Brook Properties (Birmingham) Ltd v Alton & Co (A Firm)

A solicitor’s advice is adequate where it clearly explains a material defect in proposed security and advises the client not to proceed. The solicitor need not eliminate every theoretical possibility that the defect may later be resolved, particularly where the solicitor reasonably believes the client understands the advice. A negligence claim also requires proof that competent advice would probably have altered the claimant’s conduct. Proceeding despite an express warning, while failing to obtain valuation or repayment evidence, may defeat causation.

The claimant instructed the defendant solicitors in connection with a proposed loan secured against property subject to a restraint order under the Proceeds of Crime Act 2002. The claimant alleged that the solicitors failed to explain that the restraint would take priority over the claimant’s intended charge, or alternatively failed to advise adequately about the prospect of resolving matters with the Serious Fraud Office.

The court found that the warning was probably communicated, that the claimant was advised not to proceed, and that the advice was adequate. The remaining issue was whether the claimant had shown that fuller advice would have led it to refrain from making the loan.

1. Claim dismissed. The solicitor had warned that the restraint affecting the property would remain and effectively precede the claimant’s charge. He had advised the claimant not to proceed.
2. The court accepted that the advice was adequate. It was reasonable for the solicitor not to state that it was impossible for the borrower to resolve matters with the Serious Fraud Office. That possibility existed in principle, and the solicitor understood that the borrower’s solicitors were dealing with the issue. The material warning was that the restraint would take priority and that the transaction should not proceed.
3. The extent of an explanation may depend on the client’s experience and apparent understanding, as discussed in Kandola v Mirza Solicitors LLP [2015] EWHC 460 (Ch). The solicitor reasonably believed that the relevant clients spoke English fluently and was not required to go further than the advice given.
4. In any event, causation was not established. The claimant proceeded despite the advice against completion. It had also failed to obtain a professional valuation or apparently to investigate the borrower’s ability to repay. The court was not persuaded that additional advice would have prevented the loan.
5. The claim for professional negligence was therefore dismissed.