A vendor's solicitor is required to comply with an undertaking to redeem charges over their client's property, notwithstanding that the sum due under the charges is double the purchase price.
In Clark & Clark v Lucas Solicitors LLP, the claimants purchased a property on a housing development site from the developer. Two charges were secured on the entirety of the development site. The defendant, as the developer's solicitors, in reply to requisitions on title, gave undertakings to the claimants prior to the purchase of their property to discharge the charges on it. The first charge was partially repaid with the purchase monies and that charge on the site was discharged. Nothing was left over to pay off the second charge and the second charge holder refused to release the site from its charge which was for a sum double the purchase price paid for the property. The defendant contended that, among other things, it was impossible to perform its undertaking and that an enquiry as to damages was more appropriate and ordering performance of the undertaking would be disproportionate to the claimants' true loss.
The court held that performance of the undertaking was not impossible. The undertaking was in a standard form to pay off charges on completion and it was within the defendant's control to do so. The defendant should have obtained a redemption figure and agreed how release was to be effected before it gave the undertaking but had failed to do so. The second charge holder was entitled to demand the sum owed to it for release, despite it being more than the value of the property and were not unreasonable in doing so.
Things to consider
Undertakings are taken very seriously by the court. Little sympathy is shown for solicitors who fail to undertake sufficient investigation to comply with the undertaking they intend to give before they give it, whether the undertaking be in relation to the release of a charge, the transfer of specified sums of money or the doing of an act.