Defendant solicitor negligently failing to make applications to court to extend leases under Landlord and Tenant Act 1954 – Claimant having to find alternative accommodation within three months – Claimant claiming shortage of time weakened negotiating position with new landlord – Quantum of damages
The claimant, a recruitment agency for computer and information technology professionals, held a lease of three floors of office space in a building at 357 Euston Road, London, that was due to expire in December 1998. It also held an underlease of the mezzanine floor of 365 Euston Road, expiring in April 1996. In 1994 the claimant took a further underlease of part of the first floor of 365 Euston Road, also expiring in April 1996. All the conveyancing relating to 365 Euston Road was carried out by a partner of the defendant firm and its predecessors.
At a meeting in April 1995 between the claimant, its surveyor and the defendant, it was agreed that the defendant was to prepare notices under section 26 of the Landlord and Tenant Act 1954 requesting new tenancies of the mezzanine and first-floor premises of 365 Euston Road, to commence in May 1996 and to expire in December 1998, so that all three leases held by the claimant would expire on the same date.
The notices were served in June 1995, and the landlord served counternotices stating that it did not oppose the grant of new tenancies but objected to the proposed terms. However, the defendant failed to make applications to the court for the grant of new tenancies at 365 Euston Road prior to the due date of October 1995, and, as a result, the claimant lost its protection under the 1954 Act. The oversight came to light in January 1996, by which time the claimant’s leases of 365 Euston Road were due to expire in a little over three months.
In December 1997 the claimant disposed of the residue of the 357 Euston Road lease, having previously secured a 10-year lease of new premises at 47 Eastcastle Street. It issued proceedings claiming that the defendant had been negligent in failing, between June and October 1995, to make applications to the court under the 1954 Act in order to secure new tenancies of 365 Euston Road. The defendant admitted negligence and liability. The only issue was the quantum of damages. The claimant submitted that it had had three months in which to resolve its accommodation needs, instead of a period of up to two-and-a-half years, with the effect that its negotiating position with the landlord of 47 Eastcastle Street was severely damaged, and it had had to negotiate both for the terms of the new lease and for the fitting-out of those premises within a very short space of time.
Held: Damages were assessed at £11,576.
1. It was hard to define the damage flowing from the defendant’s negligence. If the claimant had not been under a time pressure, it might have negotiated a short extension of its leases with the landlord of 365 Euston Road and not have found 47 Eastcastle Street at all. At most, what could be said was that, as a direct consequence of the defendant’s negligence, the claimant had lost the chance to go out into the market place and search for alternative premises under less pressured circumstances.
2. Therefore, applying common sense, it was probable that, as a direct consequence of the defendant’s negligence, the claimant lost the chance to achieve a better deal, in terms of rent, on some other property than was in fact achieved in respect of 47 Eastcastle Street. However, it was likely that: the claimant would have found a building equivalent to 47 Eastcastle Street being offered at a similar price; it would have had to compete against one other bidder; and it would have secured the hypothetical property on similar terms to those achieved at 47 Eastcastle Street, save that the rental price over five years would have been halfway between that offered by the rival bidder and the price that, in the event, the claimant paid. The chance of achieving that better bargain was real and was to be assessed at 35%. Accordingly, the claimant was entitled to damages in the sum of £11,576: Galoo Ltd v Bright Grahame Murray (a firm) [1994] 1 WLR 1360 and Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 considered.
Allen Dyer (instructed by Barlow Lyde & Gilbert) appeared for the claimant; Stephen Jourdan (instructed by Goodman Derrick) appeared for the defendant.
Thomas Elliott, barrister
