The case of Lillicrap v Nalder & Son involved proceedings by clients claiming damages in court against their law firm for professional negligence and breach of duty. The Lillicrap's were property developers who were suing their law firm in this civil litigation for failing to inform them of the existence of a right of way over part of a property they were purchasing while the defendant's acted as their solicitors. They claimed they would not have made the purchase if they had been informed of this and therefore sought loss and damages in court against the law firm.
Initially the defendants denied the claims of professional negligence and breach of duty. However they then sought to amend their defence to admit the professional negligence, breach of contract and duty but argued instead that they believed that informing the plaintiffs of the existence of the right of way would have been inconsequential to their decision to purchase the property. They based this belief on their knowledge of the plaintiffs purchasing habits after having acted six times for them previously in similar transactions where the plaintiffs went against the firms advice and made arguably risky purchases.
The issue for determination in the court proceedings was in regards to the defendant's application to add this prior knowledge of the plaintiffs to their defence. If allowed to do so, the problem was that in then proving this, they would have to rely on evidence from previous dealings between the firm and the clients. Such evidence would generally be excluded in court proceedings due to legal professional privilege.
The issue for determination was therefore whether the documents relating to the previous retainers between the parties were permissible as evidence in the current proceedings. The plaintiffs argued that the retainer of a solicitor is a separate retainer for each transaction even if they act on their behalf for numerous transactions. Consequently they argued that while there may be an implied waiver of professional privilege where the client brings proceedings for professional negligence against the solicitor, that waiver only extends so far as to those documents related to the particular transaction in question.
Ultimately the court held that the appeal should be allowed and that the evidence produced by the previous dealings between the parties in similar transactions was permissible.
The court accepted that an implied waiver of legal professional privilege occurred where a client commenced proceedings for professional negligence against their solicitor. It was then up to the court to determine how far this waiver extended and whether evidence from previous transactions between the parties should be allowed.
Their conclusion that such evidence should be allowed in the present case, stemmed from the belief that in denying this, the law firm was being denied the opportunity to properly defend themselves and to use a defence that was legitimately open to them. This defence was that the evidence may lead to the plaintiff's inability to satisfy the court that had they been properly advised, they would not have purchased the property in question. This would prevent their claim for substantial damages.