In February 1993, Stone Heritage Developments Limited (S) entered into a Development Agreement with the Howarths (H) who were owners of land at Moss Lane, Bolton, whereby S would build not less than 20 houses on H’s land which H would retain. Adjacent to H’s land was land of which Bolton Metropolitan Borough Council (Bolton) was the registered proprietor. Part of this land had, for many years, been in the possession of H (the Possessory Title Land), and part (the Bolton Clear Title Land) belonged without question to Bolton. Although, as found by the judge at first instance, the solicitors, Davis Blank Furniss (D) knew that there was a possibility that the development might encroach upon the Possessory Title Land, the agreement between S and H was restricted to the land owned by H. D had been specifically informed by S at a meeting on 29 October 1992 that they were not to bother about either the Possessory Title Land or the Bolton Clear Title Land because any discrepancy would be cured by the intended purchase of additional land from Bolton.
Inevitably, the development did encroach on Bolton’s land, and Bolton refused to sell that land to S. H bought the land from Bolton to enable the development to be completed, and in settlement of proceedings between S and H, sold the land to S for £192.5k in 2003. In the meantime, S had issued proceedings against D in February 1999 for negligently failing to provide in the Development Agreement for encroachment on Bolton’s land The judge at first instance in the Chancery Division of the Manchester District Registry found:
1) that D had been in breach of their duty of care as regards the Possessory Title Land because, knowing the risk of encroachment, S should have been advised of the very danger which in fact occurred, namely inability to acquire the land from Bolton in the event of encroachment on Bolton’s land. The price (£850k) which H received for making the development land available included the Possessory Title Land and
2) that H would have agreed to extend the agreement to the Possessory Title Land if that had been required of them. However, he also found that D had not been negligent as regards not advising to provide for encroachment on the Bolton Clear Title Land, and, as regards both types of Bolton land, S had failed to establish causation between the alleged breach and the loss suffered. S appealed against all the findings except 1 and 2 above. D appealed 1 and 2.
In the Court of Appeal, the Chancellor reviewed the facts of the case and in particular three cases to which reference was made in respect of the extent of the duty of care; Credit Lyonnais SAv Russell Jones & Walker1; Pickersgill v Riley2, and John Mowlem Construction plc v Neil Freddy Jones & Co3 . Both sides accepted the principle expanded by Laddie J in the first of those cases that there is “no general obligation to expend time and effort on issues outside the retainer”, but “if in the course of doing that for which he is retained, he [the solicitor] becomes aware of a risk or a potential risk to the client, it is his duty to inform the client”. The dispute lay in how to apply the principle.
In the view of the Court of Appeal, in this case, D’s retainer had been specifically restricted to drafting an agreement to enable the development of H’s land by S as licensee. D had been told not to concern themselves with the Possessory Title Land or the Bolton Clear Title Land. D had not been involved in various other aspects of the project, and indeed their advice, when given, had been ignored. S had relevant experience, and the potential risk was considered “by no means obvious”. In the circumstances, the Court of Appeal held that there was no distinction to be drawn between the Possessory Title Land and the Bolton Clear Title Land, and D had not been negligent in relation to either.
Even where the findings of fact and legal principles are accepted, the Chancellor said that the Court of Appeal is duty bound to say so, if it concludes that the judge wrongly applied the facts to the law. This is encouraging for disappointed litigants at first instance but serves to emphasise the uncertainty of litigation, not just in respect of the extent of a solicitor’s retainer, but generally.