BPE Solicitors v Hughes-Holland [2017] UKSC 21

Facts

  • The case arose out of a loan agreement between Mr. Gabriel and Mr. Little, with BPE Solicitors acting for Mr. Gabriel.
  • Mr. Gabriel lent £200,000 to Mr. Little, purportedly for the development of a property.
  • BPE Solicitors were instructed to prepare the loan documentation and ensure the funds were used for the stated purpose.
  • The funds were not used as intended, the property development did not proceed, and Mr. Gabriel suffered financial loss.
  • Mr. Gabriel claimed BPE Solicitors were professionally negligent, arguing they had failed to ensure the loan was used exclusively for development.

Issues

  1. Whether BPE Solicitors’ breach of duty caused Mr. Gabriel’s losses.
  2. Whether the losses suffered by Mr. Gabriel were within the proper scope of the solicitors’ duty.
  3. What is the correct application of the "scope of duty" principle, particularly as established in SAAMCO, in professional negligence cases.

Decision

  • The Supreme Court held that BPE Solicitors’ liability extended only to losses directly attributable to the specific risk they were employed to prevent.
  • The Court found BPE Solicitors had not assumed responsibility for the viability of the property development or monitoring the use of funds after initial disbursement.
  • Losses suffered by Mr. Gabriel arose from risks outside the scope of the solicitors’ duty and, therefore, BPE was not liable for those losses.
  • The claim was dismissed insofar as it concerned losses beyond the limits of the defined professional duty.

Legal Principles

  • The "scope of duty" principle limits professional liability to losses caused by the specific risks a professional was engaged to guard against.
  • Professionals owe duties defined by their contractual or retainer terms; liability does not extend to general or unrelated financial outcomes.
  • The distinction between "advice" and "information" cases (from SAAMCO) remains fundamental: in "information" cases, liability is limited to losses resulting from incorrect information provided, not all losses suffered by the client.
  • Clear definition and understanding of the professional’s scope of duty is critical to apportioning liability fairly.

Conclusion

The Supreme Court reaffirmed that professional liability for negligence is confined to losses falling within the scope of the duty undertaken. This provides clarity for both professionals and clients, supporting proportionate liability and emphasizing the importance of clearly defining the scope of professional engagements.

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