Tom Hoskins Plc v EMW Law (a firm)

A solicitor retained in a property transaction need not obtain a third party’s consent personally, but must advise and assist the client in securing it. This includes explaining the client’s responsibilities, the relevant contractual requirements, the risks of exchanging contracts prematurely, and the terms on which consent is offered.

Where negligence delays completion, trading losses are not irrecoverable merely because they arise from continued trading. The claimant must identify losses caused by the breach, applying ordinary causation principles. Where the loss depends on hypothetical action by a third party, the Allied Maples loss-of-chance approach applies.

Tom Hoskins PLC claimed damages for professional negligence against its solicitors, EMW Law, arising from the delayed sale of four leasehold public houses and a freehold brewery and public house.

The alleged breaches concerned the drafting of a sale contract which prevented the purchaser from being required to provide guarantees or rent deposits, failures in progressing and communicating the landlords’ consent requirements, and advice concerning dilapidations and a £50,000 retention.

The court also had to determine whether the claimant could recover continuing trading losses caused by delayed completion, and whether the claim was subject to contributory negligence or loss-of-chance principles.

1. Retainer. The solicitor was not retained to obtain the landlords’ consent as a matter of fact, since that involved several parties. However, the retainer included legal advice and assistance concerning the applications. The solicitor had to ensure that the client understood its responsibility, the application requirements, the landlords’ legitimate demands, and the risks of exchanging contracts or approaching completion without consent ([98]-[101]).
2. Contract drafting. The first contract placed the purchaser and landlords in probable conflict by preventing the purchaser from providing guarantees or rent deposits which the leases allowed the landlords to require. The solicitor was negligent in agreeing that provision without warning the client of the risk, and the client had not accepted that risk ([102]-[103]).
3. Delay. There was no general rule requiring consent in principle before exchange. Nevertheless, after exchange the solicitor had to monitor the applications closely. He was negligent in failing to communicate the landlords’ requirements, obtain copies of applications, and contact the landlords’ solicitors sufficiently early. The breaches were particularly serious because of the contractual restriction on the purchaser’s obligations ([104]-[117]).
4. Dilapidations. There was no agreement making the purchaser responsible for the dilapidations. The solicitor negligently failed to advise that the claimant could dispute liability for them ([118]-[122]).
5. Causation and loss of chance. The claimant’s own hypothetical conduct was assessed on the balance of probabilities. The purchaser’s hypothetical conduct was governed by the principle in Allied Maples v Simmons & Simmons: there had to be a real and substantial chance of the relevant conduct, with the chance then valued. The overall chance of completion by the end of October 2000 was assessed at 50%, and the chance of avoiding the retention at 40% ([124]-[140]).
6. Trading losses. Galoo v Bright Grahame Murray did not establish that trading losses were irrecoverable in every case. Losses described as trading losses had to be separated into losses caused by the breach and losses attributable to other causes. In this case, the delay caused the claimant to continue operating businesses which it intended to sell, and the resulting losses fell within the scope of the solicitor’s duty. The claimant’s trading losses were therefore recoverable ([142]-[157]).
7. The contributory-negligence defence failed. Judgment was entered for £72,083 in trading losses and £28,500 for the retention and the reduced sale proceeds. The court directed that counsel be heard on the appropriate order ([141], [162]-[163]).

First-instance decision. No appellate history is stated in the judgment.