Haugesund Kommune & Anor v Depfa Acs Bank & Anor

Haugesund Kommune & Anor v Depfa Acs Bank & Anor

Wikborg Rein’s duty was limited to advising on the validity of the swap contracts, not the creditworthiness or enforcement risks of the Kommunes. Depfa’s loss arising from the inability to recover from the Kommunes due to their impecuniosity or unwillingness is outside the scope of Wikborg Rein’s duty. The solicitor is not liable for the whole sum advanced unless the loss is attributable to the invalidity of the transaction, not to enforcement or credit risks.

Parties
Claimant: Haugesund Kommune; Claimant: Narvik Kommune; Defendant/respondent: Depfa ACS Bank; Appellant/part 20 Defendant: Wikborg Rein & Co
Jurisdiction
England and Wales
Judgment Date
28 January 2011
Procedural Posture
Civil Appeal / Appeal From Commercial Court Judgment on Assessment of Damages
Outcome
Appeal allowed; Wikborg Rein not liable for losses arising from the Kommunes’ inability or unwillingness to pay unless attributable to invalidity of the transaction.
Legal Topics
Scope of Duty, Negligent Advice, Ultra Vires Transactions, Restitutionary Claims, Damages Assessment
Professional Negligence Restitution Contract Law Scope of Duty Negligent Advice Ultra Vires Transactions Restitutionary Claims Damages Assessment

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Parties

Haugesund Kommune

Claimant

Narvik Kommune

Claimant

Depfa ACS Bank

Defendant/respondent

Wikborg Rein & Co

Appellant/part 20 Defendant

Procedural Posture

Civil Appeal / Appeal From Commercial Court Judgment on Assessment of Damages

Legal Issues

  1. 1 Is a solicitor liable for the whole sum transferred in an ultra vires transaction irrespective of other considerations except actual recovery from the counterparty?
  2. 2 Does the scope of the solicitor’s duty extend to all losses suffered by the bank, or only those arising from the invalidity of the transaction?
  3. 3 Does the existence of a restitutionary claim against the counterparty affect the assessment of loss against the solicitor?

Ratio Decidendi

Wikborg Rein’s duty was limited to advising on the validity of the swap contracts, not the creditworthiness or enforcement risks of the Kommunes. Depfa’s loss arising from the inability to recover from the Kommunes due to their impecuniosity or unwillingness is outside the scope of Wikborg Rein’s duty. The solicitor is not liable for the whole sum advanced unless the loss is attributable to the invalidity of the transaction, not to enforcement or credit risks.

Court Disposition

Appeal allowed; Wikborg Rein not liable for losses arising from the Kommunes’ inability or unwillingness to pay unless attributable to invalidity of the transaction.

Orders

  • Appeal allowed.
  • Depfa not entitled to recover full advances from Wikborg Rein unless loss is due to invalidity, not enforcement or credit risk.