Death knell for the ‘no transaction’ claim?
The Court of Appeal’s recent decision in Gabriel v Little addresses the question whether a solicitor provides ‘advice’ or ‘information’ and the scope of duty under SAAMCo. A solicitor providing advice is liable for all the foreseeable loss caused by the advice being wrong but a solicitor providing information is liable only for the foreseeable consequences of the information being wrong. The ‘information’ principle may be tested by asking what loss would have ensued if the information had been correct.
Mr Gabriel lent Mr Little, a property developer, £200,000 on terms that £270,000 was to be repaid in just over a year and was secured on a building that Mr Little would convert to offices. Mr Gabriel believed the advance was to be used for the building work. In fact, Mr Little used it to pay off bank lending secured on the property. The venture was a disaster: the building was only worth £13,000.
Mr Gabriel sued Mr Little alleging deceit — the actual use of the loan had been concealed from him. He alleged that the advance was held on a Quistclose trust and was to be used only for conversion work on the building. The facility letter stated the money was for the ‘costs of development’. He also sued his solicitors alleging that they knew how the money had been used but had failed to explain it to him and that their drafting of the facility letter was negligent…
If you are registered and logged in to the site, click on the link below to read the Mills & Reeve briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from The Lawyer
Analysis from The Lawyer
The trend for unbundling legal work is advancing through the law firm ranks but there is still resistance in some quarters - namely in-house. We asked why