Rosemary Foggitt on UK firms' liability on foreign deals

Rosemary Foggitt is a solicitor in the Birmingham office of Wansbroughs Willey Hargrave.

A recent decision – WG Gregory v Shepherds – brings good news for UK property lawyers involved in transactions for Britons abroad.

Judge Behrens QC ruled that foreign solicitors appointed to assist with litigation in their own country act as independent experts. The UK solicitor appointing them cannot, therefore, be held responsible for losses resulting from negligence on their part.

Gregory, the plaintiff, signed an agreement to buy an apartment for £60,000 while on holiday in Spain in March 1989. On his return to England, he instructed Shepherds to undertake the transaction for him.

Shepherds instructed a Spanish lawyer to do the relevant work and, on the Spanish lawyer's advice, paid a deposit of £2,500 to the vendor's London account.

Completion took place in November 1990, when the balance of £57,500 was paid over by Shepherds to the vendor's London bank account, as instructed by the Spanish lawyer.

However, it transpired that the previous owner of the property had registered a charge against it as security for debts. Gregory did not discover this until 1991.

Gregory made various unsuccessful attempts to rectify matters through other lawyers before seeking redress against Shepherds.

He alleged breach of contract, negligence and breach of fiduciary duty for failing to discover the charge and for parting with the purchase monies without adequate assurances of good title on completion.

It was held that Shepherds was not liable. Its retainer was confined to transmitting instructions to the Spanish lawyer, prep-aring a power of attorney and transmitting funds as instructed.

The Spanish lawyer was not a sub-contractor. He was instructed by Shepherds, which was acting as an agent for Gregory. The court held that, as an English law firm without Spanish qualifications, Shepherds was not responsible for omissions relating to Spanish conveyancing.

The court said the role of the Spanish lawyer was akin to the role of counsel or to that of an expert – an independent professional instructed on behalf of the client.

The Spanish lawyer's services were not part and parcel of the services provided by Shepherds.