Reliance upon legal advice

Reliance Upon Legal Advice

Reliance Upon Legal Advice

Reliance Upon Legal Advice is an interesting proposition given “lawyers rarely give unequivocal advice” as everyone knows, said Lord Justice Lewison in the case of Allen t/a David Allen Chartered Accountants v Dodd & Co Ltd [2020] EWCA Civ 258 (“David Allen v Dodd”).

I am going to compare and contrast the reliance upon legal advice in David Allen v Dodd with the incredibly fascinating case of Top Brands Ltd & Ors v Sharma & Ors [2014] EWHC 2753 (Ch).

In David Allen v Dodd an interesting battle sprouted between two accountancy firms over the services of Mr Pollock. Mr Pollock appears to have been employed to prepare tax returns. He left David Allen and joined a competitor, Dodd & Co (“Dodd”).

His employment contract had restrictive covenants. Dodd took legal advice on them and was informed some of them were unlikely to be enforceable. A contested hearing of the matter led to the Court suggesting otherwise.

The Court of Appeal had to consider if Dodd had a liability in tort for procuring a breach of Mr Pollock’s contract.

The question it would seem is whether Dodd knew it was inducing a breach of contract. Dodd took legal advice so the matter at large was certainly considered; it had not entered into the matter blindly.

What is interesting is when reliance upon legal advice can be ever so helpful and when it cannot be quite such a saviour, such as in the matter of Top Brands Ltd & Ors v Sharma & Ors [2014] EWHC 2753 (Ch).

In David Allen v Dodd, Lord Justice Lewison said about reliance upon legal advice:

This led to the Appeal being dismissed.

Top Brands v Sharma

The matter of Top Brands v Sharma was a case when a Liquidator (Mrs Sharma) was sued for misfeasance and ordered to make good a loss seemingly caused.

That position was subsequently upheld by the Court of Appeal in Sharma v Top Brands Ltd & Ors [2015] EWCA Civ 1140.

Mrs Sharma was the party held to be liable for loss that she was deemed to have caused when she made various payments of liquidation monies (“the Payments”). She took legal advice with regard to the Payments. Her reliance upon legal advice argument was summarised by His Honour Judge Simon Barker QC:

However, compared to the David Allen v Dodd case in which Lord Justice Lewison referred to legal advice “responsibility sought“, in Top Brands v Sharma it might be troublesome to suggest that such a concept could be readily applied.

His Honour Judge Simon Barker QC considered the way that Mrs Sharma had ascertained the legal advice upon which she was seemingly placing some reliance concerning the making of the Payments and he characterised it in what might reasonably be considered somewhat colourful terms as follows:

Consequently it does not appear that the legal advice assisted Mrs Sharma’s defence.

It would appear that reliance upon legal advice seems to require that it must be ‘responsibly sought’ to be relied upon in a defence.

Disclaimer: The comments in this post are not legal advice and ought not be relied upon as such. No liability is accepted by the author for any reliance placed upon the same. You should seek independent legal advice to consider the discrete facts of your scenario.

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