Professional negligence – Solicitor – Sale of land – Stamp duty land tax – Claimant retaining defendant to act on its behalf in sale of land – Defendant also acting on behalf of third party in sub-sale of part of land – Claimant alleging defendant negligently attaching wrong plan to TP1 form resulting in diminution in value of retained land – Claimant alleging defendant negligently giving wrong advice in respect of stamp duty land tax payable on transfer – Whether claimant establishing claim – Whether defendant liable in negligence – Claim allowed
In 2006, the claimant company retained the defendant to act on its behalf in the purchase of land at 60 to 64 Toller Lane Bradford, with a view to redevelopment. It was the claimant’s case that at the same time the defendant was instructed to act in the sub-sale of part of that land to a third party. The claimant alleged that the defendant discharged its retainer in respect of the sub-sale negligently and/or in breach of its contract of retainer and that it had suffered loss thereby (the land claim). Further, in respect of the purchase of the whole site, the defendant had discharged its retainer negligently and/or in breach of contract because the advice that its principal gave to the claimant regarding the amount of stamp duty land tax (SDLT) was payable had been negligently wrong with the result that the claimant paid more SDLT that was appropriate, instead of benefiting from the concession under section 45 of the Finance Act 2003 (the SDLT claim).
In respect of the land claim, the claimant argued that the retained land had been predominantly blighted because the defendant had negligently attached the wrong plan to the TP1 form transferring part of the land to the third party. The claimant also contended that the terms upon which the sub-sale had been completed and the extent of the land included in the sub-sale precluded or restricted it from vehicular access to parts of the land.
As regards the SDLT claim, the purchase of the whole site and the sub-sale of part thereof had been simultaneous. The whole site had been purchased for £1.7m and part sold for £450,000. Therefore, the SDLT payable was in respect of a transaction worth £1.25m, namely £50,000. The defendant had obtained £68,000 from the claimant to cover SDLT and subsequently paid that sum to HMRC as the duty on a purchase of £1.7m. Since an overpayment was not recoverable from HMRC if a claim was made for the repayment more than four years after payment had been made, the claimant sought to recover the excess of £18,000 from the defendant.
Held: The claim was allowed
(1) In an action relating to solicitor’s negligence the question of the parameters of the retainer were always crucial. It was implicit in the retainer that a solicitor would proffer advice which was reasonably incidental to the work being carried out. The retainer of a solicitor instructed to act in a conveyancing transaction extended to advising a client of matters regarding the title that might blight or limit the reasonably foreseeable use or enjoyment of the property. Further, the retainer extended to ensuring that only the correct amount of SDLT was paid. Both were incidental to the conveyancing process. The burden was on the claimant to establish breach of duty and causation: Minkin v Lesley Landsberg [2015] EWCA Civ 1152 and Credit Lyonnais SA v Russell Jones and Walker [2002] EWHC (Ch) 1310; [2002] 2 EGLR 65 applied.
In the present case, causation had been established in the sense that, had the correct plan been attached to the TP1, the retained land would not have been blighted. The claimant had given the defendant one plan but its principal had attached a different plan to the TP1 after it had been executed. Had the third party been approached before completion with a view to cooperating in the drawing up of a plan that gave the retained land access to all parts of the retained land, on balance, he would have agreed. The filing of the wrong plan had diminished the value of the land by the agreed sum of £211,500. However, the claimant had not established that any expenditure had been wasted due to the act of negligence other than a small amount in respect of attempted costs of cure. Accordingly, the court was not prepared to award anything for wasted expenditure other than the £470 agreed in respect of attempted cure: Re B (children) [2008] UKHL 35 and Mumtaz Properties Ltd v Ahmed [2011] EWCA Civ 610 considered.
(2) It fell within a solicitor’s retainer to calculate SDLT accurately. The effect of section 45 the 2003 Act was that, in circumstances where completion or substantial performance of both the contract of purchase of the whole site by A and of sub-sale of part of the site by A to B occurred at the same time, A was only responsible for SDLT on the consideration paid for the whole site less the proportion of that consideration which was referable to the land that was the subject matter of the sub-sale. In any event, the section 45 concession was available not just on completion but on “substantial performance”. It was difficult to believe that substantial performance did not occur when the purchase monies were paid and the purchaser got the keys.
In the present case, there was no doubt that the section 45 concession had been available because there had been substantial performance of the contract to purchase the whole site and the sale of part at the same time. The court accepted the defendant’s evidence that it had not been not aware that there had been an overpayment until it was too late to recover it and it was not appropriate to make any deduction from that amount. Accordingly, judgment would be given to the claimant for £211,500 plus £470 plus £18,000, a total of £229,970.
Nicholas Mason (instructed by Atkinson and Firth Solicitors, of Shipley) appeared for the claimant; Richard Chapman (instructed by Ozon Solicitors of Manchester) appeared for the defendant.
Eileen O’Grady, barrister
Click here to download the transcript of Mansion Estates Ltd v Hayre & Co (a firm)