Negligence — Claims against professional advisers, solicitors and estate agents for damages — Loss suffered by plaintiffs through having been given an incorrect figure for rateable value in respect of office premises available for letting — Plaintiffs took tenancy on the footing that the rateable value was £3,305 whereas it was in fact £8,305, the figure of £3,305 being a valuation, which had been deleted, for part of the premises — Discrepancy had come to light before contract in answer to a preliminary inquiry, but insufficient care was taken by the plaintiffs’ advisers to investigate it thoroughly and the plaintiffs were wrongly advised that the smaller figure was correct, and acted upon that advice — Judge found both firms of advisers negligent — The third party, a firm of surveyors and estate agents acting for the lessors, whose letting particulars had contained the incorrect figure, were held liable to make a contribution under the Civil Liability (Contribution) Act 1978 on the ground that if sued directly by the plaintiffs they would have been liable on the basis of Hedley Byrne & Co Ltd v Heller & Partners Ltd — The fourth party, the local authority, against whom a claim had been made because of an answer given to a telephone inquiry, were held not to have been guilty of any negligence — The solicitors were made responsible for 40% of the plaintiffs’ claim, the estate agents for 60%, and the third party to bear one-half of each of these percentages
In this action
brought by Computastaff Ltd, a company formed to develop computer programming
and analysis contract work, the first defendants were Ingledew Brown Bennison
& Garrett, solicitors, and the second defendants were Henry Berney Rowland
& Partners, estate agents. The third party were George Trollope & Sons,
surveyors, valuers and estate agents, and the fourth party were Westminster
City Council. The plaintiffs’ claim arose out of information given to them as
to the rateable value of ground-floor offices in Livingstone House, Carteret
Street, in the Victoria area, London SW1.
Michael F
Burton (instructed by Slowes) appeared on behalf of the plaintiffs; P St J H
Langan (instructed by Barlow Lyde & Gilbert) represented the first
defendants; John M Roberts (instructed by Ince & Co) represented the second
defendants; M J Lerego (instructed by Reynolds Porter Chamberlain) represented
the third party; and H de Lotbiniere (instructed by the chief solicitor,
Westminster City Council) represented the fourth party.
Giving
judgment, McNEILL J said: My regret that I find myself obliged to decide that
reputable and regularly responsible professional advisers are in breach of
professional duty in respect of the plaintiffs’ affairs is matched only by my
admiration for the dexterity with which each has tried to ‘pass the buck’.
My decision is
based solely on the particular facts of this case. It lays down no principle or
practice of general significance. The facts here, to my mind, are very special,
very unusual and probably unique.
Mr Alan Norris
and three colleagues in 1978 decided to branch out on their own and form a
company to exploit their talents in the field of computer programming and
analysis contract work. The first defendants, a firm of solicitors, were
consulted, in particular Mr Peter Jay, a partner of some nine years’ standing
and an admitted solicitor since 1970. An off-the-shelf company was purchased,
the name of which in due course was changed to the name of the plaintiff company.
Mr Jay advised on that and on other aspects of the proposal.
Mr Norris and
his colleagues had done some very careful preparatory budgeting. This had
impressed the appropriate branch of Lloyds Bank sufficiently to secure the
offer of adequate overdraft facilities. In particular they had estimated that
they would want at the start office space in central London close to an
underground station, preferably in W1, SW1, WC1 or WC2, of some 1,000 to 1,200
sq ft in area. Their inquiries were perhaps more particularly concentrated in
the Victoria and W1 area. They estimated that they could pay an inclusive sum
of about £12,400 for the accommodation at the start of the venture.
Mr Norris was
their spokesman. He has given evidence in this case, and he it was who conducted
the business, firstly with Mr Jay. Later, on Mr Jay’s suggestion that if he was
looking for premises, as he was, he should retain an agent, Mr Norris retained
the second defendants and conducted the business with Mr Mitchell Phillips, an
employee of the second defendants.
The second
defendants are a firm describing themselves on their business letter heading as
‘surveyors, estate agents, valuers, property and development consultants’. Mr
Phillips was in their estate agency department.
The budget documents
are at pp 1, 2 and 3 of the agreed bundle. Mr Jay said that he did not recall
seeing those documents, but he had a recollection of seeing a prediction of
profit and loss. It was clear both to him and to Mr Norris that the plaintiffs
wanted to get started in business as soon as was reasonably practicable. Mr
Norris and some, at least, of his colleagues were in employment and would have
to give notice and that again was another aspect of the matter upon which Mr
Jay was retained to advise.
Mr Jay quite clearly
was impressed by Mr Norris’ potential and capabilities and took the view that
although it was, as Mr Norris described it, a fledgling venture, nevertheless
it was one which showed every sign of being successful quite quickly.
Mr Norris’
brief to Mr Phillips was short and to the point. Mr Phillips’ record of it is
on a card at p 4 of the bundle, and having set out the name and address of Mr
Norris it reads as follows: ‘1000/1200 sq ft offices Victoria/W1 up to £10 ft.’ It may be that there was some initial
misunderstanding in so far as Mr Phillips recorded perhaps a somewhat narrower
area than that in which the plaintiff company was prepared to do business, but
more particularly as to the figure which is there mentioned. The plaintiffs’
intention was that that figure of £10 per sq ft was to be an inclusive figure,
and it matches of course, as will have been remarked, the estimate of what they
could afford for accommodation to which I have already referred. Mr Phillips,
on the other hand, told me that he was not advised that the £10 was an
inclusive figure. His note, he said, related to rent alone.
In so far as
it is necessary, and from time to time in the course of this judgment it will
be necessary, to reach decisions as to which party or which witness on a
particular matter is to be believed, then I shall do so. So far as this is
concerned, that is, Mr Phillips’ recording of ‘up to £10’, in the context of
the market as it was at that time, evidenced in particular by a document which
was put in, which emanated from independent experts who were in the end not
called, that there was plenty of accommodation in the relevant area at a price
as low as £5.50 per sq ft — in so far as it is a matter of on whose
recollection I rely, I found Mr Norris a satisfactory witness and I believe
that he did make it clear that what was intended was an inclusive figure of
£10; that is to say, inclusive of rent, service charge and rates.
I am
reinforced in that view by the fact that it was to premises which fell broadly
within that definition that Mr Phillips first introduced the plaintiffs.
So far as what
became the subject-matter of the dispute is concerned, it arose in this way.
The third party, also in business as surveyors and estate agents, were at that
time advertising office premises to let in a building called Livingstone House
in Carteret Street in the Victoria area. Mr Phillips took Mr Norris to see two
small suites of offices in that building, which together amounted only to some
900 sq ft of office space and which were separated by the length of a corridor.
Mr Norris did not like those premises and as he and Mr Phillips were leaving
the building he was drawing attention to the fact that among the requirements
was a sufficiency of telephone lines. Apparently a porter or commissionaire
overheard the conversation and pointed out that there was a suite of offices on
the ground floor of the building which had an abundance of telephones left by
the previous occupiers. He had apparently access to that suite and Mr Norris and
Mr Phillips went to see it. It was very much bigger than Mr Norris had wanted.
Mr Phillips
had, in his office files, the third party’s letting particulars and he caused
the material parts of that set of particulars to be transferred to a blank form
as used for particulars by the second defendants, and the document appears at
pp 6 and 9 of the bundle. The plaintiffs were supplied by the second defendants
with those particulars.
There was a
pleading point, which I can dispose of immediately, to this effect: that by an
endorsement on those and indeed all particulars put out by the second
defendants there is a disclaimer of responsibility for the accuracy of the
contents. In the events which I shall describe nothing now turns on that, since
the plaintiffs’ claim is not based on an inaccuracy in the document but on
negligence subsequent to the events I am describing.
The
accommodation in question was described as ‘the entire ground floor of
Livingstone House’ with an approximate total area of 2,530 sq ft, available at
a rental of £16,000 per annum exclusive of rates and service charge, with the
residue of a lease for a term expiring on June 24 1983. The particulars stated
that the rateable value of the premises was £3,305 and that the rate in the
pound then payable was 75.3 pence.
Mr Norris
appreciated that the premises were really far too big for them to begin with.
They were quite attractive as premises and they had something like 30 telephone
connections which would have suited them. He had a discussion with Mr Phillips
to inquire whether, if they took the premises, they could sublet a part. Mr
Phillips said that he would inquire to see if that would be possible and he
advised the plaintiffs that, if it were possible, it should be possible to get
a rental of about £10 per sq ft on an inclusive basis.
According to
Mr Norris, he drew attention to the rateable value in the particulars. It
looked, he said to Mr Phillips, reasonable; and according to Mr Norris, Mr Phillips
said that it looked good, or something like that. Mr Norris went on to say
that: ‘Between ourselves,’ that is, I think, inside the plaintiff company, ‘we
thought it might be because it lacked natural light.’
This is a
second point at which there is an issue of fact. Mr Phillips disputed that
anything like that was said. ‘I do not recall Mr Norris saying that the rates
were low, but I did say that he should be able to get £10 per ft inclusive if
he sublet.’ I am satisfied that Mr
Norris is right in saying that he drew Mr Phillips’ attention to the modest
level of the rateable value as disclosed on the document.
The plaintiffs
considered the possibilities offered by this entire ground-floor office suite
and concluded, subject to a number of considerations which had to be resolved,
in particular the ability to sublet at or about the figure mentioned, they
would take the suite. Mr Jay was again contacted and it is clear that from a
date at latest January 18 1979, evidenced by a letter at p 8 in the bundle, not
only were the first defendants retained as solicitors but the second defendants
were requiring that they also should be retained at scale fees for the work
that they were doing for the plaintiffs.
A day or two
later Mr Phillips wrote to the third party inquiring whether subletting was
possible. There was some issue during the course of the evidence as to whether
it was the plaintiffs or the landlords who first suggested that the subletting
should be for a short term. The whole residue was only, of course,
four-and-a-half years. The point was made on the one side that the plaintiffs
had sufficient confidence in their ability to succeed — as in fact happened —
that they did not want subtenants to be encumbering the premises if they wanted
to expand; it being equally clear that in the end the landlords also wanted to
insist not only on a short subletting but also on a subletting or licence which
would not land them with tenants with any statutory right to remain at the
conclusion of the tenancy.
On February 1
Mr Phillips wrote to Mr Jay, in the letter at p 14, enclosing a letter which he
had written to Mr Norris, confirming his discussions with the third party and
confirming that a licence agreement was acceptable. There were other
considerations which were not material to the dispute. One material matter,
however, was this: that Mr Phillips then advised Mr Jay that the landlords’
solicitors were Hewitt, Woollacott & Chown; the gentleman dealing with the
matter there was Mr Bellhouse. The third party apparently had instructed
Hewitt, Woollacott & Chown to send a draft lease to Mr Jay.
The matter
proceeded normally to the stage where Mr Jay made the usual preliminary
inquiries on the standard form which is available at law stationers. One of the
questions in that form, under the heading ‘Outgoings’ is ‘A1 What is the
rateable value of the property? A2 Have
any works been carried out at the property which might result in a revision of
this?’ Those inquiries were answered by
Hewitt, Woollacott & Chown on February 22 1979. On receiving them, Mr Jay
asked Mr Norris to come and see him, because those answers had disclosed a
substantial difference between the particulars given by the second defendant
and the information supplied by Hewitt, Woollacott & Chown, so far as the
rateable value was concerned. On February 27 Mr Norris went to see Mr Jay, who
showed him the answers and pointed out that far from the rateable value being
£3,305, the solicitors were saying it was £8,305; and in that year, without
being too precise about the calculation, at 75.3 pence in the pound it would
have meant a difference in the rate payable of £3,750 or thereabouts.
Mr Norris,
when faced with that, told me that he said: ‘That can’t be right. I wouldn’t
have looked at the premises if that were so.’
Mr Jay did not recall that form of words but accepted that it had been
made plain to him that it was clearly an important difference between the two
figures. Mr Jay said that he would raise the matter with the second defendants
and undertook to make inquiries. Indeed, he telephoned Mr Phillips, but could
not get him at that time. According to Mr Jay, Mr Norris agreed that that was
what he should do. No point turns on this. Mr Norris said: ‘That is what he
advised should be done, and he was my solicitor. But,’ said Mr Norris, ‘I
pointed out that it was very important and I wanted to get to the bottom of
it.’
In a sense I
now leave the plaintiffs. They had put the matter in the hands of their
professional advisers, and the next stage was that Mr Jay spoke to Mr Phillips,
obtained from him a confirmation that the lower figure was the correct one, and
so informed the plaintiffs. I have put that in somewhat general terms because I
need to consider it in greater detail. As far as the plaintiff company was
concerned, Mr Norris received from Mr Jay a letter, at p 32 of the bundle, the
material part of which reads:
Mr Phillips
of the agents telephoned me on Tuesday afternoon to confirm that the rateable
value was in the region of £3,300 and not the figure of approximately £8,000
that had been given by the lessors’ solicitors.
A time was
then spent in negotiating the sublease, in discussing the service charge, about
which also there was a difference of figures but not material to this dispute;
and matters were apparently proceeding and indeed proceeded to the stage of
completion of the lease and the admission to the premises of the subtenants. On
September 6 1979 Mr Norris got his rate demand from the Westminster City
Council. He was shocked to find that the demand was on a rateable value of
£8,305. So concerned was he that he went down to the Westminster City Hall and
spoke to the valuation officer. As a result of that he wrote to Mr Jay on
September 6, the same day, at p 61 in the bundle. He expresses his astonishment
at what he has discovered; confirms that the figure was quite clearly quoted in
the valuation list and that he has satisfied himself that it was not a mistake;
points out that the figure contrasts sharply with the figure quoted in the
particulars; and asks what recourse they have against the agents.
Mr Jay, on
September 11, wrote to Mr Phillips referring to that letter and continuing:
You may
recall that I raised this matter with you on February 27 when I received my
replies to preliminary enquiries, and you informed me that the rateable value
of the property was that figure which you had quoted in your letting
particulars — £3,305.00.
and inviting
comment. The second defendants’ reply, at p 64, in effect sent a copy of the
third party’s particulars from which they had taken the particulars that they
supplied and expressed disturbance as to the considerable difference in the
rateable value. The letter was not actually written by Mr Phillips, who was on
holiday, but by Mr Minsky who, from the heading, would appear to be the senior
consultant. It is hardly surprising that his letter ends: ‘. . . no doubt I
will be hearing from you shortly.’
The result of
all that is, of course, as must be obvious, that for the whole period of the
lease, until June 1983, the plaintiff company is paying rates on a rateable
value of £8,305 and not on a rateable value of £3,305, and although in the
first year the difference was still a significant one, £3,750, the rate per
pound now charged by the Westminster City Council is about double what it was
then.
The way in
which the plaintiffs put their case against their professional advisers, the
first and second defendants, is quite shortly that they were negligent in
advising them and in taking steps to get information upon which to advise them
once this big discrepancy between the figures was disclosed. Both defendants,
by their pleadings, seek indemnity or contribution from the third party, whose
negligence, they say, caused or contributed to that which happened to the plaintiff
company. To complete the list of parties, the third party has brought in as
fourth party, and has been joined in bringing in as fourth party by the second
defendants, the Westminster City Council, who keep the valuation list.
There are
certain facts which are indisputable. The first is this: that at all material
times after a date in July 1976 the entire ground floor of Livingstone House
had been a separately rated hereditament with a rateable value entered in the
valuation list of £8,305. Up to that date part of the ground floor, described
as ‘lecture hall, shop and office’, had been a separately rated hereditament,
with a rateable value of £3,305. That entry in the valuation list had been
deleted when the description of the hereditament and the higher rateable value
had been entered. Those facts can be seen on pp 86 and 87 of the agreed bundle.
Secondly, for
reasons which remain obscure, when the third party put the residue of the lease
on the market they erroneously ascribed to the entire ground floor the rateable
value of £3,305. I mention that to clear out of the way one other matter: that
it is not contended that of itself it is actionable negligence on the part of
the third party. It was, nevertheless, that detail which the second defendants
transferred to their own form of particulars.
Faced with
this important difference between £8,305 and £3,305, what did the parties
do? Mr Jay, as I have already described,
referred the whole matter to Mr Phillips. He took the view, so he said, that it
was for the professional advisers on the property side, rather than the
professional advisers on the legal side, to get the right answer. Mr Phillips
and Mr Jay are in dispute as to precisely what passed between them and
precisely what was required. According to Mr Jay, he told Mr Phillips that the
preliminary inquiries had shown £8,305 but his particulars had only shown
£3,305; and, said Mr Jay: ‘I asked him to clarify and come back to me. I did
not suggest any method to him of doing it.’
Mr Phillips’ account was in these terms: ‘Mr Jay rang me about the
rateable value. The gist of it was that there was a discrepancy and he asked me
to check out if a higher or a lower figure was correct. I cannot recall now if
he mentioned specific figures. I was given the impression that it was fairly
important but not a matter of life or death. It is right to say that Mr Jay
told me that his impression from Mr Norris was that it was not a matter of make
or break.’ For reasons which I shall come
to later, I think he was in error about that.
Mr Phillips,
in his turn, did not ring the Westminster City valuation office but rang the
third party. He wanted to speak to either Mr Bell, a partner, or a Mr Heard,
both of whom had had some dealings with the subject property. In fact he got Mr
Bell’s secretary, a Mrs Fellerman, who has given evidence in this court.
According to Mr Phillips, what he said to her was: ‘Will you check the
rates?’ She said she would; or, as he
put it at another place in his
Livingstone House.’ According to Mrs
Fellerman, there was what she described as a ‘query’ rather than a
‘discrepancy’; ‘No figures were mentioned to me. It was a routine inquiry.’ Mrs Fellerman telephoned the Westminster City
Council valuation office. Her evidence really amounted to this: ‘I stopped
being a secretary in that office only a few months afterwards. I was having a
baby and I have not been back since. So my recollection really is founded
entirely upon a note that I made at the time. It was my practice to make a
shorthand note of conversations if Mr Bell or Mr Heard was not in the office. I
look at my note and it refreshes my memory. I would have recorded what was
said. I would not have omitted anything that was important.’ At p 26 of the bundle is her note, made on
February 27 1979:
Telephone
conversation with Mr Phillips of Henry Berney. His clients have just received
the preliminary enquiries back from their solicitors and a query was raised
regarding the rates for the premises.
That seems to
me to be the most reliable record of what passed between those two people on
that day.
There is
greater difficulty, at the outset at least, in determining what happened next.
Until the first day of the hearing, on Monday of this week, the fourth party’s
case had been that they were unable to identify the person in the valuation
office to whom Mrs Fellerman had spoken. Yesterday the present chief rating
officer of Westminster City Council, Mr Bailey, gave evidence. He is a very
experienced officer, and he said it was while this case was starting, the
previous day, that he recognised that he was the person to whom Mrs Fellerman
had spoken. It was unusual for him to answer telephone queries — he had then
been the Assistant Chief Rating Officer — but as he put it, ‘too many facts
tallied’ to leave him in any doubt that he was the person concerned. For
obvious reasons, his evidence has to be weighed with very great care. Mrs
Fellerman, in her conversation with Mr Phillips, had got out the third party’s
file relating to these premises. She told me she knew of the transaction. She
had had discussion with Mr Phillips about it previously, and the premises were
known to her although she had not visited them. She could see on the third party’s
file the erroneous figure of £3,305 as the rateable value for the entire
premises. Her note of the response from Westminster was this:
I telephoned
Westminster City Council and they confirmed that the rates are as follows:¾
|
Stated as: |
Lecture Hall, Shop and |
|
GV |
£4,000 |
|
RV |
£3,305 @ 75.3p in the £. |
Mr Bailey’s recollection is that the inquiry he received was on this
basis: he ascertained that the hereditament — using his terms, I do not suppose
that Mrs Fellerman put it precisely in this way — that they were interested in
was the ground floor. Then he had to get the valuation lists which were here on
the first day and amounted to three very large volumes; he identified the
premises and then went back to the telephone and the way he put it was:
I would have
read out the description which is to be found on, now, p 87 of the agreed
bundle, that is to say, the entire ground floor at £8,305 RV
Then he said:
I believe I
was asked if I had a value of £3,305. I said, no, but there was a previous
entry, and I then read out the deleted description on p 86 of the bundle.
Mr Bailey says
that he then had the firm impression that the inquirer believed that £3,305 was
the figure she wanted and he said he tried to explain that that was not right
and hereditaments change in their description and area, and it could be split
again. Mrs Fellerman says: ‘No, if £8,305 was mentioned, I would have noted
it.’
I do not think
it is safe to go beyond this: first, that it is extremely unlikely that any
public servant would have given a deleted entry as an actual entry. I remain in
doubt as to whether Mr Bailey actually read out the £8,305 entry. It is,
however, perfectly clear to me that Mrs Fellerman was seeking to confirm the
figure she had on the third party’s particulars. She did not appreciate, as
from those particulars she could have done, that the figure she was given of
£3,305 did not relate to the entire ground floor but only to a part of it. That
having happened, as she notes, she rang Mr Phillips back and ‘confirmed this to
him’.
That is the
message that got back to Mr Norris, through Mr Jay’s letter of March 1 1979.
There is one other contemporaneous record, and it is Mr Jay’s note of February
27 1979, at p 28, where he records attending Mr Norris and going through the
form of the lease with him and then it continues:
He questioned
the amount of the rateable value of the property. Subsequently speaking to Mr
Phillips, he said this was in the region of £3,300.
It goes
without saying that the plaintiffs, through Mr Norris, were wrongly advised as
to the rateable value of the subject premises. Was that advice not only wrong
but negligent on the part of any, and if so, which of the various parties?
It seems to
me, on the facts of this case, where it is conceded by the solicitors that the
matter was of importance — and quite clearly it was, in the context of
something like £3,750 against a rental of £16,000 — that very great care had to
be taken to see that the plaintiffs were given the proper figure. To take only
one example, they needed to know the proper figure so that they could provide
for it in the rental demanded for the sublet property. One of the complications
in the case, it emerged later, because the sublease was not in fact signed
until December 1979, approval of the court having to be sought to delete any
right to Landlord and Tenant Act extension, was that subsidiary clauses had to
be put in providing for additional sums based on an apportionment of those sums
by areas occupied; and that had to be done from a base figure in relation to
rates which was the figure payable at £8,305 rateable value, and not £3,305.
The way I look
at it, first of all from the solicitors’ point of view, is this: here you get
an answer in a formal document sent for the purpose of obtaining the answers to
inquiries before contract, which on the face of it falsifies information from
the estate agents. A proper course to take may be to ask the estate agents to
check; but it seems to me to be disregarding another and more satisfactory
course: that is to say, going back to responsible solicitors and saying to Mr
Bellhouse on the telephone: ‘Look, have you got the figure wrong?’ If Mr Jay had only done that I suspect that
this trouble would never have arisen.
The next
stage, I think, is this: Mr Phillips is asked to investigate. He is not given
clear instructions about what it is that he has to investigate. If I may for a
moment take a leaf out of the preliminary inquiries, it would have been the
simplest thing in the world for the solicitors following that line of inquiry
to say: ‘What is the rateable value of the property?’ and Mr Phillips could have answered that
question. I think one of the sloppier aspects of the way in which Mr Norris was
treated was that those advising him never sufficiently formulated the question
which had to be answered. Mr Phillips, for his part, did not make inquiries
himself. He of course starts off on the difficult foot that he has adopted the
third party’s particulars: but he does so with, as I have found, the knowledge
conveyed to him by Mr Norris that the rateable value figure seemed to be a good
one.
I also confess
to some reservation about whether an estate agent employee of a firm which is
in business as surveyors as well as estate agents can achieve for his firm an
immunity from negligence because of his own inability to assess the likelihood
of the quoted rateable value being correct. I do not think it is necessary here
to decide that point, because Mr Phillips really takes the burden upon himself
by not making inquiries personally and asking the valuation office the right
question, or indeed as he could have done, for he produced their name, asking
Hewitt, Woollacott & Chown, or Mr Bellhouse; he gets on to the third party
and has those conversations with Mrs Fellerman which I have described.
There has been
evidence given on one side and the other about whether estate agents on the one
hand and surveyors on the other go to the valuation office to check personally.
I think on the whole the evidence suggests that although rating surveyors do,
estate agents do not. But they do have to be careful, and they have to be
careful in that they make it abundantly clear, if they are going to ask either
the rating office itself or an intermediary, that the precise question to be
answered is posed; and it is to my mind clear between Mr Phillips and Mrs
Fellerman that that never happened. I am of the conclusion that both of them
were happy to get the erroneous answer which confirmed the basic erroneous
information, and having got it did not exercise the degree of care which the
importance of the difference made to the lay clients.
So far as Mrs
Fellerman is concerned, as I have already indicated, she was at fault in not
recognising that that which she recorded as the hereditament which had a
rateable value of £3,305 was not the hereditament described as the entire
ground floor. Her blame is not wholly personal. She reported all this to Mr
Bell, the partner for
had gone wrong.
The only
remaining matter is this. Is it found that there was any carelessness on the
part of the Westminster City Council? I
cannot see a shred of evidence of negligence on the part of the city council,
or of Mr Bailey, if in fact it was Mr Bailey. As I have said, it is
inconceivable that they would read out as a live valuation that which was a
deleted valuation. I do not believe that any one of them did. I think they gave
an accurate figure for a different hereditament, which was a deleted
hereditament.
Those findings
of fact, while involving both the first and second defendants in acts or
omissions which amount, in my view, to actionable negligence — these are as
against the plaintiffs — in so far as they failed in their duty to them as
professional advisers, make it necessary to consider further the case against
the third party.
The claim
against the third party, which, as I have said, is for indemnity or
contribution, is necessarily founded, as counsel agreed, upon section 1(1) and
section 6(1) of the Civil Liability Contribution Act 1978. The entitlement of
the first and/or second defendants to indemnity or contribution from the third
party depends upon its being shown that the third party, if sued by the
plaintiff, would have been liable. Such liability, it is common ground, in
these circumstances could arise only if there were what I describe, I hope not
too loosely, as the Hedley Byrne liability.
Therefore the
question I have to ask myself in dealing with the claim against the third party
is whether or not, if sued by the plaintiff, the third party would have been
liable. I described the facts as being, if not unique, unusual, because the
link between the plaintiff and the third party is through two professional
advisers, that is to say, as I have described it, a chain of inquiry, for what
it is worth, went through the solicitors to the estate agents to Mrs Fellerman.
It is, I
think, without setting out in any citation the rationes decidendi of Hedley
Byrne, correct to say that it must be shown that the plaintiff was
reasonable in seeking the information from the third party and, if so
reasonable, reasonable in relying upon it. So much, I think, can be summarised
from the speech of Lord Reid in the report of Hedley Byrne & Co Ltd
v Heller & Partners Ltd [1964] AC 465 at p 486, and the speech of
Lord Morris of Borth-y-Gest at p 502 and of Lord Hodson at p 514.
This is a case
in which lines of inquiry were reasonable down both channels, but neither was
of itself sufficient; neither of itself, so far as the solicitors were
concerned, discharged their obligation, for reasons that I have already said;
that is to say, in going back to Hewitt, Woollacott & Chown to question
their figure. It was also reasonable to inquire down the estate agents’
channel. The fault there, as I have indicated, is in the posing and answering
of the questions down that channel. But as between plaintiff and third party,
it is to my mind reasonable for the plaintiff to inquire, as one of the sources
of information, of the third party and reasonable to rely upon the information
that is given.
It may be, at
the end of the day, that the information achieved from source down both
channels differs, in which case the professional advisers have
responsibilities. The plaintiff is entitled reasonably to investigate down both
channels and to rely, for what it is worth, on the information which is
provided. In my view, the third party, if sued by the plaintiff, could have
been held liable under what I have, for convenience only, called the Hedley
Byrne line of authority. That being so, the third party is to my mind
liable as a contributor under the sections of the Civil Liability Contribution
Act to which I have referred. I have not set out those sections in detail in
the course of this judgment, simply for the saving of space and time. Nor am I
to be led into an appreciation of the dissenting judgments of those two
distinguished Law Lords, Lord Reid and Lord Morris of Borth-y-Gest in the Hedley
Byrne case, who had the misfortune to find themselves in the minority in
the Privy Council in Mutual Life and Citizens’ Assurance Co Ltd v Evatt
[1971] AC 793.
There
necessarily then remains the question of the contributions which respectively
each of the three parties whom I have held to be negligent should bear. I
return to that when I have dealt with the next question, which is that of the
consequences of my finding.
It has been
forcibly argued that, even though the victim of negligence, the plaintiff
company is entitled to no damages or to nominal damages only. That is put on
the basis of cases such as Ford v White & Co [1964] 1 WLR 885
and Perry v Sidney Phillips & Son [1982] 1 WLR 1297. The way
in which the matter is put is this: that although negligently advised as to the
rateable value of the premises the plaintiffs have suffered no loss because
they have got value for what they are paying. This contention is based in part
upon the evidence. Mr G Gough, the plaintiffs’ experienced surveyor [partner,
Gerald Eve & Co], agreed in cross-examination that the plaintiff has had
value for money on his rent and that, according to the valuation list, he is
paying the correct rate; and further, he said, if you disregard the
misrepresentation, the assessment is a fair and reasonable assessment. Those
two facts are not in dispute.
Mr J C Hill, a
senior partner of Hillier Parker May & Rowden, who gave evidence for the
third party, put it in this way: that the tenants are paying the same amount of
rates and rent as they would have to pay for other properties of similar type,
size, quality and location and are getting value for money; though it is right,
while I look at his evidence and the report which was put before me, TP1, he
also observes that he finds it ‘difficult to understand in this case why proper
inquiries were not made by the lessees’ professional advisers, on warning that
there was a discrepancy in the figures. In those circumstances we feel that a
physical inspection of the valuation list or a further written inquiry should
have been made by the lessees’ surveyor or solicitor’.
The value for
money point is taken, in the submissions before me, from the judgment of
Pennycuick J, as he then was, in Ford v White, which case was
approved by the Court of Appeal in Perry v Sidney Phillips. Those
were cases concerned with the valuation of premises, and I would see no
difficulty in applying that principle to a case where there was negligence in
the valuation, despite which the plaintiff got what he was paying for: value
for his money. If this case were concerned with the rent payable for the
premises, those cases would clearly be binding and of guidance to me.
I do not see
them as in any way appropriate to negligent advice as to the rateable value of
premises, where the advice is that the rateable value is so much less than the
true value, as is the case here. What has happened as a result of the negligent
advice is that the plaintiff company is now paying an annual rate based on the
higher, and not the lower, figure; whereas it was entitled to think it would
pay at the lower figure. There are no additional benefits accruing to it
through paying more rates, for it receives precisely the same services from the
authority whatever rate it pays. This case is, to my mind, in any event
distinguishable from those, and falls into the category of cases which were
discussed in Sykes v Midland Bank Executor & Trustee Co Ltd
[1971] 1 QB 113 and Carreras v Levy, which is not reported save
in Macgregor on Damages, 14th ed para 981. For here it is abundantly
clear to me, on the evidence, that the plaintiff company would not have looked
at these premises, a fortiori would never have taken the lease, if they
had understood the rate to be not £3,305 but £8,305.
Here again,
and in so far as there is a difference of recollection between Mr Norris and Mr
Jay, I accept what Mr Norris says, and what he says is this: having, as I have
pointed out, made his comment to Mr Phillips that the rent seemed a good one, a
reasonable one, Mr Norris went on to say: ‘If I had been told the rateable
value was £8,305 we would not have looked at them at all. We would not have
gone back to look a second time. We were nervous anyway.’ Then, when Mr Jay drew his attention to the
answers to the preliminary inquiries, he said: ‘I said to him, ‘That cannot be
right. We would not have looked at the premises if that were so.” Further, he made it abundantly clear, as did
the schedule of available premises to which I have already referred, that there
were plenty of other offices that would have been suitable for them, if they
had been told that it was £8,305 rateable value, turned it down and gone elsewhere.
He was pressed about it, fairly but firmly, but never once resiled from that
proposition. When the figure of £8,305 was mentioned: ‘We would never have
looked at the premises if that had been so.’
It is true
that the business has prospered. Indeed, when the sublease came to an end after
two years it was not renewed. The plaintiff company had prospered sufficiently
to occupy the whole of the 2,500 sq ft and not simply that part which they had
occupied at the beginning. But in each year of the period until the end of the
lease they were obliged, as a result of the negligence to which I have
referred, to pay a sum by way of rates substantially in excess of the sum which
they would have expected to pay if the advice they had been given was correct.
Two alternative
ways of assessing the recoverable damages were put before me. One, which seemed
to me to have the great advantage of simplicity: that is to say, to add up the
excess payment over the years as a result of the difference between £3,305 and
£8,305. That seems to be the proper measure of damages, bearing in mind, as I
have said, that they would not have taken the premises with that rateable value
within the budget which they had, and could have gone elsewhere.
The
alternative which was conceived, born and amended from time to time throughout
the two days of the hearing was based on a calculation taking into account the
total payments for the premises, that is to say, rent, services and rates, less
what was paid by the subtenants from year to year, and indeed crediting that
which would have been paid by the subtenants if they had remained until the end
of the term; and the calculation set that against the figure which the
plaintiffs would have expected to pay out for accommodation on the basis of
their budgeting and the rateable value as confirmed. It is not without interest
and I take some comfort from the fact that the figure eventually achieved,
after a good deal of recalculation, is so near to the figure resulting from the
first calculation as to suggest that the figure is correct, in the sense that
it accurately represents the plaintiffs’ loss as a result of the defendants’
negligence.
The figure, as
a calculation, is agreed, and the plaintiffs will recover from the first and
second defendants the sum of £23,757.20. That figure is calculated up to the
end of the lease, that is to say, June 25 1983, although as originally pleaded
the claim was for a continuing loss thereafter. Mr Burton very properly has
limited the claim to that date, conscious as I expect he was of the problems of
forecasting the future, including the possibilities of revaluation.
I now turn to
the question of the apportionment. My conclusion is, weighing as best I can the
respective responsibilities of the parties, that as between the defendants, the
first defendants are responsible for 40% of the claim; the second defendants
for 60%; and the third party will bear one-half of each of those percentages.
