Dereliction of duty?

Fact: in every property transaction there’s an environmental liability that needs allocating. It’s there, and yet few solicitors see it, still less do anything about it.

Some wrongly assume that “the polluter pays”. But the polluter hardly ever pays. Rather, the law’s default position for silent contracts is that a large part of the liability passes to the new owner or occupier.

Is that what you and your residential/ commercial/leasing clients intended? If so, great. If not, potential problem.

Resting on hope

In recent years, property owners have been shielded to an extent, as taxpayers’ money has been made available for several dozen cleanup projects. But that source of funding has all but dried up.

That’s why there’s such concern just now in places like Linwood and Motherwell over recently-discovered contamination under houses. Why, ask the residents, didn’t we know about this?

Answer: because their conveyancing solicitors didn’t tell them. That’s despite the profession having had 10 years to get to grips with the legislation on land contamination.

Yet the prevailing approach, it seems, is to hope that the problem just goes away. In so doing, the profession risks creating a backlash from valued clients and Joe Public alike.

Try this test on yourself: the next time you buy a house or commercial premises, or take a lease, how will you know that the property hasn’t been built on an unremediated gasworks or some other industrial soup?

Anyone else?

Before quickly arriving at the conclusion that your solicitor ought to have warned you, you might run through the list of other people to try and blame.

What about the council? After all, surely the council wouldn’t have let the house be built if there was a problem?

Unfortunately there’s no necessary link between planning consent and contamination avoidance. Perhaps you’ll be lucky, and the council departments have liaised fully and ensured no problems through strict enforcement of planning conditions. But they don’t have to: it’s not their legal responsibility, so maybe they haven’t. True, the more modern the property, the better your chances, although they’re far from cast-iron.

But what if you’re not buying a modern house? What if the original developer was less than candid or honest? You’re trusting to luck. You can’t blame the council if you buy a property with a problem.

If not the council, surely your surveyor would have picked up on it?

But why should they? We all know the limitations of surveys. Surveyors don’t have X-ray vision and they aren’t expected to provide environmental searches. Unless they happen to be aware of a particular issue, they’ll simply give a valuation that assumes no environmental problems.

Legal questions

So you’re left with the horrible feeling that perhaps your conveyancing solicitor ought to have warned you of the potential dangers. Indeed, you perhaps even think, deep down, that your solicitor – much more so than any other person or agency – is the person who should have warned you. After all, in all seriousness, who but a lawyer should be warning you about potential legal liabilities?

What does your average solicitor know about drift geology? Not a lot, probably, and yet they are deemed capable of ordering a coal report and pointing out to their client what the report says about the potential for subsidence, the presence of mineshafts etc.

Why, then, are they deemed incapable of ordering an environmental search, complete with its useful maps and basic risk assessment, and passing that on to their client?

These reports are not a panacea, but they are a valuable first step. In England, around 85% of property transactions make use of such searches. In Scotland, it’s less than 5%.

It’s difficult to identify any explanation for this vast divergence other than what Stephen Fry would probably call “General Ignorance”.

The Scottish client body hasn’t really twigged to this so far. Once they do, it’s easy to imagine them not being best pleased about the inferior service, compared to England.

What’s intriguing about this “groupthink” is whether it effectively sets the bar on professional negligence. If most “ordinary” solicitors are all doing the same thing (and ignoring the issue), does that become the yardstick? Is the standard of care what the ordinary conveyancer is actually doing – or might the courts consider that the standard should be what the ordinary solicitor ought to be doing?

There are various negligence cases in the pipeline, and it cannot be too long before we have some definitive guidance from the courts, who might just open the floodgates.

Defensive strategy

The Law Society of Scotland recommends that you go on the defensive, and from a purely risk management (as distinct from client care) perspective, that makes perfect sense. Tucked away on p57 of December’s Journal was an announcement that you might have missed. It says that the Professional Practice and Conveyancing Committees have concluded that residential conveyancers are not qualified to give advice on whether an environmental report should be obtained. It therefore recommends that solicitors adjust their terms of business to make it clear that environmental matters do not form part of their remit.

This is interesting for various reasons:

• 1. It seems to apply only to residential conveyancers. Should we infer that commercial conveyancers are deemed qualified to advise on such issues?
• 2. It makes you wonder why it is that residential conveyancers are qualified to advise on building warrants, septic tanks, mineshafts and the like (and will obtain a property enquiry certificate that might even disclose contaminated land entries), but are deemed incapable of understanding that our industrial history means that contamination risks exist.
• 3. It begs the question where on earth residential clients are expected to turn for protection from these potential liabilities.
• 4. It conflicts with the 2003 warning card issued to all solicitors, which opens with the words: “Solicitors should be aware that environmental liabilities may arise and consider what further enquiries and specialist assistance (both legal and technical) the client should be advised to obtain.”
• 5. It leaves in a muddle the relationship between good professional practice, best practice, and negligence, and completely undermines the warning card. A negligence claim is always a worry, but what standard should be met to avoid a claim of inadequate professional service (which now attracts a SLCC penalty of up to £20,000)? After all, IPS occurs if your work is “not of the quality which could reasonably be expected of a competent solicitor”.
• 6. By focusing on residential conveyancers, it almost suggests that commercial firms shouldn’t exclude environmental advising from their remit, when in fact they would be very sensible to do so.

What the client wants?

There is no doubt that clearly setting out your remit in your engagement letter is vital, and all lawyers should be reviewing their terms of engagement to make it clear what is, and what is not, being provided to the client.

You need to decide whether to draw the client’s attention very clearly to any remit exclusions, or whether you will simply bury it away in the small print. The former seems a preferable approach, and less likely to lead to future complaints.

The defensive approach does seem rather fainthearted, however.

Are you seriously going to sit down with a client and explain that your remit does not extend to ordering an environmental search that will indicate whether their property is built on an old chemical works; that you’re not going to bother getting them a report that will indicate whether their property is downwind from a smelly landfill, or within a COMAH blast zone?

They’ll probably ask why not, as they quite like the idea of getting that information.

Here’s an alternative strategy. Instead of simply pulling up the drawbridge, why not opt for something more sophisticated. You could discuss possible environmental issues with your client, as a prelude to telling them that you won’t personally be advising them on that area. Your engagement letter will reflect the fact that you are not providing any such advice. You may offer to obtain an environmental search, but your remit does not extend to interpreting it. But you can indicate that environmental advising is available separately, it’s something you can procure as an add-on, should the client want it.

Get me a specialist

For many solicitors, the reason they shy away from environmental searches is because they’re not sure what to do if they get one that says there’s a problem with the property.

But the solution is a simple one: make better use of Society-accredited specialists in environmental law. That’s what accredited specialists (in all disciplines) are there for, as a resource. Get a non-poaching guarantee from them, and make suitable arrangements, whether it’s ad hoc advice, an annual subscription to an advice helpline, or complete outsourcing of environmental work.

By so doing (in conjunction with adjustments to your engagement letter) you can avoid all claims while broadening your offering to clients.

Whether you go defensive or broaden your offering is up to you – but do be aware of the need to do something to avoid a silent contract and a silent engagement letter creating entirely avoidable misery, for both lawyer and client.

• Barry Love is an accredited specialist in environmental law, and heads the Environmental Law Chambers Ltd. www.elchambers.com