Expert Witness Journal Issue 67 June/July 2026 - Flipbook - Page 100
Loss and scope of duty in
professional negligence claims: Afan
Valley Ltd v Lupton Fawcett LLP
by Caroline Brown, Partner & Christina Evered, Associate at Burges Salmon.
incurred signi昀椀cant liabilities of over £60m. The
principal loss claimed stemmed from the Claimants’
obligation to return investors’ payments to them.
Had the Claimants been advised earlier that the
Schemes were CISs, they argued, then they would
not have received investor money and would not
have incurred FSMA liabilities. Also relevant was
the Claimants’ further argument that none of the
Schemes made a pro昀椀t; they were in fact a “Ponzi”
scheme, dishonestly operated by a shareholder/
director of one of the claimant companies.
A recent Court of Appeal decision provides a useful
illustration of the application of the principles of loss
& scope of duty in professional negligence claims.
“
It is a principle of the law of negligence that a
defendant found to be in breach of a duty of care is
not liable for all the losses which the claimant has
sustained as a result of acting on their advice, but
only for those within the scope of their duty.”
In Afan Valley Ltd & Ors v Lupton Fawcett LLP
[2024] EWHC 909 (KB), the Court of Appeal
dismissed the Claimants’ appeal against reverse
summary judgment and strike out on their
substantial professional negligence claim against a
昀椀rm of solicitors, Lupton Fawcett. The Claimants’
application to the Supreme Court for permission to
appeal this decision has been refused.
Lupton Fawcett applied to strike out, or for reverse
summary judgment on, the claim against it on
the basis that even if negligence were established
then the Claimants would be unable to prove any
recoverable loss. Primarily, this was on the basis of
a “£ in £ out” argument; the Claimants had received
investment funds in, which set o昀昀 the requirement
to return investors’ money.
Background
The Claimant companies were used as special
purpose vehicles (“SPVs”) in connection with
investment schemes (“Schemes”) promoted to
the public, under which investors were o昀昀ered
the opportunity to buy long leasehold interests in
individual rooms in hotels, care homes or student
accommodation.
The High Court struck out the claim and granted
summary judgment against the Claimants, who
then appealed.
Appeal
The crux of the appeal was whether the Judge was
wrong to decide that the Claimants’ losses were not
attributable to Lupton Fawcett’s alleged negligence.
The Court of Appeal dismissed the appeal, ruling
that even if the 昀椀rm’s advice had been negligent as
the Claimants alleged, they could not demonstrate
any recoverable loss falling within the scope of the
solicitors’ duty of care.
Lupton Fawcett had been instructed by the Claimants
to advise on whether the Schemes were collective
investment schemes (CISs) under the Financial
Services and Markets Act 2000 (“FSMA”). If so, then
the Schemes would fall within the FSMA general
prohibition under which no person may carry on
regulated activity unless they are authorised or
exempt. The Claimants were not so authorised,
meaning that adverse consequences would follow if
the Schemes were deemed CISs.
Scope of duty
The leading Supreme Court decision in Manchester
Building Society v Grant Thornton LLP [2021]
UKSC 20, [2022] AC 783 sets out a structured
framework for the resolution of claims for damages
for negligence, as follows:
The Claimants, which were all in insolvent
liquidation and acted by their joint liquidators,
argued that as a result of Lupton Fawcett’s failure to
advise earlier that the Schemes were CISs, they had
EXPERT WITNESS JOURNAL
98
JUNE 2026
