The Court of Appeal has recently heard an appeal by a solicitor’s firm who in the lower court had been made to pay a previous client £186,000 in damages.
This was as a result of failing to advise the client about restrictive covenants which applied to the house she was purchasing overlooking Torquay harbour. After purchasing the property the client subsequently sought advice from the appellant solicitors firm about a dispute with the covenant holder. This is because she decided to carry out works to the property which were in breach of the covenant. The solicitor advised the client that the works she was carrying out should cease until an agreement was reached with the covenant holder. Despite this the client continued with the work and was issued with injunction proceedings by the covenant holder.
Eventually the client had her house repossessed due to a combination of reasons and she sued her solicitor for damages. This was on the basis that they failed to advise her of the restrictive covenants in the original conveyancing transaction. Had she known about these she would not have purchased the property at the outset.
The solicitors appealed this decision as they felt they had advised the client to stop the work and any failure to advise about the covenants in the conveyancing transaction had not caused the loss. They also maintained that the lower court was wrong to find that had the client been properly advised she would not have bought the property. They also appealed the basis on which the judge calculated the heads of damage.
The Court of Appeal, while indicating that the appellant ought not to have accepted instructions in relation to the injunction proceedings, found that the cost of the injunction proceedings were not recoverable from the appellant. This was because the appellant had clearly advised the client not to carry out the work and that if she did, expensive litigation would follow. However, it was found that the client would not have bought the house had she been advised of the restrictive covenant and therefore she should be entitled to damages representing:
a) costs of the building works as they did not enhance the value of the property;
b) the difference in value (if any) between;
(i) the price she paid for the property and
(ii) the value of the property when she purchased it subject to the property;
The Court of Appeal adjourned the case to assess the damages as outlined above.
I think this case highlights the importance of having set procedures and risk assessments in place particularly in conveyancing transactions when acting for purchasers of properties. By far the most common professional negligence claims I deal with involve purchasing transactions when simple checks just have not been made.
Stephensons has a team of specialist land dispute lawyers who are well equipped to advise on the relevant evidence required to succeed in resolving these kinds of disputes. Contact us on 01616 966 229 for assistance.