The House of Lords has issued new guidelines for professional advisers facing conflicts of interest in client relationships.
Five law lords have unanimously held that a solicitor owing “irreconcilable duties” to more than one client may be liable to compensate any client not given “single-minded loyalty”.
The UK’s highest court overturned a May 2002 Court of Appeal decision that developer Ian Hilton could not claim damages from Blackpool solicitor Barker Booth & Eastwood (BBE) following a failed £350,000 deal to build and sell six flats in 1990.
They held that BBE, who acted for both Hilton and purchaser Neil Bromage, should have informed Hilton that Bromage was a former bankrupt who had just been released from prison for fraudulent trading. The deal left Hilton fighting bankruptcy.
Lord Walker said that a solicitor “unwise enough to undertake irreconcilable duties” cannot use his “discomfiture” as a reason to modify his duty to either client.
Following the ruling, Timothy Dutton QC, counsel for Hilton, said that the decision will have a “significant impact” on any professional advisers required to act in their clients’ best interests.
“It is plainly of interest to anyone in a situation where his duties involve a duty to protect the interests of his individual client,” he said.
References: EGi News 03/02/05
