Mansion Estates Ltd v Hayre & Co [2016] EWHC 96 (Ch)

Real property; Professional negligence

  • Date: 01 Mar, 2016
  • In: Articles
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Summary

In a negligence claim brought against a solicitor in relation to a conveyancing transaction, the Court considered the inherent likelihood of the solicitor having given fraudulent evidence in order to avoid a claim.  The Court considered it would be wrong to assume that it was inherently more improbable that a professional person would be dishonest than anyone else.

The facts

A purchaser of land (C) brought claims against the defendant solicitors (D) for negligence and breach of retainer in relation to the purchase itself and the amount of SDLT payable.  It was C’s case that in late 2006 it was approach with regard to buying land in Bradford for development.  It was proposed that C would buy the whole site and transfer part of it to a third party (P) for market value.  D was retained to act for both C and P.  On C’s case D was retained in late 2006.

C’s case was that the terms upon which the sub-sale to P was completed restricted C’s access to part of its retained land, and that D had negligently attached the wrong to the TP1 form and had failed to advise C of the problems that would be created by the terms of the sub-sale.

D’s case was that the plan had been provided by C, who had been advised of the blight entailed in the sub-sale, but that C had wished to proceed regardless.

C also complained that it had made an excess SDLT payment of £18,000 because the transaction was not structured so as to take advantage of the sub-sale concession under s.45 of the Finance Act 2003.  D averred he had not been instructed on the sub-sale until October 2007.  D relied on an attendance note of a meeting on 02.11.2007 and a letter of the same date, both of which recorded that D had pointed out the problems that would arise in relation to the retained land following the sub-sale. C’s claim included allegations that D had fabricated some documents.  The Judge was troubled both by aspects of C and of D’s evidence.

The issues

The question for the Court was whether D had been negligent by attaching an incorrect plan to the TP1, in failing to advise C of the problems that would be created vis-à-vis the retained land by the sub-sale.  A further question arose as to whether it was inherently probable that D would have given fraudulent evidence to avoid a claim.

The decision

Judgment was entered for the Claimant:

  1. It was implicit in the retained that a solicitor would proffer advice which was reasonably incidental to the work carried out (see Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch)).  In this case, the retainer extended to advising a client of matters regarding title that might blight or limit the reasonably foreseeable use or enjoyment of the property, and to ensure that the correct amount of stamp duty was paid.
  2. D’s documentary evidence was materially compromised for various reasons examined by the judge.  However, on the particular question of whether it is proper to consider to ask oneself whether it is likely a solicitor would possibly risk his career by doctoring evidence in order to avoid a finding of negligence, the Court considered it would be wrong to assume that it is inherently more improbable that a professional person will be dishonest than anyone else. Nevertheless the issue of inherent improbability had to be considered in context (see H(Minors)(Sexual Abuse: standard of proof) [1996] AC 563 and B(Children)(Sexual abuse: standard of proof) [2008] UKHL 35, [2009] 1 AC 11).  On balance, C’s evidence was to be preferred. 
  3. Causation was established particularly since the land retained by C would not have been if the correct plan had been attached to the TP1.  C was entitled to judgment in a sum equivalent to the diminution in the value of the land as a result of the restrictions.
  4. The SDLT concession under s.45 was available to C.  It fell within D’s retainer to calculate SDLT accurately.  C’s evidence that he realised to late to recover the SDLT was accepted, and accordingly, judgment for £18,000 was entered.