The Court of Appeal has set the bar high with respect to the duties that surveyors owe to their clients – even when they believe that their retainer has been terminated due to non payment of a bill. This bar could lead to more professional negligence claims against surveyors and other professionals.
In Littlewood –v- Radford & Boston (2009), the court heard that Mrs Littlewood (“L”) had instructed her surveyors, Radford & Boston (“R”), to serve a notice on the landlord to exercise her statutory right under the Leasehold Reform, Housing & Urban Development Act 1993 (“the Act”) to extend the lease of her property by an additional 90 years, on payment of a premium.
The Act provides for the landlord to serve a counter-notice in the event that it does not agree that the tenant has a right to extend their lease or, more commonly, that it disputes the level of premium which the tenant is proposing to pay.
The parties will then attempt to negotiate a settlement of the premium, but the Act further provides that if there is no such agreement, the tenant must apply, no later than six months following the service of the counter-notice, to the Leasehold Valuation Tribunal for a determination. If the application is not made, the tenant has to wait another 12 months before they can serve another notice and start the process again. In that period, property prices, and therefore the premium to extend the lease, can increase.
In the Littlewood case, the landlord served a Counter-Notice, and R wrote to L enclosing the Counter-Notice and an invoice for their services to date. They also gave her advice about the application to the LVT, and subsequently warned her at the beginning of June 2000 that the application to the LVT had to be made no later than 8th November 2000. The question became whether the surveyors were negligent in their subsequent actions.
L failed to pay the invoice and therefore on 1st August, R wrote to L to state that they were unable to continue to act for her unless their fees were paid within the next fortnight. The fees were not paid, and therefore there was no further activity on the R file and the deadline for the LVT application was missed.
As a result of this, L had to negotiate the premium with the landlord outside the Act and paid more as a result. She brought a professional negligence claim against R.
At first instance, the Court rejected L’s professional negligence claim against the surveyors. The Judge decided that the retainer had ended well before the 8th November 2000 deadline and therefore the surveyors did not owe her any further duty, and so could not be negligent.
The Court of Appeal overturned this decision, and decided that the letter R wrote on 1st August was ambiguous and it would not be clear to a lay person that the surveyors were terminating their retainer. Since there was still a retainer in place the surveyors’ duty of care continued, and despite the fact that R had already stated the importance of the November date, it was negligent not to remind L of the date. She could not be expected to understand the significance of the date or the consequences of missing it. She was entitled to rely on her professional advisor to remind her as the date approached.
This case demonstrates that professionals are under a duty to remind their clients of important deadlines and need to be extremely clear if they are terminating a retainer. Simply stating that they will not act whilst the fees remain unpaid is insufficient. It must be made absolutely clear that the professional is ceasing to act, and only in those circumstances, if a subsequent deadline is missed, will the professional be released from their duty of care and not be negligent.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.