Anderson Properties Ltd v Blyth Liggins (a firm)

A solicitor’s duty in drafting a commercial contract is to exercise reasonable skill and care to seek to ensure that its terms are enforceable. It is not ordinarily a guarantee that no arguable challenge to enforceability can later be raised. Where parties intend a binding commercial bargain, the court will strive to uphold it and may imply machinery or terms that make an uncertain matter objectively ascertainable. That principle does not require a solicitor, without clear instructions, to draft contractual machinery enabling a client to disregard an obligation which the contract deliberately imposes. A claimant alleging loss caused by professional negligence must prove each element of causation and loss, including the practical ability to complete the transaction and fund the proposed venture.

The claimant company sued its solicitors for alleged negligence in drafting a conditional contract for the purchase of a development site. The contract required the claimant to submit and obtain approval for a full planning application before completion, and provided for a lease and underlease of a future care facility. The agreed lease forms contained no plans defining the relevant land.

The claimant waived the planning condition when no application had been made. The seller then refused to complete, asserting that the contract was unenforceable for uncertainty. The claimant settled with the seller and sought damages for lost development opportunities. The issues were whether the solicitors had negligently failed to draft an enforceable contract, and, if so, whether the claimant could have completed, funded the development and suffered recoverable loss.

1. Claim dismissed. The defendant’s admitted duty was to exercise reasonable skill and care to seek to ensure that the contract was enforceable. That duty did not amount to a guarantee that the contract would be immune from every arguable challenge. The court should be cautious before imposing a duty requiring professionals to anticipate and forestall inventive arguments advanced by parties seeking to escape their bargains.
2. The contract contained a workable mechanism. Had the claimant submitted a full planning application which the seller approved, or whose objections were unreasonably withheld and overruled, the application would have identified the care facility and its position on the site. Applying the principles in Novus Aviation Limited v Alubaf Arab International Bank BSC (c) [2016] EWHC 1575 (Comm) and Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] EWCA Civ 406, the court would have striven to uphold the bargain. It could have implied an obligation to agree a plan identifying the building and reasonably necessary surrounding land, with the court able to determine the matter by objective standards in default of agreement.
3. The solicitors were not negligent in failing to provide a default plan or an alternative mechanism. The claimant had expressly agreed to submit a full planning application and had not instructed the solicitor that it needed to complete without doing so. The solicitor’s role was to implement the client’s agreement, not introduce machinery enabling the client to circumvent it.
4. In any event, causation and loss were not established. The claimant and its director lacked funds to complete, and the proposed financier would not have advanced money without satisfactory land security and supported personal guarantees. There was no realistic prospect of the claimant funding development itself. A sale of the land with planning permission would not have produced a recoverable profit, because its residual value was below the pleaded acquisition costs. Loss fell to be assessed at the date it was incurred.