Solicitors’ Duty of Care

In the case of Spire Property Development LLP & Anor –v- Withers LLP [2022] EWCA6970 the Court of Appeal in England & Wales recently considered a solicitor’s duty when he or she offers advice outside the scope of the agreed retainer.

The Facts

Spire Property Development LLP and Hortensia Property Developments LLP (“the Claimants”) instructed Withers LLP (“Withers”) with respect to the purchase of two properties in central London, one known as the “King’s Chapel” and the other as the “King’s Library”. The two properties shared a boundary, and the Claimants planned to develop them both in parallel. The Claimants are each Special Purpose Vehicles, set up specifically for the acquisition and development of both properties. The purchase completed in November 2012. The combined purchase price was almost £44 million.

Following the acquisition of the properties, the Claimants discovered that each of them had buried beneath the ground, three high voltage cables, belonging to UK Power Networks. The Claimants contacted Withers in 2014 informing them of the cables and seeking advice regarding same – it is the nature of this advice which was considered by the Court of Appeal.

High Court

In the High Court proceedings, the Claimants alleged that Withers had acted in breach of duty in:-

1. Failing to undertake sufficient searches or enquiries in 2012 to identify the high voltage cables underneath both properties; and
2. Failing to investigate and advise adequately in respect of the contact in 2014 and any rights that the Claimants may have had arising from the discovery of the high voltage cables. It was alleged that Withers failed to advise the Claimants that they were entitled to have the high voltage cables removed by UK Power Networks at UK Power Networks’ expense, or to the payment of compensation by UK Power Networks’.
   

The High Court Judge concluded that Withers were negligent in 2012, in failing to carry out relevant searches which would have revealed the existence of the high voltage cables, prior to the exchange of contracts. In respect of the 2014 claim, the High Court Judge concluded that Withers were negligent in failing to advise the Claimants of their rights, in the event that UK Power Networks could not prove that it held a wayleave or other lawful authority in respect of the laying of the high voltage cables. The Judge went on to state that Withers should have advised that the Claimants could require UK Power Networks to move the high voltage cables at its own expense or, alternatively, obtain compensation under the Electricity Act 1989.

Issue to be Determined by the Court

Withers’ appeal of the High Court decision was limited to the second issue, and whether they had been negligent in failing to provide the Claimant with advice on the potential remedies against UK Power Networks in 2014. The nature and extent of the advice sought was in the dispute.

Outcome

The Court of Appeal examined the extent of the solicitor’s obligations in respect of the 2014 contact further to the original retainer. The Court examined relevant e-mail exchanges between the parties. The Court focused on one e-mail from one of the Claimants on 28 January 2014, which raised three specific queries, and Withers’ response of 3 February 2014.

The e-mail from the Claimants to Withers stated:

“1. Should the existence of the cable not have come up on the radar as a result of the sellers’ replies to enquiries, even if it did not appear on the title docs?

2. Could you elaborate slightly on the statutory rights of access point? Does this mean that UK Power could have laid the cable at Sloan and KC without having any kind of legal permission from the owners? It would seem impossible that the owners of the sites were not aware of such a large cable being laid on their property.

3. If, as there surely must have been, there is some kind of legal documentation relating to the laying of the cable on either site, then the question remains as to why this hasn’t shown up on our radar?

We need to decide how we approach UK Power about this issue, so it would be very helpful to get your thoughts on the above. The better prepared we are, the more likely we will succeed in getting the cable moved.”

Withers’ response on 3 February 2014 stated:

“In response to your e-mail below and using the same numbering:

1. The seller can only provide such information as they may have and there were no wayleave agreements or deeds of easement relating to any electricity cables revealed in the sellers’ replies to enquiries, other than the rights relating to the electricity transformer chambers. In addition, St Mark’s was acquired from receivers and therefore the information provided was extremely limited and they had no knowledge of the property whatsoever.
2. Utility companies have statutory rights of access onto private lands to lay pipes, wires, cables and other service infrastructure. Under the Electricity Act 1989, electricity companies can acquire a wayleave to install an electronic line on, under or over private land, together with rights to access for inspection, maintenance and replacement. A wayleave can either be agreed or can arise where the owner or the occupier fails to respond to a notice requiring him to grant a wayleave or gives it subject to conditions unacceptable to the electricity company. Wayleaves, whether acquired under the Electricity Act 1989 or granted by a landowner, do not need to be registered at the Land Registry. It is therefore possible that a wayleave was granted some time ago when the cable was originally laid and was not known to the seller. In relation to the Sloan building, the seller acquired the property in 2010 and before then it changed hands in 2009 and 1999. Prior to 1999, it appears the site was owned by the local authority. The seller may therefore not have been aware of the cable. As to St Mark’s, the receivers will have had limited information and are unlikely to have known about such matters.
3. Please see comments above. ”

The Court of Appeal took the view that on an objective construction of 28 January 2014 e-mail the questions were focused on and probing for reasons why the high voltage cables were not discovered prior to the purchase and Withers did not in its responses assume responsibility to provide broader advice on the Claimants’ potential remedies.

The Court noted that it is a solicitor’s contractual duty to carry out the tasks which the client has instructed and the solicitor has agreed to undertake and that it is implicit in the solicitor’s retainer that he or she will proffer advice which is reasonably incidental to the work that he or she is carrying out.

The Court noted that there was an implied criticism of Withers by the Claimants in the communications. The emails were guarded and restrictive. The Claimants’ e-mail did raise the possibility that they were considering having the cables moved at someone else’s expense, but Withers were not asked and did not comment, let alone advise, at any stage on that possibility. The Claimants questions related to what had happened at the time of the purchase. The answers from Withers had all been backward, and not forward looking.

The Court therefore came to the conclusion that Withers had not assumed responsibility for anything going beyond answering the questions which had been asked by the Claimants. Withers therefore had not taken on a duty to advise on the wider rights and remedies that the Claimants may have had against UK Power Networks.

Comment

The outcome of the above case is highly fact sensitive. In determining what advice is reasonably incidental to the work that the solicitor is carrying on, it is necessary to have regard to all the circumstances of the case. It therefore remains important to have a clear retainer with the client, setting out clearly what you are being asked to provide advice on, and importantly what you are agreeing not to provide advice on.

If you would like any further information or advice, please contact Timothy Cockram from the Dispute Resolution and Litigation team at Carson McDowell.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.