Third party duty ruling

The Court of Appeal has established that in commercial transactions solicitors can owe a duty of care to third parties which are not advised to seek independent legal help.

The judgment in Roy Dean v Allin & Watts (unreported) last month overturned the previous ruling that solicitors acting for a borrower did not owe a duty of care to a lender who was inexperienced and unrepresented.In the case, the defendant solicitors, in acting for the borrowers, failed to procure valid and binding security for the lender by way of deposit of title deeds.

The judge said that because of the foreseeability of damage, proximity of relationship and because the solicitors had neither made it clear to the lender that he could not rely on his advice or to seek independent legal advice, a duty of care could be imposed.Jonathan Ross, a professional negligence partner at City firm Denton Wilde Sapte, said: 'The case shows how solicitors shouldn't be blinkered when dealing with third parties.

You must be careful to limit liability and to protect yourself.'Andrew Crocombe of Dorset firm Coles Miller, who acted for the claimant, said: 'On the facts of the case, the findings were correct, as the solicitors acted wrongly in the way they dealt with the matter.' He added that the ruling 'just serves as a timely reminder of the pitfalls out there'.

South-west firm Bond Pearce acted for the defendant firm.

Andrew Towler