BPE Solicitors v Hughes-Holland [2017] UKSC 21

C (represented by a trustee in bankruptcy) was a semi-retired businessman. C agreed to lend L £200,000 over plans to develop an airfield heating tower into offices. C assumed that the £200,000 would finance the development. However, L intended to use it to, in effect, pay off his company’s debt, leaving no money for development unless it could be raised elsewhere. C instructed D, an assistant solicitor, to draw up a facility letter. These instructions came from L in a voicemail, telling D about his actual intentions. D never confirmed these instructions with C. D drew up the facility letter and the charge. He used the document drafted for the transaction intended by C (the development) as a template. This mistakenly inserted statements that confirmed C’s mistaken assumption.

• Was the development project viable if it had gone as C intended?
• Was D negligent in providing misinformation that led C down a course of action he would not take knowingly?
• Was D responsible for all the losses suffered by C due to providing misinformation?

The development project, on the facts, would be unprofitable. D was negligent by failing their duty to provide information allowing C to decide on a course of action, but they were under no duty to advise C on a course of action. This is the SAAMCO principle. As such, D was only liable for the losses resulting from the erroneous statements, not losses occurred through C’s decision to make the loan. The SAAMCO principle has often been misunderstood. The misunderstanding arises from a tendency to overlook two fundamental features of the reasoning. The first is that where the contribution of D is to supply information which C will take into account in making his own decision on the basis of a broader assessment of the risks, D has no legal responsibility for C’s decision. The second is that the principle has nothing to do with the causation of loss as that expression is usually used.

Professional negligence does not make an adviser liable for every loss following a transaction. Recoverable loss must fall within the purpose and scope of the duty undertaken. Establishing that accurate information would have prevented entry into the transaction is not sufficient by itself.

BPE distinguishes factual causation from the scope of professional responsibility. The solicitors' error did not make them guarantors of the project's commercial viability. Manchester Building Society v Grant Thornton [2021] UKSC 20 later explained that the purpose of the duty is central and cautioned against rigid advice/information categories. BPE therefore remains useful, but the modern analysis should identify the risk the professional undertook to protect against instead of treating a label as decisive.