Balogun v Boyes Sutton and Perry (a firm)

A solicitor who advises on the construction of a commercially important lease provision may breach duty even if the solicitor’s preferred construction is ultimately correct. The question is fact-sensitive. A warning and corrective drafting may be required where factors favouring an alternative construction create a sufficiently serious risk, having regard to the provision’s importance to the client.

That breach does not establish liability without loss. Where all relevant landlords accepted the client’s right under the lease, and the practical dispute concerned limitations arising under a superior lease rather than the defective advice, the failure to warn caused no loss.

A conveyancing solicitor need not investigate a planning condition where the client has been alerted to it, provides no instructions or plans requiring action, and the condition is engaged only before the proposed use begins.

The appellant acquired a 15-year commercial underlease for use as a restaurant. He instructed the respondent solicitors in the transaction. The premises contained a purpose-built ventilation shaft, but the appellant later encountered resistance to proposed ducting and chimney works.

At a preliminary-issues trial, the High Court dismissed his claims for professional negligence and breach of contract. The judge found that the appellant had not instructed the solicitor before completion that ducting works would be needed. The judge also held that the underlease gave a right to use the ventilation shaft.

On appeal, the appellant pursued a secondary case that the solicitor should have warned of a risk that the underlease did not confer the necessary rights. He also alleged negligent failure to obtain written planning approval under Condition 4. The central issues were breach of duty, causation, and the scope of a conveyancing solicitor’s duty to investigate.

1. Appeal dismissed unanimously. Lloyd Jones LJ held that the underlease did confer on the appellant a right to connect to and use the ventilation shaft. Although the shaft was outside Anacar’s demise, Anacar’s right under the headlease was an easement and was service media belonging to it for the purposes of clause 3.1(d) of the underlease.

2. The solicitor nevertheless breached duty by failing to identify and warn of a material risk of non-correspondence between the headlease and underlease. The applicable inquiry was fact-sensitive and turned on the strength of factors favouring a different construction. A legally defensible, and ultimately correct, construction did not remove the duty to warn where a different construction was a sufficiently serious possibility and the right was central to the client’s project. The court applied the warning principles discussed in Queen Elizabeth’s Grammar School Blackburn Ltd v Banks Wilson Solicitors [2001] EWCA Civ 1360 and Baker v Baxendale Walker Solicitors [2016] EWHC 664 (Ch).

3. The breach caused no loss. Anacar and the superior landlord accepted that the appellant could access and use the shaft. Their dispute concerned the extent of permitted works, particularly the proposed chimney. That limitation arose from the headlease and could not have been cured by amending the underlease. Ground 1 therefore failed.

4. The solicitor was not under a duty to obtain written approval under Condition 4 before completion. He had drawn the condition to the appellant’s attention. The appellant supplied no detailed works or contrary instructions, and the approval requirement was tied to commencement of the restaurant use. Absence of approval would not in any event have shown that no flue had been installed. Ground 2 failed.

5. Lloyd Jones LJ also observed that the late, unpleaded planning case had placed the respondent at a material evidential disadvantage. Although an appellate court is normally reluctant to interfere with case-management decisions, there were grounds for concern. It was unnecessary to dispose of the appeal on that procedural basis. King and Gloster LJJ agreed.

• Court of Appeal (Civil Division) In [2017] EWCA Civ 75, dismissed the appellant’s appeal.
• High Court, Queen’s Bench Division On 25 March 2015, Michael Bowes QC, sitting as a Deputy High Court Judge, dismissed the claim after trial of preliminary issues concerning breach, causation and contributory negligence.