Barclays Bank Plc v Weeks Legg & Dean (A Firm)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MILLETT,LORD JUSTICE PILL,LORD JUSTICE MAY |
| Judgment Date | 21 May 1998 |
| Judgment citation (vLex) | [1998] EWCA Civ J0521-12 |
| Docket Number | QBENF 96/0636/1 QBENI 96/1562/1 CHANF 96/1012/3 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 May 1998 |
[1998] EWCA Civ J0521-12
Lord Justice Millett
Lord Justice Pill
Lord Justice May
QBENF 96/0636/1
QBENF 96/1144/1
QBENI 96/1562/1
CHANF 96/1012/3
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MR J TOULMIN QC (SITTING AS A DEPUTY HIGH COURT JUDGE)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE HICKS)
(SITTING AS AN OFFICIAL REFEREE)
ON APPEAL FROM THE CHANCERY DIVISION
(HIS HONOUR JUDGE MOSELEY)
(SITTING AS A DEPUTY HIGH COURT JUDGE)
Royal Courts of Justice
The Strand
London WC2
In The Case Of Weeks Legg & Dean:
MR S BERRY QC and MR J NASH (Instructed by Lovell White Durrant, London EC1A 2DY) appeared on behalf of the Appellant
MR M HAPGOOD QC and MR J McMANUS (Instructed by Blake Lapthorn, Fareham Hampshire PO15 5VA) appeared on behalf of the Respondent
In The Case Of Layton Lougher & Co:
MR S BERRY QC and MR N JONES (Instructed by Eversheds, Cardiff CF2 1XZ) appeared on behalf of the Appellant
MR M HAPGOOD and MR P CRANFIELD (Instructed by Wansbrough Willey Hargrave, Bristol BS99 7UD) appeared on behalf of the Respondent
In The Case Of Ne Hopkin John & Co:
Mr S Berry Qc and Mr M Sullivan (Instructed by Eversheds, Cardiff CF2 1XZ) appeared on behalf of the Appellant
Mr M Hapgood Qc and Mr D Halpern (Instructed by Morgan Bruce, Cardiff CF1 3DP) appeared on behalf of the Respondent/1st Third Party
Thursday 21st May, 1998
These three conjoined appeals concern the proper construction of a standard form of undertaking given to Barclays Bank plc. ("the Bank") by solicitors to facilitate the completion of contracts for the purchase of land. The undertaking is in a form agreed between the Law Society and the banks. It is reproduced in Annex 24H to the Guide to the Professional Conduct of Solicitors and is in the following terms:
Undertaking by Solicitor To send Deeds/Land Certificate to Bank on completion of a purchase, the Bank and/or the Customer having provided the purchase monies.
TO BARCLAYS BANK PLC
If you provide facilities to my/our client…for the purchase of the Freehold/Leasehold property….
I/We undertake:
(a) that any sums received from you or your customer for the purpose of this transaction will be applied solely for acquiring a good marketable title to such property and in paying any necessary deposit legal costs and disbursements in connection with such purpose. The purchase price contemplated is £…gross and with apportionments and any necessary disbursements is not expected to exceed £…
(b) after the property has been acquired by….and all necessary stamping and registration completed to send the Title Deeds and/or Land Certificates and documents to you and in the meantime to hold them to your order.
In each of the cases with which these appeals are concerned the Bank has brought an action against the solicitor who gave the undertaking ("the Solicitor") for damages fo breach of the undertaking. In each case the Bank claims that the Solicitor parted with the money on completion of the purchase of the relevant property but failed to obtain a title to the property which provided satisfactory security for the Bank. In the first action this was because the property was subject to a right of way which precluded its successful development. The Judge (Mr. Toulmin QC sitting as a Deputy Judge of the Queen's Bench Division) held that the Solicitor was not in breach of the undertaking and dismissed the action. In the second action it was because there was no access to the property and there were insufficient rights of drainage and other services to allow for its development. The Judge (HH Judge Hicks QC sitting on Official Referees' business) held that the Solicitor had committed a breach of the undertaking in both respects. In the third action the property was owned by three co-owners. One of them had not consented to the sale and her signature on the conveyance of sale was forged. The Judge (HH Judge Moseley QC sitting as a Deputy Judge of the Chancery Division) held that the Solicitor had applied the money in accordance with the undertaking even though, through no fault of his own, no title was obtained, and he dismissed the action.
In reaching at their decisions the three judges adopted radically different approaches to the effect of the undertaking. In the first action the property was sold subject to the right of way in question. Mr. Toulmin QC held that it was sufficient that the purchaser had obtained a good title to that which he had contracted to buy. Distinguishing that decision on the facts in the second action, Judge Hicks QC held that the undertaking was to be construed without reference to the terms of the purchase contract. He held that a piece of land which was inaccessible could not properly be described as "marketable" however good the title to it might be. He found that the Solicitor was negligent in his investigation of title, but this was not the basis of his decision. He held that the undertaking imposed an absolute obligation on the Solicitor; the only question was whether a good marketable title was in fact acquired: and it was not. In the third action Judge Moseley QC refused to follow Judge Hicks in this respect. He said that this was to confuse purpose with effect, and held that it was sufficient that the Solicitor applied the money for the purpose of acquiring title to the property even though, through no fault of his own, this purpose was not in the event achieved.
In each case the Judge was concerned with liability only. As matters stand pending the outcome of these appeals, therefore, the first and third actions have been dismissed, and in the second action liability has been established with a trial on quantum to follow. In the first and second actions the Bank has sought leave to amend the pleadings to allege breach of a duty on the part of the Solicitor to advise the Bank as to the vendor's title. We refused leave, in the first action because it was too late and in the second because it was unnecessary.
The facts
The facts can be summarised as follows.
The first action.
The purchaser was a property development company and a customer of the Bank. It approached the Bank for facilities to assist in the purchase of a development site at 12 Nevill Road Rottingdean. The site was being offered for sale by public auction with the benefit of planning permission for a development of five houses with car parking spaces. The Bank agreed in principle to finance the purchase to the extent of an advance of £155,000 to be secured by a first legal charge on the property. The auction took place on 23rd June 1987 when the purchaser was the successful bidder at a price of £200,000.
The special conditions of sale provided that the land was sold subject to a right of way in favour of an adjoining owner. The purchaser appears to have been unaware of this. It is not clear whether the purchaser had taken the trouble to read the conditions of sale; but the Bank evidently had not: the proceedings have been conducted throughout on the footing that at the date of completion the Bank knew nothing of the subject-matter of the purchase and its own intended security beyond the address of the property and the fact that its customer was buying it for development. It is not alleged, and there is no reason to suppose, that the Solicitor was aware of the paucity of the information on the basis of which the Bank was content to make a secured advance to its customer.
On 24th. June 1987, that is to say the day following the auction, the Solicitor was instructed to act for the purchaser. The date fixed for completion was 21st July 1987. The Bank spoke to the Solicitor for the first time on 17th. July. Following this conversation the Bank forwarded a form of undertaking to the Solicitor under cover of a letter which stated that the Bank had agreed to assist the purchaser and
"in consideration, we shall be obliged to receive from you on the enclosed form your undertaking to hold the title deeds to our order and forward them to us in due course."
On 20th. July 1987 the Solicitor signed and returned a copy of the undertaking. In the undertaking the property was briefly described as "Nevill Road" (not "12 Nevill Road") and neither of the alternatives "Freehold/Leasehold" was deleted. The undertaking did not mention the right of way or any of the other rights subject to which the property was being acquired; but neither did it state that the property was free from incumbrances.
The Bank remitted the necessary funds on 21st. July 1987 and despite the existence of the right of way the purchaser completed its purchase on the following day as it was contractually bound to do.
Following completion the purchaser proceeded with the development of the property, and endeavoured to deal with the difficulties caused by the existence of the right of way by negotiating with the adjoining owner. The Bank made substantial further advances to the purchaser to assist in the development, some (and perhaps a11) of which were made after it had discovered the existence of the right of way. The development was eventually completed with the co-operation of the adjoining landowner and the development was completed and sold to him. The total loss to the Bank with interest as at 20th. December 1995 is estimated to be some £689,000, all of which the Bank seeks to recover in the action.
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