Barclays Bank Plc v Weeks Legg & Dean (Barclays Bank Plc v Layton Lougher & Co, Hopkin John (NE) & Co (Third Party), Mohamed v Farida)

A solicitor’s standard undertaking to a lender concerning purchase money is not a warranty of title. It authorises the solicitor to release money only in exchange for what a reasonably competent solicitor, exercising proper skill and care, would accept as a good marketable title.

A good marketable title is a title which can be forced upon an unwilling purchaser. The expression describes the sufficiency of the vendor’s title, not the physical or commercial qualities of the land. The property identified by the undertaking is the property forming the subject matter of the purchase transaction, including its contractual benefits and burdens.

Standing alone, the undertaking creates no general duty to report or advise the lender about the transaction or the vendor’s title.

Three conjoined appeals concerned a standard-form solicitor’s undertaking governing purchase money advanced by a bank. In the first action, the purchased development land was subject to a right of way. In the second, the vendor could not prove title to a contracted right of access, while the service easements acquired were inadequate for the intended development. In the third, an impostor forged a co-owner’s execution of the conveyance.

The first and third claims had been dismissed. In the second action, liability had been established, with quantum to be tried. The first-instance judges had differed over whether the undertaking referred to the purchase contract and whether it imposed an absolute guarantee of title.

The Court of Appeal considered the meaning of “a good marketable title to such property”, whether the undertaking created an absolute or qualified obligation, and whether it imposed any duty to advise the bank about the transaction or the vendor’s title.

1. Disposition. The Court unanimously dismissed the appeals in the first and third actions. It varied the answers given in the second action to accord with its judgment. Leave to appeal to the House of Lords was refused.
2. Lord Justice Millett, giving the leading judgment, held that the standard undertaking is contractual and sounds in damages. It is not a warranty of title. Its substance is an obligation not to part with the bank’s purchase money except on the prescribed terms. The money belongs in equity to the bank and is held on trust, so an unauthorised payment may constitute both breach of contract and breach of trust.
3. A “good marketable title” describes the quality and sufficiency of the vendor’s title. It does not describe the physical condition, commercial utility or ready saleability of the land. The relevant property is the subject matter of the identified purchase transaction, including the interests, rights and burdens comprised in the contract. The undertaking’s brief property description identifies that transaction; it is not a report on title.
4. The solicitor’s obligation is qualified. The solicitor undertakes to release the money only for what a reasonably competent solicitor, acting with proper skill and care, would accept as a good marketable title. The solicitor does not guarantee that the title is free from undiscoverable defects or that a vendor’s execution is genuine. Lord Justice Pill agreed, holding that the commercial context required an implied reasonable-care qualification and did not make the solicitor the bank’s insurer. Lord Justice May also agreed.
5. In the first action, the vendor proved a good marketable title to the freehold property as contractually sold subject to the right of way. There was no breach. In the second, the vendor could not prove title to the contracted right of access, and the solicitor’s negligent investigation breached the qualified undertaking. The inadequacy of service easements for the proposed development did not affect the marketability of the title and created no breach. In the third, the forged execution prevented acquisition of the expected security, but the solicitor had exercised proper skill and care and was not liable.
6. The undertaking alone imposed no general duty to report or advise the bank about the transaction or the vendor’s title. The applications concerning amendments to allege such a duty were therefore dismissed.

1. Court of Appeal: The appeals in the first and third actions were dismissed. The answers given in the second action were varied to accord with the Court of Appeal’s construction of the undertaking. Leave to appeal to the House of Lords was refused.
2. Queen’s Bench Division, Mr Toulmin QC sitting as a deputy High Court judge: The first action was dismissed because the solicitor had obtained a good title to the property contracted to be purchased.
3. Queen’s Bench Division, His Honour Judge Hicks QC sitting as an Official Referee: In the second action, the solicitor was held liable for failing to secure adequate access and service rights. Liability was determined, with quantum to follow.
4. Chancery Division, His Honour Judge Moseley QC sitting as a deputy High Court judge: The third action was dismissed because the solicitor had applied the money for the purpose of acquiring title despite the undetected forged execution.