Solicitors PI Update – Scope Of Retainer

A recent English Court of Appeal decision reinforces the principle outlined in South Australia Asset Management Corporation v York Montague ("SAAMCo") that, unless a solicitor's retainer requires that he advise on the taking of a particular commercial course of action, the solicitor will not be liable for losses which flow from the commercial risk (even if the solicitor was negligent in the transaction). 

In Gabriel v Little Mr Gabriel had loaned £200,000 to Whiteshore Limited, a company of his friend Mr Little, to develop a building at an airfield site (the "Site"). The loan was made on the basis of a facility letter dated 13 December 2007 which was drafted by Mr Gabriel's solicitor. The facility letter provided that the money was 'a contribution to the costs of development of the property'.