Stoll and Others v Wacks Caller (A Firm)
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Hodge QC |
| Judgment Date | 21 September 2009 |
| Neutral Citation | [2009] EWHC 2299 (Ch) |
| Court | Chancery Division |
| Date | 21 September 2009 |
| Docket Number | Case No: 6MA91303 |
[2009] EWHC 2299 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
Manchester Civil Justice Centre
1 Bridge Street West
Manchester M60 9DJ
Before: His Honour Judge Hodge QC
sitting as a Judge of the High Court
Case No: 6MA91303
Mr Jonathan Ferris (instructed by Zatman & Co, Manchester) for the Claimants
Mr Paul Chaisty QC (instructed by Pannone LLP, Manchester) for the Defendants
Hearing dates: 16 th– 18 th June, 14 th and 21 st September 2009
Approved Judgment
His Honour Judge Hodge QC:
Background
By a claim form, issued on 13 September 2006, the claimants seek damages for professional negligence and breach of contract arising out of their purchase of a house and land at 2 Ringley Road, Whitefield, Manchester M45 7LB at a price of £400,000. The proceedings were originally issued in the Queen's Bench Division in London but were subsequently transferred first (by an order of Master Fontaine dated 23 November 2006) to the Manchester District Registry and then (by an order of DJ Needham dated 4 December 2006) to the Chancery Division, and were allocated to the multi-track. The defendants are a firm of solicitors (since dissolved) who acted for the claimants on their purchase of the property, the responsible fee-earner being Mr Robert Harris, now a partner in the firm of Mace & Jones. The claimants were purchasing the property (at a price of £400,000) from the registered proprietor (Mr Paul Simon) with a view to its redevelopment; and the purchase contract was conditional upon the purchasers obtaining planning permission (acceptable to them, acting reasonably) for the conversion of the existing house into two flats with a further house at the rear. Completion was to take place on the 21 st day following the date of planning permission; but if the planning application was refused, or if in any event the sale and purchase was not completed for any reason within 6 months of exchange of contracts, the sale agreement was to lapse and be of no further force and effect. Although contracts were exchanged (on 24 February 2003, with a nominal deposit of £1) in the names of the first and second claimants, following the grant of planning permission (by Bury MBC on 30 July 2003) completion took place (on 19 August 2003) in the name of the third claimant (a company owned and controlled by the first two claimants), which had been incorporated on 4 August 2003. Although the point was in issue on the pleadings, Mr Chaisty rightly acknowledged that, as the transaction proceeded to completion, the defendants assumed a duty to the corporate claimant corresponding to the duty they owed to the individual claimants.
The proposed development never proceeded because (on 9 September 2003, and thus after completion of the purchase) neighbouring householders (Mr and Mrs Krebs) applied for judicial review of the local planning authority's decision to grant planning permission. Following the grant of permission to apply for judicial review at an oral hearing before Collins J on 6 February 2004, Bury MBC conceded that the planning consent should be quashed; and a consent order to that effect was signed by the applicants and the respondent authority on 31 March 2004 (although the order was not actually perfected until 29 April 2004). The effect was that the claimants' planning application fell to be reconsidered by Bury MBC as if it had been received on the day the authority received the court's order. Following the receipt (on 9 June 2004) of an offer (from Mr and Mrs Salisbury), at a price of £480,000 for the onward purchase of the house and land without the benefit of any further planning consent, the claimants immediately withdrew their planning application from reconsideration by Bury MBC. Unfortunately, and apparently due to difficulties on the part of Mr and Mrs Salisbury in effecting the sale of their existing property, the sale to them did not proceed to exchange of contracts and completion until April 2005, and then only at a price of £400,000. After allowing for the costs of the original purchase and later resale, and for interest, bank charges, and other outgoings, the claimants assert that they have suffered a loss on the transaction of £72,341.01 as at 20 April 2005 (the date of completion of the resale). This they seek to recover from the defendants, asserting that they were negligent in failing to include within the original purchase contract a “call-in” clause directed to preserving the conditionality of the contract in the event of a challenge to the grant of planning permission by way of judicial review. Had this been done, it is said that the claimants would have invoked the “call-in” clause to withdraw from the purchase prior to completion. Both liability and quantum are in dispute; but the principal issues that fall for decision are (1) whether the defendants were negligent in failing to seek to introduce a “call-in” clause into the original purchase contract and (2) the consequences if they had sought to introduce such a clause.
The trial
The trial was originally listed for three days on 16–18 June 2009; but, unfortunately, the evidence was not concluded until about 3.15pm on the third day. Due to the court's other commitments, it was not possible to resume the hearing until Monday, 14 September 2009. In the meantime, I had received written transcripts of the three days of evidence, together with detailed written closing submissions from Mr Jonathan Ferris of counsel (who appeared for the claimants), from Mr Paul Chaisty QC (who appeared for the defendants), and, finally, from Mr Ferris in reply. I was able to devote a full day to reading the transcripts (and my own contemporaneous notes of evidence) and considering the extensive written submissions before the hearing resumed. As a result, oral submissions were completed shortly before the luncheon adjournment on 14 September, when I reserved judgment.
The witnesses
For the claimants, I heard from three witnesses. The first was Mr Arnold Stoll, the first claimant. His witness statement was dated 21 May 2009; and he gave evidence for about 6 hours and 40 minutes, spread over 2 days (of which some 4 hours and 45 minutes was taken up with cross-examination). Now some 76 years of age, Mr Stoll is an entrepreneur and businessman; but his experience had been in the textile business, and this was his first venture into property development. Another of the claimants' witnesses, Mr Alex, said that Mr Stoll had come across “as a well-informed businessman”. Mr Harris described Mr Stoll as a “very astute businessman” who was “very savvy”. I find these descriptions of Mr Stoll to be accurate; but I also find him to be an unsatisfactory witness, and I regret that I can place no real confidence in the reliability of his evidence. At times, Mr Stoll was openly reluctant to engage with Mr Chaisty's questions, particularly when directed to hypothetical situations. His memory was both poor and uneven: in answer to many questions his response was that he could not remember. For example, he could not remember whether agents had been retained by Mr Simon on his sale of the property, or even whether a “For Sale” board had been erected outside the property before Mr Stoll offered to purchase it. During the course of Mr Alex's cross-examination, it became apparent that he had acted for Mr Simon as his estate agent on his sale of the property to the claimants. Mr Stoll was prepared to accept that Mr Harris had discussed the draft purchase contract, and had gone through clause 16 (the planning condition) with him, but he did not recall what had been said. In relation to his meeting with Mr Harris and his assistant, Ms Briony Sands, on the afternoon of 24 February (also attended by the second claimant, Mr Atkins), Mr Stoll said that it had all been a long time ago and there was not much that he could recall about the discussions. Initially, he said that he could not remember whether he had obtained a valuation of the property before exchange of contracts, although in re-examination (at T2/30) he said that “obviously” they had obtained the valuation figures in the report prepared for HSBC Bank before signing the purchase contract. In fact, that report was dated 18 March 2003, roughly a month after exchange of contracts. Perhaps unsurprisingly after more than 6 years, Mr Stoll could not remember much about the detailed conversations recorded in the contemporaneous documents. I find much of his evidence to be (perhaps inevitably) coloured by hindsight, but also dictated by self-interest. What is clear is that Mr Stoll was a highly demanding client who had been impatient to get on with the purchase of the property. I find that he considered that (1) Ringley Road (which was referred to as millionaires' row”) was “absolutely” the road to be in in North Manchester; (2) £400,000 was a good price for the property, particularly if the claimants could get the contemplated planning permission, but that, even without such consent, it represented no more than the property was truly worth; and (3) (although Mr Stoll used various adjectives to describe the claimants' prospects of doing so), based on the claimants' architect's advice, there was a “good chance” of obtaining the necessary planning permission to redevelop the property. I also find that, in Mr Stoll's own words, as recorded in the file note of the pre-exchange meeting early on the afternoon of 24 February 2003 (at B273), “the concept” underlying the deal “was to make money”; and that, coloured by the unfortunate history of subsequent events, in evidence Mr Stoll has understated his former belief that the purchase of the property represented a “win-win” situation, irrespective of the outcome...
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...to give evidence: see Wisniewski v Central Manchester Health Authority [1998] PIQRP 324. In the subsequent case of Stoll v Wacks Caller [2010] PNLR 4, His Honour Judge Hodge QC drew an adverse inference against the claimant (in a case not dissimilar to the present) resulting from the claima......