Patrick Lawrence KC, Carl Troman and Diarmuid Laffan succeed in the Court of Appeal in an important case concerning the obligations of solicitors when responding to emails and other informal queries from clients where no retainer exists.
On 19 July 2022 the Court of Appeal handed down its judgment in Spire Property Development LLP & Anor v Withers LLP [2022] EWCA Civ 970. The judgment will be of interest to all solicitors and other professionals who receive informal email queries from current or occasional clients in circumstances where no retainer exists in respect of the professional’s response.
In early 2021 Patrick Lawrence KC, Carl Troman and Diarmuid Laffan, instructed by Clyde & Co, acted for Withers LLP at the consecutive trials of two related Commercial Court claims by property investment funds for whom Withers had acted in relation to prime property developments in West London: (1) Prime London Residential Development Jersey Master Holding Ltd v Withers LLP [2021] EWHC 2401 (Comm) (“Prime”) and (2) Spire Property Development LLP & Anor v Withers LLP [2021] EWHC 2400 (Comm) (“Spire”).
The £12 million claim in Prime was substantially dismissed by the High Court on causation grounds with the claimant awarded under £300,000 in damages and, against the backdrop of the settlement correspondence, ordered to pay a substantial proportion of Withers’ costs.
The claimants in Spire brought two separate claims against Withers, which had acted for them in 2012 in the purchase for redevelopment of two adjacent properties in Fulham for over £40 million. The claimants alleged that Withers had failed prior to the acquisitions to identify and report on the presence of high-voltage cables (“HVCs”) running across the properties (“the 2012 claim”). The claimants further alleged that Withers had failed in responding to email correspondence in early 2014 to advise on the claimants’ rights against UK Power Networks (“UKPN”), and specifically their potential right to compensation if the latter could not produce a wayleave evidencing its entitlement to lay and maintain the cables (“the 2014 claim”). His Honour Judge Pelling QC found for the claimants on both claims while rejecting several heads of loss, leading to a judgment of just over £2 million (c. £600,000 for the 2012 claim and c. £1.3 m for the 2014 claim, plus interest) as against the sums claimed of approximately £9 million. Withers appealed only in relation to the 2014 claim.
The Court of Appeal’s judgment contains a useful summary of the law on the extent of solicitors’ obligations both where a retainer exists and where, such as the case before it, one does not. On an objective construction of the email correspondence between Withers and the property developer in January-February 2014, the Court of Appeal held that Withers had not assumed responsibility for advising the claimants as to their remedies if it transpired that UKPN could not produce a wayleave. Relevant to this construction were the client’s familiarity with the firm, its sophistication and thus Withers’ entitlement to read the specific queries addressed to it at face value. Also relevant was the fact that in the lead up to the crucial email exchange the property developer had been probing Withers as to why the HVCs had not been revealed by its pre-contract searches; the focus of the enquiries had been backward-looking and had prompted a guarded response from Withers.
On an objective construction of the central 28 January 2014 email in which the claimants addressed three discrete questions to Withers, the Court of Appeal held that the questions were focussed on and probing for reasons why the HVCs were not discovered pre-purchase, while Withers did not in its response assume a responsibility to provide broader advice on the client’s potential remedies. This conclusion was reinforced by the fact that there was uncertainty at the time of the exchange as to whether UKPN could in fact produce a wayleave.
The Court of Appeal noted that while its conclusion rested on the application of established principles to the specific facts, lessons could be learned from the case. Professionals responding to one-off queries should be careful to identify the extent of their assumption of responsibility, while clients should be alive to the limitations of informal responses and the degree to which they can reasonably be relied upon.
