Professional Liability in Advising Others in the UK - Essay Example

9, January James Arthur The Managing Director Real E Consultant MacArthur Investments Inc Date: 9 January 2014 Dear Sir, This has references to the various issues raised by you as regards to your proposed investment in the property of Matilda Street owned by A1 Property Investments Ltd. I have summarised my opinion on the following issues as under: Professional liability in advising others in the UK is impacted by the following laws, namely Defective Premises Act, 1972, Health and Safety Works Act, 1974, Buildings Act, 1984, Land Charges Act 1925 of UK (LCA 1925), the Law of Property Act, 1925, Housing Act 1985, RICS (2006), RICS (2007), Contracts (Rights of Third Parties) Act 1999 Privity of Contract rule, Property Misdescriptions Act 1991 and Misrepresentation Act 1967. 1.Professional Negligence: In Blemain case, it was held that where a professional employing his decision and skill fails to accomplish his obligations as per the standards anticipated from him, then he will be accountable for negligence. Under English Law, a valuer cannot be found to be fault for deriving an outcome which does not acknowledge some magnitude of error as held in Friedlander Ltd case. If a professional valuation is subjective in nature but deviation of more than ten percent to fifteen percent will be suggesting that there has been professional negligence as held in the above Friedlander case. Despite the fact that a valuation figure has been arrived at by an incorrect approach, or in the application of the approach, if, nevertheless, an acknowledgeable value has been arrived at, there may not be any adequate corroboration of actionable negligence since, in actual fact, no loss might have been borne on footing upon the decision held in Mount Banking Corp case. In Kenney case , an estate agent was held accountable for overstating negligently the value of a client’s home. In Computstaff Ltd case, it was held that an estate agent was held liable for understating a property value. In Carreras Ltd case, an estate agent was held for exaggerating the aggregate floor area of the premise in question. In GP & P Ltd case, it was viewed that an agent of client was under no duty to make a personal verification of the planning register to evaluate the permitted usage of the property in question (Murdock 55). It is to be cautioned that coveyance deed executed between the Most Noble Bernard Marmatluke Duke of Norfolk –( seller) and the buyer the Public Trustee and Henry Hardwick & Sons Limited on 31st July 1867 states that Matilda property was jointly owned by a public trust and Henry Harwick. It is unclear how land held by a public trustee jointly with Henry Hardwic & Sons Ltd can be later transferred by Henry Hardwick & Sons Ltd alone to Majesty Pony & Trap Services Ltd (buyer) on18th March 1911. In 1911, conveyance was made to Majesty Pony without the consent or authorisation of the Public trustee. Thus , a public trust is one, which owns inviolable privileges in some lands and in spite of the title ownership and that the government keeps some rights in such lands in trust for the public. Hence, transfer of title of land of Matilda property subsequently itself is void. As such, it is suggested to take appropriate legal opinion in this aspect before buying the Matilda property. 1.2 Professional’s personal Liability A personal duty of care is owed by a professionally qualified person who is tendering advice in his field of expertise to the person who relied on his advice as held in Merret case. The builder and the designer could be held accountable under professional negligence for employing construction materials, which proved to be not suitable or harmful to health under the s1 of the Defective Premises Act, 1972. Further, under s6 of the Health and Safety Works Act, 1974, there is duty imposed on manufacture of a product to make sure its safety for its usage at any work. Under s12 of the Buildings Act, 1984, quality construction materials should be used otherwise, the builder can be sued for any damages for any defective building materials used in the construction. In Urban Regeneration Agency case , the defendant was levied a whooping damages of ?18.5 m losses sustained by Regeneration Agency of UK for not carrying out and understanding the UK government’s cleanup program, and failed to verify and comprehend the land usage pattern of the site. 1.3 Negligent Misstatement A plaintiff may sue a defendant for giving a negligent but an honest misrepresentation even though there was no direct contract between the advisor and the advisee or there exists any fiduciary relationship between the parties. In such scenarios, the law will impose a duty of care where advisee relied on the expert knowledge and special skill and further, there is an expectation from the advisee that the advisor should exert due care. The advisor should be aware that he has been approached because of his skill and expertise on the subject. In Hedley case, the respondent was not held accountable as there was an express disclaimer of their accountability. This case demonstrated the doctrine of negligent but defendant’s disclaimer saved him from the claim (Harpwood 444). The House of Lords, in Donoghue case, held that defendant, as a manufacturer, was liable for the supply of defective product to the plaintiff, despite the fact that there was no existence of direct contract relationship between the manufacturer and the appellant. The main foundation of the case is that the manufacturer owed a duty of care to the consumer to pay special attention that there was no harmful object in his product, and as he had infringed this duty of care, and as a result, the plaintiff suffered a lot. (Harpwood 20). In Anns case, the plaintiff sued the defendant for letting out flats built with weaker foundation and claimed that the Council’s inspector failed to inspect the flat’s foundation properly or done with the negligent. The House of Lords held that the local authority owed a duty of care to the plaintiff (Harpwood 20). Answer to Question 2 2. Buying a Land with an existing mortgage According to the Land Charges Act 1925 of UK (LCA 1925), any encumbrance in land which affected its value has to be registered. Thus, the registration of a charge with the Land Registry will inform the buyer about the existence of an encumbrance in a land and thus, safeguarding the interests of third-parties by advancing notices. Under section 198(1) of the LPA 1925, the registration of any charge or mortgage will amount to actual notice of the encumbrance, and the buyer will unconsciously be obliged by such charges. In this case, the land is subject to a legal mortgage made between Barclays Bank Plc and A1 Property Investments Ltd. This is the clear case of actual notice of interest of Barclays Bank Plc. As the interest of Barclays Bank Plc is already registered hence, it is binding on the A1 Property Investment Ltd and also on MacArthur Investments Inc, Hence , MacArthur Investment Inc should either make full settlement of dues to Barclays Bank Plc out of consideration payable to A1 Property Investment Ltd and should see that charges are cancelled before the purchase of Matilda Street Property or else A1 Property should pay back the loan borrowed from Barclays Bank Plc and cancel the charges and then only, it should go for the registration of Matilda Street property to MacArthur Investment Inc. Practical solution suggested If the mortgage is ignored or not taken into consideration, then, MacArthur Investments Inc will be liable to repay the mortgage to the Barclays bank. Hence, it is advised that mortgage is repaid with the help of the sale proceeds before the registration of the property (Bouckaert 41). 2.1 Restrictive Covenants A land registry record or a title deed will include information as regards to the third party interests which would be impacting a property. The third party interest on all land will include restrictions, easements, mortgages, notices and covenants. A covenant can be explained as a condition or a rule concerning what must or must not be done or what can or cannot be done on the land which is impacted or saddened with such a condition or covenant. These covenants or conditions will be entered in the Charges Register by the Land Registry in UK. Covenants are imposed by the seller of the land when it is disposed off and in the majority of cases, the owner normally owns some part of land immediately in the vicinity and wants to retain some control for the concern of the other land. A covenant may be either negative or positive and a negative condition is frequently cited as a restrictive condition or covenant. Positive covenants are commitment to carry out some actions like maintaining a wall or maintaining a road. On the other hand, a negative covenant is one, which restricts the use of property or land for certain purposes, for example, not to use for sale of liquors or not to use as a lodging house, etc. Covenants may be described in the sale document itself or can be registered as a separate deed namely through a deed of covenant. A covenant is naturally a contract between the covenantor and a covenantee which establishes a privity of contract between original buyer and seller when a covenant is created along with sale or purchase of a property or land. This means that the binding may not benefit the future owners of the property. Under the common law or equity, covenants will run with the property even after sale and such benefit or burden will run for ever and this will be footing upon the fact, whether a covenant is either positive or negative. A restrictive covenant is always entered in the title deeds, and they will be binding the property or land and the parties to the contract personally, and hence it is known as “runs with the land.” The covenant should touch and concern the land of the covenantee and should offer the benefit to all the present and future owners. The property or land should be owned by the original covenantee when the covenant was made. The original parties should have intention that the covenant should continue with the covenantee. Section 78(1) of the Law of Property Act 1925 states that covenantor should covenants with the covenantee that the intended benefit should continue with the successors of title to the property. In Austerberry case, it was held that the future owners of the saddened land will not be held accountable and however, the original owner will be bound even after he has departed the property. A court can issue an injunction to prevent the abuse of covenant or levy damages for any breach. An aggrieved person who has been impacted by a restrictive covenant can get an insurance cover which is called as “ indemnity insurance “ as regards to any endeavour to implement the covenant, or he can apply for a declaration from the Land Tribunal that the covenant is not valid. Under section 86 of the LPA 1925, one can approach the Tribunal to relax or waive the covenants that seem to be unreasonable or out of date. The tribunal may modify or annul a covenant if it is satisfied that Due to changes in the nature of the property, the restriction seems to be out of date or obsolete. If such covenants limit the reasonable use of the land for the private or public purposes without any practical advantages to the other party The beneficiary has consented to the waiver of such a covenant The planned modification or discharge will not impact the individuals entitled to derive advantage of such a covenant. As regards to restrictive covenant in the problem, the buyer hereby covenants with the seller for the benefit of the seller adjoining land and every part thereof that the buyer shall not cause or permit the land to be used as a cutler’s mill, a lodging house, an action house, for the sale of liquor or any other immoral purposes or any other manner, which may be or become nuisance or annoyance to the vendor or the owner or occupier of any adjoining property owner or any part thereof. Practical solution suggested If MacArthur Investments Inc wants to remove the above restrictive covenants, it is suggested that it can apply to the Tribunal to annul the above mentioned outdated covenants under section 86 of the LPA 1925 (Whincup 91). However , this is not only time consuming job but also costly. 2.2 Easement Rights for Sewer or Drainage Lines Easement rights for sewer and drainage granted by Majestic Tours Ltd (Owner) to Fluorescent Lighting Company Lumen Ltd (Grantee). An easement right is a privilege offering advantage to one parcel of land, which is called dominant tenement that allows the owner or the user of that land to carryout particular actions over an adjacent land known as servient tenement. Thus, commonly used easement is one that permits the underground services like drainage, sewer or water passages. Through an express grant, an easement can be created through a deed of grant. An easement right can be established through the necessity due to the situation of property over a track, road or path if the route is the only way of approach between the parcel of the land and the public way. If anyone performs an act continuously without the obstruction of the landowner for a period of atleast 20 years, then, he can attain easement right by prescription. As per section 62(1) of LPA, 1925, “a conveyance of land shall be construed to include the land, including all easements , privileges ,liberties , advantages , rights whatever appertaining or reputed to appertain to the land , or any part thereof ….” If any performs an act continuously without the obstruction of the landowner for a period of atleast 20 years, then, he can attain easement right by prescription or implied easements. Such prescription easement need not have to be registered to have effect at law. As per r.73A, LRA 2002, a prescriptive or implied easement can be registered as auxiliary to the registered estate in the governing land. An implied easement can be made through an application under r.73A of LRA 2003. Practical solution suggested Since prescription easement granted by Majestic Tours Ltd (Owner) to Fluorescent Lighting Company Lumen Ltd (Grantee) is already registered with the land registry, it has to be honoured by the MacArthur Investments Inc in case if it buy the Matilda property later.. (Clark and Greer 54). 2.3 Right of Easement to Light and Air Though , a general offer of right to light is not explained adequately, which would constitute an easement , in Colls case, it was held that a right to light through a particular window can constitute to be an easement. (Card, Murdoch, and Murdoch 509). Under the Housing Act 1985, when a property is disposed under the Right to Buy provisions, some easements are automatically given and reserved by lease or transfer, and one of the rights granted by the above act is that granting of the easement of rights to have access of air and light to an adjacent building or part of premises. Practical solution suggested Hence, A1 Property Investments Ltd is enjoying the right to light and air for the last 20 years through a deed, it is eligible to enjoy continuously the easement right for the future also. (Clark and Greer 310). This research essay has given priority to the following issues in the order of following sequences . Buying a Land with an existing mortgage Restrictive Covenants Easement Rights for Sewer or Drainage Lines Right of Easement to Light and Air Thus , before buying the Matilda property , it is suggested to go for a legal opinion for the conveyance of property as it was held jointly with the Public Trust, without the authorisation of public trust on18th March 1911, it was transferred. After that issue , existing mortgage issue with Barclays Bank Plc has to be sorted out. Then , MacArthur Investments Inc should take initiatives to remove all restrictve covenants like the cutler’s mill, a lodging house, an action house, for the sale of liquor or any other immoral purposes or any other manner, which may be or become nuisance or annoyance to the vendor or the owner or occupier of any adjoining property owner or any part thereof by applying to the Land Tribunal. As regardst to easement rights for sewer or drainage lines and light and air should be adhered by MacArthur Investment Inc if it finally buys the Matilda property. Works Cited Bouckaert, Bouckaert. Property Law and Economics. London: Edward Elgar Publishing, 2010. Print. Card, Richard, John Murdoch, and Sandi Murdoch. Real Estate Management Law. Oxford:Oxford University Press, 2011. Print. Clark, Sandra, and Sara Greer. Land Law Directions. Oxford: Oxford University Press, 2012. Print. Harpwood, Vivienne H. Modern Tort Law. London: Routledge, 2008. Print. Murdock, John. The Law of Estate Agency. London: Taylor & Francis, 2003. Print. Whincup, Michael H. Contract Law and Practice. London: Wolters Kluwer, 2006. Print. Court Cases Anns v Merton London District Council [1978] AC 72 Austerberry v Oldham Corporation [1885], 8 Blemain Finance Ltd v E Surv Ltd [2012] EWHC 3654 (TCG) Carreras Ltd v D E & J Levy Colls v Home & Colonial Stores Ltd [1904] AC 179 Computstaff Ltd v Ingledew Brown Bennison & Garrett Donoghue v Stevenson (1932) Friedlander Ltd V John D Wood and Co (1977) GP & P Ltd v Bulcraig & Davis Hedley, Byrne v Heller (1964) AC 465 Kenney v Hall, Pain & Foster Merret v Babb [2001] Q B 1174 ColfA Mount Banking Corp v Brian Cooper Urban Regeneration Agency v Moff. Macdonald (1998) High Court Read More