McDougall Johnson v EBS Pensioner Trustees Ltd & Anor [2002] EWCA Civ 164 (31 January 2002)

McDougall Johnson v EBS Pensioner Trustees Ltd & Anor [2002] EWCA Civ 164 (31 January 2002)

The doctrine of abuse of confidence applies to the surety covenant between solicitor and client even where no property passes. Non-disclosure of the 1.5% service charge was a breach of fiduciary duty, but rescission was not appropriate as the non-disclosure was not material to the client's decision to proceed, and counter-restitution was not possible. The proper remedy was an account of profits, not rescission. No breach of fiduciary duty occurred in the 1990 assignment and deed of indemnity.

Citation
[2002] EWCA Civ 164
Parties
Claimant/respondent: Andrew Duncan McDougall Johnson; Defendant/appellant: EBS Pensioner Trustees Limited; Defendant/appellant: Gordon Michael O'Shea
Jurisdiction
England and Wales
Judgment Date
31 January 2002
Procedural Posture
Civil Appeal / Appeal From Chancery Division to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Abuse of Confidence, Fiduciary Duty, Solicitor Client Relationship, Non Disclosure, Rescission, Materiality of Disclosure, Remedies in Equity
Equity Trusts and Trustees Professional Negligence Abuse of Confidence Fiduciary Duty Solicitor Client Relationship Non Disclosure Rescission +2 more

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Parties

Andrew Duncan McDougall Johnson

Claimant/respondent

EBS Pensioner Trustees Limited

Defendant/appellant

Gordon Michael O'Shea

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From Chancery Division to Court of Appeal

Legal Issues

  1. 1 Does the doctrine of abuse of confidence apply to a surety covenant between a solicitor and client where no property passes?
  2. 2 Was the non-disclosure of a 1.5% service charge by the solicitor material and a breach of fiduciary duty?
  3. 3 Is rescission the appropriate remedy for non-disclosure or is an account of profits sufficient?

Ratio Decidendi

The doctrine of abuse of confidence applies to the surety covenant between solicitor and client even where no property passes. Non-disclosure of the 1.5% service charge was a breach of fiduciary duty, but rescission was not appropriate as the non-disclosure was not material to the client's decision to proceed, and counter-restitution was not possible. The proper remedy was an account of profits, not rescission. No breach of fiduciary duty occurred in the 1990 assignment and deed of indemnity.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs assessed on an indemnity basis.
  • Permission to appeal to the House of Lords refused.