Gregory v Shepherds (a firm)

Claimant instructing defendant firm of solicitors in relation to purchase of Spanish property – Defendant instructing Spanish lawyer to carry out Spanish legal work – Spanish lawyer negligently carrying out land searches – Whether defendant liable – Claimant’s claim for damages dismissed – Appeal allowed In March 1989 the claimant and his wife contracted with a Spanish company (the company) to purchase an apartment, then in the course of construction, in a complex in Tenerife. Later that month, the claimant instructed the defendant firm of solicitors to act for him and his wife in connection with the purchase. The claimant was aware that the defendant advertised its services as including “information, advice and assistance for purchasing property in Spain via our associated Spanish lawyers”. At the suggestion of the defendant, a Spanish lawyer (S) was also instructed, and a power of attorney was duly executed authorising him to purchase the apartment on behalf of the claimant and his wife. The purchase price of £60,000 was paid in two instalments, and the purchase should have been completed in November 1989. However, the relevant document required to enable the apartment to be registered in the names of the claimant and his wife was not delivered by the company. By July 1991, the claimant and his wife had decided to sell the apartment, but were inhibited from doing so by the lack of the relevant document and registration of title. They then discovered that a charge in favour of a bank had been registered against the title of the apartment in March 1989 to ensure the payment of a loan by the company. In June 1995 the claimant issued proceedings against the defendant on the basis that if S had carried out the searches against the title as the defendant had requested him to do, the existence of the charge would have been revealed and the claimant would not have paid the second tranche of the purchase price to the company. The claimant contended that the defendant had failed to undertake adequate searches against title to the apartment, to discover and advise the claimant that the apartment was subject to the charge and to arrange for it to be discharged. Alternatively, it was argued that the defendant had failed to take reasonable steps to ensure that S had taken the necessary action. The judge rejected both contentions and held that the defendant was not liable. The claimant appealed. Held: The appeal was allowed. The relative duties of the defendant and S had to be ascertained from what they were instructed to do by the claimant. Although S had been instructed by the defendant to act for the claimant and his wife in connection with the Spanish end of the transaction, and, accordingly, S was responsible for carrying out the requisite searches in Spain, it did not follow that the defendant had no responsibility for that part of the transaction. The reasonably careful solicitor in England would not, in the circumstances of the instant case, pay over his clients’ money to the vendor, rather than the foreign lawyer, without first obtaining specific and unequivocal confirmation that the searches he had instructed the foreign lawyer to carry out had been satisfactorily completed. S had neither confirmed that he had carried out the requisite searches nor that the searches had disclosed no incumbrance. The defendant had not been entitled to assume that S had carried out his instructions and that the searches revealed no incumbrances, and it had thereby exposed the claimant and his wife to an entirely unjustified risk. Michael Driscoll QC and Katherine Holland (instructed by Pickering & Butters, of Stafford) appeared for the appellant; Michael Briggs QC and Richard Walford (instructed by Beachcroft Wansbroughs, of Birmingham) appeared for the respondent. Thomas Elliott, barrister