At Barrett and Co we pride ourselves on giving our clients advice that is both accurate and concise. Nonetheless I occasionally receive the comment from my clients, “I don’t want you to send me a big, long letter about all the things which might go wrong. Just tell me where there actually is a problem.”
But the Balogun v Boyes Sutton & Perry decision ensures that future communications from solicitors to their clients will need to include anything which might go wrong.
Mr Abimbola Balogun (“Mr Balogun”) was an experienced restaurateur, running two restaurants in London specialising in African cuisine. In February 2011 Mr Balogun found another potential premises: part of 214-218 Norwood Road, London SE27.
214-218 Norwood Road was a development initially constructed by Mizen Properties Limited (“Mizen”). The property consisted of commercial units and a health and GP centre on the ground floor and basement levels and residential units above the ground floor.
Mizen had granted a 999 year lease (“the Headlease”) of the commercial units and the health centre to Anacar Limited (“Anacar”). The freehold of 214-218 Norwood Road was then sold to London & Quadrant Housing Trust Limited (“L&Q”) who were at all relevant times the freeholder.
The commercial units on the ground and lower ground floors (together “the Unit”) were offered for rental on a 15 year lease (“the Underlease”) as a shell ready for tenant fit out and with permitted retail, office or restaurant use. Critically there was a purpose built ventilation shaft linking the Unit to an outlet above the second floor roof.
Mr Balogun wanted to run the ground floor part of the Unit as a restaurant and the lower ground floor as a nightclub. (To do this he would, of course, require additional planning permission.)
In December 2010 Mr Balogun contacted the lettings agent and in February 2011 solicitors were instructed by both parties (Mr Balogun and Anacar).
It is accepted that Mr Balogun met with his solicitor – Christopher Davies (“Mr Davies”), a partner with Boyes Sutton and Perry (“BSP”) – on 8 April 2011. Accounts differ however between Mr Balogun and Mr Davies as to exactly what was discussed at that meeting.
Specifically Mr Davies asserts that he was told that no further implementation works were necessary and that the ventilation shaft was in a condition whereby it could be put into use on completion of fit out. Mr Balogun, on the other hand, asserts that he informed Mr Davies of the need for further work which was needed (including, in particular, the installation of ducting from the kitchen extractor on the roof of 214-218 Norwood Road) – hence putting Mr Davies on notice of the need to ensure that the terms of the Headlease and the Underlease allowed this and that the relevant permissions were in place.
In the event the Underlease completed on 26 April 2011 with no further enquiries having been made in this regard. Mr Balogun, on attempting to install the ducting which he required, fairly quickly found himself in dispute with L&Q.
This dispute, in due course, lead to a negligence claim against BSP (being the solicitors who had acted for Mr Balogun on the grant of the Underlease).
On 25 March 2015 Mr Michael Bowles QC, sitting as Deputy High Court Judge, dismissed Mr Balogun’s claim. Mr Balogun appealed that Order.
On 21 February 2017 the Court of Appeal dismissed Mr Balogun’s appeal. Nonetheless the following statement was made at para 38 of the approved judgment (given by Lord Justice Lloyd Jones on 21 February 2017 and endorsed by Lady Justices Gloster and King):
"I consider that if Mr Davies had considered the relevant provisions as he should, he would have appreciated that there was a possible non-correspondence between the terms of the Headlease and the terms of the Underlease in relation to access to the ventilation shaft, a matter of great importance to his client’s project. Notwithstanding my conclusion as to the correct interpretation of the provisions, I consider that the risk of a Court coming to a different conclusion was sufficiently great to require Mr Davies to advise his client accordingly and to take steps to amend the draft Underlease so as to remove the risk. Accordingly I consider that Mr Davies was in breach of duty owed to his client in failing to do so."
This, effectively, amounts to a duty to advise not just about actual problems but about things which might go wrong. That nice, short letter I was planning just got several pages longer...
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