that they had told Mr Conway the amount of their
successful bid, and that the imputation that the letter was to be read as
having that meaning was not a reasonable interpretation of it and should not
have been left to the jury. They also maintained at trial that the letter was
not to be read as meaning that Mr Conway had agreed to act for Regent in
relation to their purchase of No 24, but seemingly do not complain in the
appeal about the Judge having left that part of the meaning to the jury.
- Mr Conway's case on the third and very narrow
meaning is that it was a reasonable meaning to leave to the jury since the
making of an offer by Mr Conway could have had no effect unless it exceeded
Regent's offer.
- In support of Regent's construction, Sir Sydney
referred to the well-established canons of construction in defamation that
where there are a number of possible interpretations, the hypothetical
reasonable reader should not be taken as seizing upon the worst one: (see
Capital & Countries Bank Ltd v George Henry (1882) 7 App Cas 741
and Nevill v Fine Art & General Insurance [1897] AC 68, HL) and
that such a person is a fair minded one, who resists jumping to conclusions
(see Lewis v Daily Telegraph [1964] AC 234, HL).
- Alternatively, Sir Sydney argued that the very
narrow meaning could not have materially injured Mr Conway's reputation if he
was, in fact, guilty of unprofessional conduct by bidding against his clients
when he was also in possession of other relevant confidential information
acquired in the course of a fiduciary relationship, information, given that
relationship, which the law presumes him to have misused in the absence of
proof to the contrary. On that approach, he maintained that it did not matter
whether the letter was reasonably capable of meaning that Mr Conway had
misused information as to the amount of Regent's offer for No 24 in December
2000, since, given their acceptance that the letter was defamatory, the
primary reason why the jury was being asked to determine its meaning was to
decide whether it was substantially justified. Sir Sydney observed that it
would have been perverse of the jury to find that the letter was not
substantially justified if Regent established that Mr Conway had misused
relevant confidential information obtained through a solicitor-client
relationship, though not such particular piece of confidential information. He
thus argued that the core allegation remained the same, namely misuse of
confidential information arising out of a solicitor-client relationship in
respect of No 32 or in the discussions about No 24 in September 2000, for the
solicitor's own benefit, i.e. meanings i) and ii), a very serious breach in
itself of a solicitor's legal and professional duties.
- By contrast, Sir Sydney complained, the Judge
invited the jury to treat the letter as a sort of puzzle, and adopt a lawyer's
analytical approach to the letter, dissecting each phrase one by one with a
view to construing it as if it were a contract. Such an approach, he
maintained, was highly prejudicial to Regent, given that they had not
attempted to justify the very narrow meaning of the letter.
- Sir Sydney made a number of other mostly
marginal criticisms of the Judge's directions on justification, which, he
maintained, misled them as to how they should approach the issue of
substantial justification. These included a direction that the jury could
consider an allegation of actual misuse of confidential information as more
serious than one of a risk of such misuse or of creating a conflict of
interest, and a direction to consider as a possibility that the letter would
not be substantially justified because of the untrue allegation in it that
Regent had contacted the Law Society about Mr Conway's conduct. In my view,
there is no substance in either of those criticisms.
- An allegation of actual misuse of confidential
information may, depending on the circumstances, be more serious than creating
a risk of such misuse or acting in breach of fiduciary duty not involving
confidential information. The Judge, in the way he put the matter to the jury,
left them to consider whether that was so in this case.
- As to the possible effect of the untrue
reference in the letter about Regent having contacted the Law Society about Mr
Conway, I do not read the Judge's short reference to it in his directions to
the jury as an invitation to them to treat it as of such importance that it
could preclude substantial justification, quite the reverse. He commented:
. "
If you think that the bit about contacting The Law Society
is an unimportant detail, then you will go on to consider whether the
defendants have proved that Mr Conway did misuse any other confidential
information or otherwise act in breach of his duties as a
solicitor."
- In any event, it is difficult to see how the
jury, in rejecting Regent's defence of justification could have concluded that
the allegation that Regent had reported to the Law Society the very conduct
alleged in the letter materially added anything to the seriousness of the
allegation, though it could have been relevant on the issue of malice and/or
of quantum of damages. If Regent succeeded in justifying its allegation, a
complaint to the Law Society would have been justified.
- However, I have some sympathy with Regent's main
complaint of what might be called "salami-slicing" by the Judge in the way in
which he invited the jury to approach the variously pleaded allegations of
meaning of the libel on behalf of Mr Conway. Notwithstanding the conventions
of pleading that survive in this area of the law, I agree with Sir Sydney that
it would have been more realistic and helpful for the Judge to have
concentrated on the core of the complaint contained in pleaded meanings i) and
ii) and that recourse to the "frills" in alleged meaning iii) was likely to
add little but complication on the central question whether Regent had
substantially justified their allegation. Nevertheless, I would not on
this ground alone, set aside the jury's verdict. As I have said, it contains a
far more serious flaw flowing from the Judge's direction that, as a matter of
law, such fiduciary duty as Mr Conway had was to Pristbrook, not Regent, which
is ground enough for setting aside the verdict on justification.
Malice
- The Judge ruled that the letter of
6th December was protected by qualified privilege, a ruling that Mr
Conway has not challenged. However, the Judge went on to give directions on
malice, which Regent complain wrongly removed that protection. He put two
questions to the jury under this head. The first was whether Mr Ratiu and Mr
Karmel, in respectively sending and authorising the letter, were "acting out
of malice in the legal sense", to which the jury's answer was "yes". The
second was whether Mr Ratiu sent the letter "with the motive of getting an
economic or material gain in the belief that
[Regent] would be better off
financially if they violated Mr Conway's rights than if they did not violate
[his] rights", to which their answer was "no". So, wherever the jury found
malice it could not have been on their answer to the second question.
- There are two parts to this head of appeal. The
first is whether the Judge should have withdrawn the issue from the jury on
the ground that there was insufficient evidence on which a reasonably minded
jury, properly directed, could find it, an issue not raised by Regent at the
trial. The second is whether he wrongly directed them on the law on their
approach to the evidence going to the existence of malice.
- Regent maintain that the Judge, having wrongly
left the issue of malice with the jury, seriously misdirected them by failing
to make clear that malice did not turn on the objective meaning of the letter,
as found by them on the question of justification, but on the subjective
meaning intended by Regent, in particular in relation to the very narrow
meaning, which was in issue and which Regent had not attempted to justify.
- As to the adequacy of evidence of malice, Mr
Conway's case is that it lies ill in the mouth of Regent to complain of the
Judge leaving the issue of malice to the jury when it did not seek to persuade
him at trial not to do so, and that, in any event, there was substantial
evidence of malice for their consideration. He also seeks to support the
Judge's direction on the issue as accurate and fair, in particular as an issue
only to be addressed if the jury were against Regent on justification.
- It was for Mr Conway to prove malice. The
question is whether there was sufficient evidence on which a reasonably minded
Jury, properly directed, could find it proved adopting and adapting May LJ's
succinct formula in Alexander v Arts Council of Wales [2001] 1 WLR 1840, CA, at para 42, "whether there [is] any evidence, taken at its
highest, on which a jury properly directed could properly infer that
[Regent] subjectively did not honestly believe that what
[it] intended to
say in the
[letter] was true". Such a proposition, as May LJ noted in para
32 of his judgment in that case, is of a piece with the assertion in the
8th edition of Gatley on Libel and Slander, (1981), para
795, cited with approval by this Court in Telnikoff v Matusevitch
[1991] 1 QB 102, CA, at 120, that a "[p]laintiff must adduce probability of
malice at least".
- Where defences of justification and qualified
privilege are both in play, the meaning of the alleged defamatory words on the
issue of justification is objective and the defendant's intended meaning on
the issue of malice as a counter to the defence of qualified privilege is
subjective. A judge, in his directions to the jury, should make that
distinction, and he should keep to it in his treatment of the evidence and
inferences capable of being drawn from it. Hirst LJ emphasised the importance
of this in Loveless v Earl [1999] EMLR 530, at 538-9, in the following
terms:
"
it is very important to contrast the test for meaning on the
one hand and the test for malice on the other. Meaning is an objective test,
entirely independent of the defendant's state of mind or intention. Thus, in
a case where words are ultimately held objectively to bear meaning A, if the
defendant subjectively not meaning A, and honestly believed meaning B to be
true, then the plaintiff's case on malice would be likely to
fail."
vii) a) Whether the Judge should have withdrawn the issue of malice from
the jury
- Mr Tager, in his conduct of Mr Conway's case at
trial, put at the centre of his case on malice a "dirty trick" allegation,
namely that Regent wrote and sent the letter of 6th December 2000
to Eyre with the intention of securing No 24 at £3.75m without having to raise
their bid in response to Mr Conway's renewed bidding and, for the purpose, to
blacken his name. This allegation, which Mr Tager repeated many times in his
addresses to the jury, became the subject of the two questions of the Judge to
the jury to which I have referred. This is how the Judge introduced the issue
to the jury:
"The real issue
was Mr Karmel genuinely ringing Mr Conway as a
prospective client ringing a prospective solicitor? If he was, then the
information that Mr Karmel was giving, namely that he had done a deal with
Eyre
would, you may think, be fairly classic confidential
information.
On the other hand if Mr Karmel was not genuinely ringing as a
prospective client, but was ringing because he knew that Mr Conway was a
rival bidder and he wanted to knock him out using this dirty trick, if that
was what the position was then you may conclude that the information was not
genuinely being given in a solicitor/client relationship at all, but was
being given by one competitor trying to knock out another by unfair
means.
If there was trickery and deception
Eyre
would have been
tricked out of the chance of getting more than £3.75 million for their
property at number 24. So, you will bear the context of all this in mind.
The question is whether or not Mr Karmel was calling Mr Conway because he
genuinely wanted Mr Conway to act as a solicitor, or because he wanted to
knock him out as a competing bidder, and that is a question of fact which is
for you to decide."
- Such a formulation, suggesting dishonesty on the
part of Mr Karmel in making the telephone call, in fact formed little or no
part of Mr Conway's case or Mr Tager's presentation of it at trial, save as a
broad suggestion from the latter that there had been "a dirty trick from
beginning to end". But, the Judge, in directing the jury on the "dirty tricks"
allegation, as it had been put at trial by Mr Tager on behalf of Mr Conway,
characterised it as a suggestion that Mr Karmel, telephoned Mr Conway on
5th December 2000 to force confidential information on him so as to
disqualify him from bidding for No 24. The Judge's version appears to have had
its origin in speculation by Mr Conway, in his evidence, as to a possible
alternative reason for Mr Karmel's telephone call to him, but it was an
alternative that Mr Tager never put to Mr Karmel in his extensive
cross-examination of him.
- Sir Sydney submitted that there was no
evidential support for either version of the "dirty trick" allegation. He
suggested that the Judge's version of it was also highly improbable for a
number of reasons, but in particular that Regent had already reached an oral
agreement with Eyre, and were hardly likely to have contacted anyone whom they
regarded as a potential competitor at that stage who might seek to gazump
them.
- The Judge, in his directions to the jury in the
context of justification, had described Regent's argument that Mr Conway must
be taken to have misused confidential information as being "without an
explanation from Conway
a strong argument", namely that he must be taken to
have misused confidential information, given that he had put in a bid of only
£50,000 higher than that of Regent shortly after Mr Karmel had told him of
Eyre's acceptance of Regent's offer. The only explanation since proffered by
Mr Conway, Sir Sydney observed, was that he had had an incremental bidding
strategy that involved continuing to raise his bids after the bidding had
closed. However, he pointed out that there was no evidence that Regent knew or
could have known of that strategy when they wrote the letter, so it could not
possibly displace the strong argument of their honest belief in it. The
Judge's comment in his directions to the jury at this point that they might
find Regent's case on malice as "rather difficult to follow" was, as Sir
Sydney stressed, only because he was testing Regent's case on malice by
reference to a meaning that they may not have intended (see paragraphs 166-167
below).
- Sir Sydney also referred to the fact that it was
common ground on the evidence that Mr Conway contemplated up to and including
the telephone call from Mr Karmel on 5th December that he might be
instructed to act for Regent on the purchase of No 24 if Regent secured the
site. In answer to a question in cross-examination whether he should have
competed against Regent on No 24 whilst contemplating that he might ultimately
accept instructions from them to act as a solicitor in respect of it, he said:
"excuse me, even if I had been prepared to ride two horses, so what". If Mr
Conway had contemplated (as he had done) that he might be instructed once he
had lost the biding, why, Sir Sydney asked, should Regent not seek to instruct
him when they had won it?
- As to a suggestion by the Judge to the jury that
they could, if they considered it important, find malice against Regent in
relation to the inaccurate statement in the letter of 6th December
2000 that Regent had reported the matter to the Law Society, Sir Sydney
submitted that if Regent genuinely believed that Mr Conway had acted
unprofessionally so as to jeopardise their deal with Eyre, they were entitled
to complain to the Law Society. The fact that a draft letter of complaint was
prepared, but not sent due to pressure of time, and that Regent informed Eyre
the next day that it had not sent the complaint (see paragraph 47 above) was,
he said, to be put against the Judge's suggestion to the jury that they might
not think very much of it as an explanation.
- In summary, Sir Sydney submitted that, on the
undisputed evidence, far from being actuated by malice, Regent were entitled
to feel aggrieved at Mr Conway's conduct and to have considered that he had
acted unprofessionally in attempting to outbid them.
- Mr Tager, notwithstanding the prominence that he
had given to the "dirty trick" issue in his conduct of the case before the
jury, maintained that it formed only a small part of Mr Conway's case on
malice. However, apart from falling back on the incorrect statement in the
letter to Eyre of 6th December 2000 of having reported the matter
to the Law Society, he had little more to say on the subject save that, as a
result of his, Mr Tager's canvassing of the matter at trial and Mr Conway's
suggestions in his evidence, the Judge correctly left it to the jury and
directed them adequately and fairly on the rival contentions. He maintained
that, however unlikely the suggestion, as Regent now maintains, juries often
do have to determine the truth of unlikely suggestions. He also, in a short
hypothetical analysis, sought to suggest a number of rational bases for the
allegation or to dismiss one or more of Sir Sydney's points on this issue as
irrelevant to it.
- In my view, there is force in Sir Sydney's
submissions. Consider the telephone conversation between Mr Karmel and Mr
Conway on the morning of 5th December 2000. Mr Karmel told Mr
Conway that Regent's bid had been accepted and asked him to act as Regent's
solicitor on the purchase, information that the Judge, in his summing-up to
the jury described as "pretty classic confidential information". Mr Conway did
not say that he could not act, nor that Mr Karmel should not give him
confidential information or speak to him, as he was a competing bidder. He
simply said that he needed first to make a telephone call and then hung up
abruptly. Regent subsequently learned from Eyre, not Mr Conway, that he had
contacted Mr Johnson, its Chief Executive, immediately after putting the phone
down on Mr Karmel, and had offered to outbid Regent by the small margin of
£50,000 over their, so far, successful bid. That bid, it will be remembered
was at the same level as their unsuccessful September 2000 bid, of which they
knew Mr Conway was aware (see paragraphs 19, 22 and 23 above).
- In my view, there was no sufficient evidence on
which a jury properly directed on the law, could find malice either in respect
of the "dirty trick" allegation (in either of its forms) or in relation to the
inaccurate assertion that the matter had been reported to the Law Society. As
I have already said by reference to the passage from the 8th
edition of Gatley approved by this Court in Telnikoff v Matusevitch,
pat 120 and in Alexander v Arts Council of Wales, at paras 32,
37-38 and 42, the law requires evidence of at least probability of malice;
mere possibility is not enough. It follows that, in my view, there was no
evidence upon which the jury could, even if properly directed, have found
malice so as to defeat Regent's defence of qualified privilege. I would,
therefore, set aside the jury's finding of malice on this ground alone, with
the result, if I am right, that Regent succeed in their appeal on this issue
as well as that of justification.
Vii) b) The Judge's directions on the application of the subjective test
of malice
- If I am right in my view that there was
insufficient evidence of malice to go to the jury, it does not matter whether
the Judge correctly directed the jury on the issue. However, in case I am
wrong in that view and in relation to justification, I should go on to
consider the Judge's directions.
- Regent maintain that the Judge erred in failing
to distinguish clearly in his directions on malice that, whilst justification
was to be determined solely by reference to the objective meaning of the
letter, malice was to be determined solely by reference to the state of mind
and intention of Regent.
- Mr Conway's case is that the Judge, throughout
his directions on malice stressed that the jury could only find it if they
were satisfied that Regent knew the letter to be false or did not believe it
to be true, making plain, without using the word "subjectivity" that that is
what he meant.
- Sir Sydney illustrated the scope for confusion
by tracking the Judge's line of reasoning in the following sequence of his
directions to the jury on the issue. First, the Judge introduced the issue of
malice by telling them that "[m]ost of what you need know for this topic, as
far as the facts are concerned,
overlaps with what you need to know for the
purpose of deciding whether [the letter] is true or not.
" And, having
previously on more than one occasion referred to the meaning of the letter as
probably the most important matter they had to decide, he then made a number
of references to whether Regent believed what the letter meant or stated.
Finally, he directed them to decide, if they found that the letter bore the
very narrow meaning and related to confidential information, "whether Mr
Karmel and Mr Ratiu knew that the letter was false".
- Such an approach, Sir Sydney submitted, amounted
to a serious misdirection because it gave rise to a risk that the jury would
fix upon "the very narrow meaning" and would then find malice on the sole
basis that Regent had never attempted to justify that meaning. It would have
been otherwise, he implied, if the Judge had framed the question as "whether
Mr Karmel and Mr Ratiu intended that meaning and knew it to be false".
And he held to that criticism notwithstanding the following potentially
curative passage in the Judge's direction, maintaining that that it was so
diffuse as to be incapable of curing the earlier misdirection:
"It is for you to decide
what the letter means. And so it is
for you to decide whether it bears a meaning which the defendants did not
intend. You may not think it very likely that the letter bears a meaning
which the defendants did not intend, but if you do think that the letter
bears a meaning that the defendants did not intend, then for the purposes of
malice I must direct you, and I do, to judge the defendants' belief by what
you find they actually intended to say. If they intended to say what they
did believe to be true but have managed to something else which they knew to
be untrue, then you judge them by what they intended to say."
- Sir Sydney made a number of other criticisms of
the Judge's treatment of this issue that do not take Regent's case much
further and with which, with respect to him, I do not consider it necessary to
deal.
- Sir Sydney also criticised the Judge's direction
to the jury that it would be open to them to find malice on the sole basis
that the letter contained an inaccurate reference to having reported Mr Conway
to the Law Society. This is how the Judge put that matter:
"
it is admitted that Mr Ratiu knew they had not reported Mr
Conway to The Law Society, so what Mr Ratiu wrote about the Law Society was
obviously false and untrue to Mr Ratiu's knowledge. You heard Mr Ratiu's
explanation for those words: he said the letters were intended to be sent in
a different order. Entirely a matter for you, but you may not think much of
that as an explanation. The sentence about the Law Society you may think
could very easily have been deleted before the letter was sent.
As I said earlier, you will need to consider whether that
sentence is important; whether it makes the seriousness of the alleged
wrongdoing appear greater than it otherwise would have appeared, or whether
those words are simply detail as Mr Price suggests. If you find the sentence
is important, you may find that the defendants could not prove that the
letter was substantially true for that reason, that is going back to the
earlier stage [i.e. the issue of justification]. If you have found that the
sentence about the Law Society is important, you may also feel able to find
malice against Mr Ratiu, it is entirely a matter for you to decide how
important you decide that sentence is."
- Sir Sydney submitted that that is another
example of the Judge's elision of the objective test for justification and the
subjective test for malice. He added that it would have been perverse for the
jury to have found malice in the light of Mr Ratiu's explanation that they had
intended to send the letters in a different order but were overtaken by events
and the undisputed fact that Regent informed Eyre on the following morning
that the letter to the Law Society had not been sent. In any event, as Sir
Sydney observed, it made no difference whether Regent had already reported Mr
Conway to the Law Society or whether it was contemplating doing so. What
mattered was whether Regent, in writing the letter to Eyre, honestly believed
that Mr Conway had acted in breach of his legal and professional duties as a
solicitor.
- Mr Tager maintained that the Judge was justified
in giving the direction he did because it is malicious to write what the
writer knows to be untrue, and Regent had admitted the third possible meaning
of the letter of 6th December 2000 to have been untrue. Such
untruth was also relevant to whether the jury could infer that Regent had no
honest belief in other parts of the letter.
- Given the complexity of the task for the jury in
distinguishing between the objective meaning of the words for the purpose of
reaching a finding on justification and their subjective meaning when
considering the issue of malice, regardless of justification, it was vital
that the Judge should make that distinction clearly. And it was vital to the
outcome of the case if they had reached a stage in their deliberations of
having opted for the very narrow meaning, which Regent had not attempted to
justify, that they should have the distinction clearly in mind. In my view,
there is a grave danger, in the light of the Judge's directions, that the jury
did not have it in mind. Moreover, it does not seem to have been canvassed in
that sort of focus at the trial. In particular, it does not appear to have
been put to Mr Ratiu or Mr Karmel in cross-examination that they maliciously
intended to convey in the letter the very narrow meaning, which they had never
at any stage suggested to be true.
- Accordingly, I would also set aside the finding
of malice by the jury on the ground of misdirection.
- I should add that Regent also maintained that
the Judge presented a prejudicial and one-sided account of the parties'
respective submissions in his summing-up, including an alleged emphasis on
Regent's admission that the letter was defamatory and in a few instances where
he had referred to Regent's case on particular issues as "technical" or
"difficult" or unspecific. In my view, there is little in this complaint; the
Judge went to great trouble to sum up this case comprehensively,
comprehensibly and fairly. This case was nothing if not detailed, technical
and difficult, combining as it did the mysteries of defamation, breach of
fiduciary duty and of confidence. There were inevitably difficulties and
technicalities in the arguments on both sides, and the comments of which
Regent complains were, in my view, justified or at the very least permissible.
Damages
viii) Whether the Judge misdirected the jury on damages or whether their
award was perverse
- If I am right in my views on the issues of
justification and malice, this issue is now academic. But in case I am wrong
and also out of deference to counsel's submissions on damages, I hope that it
may be helpful for me to say something on the subject.
- The Judge, in directing the jury on this issue,
directed them comprehensively and carefully, summarising the salient points
for and against Mr Conway, including the manner in which the parties had
conducted their respective cases. He gave general guidance by way of
comparison about sums that might be awarded for very serious personal injuries
and on aggravation. The Jury awarded £96,000 in general damages, which is very
close to the conventional award for the total loss of both hands.
- Regent maintain that this was substantially in
excess of what a reasonable jury could have thought necessary to compensate Mr
Conway and to re-establish his reputation, and that, in any event, any such
loss resulted from a single letter, allegedly published only to three people;
two of them, the addressee, Mr Briant, and Mr Eyre (the Chairman of Eyre) were
not called to give evidence; and the third, Mr Johnson, who gave evidence for
Mr Conway, said that it had had no effect on his opinion of him.
- Regent also maintain that the Judge erred in
directing the Jury that:
i) Mr Johnson, who was Mr Conway's own witness, was not giving a truthful
account of his reaction to the letter;
ii) if they found that the words complained of were circulated to other
people in Mr Conway's business circle (which was unpleaded and unsupported by
evidence), they might consider raising the damages from a possible £65,000 to
up to £100,000;
iii) they should bear in mind, in assessing compensatory damages, that the
parties and the persons who read the letter were people who think in rather
large sums of money;
iv) they should assess the appropriate compensation for libel and
aggravation separately rather than together.
- As to those matters:
i) I consider that the Judge's remark about Mr Johnson's stated lack of
reaction to the letter was in the following and, in my view, acceptable
terms:
"You have heard two different statements from Mr Johnson: one as
reported by Mr Ratiu at the initial telephone call [namely that the reported
conduct was outrageous] and his evidence from the witness box. It is for you
to decide what you make of Mr Johnson's evidence if you think fit. I simply
say that it is very rare for witnesses to come to court and say that they
thought the worse of a claimant as a result of a libel and you may
understand why that might be."
ii) As to the Judge's reference to a possibly wider circulation justifying
a possible rise in the level of damages from a possible £65,000 to £100,000,
it is true there was some evidence suggesting a little wider circulation,
certainly among the Eyre Trustees and those working for them and professional
firms, such as Cluttons and solicitors instructed on behalf of Eyre. However,
I am uneasy about the Judge's invitation to the jury consider so substantial a
rise on the basis of such unpleaded and nebulous a suggestion.
iii) As to the Judge's remark about the people involved being persons who
think in large sums of money, such a factor considered on its own would
normally be irrelevant to the fixing on a sum sufficient in the circumstances
of any particular case to vindicate reputation. But this is how he put the
point, after properly directing jury on the need for a sum of damages to be
sufficient for that purpose:
"In this connection, you will bear in mind that both parties
in this case, and those by whom the letter complained of was read, were
and are people who think rather large sums of money. A sum that might be
large for most of the population of the country might appear to be not
quite so much for them. On the other hand, you will not be dazzled by the
millions you have heard spoken of and you will confine yourselves to what
is reasonable and proportionate in the
circumstances."
Such a direction, it seems to me, just about passes muster as
putting in context the direction he had just given on the function of
damages as vindication in this case a context of impugning the reputation
of a successful and highly paid solicitor in the property field. In any
event, as Mr Tager commented, if the Judge in this reference introduced an
irrelevant consideration, he did so in a qualified way and it should be seen
in the context of his directions as a whole.
iv) As to the calculation of the award taking into account aggravation if
the jury considered it appropriate, the Judge directed the jury in the
following terms:
"If you decide to award any compensatory damages and if you do
decide that they should be aggravated damages then you should award one
total sum. If you get to that stage, you decide amongst yourselves: first
the appropriate compensation for the libel you find and, second, the
appropriate sum for any aggravation. You then add them together and
produce a single sum. You will not be asked to state what sum, if any, you
have awarded as aggravated damages."
That direction does not accord with the guidance given by this
Court in Thompson v Commissioner of Police of the Metropolis [1998] QB 498, CA, at 516E, albeit in claims for wrongful arrest and false
imprisonment. However, if a defamation jury take a two stage approach to
calculating a global figure as the Judge directed here, it seems to me to be
just as desirable as in the sort of claims considered in Thompson for
them to indicate the make-up of that figure as between the "basic" award and
that for aggravated damages. But, I do not suggest that the award is
necessarily vitiated by the Judge's direction to them not to do that in this
case. As the learned editor of the 17th edition of McGregor on
Damages notes at paragraph 39-036 of that work, it has been unclear whether
the Thompson guidance applies to defamation.
- Mr Kenneth MacLean QC, for Regent, submitted
that the Judge should have directed the jury that the letter was at least
partially justified such that damages could only be minimal. In so submitting,
he had in mind Neill LJ's observation in Pamplin v Express Newspapers
[1988] 1 WLR 116, at 120, that damages may be reduced, possibly almost to a
vanishing point if a jury consider that defamatory words were partially
justified. It is plain that the jury, whatever their individual conclusions on
the many issues of fact and judgment presented to them, in particular as to
what was and was not justified, ended up well above the level of considering
damages as minimal or close to vanishing point. However, given my criticisms
of the Judge's direction of law as to fiduciary relationship and its effect on
Regent's defence of justification and its knock-on complications for his
directions on malice, and my view that there was no evidence of malice fit for
the jury, it is pointless for me to attempt a reasoned conclusion on this
aspect of Mr MacLean's submissions on damages.
- Mr Tager, in detailed oral submissions, sought
to defend the Judge against Mr MacLean's various criticisms of his directions.
And he rightly emphasised that, provided a jury is directed properly, there is
a heavy burden on a party attacking an award as excessive. As this Court held
in Rantzen v Mirror Group Newspapers [1994] QB 670, at 692H, it can
only intervene if it can give a negative answer to the question "Could a
reasonable jury have thought that this award was necessary to compensate the
plaintiff and to re-establish his reputation?"
- Mr Tager also drew attention in support of the
jury's award to a number of elements contributing to the inclusion of a sum
for aggravated damages, including: the seriousness of the allegation to a
professional man with such local involvement and contacts; the absence of an
apology; allegations of impropriety in the course of the trial going beyond
the allegation in the letter; Regent's initial attempts to deny Mr Conway
access to the 6th December letter; and claimed untruthfulness in
the witness box.
- Save for the Judge's direction as to the
possible consequence of suggested wider circulation, I could not say, taking
his directions overall, that he misdirected them so as to vitiate their award.
However, I am, concerned about that suggestion and as to its possible effect,
namely an increase of about a third in the damages that the jury might
otherwise have awarded. Independently of that concern, I also feel unease that
the total sum awarded by the jury, £96,000 is, as Mr MacLean pointed out,
close to the conventional award for the total loss of both hands. That is
probably quite enough comment from me in an area which is peculiarly within
the province of the jury and whose award in this case, if I am right in my
conclusions as to liability, is now academic.
- For the reasons I have given, I would set aside
the jury's findings on the issues of justification and malice and would
therefore allow Regent's appeal.
- Before leaving the case, I should express my
sympathy to the Judge and to the jury on the enormous burdens imposed on both
of them in this case, given the unhappy divide of responsibility between them
on supposedly self-contained issues of law and fact. In fact, the critical
issues, particularly as to fiduciary relationship and matters of confidence
and the ingredients of malice as distinct from justification were in truth
more matters of mixed law and fact. It is, in my view, no advertisement for
our system of jury trial in civil cases - where it applies - for such complex
issues to be tried in this way. A Martian, on learning of it, would be amazed,
as would the ordinary person in the street.
Lord Justice Laws:
- I agree that this appeal should be allowed for
the reasons given by Auld LJ. I would only wish to emphasise my emphatic
agreement with two aspects of my Lord's judgment. First, there is his
observation at paragraph 78 that there is a "powerful argument of principle
for lifting the corporate veil where the facts require it to include those in
or behind the company who are in reality the persons whose trust in and
reliance upon the fiduciary may be confounded". Secondly I wish in
particularly to support my Lord's presentation as to the means of trial, in
defamation cases, of complex issues such as arose here.
Lord Justice Sedley:
- I agree that this appeal succeeds for the
reasons given by Lord Justice Auld. While the want of a suitable direction on
justification would by itself have indicated a retrial, the want of sufficient
evidence of malice makes a retrial otiose.
- This was in the end a case in which a solicitor,
who had set about competing with a client, could not legitimately complain if
in the circumstances the client accused him of behaving unethically. I
recognise that there is an asymmetry between the law's longstanding insistence
on the discrete legal personality of limited liability companies and its
willingness to lift the veil, as the expression is, in a case like the
present. But it is the latter, not the former, which accords with common sense
and justice when the issue is who a solicitor owes his professional duties to.
- I too would have been concerned, had the appeal
on liability failed, at the magnitude of an award of general damages of almost
£100,000. It is worth recalling that the special damage, which the judge had
adjourned to a separate inquiry, was said to be the profit Mr Conway had lost
by being prevented from buying No.24. This could be readily gauged by the
seven-figure profit that the defendants themselves had made on the
transaction. There could be little pain that the recovery of such a sum with
costs - would not assuage. As to Mr Conway's standing in the eyes of others,
what mattered was not what Mr Johnson said about it (if indeed it was
admissible) but how few people had seen or learnt of the letter, and what
would be left of its sting once it was known to those few individuals that a
jury had cleared Mr Conway of wrongdoing. For my part, even had the verdicts
for the claimant stood, I doubt whether the jury's munificent award of general
damages could have survived.
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