Solicitor – Negligence – Sale of land – Drafting of contract – Claimant suing defendant firm of solicitors for damages in negligence in drafting conditional contract for purchase of development site – Whether defendant acting in breach of duty to exercise reasonable skill and care to ensure terms of contract enforceable – Claim dismissed
The claimant company sued the defendant firm of solicitors alleging negligence in the drafting of a conditional contract for the purchase of a six acre development site at Newlands Hurst, Droitwich. The contract was conditional on the grant of planning permission acceptable to the claimant by a stipulated date. The contractual obligations on completion included the grant, at a nominal rent, of a 999-year lease of “the care facility” to the vendor and a 999-year underlease back to the claimant, the leased area to be defined by plans. The claimant undertook to construct a new care facility within 18 months of completion, with the charity continuing to accommodate the residents until then. The claimant was obliged to prepare a draft planning permission application, and to have it approved by the vendor and submitted to the local authority by a specified date. No such application was made. As the completion date approached, no planning permission had been obtained or even applied for and the claimant exercised its right under the contract to waive the condition. The vendor refused to complete, alleging that the contract was unenforceable for uncertainty. Although the contract had agreed forms of the lease and underlease attached to it, they contained no plans. The claimant accepted a payment from the vendor to abandon any claim to enforce the contract.
However, the claimant sought damages from the defendant on the basis that it had lost the chance to pursue alternative outcomes, including selling the land with the benefit of planning permission, completing part of the development before selling it, or completing the whole development. The principal focus of the case was on the absence of a plan outlining the care facility. The claimant contended that the inclusion of a plan would have provided a mechanism for modification of the care facility area if necessary, enabling it to enforce completion and to pursue its planning application post-completion. The defendant denied negligence. It contended that the contract provided a sensible mechanism for identification of the area of the care facility by completion; and that there would have been no uncertainty if the claimant had followed the mechanism provided and submitted a planning application.
Held: The claim was dismissed.
(1) There were good reasons for leaving the precise areas of land to be governed by the lease and leaseback agreed form documents to be determined after exchange. The claimant did not know what the attitude of the planners would be to the proposed development and wished to have maximum flexibility to negotiate and amend designs so as to secure their approval. The vendor was content to leave those matters to the claimant to discuss with the planners. It had an interest in the outcome so far as concerned the new care facility into which its residents would move and retained an influence over the eventual scheme by virtue of the requirement that its agreement was required before the formal planning application was made. The stipulation that such agreement could not be unreasonably withheld showed that the parties accepted that some objective standard would have to be applied to consider whether the final plans provided for a scheme that complied with the essential bargain made. There might be some scope for debate about how much, if any, land surrounding the care facility building should be regarded as part of the care facility as defined and so be demised in the lease. However, it was inconceivable that any such debate would have resulted in the contract being held to be unenforceable. Had the claimant followed the mechanism provided by the contract and submitted a full planning application, the contract would have been enforceable: Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AS (No 1) [2000] EWCA Civ 406 applied. Novus Aviation Ltd v Alubaf Arab International Bank BSC(c) [2016] EWHC 1575 (Comm) considered.
(2) The defendant had not been negligent in drafting the contract in such a way that it might be unenforceable if that mechanism was not followed by the claimant as intended, and could not have anticipated that it might want to enforce completion notwithstanding such non-compliance. The solicitor’s role was to draft a contract to implement his client’s instructions as to the agreement made and not, unless clearly so instructed, to introduce mechanisms by which that agreement could be circumvented. There was no evidence of such instructions being given to the defendant, or of any consideration of what the claimant’s position would be if it failed to submit an application. The parties’ solicitors had discussed whether a plan should be attached to the draft form of the lease on exchange. The vendor’s solicitors had taken the view that a plan showing the position of the new facility was not critical at the draft lease stage. That was communicated to the claimant, whose director instructed the defendant to agree to dispense with the plans. Although it would have been for the claimant’s solicitors, not its director, to appreciate the possible significance in legal terms of the absence of plans, they had not been instructed that the contract should be enforceable irrespective of whether a planning application had been made, and could not be criticised for failing to draft the contract to include that possibility. In any event, it was also highly unlikely that the charity would have agreed to any such proposal. It followed that the fundamental allegation of negligence on the part of the defendant failed.
The claimant was represented by its director; Mark Cannon QC (instructed by Reynolds Porter Chamberlain LLP) appeal for the defendant.
Eileen O’Grady, barrister
Click here to read transcript: Anderson Properties Ltd v Blyth Liggins (a firm)
