England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBENF 95/1745/C

(HIS HONOUR JUDGE O'MALLEY )

Royal Courts of Justice

Strand

London WC2

Thursday, 17 July 1997

B e f o r e:

LORD JUSTICE LEGGATT

LORD JUSTICE MORRITT

LORD JUSTICE BROOKE

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FARRER & ANR

PLAINTIFF/APPELLANT

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MESSRS COPLEY SINGLETONS

(FORMERLY KNOWN AS MESSRS GOWAN & SINGLETON) (A FIRM )

DEFENDANT/RESPONDENT

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(Transcript of the handed down judgment of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR R S LEVY (Instructed by Messrs Slee Blackwell, Devon) appeared on behalf of the Appellant

MISS S I B SOLOMON (Instructed by Messrs Reynolds Porter Chamberlain, London WC1V 7HA) appeared on behalf of the Respondent

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J U D G M E N T

(As approved by the Court )

©Crown Copyright

Thursday, 17 July 1997

JUDGMENT

LORD JUSTICE BROOKE: This is the judgment of the court to which all its members have contributed.

Mary Ellen Farrer (‘Mrs Farrer’) appeals against the order of Judge O'Malley sitting in Exeter as a judge of the Queen's Bench Division whereby on 25th October 1995 he entered judgment for the defendants, Copley Singleton, who are a firm of solicitors, against the plaintiffs, Mrs Farrer and her sister-in-law Patricia Jean Jordan (‘Mrs Jordan’).

The question at the heart of this appeal relates to the circumstances in which one client of a conveyancing solicitor, in the absence of any express authority, is able to give instructions to his solicitor to dispense with the inquiries which a prudent solicitor would ordinarily make, such as will bind three other clients for whom the solicitor is also acting in connection with the same transaction. This issue arose in the present case in connection with the purchase of a house and surrounding land at the height of the 1987 property boom when the four clients were under pressure from the proposed vendors to proceed to an early exchange of contracts. Before we describe the problem we have to decide it is first necessary to say something about the clients, the solicitor and the property in question.

The clients were, originally, two sisters and a brother and their respective spouses. They all wished to retire to Devon, and their plan was to find homes of their own there and to pool some of their capital assets in buying a property which the wives could run as a business, while their husbands obtained retirement work locally. Under the original plan each of the couples were to contribute their appropriate share of the property they were buying and there would be no need for a mortgage. One of the couples then dropped out of the plan, so that a mortgage loan was in fact needed, although the other two were willing to exchange contracts on the purchase before the formal mortgage offer came through and before they had exchanged contracts for the sale of either of their existing houses. Although the third couple attended an initial meeting with the solicitor in the fourth week of June 1987, they had dropped out before contracts were exchanged in mid-August and it is not necessary to say anything more about them.

The main protagonists on the Plaintiffs’ side were Mrs Farrer and her husband Michael. The judge described Mrs Farrer as an impressive lady of strong personality, but otherwise he said virtually nothing about her background, or about one unusual feature of the evidence which related to her husband.

In 1987 Mr and Mrs Farrer lived just outside Dartford, in Kent. Their home, bought with a loan from Mrs Farrer’s employers, was the second house they had bought, and on each occasion their solicitor had arranged the structural survey they obtained before buying their house. In 1987 she held a post as an employment manager, concerned with the management of personnel, for the First National Bank of Chicago, and she had decided to take early retirement the following year, when she would be 50 and would qualify for an attractive package of retirement benefits. She had worked for them for 13 years, and before that she had been employed for a similar length of time in a corporate tax department of Gulf Oil. Unless the judge rejected this part of the Farrers’ evidence - and there is no sign of this in his judgment - it was Mrs Farrer who managed the couple’s business and tax affairs. Her husband was unable to read, although he could recognise numbers. He was understandably shy about disclosing his inability to read, and there is no evidence that their solicitor ever knew that he could not read. Mrs Farrer used to write out his work sheets for him at home in the evenings.

Mr Farrer was then aged 61. He was due to be made redundant from a job he held as a general electrician and maintenance manager in a branch of Woolworth’s at Croydon. He had always worked as an electrician, although he had no qualifications as such, and he also had a lot of experience in practical matters connected with the building trade, such as carpentry, brickwork, painting and so on.

In about 1985 the Farrers had bought a derelict barn called the Old Saw Mill in Prixford, near Barnstaple, for about £25,000. Their evidence conflicted as to whether they had a survey before purchasing it, and in the event they had to pull most of it down before they were able to have it rebuilt as their retirement home. It was made habitable by July 1986, and from then onwards they visited this property on their occasional trips to Devon, although they did not actually move their furniture down there and make it their home until 1st August 1988 after Mrs Farrer retired from her job. They arranged a loan from Midland Bank for the building works there which they paid off when they received the funds from the sale of their home in Kent. Their original intention was to turn this property into a holiday home for Mrs Farrer’s parents, but this idea was abandoned when Mrs Farrer’s father died.

In 1987 Mr Farrer started a two-man business with his nephew in the field of computerised control systems, and he put some of his money into this business, which eventually collapsed because some of the clients did not pay their bills. The Farrers’ idea of investing in a joint business with the two other family couples seems to have evolved during the early months of 1987. At that time Mrs Farrer’s sister Kathleen Jackson and her husband were looking for a modern bungalow as their retirement home in Devon, and her brother Charles Jordan and his wife were looking for an old thatched cottage in the same area. Mrs Jordan was a 50-year-old social worker employed by the Havering Council to help with their meals on wheels service, and her husband was retiring in 1987 after 32 years as a printing worker in the newspaper industry: he had a job fixed up for himself in Devon when he retired, and they had put their home in Rainham on the market. Mrs Jordan told the judge that she could not understand the only letter the solicitor ever wrote to her in connection with the joint purchase and she said she was not much up on paperwork. Although the judge made no findings it is reasonable to assume that he was satisfied that of the four people eventually involved in the purchase it was Mrs Farrer who had the business acumen.

All three couples were staying down in Devon together for the bank holiday weekend at the end of May 1987. The judge found that they were looking for a suitable property from which the three wives could run a holiday business together, and they had heard that a four-bedroomed property called Blakewell Court, which was quite close to Prixford, was about to come on the market. All six of them made an impromptu visit there on Saturday 23rd May, when they were shown round by the owners, Mr and Mrs Parker, and they were so impressed that Mr Farrer drove the three ladies back the following day when they offered the asking price of £132,000. They left a cheque for £1,000 as a deposit. The Parkers told them that they did bed and breakfasts, and that there was planning permission for the conversion of the garage into living accommodation. The judge found that the three couples liked the property from the start and they had noted that very little structural work needed doing. Mrs Jordan told the judge that their share would come partly from her savings and partly from the proceeds of the sale of their house, while Mrs Farrer’s share was to be derived from her savings and her pension entitlement.

The history of Blakewell Court was that in 1982 a Mr Mugleston and his family had bought a much larger area of land of which this property and its accompanying three acres of land was to form a sub-divided part. There was a farmhouse and a mill there, and the Muglestons invested money in a property development which enabled them to sell Blakewell Mill Farm as one plot, Blakewell Mill as a second plot and some converted farm buildings which they called Blakewell Court as a third plot. They retained a stable block, which had the potential for conversion into residential use, in their own ownership. Mr and Mrs Parker were the first separate owners of Blakewell Court when they bought this property from the Muglestons in 1986, but they had to put it on the market the following year because Mr Parker had had a heart attack and they were looking for a more manageable property than this large house in the depths of the Devon countryside.

The four difficulties which lie at the heart of this litigation all stem from acts done during the two years before the Parkers sold Blakewell Court. In summary, the Muglestons conveyed a strip of land where the Blakewell Court land meets the Blakewell Mill Farm land to the new owners of each of the neighbouring sub-divided plots. They installed a new sewage system under the front lawn of Blakewell Court for the shared use of not more than 17 people living in that house, in Blakewell Mill and in the stable block (if this was ever converted). A public footpath ran across the front lawn of Blakewell Court, and although there were discussions with the county council about a possible re-routing of this footpath, no official application for a diversion of the footpath had ever been made. Finally, the newly acquired planning permission for a conversion of the Blakewell Court garage to residential use limited any such use to dependent relatives of the owners of Blakewell Court. If the Plaintiffs’ acquisition of Blakewell Court had passed through the hands of a competent careful conveyancing solicitor who was not working under pressure of time they would have been told of the last three of these matters and would have been warned of the risks they ran in not having a survey such as would establish the true boundaries of their property. Their case at the trial was that they knew none of the last three matters and were expecting their solicitor to arrange a survey which would have told them the first. They said they would never have bought Blakewell Court if their solicitor had not been negligent in connection with all these four matters.

When the Farrers bought the Old Saw Mill they instructed a solicitor in London whose office was close to Mrs Farrer’s place of work, and the Jordans were using their own solicitor for the sale of their home. For the purchase of Blakewell Court the three couples wished to instruct a solicitor who would be independent in the sense that none of them had used him before. They therefore instructed a solicitor whose office was in the same building as Mr Farrer’s place of work, and the judge had to resolve an irreconcilable conflict of evidence about the relationship between this solicitor and Mr Farrer. Mr Farrer told the judge that the Defendants were selected because their office was in the Woolworth’s building in Croydon where he worked, and that he had been recommended by an acquaintance to use one of the partners in the firm. Mr Forrester, the solicitor who handled the Farrers’ affairs, told the judge on the other hand that he had first met Mr Farrer in the summer of 1982 when they took the lease of their new office premises and Mr Farrer had been asked to show them how the lift worked. After they moved in, Mr Farrer would come and attend to their needs when anything electrical (particularly the lift) needed attention, and Mr Forrester came to know him quite well. He was known in the firm as “Mike”, and Mr Forrester knew from him that he owned property in Devon before he was instructed in connection with the Blakewell Court purchase. Mr Beach, the firm’s senior partner, told the judge that he, too, had known Mr Farrer since the summer of 1982 and had seen him at their premises dozens of times. On these issues the judge preferred Mr Forrester’s evidence, although it is fair to say that this finding only formed a small part of the judge’s general conclusion that he found Mr Forrester, to a significant extent, a more convincing witness.

So far as the Blakewell Court purchase is concerned, the judge found that Mrs Farrer made a preliminary telephone call to the Defendants on 10th June when she spoke to Mr Forrester as the partner in charge of conveyancing and gave him brief details of the property they were to buy. On 12th June Mr Forrester instituted a local authority search. Ten days later he had a meeting with the Farrers and on the following day he had a meeting with the two other couples: it had proved impossible to find a day when they could all meet him together. The judge did not make an explicit finding on a disputed question as to whether Mr Farrer took any effective part in the meeting on 22nd June (his evidence was that he merely waited for his wife in the reception area). Nor did he make an explicit finding about the scope of the authority Mr and Mrs Jordan told him that they were willing to give Mr or Mrs Farrer in relation to instructing him on essential matters connected with the purchase. It was common ground that he advised them about the best arrangements for holding the freehold of the property under appropriate trusts and that they told him they intended to run a bed and breakfast business. He appears not to have appreciated that all three couples intended to live in separate homes nearby and to run this property as a joint business: he thought that they were all going to live in Blakewell Court together. It was also common ground that he was told to ask about the septic tank and that he was also told that a mortgage would not be needed. Mrs Jordan told the judge that she and her husband told Mr Forrester that he could use Mrs Farrer as a point of contact for messages, but that if anything important transpired they wished him to write to them, or to get in touch and arrange a meeting.

Following these two meetings Mr Forrester contacted the Parkers’ solicitor, who told him that he was under considerable pressure for his clients to exchange contracts very quickly on the purchase of their new property which they feared they might lose. He hoped to secure an option at a price to hold that contract for a period of about four or five weeks, and he told Mr Forrester that it was therefore imperative that his clients should be in a position to exchange contracts within that time limit. On 10th July Mr Forrester sent him Enquiries Before Contract and told him that he did not at this stage envisage any problems in relation to a later proposal to exchange contracts within five weeks of 2nd July. The results of the local authority search, dated 23rd July, and the responses to the Enquiries Before Contract, which were sent to Mr Forrester on 24th July, reached him at about the same time.

In the meantime the Farrers had had a fortnight’s holiday in Devon, during which they visited Blakewell Court again, and the Jacksons decided to drop out of the proposed venture after Mr Jackson’s sister died. The Farrers and the Jordans then decided they would proceed on their own, although they had not yet sold their own houses, obtaining the help of a mortgage loan of £90,000 to make up any shortfall in funding. A mortgage application form was signed by Mrs Farrer and Mrs Jordan on 25th July, and a local valuer produced a valuation report on the property for the mortgagees on 12th August. The Farrers told the judge that on their return from their Devon holiday Mr Farrer delivered to the solicitors’ office a note his wife had written, in which she had set down various points which they wished him to take up, but Mr Forrester denied all knowledge of this note, and he certainly did not initiate any new inquiries at that time.

The critical period, on which the result of the action depended, was the ensuing three-week period leading up to the exchange of contracts on 17th August. The only letter any of the clients ever received from Mr Forrester before contracts were exchanged was a two-page letter dated 10th July when he set out what had been discussed at their two meetings and how the matter was then proceeding. Mr Forrester’s attendance notes were exiguous in the extreme, and the judge had to resolve the disputed issues of fact from the impression the witnesses, and in particular Mr Forrester and Mr Farrer, made on him as they tried to recall what had happened eight years later, with what help he could glean from contemporary documents.

The only contemporary documents which related to this period are the following:

(1) A telephone attendance note dated 3rd August, showing that the Parkers’ solicitor wanted exchange of contracts that week.

(2) A note, dated 4th August, of a message from Mrs Farrer saying that the Parkers’ solicitors were pushing for an exchange on 7th or 10th August and that her husband wanted completion on 1st October or thereabouts (as they were completing their own sale on 30th September) and asking for instructions about the deposit. A telephone call to Mrs Farrer that evening was suggested.

(3) A note evidencing another call from the vendors’ solicitor on 5th August (“very urgent now”) and the need to ring Mrs Farrer and “Ring Mr Jordan urgently as well”.

(4) A copy letter dated 5th August from Mr Forrester sending a draft contract direct to the vendors for their signature and return to their own solicitor, following a discussion between the solicitors that day.

(5) Three notes between 6th and 10th August evidencing certain difficulties being experienced in effecting an early exchange, connected with a possible breakdown in a chain involved in the sale of the Farrers’ own house (“If by Thursday it looks as if it won’t happen then you will have to tell the other side it’s off”).

(6) A letter from Mr Parker’s solicitor dated 10th August with the news that they had secured an extension of time on their purchase, and requiring exchange of contracts on 14th August or at least 17th August if the matter was to proceed: this extension had been gained only on condition that the completion date remained at 3rd September, and a non-refundable deposit of £1,000 was at risk.

(7) A series of attendance notes on 17th August, showing the conversations which led to an exchange of contracts that day at a price of £132,000, with a deposit of only £8,550 (of which £1,000 had already been paid) paid to the Vendors’ solicitors as agents for the Vendors, and a completion date of 5th October.

At some stage during this period Mr Farrer took home the contract, without any explanatory letter, and returned it to Mr Forrester’s office bearing his wife’s and Mrs Jordan’s signatures. There was some evidence, as to which the judge made no findings, that Mr Forrester spoke to Mrs Farrer direct on the question of making further inquiries - this very vague evidence was not supported in the pleadings - and that Mrs Jordan tried but failed to contact him on the telephone so that he could explain to her what was happening. Mr Forrester certainly did not invite his clients to visit him again to explain the position before contracts were exchanged. At one stage he told the judge that he would have gone through everything with them thoroughly when the mortgage offer came in. In fact this did not happen, and in any event they were already committed to the purchase before the mortgage offer ever arrived.

The notes on 17th August were compiled by Mr Smith, who was standing in for Mr Forrester, who was apparently out of the office that day. They show that on that day only the Jordans’ sale was said to be certain (with completion on 1st October), although contracts had not yet been exchanged, and a mortgage offer had not yet been received. Mr Smith recorded that he explained to his clients at length the risks they would be running, but he was nevertheless instructed to go ahead if he could negotiate these terms, which understandably came as a disappointment to the Parkers who were hoping for a much earlier completion (or at any rate the willingness of the Farrers and the Jordans to recompense them for the £1,000 they would be losing if completion was delayed).

Although the judge heard evidence from everyone apart from Mr Jordan and Mr Forrester’s secretary (who were both ill) on the Plaintiffs’ and Defendants’ sides who was involved in this saga he made very few findings about it, except to reject Mrs Farrer’s evidence that Mr Smith had deliberately falsified these attendance notes. He also made the very general observation that he preferred Mr Forrester’s evidence to that of Mr and Mrs Farrer and Mrs Jordan where they conflicted as to essential matters. He concentrated in particular, however, on the exchanges between Mr Forrester and Mr Farrer which led to the Plaintiffs being willing to exchange contracts without making further inquiries or receiving clear written advice about the matters at the centre of the present litigation.

Mr Farrer’s evidence was that after the meeting on 22nd June he delivered envelopes from his wife at the reception desk in the Defendants’ office on three occasions and that Mr Forrester had approached him once in Woolworth’s and given him a packet for delivery to his wife, and that this was all the contact they had until very much later when they came into direct contact in connection with the sale of their home in Kent which Mr Forrester was handling. He believed that Mr Forrester was confusing this later set of dealings with the Blakewell Court dealings, in which his contacts with Mr Forrester were very limited.

Mr Forrester, on the other hand said that during what the judge called “the relevant period” Mr Farrer came into his office on what seemed like a daily basis. He would by-pass reception and would ask and be given copies of documents, which included copies of the vendors’ responses to the Enquiries Before Contract, to which was attached a photostat plan showing, not very distinctly, the present route of the footpath and of “a new footpath round river”. Mr Forrester said Mr Farrer came in so frequently that he devised a system of switching his phone to “divert” in order to warn the staff that Mr Farrer was with him. It was during such visits, Mr Forrester said, that Mr Farrer instructed him that there was no need to make any further inquiries about the line of the footpath; no need to make any further inquiries about the arrangements relating to the sewage system; and no need to trouble about the restriction in the use of any residential conversion for the garage, since they had dropped the idea of a bed and breakfast business and were thinking of selling cream teas, or possibly building log cabins in the grounds for fishermen instead. As we have said, the judge generally preferred Mr Forrester’s to Mr Farrer’s whenever they were in conflict. We will now turn to discuss in greater detail the four matters which gave rise to all the trouble.

One of the problems that had to be tackled when the property was split up into separate ownership was that it was bisected by a public footpath. This footpath ran south westwards from the main road, passing between the farm house and the mill and in front of the buildings that became Blakewell Court. It then went through the orchard to a small wooded bridge across a tributary of the stream. The official line of this footpath ran, in effect, across the front lawn of Blakewell Court at all material times until December 1991, long after the incidents in issue in this action occurred.

In 1986 a diversion of this footpath to a route running behind Blakewell Court was being seriously considered, but this idea was eventually turned down because it passed over rough property and included a steep rocky climb.

The judge found that in September 1986 the new owner of Blakewell Court, Mr Parker, suggested a diversion of this footpath along the river bank, and site visits were paid by officers of the county council in the autumn of 1986 and in May 1987. Mr Parker was advised that until an official diversion was made he would have to rely on the goodwill of walkers to use this unofficial diversion. No official application was made at that time because there was a dispute between Mr Parker and Mr Mugleston, his predecessor, as to who should pay the local authority’s costs of up to £300.

The judge had to decide what, if anything, the Plaintiffs knew about this footpath and its route when they contracted to buy Blakewell Court in mid-August 1987. The following contemporaneous documents touched on the issue:

(1) Two of the Enquiries Before Contract and their responses:

(a) In answer to Enquiry 5B (“Is any such easement enjoyed or claimed over the property by anyone else?”) the vendors’ solicitors replied: “There is a public footpath across the property of which the purchasers are aware but which may be diverted.”

(b) In answer to Additional Enquiry 8 (“We understand that the Vendors are of the firm opinion that the curtilage of the property extends to the distal edge of the adjoining river/stream and notwithstanding their erection of a fence on the opposite bank. The file plan would appear to contradict such an opinion. Your full comments would be appreciated”) the vendors’ solicitors replied “It seems from the 1982 Conveyance ... that the Land Registry filed plan is correct.”

These Enquiries were raised on 10th July 1987 and sent back on 24th July 1987.

(2) An undated manuscript drawing of the property, including the house known as Blakewell Court and the curve of the river, was found by the judge to have been made by Mr Forrester at a meeting with Mr and Mrs Farrer on about 22nd June 1987. A line along the Blakewell Court side of the river has the legend attached to it “New Boundary Fence? To contain fishermen and strollers.”

(3) An attendance note dated 11th January 1988 of a meeting between Mr Farrer and Mr Forrester after the difficulty over the footpath had surfaced records Mr Farrer as saying:

“... that on his inspection of the property there were notices indicating that the public should use the new route of the footpath together with a four foot fence on the inside of the curtilage to the property. Further there are three 8 foot posts, two of which Mr Parker specifically showed Mike Farrer and these carried notices directing the public to use the new footpath.”

Features of the new arrangements are then set out at greater length in the rest of this attendance note.

So far as the oral evidence is concerned, Mr and Mrs Farrer and Mrs Jordan all told the judge that there was no sign of a footpath or of a fence along the river bank when they visited the property in May. They saw fencing in that area, partially erected, when they visited in early September, and Mr Hopkins, who is a local district councillor, told the judge he had helped Mr Parker erect this fence in the first week of August. The judge, however, preferred Mr Forrester’s evidence that he had drawn the plan, with its reference to the fence, on 22nd June and that he derived the information which led him to raise Additional Enquiry 8 from what he was told by Mr and Mrs Farrer when he met them that day. The judge interpreted the expression “the erection of a fence on the opposite bank” as meaning a fence on the bank opposite to “the distal edge of the river” which was being suggested as the boundary.

Among the considerations which led him to this conclusion was the fact that he interpreted a little diagram in the corner of the plan as Mr Forrester’s way of explaining to his clients how the property could be held on a three-way trust, with appropriate arrangements for the survivor if one of the spouses died. He believed that a reference in a parish council minute of 9th September 1986 to council officers walking along the diversion “around the property of Mr Parker at Blakewell Mill” meant that they walked along the side of the stream, since a witness had told him that it was almost impossible to get round the back of the property to use the route Mr Mugleston originally proposed.

The judge was also influenced by Mrs Farrer’s evidence that when she saw the new fence being erected, she told Mr Parker that he was not allowed to have barbed wire along a public footpath when she asked him what he was doing. For all these reasons the judge therefore rejected the evidence given by Mr and Mrs Farrer, Mr Jordan and Mr Hopkins and held that when the plaintiffs bought the property they knew that there was a footpath running along the river bank that was used by the public. They did not know that the official footpath ran in front of the house and would need to be the subject of an application for diversion to the route along the stream.

In the 1940s a septic tank (to be described as ‘the old cess pit’) was installed on the river side of the farm buildings which were to become known as Blakewell Court, and about 25 yards away from them, in order to serve the needs of the farmhouse. Greater provision was needed when the properties were developed and split off in the mid-1980s, and at that time Mr Mugleston installed an “Entec” sewage treatment system. The tank for this system was placed in the ground near the old cess pit, and a compressor, used in connection with this system, was installed in the garage annexe to Blakewell Court. Under the planning permission which was granted for the development allowance was made for a system which could accommodate use by 25 persons, although the system actually installed was designed for use by 17. This system was designed to serve Blakewell Court, Blakewell Mill and the as yet unconverted building called the Old Stable Block, and the right to use it was reserved to the plaintiffs’ neighbours and thus formed an incumbrance on the plaintiffs’ land. Similarly the old cess pit was reserved for the use of Blakewell Mill Farm.

The conveyance from the Muglestons to the Parkers, which Mr Forrester received long before contracts were exchanged, reserved to the Muglestons and their successors in title “the right to connect with the drainage ... under the property subject to paying a fair proportion of the costs of maintenance repair and upkeep”. On 10th July Mr Forrester mentioned the septic tank in a letter he wrote to the plaintiffs, and told them he had made appropriate enquiries.

The answers to Enquiries Before Contract revealed the following information:

(1) To Enquiry 26(D), relating to annual or periodic charges, came the answer “Maintenance agreement on septic tank equipment. The charge is paid in equal parts for 3 properties (also the running costs of the electric).”

(2) To Additional Enquiries 4(iv) and 5, the answers came that the Vendors had not yet incurred any costs in connection with the maintenance and/or repair of the septic tank, and did not yet know the costs and frequency of the emptying of it.

So far as the oral evidence is concerned, Mrs Farrer told the judge that she had asked Mr Forrester to investigate the question of the septic tank after the Parkers told her the property had one. When the Farrers revisited the property on 11th and 12th July they asked the Parkers about the drainage because they had noticed seven manhole covers in front of the house. Mr Parker told them that they had added a shower and a downstairs toilet, which constituted the reason for that number, and he showed them the electric motor in the garage. He did not tell them the system was shared with the neighbours.

Mr Forrester told the judge that when he received the answer to the Enquiries Before Contract (on 27th July 1987) he mentioned these to Mr Farrer on a Friday (he thought) and Mr Farrer told him the following Monday that there was no problem and that he was not to bother about it as it would delay things and add to the cost of the purchase. Mr Forrester thought that Mr Farrer had been down to the property at the weekend to check this out. He also said that he handed copies of the replies to the Enquiries Before Contract to Mr Farrer on two occasions. All this evidence was disputed by the Plaintiffs, and Mrs Farrer made it plain that there was no occasion when they went down to Devon for the weekend and visited the property.

The Plaintiffs’ complaint under this head is that they were given no warning at all that they would not have sole use of their sewage system. The defence is that Mr Forrester drew Mr Farrer’s attention to potential problems regarding the septic tank, but Mr Farrer told him not to concern himself about it further.

The third dispute relates to a restriction on the use of a proposed garage annexe. When planning permission was granted for a possible residential conversion in October 1986 the use of this proposed annexe was restricted to use as a dependent relative annexe ancillary to Blakewell Court. It was not in issue that Mr Forrester learned about this restriction both from the local authority search and from the replies to the Enquiries Before Contract. His evidence was that he mentioned the restriction to Mr Farrer, who told him that they knew about it, but that it did not matter since they had changed their plans and no longer intended to use the property for a bed and breakfast business.

The Plaintiffs’ case was that their ability to develop the property for their proposed business purposes, of which Mr Forrester was aware, was restricted by this restriction on the planning permission for the garage conversion which they were unable to lift when they sought to proceed with this plan. The Defendants’ case was that Mr Farrer was told about the restriction and told him it did not matter. No mention was made of this problem in the Plaintiffs’ initial correspondence about their difficulties in early 1988 (which included a complaint to the Solicitors’ Complaints Bureau in April 1988), although Mrs Farrer told the judge that she first heard about the restriction at a meeting with Mr Forrester in February 1988.

The final dispute relates to the boundary between the Blakewell Court and Blakewell Mill Farm properties. Before the properties were split up, a track led up to the farm complex from a bridge over the river, and the plan filed at the Land Registry when the Mugleston-Parker conveyance was registered shows this strip of track forming part of the Blakewell Court property.

When the Plaintiffs first visited Blakewell Court in May 1987, this strip of land had been incorporated into the garden of Blakewell Mill Farm, and the boundary between the properties on the ground appeared to be an earth bank running along the Blakewell Court side of the former track. In due course the owner of Blakewell Mill Farm was able to show that the track was included in her registered title, too: in other words, the original owner, Mr Mugleston, had conveyed the same strip of land to the new owner of each of the now divided properties. When the Plaintiffs discovered in the summer of 1988 that this strip of land formed part of their registered title a very unhappy boundary dispute ensued, which was eventually resolved when the register was rectified and their neighbour was shown as the sole registered owner of the disputed strip.

In this part of their claim the Plaintiffs blamed the Defendants for the situation in which they bought their property without receiving advice from a surveyor instructed to check the site boundaries.

It was not in dispute that Mrs Farrer discussed with Mr Forrester the desirability of obtaining an informal valuation of the property from a local estate agent. In his note of their initial telephone call on 10th June Mr Forrester noted “Surveyor - local lad - valuation initially”. Two days later his secretary noted a telephone discussion she had with a valuer in Barnstaple who said that he was too busy but who recommended an Ilfracombe valuer to do this job. Mr Forrester thought that Mrs Farrer had instructed this valuer and that she had obtained a verbal valuation from him, with which she was quite happy, although he said he pressed her to get his valuation in writing. She told the judge that during their holiday in Devon in July she had in fact asked another Ilfracombe valuer to look at the property and to give her his views on the price they were proposing to pay, and she was satisfied with this advice when she received it. What was in dispute in this part of the case was the reason why no private survey was ever commissioned.

Mrs Farrer’s evidence was that at their meeting on 22nd June Mr Forrester told her that he would take care of everything and that it might be necessary for a local surveyor and a local solicitor to be instructed. Her case was that she expected him to make these arrangements, and that she told him in a telephone conversation that she was keen to hear the result. Mr Forrester, on the other hand, told the judge that his usual practice was to recommend to his clients that they should instruct a local surveyor to carry out a full structural survey, and that he would have made this recommendation to the Farrers in accordance with this practice. In his experience 70% of his clients, despite receiving this advice, relied on the mortgage valuation survey and were willing to exchange contracts without having commissioned their own survey.

The judge found that the Plaintiffs were not in fact expecting Mr Forrester to arrange a structural survey for them. He said that Mrs Farrer was a person who was meticulous in her dealings, and that she had commissioned her own private survey when she had bought her two previous houses. He said it was inconceivable that she would have proceeded with the purchase when she was still awaiting the results of a survey she was expecting to take place. He was satisfied that the Plaintiffs had decided to go ahead with their purchase in the knowledge that they were dispensing with the precaution of obtaining their own private survey. The building had been recently converted, and he said the Plaintiffs told him they noted that it appeared to be structurally sound, although they criticised its decorative state. He added that their possible concerns over the price had been allayed by the unofficial valuation they had commissioned.

The judge also said that the Plaintiffs never thought that they were buying the disputed strip of land, which had all the appearances of belonging to the owners of Blakewell Mill Farm who had made it part of their garden, and that all they could have done, if the mistake in the land certificate had come to light before the conveyance, would have been to attempt to beat down the purchase price, with the strong probability that they would have got nowhere in this attempt.

On this final issue, therefore, the judge’s adverse finding did not depend on the extent, if any, to which Mrs Farrer (and, indeed, the Jordans) were bound by the instructions the judge held that Mr Farrer had given Mr Forrester at their meetings in Mr Forrester’s office. On the first three issues, however, the nature and extent of Mr Farrer’s authority to bind the other three are central to our decision on this appeal.

On behalf of the appellant Mr Robert Levy, whilst taking issue with the judge's findings of fact, has argued that Mrs Farrer is entitled to succeed even if they are assumed to be correct. No ground for assailing them has been advanced. The judge had the benefit of hearing the witnesses and observing their demeanour, which is denied to us. Since his findings of fact depend mainly on which witnesses he preferred, this Court cannot interfere with them.

Mr Levy contended that a solicitor in a conveyancing transaction cannot discharge his contractual duties towards one or more of several clients by communicating with only one client without ensuring that the other clients are fully apprised of the situation. Mr Levy also submitted that when accepting instructions from a lay client not to investigate an issue which could result in serious problems for the client, the solicitor should (a) enquire into the extent of the client's knowledge of the issue and (b) warn the client of the danger in giving such instructions.

In our judgment this appeal is best resolved by determining (1) the nature and extent of a conveyancing solicitor’s duty to give information to and to receive instructions from several clients, and (2) the means by which the judge decided that that duty was in fact fulfilled in this case by Mr Forrester in relation to each of his four clients. It is convenient to consider first the question of fact.

After a full and careful survey of the evidence the judge gave at page 20 of the transcript of his judgment his conclusion that -

".... Mr Forrester did bring to the plaintiffs' attention, through Mr Farrer, the potential problems relating to the footpath, the septic tank and the annexe, and he received from Mr Farrer instructions which relieved him of taking further action with regard to those problems."

That represented a summary of his individual findings about those matters.

At page 10 of the judgment the judge had found that -

".... when the plaintiffs contracted to purchase the property they knew that there was a footpath running along the river bank which was used by the public. They did not know that the official footpath ran in front of the house and would need to be the subject of an application for diversion to the route along the stream."

About the septic tank the judge said at page 12 of the judgment-

"Mr Forrester told me that following receipt of the replies to the preliminary enquiries he had concerns about there being a shared septic tank, and he mentioned these to Mr Farrer, as he recalled, on a Friday. The following Monday Mr Farrer told him that there was no problem and that he was not to bother about it because it would delay things and add to the cost of the purchase."

Similarly, at page 13 of the judgment the judge referred to the annexe, saying -

"Mr Forrester claimed to have mentioned the limitation to Mr Farrer who replied that they knew about it but had changed their plans concerning the bed and breakfast business."

The only point left indeterminate by those references to the solicitor’s contentions is the question whether the plaintiffs were aware that the footpath had been diverted. About this Mr Forrester had said at paragraph 13 of his witness statement -

"I believe however that the Plaintiffs assumed the position of the path as they found it, to be the true line and were reassured by the notices which were erected confirming the position. I suggested that we identify the exact position of the footpath and undertake further investigations. It would have been a relatively simple matter to do this. However further investigations were deemed an unnecessary expense and superfluous by the Plaintiffs bearing in mind the highly visual physical indications available on the ground."

Asked about this in cross-examination, Mr Forrester said at page 19B of the transcript -

"Mr Farrer was quite clear in his own mind that it had been diverted and did not want me to proceed."

At paragraph 15 of his witness statement Mr Forrester said -

"On two separate occasions between 27th July 1987 and 17th August 1987 I handed Mr Farrer, at his request, copies of the Replies to Enquiries before Contract which I had received from [the vendor’s solicitor] revealing the existence of the footpath over the property. .... During this time I expressed my anxieties to Mr Farrer and was repeatedly assured by him that no further investigation regarding the footpath was necessary, contrary to the evidence before me."

It follows from this analysis of his findings that the judge held in relation to the footpath, the septic tank and the annexe that relevant information about each was imparted only to Mr Farrer and that instructions to proceed without regard to potential problems were given by Mr Farrer alone. To the sufficiency of that means of communication we now turn.

In the reamended defence it was alleged that the instructions of Mr Farrer were given on his own behalf and on behalf of his wife and Mr and Mrs Jordan. This was put in issue by the reply. At the trial the issue of authority was overshadowed by the question of whether Mr Farrer had made the statements at all. On the question of authority the judge found that Mr Farrer was one of Mr Forrester’s clients and “therefore it was proper for Mr Forrester to communicate with him and to receive instructions from him”; in the alternative he would have found that Mr Farrer had authority to receive information and to give or pass on instructions, because that is what he did, with the knowledge and consent of Mrs Farrer and Mrs Jordan.

Counsel have been unable to find any authority to support the proposition that one of two or more clients of a solicitor in respect of the same transaction is entitled, without more, to receive information from and give instructions to the solicitor both on his own behalf and on behalf of the other clients. The dearth of authority is not surprising because the proposition is, in our view, contrary to basic principle. A solicitor’s contract of retainer is with each and every client; the duties of the solicitor are owed and must be discharged to each of them. It must follow that a solicitor is entitled to communicate with and take instructions from only one of several clients if he has the authority of the other clients so to do. Accordingly the first of the two alternatives to which the judge referred is no different from the second; the sole question is whether Mr and Mrs Jordan and Mrs Farrer gave authority to Mr Farrer to receive information from and give instructions to Mr Forrester on their behalf as well as his own.

From the point of view of Mr Forrester the authority might be actual, whether express or implied, or apparent; but in each case the authority must emanate from the alleged principals, not the alleged agent Mr Farrer. It was common ground that initially it was agreed by all four clients and Mr Forrester that the channel of communication was to be Mrs, not Mr, Farrer. This is not surprising given the problems of communicating with six or, later, four clients and the business ability and experience of Mrs Farrer compared with that of the others. But the judge held that this arrangement was overtaken by events and departed from with the knowledge and consent of all parties because of the ease of communication between Mr Farrer and Mr Forrester.

In seeking to support this conclusion counsel for the solicitors relied on authority alleged to be derived from the fact that Mr Farrer was the means of communication of documents between Mr Forrester and his wife, evidence of telephone conversations between Mr Forrester and Mrs Farrer, the fact that Mrs Jordan discussed the matter with Mrs Farrer and the family relationship between the clients. We will consider each in turn.

The documents in question were the answers to the enquiries before contract and the draft contract. Mrs Farrer denied receiving the answers to the enquiries before contract. She received the draft contract for she signed it. The use of Mr Farrer in preference to any other means of transmission of documents to Mrs Farrer cannot, in our view, give rise to the inference which the judge drew. The very fact that Mr Forrester was seeking to bring the documents to the attention of Mrs Farrer is inconsistent with a conclusion that Mr Farrer was authorised to receive information and give instructions on behalf of all of them. Moreover the transmission of the contract was too late; the further investigation of the position regarding the footpath, the septic tank and the planning condition affecting the use of the annexe was required and the instructions from Mr Farrer were received well before the contract was dispatched for signature.

The evidence regarding telephone conversations between Mr Forrester and Mrs Farrer was accepted to be vague. What it amounted to was that when on the few occasions Mr Forrester managed to speak to Mrs Farrer it was clear to him that Mr and Mrs Farrer had discussed between themselves the matter which was causing concern to Mr Forrester. This evidence was wholly unspecific and unsupported by any attendance notes. But in any event the fact, if it be one, that two clients have discussed between themselves a problem arising in the transaction in which they are both involved does not establish that one of them has the authority to give instructions in relation to that matter to their mutual solicitor on behalf of the other as well as himself.

The third matter was the evidence of Mrs Jordan that Mrs Farrer had discussed everything with her. But Mrs Jordan denied all knowledge of the matters on which Mr Farrer purported to give instructions. Whilst the judge preferred the account of Mr Forrester to that of Mrs Jordan and Mr and Mrs Farrer he did not say that he found Mrs Jordan or Mrs Farrer to be unreliable witnesses. Thus there is no reason not to accept the evidence of Mrs Jordan concerning matters of which Mr Forrester could not know. If Mrs Jordan did not know of the matters of which complaint was later made then they could not have been matters discussed by her with Mrs Farrer; even if they had been it is not possible from the fact of such discussion to infer that the requisite authority was conferred on Mr Farrer by either Mrs Farrer or Mrs Jordan.

Counsel laid great stress on the relationship between the four clients and the communal use to which the property was to be put. No doubt such circumstances may give rise to less formality than would be normal in a more commercial relationship. But such considerations cannot remove the need for one client to have the authority of the others if the solicitor is to be entitled to act on the instructions of the former alone.

In our view there was no evidence to justify a finding that Mr Farrer had the actual authority, whether express or implied, of either his wife or of Mr and Mrs Jordan to receive information from or to give instructions to Mr Forrester on their behalf as well as his own. The judge’s conclusion that Mr Farrer gave instructions to Mr Forrester with the knowledge and consent of Mrs Farrer and of Mrs Jordan is contrary to the evidence of Mr and Mrs Farrer and of Mrs Jordan and outside the knowledge of Mr Forrester. Further, for the reasons already given, it is not, in our view, a permissible inference from the matters on which counsel for the solicitors relied.

Further, in our view, there was no evidence to justify a finding that Mr Farrer had apparent authority to give instructions to Mr Forrester. To establish such authority the actions of Mr Farrer as the alleged agent are irrelevant. Armagas Ltd v Mundogas S.A. [1986] AC 717, 783. For the reasons already given we see nothing in the actions of Mrs Farrer or of Mr and Mrs Jordan capable of amounting to the requisite representation that Mr Farrer had the authority for which Mr Forrester contends. Further, as Mrs Farrer was herself the agent of the other three clients, constituted by the original arrangement to which we have referred, it would be necessary, in relation to the claim by Mrs Jordan, to establish that she had authority to delegate her responsibilities to Mr Farrer. We do not think that in the circumstances of this case such authority can be implied on any of the recognised bases set out in Bowstead & Reynolds on Agency 16th Edition paras 5-001 and 5-005. Mrs Jordan was not an appellant and this point was not argued so that further elaboration is unnecessary.

The consequence, in our view, is that Mr Forrester was not instructed by Mrs Farrer or Mrs Jordan to refrain from any further investigation of the position concerning the footpath, the septic tank or the planning condition concerning the use of the annexe. It follows, and was not disputed, that it was the duty of Mr Forrester to carry out such investigations, to report the outcome to all his clients and to advise them as to the consequences. He failed to do so and is liable accordingly. In those circumstances this appeal must be allowed.

It is of course a matter of concern when a person has been ill-served by his solicitor. In this case the solicitor’s default consisted first in his failure to obtain the authority of his clients in writing to deal with one of them without the need to refer to the others, and secondly, in a failure to record, preferably in letters to his clients, but in any event in attendance notes, the advice he gave and the instructions he received. It must be borne in mind that Mr Forrester seems to have been visited with tiresome frequency by Mr Farrer. He need not have put up with those visits. But so long as he suffered them to continue, he should have recorded what happened in course of them. In that way, subject to any objection taken at the time, what happened at the meetings between the two would have been rendered indisputable. He would have been protected himself, and it would have been impossible for doubts to arise afterwards about what had been said.

We will hear counsel as to the order which should now be made, but it may be of assistance to indicate the order which, subject to any further argument, we consider is required. In view of his conclusion the judge made no assessment of the damages sustained in consequence of the breach of duty. That task must now be performed by a judge of the Queen’s Bench Division to whom the matter should now be remitted. But his assessment is likely to be affected by whether he is assessing damages recoverable by Mrs Farrer alone, as one of two joint contractors, or by Mrs Farrer and Mrs Jordan together. Mrs Jordan did not appeal the order of the judge and is now well out of time for doing so. But if she sought leave to appeal out of time she might well succeed both on that application and a subsequent appeal for her case is at least as strong as that of Mrs Farrer. Obviously it would be convenient for such an application to be made before the judge of the Queen’s Bench Division embarks on the assessment of damages.

With regard to the other two clients of Mr Forrester, namely Mr Farrer and Mr Jordan, neither has sought to claim for breach of duty to them and both are now out of time, quite aside from the fact that on the judge’s findings Mr Farrer could have no claim. We must leave it to the judge hearing the assessment of damages whether in the circumstances, as proved to him, the damages recoverable by Mrs Farrer, and Mrs Jordan if she seeks to appeal and is successful, should be diminished and if so by how much on account of the beneficial interest in the property vested, or intended to be vested, in their husbands.

In summary the order we propose, subject to further argument, is

a) to allow the appeal of Mrs Farrer;

b) to direct her solicitors to send a copy of our judgment to Mrs Jordan so that she may consider whether to seek leave to appeal out of time;

c) if within 28 days Mrs Jordan applies for leave to appeal out of time that application is to be listed to be heard in open court with the appeal to follow if leave be granted;

d) to remit to an Official Referee the assessment of damages due to Mrs Farrer in the light of our judgment;

e) to stay such assessment for 28 days or until the hearing of the application, and if leave to appeal be granted, the appeal referred to in c).

ORDER: As above: appeal allowed with costs, to be taxed if not agreed; appellants' costs up to the last date for acceptance of the first payment in, the remaining costs to be reserved to the judge who deals with the assessment of damages; the hearing before the Official Referee to take place within nine months; the security to be paid out of court.