On the Tenth day of Christmas 2022...

... Ross Condie from Irwin Mitchell’s Real Estate Disputes takes a look at the Court of Appeal’s decision in Spire Property Development LLP & Anor v Withers LLP [2022] EWCA Civ 970.

Have you ever received, or sent, a request for advice which extends beyond the scope of your existing retainer? If so, you may be interested in Spire Property Development LLP & Anor v Withers LLP [2022] EWCA Civ 970.

Facts

The claimants referred to here as “the Developers”, instructed the defendants, Withers LLP, in relation to the purchase for redevelopment of two Grade II listed properties in Fulham. Those purchases completed in 2012.

It transpired that electricity cables were present below the properties. In 2014, post-acquisition, the Developers contacted Withers regarding the cables. The Developers consequently brought claims against Withers, alleging:

• In 2012, prior to the acquisitions, they had failed to identify and report on the presence of the cables; and
• In 2014, in correspondence between the parties, Withers had failed to advise adequately on the rights and remedies available to them having now discovered the existence of the cables.

Withers initially lost on both counts. However, they appealed to the Court of Appeal on point 2 only. The Court of Appeal found in Withers’ favour, on the basis they had not assumed legal responsibility to advise on the rights and remedies of the Developers against the utility company.

The communication

The Court of Appeal placed great emphasis on the relevant correspondence between the parties. The Developers' emailed Withers in 2014 to ask three questions:

"1.  Should the existence of the cable not have come up …as a result of seller's replies to enquiries, even if it didn't appear on the title docs?

2.  Could you elaborate slightly on the statutory rights of access point? Does this mean that UK Power could have laid the cable … without having any kind of legal permission from the owners? It would seem impossible that the owners of the sites were not aware of such a large cable being laid on their property.

3.  If, as there surely must have been, there is some kind of legal documentation relating to the laying of the cable on either site, then the question remains as to why this hasn't shown up on our radar?."

Withers responded only to the three questions raised, using the same numbering.

As to point 1, Withers answered by essentially exonerating the sellers, stating that they could only provide such information as they had, and no relevant documents had been revealed.

On points 2 and 3, Withers stated:

“A wayleave can either be agreed or can arise where the owner or occupier fails to respond to a notice requiring him to grant a wayleave or gives it subject to conditions unacceptable to the electricity company.” 

“Wayleaves … do not need to be registered at the Land Registry. It is therefore possible that a wayleave was granted sometime ago when the cable was originally laid and was not known to the seller.”

Withers also referred to the fact that the site had previously been owned by a local authority to reiterate the point the seller may not have had the requisite knowledge.

The Developers’ argued that they had impliedly requested advice on their rights and remedies against UK Power in their 2014 email. Given that Withers had not then advised as to any potential action against UK Power, the Developers asserted they relied on this in believing there was no such remedy available.

Withers position was that they responded to the questions that they were asked in a situation where the retainer between the parties had come to an end. They argued they had not assumed any liability to advise any wider than that.

The Decision

The Court of Appeal usefully summarised a solicitor’s obligations both with and without a retainer in place.

Where services are being provided under a retainer, it was said there is “no duty to go beyond the scope of their express instructions… subject to the qualification that the duty extends to giving advice that is ‘reasonably incidental’”. In addition, a retained solicitor will owe a simultaneous tortious duty to the client.

In contrast, where no retainer is in place, the key question is whether responsibility has been assumed and, if so, what is the extent of the responsibility assumed.

On the facts, therefore, the Court of Appeal considered the question to be whether Withers assumed responsibility to advise on the Developers’ rights and remedies against UK Power.

The Court’s primary focus when making this assessment was the correspondence between the parties (the most relevant parts of which are referred to above). The context of those conversations, including the fact there was an ongoing professional relationship between them, their sophistication, and their experience, was also deemed relevant.

In doing so, the Court of Appeal viewed the Developers’ questions as discrete and focussed on the failure to discover the cables existence at the time of the purchase, rather than their rights and remedies for dealing with them. Given the sophistication of the Developers, Withers were entitled to take these queries at face-value. By sticking strictly to the questions asked (even using the same numbering), it was held that Withers had not assumed responsibility “for anything going beyond answering those three questions”. As such, it was found Withers had not assumed a duty to advise on the Developers’ wider rights and remedies against the UK Power.

What to take away?

There are important principles to be taken from this case. When responding to queries outside the scope of the retainer professionals should be careful to identify in clear terms what responsibility is being assumed. Clients should also be alive to those factors which can limit what they are entitled to rely on when making such queries, such as the wording and the focus of the queries raised, and their own level of experience and sophistication.