Spire Property Development LLP v Withers LLP
| Jurisdiction | England & Wales |
| Judge | Pelling |
| Judgment Date | 24 September 2021 |
| Neutral Citation | [2021] EWHC 2400 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000578 |
[2021] EWHC 2400 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: CL-2018-000578
Mr Nigel Tozzi QC, Mr Tony Singla and Mr Jonathan Scott (instructed by CMS Cameron McKenna Olswang LLP)) for the Claimant
Mr Patrick Lawrence QC, Mr Carl Troman and Mr Diarmuid Laffan (instructed by Clyde & Co LLP) for the Defendant
Hearing dates: 19–22, 25–28 January 2021 and 2 February 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Pelling QC SITTING AS A JUDGE OF THE HIGH COURT
HH Judge Pelling QC:
Introduction
This is the trial of a claim by the claimants for damages for breach of a contract of retainer or breach of an alleged duty of care in relation to the development of two high value properties in Central London. The properties share a common boundary. One is known in these proceedings as “ the King's Chapel” and is located at 459A Fulham Road, London SW10 9UZ. The other is known in these proceedings as “ the King's Library” and is a former school. The King's Chapel was purchased by the first defendant (“SPD”) on 6 November 2012 at a price of £7.8m. The King's Library was purchased by the second claimant (“HPD”) on 23 November 2012 at a price of £34m. I refer to the King's Chapel and the King's Library hereafter collectively as “ the properties”. I refer to SPD and HPD hereafter collectively as “ the claimants”.
The claimants are each special purpose vehicles set up specifically for the acquisition and development of the properties. Each was ultimately controlled by three entities, being (1) Prime London Residential Development Fund (“Fund”), managed by Savills Investment Management (“SIM”); Pryvest Limited, whose interest in the developments is also managed by SIM; and Tenhurst Limited (“Tenhurst”), a property development company, a subsidiary of which was also appointed by the claimants as the development manager for the redevelopment of each of the properties. The defendant (“Withers”) is a full service law firm which at all material times held itself out as having expertise in real property matters. It is common ground that the claimants retained Withers in 2012 to act on behalf of the claimants in relation to the acquisition of the properties, and that at all material times the partner who acted for the claimants was Ms Emma Copestake assisted by Ms Hannah Robinson.
Following their acquisition of the properties, the claimants discovered that each of them had buried beneath the ground three high voltage cables (“HVCs”) belonging to UK Power Networks (“UKPN”) running along Cable Route 379. The claimants allege that Withers were negligent in failing to identify and alert them as to the existence of the HVCs prior to exchange of contracts for the purchase of the properties. The primary issue that arises in relation to breach is whether Withers ought to have carried out a specialist search, which it is common ground would have revealed the existence and track of the HVCs. Once the existence of the cables had been discovered, the claimants sought advice concerning the HVCs from Withers (the nature and extent of the advice sought is in dispute) and it is alleged that in breach of duty, Withers failed to advise the claimants correctly as to their rights and the remedies available to them against UKPN. In summary, the claimants were entitled either to have the HVCs moved by UKPN at UKPN's expense or to the payment by UKPN of compensation. Withers did not advise that this was so and in consequence, the claimants allege, the development schemes for each property was varied resulting in costs that would otherwise have been avoided and developments that were less valuable than would otherwise have been the case.
Many of the individuals involved in this case are those involved in Prime London Residential Development Jersey Master Holdings Limited v. Withers LLP (“the Prime Case”). That judgment was written before this one (even though this one was heard by me immediately before the trial of the Prime Case). I adopted this course because there may have been credibility issues that arose there that may have impacted on the assessment of credibility of some of the witnesses in this case. Given the detailed description in that case of the various individuals and their respective roles, I have not considered it necessary to repeat the exercise in this judgment. The principles that I have applied in arriving at the factual findings set out below are those that I set out in paragraph 7 of my judgment in the Prime Case. Before turning to the facts of this case I should mention that I offered to hand down the judgment in the Prime Case in June 2021, before the judgment in this claim but both parties considered it desirable that they should both be handed down together.
The relevant Background Facts
I need not take up time in describing how Withers came to be retained other than to say that it was the result of a long standing professional relationship between Ms Copestake and Mr D'Arcy Clark, who as I explain in detail in the Prime Case judgment was the person with day to day management and control of the Fund. It is common ground that Withers was retained by SPD no later than 25 September 2012 and by HPD no later than 18 October 2012. By section A2 of the SPD retainer letter, Withers by Ms Copestake agreed to:
“…Carry out the following searches:
2.1 Local Authority
2.2 Environmental;
2.3 Chancel Check
2.4 Planning
2.5 Water Authority
2.6 Other searches appropriate to the location of the property.”
The letter set out the assumptions made by Withers at section 13 of the letter. They included:
“13.2 That you have received advice in relation to the planning, listed building and building control history of the Property, including the consents for the change of use and redevelopment of the Property into a single residential dwelling, and that no planning/listed building advice is to be given as part of this engagement.
…
13.4 That the Seller supplies a full sales pack and only additional enquiries arising from the papers supplied in the sales pack will be prepared by us.
13.5 That you will arrange a survey and valuation of the Property and that any matters arising from your survey and valuation report will not be addressed as part of this engagement.”
The HPD retainer letter was in similar terms save that the paragraph numbers are different. It is not in dispute that at all material times Withers knew that the properties were being acquired for redevelopment.
Withers prepared reports on title for each of the properties. The King's Chapel report commented at paragraph 3 that the report was based “ … on our review of the title documents and search results …”, at paragraph 4 that Withers had not inspected the property and were unable to advise on its physical condition and at paragraph 13.1 that Withers had not been sent any survey report. The report concluded that Withers saw “ … no reason why you should not proceed with this transaction …” subject to three qualifications including one concerning any adverse comments received from SPD's surveyor. The report concerning King's Library was in similar terms. Neither report mentioned the HVCs or that a search for high voltage cables passing across the sites could have been but had not been carried out. Withers did not suggest prior to delivering the reports on title that such a search could be carried out but would not be unless instructions to do so were received from the claimants. It did not explain what such a search would reveal if carried out. Having received the reports, SPD instructed Withers to exchange contracts for the purchase of King's Chapel on 9 October 2012 and HPD instructed Withers to exchange contracts for the purchase of King's Library on 25 October 2012. The purchases were completed on 6 and 23 November 2012 respectively.
The claimants intended that King's Library be converted into luxury flats (those material to this dispute being flats 3 and 4) and King's Chapel into 3 houses being St Mark's House, St John's House and a newly built house to be called King's Lodge. In order to carry those schemes into effect, a geo physical examination of the sites was carried out by Sinclair Johnson & Partners Limited and on 11 September 2013, the presence of the HVCs was discovered. Mr Mussan, the technical director of Sinclair Johnson & Partners Limited reported these findings initially by email of that date in these terms:
“Please note the presence of the HV cable running across the site, and in the location of the proposed new basement. We have instigated a below ground services desktop search (from Groundwise) and will forward the findings once received.”
The Groundwise report referred to by Mr Mussan provided a ground plan showing the track of the cable as running across the north east corner of the King's Chapel site (and so through where King's Lodge was to be constructed) and along the whole of the south west side of the King's library site. As was accepted in Withers' opening submissions, none of this is in dispute. Although the claimants allege that Withers was negligent in failing to ascertain and advise concerning the presence of the HVCs, they do not allege that they would not have proceeded had they been advised as they allege they should have been. As Mr D'Arcy Clark made clear at paragraphs 91–92 of his witness statement, (a) the claimant would have wished to proceed but would...
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Spire Property Development LLP v Withers LLP
...AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT (QBD) His Honour Judge Pelling QC (sitting as a Judge of the High Court) [2021] EWHC 2400 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL Nigel Tozzi QC and Jonathan Scott (instructed by CMS Cameron McKenna Nabarro Olswang LL......