Should I believe a solicitor…? Well there’s an interesting start. But we’re not discussing the integrity of the profession here. We’re looking at whether you should rely on what a solicitor tells you when you are not their client. A recent case[1] has highlighted this, not because of any dishonesty but looking at the position a bank was left in when it relied on a statement from a solicitor acting for its borrower.

A Glasgow-based solicitor who made an inaccurate statement about loan redemption and release of security to a lender, was found not to be liable for any loss the lender suffered. Ms Steel had been acting for an individual, Mr Munro, and a company in which he had an interest, Headway Caledonian Ltd.


Headway owned Cadzow Business Park which contained four different units. When Headway purchased the park, they granted Northern Rock (Asset Management) Plc (NRAM) ‘all sums’ security over the property as well as a floating charge over all of Headway’s assets.

In 2006, Headway entered into a contract to sell one of the units (unit one) and a request was made to NRAM to release that unit from its security. NRAM agreed to do this and it was understood that the security over units two and four would remain in place following the sale (unit three had already been sold).

The day before the sale was set to complete, Ms Steel sent an email to NRAM asking for various documents and stated: “the whole loan is being paid off for the estate and I have a settlement figure for that”. NRAM did not query this and two deeds of discharge (deeds of release) were signed and returned. The deeds referred to the release of security over the three remaining units, rather than just unit one. NRAM made no attempt to check the accuracy of Ms Steel’s statements or the documents, despite having easy access to the accurate information.

Ms Steel, at trial, accepted that the statement in her email was “completely inaccurate” and she could not explain the reason for her error. She had never been instructed that the whole loan was to be repaid and she did not have a settlement figure. NRAM noticed that the security had been discharged in 2010 when Headway went into liquidation. They claimed against Ms Steel and her employer at the time (a Scottish law firm) for losses suffered as a result of their reliance on her statements.

NRAM claimed that they were owed a duty of care by Ms Steel and that she had made the statements in the email negligently. The initial claim was rejected by the Lord Ordinary but was overturned by the Inner House and damages were awarded.

However, the Supreme Court recently overturned the decision and restored the Lord Ordinary’s original decision.

Careless misrepresentation

This decision confirms the well-established view that liability will only arise where there has been an assumption of responsibility.

For a party to be found liable for a careless misrepresentation which causes economic loss, the court is required to consider whether it was reasonable for the party that suffered the loss to rely on the statements, and also whether the individual making the statement could reasonably have foreseen that the party would rely on the statements.

Assumption of responsibility

This assumption of responsibility test was said to fit the NRAM case perfectly. The Supreme Court considered six authorities which demonstrated that solicitors are not generally presumed to assume responsibility over the other side.

The Lord Ordinary held that Ms Steel had expected NRAM to check her requests before complying with them and therefore she had not foreseen that they would rely on them without checking their accuracy. Furthermore, any prudent bank taking basic precautions would have checked the accuracy of the statements and it was not reasonable for NRAM to have relied on the statements of the borrower’s solicitors without obtaining independent legal advice of their own.

Supreme Court

The Supreme Court held that there is nothing in case law that supports the conclusion that it is not always necessary for a party receiving information to show that it was reasonable to rely on that information. This is an essential element of the assumption of responsibility. The court said that reliance by an ‘opposite party’ on the other party’s solicitor was “presumptively inappropriate“.

A commercial lender that is about to implement an agreement relating to its security does not act reasonably if it proceeds on no more than a description of the terms put forward by the borrower, without carrying out its own checks or obtaining independent legal advice.

A key factor considered by the court in this case was the nature of the relationship between Ms Steel and NRAM, the latter of which was on the other side of the transaction. Historically, the courts have been reluctant to confirm that a solicitor owes a duty to an opposing party and any imposition of a duty will be an exception to the general rule.

The case serves as a reminder to lenders to carry out their own checks rather than relying on statements from their customers’ solicitors, particularly when they relate to matters as significant as a release of security.

This blog post was written by Elliot Gibson. For further information, please contact:

Elliot Gibson, PSL assistant, Banking & Finance

T: 0161 836 7707


[1] Steel and another v NRAM Limited (formerly NRAM Plc) (Scotland) [2018] UKSC 13

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.