Sale of land — Solicitor acting for vendor and purchaser in same transaction — Possessory title only — Problems with resale of land — Action against solicitors for alleged negligence and breach of duty — Judgment for solicitor
The plaintiff was a property development company incorporated by D in 1984. D was the main shareholder and the only effective director. Before incorporation, D had worked for 10 years for another property development company. The defendants, a firm of solicitors, had acted for the plaintiff in the purchase of three pieces of land in the same area. By a letter of March 5, 1987 D instructed the defendants to act for the plaintiff in the purchase of a property fronting onto Lucas Lane, Hitchin, Herfordshire, for £28,000 without planning permission. The plaintiff, in the person of D, hoped to obtain planning permission for the erection of two houses to be sold for £70,000 each. He was content that contracts should be exchanged before any planning permission had been obtained because the property market was buoyant at the time and was keen that the plaintiff should acquire the land as soon as possible.
The defendants were also acting for the vendor of the land through a different office. The vendor was able to show only possessory title to the land without any clear rights of access. However, the sale went through. Two houses were erected but it was difficult to sell them because of the possible defects in title. They were eventually sold between November 1993 and April 1994 for £63,000 and £64,000 respectively. The plaintiff claimed damages for negligence and breach of contract by the defendants. It was alleged that before the exchange of contracts the defendants failed to advise the plaintiff: (a) to require its vendor to obtain first registration of his title to the property before contracting to buy it; and (b) as to the nature of the title offered by the vendor. It was also alleged that after exchange, the defendants failed: (a) to advise the plaintiff that the property was unmarketable until the plaintiff was registered with title absolute and rights of access and drainage were clarified; (b) to procure the registration of the plaintiff with title absolute; and (c) to advise the plaintiff not to incur expenditure in obtaining planning permission or building until the title problems had been resolved.
Held The action was dismissed.
1. Before contracts were exchanged D knew that the plaintiff was buying a possessory title. Such was D’s keenness that the plaintiff should acquire and develop the property while the market was buoyant, he decided on behalf of the plaintiff, to accept the title with all its defects and to take a risk in that respect.
2. The defendants advised the plaintiff as to the risks involved before contracts were exchanged. They were not obliged to repeat them after exchange of contracts. The defendants were under no duty to keep reminding the plaintiff of the desirability of seeking better evidence of title.
3. Following discussions before the exchange of contracts, D knew that the title the plaintiff had bought might not be acceptable to a purchaser. Given that D had some experience in property development, the defendants were under no duty separately to advise the plaintiff not to spend money in developing and marketing the houses while the title was in its existing state.
4. Although the defendants could be criticised for acting for both parties on the sale and purchase of the property and not keeping fuller written records of their advice to the plaintiff, they were not in breach of duty to the plaintiff as claimed.
David Halpern (instructed by Debenham & Co) appeared for the plaintiff; Stephen Bate (instructed by Mills & Reeve of Cambridge) appeared for the defendants.
