29 June 2012

Withers on the vine: gardening advice to be avoided

The message: Solicitors’ advice should not be too forthright

The case: A law firm has been found negligent for not being cautious enough in advising buyers on whether an expensive London house had rights to a communal garden (Herrmann v Withers, 30.05.12).

In 2008, Mr and Mrs Herrmann instructed Withers to act for them on the purchase of 37 Ovington Square in Knightsbridge for £6.8m. The house is in the “neck” of Ovington Square and does not front on to the square itself.

The Herrmanns loved the house, but were concerned that it had no garden and wanted to be sure they could use the communal garden in the square. They would not have bought the house without believing there was such a right.

The vendor’s solicitors informed Withers that access to the square was provided as a matter of courtesy by the Garden Committee, and houses that overlooked the square paid a fee for its use. But they had no paperwork on the fees paid. Because the information was so unsatisfactory, Withers investigated further: one of its assistants considered the Kensington Improvement Act 1851, which gave certain houses in Ovington Square communal garden rights.

The 1851 act applies to every house where the front or side faces or forms part of the line of any of the relevant squares. It provides for residents to belong to a committee that manages the garden, and for an annual levy. The assistant, after discussing the matter with her superior and speaking to a member of the Garden Committee, took the view that 37 Ovington Square was protected by the act, as it covered houses on terraces leading to the square. The purchase proceeded accordingly.

However, following the purchase, a dispute arose about whether the Herrmanns did have the right to use the garden. The Garden Committee contended that, as the house was in a side street, it had no such right. It was only prepared to grant a 50-year licence to use the garden subject to payment of £25,000. The Herrmanns did not accept this and pursued proceedings to establish their right.

The Herrmanns failed, as the judge held their house was not covered by the act as it did not cover houses on terraces leading on to any square.

The Herrmanns then sued Withers, which claimed it was not negligent to have taken the view that the act applied, as this was a possible interpretation and it was agreed with by a specialist counsel. It also said that clients want clear and forthright advice.

The court agreed that the act was unclear, but noted that the vendor had not said the house had garden rights and Withers should have been less forthright in its view that it had. It should have made clear that it was only arguable that there was such a right, and checked whether any levy had been paid, particularly as this was important to the Herrmanns.

The court then considered the Herrmanns’ claim for damages of £700,000 on the basis that the house was only worth £6.1m without garden rights. It determined that the lack of such rights reduced the value of the house by 5%, and so gave rise to a claim for £340,000. However, the Herrmanns failed to mitigate their loss by taking the licence, so the court based the damages on the value of the house had it had the licence: £102,600 — a £65,000 loss in value, £25,000 for the licence, £10,000 legal costs for taking the licence, and £2,600 in stamp duty.

The case is a reminder that solicitors need to properly caveat their advice when dealing with matters of significant importance.

Summing up: Herrmann v Withers

  • Withers advised the Herrmanns that they had the right to use communal gardens.
  • The committee managing the garden said they did not have an automatic right to use them.  
  • The court found Withers negligent in failing to advise the Herrmanns that their house might not have the right to use the garden. 

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