Conister Trust Ltd v John Hardman & Co & Anor

Conister Trust Ltd v John Hardman & Co & Anor

The natural and ordinary meaning of 'liability' in clause 4.5 of the panel solicitor agreement refers to an enforceable legal obligation. Where the underlying credit agreement is unenforceable under the Consumer Credit Act 1974, there is no remaining liability for the solicitor to discharge. Therefore, Hardmans is not liable under clause 4.5 in respect of unenforceable credit agreements.

Parties
First Respondent/claimant: Conister Trust Limited; Appellant/first Defendant: John Hardman & Co; Second Respondent/second Defendant: McClure Naismith (a firm)
Jurisdiction
England and Wales
Judgment Date
21 July 2008
Procedural Posture
Civil Appeal / Appeal From High Court Judgment on Preliminary Issue
Outcome
Appeal allowed
Legal Topics
Construction of Contract Terms, Enforceability of Consumer Credit Agreements, Indemnity and Guarantee, Statutory Compliance, Solicitor Liability
Contract Law Consumer Credit Law Professional Negligence Construction of Contract Terms Enforceability of Consumer Credit Agreements Indemnity and Guarantee Statutory Compliance Solicitor Liability

Case Brief

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Parties

Conister Trust Limited

First Respondent/claimant

John Hardman & Co

Appellant/first Defendant

McClure Naismith (a firm)

Second Respondent/second Defendant

Procedural Posture

Civil Appeal / Appeal From High Court Judgment on Preliminary Issue

Legal Issues

  1. 1 Whether 'remaining liability' under a loan agreement includes unenforceable obligations under the Consumer Credit Act 1974
  2. 2 Whether a solicitor's obligation to discharge a client's liability applies when the underlying agreement is unenforceable
  3. 3 Whether clause 4.5 of the panel solicitor agreement is enforceable in the context of an unenforceable credit agreement

Ratio Decidendi

The natural and ordinary meaning of 'liability' in clause 4.5 of the panel solicitor agreement refers to an enforceable legal obligation. Where the underlying credit agreement is unenforceable under the Consumer Credit Act 1974, there is no remaining liability for the solicitor to discharge. Therefore, Hardmans is not liable under clause 4.5 in respect of unenforceable credit agreements.

Court Disposition

Appeal allowed

Orders

  • Declaration that the answer to the preliminary issue is in the affirmative: Hardmans is not liable under clause 4.5 where the credit agreement is unenforceable.