Cases - Shepherd Construction Ltd v Pinsent Masons LLP
Record details
- Name
- Shepherd Construction Ltd v Pinsent Masons LLP
- Date
- [2012]
- Citation
- EWHC 43
- Legislation
- Keywords
- contract amendment - legal advice
- Summary
-
This case involves legal advice given in relation to amendments to a building contract. Shepherd Construction had instructed solicitors to advise on and draft bespoke amendments to the old DOM/1 and DOM/2 standard forms of subcontract. The advice was given in mid-1998, i.e at the time when the Construction Act was coming into force and outlawing 'pay when paid' clauses (except in the case of insolvency). S113 of the Act does, for example, allow a pay-when-paid clause in a subcontract which relates to the main contractor’s employer’s insolvency.
Although the case was primarily concerned with questions of the solicitors’ liability in a professional negligence claim, it is also of interest from the point of view of amending standard forms as it raises the question of whether solicitors have an obligation to keep earlier advice under review (a point of equal importance to in-house lawyers).
The pay-when-paid clause originally drafted by the solicitors’ predecessors (before the Construction Act came into force) did not refer to a particular route into administration, with the result that when the contractor’s employer became insolvent via that route, the contractor was unable to rely on the pay-when-paid clause in the subcontract and was obliged to pay its subcontractors even though it had not itself been paid. As a result, it sought to recover from its solicitors the losses it had suffered as a result of the clause not operating as it expected.
The court held in this case that placing individual pieces of work with the same solicitors does not imply a general retainer to review past pieces of work. In obiter comments however, the court considered that there may be some circumstances when, reviewing one construction document, this may alert the solicitor to a need to recommend amendments to a previous document, particularly where there is a long-standing relationship between solicitors and particular clients. In such circumstances, the court suggested that the review of one standard form which leads to a view that fundamental revisions of other standard forms may be required should lead to the need at least for those solicitors to advise their clients that such other revisions may be required.