BPE Solicitors v Hughes-Holland  UKSC 21, a solicitors’ negligence claim, was the Supreme Court’s first opportunity to review the 20-year-old House of Lords SAAMCO principle, which underpins the calculation of loss in professional negligence claims. The court reaffirmed the SAAMCO judgment, referred to by Lord Sumption as ‘one of the main dilemmas of the law of damages’.
The judgment emphasised that a defendant whose obligation is to provide information, even where that information was critical, which would be relied upon by the claimant, could only be liable for the consequences of that information being wrong. Lord Sumption accepted that the advice/information distinction which has been debated over the intervening 20 years was confusing, and clarified it as:
- ‘Advice’ cases only arise where the professional owes a duty to consider all the relevant matters and guide the decision-making process. The professional would then be liable for all of the losses flowing from the advice. Examples of insurance brokers and financial advisers were given as professionals to whom this may apply going forward.
- ‘Information’ cases are those where the professional provides only part of the information which will guide the decision-making, but the overall commercial assessment is for the client. The professional will then only be liable for the consequences of the information that they provided being wrong. This will now be the default position for professionals such as valuers and solicitors.
The Supreme Court decision in Lowick Rose LLP v Swynson Ltd  UKSC 32, on the other hand, dealt with issues surrounding collateral payments, transfer of loss and unjust enrichment. The judgment (which was again led by Lord Sumption) clarified the position. In particular, it reaffirmed the four-stage approach to unjust enrichment, being: 1. Has the defendant benefited in the sense of being enriched? 2. Was the enrichment at the claimant’s expense? 3. Was the enrichment unjust? 4. Are there any defences?
Their lordships agreed that the third stage required there to be some defect in the transaction itself. In circumstances where one party had loaned money to a second to enable it to repay a third, and had obtained security as a result, this was too indirect an effect to be considered ‘unjust’.
Both judgments have had a major impact on litigation involving damages assessments, although the line between advice and information may not be easy to draw in practice. Parties to claims for negligence should consider the scope of the duty any given professional may be under when advising, and it will serve solicitors well to take care to ensure that the scope of their advice is clearly defined when agreeing their client retainer. Swynson provides useful clarity on issues of collateral payments, transferred loss and (particularly) unjust enrichment.
Both cases are also helpful reminders for litigators of the approach the court will take in assessing claims for damages, applying the law on a principled basis rather than on an idea of fairness. This is worth bearing in mind when advising clients of their prospects, because although clients may sometimes feel wronged there is no guarantee that a court will agree they are entitled to damages.
Serious Fraud Office v Eurasian Natural Resources Corporation Ltd  EWHC 1017 (QB) explored the limits of litigation privilege. While only first instance, we understand the decision is under appeal. The High Court held that an investigation carried out in anticipation of a government agency investigation does not amount to ‘reasonable contemplation of litigation’. In a criminal context, the party asserting privilege would have to show they anticipated that the investigation would likely lead to criminal prosecution. In reality, this means that internal investigations, including notes taken of interviews with employees, will not enjoy litigation privilege unless the party can show that at the time the documents were produced, litigation (or in this case prosecution) was reasonably in prospect. The court also clarified that documents produced for the purposes of avoiding litigation or achieving settlement would also not attract litigation privilege.
[See ‘Law Society set to intervene in key privilege case,’ news, 10 November].
The High Court ruled that a number of trusts set up by Sergei Pugachev (known as ‘Putin’s banker’) in the name of his children were in fact ‘sham trusts’. It found that ‘the point of the trusts was not to cede control of the assets to someone else; it was to hide his control of them’. This case highlights the decreasing tolerance of the courts for parties who seek to hide assets from creditors in offshore trusts and accounts.
AIG Europe Ltd v Woodman & Ors  UKSC 18 looked at the thorny issue of aggregation under insurance contracts. The Supreme Court unanimously agreed that to be ‘a series of related transactions’, the transactions had to be, when viewed objectively and in the round, ‘interconnected’. The Court of Appeal’s addition of the word ‘intrinsic’ was rejected. This brings welcome clarity to the interpretation of aggregation clauses, although future cases will by necessity continue to be decided on a very fact-specific basis.
Procedure and practice
The Chancery Division had a name change: the Business and Property Courts. The Shorter Trials Scheme pilot is under way and proving useful in keeping costs and procedural steps to a minimum, while seeing a case through to trial within eight months. We have recently seen the revised CPR disclosure proposals out for consultation, setting the scene for 2018.
One practical impact on High Court litigation has been the introduction of the Courts Electronic Filing System for claims within the Rolls Building. This system aims to make filing and court correspondence quicker, more efficient and less costly. We are already seeing advantages in having successful filings confirmed on the day, being able to access all previous filings in one place and paying the necessary court fees online.
Georgina Squire is a partner at Rosling King and a committee member of the London Solicitors Litigation Association