Patel & Anor v Daybells (A Firm)

Conformity with a common or nearly universal professional practice is not an automatic defence to negligence. The practice must be reasonable and responsible. The court should consider whether it creates a foreseeable risk, whether that risk can be avoided, and whether experts have considered comparative risks and benefits and reached a defensible conclusion. Reliance on a vendor solicitor’s undertaking to discharge a bank mortgage was not, in the circumstances, negligent. The established English conveyancing system had practical advantages and professional protections. The court also indicated that a purchaser’s solicitor will normally need to take speedy steps to enforce such an undertaking once aware of a breach.

Mr and Mrs Patel brought solicitor’s negligence proceedings against Daybells arising from the purchase of commercial premises. Completion took place on the strength of the vendor solicitor’s undertaking to discharge a Midland Bank mortgage, but the charge was not discharged until several years later.

Gray J decided liability against the Patels and held on a separate issue that redemption before commencement of the action did not eliminate recoverable loss: [2000] LLR (PN) 844. The Patels appealed on liability and Daybells cross-appealed on the separate issue. This judgment concerned only whether reliance on the undertaking breached Daybells’ duty of care.

1. Disposition. The court, in a judgment to which all three judges contributed, dismissed the appeal on the liability issue with costs. Permission to appeal to the House of Lords was refused. The separate issue was stood over with liberty to apply for directions.
2. Professional practice. The general principle in Edward Wong Finance Co v Johnson, Stokes & Master was accepted and treated as confirmed by Bolitho v City and Hackney Health Authority. A common or universal professional practice does not automatically establish reasonable care. It must rest on a defensible assessment of comparative risks and benefits.
3. Conveyancing application. The risk that a vendor solicitor might fail to produce a Form 53 after undertaking to discharge a bank mortgage was foreseeable. However, the routine English practice was not negligent merely because that risk existed. The alternative of separate bank drafts or direct dealings with the mortgagee was untested, could create expense, delay and new risks, and was not normal English practice.
4. Daybells did not need to prove that the alternative system was unworkable. It was sufficient to show that the established practice, followed with the approbation of the Law Society and Council of Mortgage Lenders, reflected expert consideration of comparative risks and benefits and was defensible. The vendor solicitor’s status as a sole practitioner and the short-term nature of the bridging loan did not alter that conclusion.
5. Post-completion conduct. The court stated that it would normally form part of a purchaser solicitor’s duty to take speedy steps to enforce the vendor solicitor’s undertaking once aware of a breach. That observation was not determinative because the relevant post-completion allegations had been removed from the pleaded case.

1. Court of Appeal (Civil Division) — [2001] EWCA Civ 1229: dismissed the Patels’ appeal on liability with costs, refused permission to appeal to the House of Lords, and stood over the separate issue.
2. High Court, Queen’s Bench Division — Gray J made an order on 19 July 2000, reported at [2000] LLR (PN) 844. Liability was decided against the Patels, while the separate recoverable-loss issue was decided in their favour.