Stone Heritage Developments Ltd & Ors v Davis Blank Furniss (A Firm)

A solicitor’s duty is defined by the retainer and the circumstances, rather than by a general obligation to insure a client against legal or commercial risks. A solicitor must warn of a risk or potential risk disclosed while carrying out the retainer where it should reasonably be apparent that the client may be unaware of it. Where experienced clients expressly exclude additional land from a development agreement, the solicitor may ordinarily take that limitation at face value. A conditional and complex extension concerning possible future development was not an obvious hidden pitfall. No breach of duty was established.

Stone and its former directors claimed damages in negligence against solicitors who drafted a development agreement concerning land owned by the Howarths. Stone intended, or hoped, to acquire adjoining land from Bolton, comprising possessory-title land and clear-title land. The agreement contained no rights over the Howarth land to support development of either area.

The High Court found a breach of duty concerning the possessory-title land, but not the clear-title land. It nevertheless dismissed the claim because the alleged loss was not caused by the negligence. The solicitors challenged the breach finding, while Stone challenged the findings concerning the clear-title land and causation. The central issue was the scope of the solicitor’s duty in light of the retainer and the clients’ instructions.

1. Appeal dismissed. The Court accepted the ground in the respondent’s notice and rejected Stone’s ground of appeal. The alleged loss therefore could not establish liability, and the causation issues did not arise.
2. Scope of duty. The solicitor’s task was to draft an agreement enabling development of the Howarth land by Stone as licensee. He was not retained to advise on the commercial wisdom of the transaction or on additional land. The principles discussed in Credit Lyonnais SA v Russell Jones & Walker [2003] 1 Ll.L.R. (PN) 7, Pickersgill v Riley [2004] UKPC 14 and John Mowlem Construction plc v Neil F.Jones & Co. [2004] EWCA Civ 768 confirmed that the duty is governed by the retainer and circumstances, subject to a duty to warn of an apparent hidden pitfall.
3. Application. The clients had accountancy and property-development experience and expressly instructed the solicitor at the site meeting that the agreement was not to concern either the possessory-title land or the Bolton clear-title land. In those circumstances, a reasonable solicitor was entitled to take the limitation at face value. The proposed extension was conditional on the acquisition of further land and would have raised numerous additional questions about the land concerned, the condition and the appropriate time limit.
4. The supposed pitfall was not sufficiently obvious to give rise to a duty to advise. The distinction drawn by the trial judge between the two categories of adjoining land was unsustainable because the express instructions applied to both. The solicitor was not negligent in relation to either area.
5. An appellate court must examine a challenge to the application of law to facts with care and respect for the trial judge’s conclusion, but must correct the decision if it is wrong. The Court therefore upheld dismissal of the claim.

1. Court of Appeal (Civil Division): dismissed the appeal and accepted the respondent’s notice, holding that no breach of duty was established.
2. High Court, Chancery Division, Manchester District Registry: His Honour Judge David Hodge QC dismissed the negligence claim after finding no causation, although he found a breach of duty concerning the possessory-title land. Permission to appeal was refused at trial; Carnwath LJ granted permission on 7 February 2007.