Plaintiff purchasing property – Conveyance containing covenant – Vendor not registering covenant – Plaintiff receiving negligent advice in relation to unregistered covenant – Plaintiff negotiating with vendor to be released from covenant – Vendor registering covenant – Prospective purchaser withdrawing offer – Whether vendor entitled to damages for lost opportunity of selling property and defeating covenant
Judgment delivered December 19 1996.
In 1980 the plaintiff acquired a property in Swanage. The defendant, a firm of solicitors, acted for the plaintiff. The conveyance contained a covenant requiring the plaintiff to obtain consent from the vendor if the property was to be developed into more than four residential flats. Although it was unregistered land, the covenant was capable of registration as a class D(ii) charge under section 4(2) of the Land Charges Act 1972. The vendor did not however register the charge. In January 1988 a site adjoining the plaintiff’s property came onto the market and the plaintiff purchased the site with a view to selling the two properties together for development. Although the plaintiff encountered difficulties in obtaining planning permission, the properties were marketed together and an offer was recieved from Berkeley Homes (Dorset) Ltd (‘Berkeley’) of £400,000. Other offers for £350,000 and £380,000 were also received. In June 1989 outline planning permission was granted. The defendant became aware that the vendor had not registered the charge but negligently failed to advise the plaintiff that the covenant would not have been enforceable against a buyer if it had remained unregistered at the time of completion. The defendant contacted the vendor in relation to the covenant. The vendor immediately registered the charge and demanded £60,000 as the price for release from the covenant. The plaintiff refused to pay and threatened to go to the land tribunal if agreement could not be reached. In December 1989 Berkeley withdrew their offer.
The judge held that it had not been shown on the balance of probabilities that the plaintiff had lost the sale by reason of the defendant’s negligent advice and accordingly the plaintiff was only entitled to damages for the diminution in value of the property due to the registration of the covenant. The plaintiff appealed. It was not disputed that the law had developed and that the correct approach for the assessment of such damages was to consider whether, on the balance of probabilities, if the plaintiff had been correctly advised, he would have attempted to persuade Berkeley, or another purchaser, to undertake an early completion to defeat the covenant, and whether he had had a real or substantial chance, as opposed to a speculative one, of succeeding.
Held The plaintiff’s appeal was allowed
1. On the balance of probabilities, if the plaintiff had been correctly advised, he would not have entered into negotiations with the vendor in respect of the covenant but would have attempted to persuade Berkeley to agree to urgent completion to defeat the covenant, albeit at a reduced price to achieve that purpose.
2. There had been a substantial chance that the vendor would not have discovered the fact of non-registration until 18 November 1988. There had also been a real chance of obtaining the planning consent earlier and it would have been to Berkeley’s and the plaintiff’s advantage to have ensured that it had been obtained. Therefore it could not be dismissed as speculative that completion could have been achieved before the vendor became aware of the non-registration. In any event there had been a substantial chance that a sale would have been concluded with another purchaser before 18 November.
3. There had been a slightly better than even chance that the sale of the property at £375,000 would have been achieved by 18 November 1988 and that chance could be assessed at 60%. The plaintiff was accordingly entitled to 60% of £375,000.
The plaintiff appeared in person; Nicholas Davidson QC (instructed by Wansbroughs Willey Hargrave) appeared for the defendant.
