Purchasers’ solicitor negligently failing to ascertain that property subject to rights of common – Purchasers building second house on the property – Prospective buyer of both houses negotiating substantial price reduction after making appropriate search – Damages awarded on diminution in value basis.
In 1989 the plaintiffs, a married couple, retained the first defendant solicitor (F) to act for them in buying for £200,000 a house and land (the property) at 330 Guildford Road, close to Bisley Common, Surrey. During the course of his inquiries, F ascertained that a strip of land lying between the property and the highway was subject to rights of common. In 1992 the plaintiffs obtained planning permission for the building of a second house (no 330A) on part of the property (the blue land), which they intended to sell once it was developed as a separate house and garden. In February 1993 the plaintiffs again retained F, who attended to various matters affecting the development, including (for tax reasons) the vesting of the blue land in the husband alone. Following the completion of no 330A towards the end of 1993, the plaintiffs decided to accept an offer by H Ltd to buy both houses for the price of £185,000 each, it being the intention of H Ltd to turn the entire property into a private nursing home. However, searches made on behalf of H Ltd revealed that not only the strip but also the blue land was subject to rights of common, thus raising the possibility, as regards no 330A, of enforcement measures being taken under sections 193 and 194 of the Law of Property Act 1925. At the end of protracted negotiations, H Ltd, who had been let into possession of both houses, agreed to take no 330A at a price reduced to £140,000. In the plaintiffs’ proceedings for negligence, the defendants, while admitting liability for F’s failure to make a sufficient search for rights of common, contended that damages should be limited to a nominal figure as the plaintiffs had not sold the property at a loss.
Held The plaintiffs should recover £40,000 damages.
1. In the ordinary case involving solicitors or surveyors the award should be based on the diminution in value attributable to the defect complained of: see the authorities reviewed in County Personnelv Alan Pulver [1987] 1 WLR 916. Although that rule should not be mechanistically applied (see per Bingham LJ in County supra), there was nothing in the present case to warrant a departure from it. Nor could the defendants claim that the profit made by the plaintiffs had arisen from the breach of duty complained of, as the retainers in 1989 and 1993 had no bearing on the decisions to apply for planning permission and to conclude the sale to H Ltd.
2. For the same reason the plaintiffs could not claim for the inconvenience sustained as a result of the delayed completion of the sale of no 330A.
3. Having regard to expert evidence on market values, the plaintiffs were entitled to a sum corresponding to a 20% discount on the price paid in 1989 for no 330.
Nicholas Wood (instructed by Hart Reade, of Eastbourne) appeared for the plaintiffs; Nigel Gerald (instructed by Blake Lapthorn, of Fareham) appeared for the defendants.