Key point

The monetary award for breach of trust by solicitors in paying monies out wrongly must reflect loss actually suffered as a result of the breach.


The firm of solicitors acted for AIB (as lender) in connection with a loan of £3.3m to be secured against the borrowers' home. The property was valued at over £4m but was subject to an existing mortgage with Barclays of £1.5m (across two accounts). 

Barclays provided a redemption figure of £1.2m by telephone, but this only related to one of the loan accounts. The solicitors, paid out £1.2m to Barclays. The balance was paid to the borrowers. Barclays refused to discharge its security until paid the outstanding £300,000.  AIB's charge was therefore second ranking. The AIB loan went into default and the property was sold for £1.2m. Barclays were paid £300,000 in discharge of their loan.

AIB claimed that the lawyers had committed a breach of trust by paying out the loan monies without first obtaining a first ranking security and argued that the solicitors were liable to reconstitute the trust fund of £3.3m plus interest (less the sum AIB had received). 


The Supreme Court dismissed AIB's appeal from early rulings against it holding that a monetary remedy for breach of trust in circumstances such as this (where there is no dishonesty involved) had to reflect the loss actually caused by that breach. The solicitors should not have to account for loss which would have been suffered in any event.


This case will be of interest to lenders seeking redress where advisors have acted in error.

AIB Group (UK) plc v Mark Redler & Co Solicitors