On 16 September 2026, in Niprose Investments Ltd v Vincents Solicitors Ltd [2026] EWHC 2320 (Ch), HHJ Hodge KC dismissed a solicitors’ negligence claim arising out of a buyer-funded, off-plan residential development scheme which failed to reach completion.
In this article, Chris Greenwood and Faye Metcalfe summarise the decision in Niprose, and consider (1) evidential issues concerning a claimant’s sophistication, experience, and understanding of advice; (2) the relevance of professional guidance documents; (3) when a solicitor is required to give ‘business’ or ‘commercial’ advice, or advise a client not to proceed with a proposed transaction at all; (4) the application of the Manchester Building Society “duty nexus” question in practice; and (5) when parties to ‘buyer-funded development’ claims might, or might not, want to involve the seller’s or developer’s solicitors in the proceedings.
Background
The facts in Niprose are typical of what are often known as ‘buyer-funded development’ claims. An introducing agent provides to a claimant a glossy brochure for an ‘off plan’ residential development – or the construction or refurbishment of hotel, care home, or holiday or student accommodation – promising ‘guaranteed’ rental income upon completion, and that during construction, the claimant’s funds will be held in a ‘secure’ escrow account, and used only to fund the development. The claimant pays a non-refundable reservation fee, is referred to solicitors, then enters into a contract of sale with the developer – invariably an SPV – where they pay very high deposits, often held by the seller’s solicitor as ‘stakeholder’ or ‘agent for the seller’, subject to payment release mechanisms requiring varying levels of scrutiny before payment. While some such developments have succeeded, others fail, the developer goes into insolvency, and the claimant sues the solicitor who acted on their behalf, alleging that, properly advised, they would never have entered into the transaction at all.
In this case, the Claimant was a family investment company, incorporated specifically to invest in eight ‘units’ – each a self-contained residential apartment – in a development scheme in Liverpool (‘the Development’).
Before instructing Vincents Solicitors Limited (“Vincents”) as conveyancing solicitors, the Claimant had paid a non-refundable ‘reservation fee’ for each unit, to be deducted from the purchase price if the Claimant proceeded.
The Development had been marketed as offering potential capital growth, with purchasers’ funds being ‘held securely in Escrow accounts’ during construction, subject to a ‘safe and Secure Staged Payment Process’, and the ‘promise’ of a guaranteed rental income equivalent to an 8% annual return for five years following completion.
Vincents issued a standard Report on Title to all clients purchasing units in the Development, including the Claimant, attaching (amongst other documents) a copy of the proposed agreement for sale with the developer, and the SRA Warning Notice entitled “Investment schemes (including conveyancing)” issued in 2017 (‘the SRA Warning Notice’).
Each agreement required the purchaser to pay a deposit of 50% of the balance of the purchase price on exchange, and enabled the Development to be partly ‘buyer-funded’ in that the deposit monies were to be paid to the developer’s solicitors who, pursuant to clause 4.2, held them “as stakeholder for the seller” (namely, the developer).
Those monies were to be released in accordance with Schedule 2 of each agreement (‘Schedule 2’), under which the funds could be applied to satisfy the marketing, sales and construction costs of the development. One of the methods of obtaining the release of funds was to present a “Valuation Certificate” – a document issued by a professional acting as the developer’s agent, “itemising costs and expenses incurred” by the developer. Schedule 2 further provided that the developer’s solicitors “shall not be required to enquire into or verify the accuracy appropriateness or authenticity” of documents submitted on the developer’s behalf when any monies were requested.
Amongst other things, the Report on Title advised that:
- the developer’s solicitor could only release funds to the seller subject to the conditions set out in Schedule 2 to the agreement for sale, the first £10,000 would be used to discharge obligations under a loan agreement, and “[t]he remainder of the First Deposit will only be released to the Seller by their solicitor in connection with the construction of the development, including marketing of the same. This gives you some protection as the monies cannot simply be sent to the Seller to use for their own means, i.e. in respect of anything other than developing the Property/Building”;
- “[t]he usual maximum deposit in a conveyancing transaction is 10%”;
- “[i]n this case buying off-plan properties presents a substantial risk that the developer/Seller could fail between exchange and completion. Any monies you have paid, and will have released to the Seller would be lost… Please find SRA Guidance in respect of the same”; and
- “whilst we have probed the Seller’s solicitor in respect of providing some form of deposit protection scheme, unfortunately this has been rejected for the moment. Therefore it may be difficult (or even impossible) for you to recover any sums which you have paid to the Seller under the Contract, if, for instance the sale of the Property does not complete for whatever reason (for example, should the Seller be unable or refuse to complete or become insolvent or enter administration prior to your purchase of the Property)”.
Contracts exchanged in 2018, and the Claimant (and many others) paid the required deposits, but construction ceased, and the Development was never completed. The reason for the failure was not fully established; the Judge noted that “everything indicates” it was due to the finance company that had been partly funding the Development going into administration,[1] but made no finding to that effect. The Judge did, however, note there was no evidence the Development was a ‘dubious’ scheme, or that the developer’s solicitor had released funds without a signed valuation certificate.[2]
The developer went into liquidation, and receivers sold the incomplete development for less than the value of the completed and approved works, so that individual purchasers, including the Claimant, made no recovery.
A large number of claimants alleged that Vincents (a) failed to advise that the deposits had no meaningful security or protection, (b) failed to advise them not to proceed with the transaction, and (c) failed to ensure they fully understood the risks of the transaction. Had Vincents done any of these things, the claimants alleged, they would not have entered into the transactions. The claimants therefore claimed as damages the value of the deposits paid, together with Vincents’ conveyancing fees.[3] All but one of the claims settled, but the Claimant’s claim proceeded to trial.
The SRA Warning Notice
The SRA Warning Notice was issued on 23 June 2017.[4] In its original form[5], the part entitled “Conveyancing or purported investment in land” included the following:
Financing a development[6]
Schemes are being promoted as involved in the routine buying of a property when in reality the buyer’s money is being used to finance a high-risk development or refurbishment. This is of particular concern in unusual developments such as the buying of individual hotel rooms, rooms in care homes, or self-storage units. Our concerns also apply to any “off-plan” purchases. These may not be investment frauds but they still involve higher risk than the simple purchase of a property.
High deposits” are used by property developers to finance their developments. Investors are not being advised, or properly advised, that this often presents a much higher risk than simply buying an existing house or apartment.
Where you are acting for the buyers in these types of transactions, you must advise clients fully about the transaction and how it significantly differs from the simple buying of an existing property, such as:
- Buying a property not yet built or completed i.e. off plan or subject to significant refurbishment, involves substantial risk that the developer or seller could fail and money will be lost;
- Promises of substantial returns are often illusory – and standard warnings in publicity about the risk of capital loss are not enough to ensure that a law firm has properly advised a client about a transaction…
- High “deposits” are being used to finance the development (see below).
We are seeing cases of solicitors simply processing transactions for buyers and adopting the language of conveyancing. The effect is to mask what is really happening. For example, investors provide money for a “deposit” which is released to the seller upon some (often spurious) condition. The investor’s money is used to buy the property or finance its building or refurbishment. This carries substantial risks such as the money being misappropriated, the seller failing to complete the scheme or the seller becoming insolvent.
The usual deposit in a conveyancing transaction is 10 percent. It is paid to ensure that the buyer will complete the contract. In dubious schemes we have seen deposits of 30 percent or even 80 percent. These are not market standard deposits but involve both pre-payment of the price and effectively the providing of finance to the developer. Referring to them as deposits is part of the psychology of presenting a risky “investment” as routine conveyancing. Clients are actually paying their money into often what is high-risk property development leading to substantial losses. You should ensure that clients fully understand the risks they are taking and it may well be necessary to strongly advise clients against entering into such a transaction.
Decision
Duty of care
HHJ Hodge KC accepted as uncontroversial the following principles relating to a solicitor’s duty of care:[7]
(1) A solicitor is only obliged to advise on matters that fall within the compass of the solicitor’s retainer, subject, if the need arises, to the requirement to advise of any additional risks which may come to his or her attention in the course of that retainer.
(2) A solicitor may also have to go further when advising an ‘unsophisticated’ client: the extent of the duty to give advice may depend on the extent to which the client appears to need it.
(3) A solicitor is not a general adviser on matters of business and is generally under no duty to advise whether, legal considerations apart, a transaction is a prudent one: see Jackson & Powell on Professional Liability (9th edn.) at para 11-177 and Pickersgill v Riley [2004] UKPC 14, [2004] P.N.L.R. 31.
(4) Any such duty will arise only exceptionally, such as where it is plain that a client, particularly an inexperienced one, is “rushing into an unwise, not to say disastrous, venture”: see Jackson & Powell at para 11-179 and the dictum of Danckwerts LJ in Neushul v Mellish Harkavy (1967) 111 Sol J. 399 cited there. […]
(5) A solicitor must take reasonable care to advise clearly, but there is no duty to take steps to ensure that advice has been understood unless the solicitor is on notice that the client did not understand. Otherwise, a solicitor is entitled to assume that advice has been understood: see Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch); [2015] P.N.L.R. 19 per HHJ Cooke at [47].
Breach of duty
The first allegation of breach partly succeeded. The Judge held that the Report on Title failed to alert buyers to the unusual provisions governing the release of deposits contained within Schedule 2, which was “precisely the type of ‘spurious’ condition to which the SRA Warning Notice alerted the solicitors’ profession”.[8] He further held the provisions of Schedule 2 “gave rise to the sort of risk which might elude even an intelligent lay person”, and which, applying County Personnel (Employment Agency) Ltd v Alan R Pulver & Co [1987] 1 WLR 916, Vincents had therefore been required to draw to the Claimant’s attention and specifically advise about.[9]
By contrast, the allegation that Vincents should have advised the Claimant not to proceed with the transaction failed. The Judge held that the SRA Warning Notice did not create any new duty on the part of conveyancing solicitors, or extend the range of circumstances in which a solicitor is obliged to advise a client not to proceed (which he described as “exceptional”) or mandate the giving of such advice in every case.[10] Here, there was no such obligation, there being “nothing to indicate that this development involved any dubious investment scheme”.[11]
The Judge also rejected the allegation that Vincents failed to ensure the Claimant fully understood the risks of the transaction, both as a matter of principle – there being no strict or additional duty to ‘ensure’ or test also comprehension – and, save in respect of Schedule 2, because the advice provided was clear and sufficiently communicated.[12]
Factual causation
The Judge found that in relation to the limited breach of duty that was proven, factual causation was established; had the Claimant been properly advised about Schedule 2, it would probably have declined to proceed.[13]
The ‘duty nexus’ question
On scope of duty, however, the Claimant failed; the Judge accepted Vincents’ submissions that the Claimant “[could not] show the requisite connection between anything Vincents got wrong and the eventuation of any loss” and therefore “[could not] establish that the losses represent the coming to fruition of any risk in respect of which inadequate advice was given”.[14]
Having reminded himself that Vincents’ breach of duty was confined to the single failure to advise the Claimant about the true meaning and effect of the release mechanism in Schedule 2,[15] the Judge continued:[16]
the relevant risk against which the duty to advise the claimant accurately and adequately about the deposit release mechanism in Schedule 2 to the sale agreement, and the limited protection that this afforded to contracting purchasers, was the risk that the deposits received from contracting purchasers might be released otherwise than solely for the purposes permitted by paragraph 3 of Schedule 2, i.e. otherwise than for purposes connected with the marketing, construction, and completion of the development. That duty was nothing to do with the risk of the developer’s insolvency, or the failure of the development for any reason otherwise than, or collateral to, the unauthorised and improper release of the deposits. Vincents had advised separately, and adequately, in relation to this latter range of risks; and these had been freely assumed by the claimant.
On that analysis, the judge concluded that the Claimant had failed to establish the necessary legal connection “between anything Vincents got wrong and the loss of the claimant’s deposit”.[17] In other words, the “claimant has not established that the loss of its deposits represents the coming to fruition of any particular risk in respect of which inadequate advice was given”.[18] The duty nexus question accordingly fell to be answered in Vincents’ favour, barring any recovery of damages by the Claimant.[19]
Key points arising
(1) Claimants’ sophistication, experience, and understanding of advice
As transactional solicitors increasingly provide longer and more detailed advisory documents, sometimes accompanied by multiple documents, claimants commonly allege that they did not fully understand the advice provided. The Claimant did so here.
In Spire Property Developments LLP v Withers LLP, Carr LJ reviewed a number of appellate decisions including Carradine Properties Ltd v DJ Freeman & Co[20] and Minkin v Landsberg.[21] Having noted that it is implicit in a solicitor’s retainer that the solicitor will proffer advice which is “reasonably incidental” to the work that they have agreed to carry out, Carr LJ summarised the principle that in determining what advice was reasonably incidental, regard was to be had to (amongst other things) “the character, sophistication and experience of the client”.[22] But as the Judge in Niprose held, what is also relevant is “the solicitor’s reasonable perception, if necessary after due inquiry, of the client’s intelligence, and level and capacity of understanding the transaction in which they are engaged”.[23] Indeed, in Carradine itself, the Court referred to “the extent to which the client appears to need advice”.
As to whether the client has in fact understood the advice, the Judge’s acceptance of the Kandola principle that “the solicitor is not a guarantor of his client’s subjective understanding”,[24] notwithstanding the requirement in the SRA Warning Notice to “ensure that clients fully understand the risks”, provides welcome clarification. Instead, the initial requirement is to give an explanation in terms the client “reasonably appears to [the solicitor] to be able to understand”. The question is then whether the client “reasonably appears… to have understood”, and in this latter respect, the Court noted the decision in Harwood v Taylor Vinters,[25] in which HHJ Richard Seymour QC held:
… the giving of advice is, in my judgment, an inter-active process in which the client can reasonably be expected to participate, in particular by seeking further elucidation of anything which he does not understand.
In rejecting the Claimant’s evidence that it did not fully understand the advice, the Judge placed weight on the fact that the Claimant’s director, a former relationship manager at Goldman Sachs and Bank of New York whom he found to be highly sophisticated, did not raise any questions about the risk of losing the Claimant’s deposit; had she not understood, the judge was “certain she would have done so”.[26]
The decision demonstrates the potential importance, when proofing and drafting witness statements on behalf of defendant solicitors, to address not only what advice they gave, but also what they perceived about the claimant’s sophistication, character and experience, the basis of that perception, what steps they took to satisfy themselves the client did understand the advice, and why they were satisfied the client had done so. And those acting for claimants should ensure their client’s evidence addresses any positive misunderstanding they did have or, if they simply did not understand, what steps they took to try to do so.
(2) The relevance of professional guidance documents
A judge’s reliance on an SRA or Law Society warning notice as evidence of the standard of advice required after the note has been published is unremarkable. But the Judge’s findings[27] that the SRA Warning Notice “created no new duty on the part of conveyancing solicitors”, and instead “was intended to draw attention to the need to apply the conventional duties owed by solicitors to their clients”, and “reminded” solicitors of their existing advisory, are more notable. They demonstrate the willingness of the Court to accept, in some circumstances and subject to the evidence, that such documents are relevant as evidence of the standard required of advice given prior to their publication.
This approach has precedent. In Mortgage Express v Bowerman [1996] PNLR 62, 69, Bingham MR said, of professional guidance on mortgage fraud which the defendant could not be criticised for not having seen, that “guidance of this kind is not the product of parthenogenesis. It represents a distillation, or codification, of existing good practice and it represents, as it seems to me, sound practical common sense”. In other words, these sorts of guidance and warning notices do not generally appear out of a clear blue sky.
(3) ‘Business advice’, and advising the client not to proceed at all
It is commonly said – and the Judge accepted – that solicitors are not generally obliged to provide ‘business’ or ‘commercial’ advice, or to advise whether, legal considerations apart, the proposed transaction is or is not a prudent one. This includes advice in respect of the solvency of a counterparty: see e.g. Pickersgill Riley,[28] where the Privy Council held that a solicitor was not under a duty to advise the client, an experienced businessman, of the risk of taking a guarantee from a limited company and that it was desirable to investigate the company’s financial position.
And yet, many solicitors’ websites and marketing materials emphasise their ‘commercial’ approach to advice. The line between legal and ‘commercial’ advice is also not well-defined and, in some cases, the distinction is difficult to draw, or may disappear altogether: see e.g. County Personnel, where Bingham LJ did not accept the materiality of the distinction on the facts of that case, because, he held, “the significance of the legal consequences lay in the financial implications”.[29]
In the case of buyer-funded developments, the SRA Warning Notice identified a number of risks that are prima facie commercial, rather than purely legal, risks. This includes the warning that: “Buying a property not yet built or completed i.e. off plan or subject to significant refurbishment, involves substantial risk that the developer or seller could fail and money will be lost”. Together with the words “You should ensure that clients fully understand the risks”, the clear implication is that the SRA expects solicitors to advise on such risks, even though they arise only indirectly from the legal structure of the investment scheme. And in Niprose, the Court found Vincents to have acted reasonably competently because it had in fact properly advised about these risks, not because they were ‘business risks’ which Vincents had not been obliged to advise about at all.
It may therefore be that, at least in buyer-funded development claims, only ‘pure’ business considerations such as valuation and market fluctuation, which are wholly unconnected with the transaction’s legal structure, fall outside the scope of matters a solicitor is expected to raise.
Niprose also reminds us that there may be rare instances where a solicitor is obliged to advise a client not to proceed with a transaction, and identifies two principal sets of circumstances in which this may be the case:[30] (1) where the client is proposing to enter into a rash, or even an unwise, transaction; and (2) where the client is proposing to enter into a transaction which carries risks which should have been apparent to a professional legal adviser but would have been most unlikely to occur even to an intelligent lay person.
But the first category begs the question, when will it be sufficiently clear that a client is “rushing”[31] into a “rash” or “unwise” transaction? The facts of the authority cited in support, Neushul v Mellish & Harkavy, are unusual to say the least: in short, a romance fraud. The claimant, a widow, had become emotionally attached to a man and agreed to lend him £4,000. Lacking the necessary funds, she decided to raise the money by taking out a second mortgage over her home. Her bank manager tried to dissuade her, warning that the man was an ‘obvious con-man’. The widow employed the defendant solicitor, who was also acting for the man and knew of his affairs, to arrange the borrowing and act for her in the transaction. The man subsequently left England and did not repay the loan. The majority held that the defendant had failed to give the widow adequate warning of the dangers of the proposed transaction. But there is little romance in property development and, absent any obvious hallmarks of fraud, the Court may therefore be reluctant to apply such principles to conveyancing claims.
The second category was said to be exemplified by County Personnel, where a prospective underlessor refused to disclose to a prospective underlessee the amount of rent payable under the head lease, and the Court held that the underlessee’s solicitors should have sought to establish the rent under the head lease and advised the client not to enter into an underlease which contained the proposed rent review clause without knowing the rent payable under the head lease. But as the Judge in Niprose identified: “Clearly, both the need for any duty to advise against entering into a transaction, and the terms in which such advice is to be tendered, are extremely fact-sensitive.”[32]
Here, the SRA Warning Notice did warn that “it may well be necessary to strongly advise clients against entering into the transaction” but, as the Judge noted, it did not suggest that this advice should invariably be given and he did not accept that it should have been given in relation to the Development. It appears that, in considering when such advice is necessary, the test will be whether the proposed transaction falls into either of two (seemingly narrow) sets of circumstances the Judge identified.
(4) The answer to the “duty nexus” question? A “breach nexus” analysis.
In the six-part test established in Manchester Building Society v Grant Thornton UK LLP[33] the stage 2 ‘scope of duty’ question is framed as: “What are the risks of harm to the claimant against which the law imposes on the defendant a duty to take care”. The stage 5 ‘duty nexus’ question” is then framed as follows: “Is there a sufficient nexus between a particular element of the harm for which the claimant seeks damages and the subject matter of the defendant’s duty of care as analysed at stage 2 above?” (emphasis added)
On its face, the formulation of the ‘duty nexus’ question refers to the link between the harm (i.e. the loss) and the scope of the defendant’s duty. It does not, or at least not expressly, refer to any connection between the harm and the breach.
Nevertheless, the Supreme Court also approved principles iterated by Lord Sumption JSC in Hughes-Holland v BPE Solicitors, including that (save where the professional is responsible for guiding the whole decision-making process) “liable only for the financial consequences of [the information] being wrong and not for the financial consequences of the claimant entering into the transaction so far as these are greater”, and – crucially – the loss must “[flow] from the right thing, i e the particular feature of the defendant’s conduct which made it wrongful. That turns on an analysis of what did make it wrongful”.[34]
In Niprose, the cause of the loss was a commercial failure of the developer, and the Judge clearly accepted that this was a risk which it was a purpose of Vincents’ duty to protect the Claimant from by advising that the risk existed. But the Court also found that Vincents had properly advised about that risk. Accordingly, although advising about the risk of what in fact went wrong did fall within the scope of Vincents’ duty to the Claimant, that duty had been discharged. The loss did not flow from Vincents’ failure to advise as to the meaning and effect of Schedule 2 and, accordingly, the answer to the “duty nexus” question was “no”.[35]
Returning to the formulations of the six-part test, the Judge appears to have resolved the absence of any reference to “breach” in the stage 5 ‘duty nexus’ question, by reading the stage 2 ‘scope of duty’ question as if the word “risks” in “risks of harm” meant “relevant risk[s]”.[36] But a simpler way of expressing the principle may be this: in practice, the ‘duty nexus question’ is really a ‘breach of duty nexus question’.
In either case, to adapt Lord Sumption’s analogy in Hughes-Holland, the ‘duty nexus’ label may not fully describe the contents of the bottle.
(5) Claims or applications against a seller’s or developer’s solicitors
If the answer to the ‘duty nexus’ question does lie in a ‘breach nexus’ analysis, it will be critical to establish in each case what, exactly, went wrong. The Claimant in Niprose failed ultimately because it could not evidence that the developer’s solicitor had paid monies in accordance with Schedule 2, which were not expended on the Development, and because there was evidence of an alternative cause (the insolvency of the commercial funder) instead.
But in some buyer-funded development claims, there may be multiple causes of failure. How then does a claimant, or defendant, evidence exactly what went wrong?
The answer may lie in documents held by a developer’s or (if different) seller’s solicitors, who are likely to owe duties to purchasers, either pursuant to an agreement (where deposits are held as stakeholders[37]) or – at least arguably – at common law or in trust.
Practitioners acting for claimants may therefore consider intimating and, if necessary, bringing claims (or applications for non-party disclosure) against such solicitors, not only as a potential means of recovery, but also in order to create obligations to provide documents which may enable claimants to discharge their burden of establishing that the loss fell within the scope of duty.
Defendants may also consider disclosure applications or contribution claims under CPR Part 20, but these may be double-edged weapons. While they might lead to an additional wallet becoming available to satisfy claimants’ claims, they might also reveal that the causes of the loss did, in fact, include the manifestation of a risk which the defendant failed to properly advise about.
[1] At [2], [85].
[2] At [62], [85], [118].
[3] In this instance, the Claimant did not seek to recover the reservation fees, which were paid before Vincents was retained. However, such claims are often advanced on the basis that had a claimant been properly advised, they would not only have declined to exchange contracts, but also intimated a claim for misrepresentation in respect of the marketing material (as the Judge found the Claimant probably would have done). Claims are sometimes also advanced on the grounds that the relevant development is a collective investment scheme (‘CIS’) as defined in the Financial Services and Markets Act 2000 (‘FSMA 2000’) s.235, so that the – usually non-authorised – developer or introducer was acting in contravention of FSMA 2000 ss.19 or 21. Any such claimant would however bear the burden of proving there was a real and substantial prospect of the developer or introducer actually repaying the fees had they done so.
[4] Practitioners should also be aware of the SRA’s Warning Notice on Investment Schemes and Client Account issued on 21 September 2016, although this was directed at solicitors acting for operators of investment schemes, rather than consumers.
[5] An updated version was issued on 17 August 2020.
[6] The subsequent sections, entitled “Taking a lease of a room, a storage unit etc” and “Collective investment scheme – criminal liability”, will also be relevant to certain types of developments.
Whether any such scheme will amount to a CIS will turn on the facts of each case, but relevant decisions include FCA v Capital Alternatives Ltd, [2015] Bus LR 767 (plots of agricultural land and subleases of forest land), FCA v Asset LI Inc [2016] Bus LR 524 (‘landbanking’ of plots of agricultural development land), FCA v Forster [2023] EWHC 1973 (Ch) (rooms in care homes), and 4VVV Ltd v Spence [2024] EWHC 2434 (Comm) (units in holiday and student accommodation). Different considerations plainly apply in relation to developments comprising self-contained residential apartments, although in Various Angelgate and Baltic House Claimants v Key Manchester Ltd [2021] PNLR 15, [19], the Court (on an application to amend) held it to be arguable that such a development was a CIS. The application failed, however, on the basis they had no real prospect of proving that the solicitors themselves had established or operated the scheme.
[7] At [59].
[8] At [62], [66], [70].
[9] At [66], [70].
[10] At [83].
[11] At [85]-[86].
[12] At [93]-[95].
[13] At [67]-[69], [104].
[14] At [120], [123].
[15] At [124].
[16] At [125].
[17] At [142].
[18] Ibid.
[19] Ibid.
[20] [1999] Lloyd’s Rep P.N. 48.
[21] [2016] PNLR 14.
[22] [2022] PNLR 27 at [56(iii)].
[23] At [40] emphasis added.
[24] At [59(5)]. The Judge also referred to Harwood v Taylor Vinters [2003] EWHC 471 (Ch), in which HHJ Richard Seymour QC held that: “A solicitor cannot, any more than anyone else, see into his client’s mind and satisfy himself that the client does in fact understand the advice which he is given”: see [89(1)].
[25] [2003] EWHC 471 (Ch).
[26] At [45], [93].
[27] At [83].
[28] [2004] PNLR 31.
[29] At 924.
[30] At [83]-[84].
[31] See footnote 7 above.
[32] At [84].
[33] [2022] AC 783 at [6(5)].
[34] Manchester Building Society, [11], [21]; citing Hughes-Holland v BPE Solicitors [2018] AC 599, [38] and [41].
[35] At [112] and [125], the Judge also accepted Vincents’ similar submission (relying on Petersen v Personal Representatives of Cyril B. Rivlin Deceased [2002] Lloyd’s Rep PN 386) that, where the causal risk is one the claimant knew about, it falls outside the scope of the duty because the claimant freely assumed responsibility for that risk. This approach is likely to be correct; the principle of scope duty is, after all, about the allocation of responsibility for risk.
Notably, Vincents also relied on Afan Valley Ltd v Lupton Fawcett LLP [2026] PNLR 12, a claim by entities connected to schemes involving the sale of individual rooms in hotels and care homes to retail investors, against solicitors specifically retained to advise whether the schemes were CISs. The claim was held to have no real prospect of success on the basis that (amongst other reasons) the alleged cause of the failure of the schemes was that they were in fact fraudulent Ponzi schemes, which would have been the case regardless of whether they were CISs: see [66]-[74]. This is a helpful example of the application of Manchester Building Society in buyer-funded development claims, including the ‘counterfactual test’ as a cross-check, but is not fully comparable to Niprose, because the claimants in Afan Valley did not allege that the defendant was also obliged to advise them about the risk of the schemes being fraudulent.
[36] See [92], [112], [125].
[37] As to which, see HHJ Hodge KKC’s judgment in Various North Point Pall Mall Purchasers v 174 Law Solicitors Ltd [2022] EWHC (Ch) at [33]-[50].
