Liability – Measure of damages – Claimants buying old house extensively renovated by vendors without obtaining building regulation approval – Defendant solicitor assuming from response to pre-contract inquiries that such approval obtained – Claimants’ surveyor proceeding on same assumption – Claimants subsequently discovering serious defects – Whether defendant’s assumption justified in light of current professional practice – Whether defendant liable for cost of remedying all defects
In June 1993 the claimants, a married couple, instructed the defendant solicitor to act for them in the proposed purchase, for £138,000, of a detached house in Doncaster. The house had been built in about 1770 and renovated by the vendors in 1985. The defendant sent standard form inquiries that requested copies, inter alia, of any building regulation consent (the general inquiry), to which they received the reply: “The vendors do not have any of these.” In response to an additional inquiry (the specific inquiry) relating to the garage, the vendors stated that it was an integral part of major renovations carried out 7½ years earlier, for which all consents and approvals had been obtained.
On or about 7 June 1993 the claimants saw a copy of a valuation prepared for their intended mortgagee (Abbey National) that reported the possibility of rising damp and recommended a specialist survey. In July 1993 the claimants obtained a surveyor’s report from a firm called North Tech, which pointed to the very poor state of the garage but which stated that the renovations had been carried out to a high standard and that the firm understood that local authority approval had been obtained. A copy of that report was shown to the defendant, which had made the usual local authority searches. These confirmed that planning permission had been granted for the alterations and that no proceedings had been authorised for infringement of the building regulations. In a report to Abbey National dated 28 July 1993, the defendant confirmed, inter alia, that all relevant statutory consents were in force. Completion took place in August 1993.
In 1995 the claimants were alerted to serious structural problems. They discovered that no building regulation consent had been obtained for the renovations, the council having twice rejected plans submitted for their approval in 1985. The claimants, having reason to doubt the ability of North Tech to satisfy any damages award, brought proceedings against the defendant, alleging that they would not have bought the property but for the defendant’s negligent failure to advise that building regulation approval had not been obtained. The amount claimed was based on an alleged overpayment of £40,279, assessed by reference to the undisputed cost of bringing the defective work up to building regulation requirements.
The defendant contended that it had done no less than was required by conveyancing practice. It pointed out that the lack of approval would not have been discovered even if it had presented the vendors with the form of inquiry recommended at para 24.2.1(f) of The Law Society’s Conveyancing Handbook 1993, because the recommended inquiry (the handbook inquiry) was limited to alterations or additions made within the past 12 months. The defendant also took issue on quantum.
Held: The claimants had established liability, but could not recover more than £8,203.
1. The submissions based on the handbook inquiry were of no assistance, not only because the recommended form had not been used but also because the handbook failed to explain why (even though works executed outside the 12-month period could not be the subject of a notice under section 36(1) or (2) of the Building Act 1984) a purchaser could ignore the risk of injunctive proceedings being taken under section 36(6).
2. The combined effect of the answers given to the general and the specific inquiries was that the vendors had represented that works had been carried out in or about 1985 for which building regulation consent had been obtained, but that they did not have a copy of it. In those circumstances, while a purchaser’s solicitor was not ordinarily bound to verify the correctness of a vendor’s reply to a pre-contract inquiry, the defendant was negligent in not taking further steps to obtain sight of the requisite consent, whether by pursuing the matter with the local authority or otherwise. If such steps had been taken, the defendant would have been bound, on discovering that no consent had been obtained, to inform the claimants of the position under the 1984 Act and to advise them to reappraise the North Tech report with some caution. On the evidence before the court, it was proper to find that the giving of such advice would have caused the claimants to withdraw from the purchase.
3. However, given that the defendant’s duty was a duty to provide information, as distinct from a duty to advise on the course of action to be taken (see the distinction drawn in South Australia Asset Management Corporation v York Montague Ltd [1996] 2 EGLR 93), it could not be held responsible for losses that would have occurred even if the information given to the claimants had been correct. The claimants would still have gone ahead with the purchase notwithstanding the health warnings contained in the two reports on the property, and the substance of the case against the defendant was, therefore, the failure to advise that there was a risk of further undetected defects. Whether by applying the South Australia principle or by reducing the claim to take account of the claimant’s contributory negligence, the defendant’s liability should be confined to the costs necessary to remedy those defects.
Philomena Harrison (instructed by Tofield Swann & Smythe, of Sheffield) appeared for the claimants; Matthew Jackson (instructed by Beachcroft Wansbroughs, of Leeds) appeared for the defendant.
Alan Cooklin, barrister
