Specters Solicitors has recently settled a Professional Negligence claim on behalf of a client, who incurred losses due to the negligent drafting of a Lease, by their previous Solicitors.
Our client was a Landlord who owned a property, which had the ability to operate as a restaurant. Our client entered into negotiations with a prospective Tenant in order to agree a commercial Lease of the restaurant.
Following negotiations between the Landlord and prospective Tenant, the parties eventually came to agreement on the heads of term, which they intended to be drafted into a 20-year lease. The heads of term agreed were fairly standard market terms.
One of the terms specifically, was a rent review clause. This is a common term in long term commercial leases, as it allows the Landlord to review the rental price after an agreed period, to consider whether it is in-line with market value. This gives the Landlord ability to increase the rent at its discretion. Accordingly, the parties agreed that the rent review clause would be specified to allow a rent review every 5 years.
Our client instructed a local Solicitor in order to draft the Lease in accordance with the heads of terms agreed between the parties. The Solicitor prepared a draft Lease, and sent it to our client for review.
On consideration of the first draft, our client noticed that the draft Lease did not include the rent review clause.
As this clause was of particular interest to our client, he emailed his Solicitor and specifically requested for the rent review clause to be added, amongst various other amendments that he requested to be made to the draft Lease. The Solicitor acknowledged the email, and confirmed he would amend the Lease accordingly.
Our client’s Solicitor then sent the draft Lease to the Tenant’s Solicitor. The draft Lease was reviewed and amended by the Tenant’s Solicitor, in line with the Tenant’s instructions, and sent back to our client’s Solicitor. The Lease was then signed in counterpart by both parties.
Five years had passed when our client sought to utilise the rent review clause. Our client contacted the Tenant, to agree a rent review.
The Tenant initially agreed with this proposal, however half way through negotiations, the Tenant’s Solicitor noticed that the Lease did not include a rent review clause, and therefore the Landlord had no right to exercise it.
The rent review clause, which 5 years before our client had specifically requested more than once, had still been omitted from the Lease by their previous Solicitor.
The Tenant refused to agree a rent review, and our client was therefore limited to the initial rental price for the prospective future of the Lease. This caused him a loss of the opportunity to make significant increases to the rent, to match market changes for the remaining life of the Lease.
Our client considered that his previous Solicitor was negligent in failing to draft the Lease in accordance to his instructions, and against his best interests as a Landlord. Our client then contacted Specters, who have a specialised Professional Negligence team, to bring a claim against his former Solicitor.
We reviewed the case, and found that there were numerous errors in the drafting of the Lease. However, this was still a difficult case, due to the time that had passed since the drafting of the lease, and difficulties arising from lack of paperwork. Additionally, our client’s previous Solicitor and their Professional Indemnity Insurers had entered into liquidation which made the prospect of recovery of losses, all the more uncertain.
In order to further complicate matters, the Defendant attempted to argue that our client’s case was statute barred under the Limitation Act 1980, asserting that our client should have already made their claim for the negligence, which was unjust considering they only became aware of the failure to incorporate the term when the supposed 5 year expiry of the period had passed.
However, despite the difficulties that arose during representation of this case, Specters Solicitors successfully brought a claim on behalf of our client under the Financial Services Compensation Scheme, which is a body that provides compensation to parties affected by the collapse of an insurer, and subsequently, we were able to negotiate a five-figure settlement for our client.
We are delighted that justice has been achieved on behalf of our client, for the negligent service he had received from his previous solicitors so many years ago.