Skip to main content

Insight article

April 16, 2020

Relying on legal advice can provide a defence

Taking legal advice and honestly relying on it can stand as a defence to claims where a defendant’s necessary belief must be demonstrated for the claim to be successful.

In the recent Court of Appeal case David Allen t/a David Allen Chartered Accountants v Dodd & Co Limited, Dodd & Co escaped liability for inducing a breach of contract because they had sought legal advice on their intentions before acting which provided them with a defence. They successfully demonstrated that they had honestly relied upon the legal advice they were given, even though that advice was incorrect.

Facts

Mr Pollock worked at David Allen Chartered Accountants (David Allen). His employment contract contained non-compete and non-solicitation clauses, commonly known as post-termination restrictions or restrictive covenants. Dodd & Co wished to employ Mr Pollock and were aware of his restrictive covenants. Before employing him, Dodd & Co sought legal advice on the enforceability of Mr Pollock’s restrictive covenants and were advised:

“…the restrictive covenant hasn’t got a lot going for it. You could, therefore, act and allow [Mr Pollock] to act on the basis that it isn’t enforceable and contact David Allen’s clients. This is almost certain to provoke a strong reaction. He will probably write to [Mr Pollock] setting out why he believes [Mr Pollock] is in breach…”

As a result of that advice, Dodd & Co employed Mr Pollock, as whilst not entirely without risk, it was more likely than not that the restrictive covenants were unenforceable. In fact, the court held that the covenants were enforceable, and by working for Dodd & Co, Mr Pollock was in breach. Nonetheless, the court rejected the claim against Dodd & Co, brought by David Allen, for inducing the breach by Mr Pollock on the basis that they had relied honestly on the legal advice they had obtained.

The Court of Appeal’s decision

The decision was subject to appeal, and the Court of Appeal upheld the High Court’s decision. It found that Dodd & Co were not ignorant of Mr Pollock’s contractual obligations and had gone to the trouble of obtaining legal advice before offering him employment. The fact that the legal advice turned out to be wrong was not enough for David Allen to be successful in his claim against Dodd & Co. During the appeal, David Allen argued that there should be liability whenever a defendant believes there is a risk that its conduct, in this case employing Mr Pollock, would cause a breach. The court rejected the argument:

“As everyone knows, lawyers rarely give unequivocal advice; and even if they do the client must appreciate that there is always a risk …that the advice will turn out to be wrong.”

Although this case focuses on restrictive covenants in an employment setting, it is important to remember that the tort of inducing a breach of contract applies to all manner of contracts, and it is best practice to seek legal advice early on. Where a party honestly relies on such advice, it may prove to be a defence to the tort of inducing a breach of contract.

The courts accept that a solicitor’s advice is rarely definitive and will inherently attach an element of risk. Generally, the party seeking that advice must weigh up any risks identified within the advice before acting upon it – even if, in some circumstances, it may still provide a suitable defence.

The message is clear; always consult a solicitor before acting!

Call Karen Cole today for advice and information.

Note: This is not legal advice; it provides information of general interest about current legal issues.

Stay in touch

Subscribe to our newsletter

Stay in touch

By completing your details and submitting this form you confirm you are happy for us to send you marketing communications and that you agree to our Website Privacy Policy and Legal Notice and to us using Mailchimp to process your data.


Sending

News/Insight

  • Can you make a WhatsApp will?
    Key legal requirements and future outlook.


    Read more
  • Supporting neurodiverse people in family law matters
    Understanding neurodiversity in the legal context.


    Read more
  • Supreme court ruling on referees’ employment status
    In PGMOL v HMRC, the Supreme Court considered whether professional referees were self-employed. The case has the potential for far-reaching implications across the employment world.


    Read more
  • Business First Magazine
    Read our expert insights on key workplace and corporate issues.


    Read more
  • Why is clear contract drafting important?
    How simple contract clauses can protect your business.


    Read more

What they say...

  • Ian, April 2025
    “Martin and his team at Barker Gillette acted for us in our purchase and sale of property. The chain was lengthy and elements of the work became complex. Martin was tenacious and resolved to answer our queries as they arose. He handled all aspe

  • Henry, April 2025
    “We have purchased flats before with 2 different solicitors who were unable to help us this time. Martin came highly recommended and are we glad. He was very professional in every way: knowledgeable, approachable, he has a friendly manner, very

  • Megan Purcell-Jones, April 2025
    “Charlotte was extremely diligent and thorough. She talked us through the process of making our wills and listened to and understood our needs and the complexities involved. Extremely patient and very clear.”

  • Hena, April 2025
    “Great experience, Patrick was very clear and gave time to explain the legal processes. Friendly and professional communication made me feel comfortable asking questions, received great legal advice.”

  • Michael Constable, April 2025
    “I wanted to revise my will and appoint RIAA Barker Gillette as my Executor and Trustees. This was handled very efficiently and professionally. It helped that I had agreed a fixed fee in advance.” Review left for: Herman Cheung

Read more