Limitation – Solicitor’s negligence – Claimant landlord instructing defendant firm of solicitors to advise in connection with claims for statutory lease extensions made by lessee of two flats – Claim held to be time-barred
The claimant held a headlease of a building in London W1 containing flats let on underleases; it was the immediate lessor of those flats. Each underlease contained indemnity provisions under which the claimant was entitled to recover from the lessees, as part of the service charge, a proportion of the ground rent payable under its headlease. In 1997, the claimant instructed the defendant firm of solicitors to act for it in connection with a claim, by the lessee of two of the flats, for a statutory lease extension in respect of one of them pursuant to Part I of Chapter II of the Leasehold Reform, Housing and Urban Development Act 1993. In 1998, the lessee advanced a further claim in respect of his second flat; the defendant was instructed to deal with that claim also.
Negotiations for the new leases were conducted between the lessee and the freeholder of the building, although the claimant was consulted and kept informed. In March 1999, having seen a draft of the new lease for the first flat, the defendant advised the claimant that his position regarding service charge was not compromised. The new lease of the first flat was finally granted in November 1999. A draft lease in respect of the second flat was circulated around May 1999; the terms of that lease were finally agreed in November 1999 and the lease was executed in December 1999.
The new leases contained no indemnity provision and the claimant accordingly lost the right to recover a proportion of the ground rent. In August 2005, the claimant issued proceedings against the defendant for damages for negligence, contending that, had the defendant given correct advice, then either an indemnity provision would have been included in the leases or the claimant would have received compensation under the Act.
That claim was summarily dismissed by a master on the ground that it had been brought outside the applicable six-year limitation period. The master took the view that the claimant’s claim in respect of both flats stemmed from the wrong advice given by the defendant in March 1999 in relation to the first flat. He held that the claimant had no realistic prospect of showing that it had lacked the knowledge needed for bringing an action until a later date so as to bring its claim within the extended limitation period under section 14A of the Limitation Act 1980.
The claimant appealed. He contended that he had a separate cause of action respect of each flat, such that the claim in respect of the second flat was not time-barred.
Held: The appeal was allowed in part.
The correspondence and other facts showed that the defendant had been separately instructed in respect of each lease. It was under a duty to use reasonable skill and care to safeguard the interest of its client in respect of each lease. The duty continued in respect of the lease for the second flat independently of the lease for the first flat. Agreement of the terms of the first flat lease did not absolve the defendant from its duty as regards the other lease.
On the evidence, the defendant had given active consideration to the position on the indemnity provision only once, in March 1999. Having investigated the matter then, and believing that it had given correct advice, it had not positively revisited the issue in May to June 1999 when considering the terms of the lease for the second flat. It had understandably regarded the advice as regards the first flat as being equally applicable to the second flat. However, its duty to take reasonable care to ensure the protection of the claimant’s interests as regards the lease for the second flat was not diminished because of advice previously given in relation to the first flat. The defendant had not been asked to advise only once on a draft lease to be used for both flats. It continued to owe a duty to the claimant to protect the claimant’s interests as regards the indemnity provisions when considering the draft lease for the second flat. The fee charged by the defendant for each flat was the same.
Accordingly, there were separate causes of action in respect of each flat. The cause of action in respect of the second flat was not complete until November 1999 when agreement was reached on the terms of the new lease for that flat. The claimant had a real prospect of showing that its claim as regards the second flat was brought within the primary limitation period and its claim in respect of that flat should not have been dismissed summarily.
However, the master had correctly held that there was no reasonable prospect of the claimant establishing an extended limitation period under section 14A and the claim in relation to the first flat was time-barred accordingly.
Jonathan Small QC (instructed by Guy Clapham & Co) appeared for the claimant; William Flenley QC (instructed by Clyde & Co LLP) appeared for the defendant.
Sally Dobson, barrister
St Anselm Development Co Ltd v Slaughter & May (a firm)
Limitation – Solicitor’s negligence – Claimant landlord instructing defendant firm of solicitors to advise in connection with claims for statutory lease extensions made by lessee of two flats – Claim held to be time-barred The claimant held a headlease of a building in London W1 containing flats let on underleases; it was the immediate lessor of those flats. Each underlease contained indemnity provisions under which the claimant was entitled to recover from the lessees, as part of the service charge, a proportion of the ground rent payable under its headlease. In 1997, the claimant instructed the defendant firm of solicitors to act for it in connection with a claim, by the lessee of two of the flats, for a statutory lease extension in respect of one of them pursuant to Part I of Chapter II of the Leasehold Reform, Housing and Urban Development Act 1993. In 1998, the lessee advanced a further claim in respect of his second flat; the defendant was instructed to deal with that claim also.Negotiations for the new leases were conducted between the lessee and the freeholder of the building, although the claimant was consulted and kept informed. In March 1999, having seen a draft of the new lease for the first flat, the defendant advised the claimant that his position regarding service charge was not compromised. The new lease of the first flat was finally granted in November 1999. A draft lease in respect of the second flat was circulated around May 1999; the terms of that lease were finally agreed in November 1999 and the lease was executed in December 1999.The new leases contained no indemnity provision and the claimant accordingly lost the right to recover a proportion of the ground rent. In August 2005, the claimant issued proceedings against the defendant for damages for negligence, contending that, had the defendant given correct advice, then either an indemnity provision would have been included in the leases or the claimant would have received compensation under the Act.That claim was summarily dismissed by a master on the ground that it had been brought outside the applicable six-year limitation period. The master took the view that the claimant’s claim in respect of both flats stemmed from the wrong advice given by the defendant in March 1999 in relation to the first flat. He held that the claimant had no realistic prospect of showing that it had lacked the knowledge needed for bringing an action until a later date so as to bring its claim within the extended limitation period under section 14A of the Limitation Act 1980.The claimant appealed. He contended that he had a separate cause of action respect of each flat, such that the claim in respect of the second flat was not time-barred.Held: The appeal was allowed in part.The correspondence and other facts showed that the defendant had been separately instructed in respect of each lease. It was under a duty to use reasonable skill and care to safeguard the interest of its client in respect of each lease. The duty continued in respect of the lease for the second flat independently of the lease for the first flat. Agreement of the terms of the first flat lease did not absolve the defendant from its duty as regards the other lease.On the evidence, the defendant had given active consideration to the position on the indemnity provision only once, in March 1999. Having investigated the matter then, and believing that it had given correct advice, it had not positively revisited the issue in May to June 1999 when considering the terms of the lease for the second flat. It had understandably regarded the advice as regards the first flat as being equally applicable to the second flat. However, its duty to take reasonable care to ensure the protection of the claimant’s interests as regards the lease for the second flat was not diminished because of advice previously given in relation to the first flat. The defendant had not been asked to advise only once on a draft lease to be used for both flats. It continued to owe a duty to the claimant to protect the claimant’s interests as regards the indemnity provisions when considering the draft lease for the second flat. The fee charged by the defendant for each flat was the same.Accordingly, there were separate causes of action in respect of each flat. The cause of action in respect of the second flat was not complete until November 1999 when agreement was reached on the terms of the new lease for that flat. The claimant had a real prospect of showing that its claim as regards the second flat was brought within the primary limitation period and its claim in respect of that flat should not have been dismissed summarily.However, the master had correctly held that there was no reasonable prospect of the claimant establishing an extended limitation period under section 14A and the claim in relation to the first flat was time-barred accordingly.Jonathan Small QC (instructed by Guy Clapham & Co) appeared for the claimant; William Flenley QC (instructed by Clyde & Co LLP) appeared for the defendant.Sally Dobson, barrister
