Helmsley Acceptances Ltd v Lambert Smith Hampton Group Ltd [2010] EWCA Civ 356

Helmsley Acceptances Ltd (Helmsley) advanced a loan in relation to a property based upon the allegedly negligent valuation of Lambert Smith Hampton Group Ltd (LSH). LSH attempted to argue in a summary judgment application that Helmsley was only entitled to a small portion of the loan advanced, because the loan had subsequently been syndicated to other lenders (to whom LSH denied it owed a direct duty of care).

The Court of Appeal found that LSH did have an arguable case, either on the basis of (1) having constituted itself as trustee of the security and the rights associated with the security, or (2) on the basis of the Albazero exception (in the contemplation of the parties that the property might be transferred to third parties).

Comment

Longmore LJ was concerned that the claim should not be able to simply disappear into a ‘black hole’, and recognised that this remained a developing area of the law. He emphasised that wrongdoers should not be able to “escape from their liabilities, by reference to the general principle that a person can only recover for his own loss because of the happenstance that a cause of action lies in the hands of someone other than the person who has suffered the loss”.  

Although the decision is only in the context of a summary judgment application, the issue raised is self-evidently one of signifi cant interest and potentially wide application, and it is to be hoped that the matter will be considered fully at a trial.