Lease of premises for restaurant use — Condition attached to planning permission limiting hours of use — Plaintiff purchasers unaware of condition — Business failure — Whether solicitors negligent — Whether breach causing damage — Judgment for plaintiffs
In 1986 the plaintiffs purchased a 10-year lease on the Tower Restaurant, Little Downham, Ely, Cambridgeshire. This consisted of a barn and part of the former palace of the Bishops of Ely: the premium on the lease was £28,000 with a rent of £11,000 pa. The landlord lived next door to the premises. The defendant firm of solicitors acted for the plaintiffs in the transaction after negotiating for them an earlier lease of restaurant premises in St Albans. A change of use had been granted to the landlord in 1984 for a restaurant and function room. The local planning authority had imposed conditions, in particular on opening times, in order to protect the amenities of nearby residents. The planning restriction specified that the restaurant had to be closed by 11pm on Sunday to Thursday and by midnight on Friday and Saturday. The plaintiffs were particularly anxious to use the upper floor as a function room, while the ground floor would continue as a restaurant.
In 1984, building consent had also been given and other planning conditions imposed concerning the parking and turning of vehicles. The solicitor acting for the defendant firm received only the first page of the earlier planning condition relating to vehicular use, but did not receive the second page, which concerned opening times. The purchase was completed and building work went ahead to extend the function room. Relations with the landlord deteriorated and in 1988 the plaintiffs received a letter from the landlord’s solicitors drawing their attention to the planning permission regarding hours of use. The lease was placed on the market and was eventually sold for £38,500.
Held Judgment for the plaintiffs on a claim for breach of duty.
1. In dealing with the plaintiffs’ original purchase of a lease of premises in St Albans, the court regarded the solicitor’s letter to the clients as a textbook exercise of taking care of clients who were not experienced in business matters.
2. However, in dealing with the purchase of the lease of the Tower, the solicitor accepted that the first attendance note made no reference to opening hours.
3. In dealing with the draft lease, moreover, in complete contrast to the care taken in the St Albans transaction, the reference to the use clause was linked to alterations and the purchasers were not asked the elementary question of whether they had any other proposed uses for the premises.
4. The solicitor acting for the defendants had failed to keep his eye on the user covenant and although he had asked for copies of all documents, he never received them. He had only received the first page of the relevant planning permission.
5. The plaintiffs became aware of the second page of conditions when they received a copy from the landlord’s solicitors by which time the relationship had deteriorated. The landlord had been relying on those conditions all the time and he had knowledge of planning consents which were secret to them until then.
6. It was axiomatic that a solicitor who knew the law should ascertain the facts in a transaction. The most important fact was what use the plaintiffs had intended to put the premises.
7. In the instant case the landlord lived next door and would be particularly aware of his rights in relation to user.
8. The court accepted that they would not have entered into the contract had they known of the true situation and that the dominant reason for selling was that they could not keep the premises open at the hours to suit their purpose. Damages would include consequential loss other than trading losses.
Glenn Campbell (instructed by Cartwrights, of Bristol) appeared for the plaintiffs; Andrew MacNab (instructed by Mills & Reeve, of Cambridge) appeared for the defendants.
