Frank Houlgate Investment Company Ltd v Biggart Baillie Llp [2011] ScotCS CSOH_160 (30 September 2011)

Frank Houlgate Investment Company Ltd v Biggart Baillie Llp [2011] ScotCS CSOH_160 (30 September 2011)

The defenders did not owe a general duty of care to the pursuers in the transaction, as no assumption of responsibility was established. However, once the defenders became aware of the fraud, they owed a duty to inform the pursuers and not to further the fraud. The pleadings are relevant in so far as they allege loss resulting from the defenders' failure to inform the pursuers after acquiring knowledge of the fraud. The claim for breach of warranty of authority is irrelevant as it does not extend to the client's title or capacity.

Citation
[2011] ScotCS CSOH_160
Parties
Pursuer: Frank Houlgate Investment Company Limited; Defender: Biggart Baillie LLP
Jurisdiction
Scotland
Judgment Date
30 September 2011
Procedural Posture
Civil / Plea to Relevancy (motion to Dismiss)
Outcome
Partially allowed to proceed to proof (trial) on limited grounds
Legal Topics
Duty of Care of Solicitors, Breach of Warranty of Authority, Knowing Participation in Fraud, Solicitor's Duty to Third Parties, Implied Representations, Solicitor Client Privilege
Professional Negligence Fraud Agency Law Duty of Care of Solicitors Breach of Warranty of Authority Knowing Participation in Fraud Solicitor's Duty to Third Parties Implied Representations +1 more

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Parties

Frank Houlgate Investment Company Limited

Pursuer

Biggart Baillie LLP

Defender

Procedural Posture

Civil / Plea to Relevancy (motion to Dismiss)

Legal Issues

  1. 1 Whether a solicitor acting for one party in a conveyancing/security transaction owes a duty of care to the other party
  2. 2 Whether the defenders breached a duty to inform the pursuers of fraud once aware
  3. 3 Whether the defenders are liable for knowing participation in and furtherance of a fraud

Ratio Decidendi

The defenders did not owe a general duty of care to the pursuers in the transaction, as no assumption of responsibility was established. However, once the defenders became aware of the fraud, they owed a duty to inform the pursuers and not to further the fraud. The pleadings are relevant in so far as they allege loss resulting from the defenders' failure to inform the pursuers after acquiring knowledge of the fraud. The claim for breach of warranty of authority is irrelevant as it does not extend to the client's title or capacity.

Court Disposition

Partially allowed to proceed to proof (trial) on limited grounds

Orders

  • Claim for general duty of care dismissed as irrelevant
  • Claim for breach of warranty of authority dismissed as irrelevant