• March 28, 2024
 Professional liability when exercising discretion

Professional liability when exercising discretion

The limits of solicitors’ liability have been questioned by an industry expert following a case regarding a discretionary trust.

Heard earlier this year, the case centred on the estate of multi-millionaire Peter Cundill, of which his close friend – Tina Chantal Joseph – has expected to receive a significant portion of.

Prior to his death, Cundill had requested to give Joseph $10 million in order to “secure her future”. He made a request to trustees to facilitate this, with the funds being sourced from a trust fund of which he was a discretionary beneficiary.

Whilst this was initially agreed with the money being paid periodically, the trustees ceased payments when they felt Cundill’s personal care had compromised.

Following his death, Joseph brought a claim against solicitors Farrer & Co, alleging the existence of a retainer between herself and the firm, in addition to the one they had with Cundill. However, this claim was dismissed by the court in Joseph v Farrer & Co, with the retainer letter not indicating a retainer between Joseph and the firm. Rather, it highlighted that she was “the mere beneficiary of proposed bounty”.

As Mr Cundill did not owe Joseph a legal obligation, she had no legal interest which required protection, nor was she owed a duty of care. As highlighted by Judge Purle QC, Joseph had accepted the risk of the trustees changing their mind when she had started to receive the payments. Prevention of them was not the duty of the firm. In addition, the objective payment set out by Cundill was contained in a letter of wishes; as such, the trustees were under no legal obligation to adhere to it.

Questioning why the case was even brought to trial was John Melville-Smith. The solicitor at Seddons queried how Farrers could be liable in any circumstance, even if Joseph had been included in the retainer. This is, as he sets out, the fundamental purpose of the discretionary trust i.e. a model which permits the trustees to exercise discretion. Had it come to light that they had been persuaded to do so in a particular way, they themselves could be subject to a claim for breach of trust.

Georgia Owen

Georgia is the Senior Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Wills and Probate.