Engagement terms matter: Court dismisses negligence claim and clarifies scope of duty for solicitors

A recent decision from Glasgow Sheriff Court highlights the importance of clear contractual terms and, of note to solicitors, the limits of professional duties on legal practitioners. 

The pursuer, Michael Cochrane, raised proceedings against his former solicitors, Harper Macleod LLP, claiming they failed to advise him of capital gains tax (CGT) liability during his divorce. In doing so, the pursuer argued that Harper Macleod had acted negligently, or in breach of contract, and that as a result of that breach, he sustained the loss of a chance to negotiate his tax liability, thereby incurring a tax bill of over £113,000 in addition to the professional costs incurred when he instructed new agents. 

Background

The pursuer and his wife separated in 2003 and sought a divorce in 2019. In doing so they had agreed to sell their Eyemouth home, held in Mr Cochrane’s name, with the proceeds split 55-45 in his wife’s favour. After the agreement, Mr Cochrane learned he would be liable for CGT and alleged that had he known about this liability earlier, he would have structured the deal differently to negate or reduce the liability and provide him with the same share of free proceeds. 

No duty to provide tax advice

The case called at debate on the defender’s plea in law to the relevancy and specification of the pursuer’s averments. The defender argued that their contract explicitly excluded any responsibility for tax advice. The service agreement, signed in June 2019, clearly stated that the firm would not provide tax guidance, and that the pursuer could request separate tax advice if needed. The court noted that there was no evidence he had done so. The terms of the service agreement were admitted on record. 

The defender argued that as a matter of contractual interpretation, it was clear that they did not accept responsibility in any way for the pursuer’s tax affairs. Accordingly, there was no point in allowing enquiry in this kind of situation. The issue turned on the express terms of the contract. The service agreement was clear in its terms and limits in respect of the provision of tax advice. The defender submitted that the whole action was therefore irrelevant on the basis that it was concerned with allegedly negligent conduct in respect of tax. 

In respect of the pursuer’s loss of chance claim, the defender submitted that the pursuer had not averred what alternative tax advice he would have received, and this lack of specification rendered it impossible for the pursuer to establish a counterfactual. The defender also contended that there was a lack of specification in relation to causation and quantification of loss. 

Jamieson v Jamieson

For the pursuer, it was argued that any pleading defects had been remedied by a minute of amendment such that the action should proceed to proof. The pursuer relied on the well-established proposition in Jamieson v Jamieson 1952 SC (HL) 44 that an action should only be dismissed at debate if, assuming the pursuer proves his averments, his claim against the defender will necessarily fail. On that basis, the pursuer had made sufficient averments to satisfy the rest for pleading a negligence case. 

In respect of the loss of chance claim, the pursuer referred the court to the observations of Lady Haldane in McCann v Harper Macleod 2025 SLT 331 where it was stated that the requirements of pleading the loss of a chance such as arose in McCann were not onerous and that a counterfactual set of averments is not a prerequisite in every case. 

Lack of specificity undermined claim

Stating that the agreement's exclusion clause was “not qualified in any way” and that a reasonable person would not have expected the firm to provide tax advice under the terms agreed, Sheriff Taylor upheld the defender’s position and dismissed the action. The Sheriff criticised the lack of detail in the pursuer’s pleadings, especially regarding the tax advice he claimed he would have received. Since he couldn’t specify what the competent advice might have been and how it would have changed the outcome, the defenders were unable to test this through expert evidence, undermining and prejudicing their ability to defend the case.

Adding to the inconsistency in the pleadings, the court also noted that the pursuer went on to aver that the revised agreement with his ex-wife did not ultimately incur CGT – contradicting his initial claim of financial loss. The pursuer was therefore offering to prove that the loss he says he would have incurred but for the defender’s breach had not in fact occurred. 

Takeaways:

This case reinforces how vital it is for both lawyers and clients to:

• Clearly define the scope of legal services in engagement letters
• Identify the need for and seek specialist advice where appropriate
• Ensure claims are factually and legally grounded and set out as so in pleadings - if the breach of contract did not in fact cause a loss, the claim will almost certainly fail.

Our professional negligence team has acted in disputes involving lawyers, accountants, architects, engineers, insolvency practitioners, surveyors and construction professionals. Please do reach out if you would think we could provide assistance or if you would like further information about what we do. 

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