Bristol and West Plc v Bhadresa (No. 2); Bristol and West Plc v Mascarenhas (No. 2)
| Jurisdiction | England & Wales |
| Judgment Date | 13 November 1998 |
| Date | 13 November 1998 |
| Court | Chancery Division |
Chancery Division
Before Mr Justice Lightman
Costs - whether order could be made against non-party - guidelines
Where a plaintiff succeeded in a claim for damages for professional negligence against solicitors who were unable to pay the costs and, before trial, the Solicitors' Indemnity Fund had concluded that there had been dishonesty and refused cover, the plaintiffs, in the absence of exceptional circumstances, were not entitled to claim against that fund for those periods before trial during which the fund had funded the solicitors' defences while satisfying itself whether or not there had been dishonesty.
Mr Justice Lightman so held in a reserved judgment in the Chancery Division when refusing applications by Bristol and West plc for orders that the Solicitors' Indemnity Fund Ltd pay their costs for the periods before trial of a number of actions brought against two solicitors, Maganial Nanji Bhadresa and Bernard C Mascarenhas during which periods the indemnity fund had funded the defences of the two solicitors.
Mr Michael Burton, QC and Mr Paul Lowenstein for Bristol and West; Mr Christopher Symons, QC and Mr David Hodge, QC, for the indemnity fund in the Bhadresa action; Mr Christopher Symons, QC and Mr Patrick Lawrence for the indemnity fund in the Mascarenhas action.
MR JUSTICE LIGHTMAN said that section 37 of the Solicitors Act 1974 imposed on the Law Society the public duty to make rules to establish a scheme of professional indemnity to cover solicitors directly against loss resulting from negligence on the part of solicitors.
The Solicitors' Indemnity Fund was obliged to provide an indemnity where there had been no dishonesty and was obliged not to provide an indemnity where there had been dishonesty. There was no discretion.
In all cases where there were grounds for concern that dishonesty might be present, the fund was obliged to investigate and keep that question under review until a decision was reached. During the twilight period before the fund had reached that decision, it was obliged to continue to fund the defence of the claim.
The actions
In all the actions the plaintiff, Bristol, alleged breach of contract, breach of fiduciary duty and breach of trust by the two solicitors when acting for Bristol in connection with loans made by Bristol secured on residential property.
In each case the indemnity fund funded the...
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