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Disputes - Solicitor's undertaking - winning at trial

Paul Sykes co-ordinated the successful defence for solicitors' professional indemnity insurers on a £1.5 million claim for breach of an undertaking. This related to bogus gold delivery certificates. The case explored definitions of what was “Solicitorial work”, and dishonesty.  Halliwells (& Anor) v NES Solicitors & Quinn Insurance Reported case: [2011] ALL ER [D] 243


NES solicitors were approached by a new (apparently wealthy) client and asked to provide an undertaking to pay Halliwells £1.5 million as part of a share purchase agreement. NES’s client provided a “gold delivery certificate” purported to be worth £10 million as supposed security. The partners of NES, in reliance on the certificate, but knowing the funds had not cleared, gave the solicitor's undertaking. The certificate was later found to be worthless.

NES failed to honour the undertaking and was sued by Halliwells. Halliwells obtained summary judgment. The professional negligence insurers of NES, Quinn, refused to pay the claim made by NES on the basis that:

  1. the partners of NES were dishonest or condoned dishonesty;
  2. the undertaking was not given in a solicitorial capacity; and
  3. the undertaking was given for the benefit of NES (i.e. their £15,000 fee)

This was a notable case as it was a rare examination of insurer’s grounds for declinature, but also an early application of Starglade Properties Limited v Nash [2010] EWCA Civ 1314 regarding the Civil test of dishonesty of a solicitor. 

At trial it was held that NES had acted dishonestly, accordingly the Professional Indemnity Insurer was not required to provide an indemnity.


Solicitors should always carry out the requisite money laundering checks and consistently be on the look out for unusual transactions. Giving an undertaking in a ‘solicitorial’ capacity requires substantive legal advice to have been given or a legal service provided. Undertakings have to be given in connection with legitimate legal work and not merely in order to receive remuneration.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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