New Court of Appeal Decision on Conveyancing Negligence and Duty to Warn
Balogun v Boyes Sutton and Perry [2017] EWCA Civ 75
Oliver Radley-Gardner appeared for the Respondent firm of solicitors, BSP, in the Court of Appeal. The case concerned an underlease conveyancing transaction. The unit in question was a lower ground and ground floor basement unit which was intended to be used as a restaurant. Above the units were several floors of flats which belonged to the freeholder housing association. The headlease was over the commercial units below, and was vested in a property investment company. The unit in question had a ventilation shaft running from ceiling level through the building to a roof-top venting hole. Following completion, B proposed varying opening hours to allow for late-night use, and also sought to access the upper floors to carry out implementation works, and made proposals for the installation of external ventilation. This brought B into conflict with the freeholder social landlord freeholder, which disputed that B was entitled to access the freehold property to carry out the extensive works he was seeking to carry out. Following inconclusive discussions, and several redesigns of his plans for the ventilation shaft, B elected to issue proceedings against BSP instead, seeking substantial damages for negligence and breach of contract, said to arise out of breaches of duty in connection with the drafting of the underlease.
At trial, B contended that (a) his underlease did not have the benefit of an easement to use the ventilation shaft at all, and (b) that he had separately told his solicitor, BSP, that he needed access above his ceiling level to carry out fit-out works along its length, including outside his demise, to render the shaft operable, and that BSP should have secured rights to do so. BSP contended that on its true construction, B had all the rights he needed under the relevant documents. The trial judge agreed that this was the proper construction of the transactional documents and this basis of claim failed. There was no appeal from this point. As to what instructions B had given BSP, BSP’s factual position (which the trial judge preferred on the evidence) was that B had told BSP that the ventilation shaft was ready and capable of being operated without the need for any further works to be carried out.
At trial, B’s case evolved and he argued further that BSP should have
(a) warned him that the wording of his underlease was sufficiently unclear that there was a risk that he might run into difficulty in implementing shaft works, placing him into conflict with the freeholder social landlord when it came to carrying out implementation works. This was irrespective of whether or not he in fact enjoyed rights of ventilation as a matter of construction (“the Risk Case”). This argument was based on “duty to warn” cases including Queen Elizabeth's Grammar School Blackburn Ltd v Banks Wilson Solicitors [2001] EWCA Civ 1360; Herrmann v Withers LLP [2012] EWHC 1492 (Ch) and Baker v Baxendale Walker Solicitors [2016] EWHC 664 (Ch); and
(b) investigated a planning condition which required Council certification of ventilation apparatus. Had that planning condition been investigated, B contended, it would have revealed the absence of certification and hence the absence of any apparatus being in place (“the Planning Case”).
The trial judge allowed these two alternative cases to be argued, but also rejected on the grounds that there was no identifiable risk to which any drafting gave rise, and no risk had materialised in any event, and secondly because, on the evidence, B had not established that any further investigations would have revealed anything under the planning conditions.
The first instance decision (including a discussion of the weight to be attached adverse statements by witnesses accused of negligence) is here
B appealed on the Risk and Planning Cases, but not on the original issues as pleaded. He was granted leave at an oral renewal hearing, on the basis that the learned trial judge ought to have found that a risk arose on the wording of the underlease giving rise to a real potential for dispute, and secondly that he ought to have found that the planning issue ought to have been pursued further.
The Court of Appeal rejected both of those grounds of appeal: http://www.bailii.org/ew/cases/EWCA/Civ/2017/75.html. Lloyd Jones LJ (with whom Gloster and King LLJ agreed) decided that, although a duty to warn arose on the facts, on the facts of this case that did not go anywhere – on the basis of the factual findings below, including that the freeholder was not disputing the existence of B’s right but rather only the works that he was proposing to carry out, this allegation had no substance. Further, the objections to what B was proposing related to the extent of his rights under the headlease, not the underlease, and no allegation of negligence arose in relation to the headlease. In relation to the planning condition ground, the nature of the condition was such that a further enquiry would not have elicited any material that would have caused BSP to investigate further.
The appeal was therefore dismissed.
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