Conway v Ratiu: solicitors’ fiduciary duties

Conway v Ratiu [2005] EWCA Civ 1302, [2006] 1 All ER 571 (note), [2005] All ER (D) 103 (Nov) (full decision) English Court of Appeal (Auld LJ gave the lead decision with which Laws and Sedley LJJ agreed)

This report is an extract of 10 paragraphs from a defamation case in which, somehow or other, it was necessary to consider the nature of the solicitor’s fiduciary duty to the client. Lord Millett said in the leading modern English authority on conflicts between duties of confidentiality and of disclosure (that is, current client / past client conflicts) that the fiduciary duty terminates with the retainer, leaving only a duty of confidentiality. That is in a sense the principle taken issue with by Brooking JA in Spincode. Lord Justice Auld noted the principle had been wound back in Hilton v Barker Booth and Eastwood (a firm) [2005] UKHL at [28]-[30], and this proposition from Longstaff v Birtles [2001] EWCA Civ 1219 was cited with approval:

“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”.

The discussion in these 10 paragraphs was about an ongoing duty of loyalty in the sense of prohibiting a solicitor from taking advantage of trust reposed on him by virtue of an extinct retainer in order to make personal gain (that is an extension of the rule against duty/interest conflicts), not about an ongoing fiduciary duty relevant to a current/past client duty/duty conflict).

Mason J’s handy paragraph from Hospital Products Ltd v United States Surgical Corp (1984) 55 ALR 417 at 454-455 is quoted with approval and is worth reproducing:

“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 dcannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.”

Auld LJ counselled not getting too caught up in the niceties of company law suggesting that one looked to the personalities behind the legal persons to find true relationships of trust:

“[it should not 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, as in the case of a corporate client, through the use of a nominee company”.

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