Appellants instructing respondent solicitor in respect of farm purchase — Vendor not completing on time — Respondent failing to give appropriate advice — Appellants sustaining loss due to deferred completion date — Quantum of damages
In 1993, the appellants purchased a farm at auction. They paid a deposit of £23,500 and instructed the respondent firm of solicitors to act for them. It became apparent that the vendor would not be able to give vacant possession of the farmhouse by the completion date. The respondent failed to advise the appellants to protect their interests by serving a completion notice under condition 23 of the general conditions on the contract for sale. This stated: “if the sale shall not be completed on the contractual completion date, either party, being himself then ready, able and willing to complete, may after that date serve on the other party notice to complete the transaction in accordance with this condition…”, it went on to provide, in such an eventuality, for the return of sums paid, specific performance, or the termination of the contract. In the event, completion, which had been scheduled for November 1993, took place in February 1994.
The appellants argued that the respondent had been negligent in failing to advise them to serve a completion notice. They claimed damages on the basis that: (i) by the time they eventually did take possession, they had lost a season’s lambing; and (ii) had they been advised correctly, they would have served a completion notice, and had the vendor failed to comply with it, they would have terminated the contract.
At first instance, the appellants were awarded damages of £591.75, which represented interest at the contract rate on the deposit from the contractual completion date until actual completion, plus interest. The judge also held that the appellants should have mitigated their losses by suing the vendor for damages. The appellants appealed.
Held: The appeal was allowed.
Had the completion notice been served at the appropriate time, the earliest date for compliance by the vendor would have been 3 December 1993. By then, it would have been too late to purchase breeding ewes. The appellants would therefore have lost profit regardless of whether the notice had been served. That loss could not be laid at the respondent’s door.
However, it was necessary to consider the appellant’s chances of purchasing the property between the dates of the intended and actual completion. The value of that chance was the true measure of the appellants’ loss arising from the respondent’s negligence.
The appellants would have been able to purchase the breeding ewes during that period only if: (i) the vendor had reached a binding agreement with the occupier of the farm under which vacant possession would have been given on the expiry of the completion notice; (ii) the appellants had been informed of that agreement; and (iii) on that basis, they had had the certainty of entering into an agreement to purchase the ewes prior to that date. On the evidence, there had been a 40% chance of those events taking place. Therefore, but for the negligence of the respondent, the appellants would have had a 40% chance of earning a profit in that period, and that represented the amount of damages they should have been awarded. The appellants were under no duty to mitigate their damages by entering into litigation with the vendor.
Graham Walters (instructed by the Bar Pro Bono Unit) appeared for the appellants; Katherine McQuail (instructed by Pinsents) appeared for the respondent.
Vivienne Lane, barrister
