PROVING THINGS 52: SOLICITOR’S NEGLIGENCE ACTION FAILS ON ALL COUNTS: NO NEGLIGENCE AND NO LOSS

Mediatelegal

The judgment of  HHH David Cooke today in Anderson Properties Ltd -v- Blyth Liggins [2017] EWHC 244 (Ch)  is another example of a solicitor’s negligence case failing because of the absence of basic evidence in relation to liability, causation and damages.

KEY POINTS

  • The claimant had failed to prove that the defendant solicitors were negligent in their drafting of a conditional contract for the purchase of land.
  • The claimant did not establish that it would ever have been able to proceed with the contract in any event.
  • The evidence showed that the development would have caused the claimant to suffer a loss in any event.
  • The late change of mind of the claimant’s expert (that is after the joint meeting and then being spoken to by the claimant) meant that the expert’s view was given very little weigt.

THE CASE

The claimant property developers entered into a conditional contract for the purchase of land.  The seller later asserted that the contract was unenforceable for uncertainty.  The uncertainty arose because the obligations included the grant of a lease and underlease, the contracts had agreed forms of lease but no plans.

The claimant accepted advice that the contract was invalid and accepted £125,000 from the vendor to abandon any claim it had. It then pursued the solicitor who drafted the agreement for £ million in damages.

THE ALLEGATION OF NEGLIGENCE

The judge did not accept the evidence of the claimant’s principal witness, Mr Jeffs.  The absence of any documentary evidence to show that instructions were given on a certain point was a significant factor.

  1. Accordingly, in my judgment had the purchaser followed the mechanism provided by the contract and submitted a full planning application, the contract would have been enforceable. One must then ask whether it was negligent of the solicitors to draft the contract in such a way that it might be unenforceable if this mechanism was not followed by their own client as intended. Should they have anticipated that Mr Jeffs might wish to enforce completion notwithstanding he had not complied with what he had agreed to do? Towards the end of the hearing I asked Mr Jeffs if it was his case that he had instructed the solicitors that he required to be able to enforce completion even if no planning application had been made. He responded that although he could not identify any document to conform it, he was confident that he had done so.
  2. I am sorry to say that in that respect, as in a number of others, I consider that Mr Jeffs was simply willing to say whatever was necessary to promote his case, and I find that no such instructions were given. First, there is no trace of them in the documentary record, or even of any consideration between Mr Jeffs and his solicitor of what his position would be if he failed to submit an application.

CAUSATION AND LOSS

The judge went on to consider issues of causation and loss.  He found that the claimant had failed to prove:

  1. That the funds to develop the site would have been forthcoming.
  1. The onus is of course on the claimant to prove, on the balance of probabilities, all the elements of its case on causation and loss, which logically starts with the question whether, if the contract had been enforceable, it would have been in a position to complete the purchase. The evidence shows in my judgment that the claimant company and Mr Jeffs between them did not at any material time have any substantial resources of their own that could have contributed toward the £390,000 required to be paid to the seller on completion. There is no evidence that the claimant company had any resources of its own at all. Mr Jeffs was very vague about his own wealth, but accepted that he had not at any material time owned a house. He said he had had an interest in a company called Aspire, but was unable to say if he still held it in 2011, let alone what it was worth. He maintained he had earned substantial amounts from other property transactions but was very unspecific about what these were and what if anything he had made from them. Whatever they may have been, I find that by the time completion was due in April 2011 he had effectively no surplus resources of his own that could have been applied to complete the purchase or subsequent development.

2. That a business colleague who was put forward by the claimant as a proposed funder would have, in fact, provided funding.

3. That the claimant company would have been able to develop any part of the site at a profit.

THIS WAS A LOSS MAKING DEAL IN ANY EVENT (OH, AND A SURPRISING CHANGE OF MIND BY THE CLAIMANT’S EXPERT)

This is  case where a surveyor, instructed by the claimant, had a surprising change of mind after the joint meeting.

  1. Shortly after signing the joint statement, and apparently after a conversation with Mr Jeffs although he denied that this had influenced him, Mr Mason sent an email to Mr Jeffs saying that he had reconsidered what he had agreed with Mr Ellis and considered that the value of the apartments should be increased from the agreed figure of £16.75 million to £19.2 million. The effect of that would have been to increase the residual value in 2011 to £4 million, sufficient to show a profit of just over £1 million, before the adjustments Mr Cannon referred to. I did not however find the reasons that he sought to give in cross examination for this late change of heart persuasive, and none of them were accepted by Mr Ellis. It was I think particularly telling that the values he now proposed were greater not only than the jointly agreed figures, but those that Mr Mason himself had previously given.
  2. I should say also that Mr Jeffs submitted that all of these figures were much too low and the potential value of the apartments was much greater than either valuer had assumed. He referred to figures he said had been achieved on the sale of other apartments at other sites, but without these having been referred to the experts for consideration as to whether they were true comparables, I am not prepared to place any weight on Mr Jeffs’ opinion as against those of the experts.
  3. I find therefore that the residual value of the land, if it had been sold with planning permission to a developer in mid 2011, was no higher than the £1.5 million set out in the joint statement of the valuation experts, and accordingly that in that scenario, which would have been the only one realistically achievable by the claimant, it would be unable to show any loss from the negligence alleged.
  4. That date is in my judgment the correct date which to assess the relevant loss, since that is the date on which on the claimant’s case it suffered loss by being unable to complete the purchase. Other figures were put forward for valuations at later dates which were higher because of subsequent changes in market values. Had the market gone the other way, these figures would have been lower. Those valuations are in my judgment irrelevant since, in principle, the loss is to be assessed at the date it was incurred. On that basis also, therefore, the claimant would have failed.

Experts

It may help to draw attention to cases where experts have had a late change of view.

The proving things series