Malmesbury & Ors v Strutt & Parker (a partnership) & Anor

A professional adviser negotiating a long commercial lease must apply proper attention to the value and structure of the transaction, including likely turnover-based returns where the circumstances warrant investigation. A competent adviser may reasonably accept a fixed rent where the property is immature, demand is uncertain and the negotiating position is weak. However, materially changed circumstances may require the adviser to revisit an earlier position. Damages for negligent advice concerning the grant of a lease are ordinarily assessed by valuing the parties’ interests at the transaction date, unless that would fail to reflect the overriding compensatory principle.

The Estate claimed damages in negligence against Strutt & Parker (a partnership) arising from the negotiation of airport car-park leases granted to Bournemouth International Airport Ltd. The claim concerned leases made in 2000, 2002 and 2003. It was alleged that the rents should have included a substantial turnover element and that the 2002 rent-review mechanism was inadequate.

Strutt & Parker claimed contribution or indemnity from the Estate’s solicitor, Mr Fitzgerald, and Wilsons. The court also considered contributory negligence, the status of the Airport Road, the lost-chance assessment and the proper measure of damages.

1. Professional duty. The standard required of Strutt & Parker was that of a major national surveying firm holding itself out as competent to advise on development land adjacent to an airport. The firm’s duty included drawing on its wider resources where the individual adviser lacked necessary expertise. The general professional standard was stated by reference to Hall (Arthur JS) & Co v Simons [2002] AC 615.
2. 2000 lease. Mr Ashworth was not negligent. At the time, passenger use was limited, the car park was inadequately surfaced, the new-terminal plan remained possible and the Estate was in the weaker negotiating position. Accepting a fixed rent rather than pressing for a turnover rent was a permissible exercise of professional judgment.
3. 2002 and 2003 leases. The circumstances had materially changed. The new terminal was planned on airport land, car parking was a major source of airport income, passenger growth was anticipated, the car park was to become the principal facility and BIA sought a 24-year lease. Mr Ashworth should have investigated and pressed for a turnover rent. He also negligently accepted a rent review linked to season-ticket prices, which gave BIA potential control over the rent. The independent-car-park alternative was not realistic because BIA controlled access through the Airport Road and could prevent effective use of a rival facility. The 2003 lease followed from the same breach.
4. Loss of chance. Applying Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, the court held that BIA would probably have negotiated rather than refused a turnover rent. The most likely outcome was a turnover element of 10 per cent, in addition to a base rent of £9,000. The claimants were not confined to their pleaded figure of 80 per cent.
5. Damages and other claims. The damages were to be assessed by valuation at the transaction dates, subject to the overriding compensatory principle. The claims against Mr Fitzgerald and Wilsons failed because their retainer was legal, not commercial, and they were entitled to rely on Mr Ashworth’s commercial advice. The allegation of contributory negligence based on failure to forfeit the leases also failed. The fee counterclaim was left unresolved.