On 23 May 2013, the High Court handed down its decision in the latest case in which a lender has sued solicitors for breach of trust.
The decision in Santander v R. A. Legal Solicitors, confirmed and clarified the Court of Appeal’s decision in Nationwide v Davisons as to when solicitors should be relieved from the consequences of their breach of trust.
In the case R A Legal Solicitors had acted for a purported purchaser of property, for which the claimant’s predecessor, Abbey National, had advanced sums to be held by the defendant for the purpose of the purchaser’s mortgage.
Unknown to the defendant, the solicitors who had stated that they had been acting for the seller had been acting dishonestly, and the defendant had transferred the purchase sums before a first charge in favour of Abbey had been acquired and an existing charge discharged.
The Queen’s Bench Division held that, whilst the defendant had acted in breach of trust in releasing the funds advanced by Abbey, the defendant was relieved of all liability in respect of that breach since any criticisms as were properly made of the defendant in relation to the transaction were not an effective cause of the claimant’s loss.