The High Court handed down its judgment on 16 September 2026 in Niprose Investments Limited v Vincents Solicitors Limited [2026] EWHC 2320 (Ch), dismissing a professional negligence claim against a firm of conveyancing solicitors in relation to their advice on off-plan property purchases.
BACKGROUND
The claim arose out of the purchase of eight units in a partly buyer-funded, off-plan residential development scheme in Liverpool. The Claimant, Niprose Investments Limited, was a company incorporated for the purpose of acquiring the eight units.
Upon exchange of contracts, the Claimant paid an up-front deposit of £37,475 for each of the eight units, totalling £299,800 – being 50% of the total purchase price – to the developer’s solicitors. The development was partly ‘buyer-funded’ in the sense that the deposit monies were payable to the developer’s solicitors who held them ‘as stakeholder for the seller’. The deposits were to be released to the seller in the circumstances set out in the sale agreement, which permitted their application towards funding the marketing, sale, and construction costs of the development.
The development was never completed because a finance company which had been partly funding the development fell into administration. Construction work ceased, by which time only a steel-frame structure had been completed. The developer and its holding company subsequently entered into compulsory liquidation.
As a result, the Claimant lost all of its deposits.
Vincents Solicitors Limited (‘‘Vincents’’) acted as the Claimant's conveyancing solicitors. The Claimant sued Vincents for professional negligence, arguing that they had failed to: (i) advise the Claimant properly about the deposit release mechanism; (ii) warn the Claimant not to proceed with the transaction; and (iii) ensure that the Claimant properly understood its advice on the risk associated with the transaction.
DECISION
His Honour Judge Hodge KC, sitting as a High Court Judge, dismissed the claim:
Failure to advise that the deposits had no meaningful security or protection
The Claimant argued that Vincents’ Report on Title failed to advise adequately as to the risks associated with the deposit release mechanism and, in particular, the absence of meaningful security or other protection. The Court found that Vincents breached their duties in this regard, noting that the developer’s solicitors holding the deposit money would “have a complete defence to any claim” by the Claimant for misapplication of the deposit monies, in view of the terms of the sale agreement. The Report on Title did not alert the Claimant to the unusual provisions regarding the deposit release mechanism, and they were the kind of “spurious” terms which the SRA’s 2017 Warning Notice on investment schemes was intended to warn against. The effect of those provisions would have “eluded even an intelligent lay person”, and they involved the use of a law firm to hold the deposits, to give “an impression of credibility or security”, when the protection afforded to the Claimant was in fact minimal.
On causation, the Court found that, had the Claimant appreciated the true limitations on the protection afforded by the deposit release mechanism, the probability was that the Claimant would have withdrawn from the transaction. On this basis, factual causation was established.
However, on the question of nexus/legal causation, the Court noted that the relevant duty was intended to guard against the risk of the deposits being released to the developer otherwise than as permitted by the sale agreement. However, that had no correlation to the loss that arose in the present case, which resulted from the lender’s and the developer’s insolvency, rather than the unauthorised use of the deposit funds.
The Claimant was therefore unsuccessful in establishing causation.
Failure to advise the Claimant not to proceed with the transaction
The Claimant also argued, based on the SRA's 2017 Warning Notice, 'existing good practice', and the duty which Vincents assumed in agreeing to prepare the Report on Title, that Vincents' duty extended to advising the Claimant not to enter into the transaction.
The Court rejected this submission. It held that Vincents were only offering the services of conveyancing solicitors; i.e. they were not assuming an obligation to advise on the commercial merits of the investment. The Court referred back to earlier authorities, such as Neushul v Mellish Harkavy (1967) 111 Sol J 399 and County Personnel [1987] 1 WLR 916, which show the limited circumstances in which a solicitor may be obliged to advise or warn a client not to proceed with a transaction; e.g. where the transaction is “rash” (or perhaps “unwise”) or, as noted above in the context of issue (i), where the solicitor should have identified risks which “would have been most unlikely to occur even to an intelligent lay person.” Whether such a duty is owed is “extremely fact-sensitive.” In this case, whilst the issues pertaining to the deposit release mechanism were found to meet that threshold, that was not the case in relation to the investment more broadly – there was nothing to indicate that the investment was dubious. On the contrary, the evidence indicated that the investment was a genuine one which only failed due to an unrelated insolvency of the development’s funder.
The Court also said that the SRA’s 2017 Warning Notice was intended to draw the attention of solicitors (and potentially affected members of the public) to dubious or risky investment schemes which were being presented as routine conveyancing transactions, and that it did not create, and was not intended to create, any new duty on solicitors.
Failure to ensure that the Claimant fully understood Vincents’ advice on the risks of the transaction
The Claimant argued that Vincents should have more clearly highlighted the level of risk pertaining to the investment, either in a prominent warning or by including sufficient advice in the Report on Title. Notwithstanding the Court’s finding that Vincents had failed to properly warn on the deposit release mechanism, it did not accept that Vincents had failed to warn more generally about the risk of the development. It noted that Vincents had identified and warned the Claimant of the “substantial risk” that the entire deposits could be lost, and that the Claimant fully appreciated and understood this risk.
The Court acknowledged that Vincents could not have been expected to do more to draw this risk to the Claimant’s attention. It had offered the Claimant the opportunity to contact them if it had any queries, there was subsequent correspondence between the Claimant and Vincents in which the Claimant showed its understanding of the transaction, and the Claimant had signed a declaration that it had understood the Report on Title.
COMMENT
The Court’s finding on causation is particularly interesting. Notwithstanding that Vincents were held to have breached their duty in failing to adequately advise on the deposit release mechanism and that, but for that breach, the Claimant would not have proceeded with its investment, the Claimant was still unable to recover damages: the cause of the Claimant’s loss had nothing to do with the breach. This is perhaps one of the clearest applications of the duty/nexus principle, as elucidated in Manchester Building Society v Grant Thornton [2021] UKSC 20.
Some might argue that this outcome was rather unfair to the Claimant. The Judge seems to have taken this view:
“Had it been open to me to do so, I would have wished to compensate the claimant for its loss. Sadly, the law constrains me to dismiss this claim.”
In our experience, claimants often refer to SRA publications as a basis for seeking to place positive advisory duties on solicitors. This decision is a useful authority to the effect that SRA publications do not necessarily have that effect; the extent to which an SRA publication is relevant in a professional negligence case will be fact sensitive. In this case, it seems to have factored into the Court’s assessment of whether more advice should have been provided in relation to the deposit release mechanism. However, the Court considered, on the issue of whether Vincents should have advised the Claimant not to proceed with the transaction, that it did not add anything to the existing law.
A key takeaway is that when solicitors are describing their anticipated role in an engagement letter, and again when they are delivering their services, they should try to have in mind the distinction between the legal issues on which they are being asked to advise, and the commercial decision-making for which their clients retain responsibility, and to try to preserve that distinction in their client communications.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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