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The Fair-Dealing Fiduciary Rule: A Comment on Barr v Cassels

Document Cited in Related
Vincent
Author
Date01 January 2019
Published date01 January 2019
Pages89-94
DOI10.3366/elr.2019.0527
INTRODUCTION

In Barr v Cassels 1 the Outer House of the Court of Session examined the circumstances in which a transaction between a solicitor and client triggers liability for breach of fiduciary duty and the equitable remedy of reduction. In a rather reserved analysis, the court allowed a conflicted transaction to stand even though the client received no independent legal advice and her informed consent was contested. The court reached this decision correctly, by applying the Aitken 2 test and finding that the solicitor did not benefit at the expense of his client, and that there was no evidence that an independent solicitor would not have advised the transaction. The case was a missed opportunity for the court to clarify the extent of the solicitors’ common law duty to insist that clients receive independent legal advice before entering into a transaction with their solicitors, and align it with the updated and more demanding statutory practice rules.

 THE FACTS

James Cassels (“the defender”) had acted as solicitor for the Barr family for several years, in a variety of matters. In 2003 the defender assisted Mr Barr in a conveyance of a parcel of land to his daughter, Agnes Barr (“the pursuer”). In 2006 the defender's law firm acted as the pursuer's solicitor in a transfer of the same plot of land from herself to the joint names of the pursuer and defender (“the disposition”). At the same time, the pursuer was sent an advice letter, explaining the substance of the disposition and strongly urging her to seek independent legal advice, accompanied by a waiver letter, to be returned in case she declined to do so. Alongside their professional relationship, the pursuer and the defender had been engaged in a romantic relationship, and started a life together in a house built on the land transferred in their joint names. Several years later, the parties separated and in 2015 the defender was granted decree for division and sale of the heritable property. The pursuer filed an action seeking reduction of the disposition on grounds of misrepresentation, negligence and breach of fiduciary duty by the defender.3 She claimed that she was induced into signing the disposition by the defender's misrepresentations,4 that the defender was in breach of fiduciary duty by placing himself in a position of conflict of interest,5 and that no solicitor of ordinary skill and care would have failed to convince the pursuer to seek independent legal advice.6 Moreover, she averred that she never intended to convey half of the property to the pursuer,7 and she never received or signed the advice and waiver letters.8

 THE COURT'S DECISION

The court rejected the pursuer's action on all grounds. The case for misrepresentation failed mainly due to the “very serious concerns”9 of the court about the credibility of the pursuer and her averments. Lady Wolffe found the pursuer “a largely incredible and unreliable witness”10 and gave no credit to her statements, unless they...

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