Law:

Section:

(a) Trust, breach of--- ----Equitable compensation, measure of---Principles--- Solicitor acting in breach of trust---Borrowers applied to the appellant-bank to borrow £3.3 million to be secured by way of a legal charge/mortgage over the borrowers' property---Property in question was already the subject of a first legal charge/first mortgage in favour of Bank B---Appellant-bank advanced the amount to its solicitors for releasing the same to borrowers on the condition that the then existing first charge with Bank B was to be redeemed on or before release of the amount---Solicitors used the advance to make payment to Bank B believing they had made full payment to redeem the first charge, and released the remaining amount to the borrowers---Solicitors had in fact paid Bank B about £300,000 less than the total balance, because of which Bank B refused to release its first charge---Consequently appellant-bank accepted the primacy of the Bank B's charge and consented to registration of its own charge as a second charge---Borrowers defaulted and the property was repossessed by Bank B and sold, of which the appellant-bank received only £867,697, about £273,777.42 less than it should have done if the solicitors had remitted the correct amount to Bank B to release/redeem the first charge---Appellant-bank issued proceedings against the solicitors seeking to recover the full amount of loan i.e. £3.3 million less £867,697 that it had already recovered---Appellant-bank alleged that the solicitors had acted in breach of trust, breach of fiduciary duty, breach of contract and in negligence---Validity---Solicitors held the money advanced by the appellant-bank on trust for the purpose of performing their contractual obligations---Solicitors broke their contract and acted in breach of trust when they released to the borrowers the money advanced by the appellant-bank, when they should have paid to Bank B the full amount required to redeem the mortgage/charge of Bank B, and should have then released the remaining balance to the borrowers---To say that there had been a loss to the trust fund in the present case of about £2.5m (£3.3 million - £867,697 already received) by reason of the…