A leading firm of solicitors which was sued for alleged professional negligence after a property transaction went badly wrong, ending up bogged down in a costly arbitration process, has been exonerated by the High Court.
A company agreed to sell its substantial office building to developers who wished to convert it into flats. Contracts were exchanged but completion was dependent on the grant of planning permission with ‘acceptable conditions’. The developers argued that the conditions subsequently imposed were unacceptable and purported to treat the contact as over and to withdraw from the sale.
Shortly before the dispute was to be put before arbitrators, the company and the developers came to terms. The sale ultimately went through, but at a much lower price than previously agreed. The company sued the law firm which had advised it on the deal, pointing to alleged flaws in the drafting of the contract and claiming that it had been negligently advised. Including the £600,000 costs of the arbitration, the company valued its claim at almost £2.5 million.
In clearing the law firm of all liability, the Court noted that the company was a large and highly sophisticated client whose own personnel had considerable experience in the commercial property field. The law firm had given sound advice on the meaning of the contract and had properly discharged its professional duties.
The Court concluded that it would in any event have dismissed the company’s claim on the basis that, even had there been negligence on the part of the law firm, it would have caused no actionable loss. The company would probably have succeeded in the arbitration and had acted unreasonably in agreeing to the prior settlement.