In Balogun v Boyes Sutton & Perry (a firm)  EWCA Civ 75, the Court of Appeal considered whether a solicitor had breached its duty of care when advising on ventilation works as part of a purchase of an underlease.
Balogun (the ‘purchaser’) intended to fit out and run a restaurant and decided to purchase an underlease for a property that had the appropriate planning permission for use as a restaurant. The property had been fitted with a ventilation shaft which was outside the demise of the headlease. Boyes Sutton & Perry (the ‘solicitors’) were instructed on behalf of the purchaser.
Conflicting arguments presented to the court concerning what had been discussed between the purchaser and their solicitor when discussing the purchase. The solicitors stated that the purchaser had informed them that no further implementation works were necessary before the purchaser could connect into and use the ventilation shaft and that no structural works were required. Conversely, the purchaser stated that it had been made clear to the solicitors that implementation works were necessary, including the installation of ducting.
Following completion, a dispute arose between the purchaser and the landlord concerning their proposed fit-out works, which the purchaser had now realised needed and had not been properly addressed by their solicitors. The landlord objected to the proposal for a chimney to be installed above the ventilation shaft.
The court initially found that there was no breach of duty on the part of the solicitor. The purchaser appealed arguing that:
• the drafting of the lease could be interpreted in an alternative way, and the solicitor should have advised him of this risk
• the solicitor should have undertaken further investigations into a planning condition that required the local planning authority's consent for any ventilation works.
The Court of Appeal found that the solicitor was in breach of their duty of care by failing to warn the client that a court could reach a different interpretation to their own on the definition of 'service media', within the draft underlease and what this covered. The court did not find that the solicitors were under any duty to investigate the planning condition further.
However, notwithstanding the Court of Appeal finding that there had been a breach of duty, in this case, they found that the purchaser had suffered no loss and so the Appeal was dismissed.
This case serves as a reminder for those instructed with purchasing underleases to:
- mirror the headlease as much as possible when drafting an underlease to avoid any potential conflict in the future
- advise tenants thoroughly on the alterations provision in their lease where any superior or third party consent is needed
- advise clients when there is a real risk that an alternative interpretation of any provision in the lease documents may lead to a dispute in future.