Parker v Walker

Sale of land – Misrepresentation – “Land banking” – Defendant being solicitor working for property partnership company (TPP) – Claimant purchasing land sold by TPP – Land effectively having no value – Claimant seeking to recover monies spent on land – Claimant commencing proceedings against defendant – Whether claimant retaining defendant as solicitor – Whether defendant owing claimant duty of care at common law – Whether vendor companies acting through TPP committing torts against claimant – Whether defendant being responsible for any torts committed by TPP – Claim allowed in part Between June 2009 and February 2011, the claimant was induced to part with sums amounting to over £700,000 by agents or employees of companies operating under the umbrella “The Property Partnership” (TPP). The monies were used to purchase, through a so-called land banking scheme, small plots of land that were either worthless or of negligible value and had no prospects of development. TPP offered the claimant the free assistance of a solicitor to help with completion of the purchase. The claimant did not take up that offer. However, the defendant, who was a solicitor specialising in conveyancing, was retained by TPP to handle all the conveyancing aspects of TPP’s purchases and onward sales of plots in connection with the schemes in which the claimant participated. Most of the TPP companies subsequently underwent some form of insolvency process or had been dissolved. The defendant ceased practising as a solicitor at the end of 2013. The claimant sought to recover the monies he had expended and issued proceedings against the defendant for damages. It was not claimed that the defendant had made any of the misrepresentations on which the claimant had allegedly relied. The court was asked to determine: (i) whether the defendant had been retained by the claimant as his solicitor; (ii) whether the defendant had owed the claimant a duty of care at common law; (iii) whether any torts were committed against the claimant by the vendor companies acting through TPP; and (iv) whether the defendant bore responsibility for any torts committed by TPP. Held: The claim was allowed in part.(1) On the evidence, there was no objective fact to support the conclusion that the defendant had been retained as the claimant’s solicitor. There had been no communication between them beyond the routine provision of documents for signature, onward submission or safekeeping and the defendant’s letters clearly indicated that he considered himself to be acting as the solicitor to the vendors and directed the claimant to retain his own solicitors. Moreover, the claimant had done nothing to accept the offer of a free solicitor or requested the defendant to act as such for him. Further, the offer was not an offer to provide a solicitor to act for the plot-holder but an offer of a free legal service comprising the preparation of the contract and the registration of the transfer which TPP was offering to provide itself. Accordingly, the defendant had not been retained expressly or impliedly by the claimant: Dean v Allin and Watts (a firm) [2001] PNLR 39 applied. (2) The defendant had not owed the claimant a duty of care. Since the claimant sought to make the defendant liable for his omission to share information that he possessed which might have had a significant influence on the claimant’s decision to pay money to the defendant’s clients, he had to show a special reason before such a duty of care could be imposed on the defendant. On any objective analysis of the facts, the defendant had not induced the claimant expressly or impliedly to rely upon him to share the information he possessed. If he had been under such a duty, it would have undermined the duty that the defendant owed to his own client, the relevant vendor of the land, to further that client’s aims and protect its interests: Customs and Excise Commissioners v Barclays Bank plc [2007] 1 AC 181 applied; Al-Kandari v JR Brown & Co [1988] 1 QB 665, Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560, Stovin v Wise [1996] AC 923 considered. (3) The claimant’s allegation that actionable misrepresentations under section 2 of the Misrepresentation Act 1967 had been made to him by TPP, regarding the prospects of the development at each site, had been made out. On the evidence, express and implied misrepresentations had been made by TPP regarding the purchase of various properties. The claimant had been reasonably entitled to rely on the accuracy of the information with which he had been supplied. TPP had been negligent to make statements without having investigated and evaluated the prospects for development at the site, which would probably have caused TPP to conclude that the prospects were nil. (4) On the evidence, the court would infer that the defendant was party to the common design of TPP to sell parcels of land to investors through a land banking scheme. Although knowing facilitation of a tort did not in itself suffice to justify the inference of a common design and a common design would not be inferred merely because a person sold a product to another which he knew was going to be used to commit a tort, or where one person or entity looked on with approval at what another person or entity was planning or doing, there was nothing requiring the participator to be physically present at the scene of the tort. There had been a number of occasions when the defendant’s involvement could have brought an end to the project or made evident the improbability of development before any losses had been suffered by the claimant. There only reason why he had not done so was that he had been eager to ensure the success of each scheme because he would be likely to benefit substantially from such success. It had not been in his interest to do anything that might dissuade purchasers from investing in the schemes. It followed that the defendant was party to the common design and the torts committed against the claimant during the execution of that design. Accordingly, the defendant was liable to pay damages to the claimant in the principal amount of £606,000 in respect of the torts committed during the course of the carrying out of the common design: Fish & Fish Ltd v Sea Shepherd UK [2013] 1 WLR 3700 applied. Anthony Higgins (instructed by Simmons & Simmons LLP) appeared for the claimant; Jonathan Crystal and Katharine Stock (instructed by direct access) appeared for the defendant. Eileen O’Grady, barrister