Salkeld Investments Ltd v West One Loans Ltd

On an application for summary judgment, a professional service provider is ordinarily taken to have undertaken reasonable skill and care, but may assume an absolute obligation concerning a particular aspect of the retainer. The nature of the service, the contractual language and the factual context determine which obligation was undertaken. Contractual terms may be implied only where they are necessary to give the contract its meaning in context. Whether terms were incorporated, and whether a disputed conversation altered the agreement, may require a trial. An intermediary who lacks power to alter the principal’s legal relations is not the principal’s agent for that purpose, and knowledge will not be imputed on that basis.

Salkeld Investments Ltd invested £235,000 in a bridging loan arranged by West One Loans Ltd. The investment was intended to be secured by a registered charge over residential property. West One’s solicitors advanced the loan before security was obtained, but the borrower was an identity fraudster and no valid security resulted.

Salkeld sought summary judgment or, alternatively, strike-out relief. It alleged that West One had promised to obtain security and not to advance the money beforehand. West One relied on reasonable skill and care obligations, alleged incorporation of a Client Agreement containing limitation provisions, and contended that the investor’s accountant was its agent. The central issues were whether the contractual obligations were absolute or qualified, whether the Client Agreement was incorporated, and whether the accountant’s knowledge was imputable.

1. Disposition. The application for summary judgment was refused. There was leave to defend on the contractual obligations issue. The strike-out application required no separate consideration.
2. Summary judgment. The governing question was whether the defendant had no real prospect of success. The debt claim, insofar as it alleged an independent debt to repay the investment and interest, was hopeless. The contractual and negligence claims were unsuitable for final determination summarily because they were fact-sensitive.
3. Nature of the contractual obligation. Following the approach in Platform Funding Ltd v Bank of Scotland Plc [2009] 1 QB 426, a professional retainer normally imposes reasonable skill and care. That is not necessarily the limit of the obligation. Clear language or special facts may establish an unqualified obligation concerning a particular aspect of the work. A single contract may contain both absolute obligations and obligations limited to reasonable care. The relevant considerations include the nature of the service, the context and whether the result could reasonably be guaranteed. On the material before the court, the issue had to be tried.
4. Implied terms. The principles in AG of Belize v Belize Telecom [2009] 1 WLR 1988 required any implied term to spell out what the contract, read against its background, would reasonably be understood to mean. Whether West One promised to obtain valid security before advancing the loan could not be resolved without evidence of the transaction and the parties’ assumptions.
5. Incorporation and agency. The email footer did not refer to terms and conditions and did not establish incorporation of the Client Agreement. The Trust Deed was consistent with the apparent contractual documents and gave no reason to expect a further agreement. The disputed March conversation could, if proved, alter the position and therefore required a trial. The accountant was an intermediary, not an agent with power to alter Salkeld’s legal relations. Accordingly, there was no real prospect of establishing agency or imputing his knowledge to Salkeld.
6. The question whether any limitation clause would satisfy the Unfair Contract Terms Act was deferred as potentially unnecessary.

First-instance decision in the High Court. The judgment records no prior appellate decision in the same proceedings.