Upton Park Homes Limited V. Macdonalds, Solicitors
| Jurisdiction | Scotland |
| Judge | Lord Uist |
| Neutral Citation | [2009] CSOH 159 |
| Docket Number | A166/07 |
| Published date | 27 November 2009 |
| Court | Court of Session |
| Date | 27 November 2009 |
| OUTER HOUSE, COURT OF SESSION [2009] CSOH 159 | |
| A166/07 | OPINION OF LORD UIST in the cause UPTON PARK HOMES LIMITED Pursuers against MACDONALDS, Solicitors Defenders ________________ |
Pursuers: Miss Joughin; Burness LLP
Defenders: Lake QC; Brodies LLP
27 November 2009
Introduction
[1] This is an action of damages against a firm of solicitors and its partners for breach of contract consisting of professional negligence. The negligence averred relates to the negotiation of missives by the defenders on behalf of the pursuers. The defenders' first plea-in-law is a plea to the relevancy and specification of the pursuers' averments. The pursuers' third plea-in-law is a plea to the relevancy of the defences to the merits of the action. Both pleas were debated before me on the procedure roll.
The pleadings
[2] The factual background is set out in condescendence 2 as follows:
"During 2002 Mrs Melanie Collins ... entered into preliminary negotiations with Wishaw and District Housing Association ... (W & D) regarding the sale of an area of land off Woodside Crescent, Crindledyke, Newmains ("the subjects"). At that time the subjects were owned in two parts, one by Mrs Collins and the other by Oscarpark Developments Limited ... ("Oscarpark"). Mrs Collins then was and now is the principal director and shareholder of both the pursuers and Oscarpark. The subjects were under the effective control of Mrs Collins. To make the subjects more marketable for sale as a development site Mrs Collins installed infrastructure and services. Planning permission was obtained. In order to obtain roads construction consent Oscarpark obtained a road bond in compliance with the Security for Private Road Works (Scotland) Regulations 1985. It was envisaged, following sale of the subjects, W & D would place the contract for construction of the development with Mrs Collins or a company under her control. As the preliminary negotiations progressed W & D indicated that they wished the subjects to be under the sole ownership of the entity with which they would place the construction contract. It was agreed among the pursuers, Mrs Collins and Oscarpark that the subjects would be sold by Mrs Collins and Oscarpark to the pursuers. Mrs Collins transferred the part of the subjects owned by her to the pursuers by disposition of 30 January 2003 in which the consideration was stated to be £118,667. Oscarpark transferred their parts of the subjects to the pursuers by disposition dated 30 January 2003 in which the consideration was stated to be £237,333. ... Said sums were paid by the pursuers to Mrs Collins and Oscarpark respectively on about 21 February 2003."
[3] In condescendence 3 it is averred:
"During 2002 missives for the sale of the subjects were negotiated by the defenders on behalf of the pursuers with W & D by means of a travelling draft offer being adjusted by the defenders and solicitors for W & D respectively. The defenders' Robert Bree acted as solicitor for the pursuers in connection with the proposed sale. The defenders had acted for Mrs Collins, Oscarpark and the pursuers in the aforementioned preliminary negotiations and dealings involving the subjects. Mr Bree of the defenders knew of the terms of the planning permission for the subjects. He was aware of the terms of the design and build contract. He was aware that ultimately the subjects were to be sold to a housing association for residential properties to be built thereon. He was aware that the subjects contained services and that infrastructure installations had been provided thereon. On or around 6 March 2003 Brechin Tindall Oatts ("BTO") submitted an offer on behalf of their client W & D to the defenders dated 6 March 2003 for the purchase of the subjects at a price of £370,000 together with a payment of £300,000 in respect of services installed on the subjects. The offer of 6 March 2003 is referred to for its terms and is produced herewith. Said offer was the final version of said travelling draft. It was in the terms that had been adjusted between the pursuers and W & D and in respect of which it had been indicated between them agreement had finally been reached. The offer of 6 March 2003 contained the following provision:
"Clause 4. There are no overriding interest or interests (sic) within the meaning of section 28(1) of the Land Registration (Scotland) Act 1979 affecting the subjects save, if appropriate, insofar as disclosed in the Land Certificates exhibited in respect of the subjects."
By letter dated 13 March 2003 the defenders accepted BTO's offer of 6 March 2003 (together "the missives"). Specifically, clause 4 was accepted. Prior to accepting the offer of 6 March 2003 and throughout the adjustment of the said travelling draft the defenders did not seek specific instructions on the terms of the said clause 4. Said clause had originally, as proposed by W & D, provided simply that there were no overriding interests. Mr Bree of the defenders had sought to delete this clause in its entirety. It was then reinstated by W & D subject to the exception as to what might be disclosed in the Land Certificate in this respect. Mr Bree of the defenders agreed to this clause being in the final draft and then accepted it by said letter dated 13 March 2003. In doing so he took no instructions from Mrs Collins of the pursuers, nor did he explain the import of said clause to her. He did not seek to exclude the existing services and infrastructure installations from clause 4. He did not seek to qualify the clause by reference to matters within the pursuers' knowledge. Mr Bree would have or should have been aware that there could have been overriding interests over the subjects within the meaning of the said section 28(1) of which the pursuers or Mrs Collins were unaware and which were not disclosed in the Land Certificate."
[4] The duties incumbent on the defenders are averred in condescendence 5 as follows:
"The defenders' acceptance of the pursuers' instructions constituted a contract between them. It was an implied term of that contract that in acting for the pursuers in the land transaction the defenders would use the knowledge, skill and care of a reasonably competent solicitor. In the exercise of such knowledge, skill and care it was the defenders' duty in adjusting the missives, having sought to have clause 4 deleted and the defenders (sic) having reinstated it, to have sought to restrict the scope of clause 4 in respect of the existence of overriding interests to matters within the pursuers' actual knowledge. In the event that such a restriction was rejected by the purchasers' agents, it was their duty to advise the pursuers accordingly, to advise them of the risk which the existence of an overriding interest of which they were not aware might present and to take explicit instructions as to whether they wished to accept the risk involved. It was the defenders' duty not to accept a clause in terms of clause 4 without having obtained informed instructions thereon. The defenders knew or ought to have known that there could be overriding interests over the subjects of which the pursuers or Mrs Collins were unaware. They knew that if there transpired to be such interests the pursuers would be placed in breach of clause 4 of the missives, as unqualified. No reasonably competent solicitor exercising ordinary knowledge, skill and care would have failed to have sought to revise clause 4 so as to restrict it to the knowledge of the pursuers or Mrs Collins. No reasonably competent solicitor exercising such knowledge, skill and care, in the event of the purchasers refusing to accept such a restriction and insisting on the inclusion of clause 4 being part of their contract, would have failed to have advised the pursuers and Mrs Collins of the risk involved in the acceptance of said clause unrevised and, before accepting it, to have sought informed instructions. In failing to seek to restrict said clause and further in failing to explain the risk of accepting it to the pursuers prior to accepting it and thus in failing to obtain informed instructions from them in respect thereof, the defenders were in breach of said implied term of said contract. Said breach caused the pursuers to sustain loss and damage as hereinafter condescended upon. But for the defenders' breach of contract the pursuers would not have sustained the loss and damage.
[5] The consequences of the alleged negligence of the defenders are set out in condescendence 3 at pages 9C - 11A as follows:
"Had Mr Bree explained the implications of clause 4 to Mrs Collins and that it involved the pursuers warranting that there were inter alia no phone or electricity lines, water, sewerage or gas pipes or rights such as servitude rights of access or rights held by the Coal Authority over the subjects she would not have been prepared to give such a warranty. She would have realised that she could not know with any certainty that there were no such rights. Had Mr Bree explained that it would be possible to propose a qualification to the said clause 4 restricting the warranty as to their being no overriding interests in said land to her knowledge Mrs Collins would have agreed to his proposing such a qualification. It is likely that W & D would have accepted such a qualification had it been proposed. Esto W & D had not been prepared to accept such a qualification and the pursuers had been faced with the options to accept the clause unrevised or lose the sale, Mrs Collins would have sought advice from her civil and structural engineers, Scott Bennett Associates Limited. She would have informed them that she had been asked to warrant that there were no such services running beneath the subjects and requested that they investigate and report on that. They would have looked at the existing site investigation reports. They would have carried out trial bores and other site investigations. They would have written to...
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