BPE Sol v Hughes-Holland – Professional Negligence Update

Hi. Manage Rachel Coyle on I'm Embarrassed. Critics agree on past the Civil Teen and I specialize in housing, property and financial on this seminar. It's being presented today in conjunction with data. No, and some are today that we have is called BB East Listers Infused Fallen 2017 UK Supreme Court at 21. Professional negligence updates Hopefully today will be able to clarify for you. You know, summary what happened in that case. But first we need to look out to the second slide which will find hopefully in front of you. This concerns the case of South Australian Asset Management Corporation and your quantity of it in 1997 of your courts. 191 with that some girl. Why don't mention this case? Because principal in that kind Patrick are by products of Korean court in the more recent case of B p. A. But what actually happened in Sankoh? Well, Sumco concerned claimed by more agenda against bios for a negligent violation property. So Sam co established that if I was liability by negligent valuation is limited to the consequences of that way to be long, Beira should not be held liable raw losses suffered by the lender. Borrower end up defaulting on the lender, repossessing the property. The House of Nodes, in that case, with that background fact, will be brief. Made a distinction between the following. One advises that owe a duty to a client to advise on the entire decision making process of entering into a transaction. Just know that vice cases on the advice is that many provide information before property other client will take into account in deciding whether to enter into particular transaction. That's a information case, so there's a very subtle difference that was made between advice cases. In essence, one way you are with JT because, well, it's kind of obvious or reasonably foreseeable. That's all going to rely on what you say in the making that decision forward, whereas information cases but is part of almost like a collective pot, it's not so much that that information is in and of itself enough to make you decide. This is definitely this is younger and to make, so there's a subtle difference between the two. If the house in advice cases, the advice that may be liable for losses, associate ID with entering into transactions they provided Never. Gin advise. They're not just the media obvious Direkt knobs, whereas information cases losses that will not brought about as a consequence. I inconsequential off of information. Being long should be excluded. So advice cases include consequential loss information cases. They do not losses attributable, attributable to other factors. So in this instance, we talked about the property market, for example, would not be sponsored valuable that those kind of factors are also excluded in the same way that any nonsense is the consequence. That would be it's good information cases. The problem with Sankoh is that it has been the subject of credited them because of the way operates north of the basis. But it is sure to be considered in terms of scope duty called. They showed remoteness of damage in the traditional sense and tortures terms or not. And it's also being doubted whether the principle applies to why, Okay, Depression Advisors in the field of property valuation 11 in the field of crop valuation don't about descending, whether or not that it was intended or not, just be limited to that field in the circumstances, the principle in Santa was also approved and applied in the case of New Credit Mortgage Bank PLC and Edward Erdman. Greek Limited interest on damages 1997 1 weekly Lorik Wars paid 1 67 in that case, not Hoffman became the principal. Also, Exane Co. Reiterated those two stages in South principle one about vice cases to about information traces. He also emphasized that ascertaining last, which would have been avoided had there be no wrongful act is one way. And another way is that of awarding damages. The proportion of loss which followed Let's go to the defendant's duty. So turning down Teoh More recent case off BP. A return Teoh How points lie. It's free. I'm going to live with back to BP first just so that you can kind of see how they have principles that clarifies in the case the background facts. You see there's a very briefly there on that third PowerPoint side, but I did not show it's the bottling. So in 2000 for a Richard Gabriel lent £200,000 to White Short Limited, the gator was into the erroneous impression that alone would be used to develop a property owned by white shore. But action a mass than I was used to acquire the property on the banks who supplied the benefits of wanted white show of directors. So the long Waas made, however, without having have evaluation off the property, that is, to get a real decided he should probably strokes. Let's just Andi thesis lesson would be peace investors, but instructed this list of your active him not quantitative usual Search it against the property of the line registration. What ended up done. Waas he later sort to enforce the lane. Now, if the loan on the interest happening repaid in full, then he would have made a profit up £70,000 which is equivalent to a massive interest or 20% random. However, didn't when you have forced alone, the property was sold on fetched only £13,000. Quiet never been wrong and it was Well, I don't largely by sale costs. So in the end, the only half a fraction of the amount he was anticipating he's going to get and so some of the payments then were made by the director amounted to less than £10,000. In order to I s pose, try and balance the property should have been linking. That better be. The way to describe the temple was voluntary, you know? Even so, what did Paul Mr Gabriel Dio? Well, he sued various parties, But other than white Shorewood insult, which were insolvent, so succeeded on against B p A. So what happened in the non courts? Well, at first instance, Mr Robert Angle Harkey see found that will, though BP had no detectable buys is to Gabriel as the commercial risks in the project, the project was not necessary. Doomed from the outset, a Mr Robert Engelhardt QC found at the negligent tout Hidden quote The true nature off blowing transaction until the whole loss was foreseeable. In incredible subject to the usual contributor negative mitigation principles. In so doing, he applied case off Bristol and West Building Society and pumped in Jackson in 1997 4 All England reports five related to which is also applied in private court appeal in Portland Building Society and seven Ashford 2000 PN ella free. Or or you might know that case better as it struggles Palmer, could you decide to search toe in any case, role databases, But suddenly Robert Angle hockey. See the court appeal. Didn't agree. Gotta be. Actually overturn a decision on Gloucester. LJ gave this of Santic judgment in which it was said that expenditure that is the £200,000 would not necessarily enhance the value off the property. In fact, the property waas potentially on tractor the land was contaminated and divergent crossed on were highly likely over shoot. The mark will be formally £200,000 in any event. So it would consider that a lot of this was down to Mr Gable's at misjudgment on that, for damages were reduced to know. So what happened in the in the Supreme Court? Well, just very briefly. If you just turn quickly to happen, it's like bull. You'll see the two main points made by the Court of Appeal, which is yes, with people you should have cried by. Its gave us. This understanding is to be a commercial investment in which users entering into that alone the terms of the way. But his losses in Isis now actually outside of the baby BP's duty. So, for example, the fact that the renovation possibly a lot more than sail past the fact that the contaminated land in general is not really very attractive, attractive investment, so we know tend to probably slide by. We turned to what the Supreme Court decided in this case. Now it's quite a 90 judgment, but it coming broken dives the following the following of the key aspect off the decision. These the main points take away from this. So firstly, the principle of some curry was considered to be a means of restricting the defendants liable to last, which is not based Localization. Rather question, however, became whether the loss, which is claimed quote, flowed from a particular feature of the defendant's conduct, which made it a long haul. So in trying to address that question, not assumption made the following analysis off Lord Hoffman's principles in some kind and he explained the rather distinctions and in the following way on a price case on on information you will find if you want a peanut the judgment that the labels refer Teoh Paragraph 39. So that's a judgment that is so first up advice. Really quite Lord Sumption, who states that if the advisor has a duty to protect his client to borrow to you can come do it against the full range of risks associated with potential transaction. The client will not have retained responsibility for any of them that binds his responsibility. Extends to the decision with your advisor has negatively assessed risk. A result is that the overall risk riskiness of the transaction have been on us dated. If the client would not have entered into the transaction on a careful assessment of its overall mass, the fact that the lost resulted from risks B, C or D should no matter and great. So if the professional effectively sets the agenda and decides what factors are relevant, advises relation to those factors and they can. But I will water caused by transaction. So what about information? Information? He stated. I quoted as follows. It is a limited part off the material which is quite will rely. You decide whether 22 prospective transaction with the process of identifying the other album considerations in the overall assessment of the commercial merits the transaction are it's conclusively mounted. Well, the client or possibly his brother advisers and great. So that means of professional responsibility I s scope of duty does not extend decision to rent into the transaction. They are only liable for the financial implication US confined to the actual no information itself, but not necessarily for the practice. Such job, the battle of property may be contaminated. The fact that, uh, planning missions proved to be rejected more than several times I would also considerations. So you might remember just moments ago I made reference to cycles Palmer and Ultimate rockets To Portman. Well, one of the other aspects of this case in B p. A. Is that a paragraphs 47 to 52. Lord Sumption considered these cases, and in fact, he said that simulation struggles, drama case this concern just yet to know the variant of negligence information rather than on price on the fact that that in struggled Palmer and in fact, all too important, the one reported information would have revealed Dishonest day or possible dishonesty on half the borrower was fundamental, the lenders view are whether or not to proceed with the transaction. So in absence, no searching house that struggles Palmer apartment worrying correctly decided as they affect the flight there. Quote no transaction rule with the House of Lords have discredited within the sound carry decision because there was no basis for making the assessment of claimants damages dependent not on the scope of defendant you to put on the gravity of a particular bridge onto the assessment of the quality of claims reasons is to why it would not event into transaction. So what about the burden of proof in these cases, while the vertebrae rest with the claimant to prove that the losses it claims valid undiscovered planets duty, I would not have been suffered even if the information provided by the defendant had been correct, you know, and finally not socially recognized the application off Sankoh cap or restriction on damages in bio skated let result that is quote not mathematically precise due to the difficulty of trying to calculate financial damage being suffered. Worries of a range commercial factors. Thus, to quote mathematical precision is not always attainable in the Lord. Damages on the Sankoh principle is essentially they will rule, which is applied in a robust way without the need for fine tuning or detailed investigation off causation. So what of the outcome in B P A. Well, it wasan information case? BP did not assume responsibility, Mr. Gabriel decision to loan money on what only responsible for negligently admitting to correct his assumption about what £200,000 what's useful that, for the question arises what losses attributable to them having failed to correct that or something. The answer is nothing, because the same losses would have followed even if it right, because the defect development itself reasons were given contamination. No, no, very good investment. The cost of renovation and do it are being more than alone meant that it really wasn't very viable anyway. So the precise using no monies and with how they were used did not really affect that in any event. So what does this mean? Well, it means that's the sign, co principal continues. It needs that the definitions between information on at biases made more clear when this is all about it's 56 The claim. It was proved that the claimed lost balance gave the duty as that some core principle isn't just confined Teoh valuers, but that is the main thrust of that case. So just a very quick discussion. Um, the case of B p A. In terms off to what it's done has been helpful and trying to clarify the application. Sankoh Many things to take away in that respect is that the decision produces what may be called or thought are being Fanis, because at the end of the day, it's Gabriel Incidental bad transaction. He could have undertaken better due diligence on protect himself. Example. He refused to searches that would have revealed that was contaminated land. Example. He chose not to another factor to be taken away from them, he said, on which the stresses fees are almost. Consider the work it's just just asked to do. Presumably it could be and then compare it with the seven Losses plane. Of course, one of the problems is that there is a descriptive inadequacy, which would highlight to find our assumption night and information cases, advice cases tried. Teoh. Make sure the distinction wasn't clear. Deposited, could that. But he did state that they are a battery on a spectrum will see that referenced a proper 44 that he implied that the advice information dividing line is in fact, not very easy to draw on. It doesn't mean that practitioners, we should be ignore what he say's because the clearest definition we have on what information cases are advised. Cases are, which didn't you being Christian imported to turn in at what losses are capable of being okay? Do you feel being recorded wrong? The adviser gestures by words Compliance is so master case for any building which professional negligence at full develops that you deal with information when you do. With that. He was also quick to try emphasize paragraph 40 people in the judgment as well that what we have a significant information cases in advice cases. They are still categories that are fact sensitive Andi but introduced typecast organization whose some types professionals so it to quote a bio or conveyance of, for example, say you happen. It purports book will ready supply more Mr Part of material on which his client's decision bait he's generally no more than a provider of watch. Lord Hoffman called quite information. But an investment advisor abiding a client whether to buy a particular stock or financial adviser advising women to best self invested pension on an annuity are likely. You know what happens to an already regarded as giving advice that may be and quick. It may be that those generalizations are helpful, but then it will help them embolden dependent violence and compliance is in resisting claims on also encourage financial advisors. Teoh make sure that they dot the i's cross the tees as well. Importantly day by finding that struggles Palmer was when they decided not, Sumption actually rejected on escape. To focus on Actually, the kind of failure you bold so great was now potentially no longer speak. So Intel's I'm about certain acts of negligence. I was hiding that unite to job cream. I've seen any Western, any others to my taste, quite a any way of looking at things. But that is one of the one of things that might be taken from your assumptions. Rejection off the case are single parents by being so I did. What would it be helpful? That is a fair assumption, actually set out his view on the proper Nancy to the quantification record belongs in the light of struggle to Palmer and Corman. So, for example, does Firas provide information revealing the bars? Dishonesty restrict damages to the difference in five between the common ASA number thought it waas on the same carpet given by dishonest person because if that is a case on the reduction of iron ore. The college being relied the calculator that again you could happen tooted approach to damages, fresh negligence. But then that can be quite difficult to justify on and also replicate in other parts of Britain. Contract all such cases because if impressions guilty something more than just incompetence and there are loads of that at more difficult because of action available. So example decides assistance rich by the tree duty and so on. So if the Klan could make goods the, um, subject having a test, I especially great kind of failure. Then they may well have an alternative courses of action available to them. In any event, Uh, but that means that that would be looking at about two tiered approach, which could have its analytical difficulties with potential unintended consequences. That isn't necessarily what your assumption is trying to push for in that he doesn't really set out for your tour. Like I say a problem page of the culpable losses. But that is ah, I screwed up thoughts in cases such as that. So what about the practical impact off this case? Well, there are just a couple of things really actually bring to your attention. There is a scope and lots off negligent Aristide made by professional transaction. That doesn't say get off the hook on many areas which may only have a low or negligible irritable man actual value but lead to a transaction going head back. Well, why not? Bean To do still be aware of that tannic leaf on the Sumco analysis, it seems that many errors of that nature could be within one transaction, but acuity, factual effect off it off, which cannot be doubted, which could not enable control political trying that transaction lost would never last. That's crazy. More of the story is, um no matter how, um, how low when I got to go Attributable, Rachael, Uh, by always. As far as what? Your advice to the information it's still reports it will be a life is still imported trying. If you don't like that because you're starting, how big a part of my actually and a plane in the grand scheme of things, um, it could be that as a result of this case, that could be less cases in this field. Because claimants deal now have assuming the higher, higher threshold potentially to reach, especially on articles he still and trying to distinguish between information out prize. But it's like that if there is a case, whether or not a fact in the mix, it could be that it's against you rather than for you, because it could be the waters to determine what information, what's up bite and how it might actually resulted in all of the lots incurred whether they are actually with practice on our information, Uh, the main triggers the loss. Of course, that could mean that there's less cases on if there are cases. If there are less cases, then those cases they do get court may be more likely to you be summarily determined on will subject to strike applications be made by defendants. And it could also mean just looking at that two tiered approach that instead of having this course of action, I wouldn't touch panel another course of action at Charles. You see, for example, um, it could be that people decide to do with this court faction on just go tend to more fashionable one. So, um, example dishonesty, bridge flight, you treat duty claims distance and Sellem, and then Finally, which of these arguments that were raised in the air to BP, a BP a put potential be avoided by just drafting needy goods? Retain, alas, is whatever the professional field, And I think that's the main practical point to take place in this. And then it was an explosion. Any questions to false information, lots of flies. The clearly sets out what is a surprise. We'll leave it. The appliance cannot cannot big. Then that would dramatically help. Because the Senate set down, there could be no assumptions made. What is the risk of assumptions? Could be could be mitigated in that way. Do you what you found helpful? Do help with the evaluation questions Have to be able to help those. Well, um, do you have? That's been a good summary of the case of B p. A.