Professional negligence — Breach of duty — Compensation — Whether defendant breaching duty to provide non-negligent information — Whether claimant incurring loss as result of defendant’s negligence — Whether defendant liable for all consequences of negligence — Claim allowed in part
The claimant sought damages against the defendant firm of solicitors for professional negligence in respect of the defendant’s handling of the purchase of seaside premises and the adjacent unregistered land. The claimant had purchased the property, in June 1993, in order to convert it into flats and bed-sitting rooms. The property was subject to a mortgage and a debenture in favour of a bank together with three further charges in favour of three separate chargees.
The claimant had purchased the property for £240,000 from S, who had purchased it for £130,000 from the administrative receivers appointed by the bank. The property was subject to the other charges, which had not been overreached when the sale was made by the receivers. The defendant acted for both S and the claimant and it accepted liability for failing to inform the claimant, prior to completion, that the other charges over the property would remain after completion of the sale. An expert appointed jointly by the parties pronounced that the open market value of the property, at the time of the claimant’s purchase, was £130,000.
Issues remained for the court as to causation and damages.
Held: The claim was allowed in part.
On the balance of probabilities, but for the defendant’s negligence, the claimant would not have completed the purchase. No reasonable property developer would complete without a good marketable title. For the purposes of causation, the breach was of the duty to give non-negligent information by way of a report on title. Once the defect had been rectified, the decision to retain the property had no causal connection with the breach of duty.
The weight of authority supported the conclusion that, prima facie, the diminution-in-value approach to damages was appropriate in the present case. The claimant might recover the difference between what the property would have been worth, but for the negligence, and the price for which he would eventually dispose of it (or could dispose of it), provided that the delay in selling it was reasonable and did not negative the causal connection between the negligence and the ultimate loss: Ford v White & Co [1964] 1 WLR 885 ; [1964] 190 EG 595; Dent v Davis Blank Furniss [2001] Lloyd’s Rep PN 534; Shaw v Fraser Southwell [1999] Lloyd’s Rep PN 633; Oates v Anthony Pitman & Co [1998] PNLR 683 and South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191; [1996] 2 EGLR 93; [1996] 27 EG 125 referred to.
At the time of the sale to the claimant, the value of the property was £130,000, without the title problem. Its actual value with the defect was £85,000. Accordingly, the claimant was entitled to £45,000 damages for the diminution in value.
Geraint Anthony Jones QC (instructed by Darwin Gray, of Cardiff) appeared for the claimant; Andrew Macnab (instructed by Henmans, of Oxford) appeared for the defendant.
Eileen O’Grady, barrister
