The High Court has backed a claim by European bank Credit Lyonnais SA for damages for professional negligence against solicitor Russell Jones & Walker (RJW) over the termination of a lease.
The case concerned premises at 15 Highpoint Business Village, Henwood Road, Ashford, Kent, the lease of which Lyonnais entered into in 1991 for a term of 25 years. It had hoped that the opening of the Channel Tunnel would attract continental business to Ashford, and that it could secure valuable customers if it had a presence there.
By 1994, Lyonnais decided to exercise the break clause in the lease and close down the retail premises. The clause provided for termination on the third anniversary of the term by giving not less than six months’ previous written notice, and required £11,500 to be paid to the lesser by no later than the termination date.
Notice of termination was given in time but payment was not. The landlord declined to accept premature termination, thereby forcing Lyonnais to buy its way out of the lease.
In the High Court, Lyonnais alleged that RJ&W, which it instructed in relation to the exercise of the break option, breached its duty of care through its failure to warn that the payment required was a “condition precedent” and that it was “time critical”.
RJ&W did not dispute that a property lawyer reading the lease would have realised the risk involved, but argued that its instructions were very narrow and did not include any requirement to advise its client either as to the meaning of the payment clause or as to the law on conditions precedent in tenants options.
Finding RJ&W liable for damages, Laddie LJ said: “I do not believe that any responsible solicitor would consider his duties to be so limited.”
He held that Lyonnais should have been alerted to the risk it faced under the payment clause, and that RJ&W had failed in its duty to its client and was accordingly liable.
Credit Lyonnais SA v Russell Jones & Walker Chancery Division (Laddie J) 2 July 2002.
PLS News 02/07/02
