Bristol and West Building Society v. Mothew (t/a Stapley & Co.)

The Towers (buyers) purchased a home for £73,000, which they financed with a £55,000 loan from the Bristol and West Building Society (society) (plaintiff). With the consent of the society and the buyers, attorney Mothew (defendant) represented both parties. The terms of the loan prohibited the buyers from taking a further loan to fund the purchase. Accordingly, the society required Mothew to certify that the buyers were supplying £14,000 solely from their personal funds. Mothew made this certification, despite knowing that the buyers owed £3,350 to Barclays Bank (Barclays), the lender for their prior home, and that the buyers and Barclays agreed to secure the £3,350 with a second charge against the new home. The buyers defaulted on their loan, leading the society to sell it for approximately £53,000. The society then sued Mothew, alleging that Mothew was negligent, had breached his contract with the society, and breached the fiduciary duty of loyalty. The society did not claim that Mothew acted dishonestly or in bad faith. Mothew conceded that he breached his contract and was negligent. The district judge granted summary judgment against Mothew on the contract and negligence claims and set the matter for an assessment of damages, at which time Mothew could argue that he did not cause injury to the society because the society would have made the loan regardless of its knowledge of the Barclays issue. The district judge also granted summary judgment against Mothew on the breach-of-fiduciary-duty claim, awarding money damages without requiring the society to show causation. Mothew appealed, arguing that his negligence did not constitute a breach of fiduciary duty. The society initially conceded that it had to prove causation to recover damages on its contract and negligence claims, but it later withdrew this concession.