Once upon a
time, when the world held fewer lawyers and the word ‘consumer’ was nothing
more than a twinkle in some ad-man’s eye, the life of a professional man was a
pleasant, relaxed affair. Not for him the sleepless nights of the soft drink
manufacturer, tortured by images of decomposing snails in his ginger beer —
professional advice was trusted and respected, not picked over in the hope of
finding some flaw which could be used to mount a claim against its provider. Of
course, the average professional then might well not have the strength of the
insurance companies around him, and for him even to suggest that he might
shelter behind a limited company would probably have been sufficient to have
him thrown out of his professional body; however, such defences were hardly
necessary when the phrase ‘professional negligence’ had yet to be coined.
How times
change! Today’s practitioner needs every
form of defence which is available to him, given the exponential growth of
litigation in this field. Members of virtually every profession (though there
are as yet no reports of any negligence claim involving the oldest!) are
vulnerable to attack, not only from their clients but also from third parties.
Indemnity insurance premiums continue to mount, disclaimer clauses proliferate,
and still the tide of ‘consumerism’ rolls inexorably in. How will the next
generation cope and, for that matter, will there be one?
Readers
whose offspring are threatening to follow them into the profession, and who
wish to divert them into a less risky career (such as drug-smuggling or
football management) might draw their attention to the latest case to roll off
the assembly line. It is a slightly unusual one in two respects. First, it
deals, not with the usual type of complaint (‘I bought this hovel on the basis
of the mortgage valuer’s report’) but rather with the altogether more esoteric
world of the rating valuer. Second, a point which connoisseurs of this area
will surely savour, it imposes liability on someone who performed not too badly
the task which his client asked him to perform, but who failed miserably to do something
which he was not asked to do!
The facts of
Mclntyre v Herring Son & Daw [1988] 1 EGLR 231 are extremely
complicated (indeed it is doubtful whether anyone except a rating valuer will
understand their full significance), but the legal issues are relatively
straightforward. The plaintiff, who was the tenant of a house in Chelsea, was
aggrieved when, as a result of the general rating revaluation of 1973, the
rateable value of his property was increased from £850 to £2,380. He
accordingly instructed the defendants to ‘advise, negotiate and act for’ him in
an appeal against his assessment. In the event, the flood of appeals generated
by the 1973 revaluation was such that the district valuer did not consider the
plaintiff’s case until February 1978 — when he did so, the defendants persuaded
him that the rateable value should be reduced to £2,000. On the advice of the
defendants, who did not believe that an appeal to the local valuation court
would achieve any further reduction, the plaintiff accepted this figure —
subsequently, however, he came to believe that the defendants’ advice was
negligently given, and so he brought an action against them.
Now, had the
plaintiff’s complaint been limited to overpayment of rates between 1973 and
1978, this case would probably never have come to court. However, far more was
at stake. A reduction in the property’s gross rateable value to £1,834 or less
would have brought its net rateable value down below £1,500 and would thus have
entitled the plaintiff to enfranchise under the Leasehold Reform Act 1967. It
was the loss of this right (claimed to be worth some £45,000) for which the
plaintiff wanted blood.
Having waded
through an enormous amount of evidence about the property and its environment,
the deputy judge concluded that a reasonably competent valuer could have made
out a case for a reduction to about £1,800 (though without necessarily having
much confidence in its success). Given that, and knowing the critical
importance of rateable value in relation to enfranchisement, the defendants
were guilty of negligence in not drawing their client’s attention to this
aspect and thus giving him at least the opportunity to decide whether or not to
take his case to the valuation court.
Net result —
a rating valuer who achieved a reduction for his client of some 16% (agreed by
all the experts to be a good performance in normal circumstances) was held
liable for not considering sufficiently other interests of the client which
formed no part of his instructions and, moreover, of which the client was not
even aware. Floreat consumer!
auction particulars
Earlier this
year, we commented in ‘Legal Notes’ on the decision of Browne-Wilkinson V-C in Strover
v Harrington [1988] 1 EGLR 173. That case concerned a house buyer’s
claim against his vendor for misrepresentation in the sale particulars (these
stated, quite erroneously, that the property enjoyed main drainage), a claim
which failed because the buyer’s solicitors had been informed of the error by
the vendor’s estate agents before contracts were exchanged. (The solicitors had
inexplicably failed to pass on this important piece of information to their
client, but that could hardly be treated as the vendor’s fault.) And, since the essence of an action for
misrepresentation is the plaintiff’s reliance on the false statement
made to him by the defendant, it followed that correction of the error before
the contract was made was a complete defence to the claim.
Of course,
the chances of a misrepresentation being discovered and rectified before it
does any damage are considerably increased by the English system of private
treaty conveyancing, in which so much information-gathering takes place at the
lengthy ‘subject to contract’ stage. Eliminate this stage (as happens in most
sales of goods and those sales of land which take place by auction) and, one
would think, the plaintiff’s legal position following a misrepresentation is
almost impregnable. And yet, as a recent case demonstrates, hope springs
eternal in the breast of many defendants.
The case of Production
Technology Consultants Ltd v Bartlett [1988] 25 EG 121 concerned the
sale by auction of a freehold house in Balham which was divided into flats (one
on each of its four floors). The auction particulars described the terms on
which each flat was let, stating in effect that two of them (the top and ground
floors) were subject to 99-year terms at ground rents and that the other two
(the first floor and semi-basement) were let on weekly tenancies. This was
highly misleading; the truth of the matter was that the first floor was also
subject to a concurrent lease for 99 years at a ground rent, a factor which
naturally reduced the property’s overall value by a considerable amount.
The
plaintiffs, who were looking to purchase residential property of this kind as
an investment, saw that the auction conditions made the sale subject to any
entries in the register of title, but chose none the less not to inspect the
copy of the register which was available at the auctioneers’ offices for inspection
(and which would have showed them clearly the true position). Instead, having
formed the impression (on what basis is not clear) that the tenant of the first
floor was unlikely to remain in occupation for very long, the plaintiffs
attended the sale and bid successfully for the property.
Having
secured the house at a price which reflected the belief that their interest in
at least that part of the premises would soon be an unencumbered one, the
plaintiffs instructed their solicitors to proceed with the conveyancing. In due
course the solicitors received, from the vendor’s solicitors, copies of all
relevant leases (including the one omitted from the particulars of sale) but,
for some inexplicable reason, neither firm of solicitors realised the
significance of this lease! In continued
blissful ignorance, therefore, the transaction was completed, the price paid
and the property conveyed to the plaintiffs. Only then did the awful truth
dawn, whereupon the plaintiffs launched a claim for damages against the vendor
under section 2(1) of the Misrepresentation Act 1967.
The trial
judge found that there had been a material misrepresentation, that the
plaintiffs had relied upon it, and that a purported exclusion of liability in
the conditions of sale fell to be struck out under the Unfair Contract Terms
Act 1977. None the less, he rejected the plaintiffs’ claim on the ground that,
having completed the contract after they (through their agents, the solicitors)
had been shown the true state of affairs, they must be taken to have waived any
claim to damages.
This escape
route for the defendant received very short shrift from the Court of Appeal,
which regarded the trial judge as having been ‘somewhat led astray by the
welter of old authority which was put before him’. In the appeal court’s view,
a purchaser who discovers the truth between contract and completion has every
right to decide whether he will rescind the sale or instead affirm it and bring
an action for damages.
