Clarke & Anor v Iliffes Booth Bennett (A Firm)

Judgment

Mr Justice Lawrence Collins:

I Introduction

1. The Claimants are Mrs Wendy Clarke (“Mrs Clarke”), and her daughter Penelope Clarke (“Penelope”). The Defendants are Messrs Iliffes Booth Bennett, a firm of solicitors.

2. Mrs Susan Mawson (“Mrs Mawson”) qualified as a solicitor in 1977, and became a partner in Reginald Johnson & Co in 1981. That firm merged with Booth Bennett in 1992, and following a subsequent merger became Iliffes Booth Bennett in 1994. Mrs Mawson has been involved in commercial property transactions throughout her career, and has been exclusively involved in that area since 1994. She is also experienced in the legal aspects of property development work. She advised Mrs Clarke from the late 1970s or early 1980s.

3. The Claimants owned a property close to Heathrow Airport which was within the Green Belt. They entered into a contract in 1998 with a property developer, under which the developer was given an option to purchase the Claimants’ property. The option was exercisable within a period of three months from the boundary of the Green Belt being changed so that the whole or substantially the whole of the property was excluded from the Green Belt pursuant to a planning enquiry regarding the local plan.

4. The combined effect of Chapter II of the Town and Country Planning Act 1990 and the Town and Country Planning (Development Plan) (England) Regulations 1999 (SI 1999 No 3280) is as follows: proposals for the alteration or replacement of a local plan become operative on the date on which they are adopted by the local authority; where objections are made to the proposals, the local authority is obliged to cause a local enquiry or other hearing to be held; the local authority makes the report resulting from the enquiry available for inspection, and prepares a statement of the decisions it has reached in the light of the report, including the reasons for any decision which does not follow its recommendations. Where the local authority resolves to adopt proposals for the alteration of a local plan, the Secretary of State may, if it appears to him that the proposals are unsatisfactory, direct the authority to modify the proposals.

5. Consequently an Inspector who conducts a public local enquiry into such proposals makes recommendations and does not himself make an effective determination of any issue. Mrs Clarke was under the impression that the property would be excluded from the Green Belt upon publication of the Inspector’s Report recommending that it be excluded. Mrs Mawson did not know what procedural steps were necessary before property came out of the Green Belt.

6. The contract was entered into in July 1998, and the Inspector’s Report was published in November 1998. In the event, the option period under the contract would not have been triggered until April 2001 because (a) in October 1999 the local authority resolved to adopt the amendments to the local plan on December 2, 1999, but (b) on December 1, 1999 the Secretary of State issued a direction stopping the Council from adopting the plan, and requiring a change to the authority’s policy on affordable housing. This took more than a year to resolve and the amendment to the local plan was adopted on April 20, 2001, with the effect that the option period of three months would have run from that date (had not Mrs Clarke entered into a fresh agreement in January 2001 for the sale of the Property to the developer for an increased price).

7. Mrs Clarke complains that Mrs Mawson wrongly advised her that the property would be excluded from the Green Belt upon publication of the Inspector’s Report, or failed to advise her that the condition precedent ran only from adoption of the Inspector’s Report by the local authority. Mrs Clarke says that if she had been properly advised she would never have entered into the contract, or would have secured different terms.

8. The case raises the question, among others, of the duty of a solicitor to understand and advise upon the implications and consequences of a contract to be entered into by a client.

II Background

9. At the material times, the Claimants owned a residential property known as Mentone Farm, Bedfont Road, Stanwell, Middlesex, which comprised a bungalow and garden adjacent to Heathrow Airport (“the Property”). The site comprised almost one acre, including a strip of land (originally registered in the name of British Airports Authority) in relation to which possessory title was registered in 1998.

10. The Property is on the south side of Bedfont Road and directly facing Heathrow Airport. Behind the Property was a crane hire business on a site owned by Arup & Arup Ltd. Behind the crane hire depot was a plot owned by Hundalani & Co, which was used as a scrap metal yard.

11. The bungalow was originally bought in 1982 by Mrs Clarke from Arup & Arup Ltd for £62,500. She transferred it in 1988 to her son Gregory Clarke, who then transferred to Penelope in 1991, and it was transferred back to Mrs Clarke in 1999. The strip to which there was possessory title was registered in the name of Penelope in 1998, and transferred to Mrs Clarke in 2000. Penelope is severely handicapped. It is accepted by the Defendants that nothing turns in these proceedings on the exact ownership within Mrs Clarke’s family.

12. The land between the Property and Long Lane to its west was historically part of the Green Belt. The land to the east of the Property was an Esso oil depot and that land was not in the Green Belt.

13. Ravenseft Industrial Estates Ltd (“Ravenseft”) is a subsidiary of Land Securities plc. Ravenseft had a proposal for a warehouse development to serve Terminal 4 on the 35 acre site (“the site”) of which the Property (and the adjoining properties of Arup & Arup Ltd and Hundalani & Co) was a part.

14. Ravenseft’s interest was dependent upon the land being released from the Green Belt or, if it was not released, upon planning permission being granted on the ground of the development being of national importance.

15. When Mrs Clarke bought the Property from Arup & Arup Ltd she entered into an agreement that she would account to Arup & Arup Ltd for half of any increase in the value of the Property if planning permission for development of the Property were granted during the currency of the agreement (which was 10 years from November 1982).

16. Mr Nevett, the director of Ravenseft responsible for the project, was working with Mr Whitear, an independent consultant whose idea it had been to develop the site. Ravenseft entered into several option agreements relating to the site in the late 1980s, and bought some of the plots on the site. In 1989/1990 there were negotiations for the grant of an option over the Property to Ravenseft, but they did not result in an agreement.

17. In 1991 Land Securities informed Mr Whitear that, because of the downturn in the property market, Ravenseft had decided not to go ahead with the development of the site. Its options were allowed to lapse. Mr Nevett’s evidence was that the downturn in the market meant that the proposed development would not be viable.

18. In the mid 1990s, when the property market became more favourable, Ravenseft’s interest in the site was revived. In 1996 Ravenseft entered into an agreement with Salmon Developments Ltd to develop the site jointly. Mr Whitear was then instructed to revive negotiations with the owners of the plots on the site, and as a result conditional contracts were entered into for the purchase by Ravenseft of 8 plots on the site. The plot owned by Arup & Arup Ltd (which is about twice the size of the Property) was the subject of a sale to Ravenseft on October 10, 1997 for £1.75 million. Arup & Arup Ltd remained in occupation of that site thereafter as tenants.

19. In September 1995, Spelthorne Borough Council published draft amendments to the local plan, which showed the land between the Property and Long Lane as remaining in the Green Belt. In 1997/1998 there was a local plan inquiry. Mrs. Clarke, together with Arup & Arup Ltd and Hundalani & Co. instructed the surveyors Richard Ellis to object to their land remaining within the Green Belt. Ravenseft also objected to the Green Belt policy (and other policies) in the draft adaptations of the local plan.

III Negotiations between Mrs Clarke and Ravenseft

20. Following discussions between Mrs Clarke and Mr Whitear, on October 16, 1997 Messrs DJ Freeman, the solicitors for Ravenseft, wrote to Mrs. Clarke with a draft conditional sale contract (at a price of £1 million) for the Property.

21. On about October 24, 1997 there was a telephone conversation between Mrs Clarke and Sally Dobson of DJ Freeman. Following that conversation, Sally Dobson wrote to Mrs Clarke on October 24, 1997:

“I note that you wish a clause to be included in the contract to the effect that once your property has been taken out of the green belt, you wish the purchaser to purchase the property within 3 months. I therefore propose to alter the definition of Completion Date to:

Completion Date: the date 5 working days after the earlier of:

22. On October 28, 1997 Mrs Clarke appeared in person before the Inspector and made representations as to why the Property should be released from the Green Belt.

23. In early December 1997, Mrs. Clarke instructed Mrs. Mawson to act for her in relation to the proposed conditional contract/option. Shortly afterwards DJ Freeman got in touch with Mrs Mawson and told her that draft documentation had been sent to Mrs Clarke direct.

24. Following conversations with Mrs Clarke, on December 17, 1997 Mrs Mawson wrote to DJ Freeman:

“We understand that Mrs Clarke has indicated directly to your clients that she is not happy with the form of agreement that has been offered to her and in particular with respect to the following aspects:-

1. She wishes to have certainty as to the price to be paid and does not wish the price to be geared to a measurement of acreage. It is her view that the site equates broadly to one acre;

2. She is not prepared to tie up the site for the period set out in the Contract, which could be in excess of five years, at a fixed price albeit with interest. You will of course appreciate that this may not reflect the then market value of the property;

3. Our client anticipates that her property will be released from the Green Belt within the next nine months. She has advised your clients that she would be prepared to enter into a contract for the sale of the property conditional on it being released from the Green Belt. She would require completion to take place within three months of such release. At this stage she is not happy for the contract to be conditional upon satisfactory planning permission or on pre-lets and if the purchaser wishes the purchase to be subject to environmental audit then we will need a much tighter timetable for the necessary investigations to be carried out.”

25. On the same date Mrs Mawson sent to Mrs Clarke a copy of her letter to DJ Freeman, and gave comments on the conditional sale contract. She pointed out that the price was to be calculated in accordance with an agreed figure of £1 million per acre, but that the contract said that the Property was approximately 0.59 acres. She warned that the fact that the contract was conditional on conditions which were to be satisfied by December 31, 2002, or the date when all planning appeals etc. had been concluded, whichever was the later, could in effect keep the contract open for some considerable period after the 5 years. Mrs Mawson said that she agreed with Mrs Clarke’s initial assessment that the contract needed to be re-written and more acceptable terms agreed.

26. Also on December 17, 1997 DJ Freeman wrote to Mrs Mawson to say that following conversations between their client and Mrs Clarke two changes had been agreed to the form of conditional contract. The first was that the definition of completion date would be the date 5 working days after the earlier of the Unconditional Date, or “at the sole discretion of the Purchaser the date three months after the date that the local authority provides written confirmation that the site has been withdrawn from the Green Belt area as comprised in the Structure Plan relating to the site produced by Spelthorne Borough Council.” The second was that it had been agreed that the area of the site was one acre and that there was no need for it to be measured.

27. On December 23, 1997 Mrs Mawson had a telephone conversation with Mrs Clarke, who had suggested to Ravenseft that the contract should provide for (a) a price of £1.2 million conditional on the release of the Property from the Green Belt, with completion 3 months from release of the land; (b) if the Property was not released from the Green Belt she was prepared to enter into a conditional contract conditional on planning permission with a long stop date of 5 years at a price of £1 million. According to Mrs Mawson’s attendance note, Mrs Mawson noted that Ravenseft had already entered into conditional contracts in relation to the remainder of the site and required to exchange contracts with Mrs Clarke by January 10, 1998. She noted that Mrs Clarke was happy to accept the price with the uplift of interest only and was not concerned to gear the price to an index as advised by Mrs Mawson. Against the Green Belt option Mrs Mawson wrote “12 months long stop date.” Her evidence was that this question was not raised by her during the drafting process, but was on her list of matters to be discussed at the final meeting, which took place on June 12, 1998.

28. Throughout this period and until the conclusion of the contract in July 1998, there are numerous references in the documents to the Property being “released” or “withdrawn” or “excluded” from the Green Belt, or to it coming out of the Green Belt.

29. There was a meeting at Mrs Mawson’s offices on January 9, 1998 with Mrs Clarke and Mr Nevett of Ravenseft. At the meeting a long stop date of 6 years was agreed for the conditional sale. Ravenseft would not agree to the price being linked to an index, because one of the vendors on the site did not feel this was reasonable, but interest would be paid on the price if completion did not take place within 12 months at bank base rate. Mrs Mawson’s attendance note records that Mrs Clarke felt it was reasonable and was happy to accept the provision. On the Green Belt option the attendance note records:

“It was also specifically agreed that if the land comes out of the Green Belt following the recent public enquiry then the Purchaser will have three months to purchase the property and if does not do so the Vendor will be free to sell on the open market. Mrs. Clarke would prefer this to be a right of pre-emption and that if the Purchaser exercises its right completion will take place twenty eight days thereafter. It was left that Mr. Nevitt [sic] would come back to Mrs. Clarke to negotiate further with respect to this aspect.”

30. On February 2, 1998 Mr Nevett wrote to DJ Freeman that Ravenseft had agreed with Mrs Clarke that the purchase price for the conditional sale would be £1 million, and that the price would be £1.1 million if the site were redesignated from Green Belt to commercial use.

31. On the same day DJ Freeman sent Mrs Mawson an amended contract. They pointed out that if the Property were taken out of the Green Belt and redesignated for commercial purposes, then Ravenseft would have the right to purchase the site at a price of £1.1 million within three months, otherwise the contract would be determined, and there would be a 28 day completion. The definition of condition precedent in the enclosed draft was:

“either of the following, namely: the boundary of the green belt is changed so that the whole or substantially the whole of the Property is excluded from the green belt; or the Property remains within the green belt but planning permission is granted for commercial purposes …”

32. On February 3, 1998 Mrs Mawson sent the draft to Mrs Clarke and drew her attention to the new provisions relating to the Green Belt, and said:

“New provisions have been added whereby it is agreed that if the boundary of the Green Belt is changed so that the whole or substantially the whole, of the property is excluded from the Green Belt then Ravenseft will have the option for a period of three months from the date the property is excluded from the Green Belt to acquire the same at a price of £1,100,000.00. It will be incumbent upon you to service notice on Ravenseft that the property has been removed from the Green Belt.”

33. At some time in February or March, Mrs Mawson went through the contract, and her notes include: “Option if comes out of Green Belt must be limited in time if at fixed price”. Her evidence was that she wrote this as an aide-memoire to remind her that this matter was to be dealt with in the contract. The note also referred to the price of £1.1 million for the conditional contract and added: “If it comes out of the Green Belt at market value”. Mrs Mawson’s evidence was that these notes reflected issues that she needed to think about, and that she may have discussed some of them with Mrs Clarke, but that she did not raise any of them with Ravenseft’s advisers.

34. There was a telephone conversation between Mrs Clarke and Mrs Mawson on February 6, 1998, when Mrs Clarke said that she was happy to accept the £1.1 million “should the property come out of the Green Belt”.

35. On March 5, 1998 Mrs Mawson reported to Mrs Clarke that DJ Freeman were saying that if Ravenseft decided not to purchase the site following its release from the Green Belt and the commercial redesignation then the agreement would be determined, leaving Mrs Clarke free to sell elsewhere.

36. DJ Freeman sent a further draft to Mrs Mawson on March 25, 1998 and asked her to confirm that the contract was in an agreed form so that engrossments could be prepared for execution.

37. On April 2, 1998 Mrs Mawson wrote to Mr Taylor of DJ Freeman commenting on the draft, but not on the condition precedent relating to the Green Belt. A further draft was produced in mid-April.

IV Meeting of June 12, 1998

38. On May 6, 1998 Mr Taylor of DJ Freeman suggested to Mrs Mawson that there should be a meeting to agree any outstanding points. On May 13, 1998 Mrs Mawson wrote to Mr Taylor to say that Mrs Clarke had agreed to enter into the contract as she believed it would improve her prospects of realising the development value of the site should it not be released from the Green Belt. She wished to be included in the Ravenseft development proposals but had considerable concerns and misgivings as to the time that the Property would be tied in.

39. In circumstances which are not clear, and which she did not fully explain in evidence, in May 1998 Mrs Clarke had discussions with a Mr D Clarke (unrelated to her) for an option agreement for £10,000 to purchase the Property for £1.2 million. She appears to have entered into a form of exclusivity agreement for a period of 28 days between May 22 and June 19, 1998, but the discussions came to nothing.

40. The meeting to resolve outstanding points took place on the late afternoon of June 12, 1998 at Mrs Mawson’s office. Those present were Mrs Mawson, Mrs Clarke, Mr Nevett and Mr Taylor. Mr Nevett’s main concern was to remove from the contract a provision first inserted in the draft in February 1998, whereby Mrs Clarke would have a right to dispose of the Property before the contract became unconditional subject to a right of pre-emption for the benefit of Ravenseft at the price agreed by Mrs Clarke with the proposed transferee. Mrs Clarke’s main object at the meeting was to increase the option price to £1.2 million, and the conditional sale price to £1,050,000.

41. Neither of the solicitors made an attendance note of the meeting, but there is a handwritten note by Mrs Mawson which records the points which were agreed, and Mr Taylor sent on the following Monday, June 15, 1998, a revised draft under cover of a letter in which he drew attention to the main changes which had been made following the meeting. One of the drafting changes introduced as a result of the meeting was that the words “pursuant to a planning enquiry regarding the local plan in 1997” were introduced into the definition of condition precedent. Mrs Mawson’s evidence was that she had it in mind that there ought to be a longstop date on the exercise of the option, especially since the price was not index-linked. At that meeting it was agreed that the exercise of the option would be limited not by a period of time but by reference to the planning enquiry relating to the local plan which had taken place in 1997.

42. Mrs Mawson’s notes include a heading “Green Belt” which was probably written as an agenda item, and against those words are also written the words “October/November” which were probably added in the course of discussions during the meeting.

43. There are differing accounts of what was discussed about the projected timescale for the Property coming out of the Green Belt and the trigger event for the exercise of the option. The Claimants’ case is that Mrs Mawson and Mrs Clarke proceeded on the basis that the trigger event would be the publication of the Inspector’s Report, and that Mrs Mawson suggested that the contract should reflect that.

Particulars of claim

44. According to the particulars of claim (para 16), which were settled by Mr Adrian Davies of counsel, and are dated April 2003, at the meeting Mrs Clarke told Mrs Mawson that she wished completion to take place as soon as reasonably practicable after publication of the Inspector’s Report recommending that the Property should be taken out of the Green Belt. Mrs Mawson said: “I suggest that in the contract, completion is stated to be three months after the date of the Inspectors’ Report” and Mrs Clarke agreed. The defence denies that this was said.

Mrs Clarke’s witness statement

45. According to Mrs Clarke’s witness statement of April 30, 2004:

“Mrs. Mawson asked when the Inspector’s report would be published, and I said ‘October or November [of 1998].’ Mrs. Mawson then remarked that if the Inspector’s report was published in October, completion would be in February 1999, but if the Inspector’s report was published in November, completion would be in March 1999, though Ravenseft could take up the option earlier. I then said that that would mean that I would have my money no later than March 1999.

Neither Mr Nevett nor Mr Taylor informed me or Mrs Mawson that our view was not correct, nor was the word ‘adoption’ ever used at that meeting.”

Mrs Mawson’s witness statement

46. In her witness statement of May 13, 2004, Mrs Mawson says:

“I do not recollect saying this and I do not believe that I did. Mrs Clarke did however state at that meeting that she expected that the Property would be out of the Green Belt by October/November 1998. She used this meeting to negotiate an increase in the price from £1,100,000, which had been agreed in February 1998, to £1,200,000, if the Property came out of the Green Belt.”

Mr Taylor’s witness statement

47. In a witness statement made in the course of Ravenseft’s proceedings against Mrs Clarke, Mr Taylor’s evidence was that Mrs Clarke “commented at some stage during the meeting, along the lines that ‘if the [planning inspector’s] report is published, we will get completion within 3 months.” He says that this was substantially in line with the commercial agenda agreed between the parties. He took this purely to be a broad statement as to timing and not any comment as to legal procedure.

Attendance note of September 9, 1999 conference

48. Following a request for information by the Defendants, the Claimants disclosed an attendance note of a conference which Mrs Clarke and her solicitor had with Mr Adrian Davies of counsel on September 9, 1999, when they were considering whether Mrs Clarke had grounds for avoiding being bound by the agreement with Ravenseft. The note of the solicitor then acting for Mrs Clarke records:

“At the last meeting at Mrs Mawson’s office Mrs Clarke had said ‘I am happy with the £1.2 million because it means that if the inspector’s report is published in October the option period will expire in February and I will have my money March.’ They all agreed with that. Counsel said that would be good evidence.”

Oral evidence

49. Mrs Clarke said (after some hesitation) that she remembered Mrs Mawson using the words quoted in the particulars of claim, and in particular Mrs Mawson referred to the publication of the Inspector’s Report. Discussion of the Inspector’s Report was the most important issue discussed at the meeting. She did not agree that Mr Taylor’s account in his witness statement was complete. He had omitted any reference to what Mrs Mawson had said. It was Mrs Mawson who had asked when the Inspector’s Report would be published, and it was Mrs Mawson who had said that completion would be within three months of publication. She accepted that the note of the 1999 conference was correct, but she was only repeating what Mrs Mawson had said.

50. Mrs Mawson accepted that she might have asked the question, which resulted in the answer “October/November”, and does not recall who answered. She did not recall any reference to the Inspector’s Report. She accepted that Mrs Clarke may have said it, but she did not believe that she herself would have used those words, since she always referred to the release (or similar expressions) of the Property from the Green Belt.

51. Mr Taylor confirmed his witness statement, and said that the solicitors were not involved in the relevant exchanges at the meeting. The discussions were in commercial terms. Mr Nevett could not remember October/November being mentioned. They were talking about completion in about 9-12 months. He accepted that there might have been mention of the Inspector’s Report being the trigger.

V Conclusion of the contract

52. Following the meeting on June 12, 1998, DJ Freeman wrote to Mrs. Mawson on June 15, 1998 with a revised draft contract. The option price was amended to be £1.2 million. The provision in relation to the Green Belt was in clause 18 in Part 3 of the Contract, where “Condition Precedent” was defined to include the case where:

“The boundary of the green belt is changed so that the whole or substantially the whole of the Property is excluded from the green belt pursuant to a planning enquiry regarding the local plan in 1997 …”

53. The relevant provision was amended to introduce a reference to the planning enquiry. This must have been discussed at the meeting. Its effect was to ensure that the option could only be exercised during the current round of alterations to the local plan.

54. Mrs Mawson gave her comments to Mr Taylor on the draft on June 16, 1998 and on the same date wrote to Mrs Clarke referring to the alternative methods of sale. She drew attention to the provisions relating to the Green Belt exclusion. In particular she said that it would be Mrs Clarke’s responsibility to notify Ravenseft of the exclusion of the Property from the Green Belt, and Ravenseft would then have three calendar months to exercise the option.

55. Mr Taylor replied to Mrs Mawson’s comments on June 18, 1998 and on June 22, 1998 stressed that Ravenseft was very anxious to proceed to exchange of contracts. On July 2, 1998 Mrs Mawson reported to Mrs Clarke that she was getting telephone calls almost every other day from Mr Taylor enquiring as to whether she had received instructions. On July 3, 1998 Mr Taylor offered to prepare an engrossment for execution.

56. Ravenseft and Mrs. Clarke entered into the contract on July 15, 1998. Part 2 (together with Part 4) provides for a conditional contract for the sale of the Property to Ravenseft. Part 3 (together with Part 4) grants Ravenseft an option to purchase the Property.

57. Clause 3 in Part 1 recites that it is the intention of Ravenseft to enter into other conditional purchase contracts with other owners in respect of the site.

58. Clause 12 in Part 2 defines the Price for the conditional contract, as £1,050,000 together with interest from January 1, 1999 until the Completion Date, at a rate equal to the base lending rate of The Royal Bank of Scotland plc. The interest provision had been in the successive drafts of the contract from the outset.

59. The effect of the contract was that the conditions (including, but not only, the grant of planning permission) for the conditional sale had to be fulfilled by June 30, 2004 or such later date as might be agreed (“the Long Stop Date”). If the Unconditional Date (as defined in clause 1) occurred before the Long Stop Date the contract to buy and sell at £1,050,000 plus interest was to become unconditional.

60. Clause 17 in Part 3 contains definitions. It defines Condition Precedent as follows:

“The boundary of the green belt is changed so that the whole or substantially the whole of the Property is excluded from the green belt pursuant to a planning enquiry regarding the local plan in 1997; or [sic]”

61. Option Period is defined as the period of 3 calendar [months] commencing on the date the Condition Precedent is satisfied. The Price is defined as £1,200,000 exclusive of VAT.

62. Clause 18 grants to Ravenseft, in consideration of £1, an option to purchase the Property at the Price for the Option Period.

63. Clause 19 states in relation to the Condition Precedent:

“The Purchaser must serve notice on the Vendors as soon as practicable after the Purchaser first becomes aware that the Condition Precedent has been satisfied. For the purposes of this Agreement the date of satisfaction of the Condition Precedent means the date of service of notice of that fact on the Vendors.”

64. Clause 21.1 provides that if the purchaser does not exercise the option by serving the Option Notice in the Option Period then the Vendors may sell the Property free from the option.

VI Events following the contract

65. The Inspector who conducted the public local enquiry completed a report which he sent to Spelthorne Borough Council in July 1998. It was published on November 2, 1998. The Inspector recommended that the local plan be modified by deleting from the Green Belt the Property and land at the rear so that the eastern boundary of the Green Belt was moved so as to follow Crane Road and to continue along the western and southern boundaries of the land included in an established use certificate of 1974. The land occupied by Arup & Arup Ltd was to be removed from the Green Belt, as was the land used as a scrap yard by Hundalani & Co.

66. The reasons were: (1) the Property, whilst having a “neat and tidy” appearance, was flanked to the south by two commercial yards, containing significant buildings; (2) with the exception of areas used for manoeuvring, the Arup & Arup Ltd land was generally used for the open storage of cranes, plant, vehicles and scrap; (3) those yards could not fairly be described as open land; (4) the land was so intensively used that it could not be said to have an undeveloped, open character; (5) consequently, the yards did not have a Green Belt function; (6) there was no reasonable prospect of that land returning to a use appropriate to the Green Belt; (7) these factors amounted to exceptional circumstances justifying the exclusion of the Arup & Arup Ltd land from the Green Belt; (8) it would be incongruous to exclude that land without excluding the Property.

67. Shortly after November 16, 1998 Mr Nevett and DJ Freeman received a copy of a letter of that date from Mr Castle of Town Planning Consultancy to Mr Stewart of Salmon Developments enclosing extracts from the Inspector’s Report. Mr Castle pointed out that the Council had not considered the recommendations and it was therefore not certain that they would be accepted. Mr Nevett was under the impression in the witness box that he had first heard of the Inspector’s Report when Mrs Clarke telephoned him, but I am satisfied that his recollection was mistaken.

68. On November 22, 1998 Mrs. Clarke made enquiries at the local authority and became aware of the recommendations concerning the Property. She telephoned Mrs Mawson’s office and left a message that the Property had been excluded from the Green Belt. After referring to the message, Mrs Mawson wrote to Mrs Clarke on November 23, 1998:

“Under the terms of the Contract with Ravenseft it is now necessary as soon as practicable [emphasis in original] after the exclusion of the property from the Green Belt to serve notice on Ravenseft, giving them the option to purchase the property. The option period runs from three months from the date of the Inspector’s Report and perhaps you could confirm to me whether such Report has now been published and, if so, the date thereof. If Ravenseft exercise the option to purchase then completion is to take place twenty working days after the date of service of the option notice by Ravenseft and the price is £1,200,000.00.”

69. Mrs. Clarke telephoned Mr. Nevett, who told her that the land was only effectively excluded from the Green Belt on the adoption by the local authority of the Inspector’s Report. Mrs Clarke then telephoned Mrs Mawson and told her of Mr Nevett’s reaction, and Mrs Mawson said that she would get back to Mrs Clarke. Later that day they had a telephone conversation, and Mrs Mawson recorded:

“[Mrs Clarke] confirms that the Inspectors’ Report recommends removal of Mentone Farm from the Green Belt and this has been published. The recommendation is going before a committee meeting of the Council in January 1999 and it is at this stage, if the recommendation is approved, that the property will be released from the Green Belt and the three month period will commence. She is happy that completion will not then take place for up to four months and is also confident that Ravenseft will purchase.”

70. Mrs Clarke’s evidence was that Mrs Mawson told her that she (Mrs Mawson) was “dreadfully sorry.” Mrs Mawson denied this. Mrs Mawson says that Mrs Clarke was not angry, merely disappointed.

71. On January 29, 1999, Mrs Mawson wrote to Mrs Clarke:

“I can confirm that having spoken to the Planning Department at Spelthorne Borough Council the modifications recommended by the Inspector to the Green Belt will not take effect until the Council adopt the Report and that subject to service of notice immediately the Report is adopted on Ravenseft Industrial Estates Limited, they will have 3 months in which to decide whether to proceed with the purchase at the price of £1,200,000.00.

Unfortunately you are not entitled to an uplift in the price to compensate for the Council’s delay in adopting the Inspectors Report. I understand from the Planning Department that the Report will be going before the relevant Committee for approval in two months or so. However, the draft Local Plan must then be placed on deposit for a further period and is unlikely to be finally adopted until late summer.

Unless Ravenseft require your property earlier it does seem unlikely that the sale of Mentone Farm can be concluded until nearer the end of the year.

The price you will achieve is still higher than the £1,050,000.00 agreed for the property even with interest from January 1999 but I accept that it must be very disappointing for you to have to wait this further period.

You will of course however appreciate that it is likely that any other interested Purchaser for the Property would also in all probability wish to await the adoption of the Report, although of course this is of little comfort if prices begin to increase.

Perhaps you will let me know later in the year when there is further news on the timing of the adoption of the Local Plan which will confirm the new Green Belt boundary.”

72. On March 1, 1999 Mrs. Mawson wrote to Mrs. Clarke:

“I am of the view that both party’s intention must have been that [the exclusion of the Property from the Green Belt] should relate to the date the Inspectors’ recommendation takes effect which, as we now know, requires formal adoption by Spelthorne and public consultation.

Neither you nor I at the time appreciated that it would be many months after the issue of the Inspectors’ Report before the property was formally excluded from the Green Belt but I do not think there is anything to be done at present other than to await events.”

73. On March 18, 1998 Mrs Mawson wrote to Mrs Clarke that it was impossible for her firm to express a view at that stage as to the prospects of making a claim of rectification on the ground of mistake and she advised Mrs Clarke to take independent advice as to the position.

74. On May 6, 1999, Spelthorne Borough Council published its proposed modification to the local plan, including the omission of land from the Green Belt as recommended by the Inspector. On May 19, 1999 Mr Nevett reported to Mrs Clarke that on April 22, 1999 the Council had agreed that it did not object to the land east of Crane Road (including the Property) being excluded from the Green Belt. The amendments to the revised plan would go forward for public consultation, and if there were no objections the Council would adopt the amended revisions by publishing them, which was likely to take place sometime in August. There was no certainty that the Property would be removed from the Green Belt.

75. On August 9, 1999, Ravenseft applied for planning permission for the erection of two warehouses on the Property and on the land previously owned by Arup & Arup Ltd.

76. On October 14, 1999, Spelthorne Borough Council resolved to adopt the amendments to the local plan on December 2, 1999, including the exclusion of the relevant land from the Green Belt.

77. On December 1, 1999, the Secretary of State issued a direction stopping the Council from adopting the Plan and requiring a change to be made to one of the Plan’s policies (relating to affordable housing). This had nothing to do with the Green Belt land issue but meant that the local plan could not be formally adopted until the affordable housing issue had been resolved. This took more than a year to resolve.

78. On February 2, 2000, Spelthorne Borough Council resolved to grant the planning permission sought by Ravenseft, subject to completion of an agreement to secure the implementation of highway improvement on the junction of Bedfont Road and Crane Road.

79. On February 25, 2000 Jo Cutler of Town Planning Consultancy wrote to Mr Stewart of Salmon Developments plc to say that a very irate Mrs Clarke had telephoned to say that she was very upset that she was not informed about the planning application and the fact that they were proposing highway works within her land. Ms Cutler told Mr Stewart that notice on Mrs Clarke had in fact been served.

80. When Mrs Clarke heard that Ravenseft had obtained planning permission, she alleged on March 6, 2000 through her new solicitors, Fenwick & Co, that the contract was void under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and/or should be rectified or rescinded for mistake. On August 3, 2000, Ravenseft issued proceedings against Mrs. Clarke claiming a declaration that the contract was in full force and effect.

81. On January 8, 2001, Ravenseft and Mrs. Clarke entered into a compromise agreement varying the contract, whereby it was to be deemed unconditional, as if Ravenseft had exercised the option under Part 3 of the agreement at a price of £1.2 million exclusive of VAT. In addition, Ravenseft was to pay Mrs. Clarke the additional sum of £72,000 exclusive of VAT, with no order as to costs. She subsequently refused to vacate and further proceedings were brought by Ravenseft for possession.

82. On March 1, 2001, Spelthorne Borough Council granted planning permission for two warehouses as sought by Ravenseft. On March 20, 2001, Ravenseft and Southway/Scania applied for planning permission for a building for the servicing of HGV vehicles and similar uses.

83. On April 20, 2001, Spelthorne Borough Council adopted the amendments to the local plan and the Property was thereby removed from the Green Belt. This would therefore have been the trigger date for the option but for the new agreement between Mrs Clarke and Ravenseft.

84. In August 2001 Ravenseft sold the Property and the land formerly owned by Arup & Arup Ltd to Scania for £6.5 million, subject to obligations (which involved Ravenseft in costs of some £500,000 to £600,000) by Ravenseft to clean up the site and carry out works.

VII The claim

85. The claim, in so far as now relevant, set out in the particulars of claim (and expanded in further information dated May 6, 2004) is as follows:

(1) Mrs Mawson’s instructions had at all relevant times been that the date upon which the option was to be triggered was to be 3 months from release of the land from the Green Belt.

(2) Both Mrs Clarke and Mrs Mawson thought that the option would be triggered by publication of the Inspector’s Report.

(3) Mrs Clarke told Mrs Mawson that she wished completion to take place as soon as reasonably practicable after publication of the Inspector’s Report recommending that the Property be taken out of the Green Belt, and Mrs Mawson said at a meeting on June 12, 1998: “I suggest that in the contract, completion is stated to be three months after the date of the Inspector’s report,” and Mrs Clarke agreed.

(4) Mrs Mawson agreed the terms of the contract with Ravenseft negligently and mistakenly believing that she had fixed the date for completion at three months after the date of the Inspector’s Report in accordance with her instructions.

(5) The Claimants entered into the contract relying on Mrs Mawson’s advice.

(6) Any reasonably competent practitioner would have known, and Mrs Mawson should have known but did not know, that the condition precedent to the exercise of the option would not be fulfilled until the local authority adopted the Inspector’s Report, which might not be until a year or more after its publication.

(7) Mrs Mawson knew or ought to have known by reason of her experience as a conveyancer that the value of land in Greater London was increasing at such a rate that, if the option period ran for any material period of time before Ravenseft exercised it, that would work in favour of Ravenseft and against Mrs Clarke.

(8) Mrs Mawson was negligent in that (a) she failed to take any or any adequate steps to ascertain the procedure by which land is excluded from the Green Belt; (b) she failed adequately to advise Mrs Clarke as to the above matters; and (c) because she did not understand the procedure, she advised the Claimants to sign the contract, even though it was against their interests so to do.

(9) The advice to sign the contract was given on the telephone after it had been sent to Mrs Clarke’s home, when Mrs Mawson said that everything was ok, and “You can go ahead and sign.”

(10) Until she spoke to Mr Nevett on November 22, 1998, Mrs Clarke had been wholly unaware that the option period would only run from the date when the Inspector’s Report was formally adopted by the Council.

(11) Had Mrs Mawson advised Mrs Clarke that the option period would only run from adoption by the Council, Mrs Clarke would not have signed the contract or (by amendment allowed during final submissions) would have required interest to be paid on the purchase price.

(12) Mrs Clarke having sold the Property to Ravenseft for the increased price of £1,272,000 for completion on March 20, 2001, the Claimants had suffered a loss of £448,000, which was the difference between the price and the value of the Property at that date, which was £1,720,000.

86. In the defence, the Defendants pleaded:

(1) Since terms had already been agreed or were in the course of being agreed by Mrs Clarke personally when Mrs Mawson was instructed in December 1997, her retainer was limited to dealing with Ravenseft’s enquiries, and drafting or approving the drafting of the documents.

(2) In the conversation of December 23, 1997 Mrs Mawson advised Mrs Clarke of the risk if the value of the Property rose, but the price was not index-linked, and Mrs Clarke said that she was not concerned with this.

(3) Mrs Clarke was a sophisticated client: (a) she made representations to the Inspector; (b) she negotiated the transaction with Ravenseft in such a way as to protect the development potential of the Property in the event of failure to have it removed from the Green Belt; (c) she knew that the new local plan was likely to be published shortly and that accordingly the option period was not likely to be a long one.

(4) It was not part of Mrs Mawson’s duty as a conveyancer to know or advise on the procedure for the removal of land from the Green Belt.

(5) Mrs Mawson did not advise the Claimants to sign the contract, and her role was confined to giving information rather than advice, but in any event it is denied that it was against the Claimants’ interests to sign the contract.

(6) It is denied that, had Mrs Mawson advised Mrs Clarke that the option period would have run only from adoption of the Report, Mrs Clarke would not have signed the contract: (a) Ravenseft would not have agreed to take an option exercisable within 3 months of publication of the Report, since it was obviously too risky for them to spend £1.2 million on purchasing land which might not be released from the Green Belt if the Report were not adopted; (b) at most the Claimants’ claim would be for loss of a chance that Ravenseft would have agreed, but the chance was so small as to be negligible.

87. On June 15, 2004 Lewison J ordered that the trial should be confined to the issues of liability and causation of loss but should not extend to quantum. The reason was that one of the expert witnesses on valuation of the Property would not be available in the trial window. But it was agreed in the course of the hearing that to the extent that it was possible to decide any issues of damages without a further enquiry or without hearing the experts it would be appropriate for me to do so.

88. In the course of the trial I heard evidence from Mrs Clarke for the Claimants, and from Mrs Mawson, Mr Nevett (Ravenseft), Mr Stewart (Salmon Developments Ltd, whose evidence was confined to agreeing with Mr Nevett), and Mr Taylor (DJ Freeman). Written evidence was also available from Mr Whitear, who was not required to attend, and from the valuation experts, Mr Outterside and Mr Pagella, to which I shall refer, and from Mr Simkins, a town planner.

VIII Claimants’ case

Liability

89. Mrs. Clarke consulted Mrs. Mawson for the purpose of obtaining legal advice as to the proper drafting of the contract and as to the meaning and effect of the draft provisions.

90. The retainer was a general one, and there was no express limitation on the retainer. Mrs Mawson did not confirm her instructions in writing. If she had done so, the only thing that she might have referred to as a limitation on her retainer would have been that she should not be expected to advise on the taxation consequences of the transaction.

91. Mrs Mawson held herself out to Mrs Clarke as a solicitor who specialised in commercial property transactions, including transactions involving land with development potential and including transactions involving conditional contracts and conditional options where the conditions referred to the grant of planning permission and similar planning events.

92. Mrs Mawson had a duty to understand the effect of the documents which were being drafted and amended and to ensure that Mrs Clarke understood the effect of the documents before committing herself to them. The duties on Mrs Mawson extended to advising her client on the need for protection against risks and adverse contingencies.

93. Mrs. Clarke and Mrs. Mawson were completely wrong when they thought, during the negotiations for the contract and in respect of the drafting of the contract, that the status of the Property (within or without the Green Belt) would be determined by the Inspector’s Report following the public enquiry.

94. The timing of the trigger event was of great importance. It would have been important in any case but it had particular importance where the option was virtually open-ended as to time, where the price was fixed and there was to be no provision for interest on the price.

95. Mrs Mawson did not at any time understand what precise event which might happen would constitute the trigger event. It was incumbent on Mrs Mawson to inform herself sufficiently of the procedures which would lead to the land being released from the Green Belt so that she could understand the event which would be the trigger event.

96. Mrs Mawson could have informed herself of the procedures by consulting a planning encyclopaedia or Halsbury’s Laws of England, volume 46, or by telephoning the local authority and asking them briefly to explain the procedures, as she did in January 1999. If on examination of the procedures, it was obvious that there was considerable scope for delay, then she ought to have advised her client of the need for protection against the contingency of undue delay.

97. The appropriate protection against delay would have involved (a) fixing an early long stop date or (b) providing for interest from an early date or (c) providing for an open market valuation at the date of exercise of the option or (d) a combination of some or all of the above.

98. Mrs Mawson ought to have told Mrs Clarke that she did not understand the procedures, did not know what event would bring the land out of the Green Belt and being ignorant of these matters she could not hope to guide Mrs Clarke as to what protection she needed against the possibility of delay in the trigger event coming about. This would have brought to light the error that Mrs Clarke was labouring under, namely, that the matter would be determined by the Inspector’s Report which Mrs Clarke felt she could predict as due in the Autumn of 1998 (i.e very soon after the contract of July 15, 1998).

99. Mrs Mawson was negligent in her response to Mrs Clarke’s statement on June 12, 1998 that the land would come out of the Green Belt with the Inspector’s Report in October/November 1998. Mrs Clarke thereby revealed her belief that the relevant event was the Inspector’s Report. Mrs Mawson was negligent in adopting what Mrs Clarke said and/or in not correcting Mrs Clarke, or at the very least, telling Mrs Clarke that she did not know whether her statement was legally correct and that it ought to be checked.

100. Mrs Mawson was further negligent in that having thought of the need for an early long stop date (her reference to a 12 month long stop date in her attendance note of December 23, 1997, and her reference to the need to limit the option in time if it was at a fixed price in her notes on going through the contract in March 1998), she did not raise it with Ravenseft’s solicitors. The wording introduced in June 1998 which referred to the land coming out of the Green Belt “pursuant to a planning enquiry regarding the local plan in 1997” was inadequate. Mrs Mawson had also in her March 1998 notes thought of the need for the price to be reviewed to open market value when the option was exercised but for no reason, or no adequate reason, she did not advise Mrs Clarke of this possibility or ask Ravenseft to agree it.

101. So also Mrs Mawson was negligent in not seeking to have a provision for interest in relation to the Green Belt option (when there was a provision for interest in relation to the conditional contract in respect of the period from 1 January 1999), unless Mrs Mawson was quite satisfied that there was no prospect of delay in the land coming out of the Green Belt past the end of 1998. Mrs Mawson could not have been satisfied of that when she was ignorant of the procedures involved, had made no attempt to inform herself of them and had not even investigated with her client why her client was asserting that the decision on the issue would be known in October/November 1998.

Causation

102. Mrs. Clarke was bound by the contract, which granted to Ravenseft, in consideration of the payment of £1, an option to buy at a fixed price. There was no provision for the price to be determined by reference to the market value at the date of exercise of the option. There was not even a provision as to the payment of interest on the price, as there was in the case of the price for the conditional contract. The timescale for satisfying the condition precedent was not under the control of Mrs. Clarke and was uncertain. In the events which happened, with the local authority adopting the amended plan on April 20, 2001, Ravenseft was entitled to delay for up to 3 months following April 20, 2001 before exercising the notice with completion to be 20 working days thereafter.

103. In fact, Mrs. Clarke slightly mitigated the adverse position created by the contract by raising an issue as to the enforceability of the contract and this led to completion in March 2001. Ravenseft paid an additional sum of £72,000 but Mrs. Clarke had legal costs in relation to the issue she had raised as to the enforceability of the contract.

104. If Mrs Clarke had been told about the procedures and timescales for the adoption of amendments to a local plan, Mrs. Clarke would not have granted an option at a fixed price exercisable at a time which was outside her control and otherwise uncertain. Mrs. Clarke did not feel under any imperative to contract with Ravenseft. Ravenseft were plainly keen to contract with her.

105. The probability is that Mrs Clarke would not have been prepared to tie up her land in this way. The period of commitment was uncertain and Mrs Clarke was unhappy about an uncertain commitment. If she had declined to contract with Ravenseft, she would have been free to sell the land in March 2001 at its then value rather than being under contract to sell in March 2001 at a fixed price. In that event she would have been able to bargain with Ravenseft for the payment of a price for her land which reflected some of the marriage value from a combined development of her land and the land formerly owned by Arup & Arup Ltd. On the agreed valuation figures, the values in February/March 1999 which reflected an appropriate share of marriage value was £1.23 million. That is consistent with the price of £1.2 million agreed in July 1998. The price which Mrs. Clarke would have been able to secure from Ravenseft in March 2001 would have been the open market value of the Property at that date recognising the special interest which Ravenseft had always shown, namely £1.72 million. Mrs. Clarke therefore lost £520,000, but gives credit for the £72,000 uplift in the price agreed by Ravenseft.

106. Alternatively, Mrs Clarke would have been persuaded in July 1998 to grant an option to Ravenseft upon the land coming out of the Green Belt but subject to a long stop date. As the land only came out of the Green Belt on April 20, 2001, any conceivable long stop date would have expired by then. In March 2001 (when Mrs Clarke was constrained to sell to Ravenseft for £1.2m) she would have been free to negotiate with Ravenseft for the payment to her of £1.7 million.

107. Another possibility is that Mrs Clarke would have been persuaded (in July 1998) to grant an option to Ravenseft upon the land coming out of the Green Belt but only on terms that if there turned out to be a delay, interest would be payable.

108. The obvious time from which interest would run would be January 1, 1999. This was the start date for interest in relation to the conditional contract. The rate of interest would be the same as under the conditional contract. Ravenseft would have been prepared to agree to such a term. Ravenseft were sufficiently anxious to add Mrs Clarke’s land to their land assembly. An interest provision would not really matter if the land came out of the Green Belt fairly quickly. An interest provision would only really matter if there was an unexpected delay in the land coming out of the Green Belt but, in such a case, Ravenseft would have to recognise that Mrs Clarke would have had a very strong case for seeking the protection of an interest provision.

IX Defendants’ case

Liability

109. Mrs Clarke personally negotiated the terms, including the price, and Mrs Mawson’s role was limited to drafting and dealing with Ravenseft’s enquiries.

110. As to the allegation that Mrs Mawson gave positive advice to Mrs Clarke to sign the contract, although it was against her interests to do so: (1) it is not usually the function of a solicitor to advise the client to enter into a transaction: cf South Australia Asset Management Co Ltd v. York Montague Ltd [1997] A.C. 191, 213-4, per Lord Hoffmann on the distinction between “information” and “advice”; (2) Mrs Mawson did not advise Mrs Clarke to enter into the contract.

111. No evidence was called to support the allegation that there was a breach of express instructions to draft an agreement for the option to be triggered by the release of the land from the Green Belt. Nor was there any evidence that Mrs Clarke gave instructions to draft an agreement for an option to be triggered by publication of the Report.

112. As for the allegation that Mrs Mawson gave wrong advice on June 12, 1998, the court should reject Mrs Clarke’s account of the meeting and to accept the account put forward by the Defendants’ witnesses.

113. The documents are more consistent with the Defendants’ version. Mr Nevett wanted the meeting because he wanted to remove the right of pre-emption. Mrs Clarke saw the meeting as an opportunity to increase the price on the two alternative bases. Each achieved their objective. It was Mrs Clarke and Mr Nevett who conducted the negotiations on points of principle, whilst Mrs Mawson and Mr Taylor were there to deal with drafting points.

114. Mrs Clarke has to rely on the meeting because she gets no assistance from the documents. It is was inherently improbable that Mrs Clarke, having herself thought up the concept of a higher price if the land was released from the Green Belt and herself negotiated this with Ravenseft, would turn to Mrs Mawson during the meeting, in Ravenseft’s presence, and seek advice as to the meaning of the deal she herself had been negotiating since October 1997.

115. If Mrs Mawson gave no positive advice at the meeting, then the question arises as to the scope of retainer.

116. Mrs Clarke is a highly intelligent woman with considerable experience of the planning process and a sophisticated approach to property transactions. She moved the Property into the ownership of different members of her family during the 1980s and 1990s to suit her purposes. She made representations to the Inspector and took a keen interest in the planning enquiry in 1997.

117. Upon receipt of the first letter from DJ Freeman on October 16, 1997 enclosing a draft contract, she telephoned DJ Freeman and proposed some fundamental alterations which resulted in the contract being re-drafted. This was done without consulting a solicitor. She was the one who stipulated the trigger event for the option, i.e. release from the Green Belt.

118. The parties had a relationship going back some 20 years. Mrs Mawson knew Mrs Clarke to be an intelligent woman who was capable of dealing herself with matters for which some clients would need a solicitor. Mrs Mawson knew that Mrs Clarke was not only capable of negotiating deals herself, but that she liked to be in control. Mrs Mawson did not give advice on planning. Her role was to draft conveyancing documents, which included advising on drafting points. There may have been times when (as a solicitor seeking to follow best practice) Mrs Mawson offered advice on wider matters, but that does not mean that the scope of her duty was widened by any course of dealing.

119. In this case the retainer was plainly in relation to conveyancing, not planning. The duty to give advice in relation to the Green Belt procedure arose only if that was incidental to the conveyancing retainer.

120. Mrs Clarke negotiated the terms and dealt with the planning side, whilst Mrs Mawson was responsible for the drafting. It is not always easy to draw the line between the two. How one draws the line then depends upon the extent to which the client is able and willing to deal with these matters himself – this will vary from case to case. A solicitor following best practice may offer advice to the client in relation to a matter on the commercial side of the divide, but this does not necessarily mean that he has thereby assumed a duty to offer advice on other matters which also fall on the commercial side of the line.

121. Mrs Mawson knew that Mrs Clarke had already been involved in the planning enquiry. Mrs Clarke appeared to understand the process. She told Mrs Mawson about the procedure and did not seek advice on the point. Mrs Mawson was entitled to take what Mrs Clarke said at face value. Mrs Clarke continued to conduct the negotiations with Ravenseft after Mrs Mawson had been instructed. Mrs Mawson did understand what the trigger event was and she properly drafted or approved the drafting of an agreement which reflected the deal which her client had done. She did not understand the procedure by which the land was to be released, but it was unnecessary for her to understand this in order to draft the agreement. It would not have been appropriate to draft the agreement any differently in order to give effect to the client’s instructions.

122. What Mrs Clarke claims not to have understood is the nature of the risk that the trigger event might be delayed, rather than the drafting methods of limiting this risk. Mrs Clarke chose to negotiate an option by reference to a planning procedure which she herself was engaged in and upon which Mrs Mawson never assumed any responsibility for advising her. In the circumstances Mrs Mawson did not owe a duty to advise her as to the effect of the terms which she herself had negotiated.

Causation

123. Whilst the Property was a useful addition to its proposed development, it was by no means essential. Ravenseft had acquired enough other land (or options over other land) to be able to proceed without the Property. Accordingly, far from Ravenseft being a special purchaser, the position was, if anything, the reverse, since any other purchaser would find it hard to develop the Property in isolation. It is therefore inconceivable that Ravenseft would have paid more for the Property or would have agreed to an option which had to be exercised before it knew whether or not the Property was to be released from the Green Belt.

124. Even if the value would have been £1.72 million in March 2001, this cannot be the correct measure of damages. Mrs Clarke’s claim is that she thought the option would be triggered by the Inspector’s Report. She was willing to sign an agreement which gave Ravenseft the right to buy the Property for £1.2 million in February 1999. Accordingly, the loss falling within the scope of the duty cannot exceed the loss of interest between February 1999 and April 2001. If she were to treat this as a “no-transaction” case and to recover market value as at 2001, she would be recovering for a loss falling outside the scope of the duty. The loss of interest is not a measure of loss which has ever been claimed.

125. At best the claim is for the loss of a chance, and no damages should be awarded unless the chance was a real or substantial one.

126. If Mrs Mawson was negligent, the onus is on Mrs Clarke to show: (a) that on the balance of probabilities she would have taken some further step; and (b) that there is a real or substantial chance that Ravenseft would have agreed to that step, or else that she would not have sold to them.

127. The value of the Property in isolation was substantially less than £1.2 million in 1999, and was slightly less even in 2001. Therefore, unless Ravenseft was a special purchaser, Mrs Clarke suffered no loss falling within the scope of the duty. Mr Pagella’s basis of valuation is not supported by the facts. Ravenseft would not have agreed to pay the full marriage value. It did agree to pay more than the value of the Property in isolation but there is no real prospect that it would have agreed to pay any more than it offered.

128. At best this is a “loss of a chance” claim. If Mrs Clarke can establish that there is a real chance that Ravenseft would have agreed to pay more than £1.2 million, and if she is entitled to damages for loss of that chance, she must then give credit for the further £72,000 which she succeeded in extracting from Ravenseft in order to settle the proceedings brought in 2000.

X Expert evidence

129. There were expert reports by Mr Pagella (of Montagu Evans) on behalf of Mrs Clarke, and by Mr Outterside (of Vail Williams) on behalf of the Defendants.

130. They valued the Property as at two dates: (a) February 1999 (3 months after publication of the Report) and (b) March 2001 (actual completion).

131. Mr Outterside valued the Property by itself. His reasoning was as follows: Ravenseft was not a special purchaser of the Property in that it had already acquired various interests, including options, over large areas of the surrounding land to which it had means of access other than via the Property. For this reason acquisition of the Property would have been beneficial to Ravenseft but not essential. The Property required the benefit of the surrounding land to unlock an uplift in its value. As Ravenseft had a controlling interest in that surrounding land, the majority of the market interest in the Property would have been “closed out”. This controlling interest meant that if anything, Ravenseft could bid less, rather than more than market value for the Property. The Property required the addition of some surrounding land (such as the property occupied by Arup & Arup Ltd (“Plot 5”)) to improve its density and therefore its value. That would have created “a potential reverse ransom situation” in favour of Ravenseft.

132. Mr Pagella valued the Property as part of a composite site including Plot 5. It was necessary to take account of the special interest which Ravenseft, as owner of Plot 5, would have had in securing the Property. Ravenseft had been interested for a number of years in acquiring the Property so as it enable it to develop the two pieces of land together with the benefit of a frontage onto Bedfont Road, increased presence and critical mass. Developing the site as a whole, including the Property, meant that Ravenseft could construct an access road without needing to encroach on Green Belt land and that a larger and more valuable total “built area” for the benefit of both interests could be achieved than if the sites were developed separately. Furthermore, valuation of the composite site reflected the transactions that actually took place i.e. the purchase made by Ravenseft and their subsequent disposal of the site to Scania.

133. The experts agreed values at the 2 dates on each of the bases. On Mr Outterside’s approach the agreed values were £810,000 in February 1999 and £1,185,000 in March 2001. On Mr Pagella’s approach, the Property forms part of a comprehensive development incorporating Plot 5, and the agreed values were £1,230,000 in February 1999 and £1,800,000 in March 2001.

XI Conclusions

134. My impressions of the witnesses are as follows. Mrs Clarke was not a truthful or frank witness, and missed no opportunity to bolster her case against the evidence of the documents. For example, she said that Mrs Mawson was instructed immediately when Ravenseft approached her in or before October 1997, when in fact the documents showed that Mrs Mawson was not instructed until December 1997. She was evasive about the reasons for the conditional sale/option split in the contract, trying to suggest that it was Mrs Mawson’s doing, when in fact it was Mrs Clarke who negotiated the terms. She said that she could not remember whether she had used the words “Release from Green Belt” or “Inspector’s Report” but that “Inspector’s Report to me was the normal word”, when all of the documents referred to release or some similar phrase, including the early documents which emanated from her discussions with DJ Freeman. When Mrs Mawson’s attendance notes were inconsistent with the Claimants’ case, Mrs Clarke suggested that they might not be genuine (although, rightly, no such suggestion was put to Mrs Mawson in cross-examination). She spoke about other people being interested in buying the Property in 1998 but was unable to produce any examples, save for a Mr. D Clarke who represented a company which she was unable to name.

135. I found the evidence of the other witnesses who were called entirely satisfactory. Mrs Mawson’s evidence was fair and measured. Mr Taylor’s evidence was solid, and Mr Nevett gave me the impression of being a hardheaded and firm, but entirely honest businessman, whose evidence I found truthful and helpful.

136. The main issues on liability, causation and damage which arise on the amended particulars of claim (as expanded by the further information) are these:

(1) What the scope of Mrs Mawson’s instructions was.

(2) Whether both Mrs Clarke and Mrs Mawson thought that the option would be triggered by publication of the Inspector’s Report.

(3) What was said at the meeting on June 12, 1998, and in particular whether Mrs Mawson advised that the contract should provide that the option should be exercisable within three months of publication of the Inspector’s Report.

(4) Whether Mrs Mawson was negligent in not informing herself of the procedure by which land was released from the Green Belt and in not advising Mrs Clarke that release from the Green Belt was not effected by the Inspector’s Report.

(5) Whether Mrs Mawson agreed the terms of the contract with Ravenseft negligently believing that she had fixed the date for completion at three months after the date of publication of the Inspector’s Report in accordance with her instructions.

(6) Whether Mrs Mawson advised the Claimants to enter into the contract.

(7) Whether, had she known that the option period would run only from the date when the Inspector’s Report was formally adopted by the Council, Mrs Clarke would have signed the contract.

(8) Whether, had she known that the option period would run only from the date when the Inspector’s Report was formally adopted by the Council, she would have negotiated for interest to run from January 1, 1999, and whether Ravenseft would have agreed.

(9) Whether the Claimants have suffered any loss.

137. Mrs Mawson was retained by Mrs Clarke as a solicitor who specialised in commercial property transactions, including transactions involving land with development potential and including transactions involving conditional contracts and conditional options where the conditions referred to the grant of planning permission and similar planning matters.

138. The duty of a solicitor is to use reasonable care and skill in giving such advice as the facts of the case demand, in the light of (inter alia) the client’s understanding and experience. Normally it will not be part of the solicitor’s duty to advise the client whether or not the client should enter into the contract.

139. Mrs Mawson would have understood herself to be instructed to involve herself in drafting the necessary documents (either by drafting them, or by commenting on drafts prepared by Ravenseft’s solicitors, DJ Freeman), to draw to the attention of Mrs Clarke any significant matters of which she would reasonably expect Mrs Clarke to be unaware, and to attend meetings as instructed, and to participate in the negotiating process as instructed.

140. In my judgment it is plain that a solicitor has a duty to understand the effect of the document which is being negotiated, and may (depending on the circumstances) have a duty to be equipped to correct the client’s misunderstanding of an important part of the transaction.

141. From the outset Mrs Mawson knew (as she said in her letter of December 17, 1997 to DJ Freeman, about two weeks after she was first instructed) that Mrs Clarke had been negotiating an option to be exercisable following “release” of the Property from the Green Belt. Also on the same date DJ Freeman wrote to Mrs Mawson to point out the changes to the draft contract to provide for reference to the site being “withdrawn” from the Green Belt. As I have said, there are numerous references in the period up to the conclusion of the contract to the Property being withdrawn or released or excluded from, or coming out of, the Green Belt. The documents with these references include various versions of the draft contract, the contract itself, letters to and from Mrs Mawson, and her own notes and attendance notes.

142. Mrs Mawson accepted that at no time until the problem arose at the end of November 1998 did she have any understanding of the procedures for land coming out of the Green Belt. She did not, therefore, have any idea of what event would trigger the option period.

143. I do not consider that Mrs Mawson was under a positive duty, prior to the meeting on June 12, 1998, to advise Mrs Clarke on the Green Belt procedures. She had reason to believe, by virtue of Mrs Clarke’s experience in property, her involvement in the enquiry, and her negotiation of the contractual provision, that Mrs Clarke knew the procedure for release from the Green Belt.

144. But that does not mean that she was relieved of the duty of understanding the contract and its effect. In the circumstances of this matter, I consider that Mrs Mawson had a duty to equip herself to understand the contract to the extent necessary to give proper advice to the client. The Claimants say that it would have been easy for her to do this, by looking at Halsbury’s Laws or by telephoning the local authority, but I do not consider that the relative ease of the exercise makes any difference. If a solicitor who holds himself or herself out as a specialist in corporate matters is involved in the drafting of an agreement for the sale and purchase of assets, or of shares, and the agreement contains tax indemnities, then the solicitor cannot be heard to say that he or she is not under a duty to understand the indemnities and advise as may be necessary in the circumstances, simply because the client is sophisticated and has negotiated the indemnities.

145. I do not accept, therefore, the Defendants’ contention that, simply because Mrs Clarke had negotiated the term before Mrs Mawson was instructed, Mrs Mawson’s retainer was limited to dealing with Ravenseft’s enquiries, and drafting or approving the drafting of the documents. Nor do I accept that it was no part of the duty of a commercial conveyancer to know or advise on the procedure for the removal of land from the Green Belt. All will depend on the circumstances, but where release from the Green Belt is one of the important terms of the contract, the circumstances may require that knowledge or advice.

146. I turn now to the relevant circumstances and to my findings of fact. First, I accept that at all material times Mrs Clarke was under the mistaken view that the trigger event would be the date of publication of the Inspector’s Report. Second, I do not consider that Mrs Mawson shared that view. In my judgment, she had not turned her mind to the question of the trigger event, and did not do so, until having accepted uncritically Mrs Clarke’s view to that effect on November 23, 1998, she checked the position with the local authority after Mr Nevett had expressed the view that the trigger event was adoption by the local authority. Third, I reject Mrs Clarke’s case that Mrs Mawson advised her to sign the contract. Even on Mrs Clarke’s evidence the most which Mrs Mawson did was to confirm that everything was ok with the contract.

147. In reaching that conclusion I reject Mrs Clarke’s evidence, variously stated, that at the meeting on June 12, 1998, both Mrs Mawson and Mrs Clarke proceeded on the basis that the trigger event would be the publication of the Inspector’s Report, and that Mrs Mawson suggested that the contract should reflect that. Having heard Mrs Clarke and Mrs Mawson, I am satisfied that Mrs Mawson did not suggest (as claimed in the particulars of claim) that the contract should provide that completion be stated to be three months after the date of the Inspector’s Report, or that Mrs Clarke agreed. Nor do I accept Mrs Clarke’s evidence that Mrs Mawson positively advised that if the Inspector’s Report were published in October, completion would be in February 1999, and if the Inspector’s Report were published in November, completion would be in March 1999, though Ravenseft could take up the option earlier.

148. In my judgment what happened can be seen from the combined evidence of Mrs Mawson, Mr Nevett and Mr Taylor, although their recollections of a meeting which took place some six years ago naturally differ. Mrs Clarke mentioned at the meeting, in the context of the commercial discussion, that she expected that the Property would be out of the Green Belt by October or November. I am satisfied on the balance of probabilities that she gave those present at the meeting to understand that what she meant by the reference to October/November was publication of the Inspector’s Report. This is also consistent with what Mrs Clarke told her lawyers in September 1999, namely that it was Mrs Clarke who said that if the Inspector’s Report were published in October 1998 the option period would expire in February and she would have her money in March 1999. There was no explanation from the Claimants as to why Mrs Clarke’s recollection at the conference in September 1999 (just over a year after the meeting) that she had made the statement had changed in the particulars of claim three and a half years later, and in her witness statement a year after that, to Mrs Mawson having made the statement. I consider that Mrs Clarke’s evidence, that she was only repeating what Mrs Mawson had said, was untruthful.

149. I prefer Mr Taylor’s evidence that any discussion of the Inspector’s Report and completion within 3 months of that date or 9-12 months from the meeting was part of the commercial discussion between Mrs Clarke and Mr Nevett, in which the solicitors were not actively involved. As I have said, Mr Nevett’s main concern was to remove from the contract a provision that Mrs Clarke would have a right to dispose of the Property before the contract became unconditional subject to a right of pre-emption for the benefit of Ravenseft at the price agreed by Mrs Clarke with the proposed transferee. Mrs Clarke’s main object at the meeting was to increase the option price to £1.2 million, and the conditional sale price to £1,050,000.

150. I therefore reject Mrs Clarke’s evidence that she remembered Mrs Mawson using the words quoted in the particulars of claim, and in particular that Mrs Mawson referred to the publication of the Inspector’s Report. I reject her evidence that Mr Taylor’s account omitted what Mrs Mawson had said. I also reject her evidence that discussion of the Inspector’s Report was the most important issue discussed at the meeting.

151. But I do accept that on the balance of probabilities Mrs Clarke made statements (primarily directed to Mr Nevett) at the meeting which, had Mrs Mawson understood the Green Belt procedure, would have alerted Mrs Mawson to the fact that Mrs Clarke did not understand it, and that Mrs Clarke was working on the incorrect basis that the effect of the contract was that the option period ran from the date of publication of the Inspector’s Report.

152. I therefore accept the Claimants’ contention that Mrs Mawson was negligent in not correcting Mrs Clarke, or telling Mrs Clarke that she did not know whether her statement was correct and that it ought to be checked. Mrs Mawson quite rightly accepted that, if she had appreciated the procedures involved in the release of land from the Green Belt, she would have informed Mrs Clarke and taken further instructions.

153. What would have happened if Mrs Mawson had, at the meeting on June 12, 1998, realised that Mrs Clarke was under the false impression that the trigger date was the date of publication of the Inspector’s Report? If Mrs Mawson was negligent, the onus would be on Mrs Clarke to show: (a) that on the balance of probabilities Mrs Clarke would have not have entered into the contract, or have demanded different terms; and (b) if she had demanded different terms, that there is a real or substantial chance that Ravenseft would have agreed to them: Allied Maples Group Ltd v. Simmons & Simmons [1995] 1 W.L.R. 1602.

154. In Mr Morgan QC’s closing submissions he argued that Mrs Mawson ought to have advised Mrs Clarke that she needed some protection against the possibility of delay, which would have involved (a) fixing an early long stop date or (b) providing for interest from an early date or (c) providing for an open market valuation at the date of exercise of the option or (d) a combination of some or all of these.

155. Mr Morgan first raised these matters in his opening, and after the evidence they were the subject of an application to amend the particulars of claim. The principal objection by the Defendants to the proposed amendments was that the evidence of Mr Nevett was crucial on the issues of the additional terms which might have been negotiated, and the Defendants had not had a chance to take a statement from him, and his answers off the cuff might not be reliable evidence on which to decide the issue. In the event I decided that his evidence on interest was sufficient for me to take a view without injustice to the Defendants. He had not been questioned on the long stop date point, and there was therefore no basis for a reliable finding, and his answer that Ravenseft would never have agreed to a market valuation formula disposed of that contention since it was never suggested that his evidence was unreliable.

156. The amendment as allowed by me pleaded that had Mrs Mawson advised that the option period would only run from adoption by the local authority, the Claimants would have required a term as to interest to be paid on the purchase price and Ravenseft would have agreed. The date from which interest would have run was unspecified, but (as I have said) January 1, 1999 was contended for, by analogy with the interest payable on the conditional sale price.

157. I am satisfied that the Claimants are wrong in their contention that, had she known of the Green Belt procedures, Mrs Clarke would not have signed the contract and would have not sold to Ravenseft at that time.

158. Both Mrs Clarke and Mrs Mawson had the benefit of hindsight when they gave evidence. They knew that it had in fact taken until April 2001 for the Property to come out of the Green Belt. But if Mrs Mawson had given proper advice at the meeting, it would have been that exclusion from the Green Belt required adoption by the local authority, which might involve some delay, and the Secretary of State had power to stop adoption, which in theory might involve further delay. But I do not consider that Mrs Clarke should have been, or would have been, advised that there was a real risk that the process would take several years. Mr Nevett and Mr Taylor were well aware of the procedures. Mr Nevett thought that completion would take place in 9 to 12 months, and Mr Taylor thought that the adoption by the local authority of the Inspector’s Report would be a rubber stamp process.

159. But even if the risk that it might take a long time for the adoption process to be completed had been put to Mrs Clarke, I reject her evidence in the witness box that if anyone had explained the adoption process and said that it would take such a long time to be resolved, she would not have signed the contract. I also reject her evidence that she was not keen to be part of the Ravenseft development, and her land was large enough to be sold independently. The sale was very important to Mrs Clarke, she had no other serious purchaser in 1998 and she was very keen to sell. If the land was not released from the Green Belt, her only opportunity of realising its value was to be included in Ravenseft’s plans. She knew that Ravenseft had acquired most of the land around her.

160. Accordingly, I do not accept the Claimants’ primary case. That leaves the question of whether Mrs Clarke would have negotiated different terms to protect herself against the risk of delay.

161. Mrs Clarke’s evidence was and remained that she would not have entered into the contract at all, and she did not give evidence that she would have sought interest. Mrs Clarke gave evidence that she expected that the option would have been exercised in 9 months, and knew that she would get a better price if the land were released from the Green Belt than if planning permission were obtained, and was not concerned about interest because she thought that the period would be a fairly short one. But she also said in evidence that if she had not signed the contract Ravenseft would have rushed round to see her.

162. Mrs Mawson accepted in evidence that she did not ask for a long stop date and/or interest at the meeting because she thought that the parties would know either way in October/November 1998 whether the land had been released, but also because she had not been instructed to ask for such provisions, and Mrs Clarke was happy with the suggestion that there already was a limitation on time agreed by Ravenseft in relation to the 1997 enquiry process. She also said that if she had been aware that release was dependent on adoption, she would have suggested a fixed period of time. But Mrs Clarke was satisfied having negotiated the additional sums for the conditional sale and the option, and it was not clear that, if they had asked for even more money, they would have succeeded. But she accepted that if she were in Mrs Clarke’s position and had been advised of the potential for delay, she would have demanded interest.

163. When asked in cross-examination whether a claim in the negotiations to interest would have been fair, Mr Nevett replied that all parties considered that the Green Belt issue would be resolved quickly. The deal was a package. He would have considered any proposal that was put to him and would look at the whole package proposed. If interest had been proposed, he might not have been prepared to go as high as £1.2 million. There was provision for interest on the conditional sale because there was a longstop date and the planning process would take longer than the Green Belt release. He said in re-examination that the price was very much at the upper end of what Ravenseft was prepared to agree.

164. My conclusion on this aspect of the case is that the Claimants have not shown on the balance of probabilities that Mrs Clarke would have in fact demanded interest as from January 1, 1999, and that if she had demanded it, there is no substantial chance that Ravenseft would have agreed. I do not rest this conclusion on the fact that Mrs Clarke did not give evidence that she would have required interest had she been properly advised. In my judgment, as I have said, the submissions and the evidence have been over-influenced by the hindsight of what actually happened, namely that the Property did not come out of the Green Belt until April 2001.

165. In June 1998 Mrs Clarke was confident that there would be a recommendation in her favour by October/November 1998, and was under the impression that this meant she would sell and be paid by Spring 1999. Mr Nevett thought that completion would take place in 9 to 12 months, i.e. by the summer of 1999.

166. Mrs Clarke was using the meeting to obtain an uplift in the conditional sale price of £50,000 and in the option price of £100,000. She would have had to consider very carefully whether asking for interest might frustrate her main objective. If Mrs Mawson had known, and had advised, that the process would require adoption by the local authority and that the Secretary of State could intervene, I do not consider that anyone at the meeting would have considered that this was a situation which called for an interest provision.

167. All of them (including Mrs Clarke) reasonably thought that the end of the Green Belt process was near, and this would have been unaffected if Mrs Mawson had explained the procedure to Mrs Clarke. The situation was different in relation to the conditional sale, where it was thought from the outset that the obtaining of planning permission on grounds of national importance might be a very long process. I consider therefore that not only have the Claimants not shown, as they must, that on the balance of probabilities Mrs Clarke would, if she had been properly advised by Mrs Mawson, demanded interest, but also that without the benefit of hindsight, and given the purpose of the meeting, Mrs Clarke would not have done so.

168. But even had the Claimants shown that Mrs Clarke would have demanded interest, they must satisfy the court that there was a real or substantial chance that Ravenseft would have agreed. The total interest claimed was about £156,000. The Claimants accept that they have to give credit for the £72,000 uplift in the price they obtained in 2001, but say that they reasonably incurred legal costs in obtaining the uplift. In order to obtain more than nominal damages on this claim the Claimants would have to show a chance of at least about 33%. But I do not consider that they had anything like such a chance, and in fact my conclusion is that they had no real or substantial chance at all of obtaining it had Mrs Clarke pressed for it.

169. I accept that the fact that all parties considered that the end of the process was near would mean that Ravenseft would not be giving much away if it agreed to an interest provision, but I consider that the overall effect of the evidence of Mr Nevett and Mr Stewart is that, having agreed to an increase in the price, which they considered to be part of a package and at the upper end of what Ravenseft was prepared to agree, Ravenseft would successfully have rejected a claim to interest, which, even had Mrs Clarke been properly advised, would not have been a priority for her.

170. I should add (although it was not the subject of argument) that interest would have been subject to tax, and the evidence of Mrs Mawson was that Mrs Clarke was very conscious that capital gains tax would not be payable on the potential gain (from £62,500 in 1982 to £1.2 million in 1999) if the Property were regarded as a principal residence. That would be another reason for Mrs Clarke (without the benefit of hindsight) not pressing for interest for what was envisaged to be a comparatively short period had any demand in the negotiations for interest been resisted by Ravenseft.

171. I will also add my conclusion (although it does not arise on my principal findings) on damages had I acceded to the Claimants’ case that, but for the negligence, Mrs Clarke would not have signed the contract, and been free to sell the Property in 2001. The evidence of Ravenseft (which I accept) was that while the Property was a desirable addition to the site, it was not essential. It was not necessary for access, nor was it in a key position on the site. Ravenseft would not have been a special purchaser. Its controlling interest in the 35 acre site would have excluded the rest of the purchasers’ market, and would have acted in its favour so that it would not need to pay more than market value. Consequently, on the facts I am satisfied that Mr Outterside’s approach to the valuation is the correct one. The result would be that the Claimants would have suffered no loss had there been no contract in 1998.

172. The result of this judgment is that the Claimants are not entitled to more than nominal damages, and I will hear argument on the form of the order if it cannot be agreed.