Clark & Anor v Lucas Solicitors Llp

The court’s supervisory jurisdiction ordinarily requires a solicitor to perform an undertaking given in the course of practice. An undertaking to redeem or discharge a charge is not impossible merely because the chargeholder demands more than the value of the property or more than might have been required had timely enquiries been made. The solicitor may be ordered to pay the sum necessary to obtain the discharge. Compensation is appropriate where performance is impossible, otiose, or otherwise inappropriate. The court may consider uncertainty, the involvement of a third party and proportionality, but the remedy should not ordinarily depend on the lender’s willingness to accept less where the solicitor should have contemplated that the entire secured debt might be demanded.

The claimants purchased a newly built property from a developer. The defendant solicitors acted for the developer and gave standard undertakings to redeem charges affecting the site and provide the necessary Land Registry discharge. Completion took place, but the defendant paid the sale proceeds to the developer’s bank without obtaining the redemption figure or securing the discharge of a second charge.

The second chargeholder later refused to provide a discharge unless paid the outstanding loan, which substantially exceeded the property’s value. The defendant admitted breach but argued that performance was impossible and that the appropriate remedy was an inquiry into loss and compensation. The claimants applied for summary judgment and specific enforcement.

1. Application allowed. Summary judgment was granted and the defendant was ordered to enforce its undertaking, with the precise form of order and costs to be determined after further submissions.
2. The court’s jurisdiction to enforce solicitors’ undertakings is compensatory, although it retains a disciplinary aspect. Failure to implement an undertaking is prima facie misconduct. The fact that performance depends upon a third party does not prevent enforcement, although it may affect the form of relief. Guided by Udall v Capri Lighting Limited [1988] 1 QB 907, the usual order where performance is not impossible is an order requiring performance.
3. The undertaking was not impossible. It was a standard undertaking to pay off charges on completion. The defendant could perform it by paying the sum demanded to obtain the discharge. The case differed from Udall v Capri Lighting Limited and Fox v Bannister, King & Rigbeys [1988] 1 QB 925, where performance could no longer be achieved or had become otiose. Nor did the case fall within the second or third categories discussed in Wroth v Tyler [1974] 1 Ch 30.
4. The amount demanded, although approximately twice the property’s value, was not wholly unreasonable or outside the defendant’s contemplation. The chargeholder was entitled to demand the full sum secured. The court therefore declined to substitute compensation merely because the defendant had failed to obtain redemption figures at the proper time. The obiter qualifications in L Morgan & Co v Jenkins O’Dowd & Barth [2008] EWHC 3411 (Ch) and Angel Solicitors (a Firm) v Jenkins O’Dowd & Barth (a firm) [2009] 1 WLR 1220 did not apply.
5. The subrogation argument disclosed no real prospect of defending the claim. Requiring the purchasers to undertake difficult litigation, or potentially sell their property, would improperly deprive them of the benefit of the undertaking.

First instance decision. The claim was transferred from the Cardiff County Court to the Chancery Division of the High Court.