Plaintiff acquiring development site and instructing surveyors – Plaintiff going into receivership – Surveyor informing third party about site – Third party buying part of site – Whether surveyors owed plaintiff fiduciary duty – Whether third party on notice of surveyor’s breach of duty – Remedies – Judgment for plaintiff
In 1987 the plaintiff, a property development company, acquired a parcel of land within a site adjacent to Tiviot Way, Stockport, Greater Manchester, (the site), which had potential for development. In 1988 the plaintiff instructed the first defendant in relation to acquiring the remainder of the site, obtaining planning permission and marketing the site to a suitable end user. The second defendant was a co-director of the first defendant. In 1992 the plaintiff entered into a conditional sale agreement to sell the site to Tesco. The plaintiff and Tesco made planning applications. Meanwhile the plaintiff entered into an option to purchase another part of the site (the Brewery site).
On July 5 1995 joint administrative receivers were appointed over the whole of the undertaking and the plaintiff’s assets under debenture in favour of its bankers. By a letter dated July 17 1995 the second defendant wrote to the third defendant passing on information about the site. Subsequently the third defendant acquired the Brewery site and a neighbouring site (the Hope site). The loss of the Brewery site gave rise to serious problems for the plaintiff’s development intentions. In May 1996 planning consent was granted for non-food retail use of the site. In January 1996 the joint administrative receivers were discharged. The plaintiff issued proceedings claiming that the first and second defendants were in breach of fiduciary duty by passing on the information contained in the letter, and that the third defendant had known of the breach.
Held Judgment was given for the plaintiff.
1. The first and second defendants had owed the plaintiff a fiduciary duty as they had been involved with the plaintiff in assembling the site and in obtaining the planning permission, giving rise to a relationship of trust and confidence. They had acted in breach of that duty by communicating the information contained in the letter and by failing to inform the plaintiff upon learning that the third defendant was interested in acquiring the Brewery site.
2. The third defendant had notice that the information given in the letter was in breach of the first and second defendants’ obligation of confidence since it was clear from the letter that the first and second defendants had been retained by the plaintiff and that the letter had not been written on the plaintiff’s behalf or with its authority. There was no reason for assuming that the appointment of a receiver released fiduciary agents from their obligations.
3. The loss of opportunity to acquire the Brewery site for the benefit of the plaintiff was caused by the breaches of fiduciary duty and therefore it was appropriate, applying equitable remedies, to declare that the Brewery site was held by the third defendant on trust for the plaintiff and to direct that the site be conveyed to the plaintiff on payment of the costs of acquisition.
Mark StrachanQC and Michael Lazarus (instructed by Dibb Lupton Alsop, of Birmingham) appeared for the plaintiff; Phillip Valance QC and Angus McCullough (instructed by Park Nelson Thomson Quarrell) appeared for the first and second defendants; Michael Kent QC and Ian Swan (instructed by Bullivant Jones & Co, of Liverpool) appeared for the third defendant.
