Withers overturns part of £1.4m negligence ruling

Law firm Withers has successfully appealed part of a professional negligence claim brought against it by a property developer client operating in the super-prime market. In a ruling handed down yesterday, a three-judge panel at the Court of Appeal in London ruled the firm didn’t have a tortuous duty of care to its clients, Spire Property Development and Hortensia Property Development, to advise them on what they should do when they discovered extra-high voltage power cables buried underneath properties they had bought two years earlier. The judgment, which overturns part of an earlier ruling, means the firm no longer needs to pay the developers £1.5m in compensation. The dispute centres on two Grade II listed properties in Fulham, SW6: Kings Chapel and Kings Library. Spire bought Kings Chapel in November 2012 for £7.8m and Hortensia bought Kings Library, also in November 2012, for £34m. Withers advised on the conveyancing. The properties share a common boundary and were to be redeveloped in parallel. In 2014, while developing the property, the developers found three extra-high-voltage cables buried under the properties that hadn’t been brought to light during the conveyancing and inhibited the development. The developers sued, saying the firm didn’t carry out the correct searches in 2012 and didn’t properly advise about remedies in 2014. The case went to trial last year, and in a judgment handed down in September, Judge Telling QC found in the developers’ favour in both claims. He awarded damages of £584,000 for the 2012 claim and £1.5m for the 2014 claim. Withers appealed the judge’s findings about the 2014 claim, and in yesterday’s ruling, the Court of Appeal allowed the appeal. The complaint is based on an e-mail exchange between the client and a solicitor at Withers in February 2014. In the exchange, the client, property developer and former City solicitor Barney Joy, asked Withers if the cable should have come up in the survey, what the access rights were, and why it hadn’t been discovered. The Withers solicitor replied, answering the three questions posed. The e-mail did not offer any advice about what should now be done. During the trial, lawyers for the developers argued that this amounted to negligent advice as Withers should have told the developers they could take action against UK Power Networks, which looks after power cables, to make it move the cables. Withers argued the February e-mail only contained information, not advice, and didn’t breach any duty owed to the client. The High Court judge disagreed, and said Withers should have advised that the developers were entitled to have the cables removed by UK Power Networks, or seek compensation. However, yesterday’s ruing overturned this. In her ruling, Lady Justice Carr said the e-mail exchange should be viewed in context. “From the very outset, there was implicit criticism of Withers by the developers (or at the least the very real potential for criticism down the line),” she said. “The situation was delicate and the context for the communications – and an objective interpretation of those communications – was a guarded and restrictive, rather than an open and expansive, one.” With regards to the February e-mail, the solicitor “was asked in terms to provide her thoughts on three specific questions. It was not for her to second-guess how or why her answers to the three questions might assist the developers when they chose to approach [UK Power Networks] in due course,” she said. “I would allow the appeal. On a fair and objective reading of the relevant e-mail exchanges in context, Withers did not assume legal responsibility to the developers to advise on the legal position if [UK Power Networks] did not have documentation in support of its right to lay cables through the properties and/or in respect of their rights generally against [UK Power Networks].” Lady Justice Carr said there are “lessons to be learnt on both sides” from this case. “It is important that solicitors are able to respond courteously and constructively to ‘one-off’ requests for information or advice from former or potential clients or third parties without fear of creating legal liability,” she said. “At the same time, when volunteering any such information or advice, solicitors need to take care to identify the limits of any assumption of responsibility in order to avoid the risk of litigation such as the present. “Equally, those seeking information or advice from solicitors on an informal basis need to take care to understand the potential limits of the exercise and the extent to which they can reasonably rely on any response.” Joe Edwards, a senior associate at Charles Russell Speechlys specialising in professional negligence, said while the judgment was about a specific set of circumstances, practitioners should still take note. “It is easy to have sympathy for the people involved because it shows the challenging situations that can occur when something goes wrong,” he said. “Even so, the obvious takeaway for practitioners is that one should always be very clear with the client about what your scope of work is when one-off requests are made to avoid an unintended assumption of responsibility.” A Withers spokesperson said the firm was pleased with the outcome of the appeal.