As solicitors acting for banks in professional negligence matters, we often come up against the argument from defendant professionals that the lender would not have acted differently even if it had been properly advised. These defendants, while acknowledging their advice fell short of the expected standard, seek to avoid or minimise their liability by arguing that it had no material impact on the lender’s decision to proceed with the advance. To try to support this argument, defendants are increasingly looking to lenders’ policies, seeking to offload some of the blame.
The case of Ward Hadaway v DB Bank UK Ltd was such a case. The lender had instructed solicitors to act on its behalf in relation to a series of buy-to-let loans. The solicitors did so, but failed to advise the lender that these were all sub-sales, with a third-party vendor who was not the registered proprietor. The solicitors accepted that they should have reported the true nature of the transactions to the lender, but denied that they were responsible for the loss, alleging that the lender would have proceeded with the advances even if it had known of the sub-sales.
The lender, as part of the pre-action disclosure process, had provided the solicitors with a copy of its underwriting guidelines. Those guidelines referred to a credit policy document that was, by virtue of that reference, technically disclosed. The solicitors demanded sight of the credit policy document but the lender refused, stating that it was commercially sensitive and was a more strategic-level document that did not determine how individual cases should be dealt with. The lender contended that the policy document was not relevant to the facts of the case: it related to how the lender ran its business and was relevant to the raising of funds; it did not cover lending decisions, whereas the underwriting guidelines, which were available for inspection, did…
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