Practice and Procedure


PUBLISHED May 30, 2003

A solicitor had acted negligently in failing to advise that the taking of a lease of a particular property in a company name might lead to difficulties on resale.Claim for damages for professional negligence. The defendant, through one of its conveyancing solicitors ('G'), acted as the claimant's ('P') solicitor in the assignment of a lease of a residential property for investment purposes. P acquired the 30-year lease from the Grosvenor Estate in south-west London in the name of a company so as to reduce any potential capital gains tax liability. P re-negotiated a 99-year lease, renovated the property and put it on the market with an asking price of ?850,000. As the assigned property was held in the name of a company, the Grosvenor Estate would only permit a further assignment to a company. The property was not sold until February 2001 when a price of £820,000 was achieved. P claimed that G had acted negligently in not advising her as to the difficulties of selling on the property if bought in the name of a company. P argued that: (i) she had specifically raised the issue with G; (ii) G had informed her that she would not have to sell in a company name; (iii) in doing so G had acted negligently; and (iv) a sale would have been achieved by May 2000 had G discharged his duty. P denied that any advice had been sought and averred that P would have proceeded with the assignment in a company name in any event such that she had suffered no loss.HELD: (1) On the evidence, P had sought G's advice on the issue. P's evidence was accepted on all issues of fact. (2) G had been asked to advise on the legal side of the whole project in which he knew there was to be a purchase, renovation and resale. It had been foreseeable that if incorrect advice had been given to G on the implications of taking a Grosvenor Estate lease in the name of a company, then the consequences of the advice being wrong might have included there being a more limited class of potential purchasers, delay and other related losses on the resale of the property. G had failed to properly discharge his duty to P. (3) Had G properly discharged his duty, P would have taken the lease in her own name. (4) There was a difference between the value of the lease taken in the company name and the value which the same lease would have had if taken in P's own name. With a smaller class of potential buyers at the material time, the seller of a company lease ran a significant risk of not finding a buyer for a considerable time. A figure of 6 per cent reflected the chance of not selling within the two to three months that a seller of an individual lease would normally wait. Damages had to be assessed as at the date on which the advice was acted upon.Judgment accordingly.

[2003] EWCA 1169 (QB)