IN THE SUPREME COURT OF JUDICATURE		QBENF 96/0636/1
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MR J TOULMIN QC (SITTING AS A DEPUTY HIGH COURT JUDGE)

								Royal Courts of Justice
								The Strand
								London WC2

								Thursday 21st May, 1998

	B e f o r e:

	LORD JUSTICE MILLETT
	LORD JUSTICE PILL
	LORD JUSTICE MAY

	- - - - - - 

BETWEEN:

	BARCLAYS BANK PLC
	Appellant

	- v -

	WEEKS LEGG & DEAN (A FIRM) AND OTHERS
	Respondents

AND
										QBENF 96/1144/1
ON APPEAL FROM THE QUEEN'S BENCH DIVISION		QBENI 96/1562/1
(HIS HONOUR JUDGE HICKS)
(SITTING AS AN OFFICIAL REFEREE)

	BARCLAYS BANK PLC
	Appellant

	- v -

	LAYTON LOUGHER & COMPANY (A FIRM) AND OTHERS
	Respondents
AND
				
ON APPEAL FROM THE CHANCERY DIVISION		CHANF 96/1012/3
(HIS HONOUR JUDGE MOSELEY)
(SITTING AS A DEPUTY HIGH COURT JUDGE)

	BARCLAYS BANK PLC
	Appellant

	- v -

	NE HOPKIN JOHN & COMPANY (A FIRM) AND OTHERS
	Respondents/1st Third Party

	- - - - - - 

	(Handed down Transcript of Smith Bernal Reporting Ltd
	180 Fleet Street, London EC4A 2HD
	Tel: 0171 421 4040
	Official Shorthand Writers to the Court)

	- - - - - - 

IN THE CASE OF WEEKS LEGG & DEAN:

MR S BERRY QC and MR J NASH (Instructed by Lovell White Durrant, London EC1A 2DY) appeared on behalf of the Appellant

MR M HAPGOOD QC and MR J McMANUS (Instructed by Blake Lapthorn, Fareham Hampshire PO15 5VA) appeared on behalf of the Respondent

	- - - - - -

IN THE CASE OF LAYTON LOUGHER & CO:

MR S BERRY QC and MR N JONES (Instructed by Eversheds, Cardiff CF2 1XZ) appeared on behalf of the Appellant

MR M HAPGOOD and MR P CRANFIELD (Instructed by Wansbrough Willey Hargrave, Bristol BS99 7UD) appeared on behalf of the Respondent

	- - - - - - 

IN THE CASE OF NE HOPKIN JOHN & CO:

MR S BERRY QC and MR M SULLIVAN (Instructed by Eversheds, Cardiff CF2 1XZ) appeared on behalf of the Appellant

MR M HAPGOOD QC and MR D HALPERN (Instructed by Morgan Bruce, Cardiff CF1 3DP) appeared on behalf of the Respondent/1st Third Party

	- - - - - - 

	J U D G M E N T
	(As approved by the Court)

	- - - - - - 

	©Crown Copyright

									Thursday 21st May, 1998

	JUDGMENT

LORD JUSTICE MILLETT:
	 
			These three conjoined appeals concern the proper construction of a standard form of undertaking given to Barclays Bank plc. (“the Bank”) by solicitors to facilitate the completion of contracts for the purchase of land. The undertaking is in a form agreed between the Law Society and the banks. It is reproduced in Annex 24H to the Guide to the Professional Conduct of Solicitors and is in the following terms:
Undertaking by Solicitor
		To send Deeds/Land Certificate to Bank on completion of a purchase, the Bank and/or the Customer having provided the purchase monies. 
	TO BARCLAYS BANK PLC
	If you provide facilities to my/our client.....for the purchase of the Freehold/Leasehold property....
	
	I/We undertake:
	(a) that any sums received from you or your customer for the purpose of this transaction will be applied solely for acquiring a good marketable title to such property and in paying any necessary deposit legal costs and disbursements in connection with such purpose. The purchase price contemplated is £...gross and with apportionments and any necessary disbursements is not expected to exceed £...
	(b) after the property has been acquired by....and all necessary stamping and registration completed to send the Title Deeds and/or Land Certificates and documents to you and in the meantime to hold them to your order.
			In each of the cases with which these appeals are concerned the Bank has brought an action against the solicitor who gave the undertaking (“the Solicitor”) for damages for breach of the undertaking. In each case the Bank claims that the Solicitor parted with the money on completion of the purchase of the relevant property but failed to obtain a title to the property which provided satisfactory security for the Bank. In the first action this was because the property was subject to a right of way which precluded its successful development. The Judge (Mr. Toulmin QC sitting as a Deputy Judge of the Queen’s Bench Division) held that the Solicitor was not in breach of the undertaking and dismissed the action. In the second action it was because there was no access to the property and there were insufficient rights of drainage and other services to allow for its development. The Judge (HH Judge Hicks QC sitting on Official Referees’ business) held that the Solicitor had committed a breach of the undertaking in both respects. In the third action the property was owned by three co-owners. One of them had not consented to the sale and her signature on the conveyance of sale was forged. The Judge (HH Judge Moseley QC sitting as a Deputy Judge of the Chancery Division) held that the Solicitor had applied the money in accordance with the undertaking even though, through no fault of his own, no title was obtained, and he dismissed the action. 
			In reaching at their decisions the three judges adopted radically different approaches to the effect of the undertaking. In the first action the property was sold subject to the right of way in question. Mr. Toulmin QC held that it was sufficient that the purchaser had obtained a good title to that which he had contracted to buy. Distinguishing that decision on the facts in the second action, Judge Hicks QC held that the undertaking was to be construed without reference to the terms of the purchase contract. He held that a piece of land which was inaccessible could not properly be described as “marketable” however good the title to it might be. He found that the Solicitor was negligent in his investigation of title, but this was not the basis of  his decision. He held that the undertaking imposed an absolute obligation on the Solicitor; the only question was whether a good marketable title was in fact acquired: and it was not. In the third action Judge Moseley QC refused to follow Judge Hicks in this respect. He said that this was to confuse purpose with effect, and held that it was sufficient that the Solicitor applied the money for the purpose of acquiring title to the property even though, through no fault of his own, this purpose was not in the event achieved.  
			In each case the Judge was concerned with liability only. As matters stand pending the outcome of these appeals, therefore, the first and third actions have been dismissed, and in the second action liability has been established with a trial on quantum to follow. In the first and second actions the Bank has sought leave to amend the pleadings to allege breach of a duty on the part of the Solicitor to advise the Bank as to the vendor’s title. We refused leave, in the first action because it was too late and in the second because it was unnecessary.
			
The facts

			The facts can be summarised as follows.
The first action. 
			The purchaser was a property development company and a customer of the Bank. It approached the Bank for facilities to assist in the purchase of a development site at 12 Nevill Road Rottingdean. The site was being offered for sale by public auction with the benefit of planning permission for a development of five houses with car parking spaces. The Bank agreed in principle to finance the purchase to the extent of an advance of £155,000 to be secured by a first legal charge on the property. The auction took place on 23rd June 1987 when the purchaser was the successful bidder at a price of £200,000.  
			The special conditions of sale provided that the land was sold subject to a right of way in favour of an adjoining owner. The purchaser appears to have been unaware of this. It is not clear whether the purchaser had taken the trouble to read the conditions of sale; but the Bank evidently had not: the proceedings have been conducted throughout on the footing that at the date of completion the Bank knew nothing of the subject-matter of the purchase and its own intended security beyond the address of the property and the fact that its customer was buying it for development. It is not alleged, and there is no reason to suppose, that the Solicitor was aware of the paucity of the information on the basis of which the Bank was content to make a secured advance to its customer.
			On 24th. June 1987, that is to say the day following the auction, the Solicitor was instructed to act for the purchaser. The date fixed for completion was 21st July 1987. The Bank spoke to the Solicitor for the first time on 17th. July. Following this conversation the Bank forwarded a form of undertaking to the Solicitor under cover of a letter which stated that the Bank had agreed to assist the purchaser and 
		 “in consideration, we shall be obliged to receive from you on the enclosed form your undertaking to hold the title deeds to our order and forward them to us in due course.” 

On  20th. July 1987 the Solicitor signed and returned a copy of the undertaking. In the undertaking the property was briefly described as “Nevill Road” (not “12 Nevill Road”) and neither of the alternatives “Freehold/Leasehold” was deleted. The undertaking did not mention the right of way or any of the other rights subject to which the property was being acquired; but neither did it state that the property was free from incumbrances.  
			The Bank remitted the necessary funds on 21st. July 1987 and despite the existence of the right of way the purchaser completed its purchase on the following day as it was contractually bound to do.
			Following completion the purchaser proceeded with the development of the property, and endeavoured to deal with the difficulties caused by the existence of the right of way by negotiating with the adjoining owner. The Bank made substantial further advances to the purchaser to assist in the development, some (and perhaps all) of which were made after it had discovered the existence of the right of way. The development was eventually completed with the co-operation of the adjoining landowner and the development was completed and sold to him. The total loss to the Bank with interest as at 20th. December 1995 is estimated to be some £689,000, all of which the Bank seeks to recover in the action.
The second action
			The purchasers, who were also customers of the Bank, approached the Bank for facilities to enable them to purchase and develop unregistered land at Talygarn. They gave the Bank the name of the solicitor who was acting for them, and the Bank forwarded a form of the undertaking to him. The Solicitor signed and returned it on 19th. October 1988. As in the first action, neither of the alternatives “Freehold/Leasehold” was deleted and the property was identified only by its address, viz. Talygarn Farm, Pontyclun, Mid Glamorgan. No reference was made to any rights of way or other rights which were being acquired with the farm. The undertaking differed from that in the first action in that it contained a further paragraph (c) in the following terms

	“(c) To register Bank’s charge and obtain Charge certificate”

but nothing turns on this.
			Shortly before signing and returning the undertaking the Solicitor had received from the vendor’s solicitors a draft contract for approval together with copies of the documents of title. The draft contract provided that the property was sold subject to the rights and easements and with the benefit of the rights and easements contained or referred to in a Conveyance dated 16th. February 1977. 
			The 1977 Conveyance referred to a specific right of drainage reserved for the benefit of the property in an earlier Conveyance of 24th. August 1970 and granted a right of way at all times and for all purposes connected with the use and occupation of the property over and along a track which abutted the property and thence by means of a lane to the public highway. The 1970 Conveyance had reserved a specific right of drainage along an identified covered drain and the free passage of water, soil, gas and electricity through the drains, pipes, wires and sewers then running under adjoining land. The Judge held that these rights had passed to the vendor but were limited to the passage of services through the drains, pipes, wires and sewers existing in 1970. These were sufficient to serve a farmhouse but not a substantial residential development. 
			Contracts were exchanged on 12th. December 1988. Their terms did not materially differ from those of the draft contract. The vendor was, therefore, contracting to sell and convey the farm together with a right of way over the track and lane leading to the public highway and the right of drainage reserved by the 1970 Conveyance, but without the benefit of any further easements beyond this. In an exemplary and painstaking judgment to which I would like to pay respectful tribute the Judge found that the vendor had failed to deduce title to the right of way over the track because he was unable to show that the vendor to the 1977 Conveyance had any title to the servient land. He also found that the Solicitor’s failure to appreciate this and his consequent acceptance of the vendor’s title were negligent. There is no appeal against these findings.
			The Judge distinguished the decision of Mr. Toulmin QC in the first action on the ground that in the case before him the undertaking was given before exchange of contracts. He held that the undertaking must be construed without reference to the contract because when it was signed by the Solicitor and received by the Bank there was no binding contract in existence and the Bank did not know, and was never afterwards informed, of the terms whether of the draft contract or of the contract as exchanged. 			
			This gave the Judge a problem, since he could not found liability on the Solicitor’s failure to obtain title to the right of way as part of the property contracted to be sold. He recognised that there was no defect in the title to the land itself, meaning the property described in the undertaking, but rather an absence of an appurtenant interest in other land. He overcame this difficulty by holding that “in no practical sense is a piece of inaccessible land marketable”. He held that the absence of adequate easements for services had the same effect as the lack of a right of access.
			Accordingly, the Judge found that the Solicitor had committed a breach of the undertaking in parting with the money on completion. There was also an issue whether the Solicitor had been retained more generally to act for the Bank in relation to the transaction. The Judge found that he was not, except for the limited purpose of registering the Bank’s charge and obtaining the Charge Certificate. He held that the Solicitor had no duty to advise the Bank either generally in relation to the transaction or the vendor’s title.
The third action
			The Bank agreed to lend money to its customers to enable them to buy a property in Cardiff. The legal estate in the property was vested in Mr. Fahiya, his ex-wife Mrs Mohammed and their son Ibrahim Fahiya. Unknown to Mrs. Mohammed, who no longer resided at the property, Mr. Fahiya and his son together with an unknown woman impersonating Mrs. Mohammed agreed to sell the property to the purchasers and instructed a firm of solicitors to act for them. The purchasers instructed the Solicitor, who gave the undertaking to the Bank. Although the fact is not material in this case, it may be observed that (apart from the deletion of the word “Leasehold”) the property was identified in the undertaking in the same manner as in the other cases; that is to say, merely by its address.
			On completion the transfer was executed by Mr. and Mrs. Fahiya and the impostor. It was not executed by Mrs. Mohammed. It was therefore not effective to transfer Mrs. Mohammed’s one third beneficial interest or the legal estate.
			The Bank was made one of the defendants to proceedings brought by Mrs. Mohammed to establish that she was not bound by the transfer. The Bank joined the Solicitor as third party. It is these third party proceedings which form the subject matter of the appeal.
			The Bank alleged that the Solicitor was in breach of the undertaking because he had parted with the completion money and failed to acquire a good marketable title to the property. The Bank did not allege any failure to exercise proper care on his part in accepting the conveyance executed by the impostor. It appears to have been common ground that the Solicitor was not at fault. He had no means of verifying Mrs. Mohammed’s signature; she was not his client. He would have to rely on the vendors’ solicitors for this purpose.
			Judge Moseley QC  construed the words “for acquiring” in the undertaking as meaning “for the purpose of acquiring”. He held that money could be expended for the purpose of acquiring a good marketable title to property even though in the event such a title was not acquired. He accordingly dismissed the action.
Features common to all three actions
			The three actions have these features in common:-
	(1). In each case the Bank was lending money to its own customer for a particular transaction known to the Bank. 
	(2). The transaction is briefly described in the undertaking.
	(3). The extent of the Bank’s knowledge of the transaction was not known to the Solicitors.	
	(3). Except in the second action and then only in relation to the registration of its security the Bank did not instruct the Solicitors to act for it in the transaction.
	(4). The Bank did not ask the Solicitors to provide a Report on Title or to advise in relation to any aspect of the transaction.
	(5). The Solicitors were not paid by the Bank for their services. 
		
The issues.

			The issues raised in these appeals are (i) the meaning to be attributed to the expression “for acquiring a good marketable title to such property”; (ii) whether the obligation which the Solicitors assumed by giving the undertaking is an absolute or a qualified obligation; and (iii) whether any of the Solicitors undertook a duty to advise the Bank either generally in relation to the transaction in question or in relation to the vendor’s title. I shall deal with each of these issues in turn. Before doing so, however, I should say something about the purpose and function of the undertaking.

Purpose and function of the undertaking

			The undertaking is in a standard form designed for a common situation. Its effect in any particular case, however, depends upon the circumstances in which it is used and the manner in which it is completed. Subject to such variable factors by which it may be affected, the Court should approach its construction with the situation for which it was designed in mind.
			From the Bank's point of view the undertaking is intended to facilitate the completion of a transaction to which its own customer is already committed. Although capable of being included in a general retainer, it is designed to stand alone as the only communication passing between the Solicitor and the Bank. In such a case the scope of the Solicitor’s obligations is determined exclusively by the terms of the undertaking. 
			The undertaking is a contractual undertaking which sounds in damages. It is not a warranty of title. Although positive in form it is negative in substance. The only obligation undertaken by the Solicitor is not to part with the money except in the circumstances prescribed. Although it may be provided at any stage of the transaction, it is clearly designed to be provided to the lender on the eve of completion and to become effective only when the completion money is received.
			The function of the undertaking is to prescribe the terms upon which the Solicitor receives the money remitted by the Bank. Such money is trust money which belongs in equity to the Bank but which the Solicitor is authorised to disburse in accordance with the terms of the undertaking but not otherwise. Parting with the money otherwise than in accordance with the undertaking constitutes at one and the same time a breach of a contractual undertaking  and a breach of the trust on which the money is held.  
			
Construction

“A good marketable title.”
			The Bank submits that this means “a freehold title free from incumbrances”; and that such a title is better than “a good title” since it must be both “good” (in the sense of being without blemish) and “marketable” (in the sense of relating to property which is readily saleable). Both propositions are quite untenable. They are the product of a growing unfamiliarity with the language which was once the common currency of conveyancers of unregistered land. They confuse the subject-matter of the sale (what has the vendor agreed to sell?) with the vendor’s duty to prove his title to the subject-matter of the sale (has the vendor sufficiently deduced title to what he has agreed to sell?) 
			These are two quite separate questions. They are dealt with separately in Emmett on Title (19th. ed.) at para. 2-072 where the editors deal with open contracts for the sale of land as follows:
		“The following miscellaneous terms or conditions will be implied where there is no condition to the contrary:
		(a) That the sale is of an estate in fee simple in possession free from incumbrances....
		(b) That the vendor will show a good title....”

			The first of these conditions was in issue in Timmins v Moreland Street Property Co. Ltd. [1958] Ch. 110 where the Court had to consider the effect of a note or memorandum evidencing the sale of a property described as “6,8 and 41, Boundary Street, Shoreditch (freehold).” Jenkins LJ said at p. 118
		“A description of this kind is to be taken as extending to the whole of the vendor’s interest in the property, so that the memorandum on the face of it records an agreement for the sale and purchase of the while of such interest. Moreover, unless the contrary appears, such interest is to be taken as comprising the fee simple in possession free from incumbrances, and the purchaser will be entitled to reject any less interest than that....” 

			The second condition concerns the  obligation of the vendor to deduce a good title to that which he has contracted to sell. He is not, however, required to show a perfect title; that is to say, he is not required to produce perfect evidence of his title. From time to time, therefore, the question arises whether the vendor has shown a sufficiently good title to the property which he has contracted to sell: see M.E.P.C. Ltd. v Christian-Edwards [1981] AC 205,220 per Lord Russell of Killowen. A purchaser is entitled to be satisfied

	“that his vendor is seized of the estate which he is purporting to sell, in this case the fee simple, and that he is in a position, without the possibility of dispute or litigation, to pass that fee simple to the purchaser”
Re Stirrup’s Contract [1961] 1 WLR 449, at p. 454  per Wilberforce J. Where the title shown is less than perfect, the question is whether the risk is
	“so remote or so shadowy as to be one to which no serious attention need be paid....the test must always be, would the court, in an action for specific performance at the instance of the vendors, force a title containing the alleged defect upon a reluctant purchaser ?”
Manning v Turner [1957] 1 WLR 91, at p. 94 per Sir Leonard Stone V.-C.
			A title which, though technically defective, is one which the purchaser is bound to accept, is known as “a good marketable title”. The meaning of the expression is well established. In Pyrke v Waddington (1853) 10 Hare 1 Turner V.-C. said at p. 8
		“The rule rests upon this, that every purchaser is entitled to require a marketable title, by which I understand to be meant a title which, so far as its antecedents are concerned, may at all times and in all circumstances be forced on an unwilling purchaser....and that this is the true rule to be applied in such cases is I think the more apparent from the repeated decisions that the Court will not compel a purchaser to take a title which will expose him to litigation or hazard.”

			In Re Spollon & Long’s Contract [1936] 1 Ch. 713 Luxmoore J said at p. 718
		“The purchaser having bought under an open contract was entitled to have a good marketable title which, as I understand it, is a title which will enable him to sell the property without the necessity of imposing special conditions of sale restrictive of the purchaser’s rights.”

			The obligation of a vendor is to deduce sufficient title to the property which he has contracted to sell. The expression “good marketable title”  describes the quality of the evidence which the purchaser is bound to accept as sufficient to discharge this obligation. It says nothing about the nature or extent of the property contracted to be sold to which title must be deduced. The expression is a compendious one which describes the title and not the property. It is used in contradistinction to “a good holding title”, by which is meant a title which a willing purchaser might reasonably be advised to accept, but which the Court would not force on a reluctant purchaser. 
“To such property”.
			It follows from what I have said so far that the expression “a good marketable title” leaves open the question “a good marketable title to what?” Where the expression is contained in a contract for the sale of land, it must mean “to the property contracted to be sold”. It can have no other meaning. Where the contract is an open contract, that is to say one which describes the property in general terms without mentioning whether it is freehold or leasehold and without stating that it is subject to incumbrances, it means “to the fee simple free from incumbrances”: see Cato v Thompson (1882) 9 QBD 616. 
			In the present case it is not contained in a contract for sale or in a communication between vendor and purchaser, but in a separate document provided by the purchaser’s solicitor to a third party. The Bank submits that the undertaking is to be construed as free-standing and without reference to the contract of sale. Good marketable  title “to such property”, it rightly says, refers to the property previously described and not to the interest in the property which the purchaser is acquiring. If the property which is being acquired is subject to a right of way or other incumbrance, it submits, this should be stated in the description of the property in the undertaking itself.   
			In my judgment these submissions misconstrue the undertaking and are based on a misunderstanding of the reason why a description of the property is included in the document. The description of the property occurs at the outset in the passage which relates to the provision of facilities:
	“If you provide facilities to my client...for the purchase of [ description of property]
	I undertake that any sums received from you..for the purpose of this transaction...”

What follows is not a report on title. It is not intended that the Bank should rely on the document to ascertain the nature and extent of the property which its customer is acquiring. It must already have agreed at least in principle to provide facilities to enable its customer to acquire the property. If it has not already satisfied itself as to the nature and value of the property in question and the sufficiency of the security which it will provide, it can do so if it wishes before it makes facilities available to its customer. It is only when it remits the money  expressly “for the purpose of this transaction” that the solicitor’s undertaking takes effect.
			In my judgment the property is described in the undertaking in order to enable the parties to identify the transaction to which the undertaking relates, not the property which the purchaser is acquiring. It is not necessary for the full particulars of the property together with the rights with and subject to which it is being sold to be set out in the undertaking, any more than it necessary for them to be set out in the letter under cover of which the Bank later remits the money. It is sufficient in either case that the property is described in terms sufficient to enable the relevant transaction to be identified. Far from it being incumbent on the Solicitor to set out the full particulars of the property in the undertaking, it would be most unwise for him to do so, for if there should be any discrepancy between the terms of the contract for sale and those of the undertaking it would be impossible for the transaction to be completed. A document intended to facilitate completion would frustrate it.    
The effect of the undertaking			
			In my judgment, therefore, the undertaking is to be construed as an undertaking not to part with the money except for a good marketable title to the property which is the subject-matter of the transaction briefly described in the document. The Bank submits that such a construction fails to give it adequate protection. But this misunderstands the nature of the protection which the Bank needs. It needs an assurance that in return for its money it will obtain the security which it expects. The value of the security depends on the nature and extent of the property which is acquired, the value of the property, and the Bank's ability to realise its security by sale if necessary. The first two matters are within its own control. If it wishes to do so it can call for a copy of the contract (and of any later variations which may since have been agreed with the vendor) and commission a valuation before it parts with the money. But the third matter is not within its control. Its ability to realise its security depends upon its obtaining a good marketable title, that is to say, a title which, in the event of a sale, it can compel a reluctant purchaser to accept. Its customer, however, is likely to be a willing purchaser, and all the more so if he is not risking his own money. There is a danger that he may instruct the Solicitor to accept the vendor's title despite the existence of a defect to which he would be entitled to object. He may be willing to accept a good holding title (or worse), but even a good holding title would not satisfy the Bank's requirements. The Bank needs an assurance that it will obtain a good marketable title to the property. This assurance is what is provided by the undertaking.     

Absolute or qualified obligation ?

			The next question is whether the obligation which the Solicitors assume by giving the undertaking is  absolute or qualified, that is to say, whether they undertake to be liable if they part with the money without in fact obtaining a good marketable title to the property, even though this is through no fault of their own, or whether they undertake to be liable only if such failure is the result of their own default.
			Judge Moseley QC considered that this depended on whether the expression "for acquiring...title" meant "for the purpose of acquiring...title". He held that it did, and that money can be laid out for the purpose of obtaining something even though, in the event, that something is not in fact obtained.
			I do not think that this kind of linguistic analysis yields a solution to the problem. I am disposed to accept the Bank's submission that in the present context the expression "for acquiring" simply means "in exchange for". But in my opinion it would make no difference if it were taken to mean "for the purpose of acquiring", for the test must be an objective one, and I do not accept the proposition that money is expended objectively for the purpose of obtaining something if it is laid out in exchange for a document which is incapable of providing that something. 
			In my judgment the question turns on what it is that the Solicitors undertake to obtain in exchange for the money. Is it, as the Bank submits, "what is in fact a good marketable title"? Or is it, as the Solicitors submit, "what reasonably appears to be a good marketable title?" The actual words of the undertaking are obviously capable of either construction.
			I was at first disposed to think that the undertaking should be construed literally, and that the construction for which the Solicitors were contending required too much to be implied  to be accepted. On further reflection, however, I have changed my mind, though I would substitute the formulation "what a reasonably competent solicitor acting with proper skill and care would accept as a good marketable title." My reasons are as follows:
	(1). It is inconceivable that the parties should expect the Solicitor to assume a more onerous obligation to the Bank, which is not his client and is not being charged for his services, than he has assumed towards his own client. 
	(2). The undertaking relates to the investigation of the vendor's title as well as to the due execution of the conveyance by the vendor. But it is impossible for a purchaser's solicitor to give an unqualified guarantee of the vendor's title. He is not entitled to call for evidence of the vendor's title earlier than the root of title, yet a defect in his title may be discoverable only by examining the pre-root title. If such a defect is discovered before completion, the purchaser may refuse to complete; but he may well not discover it and complete in ignorance of its existence. The purchaser's solicitor should not readily be assumed to have accepted liability in such circumstances.
	(3). Similarly the purchaser's solicitor can take reasonable precautions to ensure that the legal charge is properly executed by his own client. But it is difficult to see what steps he can take to ensure that the conveyance to his client is properly executed by the vendor. He must rely on the vendor's solicitor for this purpose. 
	(4). Given that the purpose of the undertaking is to prescribe the terms on which the Solicitor is authorised to part with trust money which belongs in equity to the Bank, it is difficult to see why he should assume a more onerous obligation in contract than he assumes by virtue of the trust. Theoretically his liability as a trustee is strict, but in practice it is not, for if he acts honestly and reasonably and ought to be excused from liability, the Court will grant him relief under Section 61 of the Trustee Act 1925. The Court has no similar relieving power in contract; but it is not to be supposed that, by entering into the undertaking, the Solicitor was intending to disentitle himself to such relief.
			In my judgment, therefore, the undertaking ought to be construed as subjecting the Solicitor to qualified obligations only. This will bring his obligations under the undertaking into conformity with his obligations to his own client as well as with his trust obligations to the Bank, and will not involve exposing him to a liability which no solicitor could be properly advised to accept. 

Application to the present actions.

			It remains to apply these principles to the three actions in which the present appeals have been brought.
The first action
			There is nothing in the documentation or surrounding circumstances to render the ordinary construction of the undertaking inappropriate. The property is described as "Nevill Road" not "12 Nevill Road" and neither of the alternatives "Freehold/Leasehold" has been deleted. It is not possible to construe the undertaking without reference to the purchase contract.
			The transaction consisted of the sale and purchase of a freehold property subject to right of way. The vendor deduced a good marketable title to the property contracted to be sold. The Bank obtained the security which it was entitled to expect; the Solicitor was not in breach of the undertaking; and the Judge was plainly right to dismiss the action.  
The second action
			Judge Hicks QC distinguished the first action on the ground that, at the date when the undertaking was signed, there was no binding contract of sale in existence. In my judgment this was irrelevant. Even if the undertaking fell to be construed as at the date it was signed, what mattered was the identification of the transaction to which it referred. This did not depend on whether binding contracts of sale had been exchanged. The undertaking could be given full effect by reference to the draft contract in the Solicitor’s hands which was afterwards approved without material alteration.
			It is not, therefore, strictly necessary to decide whether the undertaking falls to be construed as at the date it is signed, but I doubt that this reflects the true position. I am strongly inclined to think that, whenever signed, it speaks as from the date the completion money is received. Where necessary, the Solicitor’s authority to make an earlier payment of the deposit with funds supplied by the Bank is expressly confirmed.  
			The relevant transaction was the sale of a property with the benefit of a right of way to which the vendor was unable to make title. In this respect the Bank did not obtain the security which it was entitled to expect. The Judge made the necessary finding that this was because the Solicitor did not investigate the title with proper skill and care; he was therefore in breach of his qualified undertaking; and to this extent liability has been established.
			The vendor did, however, show a good title to the easements for services mentioned in the contract of sale. The fact that these were inadequate to enable the property to be successfully developed did not put the vendor in breach of the contract of sale or the Solicitor in breach of his undertaking. The Judge treated the word “marketable” as qualifying the property and not merely the title. In this respect the Judge fell into error.
The third action
			The Judge found that the Solicitor's failure to obtain a properly executed conveyance was not due to any want of skill and care on his part. Although the Bank did not obtain the security which it was entitled to expect, this was not the fault of the Solicitor. The Bank failed to establish liability, and the Judge was right to dismiss the action.

Liberty to amend the proceedings.

			In the first action the Bank applied to us for leave to amend the proceedings in order to allege a duty on the part of the Solicitor to advise the Bank in relation to the title offered. We refused leave on the ground that it was impossible to derive such a duty from the terms of the undertaking itself; that it would be necessary to establish the existence of such a duty by further evidence; and that it was far too late to allow an amendment which could succeed only on the basis of fresh evidence.
			In the second action Judge Hicks QC refused to allow a similar amendment, and the Bank appealed to us from his refusal. We dismissed the appeal on the ground that no amendment was necessary. The issue was properly raised before the Judge and was decided by him on the evidence. His conclusion that there was no such duty was one to which he was entitled to come; indeed, we are satisfied that he was plainly right.

Conclusion.

		The appeals in the first and third actions must be dismissed. Where necessary the answers given by the Judge in the second action should be varied to accord with this judgment.  

LORD JUSTICE PILL: I agree. The undertaking is in a standard form agreed between Barclays Bank plc (“the bank”) and the Law Society. It is in general use. It is for use when a customer of the bank intends to purchase property with the help of money lent to him by the bank upon the security of the property to be purchased. If the customer has a solicitor, the duties of the solicitor to his client are likely to include upon completion the payment of the purchase price to the vendor or his solicitors. They will also include obtaining from the vendor or his solicitors the appropriate title deeds or land certificate. The bank will know that it is the solicitor who performs these tasks. The bank can be expected to protect itself by ensuring that the money they have lent is applied for and only for the purpose of the transaction they are financing and that the title deeds or land certificate are passed to them. It is not surprising that they seek such protection. They obtain it by way of an undertaking from their customer’s solicitor which can be relied upon because of solicitors’ professional standards and, if necessary, recourse to the Law Society.
	It is common ground that solicitors do not charge for giving the undertaking in the standard form. They give it as a part of the service to their client.
	It is also common ground that the bank sometimes obtains a report on title with respect to the property. They may also obtain a valuation. For the first of those purposes they instruct a solicitor and for the second a valuer, in each case for a fee. By giving them assurances as to title and as to value, such reports will protect them against an improvident transaction by their customer which could put their money at risk.
	What the bank seek to do in the present cases is to construe a document headed “Undertaking by Solicitor to send Deed/Land Certificate to the Bank on completion of a purchase, the Bank and/or its customer having provided the purchase money” as a guarantee by the solicitor that he will pay the money to the vendor only in return for a good marketable title. By means of the undertaking, they claim a guarantee from the solicitor that its customer will obtain a good marketable title.
	In construing this standard form contract between the bank and solicitor, it is important to keep in mind the statement of Lord Wilberforce in Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 996. Lord Wilberforce stated: “In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating”. In Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98, Lord Hoffman referred to the effect of the speech of Lord Wilberforce in Reardon Smith Line and stated as the first of several principles as to how contractual documents should be construed:
		“Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.”

	On behalf of the bank, it is submitted that to receive assurance as to title, the bank can go as well by what counsel described as the “undertaking” route as by the “report on title” route. Upon the construction of the undertaking which they advocate, they obtain as good if not better protection by this form of undertaking than they do by obtaining for a report on title which instruction would impose the duty to take reasonable care upon a solicitor providing it.
	I regard it as inconceivable that a document for general use which has obvious and sensible purposes in a property transaction can have been intended by the parties to provide the bank with a guarantee as to title and  put the solicitor in the position of the bank’s insurer for the purposes of title. In context, and for the reasons given by Millett LJ, I agree that the words “good marketable title” in the undertaking must be qualified in the manner proposed by Millett LJ. In the circumstances, that qualification must be implied. The undertaking must be read as achieving objectives in the course of a property transaction which are important but limited in that way.
	It was conceded on behalf of the bank that a qualification not expressed in the standard form must, on the bank’s view of the document, be implied. That is the qualification that the undertaking does not cover defects in title of which the bank was aware. The bank accepts that, in the event of a defective title, it could not enforce the undertaking against a solicitor who could establish that the bank was aware of the defect. That is a concession rightly made because an agreement under which the bank could obtain damages for a defect of which they are aware would be repugnant to business morality and sense.
	I cannot accept that the extent of the implication should be limited to that conceded by the bank. The liability of the solicitor would depend on the conduct and knowledge of the bank of which the solicitor could not be expected to be aware and the bank could achieve a guarantee as to title upon the undertaking by declining to ask for or even receive information as to title offered to it. The bank would have every incentive not to receive information as to title which might be readily available to it. I cannot accept that the parties intended to create such a situation.
	It is however common ground that it is necessary to imply some words additional to those of the undertaking to give it business efficacy. Once the inadequacy of the wording is exposed, it is easier to construe it so as to reflect what I am in no doubt was the intention of the parties, that is to impose a duty to take reasonable care as to title before departing with the money but not to make the solicitor the bank’s insurer.
	His Honour Judge Moseley QC, in the Hopkin John case, has attempted to achieve the same result by reading an additional “for the purpose of” into the wording of the undertaking. He arrived at the correct result in that case in my view but I prefer to achieve it by implying a term to reflect the intentions of the parties rather than by adding words and construing them literally.
	I agree with the orders proposed by Millett LJ.
					
LORD JUSTICE MAY: I also agree.	 

		In the first action: Application for leave to amend and appeal dismissed with costs. 

		In the second action: the answers given by the judge to question 12(ii) and 12(iv) will be answered "yes". Application for leave to appeal dismissed. Costs order in favour of the bank below unaltered. No order for costs on the appeal. 

		In the third action: Appeal dismissed with costs. 
  
		Leave to appeal to the House of Lords in all three actions refused.
 
	(Order not part of approved judgment)

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