The appeal court ruling in Spire Property Development (2022) will be particularly important for the profession for a long time to come.
Assumption of responsibility
The case concerned a claim by two property development companies for damages against Withers for negligent advice in relation to the purchase of two listed buildings in Fulham, London. The properties shared a boundary and the client intended developing them together. The purchase was concluded in late 2012.
Unfortunately for the developers – and Withers – it was later discovered that high-voltage electricity cables were buried under the properties. The developers successfully sued for negligence, the court finding that Withers breached its duty in relation to carrying out (or advising on) a specialist power line search of UK Power Lines.
The developers also claimed that the firm, in 2014, failed to adequately investigate and advise on any rights and remedies the developers could have given the subsequent discovery of the cables. It was this issue on which Withers appealed, arguing that it had simply responded to the specific questions asked of it by the developers – pointing out that their retainer had ended.
The court observed that a retained solicitor owes no duty, as a general principle, to go beyond the scope of their express instructions and give advice in relation to other matters. This is subject to the qualification that the duty extends to giving advice that is ‘reasonably incidental’ to work they agree to carry out. In addition, a retained solicitor owes a concurrent independent tortious duty of care.
But what if there is no retainer, ie there is no contractual duty?
Here, the court pointed to “the concept of assumption of responsibility [which] remains the foundation of the tortious liability” - the extent of which is to be decided objectively and in context. The key focus must be on the exchanges between solicitor and client.
The nature of the exchanges in this case demonstrated that no responsibility had been assumed by Withers. At no point had the firm been asked to comment - or even advise - on the possibility of someone else paying for the electricity cables being removed. The developers’ questions related only to what happened at the time of their purchase and Withers’ “guarded” responses were restricted to answer those questions (“using the same numbering”).
Withers had not assumed responsibility. Though the case was decided on its facts, the guidance for lawyers is useful and should be noted.
It’s not at all uncommon for lawyers to be contacted by clients or former clients on an issue relating to a matter that has been concluded. This ruling provides important guidance on the limits to solicitors’ duties in circumstances where a prior contractual duty has ended.
The court’s approach will, it would appear, depend on the nature of the client concerned. Here, the developers were described as a “sophisticated” and the firm was entitled to take its communications at face value. If, for instance, they had wanted Withers’ advice on their rights and remedies against UKPN, they would have asked for it.
The inference is that in the case of lay clients, law firms could potentially have a harder time convincing the court that they did not owe a duty under assumed responsibility.