Solicitors Qualifying Examination 1 (SQE1)

# SQE1 Revision Notes — Grounded in Real UK Cases

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## TORT LAW

### 1. Duty of Care — General Principles

The modern approach to duty of care is the three-stage test: (1) reasonable foreseeability of harm; (2) sufficient proximity between claimant and defendant; (3) whether it is fair, just and reasonable to impose a duty. This test was established in **Caparo Industries v Dickman [1990] 2 AC 605**. The House of Lords held that auditors owed no duty of care to potential investors who relied on published statutory accounts; auditors owe duties to the company and to existing shareholders as a body only. Post-*Robinson v Chief Constable of West Yorkshire Police* [2018] UKSC 4, the three Caparo factors apply only in novel situations — established categories are governed by precedent.

### 2. Duty of Care — Foundational "Neighbour Principle"

A manufacturer owes a duty of care to the ultimate consumer to avoid acts or omissions that could reasonably foreseeably cause harm, even without any contractual relationship, provided the product reaches the consumer in the same state it left the manufacturer. Established in **Donoghue v Stevenson [1932] AC 562** (House of Lords, 3:2). Lord Atkin's neighbour principle: you must take reasonable care to avoid acts or omissions which you can reasonably foresee would injure your neighbour — anyone so closely and directly affected by your act that you ought reasonably to have them in contemplation.

### 3. Duty of Care — Solicitors to Third-Party Beneficiaries

A solicitor instructed to draft a will owes a duty of care to the intended beneficiaries even though they are not the solicitor's client. The assumption-of-responsibility principle (from *Hedley Byrne*) is extended so that the only persons who suffer loss (the disappointed beneficiaries) are not left without a remedy. Established in **White v Jones [1995] UKHL 5**. A 3-2 majority of the House of Lords allowed recovery: each of the two daughters recovered the £9,000 legacy lost through the solicitor's negligent delay in drafting the will before the testator died. Key SQE1 point: this is an exception to the general rule that solicitors owe duties only to their clients.

### 4. Pure Economic Loss — No Recovery in Negligence

Pure economic loss (financial loss unaccompanied by personal injury or property damage) is generally irrecoverable in negligence. A local authority approving defective building plans owes no duty of care to a subsequent purchaser for the financial consequences of a structurally defective house. **Murphy v Brentwood DC [1991] 1 AC 398** (House of Lords). Only dangerous defects causing personal injury or damage to other property are recoverable; the defect in the building itself is mere defective quality — not actionable in negligence.

### 5. Parent Company Liability to Subsidiary's Employees

A parent company can owe a direct (non-derivative) duty of care to employees of its subsidiary where: (1) the businesses of parent and subsidiary are in relevant respects the same; (2) the parent has, or ought to have, superior knowledge of health and safety matters; (3) the subsidiary's system of work was unsafe and the parent knew or ought to have foreseen this; (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on it using that superior knowledge for protection. **Chandler v Cape [2012] EWCA Civ 525**. This is a direct duty — it does not require piercing the corporate veil.

### 6. Landowner Liability for Natural Hazards (Nuisance/Negligence)

The *Goldman v Hargrave* principle (measured duty of care for natural hazards) applies in English law to all natural hazards including land movement. A landowner who knows of a natural hazard on their land emanating onto a neighbour's property must take reasonable preventive steps proportionate to their resources. **Leakey v National Trust [1980] QB 485** (Court of Appeal). The National Trust was held liable when naturally occurring soil and debris from Burrow Mump slid onto the claimants' property, causing damage to their cottage.

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## CONTRACT LAW

### 7. Contract — General Principle on Solicitors' Negligence in Advising

Solicitors must advise clients whether a claim is properly pleadable before issuing proceedings. Acting without a proper foundation may itself constitute professional negligence. **Robert David Mackenzie v Rosenblatt Solicitors [2023] EWHC 331 (Ch)** illustrates the principle that solicitors owe a duty to advise clients on the professional conduct dimensions of pursuing a claim. (SQE1 relevance: ethics + legal services + tort liability of solicitors.)

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## COMPANY LAW & BUSINESS LAW

### 8. Corporate Veil and Parent-Subsidiary Duties

The corporate veil is not pierced simply because a parent company is negligent in its supervision of a subsidiary. Liability is direct (tortious duty of care), not veil-piercing. See **Chandler v Cape [2012] EWCA Civ 525** (above). Key for Business Law and Practice: separate corporate personality (Salomon principle) is preserved; liability arises through the law of tort, not by disregarding the separate legal identity.

### 9. Schemes of Arrangement Under Companies Act 2006

A scheme of arrangement under Part 26 of the Companies Act 2006 requires court sanction. The court will approve a scheme where creditor classes have been correctly constituted, the statutory majorities have been met, and the scheme is fair. **Re Noble Group Ltd [2018] EWHC Ch 3092**: sanction granted for restructuring of a major global commodities trader; two creditor class meetings were convened (Deutsche Bank alone in one class, all others in the second). SQE1 point: class constitution is critical — if creditors' rights against the company are not "so dissimilar" as to make it "impossible for them to consult together with a view to their common interest," they form one class.

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## TRUSTS LAW

### 10. Fiduciary Profit Rule

Fiduciaries must account to their principals for all profits made from the fiduciary relationship unless the principal gives fully informed consent to retention. This rule derives from *Regal (Hastings) Ltd v Gulliver* [1967] 2 AC 134 and *Boardman v Phipps* [1967] 2 AC 46. In **Rukhadze and others v Recovery Partners GP Ltd [2025] UKSC 10**, the Supreme Court (seven justices) was asked to depart from those authorities. SQE1 note: the rule is strict — there is no requirement to show that the principal could have made the profit itself, or that the fiduciary acted dishonestly or in bad faith.

### 11. Breach of Fiduciary Duty — Director/Company Context

A director who secretly acquires interests in company trademarks and diverts business opportunities to competing companies commits a breach of fiduciary duty. Remedies include account of profits and equitable compensation. **Akkurate Limited (in liquidation) v Richmond [2023] EWHC 2392 (Ch)** illustrates the application of directors' fiduciary duties under Companies Act 2006 ss.171-177.

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## WILLS AND ADMINISTRATION OF ESTATES

### 12. Testamentary Capacity and Undue Influence

A will may be challenged on the grounds of lack of testamentary capacity or undue influence even where it was formally validly executed. **Henrietta Ingram v Simon Timothy Abraham [2023] EWHC 1982 (Ch)**: the deceased changed her will to leave her residuary estate to her brother (who had drafted it), disinheriting her two children. The court considered both testamentary capacity (she was found to have capacity) and undue influence. The burden of proving undue influence rests on the person alleging it. SQE1 rule: a will is only invalid for undue influence if the testator's will was overborne; mere persuasion is not enough.

### 13. Probate — Later Will Revoking Earlier Will

A later valid will automatically revokes an earlier will unless there is a specific clause preserving parts of it. **Carol Frances Gowing v Terence Arthur Ward [2024] EWHC 347 (Ch)**: disputed probate claim; the 2018 Will left the estate to the testator's two children, revoking the 2011 Will. The court examined the formal validity requirements (Wills Act 1837 s.9) and capacity.

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## SOLICITORS AND PROFESSIONAL CONDUCT

### 14. Solicitors' Duty of Care to Non-Clients

The general rule is that solicitors owe duties only to their clients. However, there are exceptional situations where a duty arises to third parties. **White v Jones [1995] UKHL 5** (see above). **Seema Ashraf v Lester Dominic Solicitors [2023] EWCA Civ 4**: the Court of Appeal reviewed whether a solicitor owed a duty to a third party who was not their client in the context of a property fraud. The general principle was reaffirmed — duties to non-clients require special circumstances (assumption of responsibility).

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## KEY CASES SUMMARY TABLE

| Case | Citation | Topic | Holding |
|---|---|---|---|
| Donoghue v Stevenson | [1932] AC 562 | Tort — duty of care | Manufacturer owes duty to ultimate consumer; neighbour principle |
| Caparo Industries v Dickman | [1990] 2 AC 605 | Tort — duty of care test | Three-stage test: foreseeability, proximity, fair/just/reasonable |
| White v Jones | [1995] UKHL 5 | Tort — solicitor to beneficiary | Solicitor owes duty of care to intended will beneficiaries |
| Murphy v Brentwood DC | [1991] 1 AC 398 | Tort — pure economic loss | No duty for pure economic loss from defective building approval |
| Chandler v Cape | [2012] EWCA Civ 525 | Company law — parent liability | Parent may owe direct duty of care to subsidiary employees |
| Leakey v National Trust | [1980] QB 485 | Tort — nuisance/natural hazards | Measured duty to take reasonable steps to prevent natural hazards |
| Re Noble Group Ltd | [2018] EWHC Ch 3092 | Company law — schemes | Court sanctions scheme if proper class constitution + majority |
| Rukhadze v Recovery Partners | [2025] UKSC 10 | Trusts — fiduciary profit | SC considered but did not overturn strict fiduciary profit rule |
| Ingram v Abraham | [2023] EWHC 1982 (Ch) | Wills — capacity/undue influence | Claimant must prove undue influence; capacity separate question |
| Gowing v Ward | [2024] EWHC 347 (Ch) | Wills — revocation | Later will revokes earlier; formal validity under Wills Act 1837 s.9 |