By Ashley Young-
A london City firm has been ordered to pay over £300k in damages following a negligent civil suit over the advice it gave one of its clients.
Withers was accused of providing negligent advice to a property developer and failed to take notes at a crucial meeting, the High Court has ruled.
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The judge deciding the case, agreed that Withers were negligent in the way in which they prepared the settlement consent order.
He said: ‘It is agreed that the loss caused by this in terms of project delay quantifies at £32,939.90, the professional fees in connection with the application to vary the terms of the settlement consent order’.
The judge that the loss incurred as a result of professional fees in connection with the application to vary the terms of the settlement consent orders was £236,272.19
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Glen’s had put in for damages at £12m, but instead Withers is only to be made to may under £300,000.
Professional Negligence
Withers was sued for professional negligence over erroneous advice given in 2014 to litigation partner Andrew Wass.
Andrew Wass on behalf of Prime obtained an interim injunction restraining the continuation of the redevelopment works when it realised it had been in receipt of erroneous advice.
Prime alleged that, as a result of Wass’ advice, Glen believed it was entitled to demolish the upper floors of a building in South West London as part of a redevelopment project.
Ironically for much of the case, there wasn’t any detailed evidence of what was said at the meeting where the advise disputed was given, the judge stating that only a very skeletal attendance note prepared by Ms Copestake surfaced, which did not shed any light on what occured.
However, just before the closing of arguments, Ms Hannah Robinson- a senior associate employed by Withers in its conveyancing department- and who gave initial advice on the construction of the Lease in February, discovered a note she prepared that led ultimately to the letter of 5 November 2014 that has become the focus of attention in relation to what Ms Wass had advised on 29 October.
Investment Fund
Glen was owned as to 95% by an investment fund known as the
“Prime London Residential Investment Fund”, (“Fund”) .
It was managed by Savills Investment Management (“SIM”). Mr D’Arcy Clark was the person responsible for managing SIM’s interest in the Fund.
The remaining 5% of Glen was owned ultimately by Tenhurst Limited, a company whose business was and is that of property development through its control of a wholly owned subsidiary called Tenhurst (Capital) Glen Limited
In submissions to the court, they argued that had they been advised correctly, it would not have proceeded other than by prior agreement with HRO.
They said that the effect of the erroneous advice was to deprive Glen of the real and substantial chance of agreeing better terms for the redevelopment of the building with HRO than in the event it was able to obtain by negotiation.
By clause 2.1 of the Lease, Tokara let the Property (as defined) to HRO for the Contractual Term. The rights that were excepted from the Lease were set out in clause 4 of the Lease and included at clause 4.1:
“(c) at any time during the term, the full and free right to carry out any Development;
(d) the right to erect scaffolding at the Property or the Building and attach it to any part of the Property or the Building in connection with any of the Reservations or any of the Landlord obligations in the Lease;
notwithstanding that the exercise of any of the Reservations or the works carried out pursuant to them result in a reduction in the flow of light or air to the Property or loss of amenity for the Property provided that they do not materially adversely affect the use and enjoyment of the Property for the Permitted Use.”
Clause 4.5 agreed that: “No party exercising any of the Reservations, nor its workers, contractors, agents and professional advisors, shall be liable to the Tenant or to any undertenant or other occupier of or person at the Property for any loss, damage, injury, nuisance or inconvenience arising by reason of its exercising any of the Reservations except for:(a) physical damage to the Property; or
(b) any loss, damage, injury, nuisance or inconvenience in relation to which the law prevents the Landlord from excluding liability.
This, it said, was following the grant of the injunction and as a result was deprived of a real and substantial chance of proceeding with the development in a manner that would have involved significantly less delay and less cost
Some of the lower floors were then occupied by H.R. Owen Dealerships Limited (HRO) and were being used as Ferrari showrooms.
HRO subsequently commenced proceedings against Glen and obtained an interim injunction restraining the works. The claimant argued that Withers’ erroneous’ advice deprived Glen of the ‘real and substantial chance’ of agreeing better terms for the redevelopment and led to delays and extra cost.
A number of experts were due to give evidence relevant to the quantum aspects of this claim. However, aside from one head of loss, agreement was reached as to the sums being claimed subject to the issues of breach and causation and so the parties decided not to call any of the expert evidence that was available. I return to this at the end of the judgment.
Judge Pelling QC found that the advice in question was ‘plainly wrong’.
‘Withers had advised Glen that HRO’s right of quiet enjoyment was subject to Glens right to develop contained in clause 4.1 of the lease and thus that Glen’s right to develop was not qualified by the no material adverse effect proviso. I further find that this was both wrong and was advice that no reasonably competent solicitor in the position of Mr Wass or Withers could have given in the circumstances.’
He also criticised the firm for failing to take meaningful notes at a crucial meeting in October 2014, describing the omission was ‘surprising and contrary to reasonable professional practice, particularly where decisions were being taken as to how to proceed in what had become a commercially sensitive situation’.
None of the lawyers at Withers kept attendance notes of the advice that was being given, and only one of the witnesses-Ms Robinson- discovered what was a plainly material note after evidence had been completed.
The sititng judge, Pelling J, said that ”the failure to discover this note and disclose its existence as and when it should have been inevitably undermines the confidence that I have in the disclosure processes adopted by Withers”.
Interestingly, the court found that, even if Glen had received the correct advice ‘nothing fundamental would have altered’.
‘HRO would have continued to make the demands that it made and either an agreement would have been reached in broadly the terms reached ultimately or Glen would have continued as it was doing with the result that HRO would have applied for the injunction it ultimately sought and obtained,’ he said.
As a result, the claimant failed to prove as a matter of causation that Glen had a ‘real or substantial chance’ of obtaining a better outcome had negligence not occurred.
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