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19 February, 2016

NRAM plc v Jane Steel and Bell & Scott LLP [2016] CSIH 11

In a 2-1 majority decision (Lord Brodie dissenting), the Inner House has allowed a reclaiming motion and reversed a decision by Lord Doherty, following proof, to the effect that a solicitor did not owe a duty of care to a lender during the course of a security transaction in which the solicitor was acting for the borrower.

Lady Smith (Lady Clark of Calton concurring) recognised the general rule that a solicitor acting for one party in a property transaction does not owe a duty of care to another party but, after analysing the circumstances of this situation – which involved the solicitor sending an email to the lender which was (a) outwith her instructions and (b) contained negligent misstatements – held that a duty of care did arise.  It having already been established that, if such a duty existed it had been breached, damages were awarded to reflect the losses sustained by the lender in having relied on the terms of the email and thereby discharged a security in full which ought only to have been partially restricted.

Ampersand’s Ronnie Clancy QC and Graeme Hawkes acted for the successful reclaimers.

The Decision of the Inner House can be viewed here.

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