Plaintiff instructing defendants to act in acquiring lease of commercial premises – Plaintiff and wife unable to speak English – Plaintiff requiring power to remortgage home in order to finance venture – Lease barring plaintiff from charging or mortgaging home – Plaintiff unable repair property and comply with terms of lease due to lack of capital – Whether plaintiff adequately advised by defendant solicitors – Judgment for plaintiff
The plaintiff was an Iranian national who fled from Iran in October 1991 . He arrived in England with his wife and children and only £55,000. The plaintiff’s and his wife’s knowledge of English was so limited that they had to use interpreters. They purchased a home in Luton using the funds they had brought into the UK. Subsequently the plaintiff became interested in renting premises in Acton High Street comprising a ground-floor shop unit with residential accommodation above. He instructed the defendant using an interpreter each time they met. The landlord’s solicitors contacted the defendant and sent a draft lease. It was a full repairing lease for 12 years and required the plaintiff to execute a charge of the residential property as security for performance of his covenants as lessee. The covenant required the plaintiff to pay sums due under the lease on demand and not to create any other mortgage or charge without the prior consent of the landlord. The plaintiff did not make arrangements for a structural survey before the completion of the lease of the premises took place. The plaintiff found the premises in poor condition and the landlord estimated that repairs would cost £50,000. The plaintiff was unable to raise the capital because he was unable to mortgage his home. The landlord brought proceedings and obtained an order for possession if the amount adjudged to be due was not paid. The plaintiff issued proceedings against the defendant alleging that he had been negligently advised.
Held Judgment was given for the plaintiff.
1. The plaintiff had had a limited command of English and he was taking on a lease of relatively old commercial property with a full repairing covenant and was giving a legal charge. Therefore it was incumbent on the defendant to take all reasonable steps to explain the nature and scope of the obligations and ensure that the plaintiff had understood the advice he received. Such advice ought to have been put in writing and the incorrect advice clearly ought to have been corrected. In any event the plaintiff had not been adequately advised in relation to his obligations under the lease.
2. If the effect of the charge, the full repairing covenant and the continuing obligations under the lease had been fully explained to the plaintiff, and confirmed in writing, he would have appreciated that the charge prevented him from raising finance on the security of his home and that therefore the whole transaction would have been commercially impossible for him to undertake. Accordingly the defendant’s negligence had been the effective and dominant cause of the plaintiff’s loss: see Hayes v James & Charles Dodd [1990] 2 All ER 815.
3. The losses which the plaintiff had incurred had been reasonably foreseeable and accordingly he was entitled to the damages claimed.
Neil Mendoza (instructed by Freedman Crossick) appeared for the plaintiff; Andrew McNab (instructed by Mills & Reeve, of Cambridge) appeared for the defendant.
