Conflict of interest

Hilton (Ian) v Barker Booth & Eastwood (a firm) [2005] UKHL 8; Lawtel 3 February; NLJ 11 February

The appellant appealed against the dismissal of his claim for damages against the respondent solicitors for breach of their contractual duty. The claimant instructed the defendant to act as his solicitors in respect of his property development business. He had agreed to purchase a development site, build flats on it and sell the developed property to another client of the solicitors, but they did not disclose to the claimant that they had a conflict of interest because they were lending their other client the deposit for the purchase from the claimant, nor did they disclose to the claimant their knowledge that their other client had been declared bankrupt and was a convicted fraudster. The purchasing client failed to complete the transaction and the property was sold by the bank as mortgagee. The claimant’s business collapsed. The judge found that if the claimant had been informed of the other client’s antecedents, he would not have become involved in the transaction. The judge held that the solicitors were in breach of duty but that the breach had caused no loss. The Court of Appeal dismissed the claimant’s appeal on the basis that the retainer and duty of disclosure to the claimant were subject to an implied exclusion of information which the solicitors were obliged to treat as confidential.