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

  • Buying a commercial unit: what you need to know
    Buying a commercial unit can be a valuable step for your business, but it comes with legal, tax, planning and property risks. Brinda Granthrai explains what buyers should consider before committing.


    Read more
  • Pension and inheritance tax changes from April 2027: why now is the time to review your will and estate plan
    From 6 April 2027, most unused pension funds and pension death benefits are expected to be included in a person’s estate for inheritance tax purposes. This article explains what the changes could mean for families, pension nominations, wills, chari


    Read more
  • What happens when company owners disagree? The key to keeping private companies running smoothly
    Director and shareholder disagreements can quickly disrupt a business if they are not addressed early. This article explains what disputes can mean for a private company, how they can be avoided, and how legal advice can help protect stability and su


    Read more
  • SMEs urged to review risks as liability rules expand
    New criminal liability rules taking effect on 29 June 2026 will make it easier to prosecute businesses of any size where senior managers commit offences while acting on the organisation’s behalf.


    Read more
  • AI-written grievances add new pressure for employers
    AI is making it easier for employees to produce detailed, formal-looking grievances that refer to legal concepts and workplace rights. For employers, the key is to look beyond the language, identify the core concern and follow a fair, consistent grie


    Read more

What they say...

  • Client, July 2026
    Pragmatic, but commercially astute support “Genuinely, we valued your pragmatic, but commercially astute support. It has helped us get this tricky deal over the line in a manner that we both feel supports our needs in a balanced way and gives L

  • Chey, July 2026
    Professional and speedy “I’m extremely happy with the service provided by RIAA Barker Gillette. They were very professional, dealt with my matter at speed and were very accommodating with my disability. I wouldn’t hesitate to use th

  • Client, June 2026
    Thank you “I had a call with Pippa that was not only factual and to the point but also reassuring and very helpful. Would highly recommend.”

  • Client, June 2026
    Trusts services “Very helpful service which solved our problem.”

  • Client, June 2026
    Probate Services “We used Patrice Lawrence to deal with our parents’ probate, and she handled the case promptly, professionally and with the respect due for a matter of this nature.”

Read more