428

[1994|

[PRIVY COUNCIL] A

C L A R K BOYCE APPELLANTS
AND
MOUAT RESPONDENT

[APPEAL FROM THE COURT OF APPEAL OF NEW ZEALAND] B

1993 May 10, 11; Lord GofT of Chieveley, Lord Jauncey of

Oct 4 Tullichettle, Lord Lowry, Lord Mustill
and Lord Slynn of Hadley

Solicitor—Duty—Conflict of interest—Plaintiff mortgaging house to

secure loan to son—Solicitor acting for both—Plaintiff advised of C
risks and to obtain independent advice but failing to do so—Whether
solicitor in breach of contractual duty—Whether in breach of
fiduciary duty
The plaintiff agreed to mortgage her house to secure a loan to her
son of $110,250. She was unaware that the son's own solicitor had
declined to act in the matter, and was informed by a partner in the
defendant firm of solicitors who had agreed to act for both parties in D
the transaction that her position as mortgagor providing the security
was substantially different from that of her son as guarantor and
recipient of the loan, that she ought to obtain independent legal advice
and that he could arrange for her to see a lawyer at a neighbouring
firm if she wished. He also pointed out that she would lose her house
if her son failed to meet the mortgage payments. The plaintiff
declined to see another lawyer and the partner thereupon acted for £
both the plaintiff and her son and completed the mortgage transaction.
The son later became bankrupt with the mortgage payments in arrears
and the plaintiff was left with a liability to repay the principal sum.
She commenced proceedings against the defendants for damages for
breach of contract, negligence and breach of fiduciary duty for, inter
alia, failing to decline to act for the plaintiff when they were acting
for her son, failing to disclose that the son's former solicitor had
declined to act and failing to advise her that it was not in her interests F
to sign the mortgage. The judge dismissed the claim but the Court of
Appeal of New Zealand, by a majority, allowed the plaintiffs appeal
and remitted the case back to the High Court to deal with questions
of contributory negligence and contribution.
On the defendants' appeal:—
Held, allowing the appeal, (1) that a solicitor could properly act in
a transaction for two parties with conflicting interests provided that ^
he had obtained the informed consent of both parties; that informed
consent meant that each party knew that there was a conflict between
himself and the other which might result in the solicitor being disabled
from disclosing his full knowlege of the transaction or from giving
one party advice which conflicted with the interests of the other; that
in determining whether the solicitor had obtained informed consent it
was necessary for the court to determine the precise services required
of him by the parties, and in circumstances where the plaintiff had H
required the defendants to do no more than carry out the mortgage
transaction and explain its consequences, had been aware of the
consequences of mortgage default and had rejected independent
advice, there had been no duty on the defendants to refuse to act for
 429
1 A.C. Clark Boyce v. Mouat (P.C.)
^ her; that, further, solicitors were under no duty to proffer
unsought advice on the wisdom of entering into a transaction to
a client in full command of his faculties; and that, accordingly,
the defendants had not been negligent or in breach of their
contractual duty to the plaintiff (post, pp. 435F-G, 436E-G, 437A-
D).
(2) That a claim for breach of fiduciary duty could not be
prayed in aid to enlarge the scope of contractual duties, and since
B the defendants had not owed any contractual duty to advise the
plaintiff on the wisdom of entering into the transaction, they
could not owe any fiduciary duty to give such advice; that any
duty of disclosure could only extend to the solicitor's knowledge
of facts and not to his lack of knowledge thereof and although
the plaintiff had not been told of the refusal by her son's former
solicitors to act, the defendants had not been obliged to disclose
p that information since they had been unaware of any ground for
, concern over the refusal; and that, accordingly, the defendants
had not been in breach of their fiduciary duty to the plaintiff
(post, pp. 437F-438A).
Decision of the Court of Appeal of New Zealand reversed.
The following cases are referred to in the judgment:
Boulting v. Association of Cinematograph, Television and Allied Technicians
D
[1963] 2 Q.B. 606; [1963] 2 W.L.R. 529; [1963] 1 All E.R. 716, C.A.
Farrington v. Rowe McBride & Partners [1985] 1 N.Z.L.R. 83
Lewis v. Hillman (1852) 3 H.L.Cas. 607, H.L.(E.)
Nocton v. Lord Ashburton [1914] A.C. 932, H.L.(E.)
The following additional cases were cited in argument:
Bowdage v. Harold Michelmore & Co. (1962) 106 S.J. 512
E Brickenden v. London Loan & Savings Co. [1934] 3 D.L.R. 465, P.C.
Canson Enterprises Ltd. v. Boughton & Co. (1991) 85 D.L.R. (4th) 129
Day v. Mead [1987] 2 N.Z.L.R. 443
Grove Darlow & Partners v. Rusden (unreported), 17 December 1992, New
Zealand
Kelly v. Cooper [1993] A.C. 205; [1992] 3 W.L.R. 936, P.C.
Moody v. Cox and Halt [1917] 2 Ch. 71, C.A.
F Neushul v. Mellish & Harkavy (1967) 111 S.J. 399, C.A.
Wills v. Wood [1984] C.C.L.R. 7, C.A.
APPEAL ( N O . 49 of 1992) with leave of the Court of Appeal of New
Zealand by the defendants, Clark Boyce, a firm of New Zealand solicitors,
against the judgment of the Court of Appeal of New Zealand
(McGechan J. and Sir Gordon Bisson, Gault J. dissenting) on 26 June
G 1991 allowing an appeal by the plaintiff, Mrs. Dorothy Dean Mouat, from
the order of Holland J. dated 4 March 1991 dismissing her claim for
damages for negligence, breach of contract and breach of fiduciary duty
against the defendants for having accepted instructions from both herself
and her son in respect of a transaction whereby the plaintiff executed a
mortgage as first security over her house to secure a loan for her son, as
XT guarantor of the loan, who subsequently defaulted and became bankrupt.
The facts are stated in the judgment.
Rupert Jackson Q.C., Austin Forbes (of the New Zealand Bar) and
Shuna Lennon (of the New Zealand Bar) for the defendants. This was a
430
Clark Boyce v. Mouat (P.C.) (1994|

family transaction in which the plaintiff deliberately risked her property A

in order to assist her son. She was not seeking advice about the wisdom
of the transaction which was self-evidently unwise from her point of view.
She and her son were jointly instructing the solicitor for the limited
purpose of being able to give legal effect to the transaction. The solicitor
warned the plaintiff of the risks and the need to obtain independent legal
advice, but she chose to continue with him. In those circumstances it was
proper for the solicitor to act for both parties. "
A solicitor stands in a fiduciary relationship to his client: Nocton v.
Lord Ashburton [1914] A.C. 932. He ought not to act in a case where his
own interests or those of another whom he represents conflict with the
interests of his client. This basic rule may be relaxed by the party who is
entitled to its benefit: Boulting v. Association of Cinematograph, Television
and Allied Technicians [1963] 2 Q.B. 606. A solicitor may properly act for Q
both parties to a transaction where the terms have been agreed and he is
merely asked to give legal effect to the parties' common intention (Wills
v. Wood [1984] C.C.L.R. 7), or if he has obtained the parties' informed
consent: Farrington v. Rowe McBride & Partners [1985] 1 N.Z.L.R. 83 and
Day v. Mead [1987] 2 N.Z.L.R. 443. [Reference was also made to Moody
v. Cox and Hatt [1917] 2 Ch. 71.] Thus, in accepting the instructions, the
solicitor was not in breach of any fiduciary tortious or contractual duty D
owed to the plaintiff.
In the absence of specific instructions or special circumstances, a
solicitor is not under a duty to advise generally as to the wisdom of the
transaction: see Bowdage v. Harold Michelmore & Co. (1962) 106 S.J. 512.
Neushul v. Mellish & Harkavy (1967) 111 S.J. 399 is to be distinguished.
The fact that the solicitor was acting for both parties showed that he £
could not, and was not expected to, advise either party as to the wisdom
of the transaction. His duties were to take reasonable care to ensure that
the mortgage was in proper form and properly executed, to ensure that
the plaintiffs son received the correct sum under the mortgage agreement,
and to explain to both parties the documents which they were signing and
the obligations which they were undertaking. By rejecting the solicitor's
proposal that she take independent advice, the plaintiff limited the F
retainer. If the contractual duty was thus limited, any concurrent tortious
or fiduciary duty could not be wider: see Grove Darlow & Partners
v. Rusden (unreported), 17 December 1992; Kelly v. Cooper [1993] A.C.
205 and Professor P. D. Finn's paper "The Fiduciary Principle" in Equity,
Fiduciaries and Trusts, ed. Youdan (1989).
As to the failure of the solicitor to disclose that the son's former Q
solicitor had declined to act, it is a commonplace of professional life that
solicitors and counsel are asked to take over cases or matters from
colleagues for a variety of reasons. The withdrawal of the former solicitor
was not a suspicious circumstance calling for disclosure.
Peter Whiteside (of the New Zealand Bar) for the plaintiff. This
transaction was so manifestly unwise from the plaintiffs point of view
that before a court could hold that the solicitor was entitled to act for "
both parties there would have had to be the clearest possible disclosure of
all relevant facts by the solicitor and the clearest possible evidence that
the plaintiff was giving her informed consent to the solicitor operating
 431
1 A.C. Clark Boyce v. Mouat (P.C.)

A only on a limited retainer. There is no doubt that fiduciary obligations

can be relaxed by a beneficiary, but only if "he is of full age and sui juris
and fully understands not only what he is doing but also what his legal
rights are, and that he is in part surrendering them:" Boulting's case [1963]
2 Q.B. 606, 636, per Upjohn L.J. By contrast, the plaintiff did not
understand what she was doing, nor did she understand fully what her
legal rights were and that she was in part surrendering them. The solicitor
° was under a duty to advise on the wisdom of the transaction: see Neushul
v. Mellish & Harkavy, 111 S.J. 399. He was also under a duty to ensure
that the plaintiff took independent advice: he could not fully and properly
advise her without acting contrary to the interests of her son. Because the
circumstances were such that undue influence could be in issue, it was
incumbent on the solicitor to be particularly careful.
Q Equity has traditionally imposed on solicitors a fiduciary obligation.
The solicitor's duty to make full disclosure arose in the period prior to the
contract being entered into. Fiduciary obligations have always been treated
as separate from contractual ones: see Canson Enterprises Ltd. v. Boughton
& Co. (1991) 85 D.L.R. (4th) 129. Kelly v. Cooper [1993] A.C. 205 is to be
distinguished: it is usual for estate agents to act for several clients; it is
not usual for solicitors to act for clients whose interests conflict. A
D solicitor's fiduciary duty overrides his duties under a contract. A solicitor
cannot say that his non-disclosure of material facts relating to a transaction
made no difference to the client's decision to proceed with the transaction:
Brickenden v. London Loan & Savings Co. [1934] 3 D.L.R. 465. This
principle is applicable, not only in cases where the solicitor stands to gain
personally but also in cases where there is a conflict of interest between
E his clients (Farrington v. Rowe McBride & Partners [1985] 1 N.Z.L.R. 83),
though as McGechen J. observed in the Court of Appeal, since Day v.
Mead [1987] 2 N.Z.L.R. 443, it has become open to the solicitor to point
to equitable apportionment considerations analogous to contributory
negligence factors as going to reduction of liability. However, the
appropriate reduction in this case was not 50 per cent, but 20 per cent.
Jackson Q.C. replied.
F
Cur. adv. vult.

4 October. The judgment of their Lordships was delivered by LORD

JAUNCEY OF TULLICHETTLE.
G This appeal concerns the position of a solicitor who carries out a
conveyancing transaction on behalf of two parties with conflicting
interests. The dramatis personae are Mrs. Mouat, the respondent plaintiff,
a widow of 72 years at the material time, her son Mr. R. G. Mouat, a
chartered accountant and management consultant then aged 45 years, and
Mr. Martin Boyce, a solicitor and partner in the Christchurch firm of
Clark Boyce, the appellant defendants.
In August or September 1988 Mr. R. G. Mouat wished to raise
$100,000 to pay for certain alterations to his house and meet certain
business expenses. Since his own house was fully mortgaged he asked his
mother whether she would be prepared to mortgage her house for the
432
Clark Boyce v. Mouat (P.C.) |1994|

required sum and upon her agreement he made preliminary arrangements A

for the execution by her of a mortgage as a first security over her house
to secure a loan of $110,250 from Allied Mortgage Guarantee Co. Ltd.
("A.M.G.")- In terms of the proposed arrangements Mrs. Mouat was the
mortgagor, Mr. R. G. Mouat was the guarantor and the loan was for a
period of three years with interest of $4065 payable quarterly. It was part
of the arrangement that Mr. R. G. Mouat would undertake primary
liability for payment of the interest. In pursuance of the proposed "
arrangements A.M.G. sent certain documents to Mr. R. G. Mouat's
solicitor, Mr. P. M. Davis of Messrs. Meares Williams, who was also a
family friend, but he advised Mr. R. G. Mouat that it was not a matter in
which his firm should properly act. Thereafter Mr. R. G. Mouat asked
Mr. Boyce whether he would be prepared to act for him and his mother
to which Mr. Boyce replied that he would subject to certain conditions. Q
On 9 November 1988 Mrs. Mouat was taken by her son to Mr. Boyce's
office and during the course of a meeting, whose details will be referred to
later, Mrs. Mouat signed the mortgage and some ancillary documents.
Mr. R. G. Mouat also signed the mortgage. In 1989 Mr. R. G. Mouat's
business deteriorated and by early 1990 he was in arrears with payment of
interest on his mother's mortgage. Later he became bankrupt with the
result that Mrs. Mouat was left with a liability to repay the principal sum D
of $110,250 together with arrears of interest. She thereafter raised the
present action against the defendants alleging in her statement of claim
that they were in breach of contract inter alia the following respects:
"(a) That the defendants failed to ensure that the plaintiff had her
own independent advice in respect of the said transaction, (b) That
the defendants failed to refuse to act for the plaintiff in respect of the E
said transaction when it was acting for the said Robert Gordon
Mouat."
She alleged negligence on the part of the defendants in identical respects.
She further alleged that the defendants had breached their fiduciary
obligations in the following manner:
"(a) [They] failed to decline to act for the plaintiff, (b) [They] failed
to disclose the following relevant information to the plaintiff: (i) that
the former solicitors for the said Robert Gordon Mouat, Meares
Williams, had declined to act for either the said Robert Gordon
Mouat or the plaintiff in respect of the proposed mortgage transaction;
(ii) that [they] had only been instructed on 8 November 1988 to act
for the said Robert Gordon Mouat in respect of the proposed G
mortgage transaction and knew nothing about his ability to service
the mortgage; and (iii) that it was not in her interests to sign the
mortgage, (c) [They] failed to adequately advise the plaintiff of her
need for independent advice."

After trial Holland J. gave judgment for the defendants but the Court
of Appeal, by a majority, allowed Mrs. Mouat's appeal and remitted the
case back to the High Court to deal with questions of contributory
negligence and contribution. At this stage it is unnecessary to refer to the
further proceedings which followed the remit.
 433
1 A.C. Clark Boycc v. Mouat (P.C.)

A It is appropriate now to return to the meeting in Mr. Boyce's office

which lasted for some 40 to 50 minutes. Holland J. accepted Mr. Boyce's
account of this meeting and where there was a conflict preferred his
evidence to that of Mrs. Mouat. Although he found that in 1988
Mrs. Mouat was fully able to comprehend the nature of the transactions
involved and the risk to her property he considered that her health had
deteriorated since that time and that her memory as to certain events
" which had then occurred was not entirely accurate. In reaching this
conclusion he made clear that Mrs. Mouat gave her evidence in accordance
with what she believed to be true.
At the beginning of the meeting Mr. Boyce pointed out to Mrs. Mouat
that her position as mortgagor providing the security was substantially
different to that of her son as guarantor and recipient of the loan and he
Q advised her to obtain independent legal advice. He also indicated that he
could arrange for her to see a lawyer at one of the neighbouring law firms
if she so wished. Mrs. Mouat stated that she did not think it was
necessary to see another lawyer. Mr. Boyce formed the impression that
she had made her decision and that was the end of the matter. He then
drafted a form of authority and declinature of independent advice which
Mrs. Mouat agreed to sign and which was in the following terms:
"Messrs. Clark Boyce, Solicitors, Christchurch. Attention: Mr. Boyce.
Dear Sirs, I hereby direct and authorise you to disburse to my son
Robert Gordon Mouat the net proceeds derived from the mortgage
over my property at 106, Roydvale Avenue, Christchurch and given
to the Allied Mortgage Guarantee Co. Ltd. on 9 November 1988 and
in accordance with the documentation I have signed at your offices
E today. I further direct that the receipt of my son shall be a sufficient
and proper discharge to you as the disbursement of those funds. I
acknowledge you have fully advised me of the legal implications and
effects arising out of the mortgage I have given to Allied Mortgage
Guarantee Co. Ltd. I am aware your instructions in this matter have
been given to you by Allied Mortgage Guarantee Co. Ltd. on behalf
of my son. Notwithstanding your advice I should obtain independent
legal advice in relation to the matter I record and hereby instruct you
I do not wish so to do. Yours faithfully, (Dorothy Dean Mouat)."
Thereafter Mr. Boyce went through the terms of the mortgage with
Mrs. Mouat and pointed out to her as bluntly as he could that if her son
failed to meet the mortgage payments she would lose her house and
/- property. Mrs. Mouat then stated that she considered that her son knew
what he was doing and she trusted him. Mrs. Mouat also made clear that
she was already aware of the consequences of non-payment by her son.
She thereafter signed the form of authority and the mortgage. On three
occasions during the meeting Mr. Boyce raised the question of independent
advice but Mrs. Mouat appeared to be determined to proceed without it.
Against that background of fact Holland J. dealt with the allegation
H that Mr. Boyce should have ensured that Mrs. Mouat had independent
advice in the following manner:
"I am satisfied from the totality of the evidence that Mrs. Mouat
knew at all times that Mr. Boyce was her son's solicitor, she knew
A.C. 1994--15
434
Clark Boyce v. Mouat (P.C.) |1994|

the type of transaction that she was about to embark upon, and that A
having decided to support and trust her son she did not expect or
require any legal advice as to the wisdom of her entering into the
transaction. In the circumstances Mr. Boyce was not negligent in
what he did in this regard."
He rejected the claim that Mr. Boyce should have declined to act for
Mrs. Mouat on the ground that there was no general principle of law to °
this effect and went on to hold that Mr. Boyce's failure to discuss with
Mrs. Mouat the refusal of Messrs. Meares Williams to act did not amount
to a non-disclosure of material information in breach of a fiduciary duty.
Even if the matter had been discussed, the judge considered that Mrs.
Mouat would either have said that she was aware of the matter or that it
was not a matter which concerned her. Holland J. further rejected the C
claim that in the circumstances Mr. Boyce should have disclosed to Mrs.
Mouat that he was unaware of Mr. R. G. Mouat's ability to service the
mortgage. He dealt with the claim that Mr. Boyce should have advised
Mrs. Mouat that it was not in her interests to sign the mortgage in this
way:
"It was made quite apparent to Mr. Boyce that Mrs. Mouat knew D
what a mortgage was and that if her son defaulted she stood the risk
of losing her home. It was obvious to her, as it was to everyone
else, that it was not in her financial interests to sign the mortgage,
but nevertheless she wished to do so. The circumstances were not
such as gave rise to any obligation on Mr. Boyce to advise her against
signing the transaction. I note that in giving evidence the plaintiff E
indicated that if she had been advised by Mr. Boyce not to sign the
mortgage she would not have done so. Sadly, I am unable to accept
that answer as accurately recording the situation as it was on the
day."
It was implicit in Mr. Boyce's evidence, which Holland J. accepted, p
that Mrs. Mouat did not require advice from him as to the wisdom of the
transaction and that she had already decided what she wanted to do.
Indeed during his evidence-in-chief Mr. Boyce said:
"I recall it was at that point she said she trusted [her son] and that
was really the end of it as far as she was concerned. I,got the distinct
impression she'd made up her mind that she was going to assist him Q
in this way. And there was nothing I was going to be able to do to
dissuade her from that."
The majority of the Court of Appeal, McGechan J. and Sir Gordon
Bisson, Gault J. dissenting, allowed the appeal although accepting
Holland J.'s findings as to credibility and fact. Sir Gordon Bisson who
delivered the leading judgment in relation to breach of contract and tort H
considered that Mr. Boyce was not justified in accepting Mrs. Mouat's
instructions relying, as he did, on his impression that she had made up
her mind to assist her son. After referring to the conclusion of Holland J.
 435
1 A.C. Clark Boycc v. Mouat (P.C.)

A that Mrs. Mouat did not require legal advice as to the wisdom of entering
into the transaction he stated:
"With respect, for the reasons I have given I draw a different
conclusion from the evidence. In a word, the situation was so
obviously one of grave conflict, one in which the son's usual solicitor
was not prepared to act even for him, that Mr. Boyce, who was not a
R family solicitor with a full understanding of all the circumstances,
should have ensured Mrs. Mouat had independent legal advice or in
the absence of advising her fully himself, he should have refused to
act for her as well as for her son. In my view he was negligent under
paras, (a) and (b) as pleaded and already set out."
In relation to fiduciary duty Sir Gordon Bisson said:
£, "Applying those principles to this case, I am satisfied that there was
a breach of fiduciary duty under the first allegation, that Mr. Boyce
should have declined to act for Mrs. Mouat when already acting for
Mr. Mouat for the same reasons I have held he was negligent. He did
advise Mrs. Mouat that she should have independent legal advice but
he did not make the fullest disclosure to her of the circumstances
known to him, or adequately advise her of her need for independent
D advice. Although Mrs. Mouat understood her home would be at risk
if her son defaulted in making the payments due under the mortgage
she did not know the degree of that risk. Nor did Mr. Boyce. He
had the last chance to advise her on that risk. He should have
disclosed that her son's usual solicitors had declined to act for him
and that he, Mr. Boyce, unlike Mr. Davies knew nothing of her son's
financial position and that he had made no inquiries into it. For
these reasons I consider there was a breach of fiduciary duty as
pleaded."
McGechan J. agreed with Sir Gordon Bisson's conclusions as to breach
of fiduciary duty and considered that Mr. Boyce had failed to make a
sufficient disclosure of material matters to establish a fully informed
consent to the dual retainer proposed and that this failure related in
F particular to the following three facts: (1) that her son's solicitors had
refused to act; (2) that he had no knowledge of her son's ability to service
the mortgage; and (3) that it was not in her interests to sign the mortgage.
There is no general rule of law to the effect that a solicitor should
never act for both parties in a transaction where their interests may
conflict. Rather is the position that he may act provided that he has
Q obtained the informed consent of both to his acting. Informed consent
means consent given in the knowledge that there is a conflict between the
parties and that as a result the solicitor may be disabled from disclosing
to each party the full knowledge which he possesses as to the transaction
or may be disabled from giving advice to one party which conflicts with
the interests of the other. If the parties are content to proceed upon this
basis the solicitor may properly act. In Boulting v. Association of
H Cinematograph, Television and Allied Technicians [1963] 2 Q.B. 606, 636,
Upjohn L.J. said:
"the client is entitled to the services of his solicitor who may not
charge more than he is legally entitled to, and must not put himself
 436
Clark Boyce v. Mouat (P.C.) |1994|

into a position where he may owe conflicting duties to different clients \

(see, for example, In re Haslam and Hier-Evans [1902] 1 Ch. 765).
But the person entitled to the benefit of the rule may relax it, provided
he is of full age and sui juris and fully understands not only what he
is doing but also what his legal rights are, and that he is in part
surrendering them."
Farrington v. Rowe McBride & Partners [1985] 1 N.Z.L.R. 83 concerned B
a solicitor who advised a client to invest money in a company which was
also a client of his without disclosing that fact to the potential investor.
Richardson J. said, at p. 90:
"A solicitor's loyalty to his client must be undivided. He cannot
properly discharge his duties to one whose interests are in opposition
to those of another client. If there is a conflict in his responsibilities Q
to one or both he must ensure that he fully discloses the material
facts to both clients and obtains their informed consent to his so
acting: 'No agent who has accepted an employment from one
principal can in law accept an engagement inconsistent with his duty
to the first principal from a second principal, unless he makes the
fullest disclosure to each principal of his interest, and obtains the
consent of each principal to the double employment' (Fullwood v. D
Hurley [1928] 1 K.B. 498, 502 per Scrutton L.J.). And there will be
some circumstances in which it is impossible, notwithstanding such
disclosure, for any solicitor to act fairly and adequately for both."
In the last sentence of that dictum Richardson J. no doubt had in
mind a situation where one client sought advice on a matter which would
involve disclosure of facts detrimental to the interests of the other client. E
In determining whether a solicitor has obtained informed consent to
acting for parties with conflicting interests it is essential to determine
precisely what services are required of him by the parties. In this case
Holland J. was satisfied that Mrs. Mouat was not concerned about the
wisdom of the transaction and was
"merely [seeking] the service of the solicitor to ensure that the F
transaction [was] given proper and full effect by way of ascertaining
questions of title and ensuring that by appropriate documentation the
parties [achieved] what they [had] contracted for."
" Gault J. considered that this finding was amply supported by the evidence.
As has already been observed, Sir Gordon Bisson drew a different
conclusion from the evidence as did McGechan J. In their Lordships' G
opinion Holland and Gault JJ. drew the correct conclusion. As Viscount
Haldane L.C. observed in Nocton v. Lord Ashburton [1914] A.C. 932, 957:
"it is only in exceptional circumstances that judges of appeal, who
have not seen the witness in the box, ought to differ from the finding
of fact of the judge who tried the case as to the state of mind of the
witness." \\
Holland J. had the advantage of seeing and hearing all the witnesses and
of forming an impression therefrom as to their states of mind and what
had occurred during the meeting in Mr. Boyce's office. There are no
 437
1 A.C. Clark Boyce v. Moual (P.C.)

A exceptional circumstances which would justify differing from his

conclusions on these matters.
Their Lordships are accordingly satisfied that Mrs. Mouat required of
Mr. Boyce no more than that he should carry out the necessary
conveyancing on her behalf and explain to her the legal implications of
the transaction. Since Mrs. Mouat was already aware of the consequences
if her son defaulted Mr. Boyce did all that was reasonably required of him
° before accepting her instructions when he advised her to obtain and
offered to arrange independent advice. As Mrs. Mouat was fully aware
of what she was doing and had rejected independent advice, there was no
duty on Mr. Boyce to refuse to act for her. Having accepted instructions
he carried these out properly and was neither negligent nor in breach of
contract in acting and continuing to act after Mrs. Mouat had rejected his
Q suggestion that she obtain independent advice. Indeed not only did
Mr. Boyce in carrying out these instructions repeat on two further
occasions his advice that Mrs. Mouat should obtain independent advice
but he told her in no uncertain terms that she would lose her house if
Mr. R. G. Mouat defaulted. One might well ask what more he could
reasonably have done.
When a client in full command of his faculties and apparently aware
D of what he is doing seeks the assistance of a solicitor in the carrying out
of a particular transaction, that solicitor is under no duty whether before
or after accepting instructions to go beyond those instructions by
proffering unsought advice on the wisdom of the transaction. To hold
otherwise could impose intolerable burdens on solicitors.
It remains to consider the conclusion of the Court of Appeal that
p Mr. Boyce was in breach of fiduciary duties. Sir Gordon Bisson's
observations on this matter have already been set out. McGechan J.
agreed with these observations albeit at somewhat greater length. That a
solicitor owes a fiduciary duty to a client is not in doubt. The classic case
of the duty arising is where a solicitor acts for a client in a matter in
which he has a personal interest. In such a case there is an obligation on
the solicitor to disclose his interest and, if he fails so to do, the transaction,
F however favourable it may be to the client, may be set aside at his
instance: Lewis v. Hillman (1852) 3 H.L.Cas. 607.
Another case of breach is where a solicitor acts for both parties to a
transaction without disclosing this to one of them or where having
disclosed it he fails, unbeknown to one party, to disclose to that party
material facts relative to the other party of which he is aware. A fiduciary
Q duty concerns disclosure of material facts in a situation where the fiduciary
has either a personal interest in the matter to which the facts are material
or acts for another party who has such an interest. It cannot be prayed
in aid to enlarge the scope of contractual duties. Thus, there being no
contractual duty on Mr. Boyce to advise Mrs. Mouat on the wisdom of
entering into the transaction, she cannot claim that he nevertheless owed
her a fiduciary duty to give that advice. Furthermore any duty of
" disclosure can only extend to the solicitor's knowledge of facts and not to
his lack of knowledge thereof.
Both Holland and Gault JJ. considered that Mr. Boyce's failure to
disclose that Messrs. Meares Williams had declined to act for Mr. R. G.
438
Clark Boyce v. Mouat (P.C.) (19941
Mouat was not a failure to disclose information material to the transaction. A
Given the information which was then available to Mr. Boyce and the
fact that he saw nothing sinister in Messrs. Meares Williams' refusal to
act their Lordships are satisfied that that information was not material
information which should have been disclosed. It therefore follows that
Mr. Boyce was not in breach of any fiduciary obligation owed to
Mrs. Mouat.
It only remains to say a further word about Mr. Boyce's alleged failure "
to disclose his lack of knowledge as to Mr. R. G. Mouat's ability to
service the mortgage. It is implicit in this allegation that Mrs. Mouat
should have been advised to investigate her son's financial affairs. Such
an allegation might be the basis for breach of contract but could not for
the reasons already stated found a claim for breach of fiduciary duty.
However even if it had amounted to a breach of contract there was Q
evidence neither that Mrs. Mouat would have accepted the advice nor that
if she had she would have acted differently. It follows that she has failed
to establish that she suffered a loss as a result of any such breach.
For the foregoing reasons their Lordships will humbly advise Her
Majesty that the appeal should be allowed and the judgment of Holland J.
of 4 March 1991 be restored. There will be no order as to costs before
the Board and in the Court of Appeal. It is accordingly unnecessary to D
consider the cross-appeal by Mrs. Mouat against a finding of contributory
negligence in the proceedings subsequent to the remit by the Court of
Appeal after the first hearing in that court.

Solicitors: Turner Kenneth Brown; Alan Taylor & Co.

E
C. T. B.

[HOUSE OF LORDS]

SEACONSAR FAR EAST LTD APPELLANTS

AND Q

BANK MARKAZI JOMHOURIISLAMI IRAN . . RESPONDENTS

1993 June 14, 15, 16; Lord Templeman, Lord Griffiths, Lord Goff
Oct. 14 of Chieveley, Lord Browne-Wilkinson
and Lord Mustill
H
Practice—Writ—Service out of jurisdiction—Application to set aside
leave granted ex parte—Establishment of merits of claim—Whether
serious issue to be tried—Whether substantial question of fact or
law arising on affidavits—R.S.C., Ord. 11, rr. 1(1), 4(1) (2)