AW Group Ltd v Taylor Walton (A Firm)

A solicitor retained on a conveyancing transaction must exercise reasonable professional judgment within the scope of the retainer. Where the solicitor becomes aware, or ought to become aware, of a material risk to the client, the solicitor must advise the client of it or investigate further. This duty includes taking adequate instructions about the client’s intended use of property and explaining relevant planning restrictions. In assessing loss for negligent information, diminution in value is a starting point, but the court must identify the loss attributable to the inaccurate or omitted information and avoid over-compensation. The claimant succeeded on breach of duty but failed to prove causation.

The claimant acquired an industrial estate after being advised by the defendant solicitors in connection with the conveyance. It alleged that the solicitors failed to investigate and explain the planning position, including the absence of permission for HGV parking and certain business uses. Planning enforcement action later followed. The claimant sought damages for professional negligence, including diminution in value and consequential losses.

The court considered breach of duty, causation, loss, contributory negligence, interest and costs. It found that the defendant had failed properly to advise on the planning status, but that the claimant would have completed the purchase even if properly advised.

1. Breach of duty. A solicitor’s responsibilities are defined by the retainer, but the solicitor must report risks or potential risks revealed while carrying out the retained work. The court applied the principles discussed in County Personnel Ltd v Alan R Pulver & Co Ltd [1987] 1 WLR 916 and Credit Lyonnais SA v Russell Jones & Walker [2003] PNLR 2. The defendant knew, or should have known, that the claimant intended to transfer business activities to the property. It should have made proper enquiries and explained the significance of the B1, B2 and B8 use classes, the lack of permission for HGV parking, and the restrictions affecting the site.
2. The defendant’s report on title and its letter to the bank’s solicitors were inadequate. In particular, its statement that no consents were necessary for the works at the rear of the site was incorrect. The defendant was in breach of duty in failing to give proper advice on the planning status before completion.
3. Causation. The claimant failed to establish that it would have withdrawn from the purchase. By the time the relevant planning information should have been provided, it had paid a non-refundable deposit, faced pressing obligations to vacate its existing premises, had limited time to obtain alternative accommodation, and would probably have regarded enforcement risk as manageable. The claim therefore failed on causation.
4. Loss. The court nevertheless considered damages in case of appeal. Applying South Australia Asset Management Corporation v York Montague Ltd [1997] AC 192, the defendant would have been liable only for loss attributable to the absence of the relevant planning consents. Diminution in value was the starting point, but the court could depart from a mechanical application of that approach where necessary to achieve proper compensation. The actual hard standing and immediately available tenants could be taken into account in assessing the hypothetical value.
5. Contributory negligence and costs. The claimant was not contributorily negligent. The defendant was ordered to pay 90 per cent of the defendant’s costs, subject to detailed assessment, with an interim payment of £90,000.

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