International firm Withers has won an appeal in a professional negligence case over a multi-million pound ‘super-prime’ property development deal.

The firm was retained by Spire Property Development and Hortensia Property Development in relation to the purchases of two Grade II listed properties in west London, bought in 2012 for a total of £41.8m.

Spire and Hortensia later discovered three high-voltage electric cables running under the sites that were owned by UK Power Networks (UKPN) and sued Withers for negligence.

The developers said the firm failed to advise them that, if UKPN could not prove it had the right to lay and maintain the cables, they could have required UKPN to move them at its own expense or obtain compensation. The High Court awarded £1.5m in damages and interest.

However, the Court of Appeal yesterday ruled that Withers did not owe ‘a tortious duty of care to the developers to advise them as to their rights and remedies against UKPN’.

Spire and Hortensia had relied in particular on an email from a senior conveyancing associate at Withers, in response to a query as to whether UKPN could have laid the cables ‘without having any kind of legal permission from the owners’.

The associate replied that ‘utility companies have statutory rights of access onto private land to lay pipes, wires, cables and other service infrastructure’, adding that ‘electricity companies can acquire a wayleave to install an electric line on, under or over private land’ under the Electricity Act 1989.

The developers alleged Withers therefore ‘assumed a duty to advise as to the legal position if UKPN did not have documentation in support of its right to lay cables … and/or in respect of their rights generally against UKPN’.

But Lady Justice Carr rejected the contention that the query was ‘a clear request for advice’, saying: ‘[The associate] was asked in terms to provide her thoughts on three specific questions. It was not for her to second-guess how or why her answers to the three questions might assist the developers when they chose to approach UKPN in due course.’

‘Withers is not to be taken as having assumed a duty to advise on the wider questions of potential rights and remedies,’ the judge added.

Carr concluded: ‘The outcome turns on no more than the application of well-established principles to the specific facts of the case. It is nevertheless clear that there are lessons to be learned on both sides. As [Withers’ counsel] submitted, it is important that solicitors are able to respond courteously and constructively to “one-off” requests for information or advice from former or potential clients or third parties without fear of creating legal liability.

‘At the same time, when volunteering any such information or advice, solicitors need to take care to identify the limits of any assumption of responsibility in order to avoid the risk of litigation such as the present. Equally, those seeking information or advice from solicitors on an informal basis need to take care to understand the potential limits of the exercise and the extent to which they can reasonably rely on any response.’

 

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