Case in Brief BPE Solicitors v Hughes-Holland: Mountaineer’s knee – object lesson in negligence law
By Jeremy Upson
The building blocks for most claims in contract and negligence are deceptively simple - claimants must establish that they were owed a duty, that the duty holder breached that duty and that the breach caused them to suffer loss. But, as a recent judgment of the UK Supreme Court reminds us, there is a further test. The claimant must also show that the loss suffered was within the scope of the defendant's duty. Claimants and defendants need to be aware of this requirement and professionals should bear it in mind when giving advice to their clients. Which brings us to the mountaineer's knee…
The context In BPE Solicitors v Hughes-Holland, Peter Hughes-Holland sued BPE for losses sustained after a property development into which he had injected £200,000 failed. The £200,000 loan had been documented by BPE and he entered the arrangement without full knowledge of the facts. He had misunderstood from the borrower that the money would be used to re-fit a disused heating tower into office space, that the borrower owned the building, and that he had planning permission for the development. In fact, the borrower would use the money primarily to refinance debt secured by the property, and the development plans exceeded the scope of the planning permission. Further funds and permission were needed for the building's development. Using a precedent from a previous transaction, the solicitors produced documents including provisions to the effect that the loan moneys “will be made available as a contribution to the costs of development of the property" and that the purpose of the loan “was to assist with the costs of the development of the property". These statements reflected the Hughes-Holland's understanding, but not the actual structure of the transaction. The question At issue was whether BPE had a legal responsibility to prevent the loss claimed. This is not an easy concept to grasp, and is often mistaken as a question of factual causation, for which the basic test is “but for the defendant's breach of duty, the claimant would not have suffered the loss". Explanation by example This is where the mountaineer's knee comes in. In the SAAMCO House of Lords decision, Lord Hoffmann explained the distinction with this famous analogy: A mountaineer about to undertake a difficult climb is concerned about the fitness of his knee. He goes to a doctor who negligently makes a superficial examination and pronounces the knee fit. The climber goes on the expedition, which he would not have undertaken if the doctor had told him the true state of his knee. He suffers an injury which is an entirely foreseeable consequence of mountaineering but has nothing to do with his knee.