Solicitors — Negligence — Purchase of land — Whether solicitor negligently failing to give appellant proper advice as to effect of compulsory purchase order — Causation — Appeal allowed
P, the owner of the appellant companies, wished to develop an Asian Centre on the site of a former waste-disposal site belonging to the local council. In 1992, P retained the respondent firm of solicitors to act for him on the purchase of the site for £1.6m. At that time, P’s application for planning permission to develop the site had not been granted. P was also aware, as a result of earlier negotiations with the council in 1989, that 40% of the site was the subject of a compulsory purchase order (CPO) made by the Department of Transport (DoT) in 1988 as part of a road-widening scheme. The DoT had served on the council notices to treat and to enter on the council pursuant to the order. The council reiterated this to the respondent in response to pre-contract enquiries relating to the 1992 agreement, and, in a letter of August 1992, sent copies of the CPO and notices, and plans showing the area affected.
After the purchase, P, via the appellants, brought proceedings against the respondent, alleging that it had been negligent and in breach of duty by failing properly to advise P of the effect of the CPO. The respondent admitted some limited negligence, but maintained that causation was not proved because P would have proceeded with the purchase in any event. The judge found in favour of the respondent and dismissed the claim. The appellants appealed.
Held: The appeal was allowed.
This was a very stark case of professional negligence. At least by the stage of receipt of the August letter, a competent conveyancing solicitor, on studying the documents, would have appreciated that: (i) under the CPO, the DoT enjoyed rights over 40% of the site; (ii) since the CPO had been implemented by service of the appropriate statutory notices, those rights included the right to possession of that area without limit of time; and (iii) the council were legally helpless to affect the matter. The respondent should have advised P of all these points and given him a plain warning that he would not get vacant possession of a large section of the site. It was obliged to put P into a position where he was able to decide what to do in the clear knowledge of all those factors. It had failed to do so.
The judge had significantly underestimated the extent of the respondent’s negligence. There was no sufficient basis for his finding that P would have proceeded with the purchase in any event. The question of causation, as to what P would have done had he been properly advised, could be satisfactorily determined only by a retrial at first instance, and a new trial on that issue would accordingly be ordered.*
* Editor’s note: On 11 June 2004, Cresswell J, sitting in the Queen’s Bench Division, held that P would, if properly advised, have negotiated a £300,000 reduction in the price paid for the site: [2004] EWHC 1362 (QB).
Romie Tager QC and Neil Mendoza (instructed by Barker Gillette) appeared for the appellants; Christopher Gibson QC and Christopher Semken (instructed by Reynolds Porter Chamberlain) appeared for the respondent.
Sally Dobson, barrister
