Clarke & Anor v Iliffes Booth Bennett (A Firm)

A solicitor retained for a commercial property transaction must understand the effect of the documents being negotiated and, where the circumstances require, correct an important misunderstanding by the client. This duty may require the solicitor to understand planning procedures forming an important contractual trigger, even where the client negotiated the term and is experienced. The solicitor is not ordinarily required to advise whether the client should enter into the transaction. For causation, the claimant must prove on the balance of probabilities that a different course would have been taken and, where that course depended on agreement by a third party, that there was a real or substantial chance of agreement. Breach does not justify substantial damages where those causative matters are not proved.

The claimants alleged that their solicitor negligently advised on a conditional contract and option relating to land in the Green Belt. The option was exercisable for three months after the land was excluded from the Green Belt, but the solicitor failed to appreciate that exclusion required adoption of the relevant local plan by the local authority, rather than publication of the planning inspector’s report.

The claimants contended that they would either have declined the transaction or required protection against delay, particularly interest on the fixed purchase price. The issues concerned the scope of the solicitor’s retainer, breach of duty, causation and loss.

1. Duty. The solicitor was retained in connection with a commercial property transaction involving development potential and a conditional option. Her duty was to use reasonable care and skill in giving such advice as the facts required, having regard to the client’s understanding and experience. Although a solicitor is not ordinarily required to advise whether a client should enter into a contract, the solicitor must understand the effect of the document being negotiated.
2. The solicitor was not under a positive duty, before the relevant meeting, to advise on Green Belt procedures merely because the client had negotiated the term and had planning experience. However, once the client’s statements revealed that she misunderstood the contractual trigger, the solicitor had to correct her or explain that the position required checking. The solicitor could not rely on the limited role of drafting and approving documents where the Green Belt release was an important contractual term.
3. Breach. The client believed that publication of the inspector’s report would trigger the option. The solicitor did not share that belief but had failed to turn her mind to the trigger event. She was negligent in failing to correct the client’s misunderstanding or to say that she did not know whether it was legally correct.
4. Causation. Applying Allied Maples Group Ltd v Simmons & Simmons [1995] 1 W.L.R. 1602, the claimants had to establish on the balance of probabilities that the client would not have entered into the contract or would have demanded different terms, and that there was a real or substantial chance that the purchaser would have agreed to those terms.
5. The claimants failed to prove that the client would have refused the transaction or demanded interest. They also failed to establish any real or substantial chance that the purchaser would have agreed to pay interest. On the alternative no-transaction case, the court found that the purchaser was not a special purchaser and that the claimants would have suffered no loss. The claimants were therefore entitled to no more than nominal damages.

First-instance decision of the High Court (Chancery Division). The judgment records no appeal or earlier decision in the same proceedings.