Case of the week: Negligence

Guy v (1) Mace & Jones; (2) George Davies Solicitors; (3) Weightman Vizards (2012) EWHC 1022 (Ch). Chancery Division. Sir William Blackburne. 24 April 2012

Solicitors instructed in connection with the sale of land were not liable for the loss incurred following the alleged fraudulent transfer of the land where the vendor knew and approved of its transfer.

Claim dismissed

The claimant issued a claim against three firms for professional negligence arising out of the alleged fraudulent transfer of his land.

Guy instructed a George Davies solicitor in relation to the sale of his land. The issue of consideration for the land, and how it was to be structured, had not been decided by the parties. The claimant pre-signed the transfer deed, which the firm then gave to the purchaser’s solicitor to be signed. The firm did not request the return of the transfer deed, and it later ceased acting for the claimant.

A Weightman Vizards solicitor was instructed by Guy, who had previously represented the purchaser in the transaction. Weightman Vizards ceased acting for Guy in relation to the sale of the land, but continued to act for him in relation to other matters.

The purchaser’s then solicitor, Mace & Jones, contacted Weightman Vizards to confirm whether it acted for Guy and whether Guy wished to proceed in the transaction. Weightman Vizards confirmed that it acted for Guy and was acting for him in relation to other matters, and that the claimant wished to proceed in the transaction. Mace & Jones then submitted the transfer deed to the Land Registry.

Guy’s case was that the purchaser fraudulently transferred the land from his ownership, and that the negligence of the defendant solicitors facilitated the transfer. The defendants denied liability. Weightman Vizards denied that its actions were causative of any loss.

Claim dismissed

Mace & Jones was not retained by Guy; there was no evidence of any reliance on the firm by the claimant or of any assumption of responsibility by the firm. Mace & Jones was given to understand that Weightman Vizards was acting for the claimant. There was no duty on Mace & Jones to obtain explicit confirmation that Weightman Vizards was acting for the claimant in the matter and that no payment was to be made for the transaction.

George Davies Solicitors could not be criticised for getting the claimant to pre-sign the contract and transfer deed as it was good practice in conveyancing transactions for a solicitor to get a client to pre-sign documents, once they had been agreed, to be used in an impending transaction.

The transfer deed was handed by the firm to Weightman Vizards on an implied understanding that its release was solely for the purpose of obtaining its execution and that it would otherwise be held to the firm’s order. The failure did not amount to a breach of duty.

The failure to obtain the return of the signed transfer deed was arguably a breach of duty; however, it was not causative of any loss, as the fault lay with Weightman Vizards in allowing the purchaser to retain the transfer deed.

The fact that Weightman Vizards started representing the claimant after having acted for the purchaser did not constitute a breach of duty.

The defendants’ alleged negligence did not cause a loss as the claimant knew and approved of the transfer of the land. Therefore, the claims failed.

For the claimant Guy

Claimant appeared in person

For first defendant Mace & Jones

Mark Simpson QC, Fountain Court

Spike Charlwood, Hailsham Chambers

Anthony Hill, DAC Beachcroft

For second defendant George Davies Solicitors

Ian Gatt QC, partner, Mark Cooper, senior associate, Herbert Smith

Kings Chambers

For the third defendant Weightman Vizards

Ben Patten QC, 4 New Square

Sian Mirchandani, 4 New Square

James Holman, partner, Weightmans

Commentary: James Robins

On the face of it, the judgment in Guy v (1) Mace & Jones (2) George Davies Solicitors (3) Weightman Vizards is good news for solicitors. All three escaped liability.

In the case of Mace & Jones, the outcome was hardly surprising. The firm was not acting for Mr Guy and assumed no duty of care towards him.

Sir William Blackburne appeared to be reluctant to make findings of liability against the other two firms, even though there were aspects of the transaction that with hindsight they might have chosen to handle differently.

Instead he dismissed the claims against them on causation grounds.

This case shows that you can rely on causation arguments to defend professional negligence claims even though there may be a question mark concerning the quality or level of service provided – but probably only in suitable cases.

In this circumstance it was important that the judge said in relation to Mr Guy that he felt “unable to place any reliance on the evidence of this colourful person”.

Where there are more credible or sympathetic claimants, it could be the case that judges would be less willing to find against them on causation grounds.

In all but the most clear-cut of cases, relying on a causation defence at trial can still be a risky strategy.

 

James Robins, partner, Bond Pearce