Public house –Purchase of leasehold property — Short lease — Client purchasers assuring solicitor that funds for purchase would be forthcoming — Solicitor proceeding to exchange contracts — Clients unable to complete — Vendor suing purchasers on contract — Whether solicitor under duty of care to warn clients — Appeal by purchasers dismissed
The plaintiff appellants had been in the catering trade for a considerable time and they sought to purchase a public house, the Old Mint, Southam, Warwickshire, in which they had been employed. The property on offer was on a short lease of 8 1/2 years so that it was plain to everyone concerned that the purchase money could not be raised by mortgage on the assets which they intended to buy. The defendant solicitors were instructed and advised the plaintiffs to proceed only on the basis of acquiring the freehold. That was not obtainable and the exchange was due to take place under the Law Society, Formula B Procedure, viz that it would take place over the telephone on the defendant firm’s undertaking to pay the deposit. The plaintiffs arrived at the office on the appointed day without the deposit cheque but, on their assurances that they would bring it in the afternoon, L, a partner in the firm, agreed to the exchange. It transpired that the plaintiffs had put the finance-raising in the hands of a mortgage broker who did not come up with the money. The defendants had to pay £12,500 for the deposit. The plaintiffs were sued by the vendor, who had to sell at a lower price. The plaintiffs alleged negligence against the defendants who had failed to advise, inter alia, that they should not commit themselves and should not have exchanged without the cheque for the deposit. At the trial, the judge accepted the defendants’ evidence that they had been assured that the money would be forthcoming and found that the plaintiffs knew enough about the world to know that they were entering into a binding contract. Judgment was given for the defendants on their counterclaim for the deposit sum.
Held The appeal was dismissed.
1. Faced with those findings of fact based on credibility there was very little room to find ground for appeal.
2. The plaintiffs submitted that a warning light should have appeared once they failed to bring in the cheque on the day of exchange. If L had asked questions, it would have revealed their position had not been as secure as they represented. It would have shown that the mortgage broker had not given a commitment in writing and that they should have been warned that it was foolhardy to go ahead.
3. That imposed too high a duty on a solicitor acting in a conveyancing matter. He was not a business adviser but a lawyer, although most good solicitors would offer business advice and — to some extent — try to protect a client against himself.
4. However, he was not under a legal duty to do so. If on the facts of the case a client was wholly inexperienced and was deluding himself, it might well be there was a duty to probe further. In the instant case, the clients had shown a grasp of accounts and business prospects. Their confidence in obtaining the money was so expressed as to convince L into taking the unusual step of committing the firm to payment of the deposit. While that might have been a lapse of duty to other partners, it did not constitute such to the plaintiffs.
Donald Lambie (instructed by Band Hatton & Co, of Coventry) appeared for the appellant purchasers; Philip Kolvin (instructed by Pinsent & Co, of Birmingham) appeared for the solicitors.
