Preliminary issue — Lease of premises — Option to acquire freehold — Extensive refurbishment by tenant — Plaintiff alleging failure by defendant solicitors to advise on difficulties in lease and exercise of option — Judge finding solicitors negligent on preliminary issue — Issue of causation to be tried — Judgment for plaintiff
In January 1991, the plaintiff decided with her husband to purchase freehold premises at 4 Theberton Street, London N1, for £200,000. The defendant firm was instructed to act on their behalf in connection with the proposed purchase. Those negotiations did not materialise, but on May 29 1992, she signed a 25-year lease of the premises with an option to purchase the freehold within two years of the commencement of the lease. The premises were virtually derelict and she undertook to complete substantial refurbishment and repair works within 12 months. Other terms included: (i) upwards-only rent reviews every four years; (ii) initial rent of £15,000 pa; (iii) an option to purchase the freehold at £150,000 to be exercised before the expiry of the first two years of the term. The works to the premises cost the plaintiff about £146,000 but for the purposes of the rent reviews, the works were not to be disregarded so that the benefit would accrue to the landlord. The first two years were to be rent free.
Once the works were completed, she and her husband traded from there, using the premises as a restaurant. On May 10 1994, she wrote to the landlord company asking if they would assist with a mortgage to enable her to exercise the option but, failing that, to extend the two-year deadline. The two-year anniversary fell due on May 29 1994, but she did not manage to get in touch with the landlords despite a further letter from her of May 21 to say that she was very concerned about her position. On June 1 she received a communication stating that the option had expired. The term in the lease concerning the option to purchase stated that time was of the essence and that payment was due within 14 days of such exercise. The landlord refused to sell the freehold thereafter and she remained liable to the rent review provisions in the lease. She brought a claim against the solicitors alleging breach of contract and breach of their duty of care in failing to explain to her the terms of the lease and the need to take the necessary steps for the exercise of the option.
Held Judgment for the plaintiff on the preliminary issue.
1. At the time that she acquired the lease of the property the plaintiff was 25-years old and had come to this country in 1979 from Turkey.
2. The solicitor, who had since left the firm, had not sent a follow-up letter setting out the main points of the lease after their meeting and had failed to ask her to come to see him when the time drew near for the option deadline.
3. It was a commercial lease with difficult terms for anyone to handle and the solicitor did not appreciate how much she needed careful advice. Instead he treated it as a straightforward matter with no major pitfalls. The authorities cited to the court were all consistent about the duty owed by a solicitor to his client in advising on a property transaction although every case had to be decided on its own facts.
4. The issue of causation was to be tried separately.
Charles Douthwaite (instructed by Colman Coyle) appeared for the plaintiff; Graeme McPherson (instructed by Pinsent Curtis) appeared for the defendants.
