Thomas & Anor v BPE Solicitors (A Firm)

Completion of a transaction must be determined objectively from the parties’ agreement and what occurred, not from solicitors’ later subjective views. Where completion arrangements require both a satisfactory undertaking and a telephone call between the solicitors, neither the undertaking alone nor an inadequate communication completes the transaction. An email acceptance is generally effective when received, rather than when sent, where the parties are using email as an instantaneous method of communication. A solicitor is not negligent in seeking an additional, reasonable term in an undertaking without express client instructions where no foreseeable problem arises from doing so. The claim failed because completion had not occurred and the defendants’ handling of the undertaking was not negligent.

The claimants had instructed the defendant solicitors in connection with the proposed sale of their shares in PDP Management Services Ltd to a company controlled by a fellow shareholder. Signed transaction documents were exchanged, but the documents were undated and the purchase money was not transferred before the bank’s deadline on 24 August 2007.

The purchaser’s solicitors provided undertakings to transfer the money on the following Tuesday. The defendants requested that interest also be included and no completion telephone call took place. The transaction was then abandoned after adverse financial information emerged. The claimants alleged that completion had already occurred, that they should have been advised of it, and that the defendants had negligently rejected or failed to accept the undertakings.

1. Completion. The claimants had to establish objectively that completion occurred on 24 August 2007. The solicitors’ later opinions that the transaction had completed were neither relevant nor admissible as conclusions on that issue. The court had to examine the contemporaneous agreement, communications and events.
2. The parties had agreed that the purchaser’s solicitors would provide an undertaking to transfer £1.3 million on the following Tuesday, but that the undertaking had to be acceptable to the defendants. A telephone call between the relevant solicitors was also required to complete the transaction. Receipt of the undertakings alone was insufficient.
3. The undertaking sent at 17:14 did not provide for interest over the bank holiday weekend. The defendants’ 18:00 email requesting inclusion of interest amounted objectively to rejection of that undertaking. No subsequent completion call occurred. The 15-second call at 17:44 was insufficient for that purpose, and the purchaser’s solicitor had probably already left the office. The transaction therefore did not complete.
4. There was consequently no negligence in failing to advise the claimants that completion had occurred. Nor was it negligent to require provision for interest without first obtaining express instructions. In any event, the further completion call remained necessary.
5. As an alternative issue, the court considered email acceptance. The postal rule was an exception confined to its particular circumstances and did not apply to instantaneous communications: Entores Ltd v Miles Far East Corporation [1955] 2 QB 327. Applying the approach in Brinkibon Ltd v Stahag Stahl G.m.b.h. [1983] 2 AC 34, acceptance would have been effective on receipt at about 18:00, since the email was available during working hours. This was immaterial because no acceptance had been sent.
6. The causation issue was determined in the claimants’ favour on the assumption that completion had occurred, but that finding did not affect the result. The claim was dismissed.