Conway v Ratiu and others

Libel — Allegations of misconduct by solicitor — Whether solicitor owing fiduciary duty to third appellant — Whether judge’s directions to jury flawed — Appeal allowed The first and second appellants were business partners in the third appellant company. The third appellant, acting through a nominee company, instructed the respondent solicitor in the purchase and sale of a development site (no 32). The appellants sought to acquire a second site (no 24), a matter that they had discussed with the respondent. The latter subsequently submitted a higher bid for no 24 in a personal capacity. In a letter to the vendor’s agent, the appellants accused the respondent of misusing confidential information which had been obtained in his capacity as their solicitor, in order to submit a higher offer. The respondent brought a claim for libel and malicious falsehood. He accepted that the letter was prima facie protected by qualified privilege, but argued that it had lost that protection because it had been actuated by malice. The appellants pleaded justification. The issues in the case turned on the question, inter alia, as to whether the respondent owed a fiduciary duty of trust and loyalty to the third appellant, whether as a past, existing or prospective client. The respondent maintained that he had not owed such a duty to the third appellant because he had been retained by the nominee company, and, in any event, only in relation to no 32. Following the judge’s directions, the jury found that the letter was not justified and had been actuated by malice. On appeal, the appellants challenged the correctness of certain of the judge’s directions, including his direction that, as a matter of law, a distinction was to be made between the nominee company and the third appellant. Held: The appeal was allowed. A solicitor’s fiduciary duty to a client, although engendered by the retainer, was distinct from the contractual obligations arising under that retainer. It arose from the relationship of trust and confidence which was a feature of the solicitor/client relationship and was not necessarily to be found in, or confined to, the terms of the contractual retainer: Bristol & West Building Society v Mothew (trading as Stapely & Co) [1998] Ch 1, Bolkiah v KPMG [1999] 2 AC 222, Hilton v Barker Booth & Eastwood [2005] UKHL 8; [2005] 1 WLR 567 and Longstaff v Birtles [2001] EWCA Civ 1219; [2002] 1 WLR 470 considered. Whether a fiduciary duty that began in a solicitor/client relationship could outlive it was highly fact-sensitive. In the intensely personal context of considerations of trust, confidence and loyalty, there was a powerful argument of principle for lifting the corporate veil, where the facts required it, to include those in or behind the company who were, in reality, the persons whose trust in, and reliance upon, the fiduciary might be confounded. Where a fiduciary duty was engendered by a contractual relationship, it should not matter, in principle, whether the client had entered into a direct contractual relationship with the fiduciary, or acted through an agent or a nominee company. In the context of defamation, in particular, there was a greater imperative for allowing reality to prevail over technical aspects of corporate law. In the instant case, the respondent knew that his client was the third appellant, for which the nominee company was merely a vehicle. The judge’s direction on that issue was seriously flawed. He should have directed the jury that there was evidence with regard to which they should have considered whether the third appellant had retained the respondent in respect of no 32 and whether, as a result of that retainer and his discussions with the first and second appellants regarding no 24, he had a fiduciary duty to the third appellant at the time of his bidding for no 24. Sir Sydney Kentridge QC, Kenneth MacLean QC and James Goldsmith (instructed by Clifford Chance) appeared for the appellants; Romie Tager QC, William Bojczuk and Richard Clegg (instructed by David Conway & Co) appeared for the respondent. Sally Dobson, barrister