A solicitor’s firm was found in “breach of their duties” in providing advice and taking the necessary legal steps to avoid causing the kinds of loss and damage their client sustained.
The solicitors had advised a company over the purchase of a multiple housing development. Included was conditional planning permission with the owners of a fish and chip shop adjacent to the site for the installation of a ventilation system to ensure that odours from the shop were extracted at a suitable level.
Three months after completing documents relating to the sale of the site, the company owners of the fish shop sold the premises. The new owner of the fish shop then disputed the entitlement of the housing developer to install the ventilation system and requested a payment of £75,000 in return for allowing the installation to go ahead.
Acting on advice from the defendant solicitors, the property firm claimed they had a legal right to install the system and refused to pay. However, the company failed to obtain a variation of the planning permission and agreed to pay the chip shop owner £324,000 in return for the grant of a right to install the ventilation system.
The developer claimant argued that as a result of the solicitor’s breach of duty, they had postponed active marketing and the launch of the development, which led to additional bank borrowing costs and lower sales prices due to the property market at the time.
Judge said the solicitors were “not merely providing information”
At court, the solicitors accepted that they were in breach of their duties in failing to advise their client and take the required steps to carry out an enforceable right against the fish and chip shop owner. However, they contested that the losses their client claimed for additional bank charges and reduced house sales were “not within the scope of their duties”. The solicitors said it would not be fair and reasonable to impose the losses as they had “not assumed the risk”.
The court disagreed, which found that the scope of the solicitor’s duties was “sufficiently wide” to include the duty to avoid causing their client the losses they incurred. The judge said the solicitors were “not merely providing information” but were “under a duty to advise them correctly of their legal position at the time” of the proposal by the new shop owners so that a properly informed decision could be made over action to be taken.
The judge concluded that it was reasonably foreseeable that their breach of duty might result in an interruption to the planned progress of the development and sale of the properties, and may also cause delay and additional borrowing costs. The claimant was awarded damages of more than £1.1 million, which included the payment made to the new chip shop owners, additional bank borrowing costs and loss of sales.