Professional negligence – Liability – Solicitor – Respondent developers alleging breach of contract/negligence by appellant firm of solicitors – High Court awarding damages – Appellant appealing – Whether judge erred in finding appellant owed tortious duty of care to advise respondents as to rights and remedies upon discovery of high voltage electric cables under development sites – Appeal allowed
In 2012, the appellant firm of solicitors was retained to act on behalf of the respondent developers in their respective purchases of two high-value Grade II listed properties in Fulham, London SW10. The properties shared a common boundary and were to be redeveloped in parallel.
In January 2014, the respondents contacted the appellant following their post-acquisition discovery of three extra-high voltage electric cables (HVCs) running under both development sites and owned by UK Power Networks (UKPN).
In 2018, the respondents commenced proceedings against the appellant alleging breach of contract and/or negligence on its part: (i) in failing to make sufficient searches or enquiries so as to identify electrical lines and/or wayleaves and/or electrical apparatus on the properties prior to purchase in 2012; and (ii) in failing to investigate and advise adequately in 2014 as to the respondents’ rights and remedies upon the discovery of the HVCs.
The High Court held that the appellant had acted in breach of contract and negligently in 2012 in failing to carry out relevant searches which would have revealed the existence of the HVCs prior to the exchange of contracts. Damages in the sum of just over £584,000 were awarded. Damages were also awarded in respect of the 2014 claim for the value of the respondents’ lost chance to obtain compensation, assessed at just under £1.5m: [2021] EWHC 2400 (Comm).
The appellant appealed against the judge’s finding that it owed a tortious duty of care to the respondents to advise them as to their rights and remedies against UKPN.
Held: The appeal was allowed.
(1) A solicitor retained by a client owed a concurrent independent duty of care in tort. The duty under a retainer was limited to carrying out the tasks which the client had instructed and the solicitor had agreed to undertake. The court had to beware of imposing, on solicitors, duties which went beyond the scope of what they were requested and undertook to do. The duty was directly related to the confines of the retainer. However, it was implicit in the retainer that the solicitor would proffer advice which was “reasonably incidental” to the work that they had agreed to carry out.
In determining what advice was “reasonably incidental”, regard should be had to all the circumstances of the case, including the character, sophistication and experience of the client. More burdensome responsibilities were likely to be placed on solicitors if their clients were inexperienced or vulnerable and more limited responsibilities for experienced or sophisticated clients. The extent of the burden that the allegedly incidental task placed on the solicitor would be relevant. In determining what was reasonably incidental to the solicitor’s engagement, regard might be had to the level of fees charged: Midland Bank Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384, Minkin v Lansberg [2015] EWCA Civ 115, Lyons v Fox Williams LLP [2018] EWCA Civ 2347, Carradine Properties Ltd v DJ Freeman & Co [1999] Lloyd’s Rep PN 48, Football League Ltd v Edge Ellison (a firm) [2006] EWHC 1462 (Ch) and Bank of Ireland v Watts Group plc [2017] EWHC 1667 (TCC) considered.
(2) Where a solicitor became aware of a risk to the client in the course of doing that for which they were retained, it was the solicitor’s duty to inform the client. In so doing, the solicitor was neither going beyond the scope of their instructions or doing extra work on such matters. It would only be in obvious cases that an extended duty to advise would arise. There would have to be a close and strong nexus between the retainer and the matter upon which it was said that the professional should have advised: Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch) and Denning v Greenhalgh Financial Services Ltd [2017] EWHC 143 (QB) considered.
Where there was no retainer, the concept of assumption of responsibility as identified in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 remained the foundation of the tortious liability. The doing of the act implied a voluntary undertaking to assume responsibility. The fact that information or advice was provided gratuitously negated neither the assumption of responsibility nor the requirement to perform the tasks so assumed with reasonable skill and care. Whether any responsibility was assumed, and its extent, was to be judged objectively in context and without the benefit of hindsight.
(3) In the present case, the basis of any liability was an assumption of responsibility by the appellant. There was no contractual duty to advise. The central question was the scope of the assumption of responsibility on the facts determined by an objective construction of the relevant exchanges between the parties. The relevant email exchanges were not to be read as if they were formal legal documents, and had to be considered in the context that they were exchanges between a solicitor and former client who were familiar to each other and involved in ongoing professional relationships on other projects. At the same time, the respondents were both highly experienced and well-resourced.
On a fair and objective reading of the relevant email exchanges, the appellant did not assume legal responsibility to the respondents to advise on the legal position if UKPN did not have documentation in support of its right to lay cables through the properties and/or in respect of their rights generally against UKPN.
(4) It was important that solicitors were able to respond courteously and constructively to “one-off” requests for information or advice from former or potential clients or third parties without fear of creating legal liability. At the same time, when volunteering any such information or advice, solicitors needed to take care to identify the limits of any assumption of responsibility in order to avoid the risk of litigation such as the present. Equally, those seeking information or advice from solicitors on an informal basis needed to take care to understand the potential limits of the exercise and the extent to which they could reasonably rely on any response.
Patrick Lawrence QC, Carl Troman and Diarmuid Laffan (instructed by Clyde & Co LLP) appeared for the appellant; Nigel Tozzi QC and Jonathan Scott (instructed by CMS Cameron McKenna Nabarro Olswang LLP) appeared for the respondents.
Eileen O’Grady, barrister
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