Legal News
A property company allowed pursuing its claim against a law firm for negligence (13 February 2013)
Date: 13/02/2013
A property company was given go ahead by the High Court to continue with its claim of negligence against a law firm over a lease extension granted to a flat in Piccadilly.
The court heard that St Anselm Development Company, owner of the head lease, lost the right to recover a proportion of the ground rent after agreeing to a lease extension by an under-lessee of two flats.
The law firm argued that the claim of negligence relating to both flats were time-barred. The High Court agreed that the company had no prospect of showing that its claim fell within the limitation period in respect of one flat but not the other.
Delivering judgment in St Anselm Development Company v Slaughter and May [2013] EWHC 125(Ch), Mr Justice David Richards said the claim arose out of the extension of leases under the Leasehold Reform, Housing and Urban Development Act 1993.
He said that the correspondence and the facts showed that the firm was separately instructed in respect of each lease, the lease for flat 27 being executed before flat 26.
The judge added that it was the duty of the firm to use reasonable skill and care to safeguard the interest of their clients in respect of each lease and the duty continued as regards the lease for flat 26 independently of the lease for flat 27. Agreement of the terms of the lease for flat 27 did not release the property solicitors from their duty as regards the other lease.
David Richards J said it appeared clear on the evidence that the law firm gave “active consideration” to the provision on the share of ground rent only once and did not “positively re-visit the issue” when considering the terms of the lease for flat 26.
The judge said that the law firm could have been instructed to advise once on a draft lease to be used for both flats, but that is not what happened. On this appeal the claimant had only to show that it had a real prospect of showing that its claim with regards to flat 26 was brought within the primary limitation period.
The judge said that he was of the belief that in this particular part of the claim the defendant property solicitors were not going to succeed on a limitation plea.
However, David Richards J also said that as the claimant could not recover a rateable proportion of the ground rent of the head lease for flat 27 there was reasonable cause to start asking questions about the advice it had been given by the solicitors.
There was an absence of an appropriate indemnity clause in the new lease for flat 27 or the loss of compensation if it was to be deprived of the existing provision and was reasonable to have expected the claimant to appreciate at least the possibility that each of those alternative losses were caused by the act or omission of the defendant solicitors.
David Richards J concluded that the Master was right to hold that there was “no reasonable prospect” of the claimant establishing an extended limitation period in respect of flat 27. He allowed St Anselm’s appeal relating to the primary limitation period for the claim in respect of flat 26, but dismissed the appeal in respect of flat 27.