Mortgage leases — Defective title — Purchasers’ solicitors failing to see defect — Damages for negligence — Appeal on amount of damages — Court of Appeal holding that purchasers entitled to full price paid plus interest and costs — Award for inconvenience, discomfort and distress caused also appropriate — Appeal dismissed
The respondents were two young couples who were first-time buyers. They chose two single-bedroomed flats at 12 Bulstrode Road, Hounslow, which were owned by G, who purported to let each flat by way of a 999-year lease. The leases were in similar form and contained qualified covenants by the lessees against assignment, and unqualified covenants amounting to prohibitions against subletting or parting with possession of the demised premises. Each couple obtained a building society mortgage advance of the total purchase price, being £38,950 and £38,000, respectively. In the event G was unable to confer a valid leasehold title to either flat with the result that registration of the leases was refused. The defect in title was discovered when the couples tried to sell their flats. They consulted other solicitors who were unable to perfect their titles to obtain registration. They were unable to sell their flats and obtained damages against their original solicitors for negligence in failing to identify the defect at the time of purchase. The master respectively awarded sums of £76,202 and £74,890 inclusive of interest and costs. The solicitors, through the Solicitors Indemnity Fund, appealed against the amount of those damages.
Held The appeal was dismissed.
1. The basis of the master’s valuation of the lease at the time of the transaction in 1986 was unassailable and he was correct to take the view that the respondents’ damage was properly measured by the amount of the purchase price unreduced by any value in the defective lease they obtained.
2. It could not be said that the respondents had been overcompensated. They were left with properties with no equity and which were of no value to them as security for repayment of their mortgages.
3. There was a valid distinction between compensation for mere disappointment or vexation arising from a breach of contract and active discomfort, inconvenience and distress consequent upon breaches which were reasonably foreseeable at the time of entry into the agreement.
4. In this case the question for the court was whether the defendant solicitors retained to act on behalf of a young couple buying a single-bedroomed flat could reasonably foresee that, as a consequence of breach of duty, the flat would be unsaleable and that the couple might be compelled to remain in cramped conditions if they started a family.
5. In such circumstances a solicitor ought reasonably to contemplate such consequences. His clients were not pensioners seeking a retirement home: this was a first purchase. Accordingly, damages for discomfort, inconvenience and distress due to being unable to sell houses were not too remote — nor could there be any reasons of policy for refusing recovery in those circumstances The master was wrong to refuse that head of damage and the respondents were entitled to the sum of £3,000 in that respect.
Gilead Cooper (instructed by Ince & Co) appeared for the solicitors; Mr John Rylance (instructed by Lane Heardman) appeared for the respondents.
