Professional negligence – Solicitor – Causation – Appellant instructing respondent firm of solicitors on conveyancing transaction – Respondent instructed to investigate planning matters – No planning consent for parking of HGV lorries to rear of property as intended by appellant – Whether negligence of respondents in investigating planning position causing loss to appellant – Whether appellant likely to have proceeded with purchase if true planning position discovered – Appeal dismissed
In 2005, a developer exercised an option to purchase the appellant’s truck stop near the M1 motorway at Luton for £6.2m with a view to residential development. The appellant needed to transfer its business activities to an alternative site in order to secure roll-over relief from capital gains tax on that transaction. It agreed subject to contract to purchase a site on the A5 south west of Luton for £2.8m and paid a £140,000 deposit, refundable only if the vendor pulled out of the transaction. The purchase was to be funded in part by a mortgage loan from a bank.
The appellant instructed the respondent firm of solicitors to act for it on the purchase, including the investigation of title and planning matters. When the purchase of the new site was completed in November 2005, various of the appellants’ moved there from the truck stop site, including two associated companies which operated a haulage business and a vehicle repair business. The appellant laid hardstanding on an area to the rear of the site, which it used for the parking of HGV lorries. It later emerged that there was no planning permission for that use, which was precluded by the terms of a planning condition. The appellant proved unable to secure planning permission and had to cease using the area for parking. Its associated companies went into liquidation, although not until sufficient business continuity had been established to enable the appellant successfully to claim roll-over relief.
The appellant brought a claim against the respondent for negligent advice in relation to the planning position. Dismissing the claim, the judge found that the respondent was in breach of a relevant duty owed to the appellant but that that its negligence had caused no loss since, on the evidence, the appellant would have proceeded with the purchase in any event; see [2013] EWHC 2610 (Ch); [2013] PLSCS 224.
The appellant appealed, seeking to challenge the judge’s findings on causation. Its application to adduce fresh evidence was refused but it further argued that: (i) the judge had unfairly taken into account partial information about the financial circumstances of the appellant’s associated companies, which had not been put to the appellant’s accountant when he gave evidence; and (ii) had the planning position come to light earlier, the bank would have been unwilling to lend and the transaction would not have gone ahead.
Held: The appeal was dismissed.
(1) The judge’s decision on causation was not finely balanced. He had given several reasons that, by the time the respondent should have warned of the planning difficulties, the appellant the appellant was already too committed to the purchase of the new site to be able to back out. It would by then have been too late to find an alternative site. The appellant would have lost its £140,000 deposit and would, in addition, have incurred a financial penalty under the agreement for the sale of the truck stop site if it did not vacate that site by the agreed date. The judge had also found that the appellant would probably have taken the view that enforcement action at the new site was unlikely and nothing seriously to worry about. The appellant could take the risk of enforcement action since it was unlikely to become effective in time to prevent the appellant from achieving full roll-over relief from capital gains tax by moving to the site, as indeed it had.
(2) The judge could not be criticised for admitting late evidence as to the financial position of the appellant’s associated companies and relying on that evidence when forming views about the financial condition of those companies. The question of whether those companies had any real business future, beyond the purpose of assisting in the obtaining of roll-over relief, was plainly relevant to the question of what the appellant would have done if properly advised about the planning difficulties affecting the site. There was no unfairness to the appellant in having the published accounts of those companies deployed at trial. The judge’s perception that the businesses of the associated companies were loss-making had led to his conclusion, after hearing all the evidence, that the main reason for relocating them to the new site was the obtaining of roll-over relief rather than their long-term survival.
(3) The judge had not erred in his approach to the attitude of the mortgagee bank. The appellant’s pleadings had not stated how much the bank was prepared to lend on the site and the appellants had not disclosed documents relevant to their banking relationship with the bank and its lending guidelines. There was nothing to enable the court to form an evidence-based view, rather than mere speculation, as to the effect that knowledge of the true planning position would have had on the bank’s readiness to lend. The appellant had made no real attempt at trial to show what the bank had been prepared to lend, or indeed did lend, to assist in the purchase of the site. There was nothing on which to find that, if appraised of the full planning difficulties, the bank would not have been prepared to lend. The appellant’s challenge to the judge’s findings on causation was without foundation.
Geraint Martyn Jones and (instructed by direct access) appeared for the appellant; Neil Hext (instructed by Bond Dickinson LLP, of Bristol) appeared for the respondent.
Sally Dobson, barrister
