Leading law firm Irwin Mitchell (IM) was not under a duty to advise a prospective client to notify their travel agent about an accident on holiday until the retainer was signed, the High Court has ruled.
His Honour Judge Cadwallader said no retainer was formed during the 20 months in which it waited for information from Carol Miller and investigated her potential claim.
Mrs Miller suffered an accident during a holiday to Turkey in May 2014, which led to her leg being amputated above the knee 18 months later. The holiday was booked with an online travel agency called Lowcostholidays.
She argued that her accident was attributable to the hotel’s breach of local standards, and thus Lowcost was in breach of contract.
She initially contacted IM on 19 May 2014 after seeing a television advert but the firm said only it received sufficient documents to carry out a conflict check in April 2015, after which it conducted some preliminary enquiries as it sought to decide whether to take on the case.
It was in January 2016 that IM decided it was and Mrs Miller signed a conditional fee agreement (CFA). The following month, IM sent a letter of claim to Lowcost asking to confirm the identity of its insurer.
Plexus Law, the solicitors to Lowcost’s insurer, HCC International, then established that Mrs Miller had not reported her accident to Lowcost at the time.
HCC declined to indemnify Lowcost on the ground that, although Lowcost had been formally notified on 15 May 2014 of the accident by its intermediary in Turkey, it had failed to notify HCC until March 2016. This put Lowcost in breach of a condition precedent of its insurance policy.
Lowcost then went into administration. With counsel instructed by IM agreeing that HCC was entitled to decline cover, IM told Mrs Miller that there was “no viable source of compensation for your claim and we will be unable to proceed with it”.
Mrs Miller then sued IM for the lost opportunity of bringing her claim on the basis that failing to advise her to notify Lowcost, and failing to do so itself – which would have led Lowcost to notify HCC – was in breach of its duty to her.
HHJ Cadwallader, sitting in Liverpool as a High Court judge, rejected the argument that either an express or implied retainer came into existence at or around the time Mrs Miller first called IM’s contact centre.
The advertisement was, “at most”, an invitation to treat, and though internally IM opened a file, referred to her as a client and recorded time on the basis that she may later become liable to pay the firm, at no point did it tell her she was a client.
Opening a file “would hardly have suggested to any reasonable person in her position that it was a file which related to her as any more than a potential client”, the judge said.
He added that there was nothing in the CFA to suggest it had retrospective effect.
HHJ Cadwallader recounted how two of the many chasing letters IM sent Mrs Miller before April 2015 stressed that the firm had done nothing to protect her right to take legal action.
He went on to hold that “no duty of care equivalent to that under a retainer was owed” to Mrs Miller before the CFA was signed.
The limited basis on which the helpline worked was explained to Mrs Miller and she was only given “some limited high-level and generic legal advice about personal injury claims”.
The judge continued: “[This] did not purport and cannot have been understood to be complete or comprehensive legal advice about her claim, and it was a preliminary to further consideration…
“Mrs Miller was certainly entitled to rely on such advice as she was given, but she was not advised to ensure the insurers were informed, and the facts to which I have referred did not give rise to a duty on the defendant to provide such advice. Her undoubted lack of experience in legal matters does not change that.”
HHJ Cadwallader added that, even if IM had been under a duty from April 2015, HCC would have been able to decline cover.
Further, even if Lowcost had notified HCC, the insurance policy had an annual aggregate deductible of £560,000, of which only £8,000 had been paid at the time of its administration, and so “there would have been no prospect of the policy’s responding at any relevant time following the administration”.
The claimant, represented by Bond Turner, has been granted permission to appeal and an appellant’s notice has been lodged at the Court of Appeal.