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Beware: Warnings Must Be Given

Published: 9th December 2009

A recent Court of Appeal decision has held that a surveyor is under a duty to remind a client of approaching deadlines.

The Claimant bought a leasehold flat in London. The Lease was for a term of 35 years from 10 October 1978, and was due to expire in 2014. The Claimant was entitled to acquire an extended lease of the flat in accordance with the Leasehold Reform, Housing Act 1993 ("the Act"). The Claimant instructed the defendant surveyor to act for her in connection with acquiring an extended lease under the Act.

The Defendant served a notice under s.42 of the Act on behalf of the Claimant on 8 May, 2000. The landlord then served a counter-notice. However, within two months all terms were agreed except for the amount of the premium. Under the Act, an application had to be made to the Leasehold Valuation Tribunal ("LVT") by 8 November for the LVT to determine the premium, or the s.42 notice would be deemed to be withdrawn. On 5 June, the Defendant informed the Claimant that the terms, other than the premium, were agreed and stated that the valuation date was therefore 5 June.

The Defendant then wrote to the Claimant on 1 August, informing her that unless she paid his invoice, he would be unable to continue to act on her behalf. No application to the LVT had been made by 8 November, consequently the Claimant's notice was deemed withdrawn. Thus the Claimant lost the chance of being able to buy an extended lease for £380,900 under the Act and proceeded to purchase outside of the Act, paying £485,000 on 31 October 2001.

The Claimant alleged that the Defendant failed to apply or advise her to apply to the LVT by the deadline and that the retainer had continued past the deadline. However, the Defendant alleged that the retainer terminated in August when he wrote to the Claimant informing her he would no longer be able to act for her unless his invoice was discharged.

The trial judge found that the Defendant had been instructed on a stage-by stage basis. Despite neither party alleging the retainer terminated on 5 June the trial judge found that the retainer had terminated on 5 June and during the retainer the Defendant had advised the Claimant of the importance of making the application before the deadline.

The Claimant appealed against a decision that the Defendant was not liable for professional negligence and submitted that both she and the Defendant had acted on the basis that the retainer had continued beyond 5 June. Secondly, the Defendant had been under a duty, as the deadline approached, to remind her of the deadline and inform her of the importance to apply to the LVT by the deadline if she wished to keep alive the benefit of the notice.

The Court of Appeal disagreed with the trial judge and held that the trial judge's finding "that the retainer terminated on the 5 June was contrary to the evidence and was wrong". The letter of August 1 had "positively recognised" the Defendant "regarded himself as still acting" for the Claimant as he warned that he would be unable to continue to act unless his fees were paid. "The trial judge had made an unchallenged finding that, if the retainer was still continuing by 1 August, it did not thereafter terminate as a result of the non-compliance with the terms of the letter..." . Thus, as the trial Judge was wrong to find that the retainer had terminated on 5 June, it must still have been in place on November 8.

Secondly, the Court of Appeal held "if a professional person gave clear advice on a particular point to his client as to the need to take a particular step by a particular time, there could not be any general principle that he was under a duty to keep repeating that advice." Further as the Claimant was inexperienced, "she was just the sort of client who could be expected to rely on a professional adviser" such as the Defendant "to remind her, when the time arose, of the need to take appropriate procedural steps to protect her position. " The Defendants continuing retainer required him, as the deadline loomed, to repeat to the Claimant the need for her, if she wished to keep her claim alive, to apply to the tribunal by the deadline.

Whilst the Court of Appeal have held that there is no need to keep repeating advice, there is a duty to remind the client of the importance of an approaching deadline.

Professionals should ensure that they protect themselves and make sure that all key dates are given in writing. If there is a dispute with the client and the client does not pay their bill remind the client of any key dates when terminating the retainer. Finally make sure that deadlines are diarised properly in order to advise the client whether lay or professional of approaching deadlines.

The decision is a clear warning to all professionals of the need to make sure your client is reminded of an important approaching deadline.

If you would like to discuss any of the issues raised in this article please contact Karl Jackson on 0161 214 0500.