Shepherd Construction Ltd v Pinsent Masons LLP

Factual and Procedural Background

The Plaintiff, a national building contractor based in North Yorkshire, initiated proceedings against its solicitors, comprising three successive legal entities: Masons, Pinsent Masons, and Pinsent Masons LLP ("PMLLP"), alleging professional negligence in relation to advice given concerning various standard forms of construction contracts. The solicitors had provided advice and drafted subcontract amendments over a period spanning from 1994 to 2008. The dispute arose primarily from the alleged failure to update contractual payment provisions in light of legislative changes, notably the Housing Grants, Construction and Regeneration Act 1996 and the Enterprise Act 2002, which affected the validity of "pay when paid" clauses.

The Plaintiff contended that there was a "Single Contract" encompassing the relationship with all three legal entities, obliging them to provide ongoing review and advice on subcontract amendments. The Defendant (PMLLP) sought to strike out this claim, disputing the existence of such a Single Contract and challenging the legal basis for the Plaintiff's allegations.

The procedural history includes an initial claim directed at PMLLP as the successor to the earlier firms, an application to strike out parts of the claim, amendments to the Particulars of Claim, and a dispute over whether the earlier firms should be joined as defendants. The court granted an adjournment to allow the Plaintiff to clarify its pleadings, and subsequent developments saw the Plaintiff no longer seeking to join the earlier firms in the initial proceedings. The matter returned to the court for consideration of the strike-out application focused on the Single Contract allegation.

Legal Issues Presented

1. Whether the Plaintiff and the successive solicitor firms were parties to an overarching "Single Contract" or general retainer imposing an ongoing duty to review and update previous legal advice and contract drafting in light of legislative changes.
2. Whether the Defendant (PMLLP) assumed responsibility for the liabilities and duties of its predecessor firms under such a Single Contract.
3. The extent and nature of the solicitors' duty of care in the context of multiple specific commissions over a long-standing professional relationship.
4. Whether the claims based on the Single Contract have any realistic prospect of success and should be struck out.

Arguments of the Parties

Defendant's Arguments

• The claim based on the Single Contract has no realistic prospect of success and is "hopeless".
• There was no express or implied agreement constituting a Single Contract encompassing all dealings with the Plaintiff across the different firms.
• The Plaintiff was billed for individual pieces of work, indicating separate contracts rather than a general retainer.
• Specific commissions do not imply a continuous duty to review all prior advice and drafting.
• The merger and transfer of business assets between the firms do not create an implied Single Contract or transfer of liabilities for earlier advice.
• Any continuing duty to review would raise commercial and professional difficulties, including issues related to payment for ongoing advice.

Plaintiff's Arguments

• The relationship with the solicitors over many years and through changes in firm structure gave rise to a Single Contract or general retainer.
• The same or substantially the same individuals provided continuity in legal advice, supporting the existence of a Single Contract.
• The Defendant firms had an ongoing duty to review and revise earlier advice and subcontract amendments in light of legislative changes.
• Specific communications from PMLLP indicated a continuation of the legal services and obligations previously provided by predecessor firms.
• Alternatively, multiple individual contracts existed, but these included commissions which should have involved reviewing earlier advice, particularly regarding payment provisions in subcontract forms.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analysed the legal relationship between the Plaintiff and the successive solicitor firms, focusing on whether a Single Contract or general retainer existed that imposed an ongoing duty to review prior advice and drafting. The court acknowledged that a specific commission to review a draft subcontract might carry a responsibility to consider earlier related advice, especially in a long-standing solicitor-client relationship. However, it found the Plaintiff's contention of a broad Single Contract requiring continuous review unsustainable for several reasons:

• A solicitor's duties are primarily defined by the specific retainer or commission given; there was no express agreement for a Single Contract.
• The Plaintiff was billed for individual pieces of work, indicating separate contracts rather than a continuous general retainer.
• The informal nature of instructions and the presence of multiple specific commissions militated against implying a general retainer requiring ongoing review of all prior advice.
• The fact that the same personnel provided advice over time does not imply a Single Contract or continuous duty.
• The Plaintiff did not allege that the solicitors knew their earlier advice had become obsolete due to legislative changes, except for one instance of advice given after the relevant contracts were entered into, which could not be causative.
• Successor firms did not assume responsibility for reviewing advice given by predecessor firms under separate Single Contracts.
• Commercial and professional considerations cautioned against imposing an indefinite obligation to review all prior advice, especially without clear agreement or provision for remuneration.

The court also noted difficulties with the Plaintiff's assertion that consideration for the Single Contract included the prospect of future instructions, finding this insufficient to imply such a contract. It distinguished the present case from situations where a general retainer exists, such as family solicitors with ongoing advisory roles.

Overall, the court concluded that the claim based on the Single Contract was too wide and lacked a sufficient legal basis, given the facts and pleadings.

Holding and Implications

The court struck out those parts of the draft Amended Particulars of Claim relying on the existence of a Single Contract, finding that they did not have any realistic prospect of success.

The direct effect of the decision is that the Plaintiff cannot proceed on the basis of a Single Contract or general retainer encompassing all dealings with the successive solicitor firms. The ruling does not preclude claims based on multiple individual contracts or specific commissions. No new precedent was established; rather, the court applied established legal principles concerning the nature of retainers and duties owed by solicitors.