Damages for negligence — Plaintiff acquiring commercial property for investment — Defendant solicitors failing to inform plaintiff of break clauses in leases — Defendants conceding failure to advise — Defendants pleading contributory negligence and action being statute-barred — Whether plaintiff having knowledge at time of deal in 1981 — Whether plaintiff contributorily negligent — Judgment for the plaintiff — Assessment of quantum of damages
In 1981, the plaintiff was interested in acquiring Navire House, Mere Street, Diss, a freehold shop and investment property, in Norfolk. It was a three-storey building with two floors of office space above the three ground-floor shops. Copies of the leases were sent to S, who at all material times owned and controlled the plaintiff company, by the defendant solicitors, who had been retained to act in the transaction. By a letter dated February 10, 1981, and addressed to S, the defendants drew his attention to certain terms in the leases but, according to the statement of claim, failed to mention or to summarise the effect of clause 5 of the leases (the break clause) of both the first and second-floor office units, which allowed the tenant(s) to determine the term at the expiration of the fifth, 10th, 15th or 20th years on 12-months notice in writing. S contended that if he had been advised of the existence and effect of the break clause, he would not have proceeded with the purchase. He claimed that he acquired knowledge of the clause as a result of a telephone conversation between his wife and a representative of the assignee of one of the lessees in July 1993. The defendants conceded failure to advise, but pleaded contributory negligence on S’s part, and that the action was statute-barred as S had first seen the leases in 1981.
Held Judgment for the plaintiff.
1. With regard to the question of contributory negligence, although S’s company had been involved in property investment, that had been for the most part of a residential nature. He had no great experience in the terminology of commercial leases. He had been interested in acquiring a landlord and tenant investment of a kind which would bring him in a steady income stream.
2. He had satisfied himself that he had made sufficient inquiries regarding the tenants’ covenants to ensure a sound investment.
3. S had received copies of all the leases in February 1981. The letter covering the enclosures had set out the terms, amount of rent, the rent review, repairing covenants, as well as covenants concerning office use. The break clause was not referred to.
4. It would have been a very considerable task for S to have read through the leases and he stated in cross-examination that he had left it to his solicitors and had relied on them.
5. The court was wholly satisfied that it would have been totally unrealistic to expect S to have looked through all the leases to satisfy himself that solicitors had failed to draw his attention to certain matters. He had acted entirely reasonably on relying on their advice; the allegation of contributory negligence was rejected.
6. Further the cause of action was well within the three-year limitation period having first come to the attention of Mrs S in July 1993.
7. In light of the conflicting valuation evidence, the court reached the conclusion that the damages regarding the value of the property, as subject to the break clause, was £54,000 plus interest.
Timothy Scott QC (instructed by Harris Rosenblatt & Kramer) appeared for the plaintiff; Patrick Lawrence (instructed by Wansboroughs Willey Hargrave) appeared for the defendants.
