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What are the implications of the court's decision to hold a client responsible for two-thirds of the total recoverable loss where the solicitor gave negligent planning advice? Flattery v Newman demonstrates that where a property's use is crucial to the buyer and no planning permission is in place, solicitors and clients should be careful not to proceed with a property purchase without an actual certificate of lawful use, regardless of the strength of supporting evidence.
Flattery v Newman & Maxwell (a firm) and others  EWHC 3006 (Ch),  All ER (D) 128 (Sep)
The Chancery Division found that M, a solicitor in the defendant firm, had failed to exercise reasonable care in advising the claimant on planning issues during the course of a conveyancing transaction. However, the claimant was found to bear responsibility for two-thirds of the total recoverable loss of £232,150.
The court had to decide whether solicitors breached their duty to exercise reasonable skill and care in not advising a client to apply for a lawful development certificate (LDC) before completing on a property purchase.
Mr Flattery instructed M, to act in the purchase of a property for use as a scrap metal yard. Mr Flattery had used M previously in relation to an application for an LDC under the Town and Country Planning Act 1990, s 191. An LDC is a certificate from the local authority that a given use of land, which would otherwise contravene planning legislation, has been continuing without interruption for ten years or more and is now lawful in that it cannot be the subject of enforcement action. See Practice Note: Lawful development certificates.
Before the sale was complete, the local search results had revealed that there was no planning permission for use of the site as a breaker's yard. Mr Flattery obtained from the vendor five documents showing lengthy established used of the site as a scrap yard that appeared to show that the use had become lawful.
M advised Mr Flattery that a letter from the council stating that there was a continuation of 'the present established use namely the storage of scrap on the land without advertising' was definite and his opinion could not be contested by the council.
After completion of the purchase, Mr Flattery unsuccessfully applied for an LDC in respect of the site. Without planning permission there was no practical use for the site and Mr Flattery's company was in liquidation.
Although M did not claim to be an expert in planning law, he held himself out as a commercial conveyancing solicitor. Any commercial conveyancer is likely to come across planning queries and either they should be able to answer them themselves or take specialist advice.
There was no doubt that for the purposes of planning law the five documents shown to M were not 'good as an LDC'. M should have advised Mr Flattery to apply for an LDC and by not doing so Mhad failed to exercise reasonable care.
Mr Flattery had to bear substantial responsibility for his own loss. He undoubtedly knew about the LDC procedure from his previous experience and must have appreciated that there was no actual LDC for the site when he proceeded with the acquisition. He had been specifically advised by the environmental officer that he could not lawfully trade without planning permission or an LDC and the council's letter showed that the 'established use' was for the storage of scrap only.
While the decision to proceed with the purchase might have been bolstered by what M had said about the letter, the decision had been taken by Mr Flattery himself.
The property was bought on the assumption that it could lawfully be used as a scrap yard but once sold it had no current lawful use apart from potentially an agricultural use.
The court took into account that the expenditure was voluntarily undertaken with knowledge and advice from the environmental officer that it could not be traded lawfully as a scrap yard unless and until an LDC was obtained.
In light of this, Mr Flattery had to bear responsibility for two-thirds of the total recoverable loss of £232,150.
As the judge pointed out, property solicitors are expected either to be capable of handling planning issues themselves, or if they are not, to instruct specialist advice.
If the property's use is crucial to the buyer and there is no planning permission in place, clients and their advising solicitors are advised to ensure that an LDC is in place before completing the purchase, regardless of the strength of evidence supporting the apparent use. If there is any doubt, consult the relevant planning authority and obtain the LDC before completing the property sale.
The degree to which a client may be contributorily negligent will depend on the client's knowledge. The client cannot entirely pin blame on the solicitor's advice if it is aware of the risks involved. If the position is unsure, it may be advisable to instruct counsel and ensure that advice is properly documented, to clarify the position in the event of dispute.
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