Professional negligence — Causation — Respondent solicitors failing to ensure title transferred upon sale of property to appellants — Judge holding no loss resulting from respondents’ breach of duty because outweighed by value of appellants’ occupation — Whether credit to be given for occupation — Whether any loss — Whether loss caused by respondents’ negligence — Appeal dismissed
In 1988, the second respondent, W, a solicitor in the first respondent firm, agreed to sell a plot of land to the appellant couple and to act for them on the conveyancing. Unknown to the appellants, W had no title to transfer, and, furthermore, took no steps to register the transfer to the appellants.
The appellants built a house on the plot, borrowing £77,000 on a mortgage for that purpose, and went into occupation. Their attempts to sell the house came to nothing, and, in 1993, they took it off the market. In 1994, they became aware of the problem with the title and took steps to remedy it, finally acquiring a registered title in 2001.
Meanwhile, in 1998, the appellants’ renewed efforts to sell the house failed after a potential buyer withdrew because of the delay arising from the appellants’ inability to offer a good title. At that time, the appellants held negative equity in the house.
The appellants claimed damages from the respondents for negligence, which was admitted, for failing to procure a transfer of title. By that time, the value of the house had risen, and there was equity of more than £12,000. The appellants sought to recover a sum representing either: (i) the interest paid on the mortgage up to the date they acquired title; or (ii) loss stemming from their inability to realise their equity in the house. The judge awarded the cost of procuring the eventual transfer of title, but considered that the appellants had suffered no other loss in consequence of the respondents’ breach of duty. He found that the value of the appellants’ 13-year occupation exceeded the loss assessed on either of the bases put forward by them. The appellants appealed.
Held: The appeal was dismissed.
1. The judge had erred, when assessing the appellants’ loss, in requiring them to give credit for the value of their occupation of the house. The only benefits in respect of which they had to give credit, as countering their loss, were benefits that flowed from the breach of duty to which their claim related. The benefit to the appellants of occupying the house did not result from the failure to transfer title, but was, on the contrary, enjoyed despite that failure.
2. The appellants’ liability to interest on the mortgage was not a recoverable loss, since it was not a consequence of the respondents’ negligence. The appellants had to show not only that they had suffered loss but also that the respondents’ breach of duty had been an effective cause of that loss. They had not done so because they would still have taken out the mortgage, and incurred liability to interest under it, even if they had acquired a good title.
3. The appellants could not recover in respect of any “loss of equity”. On the facts, their failure to sell the house before 1998 was due not to their lack of a good title, but to other reasons, including, after 1993, the fact that they had, for their own reasons, chosen not to market it. Accordingly, the respondents’ negligence was not an effective cause of any loss on that account. Although, by 1998, the appellants had once more wished to sell, they had suffered no loss by reason of being prevented by their lack of a title from doing so. They were in fact better off, as they now held a valuable equity in the property, whereas if they had sold in 1998, when they held negative equity, they would have made a loss. Accordingly, the judge had been right to limit damages to the costs incurred by the appellants in perfecting their title.
Milwyn Jarman QC (instructed by Loosemores, of Cardiff) appeared for the appellants; Andrew Keyser (instructed by Morgan Cole, of Cardiff) appeared for the respondents.
Sally Dobson, barrister
