Defendant solicitor acting for claimant in relation to purchase of property – Sale falling through – Claimant issuing proceedings seeking damages – Whether claimant having realistic prospect of establishing loss from any negligence by defendant – Claim dismissed – Appeal dismissed
In 1987 the claimant’s husband borrowed £1m, secured on 39 Green Street, Mayfair, in order to develop the property. In 1990 he agreed to sell it to the claimant and the defendant firm of solicitors was instructed in relation to the transaction. It was agreed that the claimant would pay £800,000 in cash to her husband and assume liability for the payment of interest and capital in respect of the mortgage of £1m. Prior to the transfer of the property, the bank commenced possession proceedings against the claimant’s husband, based on non-payment of interest instalments and capital sums due under the mortgage. In November 1992 the bank obtained a possession order, suspended on terms. The claimant was unaware of the proceedings. Subsequently, the husband surrendered possession of the property to the bank and in May 1993 the bank contracted to sell the property.
The claimant issued proceedings against the defendant claiming that it had acted negligently by failing to: (i) complete the purchase in accordance with its retainer; and (ii) keep her informed of all matters relevant to the transaction, including the possession proceedings brought by the bank. The claimant contended that if it had done so, she would have either negotiated a further extension of the mortgage terms or refinanced the mortgage with other lenders. The claimant sought damages on the basis that if she had purchased the property she would have sold it within a few years at a substantially higher price.
The defendant applied for summary judgment on the basis that the claimant had suffered no recoverable loss. The judge concluded that the loss was to be assessed as at the date of any breach and that the losses arising from subsequent events, including movement in the housing market, were not recoverable. He found that the claimant had not incurred any loss at the time of any breach by the defendant since she could have invested her money in another property. The claimant appealed, contending, inter alia, that it was not appropriate to assess the loss at the date of the breach, since the transaction could not be analysed simply as the loss of an opportunity to participate in the market but involved the loss of a unique property, which would become the claimant’s home.
Held: The appeal was dismissed.
The judge had been right, on the evidence, to conclude that the date of breach rule applied. What had been lost were potential profits from the property’s development. However, there was no evidence before the court to show that the property was unique and that the claimant could not have invested her money in an alternative property with similar potential. Her failure not to invest her money after the purchase failed was not as a result of any negligence on the part of the defendant. Accordingly, it had been appropriate to dismiss the action.
Jonathan Nash instructed by Pemberton Greenish appeared for the claimant; Michael Briggs QC and Justin Higgo instructed by Barlow Lyde & Gilbert appeared for the defendant.
Thomas Elliott, barrister
