Damages – Land – Development agreement – Solicitor’s retainer in respect of agreement for development of land – Appellants instructing respondent solicitor to draw up terms of agreement – Whether solicitor negligent in drafting agreement – Appeal dismissed
The second and third appellants instructed the respondent firm of solicitors to act in connection with a proposal for a development and sale of land (the Howarth land), to be undertaken by the first appellant. The council was the registered proprietor of land adjoining that site. The part immediately adjoining the Howarth land (the possessory title land) had been in the Howarths’ possession for many years and the Howarths believed that this conferred on them a good possessory title. The remainder (the clear title land) had always been in the possession and occupation of the council.
In accordance with the appellants’ instructions, a partner in the respondent firm (S) attended a meeting on the site of the proposed development, at which the second appellant informed him that the development could encroach on the adjoining land. However, he told S not to take action since any discrepancy would be cured by the intended purchase of additional land from the council. S subsequently prepared a draft agreement in respect of the project, a development agreement was entered into and the work proceeded.
Problems concerning the adjoining land arose but were eventually settled. However, the appellants claimed damages for negligence arising from the respondent’s retainer relating to the development agreement. They alleged that, despite knowing that the proposed development extended beyond the boundary line of the Howarth land, the respondent had caused or permitted the first appellant to enter into the agreement without taking any steps to protect its interests or to advise that the intended development might give rise to the difficulties that in fact ensued.
The judge dismissed the claim, holding, inter alia, that the respondent had been negligent in failing to point out that the licence provisions of the agreement should be extended to enable the development of any part of the possessory title land acquired in the future, but not in failing to give similar advice in respect of the clear title land; in any event, the alleged loss had not been caused by any such negligence. The appellants appealed.
Held: The appeal was dismissed.
The distinction that the judge drew in respect of the respondent’s conduct between the possessory title land and the clear title land was unjustified. It was not a distinction recognised by the instructions given at the site meeting. In any event, the respondent had not been negligent in respect of either section of land.
A solicitor was not a general insurer against its client’s legal problems. Its duties were defined by the terms of the agreed retainer. In the present case, the respondent had not been asked to advise on the commercial wisdom of the deal that was being negotiated with the landowners. Its task had been to draft an agreement to enable the first appellant and its subcontractors, as licencees of the Howarths, to develop the Howarth land: Crédit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch); [2002] 2 EGLR 65; [2002] 33 EG 99 applied.
The limitations on what was expected of the respondent were clear from the way in which the appellants dealt with S. Furthermore, bearing in mind that the individuals with whom S dealt had accountancy and property development experience, if the reasonable solicitor was told that the development agreement was not to concern any land other than the Howarth land, he or she was entitled to take that limitation on his or her role at face value.
Michael Booth QC (instructed by Nexus Solicitors, of Manchester) appeared for the appellants; William Flenley (instructed by Halliwells LLP, of Manchester) appeared for the respondent.
Eileen O’Grady, barrister
