Supreme Court Decision: Assumption Of Responsibility

In Steel and another (Appellants) v NRAM Limited (Respondent (Scotland) [2018] UKSC 13, the Supreme Court confirmed that, in order to prove an assumption of responsibility by a professional for a careless misrepresentation, reasonableness is a key factor. The representee must show that it was reasonable for it to rely on the representation and that the representor should reasonably have foreseen that the statement would be relied on.

The facts

The appellant solicitor acted for a company called HCL which, in 2002, purchased a business park using funds borrowed from the respondent, a commercial lender. The loan was secured over 4 commercial units in the business park.

In 2005, HCL sold one of the units. The respondent consented to the release of that unit from its security in return for partial redemption of the loan.

In 2007, HCL was selling a second unit. The respondent had confirmed that it would release that unit from its security in return for repayment of £495,000, with the balance of the loan being secured over the remaining 2 units. The appellant acted for HCL on both sales.

On the eve of...