Solicitors must explain the results of the due diligence process in a conveyancing transaction in a form and in terms that can be readily understood
Solicitors do not have any obligation to spend time and effort on issues outside their retainer. However, if, in the course of carrying out their instructions, they become aware of a risk or a potential risk to their client, they must tell them. AW Group Ltd v Taylor Walton [2013] EWHC 2610 (Ch); [2013] PLSCS 224 highlights the implications of this rule for the due diligence process in conveyancing.
The case concerned advice given in connection with the acquisition of an industrial estate. The buyer used some bare land at the rear of the site to create a hard standing for heavy goods vehicles, which brought it into conflict with the local planning authority. The authority subsequently issued an enforcement notice requiring the removal of both the vehicles and the hard standing. The buyer appealed, but its appeal was dismissed because the site was in the green belt and the buyer was unable to establish the existence of circumstances that would justify the grant of planning permission for such use.
The High Court decided that the buyer’s solicitors had been negligent. They were not necessarily under a duty to provide detailed planning advice in connection with the purchase – but should have given their clients sufficient information about the planning position to enable them to seek specialist advice, if necessary. It was no excuse for them to say that they did not know what their clients’ intentions were; it was up to them to find out and then to ensure that their clients had all the relevant information and understood the legal position.
The court reminded the buyer’s solicitors that legal advice, like any other communication, should be in terms appropriate to the comprehension and experience of the particular recipient. The firm’s report on title had disclosed very little about the planning position, because they were waiting for further information from the local authority. They did state that the property was in the green belt and also in an area of outstanding natural beauty, of great landscape value. However, they did not explain the significance of this, or state that it might make it more difficult to obtain planning permissions in the future, and a professional adviser does not necessarily discharge his duty by spelling out the obvious, without explaining the implications.
Practitioners will also be interested in the judge’s reaction to the buyers’ claim that they had not read the report on title provided. He ruled that this was not an obstacle to their negligence claim. The planning status of the site was of such significance in this case that the law firm should have communicated directly with the buyers in a manner that could not have been ignored.
The judge went on to decide that the buyer’s solicitors had received a copy of a planning permission that should have alerted them to the potential problem before contracts were exchanged, and should have raised this with their clients. However, he also decided that the buyers were risk takers, who would have proceeded with the purchase anyway as a result of the commercial pressures they were under. Consequently, the negligence claim came to nothing because the buyers would not have acted any differently, had they been differently advised.
Allyson Colby is a property law consultant
