High Court saves sellers' solicitor from negligence in drafting planning conditionality

High Court saves sellers' solicitor from negligence in drafting planning conditionality

In what circumstances will a firm of solicitors be liable where a contract conditional on planning fails to complete? The High Court confirmed that a firm's retainer does not extend to advising on planning or commercial issues.

Original news

Rentokil Initial 1927 plc v Goodman Derrick LLP [2014] EWHC 2994 (Ch)

Goodman Derrick (GD) was retained by Rentokil to act on its behalf in the sale of commercial office premises to Taylor Wimpey. The purchase was to be subject to the grant of planning consent for development for residential purposes. Planning consent was to be sought after exchange of contracts. Completion was to be dependent on the grant of planning consent with acceptable conditions.

Rentokil asserted that:

  •  GD was negligent in drafting (or approving or agreeing with the purchaser's solicitors) the terms of the contract for sale of the property in such a way that it enabled the purchaser to avoid completing the contract at a time when the property market was falling
  • GD failed to advise the claimant as to the proper meaning and effect of the terms of the contract with the result that it entered into a contract which it would not otherwise have entered into

At the heart of the allegations was the assertion that GD failed to properly draft and advise on the definition of 'Unacceptable Planning Conditions'. Rentokil also asserted that GD was negligent in drafting the definition of 'Costs' payable in respect of obligations to be performed under a Town and Country Planning Act 1990, s 106 agreement between Taylor Wimpey, as buyer, and the local planning authority--with the result that the definition was capable of reducing the purchase price when it ought not to have been.

Taylor Wimpey had argued that the planning conditions that were ultimately imposed were unacceptable and refused to complete the purchase. The parties started arbitration proceedings on the issue, which were compromised a few days before the hearing was due to take place. The compromise provided for completion of the

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About the author:
Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.