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AIB Group (UK) Limited v Mark Redler & Co Solicitors [2013] EWCA Civ 45.

Date: 08/02/2013

This decision of the Court of Appeal handed down on Friday 8 February 2013 is of very considerable importance in the context of lenders’ breach of trust claims against solicitors and is likely to be of very substantial significance (and benefit) to those defending PI claims by lenders against solicitors:

  • The decision provides clarification as to when, following the ‘purchase and mortgage’ cases of Lloyds TSB plc v Markandan and Uddin [2012] EWCA Civ 65 and Davisons Solicitors v Nationwide Building Society [2012] EWCA Civ 1626, ‘completion’ takes place in a re-mortgage transaction, and so when a solicitor acting on a re-mortgage transaction can safely pay away advance monies
  • The decision makes clear that in a claim for breach of trust against a solicitor, a lender is not entitled to recover from the solicitor the entirety of the losses suffered by it on the loan transaction. Instead, issues of causation and compensation should be approached in a manner analogous to that used at common law in claims for breach of contract and negligence. The court should use the benefit of hindsight to ascertain what losses, if any, have actually been suffered by the lender as a result of the failings of the solicitors rather than as a result of any extraneous cause (such as a fall in the value of the property over which a first legal charge ought to have been obtained). The fact that a lender did not – either at the time of the transaction or subsequently - obtain a first legal charge over the property is ‘irrelevant to the question of what loss [the lender] has suffered as a result of the breach.

Graeme McPherson QC and Sian Mirchandani of 4 New Square acted for the successful solicitors both at first instance and on the appeal.

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