A solicitor’s deletion of a few words from a property charge has resulted in a £100,000 professional negligence award against a law firm, after the High Court found that the drafting error deprived an investment company of an effective form of security.
What did the High Court decide?
In MPP (Services) Ltd v Ratio Law Solicitors LLP [2026] EWHC 2852 (Comm), His Honour Judge Stephen Davies, sitting as a High Court judge, handed down judgment on 6 November 2026 in the Circuit Commercial Court in Manchester.
The claim concerned professional negligence arising from legal services provided by Ratio Law Solicitors LLP in connection with the preparation, amendment and registration of a legal charge over a property owned by Lesley Hearne.
MPP (Services) Ltd, the claimant, had intended the charge to provide security for sums it claimed were owed by Ms Hearne in connection with a failed children’s care home venture. The intended security related to her property at Laurel Bank, Hyde, Tameside.
The defendant admitted that its fee-earner had made a human error when amending the draft legal charge. The solicitor removed the wording identifying the amount secured without replacing it with any alternative wording.
As a result, the executed document did not identify the sums secured by the charge. When a dispute subsequently arose, Ms Hearne relied on this omission to argue that the charge was void for uncertainty.
MPP eventually accepted that this defence was realistically unanswerable and agreed at mediation to cancel the registration of the charge. It subsequently brought a professional negligence claim against the solicitors.
The court found in favour of MPP and awarded £100,000 in damages, together with interest.
How did the drafting error happen?
The dispute arose from a proposed joint venture between MPP’s directors, Steven Reel and Stephen Carroll, and Ms Hearne, an experienced manager of children’s care homes.
The parties had planned to acquire and convert properties into children’s care homes. MPP would provide funding and organise property acquisitions and conversion works, while Ms Hearne would contribute her experience and manage the care homes.
Two properties in Cheadle were acquired for the venture. However, planning difficulties meant that the intended use of those properties was unlikely to receive approval. The parties subsequently considered using Ms Hearne’s property at Laurel Bank as an alternative.
By this stage, MPP claimed that it had incurred approximately £180,000 in expenditure connected with the unsuccessful Cheadle project. The parties discussed providing a legal charge over Laurel Bank as security for the expenditure, while allowing the venture to continue using the alternative property.
On 3 April 2019, Mr Reel emailed Ms Alberici of Ratio Law Solicitors LLP with a completed draft of the standard HM Land Registry CH1 legal charge form. He asked whether it had been completed correctly.
The original wording in the draft was:
Panel 9: “2nd Charge of £180,000 payable within 24 months of the date of this agreement”.
Original draft wording as reproduced in the approved judgment.
Ms Alberici removed the words identifying the second charge of £180,000 and did not insert any replacement wording. The amended version returned to MPP and subsequently signed by Ms Hearne contained only:
Panel 9: “Payable within 24 months of the date of this legal charge”.
Wording in the executed legal charge.
This meant that the document continued to refer to sums detailed in Panel 9 without actually specifying what those sums were.
The charge was subsequently executed and registered. However, its failure to identify the secured sums created a fundamental problem when MPP later attempted to rely on it.
- MPP’s directors and Ms Hearne agree to establish a joint venture to develop children’s care homes.
- Two properties in Cheadle are acquired, but planning difficulties undermine the proposed development.
- A planning application for Laurel Bank is submitted as an alternative care home location.
- Mr Reel sends the draft legal charge to Ratio Law for review.
- The revised charge is returned after the crucial Panel 9 wording has been deleted.
- The relationship between MPP and Ms Hearne breaks down, and the effectiveness of the charge is disputed.
- The professional negligence claim is heard at trial.
- The High Court hands down judgment, awarding MPP £100,000 plus interest.
Why was the legal charge ineffective?
The central problem was the absence of wording identifying the sums secured by the legal charge.
Panel 7 of the document stated that the borrower charged the property by way of legal mortgage as security for payment of the sums detailed in Panel 9. However, following the amendment, Panel 9 no longer identified any particular amount or liability.
This omission allowed Ms Hearne to argue that the charge was void for uncertainty because it did not specify what financial obligation it was intended to secure.
Following advice from new solicitors and counsel, MPP accepted that the legal uncertainty defence was realistically unanswerable. The parties subsequently reached a settlement at mediation, which involved cancelling the registration of the legal charge.
The consequence was significant. MPP lost the benefit of the security it had intended to obtain over Laurel Bank and was left to consider recovery of the underlying sums without the advantage of an effective registered charge.
The professional negligence proceedings therefore focused not only on the admitted drafting mistake but also on the extent to which the mistake caused a recoverable financial loss.
What did the court say about professional negligence?
Ratio Law admitted that deleting the crucial wording from Panel 9 without replacing it was a breach of duty. However, the defendant disputed the extent of its legal responsibility for the financial consequences claimed by MPP.
The defendant raised arguments concerning the scope of the solicitor’s duty, the connection between the breach and the loss, remoteness, mitigation and the value of the lost opportunity to recover money from Ms Hearne.
The court considered the principles identified by the Supreme Court in Manchester Building Society v Grant Thornton [2021] UKSC 20, including the scope of duty, duty nexus and legal responsibility questions.
The judge rejected the argument that the defendant’s responsibility was limited to any future loan advanced after the legal charge was prepared. He found that the risk of losing the opportunity to recover the true extent of Ms Hearne’s liability was within the scope of the solicitor’s duty.
There was also a sufficient connection between the drafting error and the loss of the opportunity to rely on the legal charge. The judge found that Mr Reel did not need to explain every detail of the underlying commercial arrangement to Ms Alberici.
However, the court did not accept every aspect of MPP’s case. In particular, it rejected the contention that the solicitor was required to investigate the full underlying commercial arrangement and independently redraft Panel 9 to record an agreed, existing liability of £180,000.
The judge considered that the original wording was not obviously defective from a legal perspective and that the request for confirmation was a general request from a non-lawyer who had completed the standard form.
Nevertheless, the admitted deletion of the wording was a breach of duty, and the resulting loss of the opportunity to enforce the security was legally recoverable.
How were the damages calculated?
Although MPP had initially identified £180,000 as the amount it sought to secure, the court did not simply award the full amount.
Judge Davies treated the claim as a loss of a chance case. The relevant question was what would probably have happened if Ratio Law had properly performed its duty and the legal charge had remained effective.
The judge examined the underlying relationship between MPP and Ms Hearne, the expenditure incurred on the children’s care home project, the available equity in Laurel Bank and the likelihood of recovering the money through enforcement or settlement.
The judgment identified several relevant findings:
- The claimant had a good case that Ms Hearne was responsible for failing to identify and advise on significant planning risks affecting the Cheadle properties.
- The evidence supported a claim involving approximately £160,000 of wasted project expenditure and a £20,000 loan to Ms Hearne.
- The court considered the prospects of Ms Hearne successfully challenging the legal charge, apart from the legal uncertainty issue, to be poor.
- Laurel Bank was valued at approximately £300,000, with available equity estimated at around £180,000.
- Ms Hearne would probably have been unable to repay the full amount immediately, and the parties would likely have considered settlement.
The judge concluded that the most likely outcome in the hypothetical scenario was a settlement funded through a remortgage of Laurel Bank.
The figure of £100,000 was considered a realistic all-inclusive settlement amount, which could be justified by reference to the £70,000 fees paid to Ms Hearne, the £20,000 loan and interest on that loan.
The court therefore concluded that £100,000 represented the appropriate value of the lost opportunity, rather than the entire £180,000 originally claimed.
| Item | Amount | Court’s assessment |
|---|---|---|
| Original secured amount | £180,000 | Amount identified in the original draft charge. |
| Property valuation | £300,000 | Estimated value of Laurel Bank. |
| Available equity | Approximately £180,000 | Estimated available equity in the property. |
| Likely settlement | £100,000 | Most likely outcome in the hypothetical scenario. |
| Final damages | £100,000 plus interest | Awarded to MPP by the High Court. |
The judge also indicated a provisional view that interest should be calculated at a commercial rate of 3% above base rate, running from 10 October 2021. He stated that submissions would be heard on the appropriate amount and period of interest.
What does the judgment mean for solicitors?
The decision illustrates how a seemingly straightforward administrative amendment to a legal document can have substantial financial consequences for a client.
For solicitors dealing with property transactions, secured lending and legal charges, the judgment highlights the importance of ensuring that the operative provisions of a document accurately identify the obligations and liabilities they are intended to secure.
Several practical considerations emerge from the decision:
- Check amendments carefully: Any alteration to a legal document should be checked against the original instructions to ensure that essential wording has not been removed.
- Verify secured liabilities: A legal charge should clearly identify the financial obligations it is intended to secure.
- Clarify ambiguous instructions: Where the nature or extent of an underlying liability is unclear, solicitors should seek clarification before finalising the document.
- Maintain proper records: Contemporaneous emails, attendance notes and document versions can be important evidence when a professional negligence dispute arises.
- Consider the consequences of seemingly minor errors: A drafting mistake may affect the enforceability of security and create substantial financial exposure.
The judgment also demonstrates that damages in professional negligence claims are not necessarily equivalent to the full amount a client originally hoped to recover. Where the loss concerns an opportunity, the court must assess what would probably have happened if the professional had performed the relevant duty correctly.
Frequently asked questions
What was the outcome of MPP (Services) Ltd v Ratio Law Solicitors LLP?
The High Court found in favour of MPP (Services) Ltd in its professional negligence claim and awarded £100,000 in damages plus interest.
Why was Ratio Law Solicitors LLP found negligent?
The defendant admitted that its fee-earner had accidentally removed the wording identifying the £180,000 secured amount from Panel 9 of a legal charge without inserting replacement wording. This left the executed charge uncertain as to the sums secured.
What was the legal uncertainty defence?
Ms Hearne argued that the legal charge was void for uncertainty because it did not identify any sum secured against her property. MPP eventually accepted that this defence was realistically unanswerable and agreed to cancel the charge’s registration.
How much compensation did MPP originally seek?
The original draft charge identified £180,000. However, the court assessed the value of the lost opportunity to recover the underlying sums at £100,000.
How did the court calculate the £100,000 award?
The judge assessed the likely outcome had the legal charge been properly prepared. He concluded that the parties would most likely have reached a settlement involving a £100,000 payment funded through a remortgage of Laurel Bank.
When was the judgment handed down?
The judgment was handed down on 6 November 2026 by His Honour Judge Stephen Davies, sitting as a judge of the High Court.
Does the judgment establish that solicitors must investigate every underlying commercial liability?
No. The judge rejected MPP’s argument that the solicitor was required to investigate the entire commercial arrangement and independently redraft the charge to record an agreed £180,000 liability. The finding of negligence arose from the admitted deletion of the crucial wording and the resulting loss of the opportunity to rely on the charge.
What interest was awarded?
The court awarded interest in addition to the £100,000 damages. The judge expressed a provisional view of 3% above base rate from 10 October 2021, subject to further submissions on the amount and period.