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Opportunity Knocks!

A firm of solicitors successfully defended a negligence claim for over £600,000, involving an abortive property transaction, on the grounds of causation, with the judge describing the claimants' claim of lost opportunity to make profit as "unrealistic and fanciful".

Background

In November 2012 Taray Investment Limited and Bellevue Homes Limited ( "the Claimants ") formed a joint venture and  instructed Gateley Heritage LLP (" Gateley"), the defendant firm, to act in the acquisition of development land in  Rotherhithe South East London (" the site ").  Planning permission had already been granted for demolition of the original structure on the site and the building of seven new residential units and parking. 

Whilst preparing the report on title in December 2012, Gateley failed to identify a discrepancy between the land registry plan and the highways plan, which showed that part of a footpath encroached on the site and would be included in the proposed development.  

The anomaly was spotted over four months later when the report on title was sent to the potential lender's solicitor.  Further investigation and conversations with the local council confirmed that a stopping up order would be needed in order to extinguish the highway rights over the footpath and allow the development to proceed. The timescale for obtaining such an order was likely to be between 3 and 12 months (depending on whether objections were received).  

The deal fell apart quickly after the discovery of the requirement for a stopping up order .The Claimants would not agree to exchange contracts conditionally on obtaining the stopping up order and pay a deposit of 10% of the purchase price. The vendor remarketed the site and it was subsequently sold. 

The Claimants brought a claim against Gateley in negligence. Damages of over £600,000 were claimed allegedly arising from the loss of opportunity to purchase and develop the site.  It was said that had Gateley not been negligent and had they pointed out the requirement for a stopping up order the Claimants would quickly and inexpensively have obtained a stopping up order at a much earlier point in the property transaction.

Gateley admitted breach of duty  but defended the claim on the grounds of causation namely that the Claimants could not prove that, if the correct information and advice had been provided in the report on title in the first place and the requirement for the stopping up order pointed out, they would have purchased the site. Gateley argued that the Claimants could not overcome the first hurdle in the two stage test required to prove loss of a chance (established in Allied Maples). This was because, amongst other things, the Claimants did not have adequate funding.

Decision

Sitting in the High Court, Mrs Justice Tipples DBE heard evidence from four witnesses of fact about events which took place seven years earlier and from six expert witnesses. She found that the Claimants' claim failed on causation grounds, stating that their case was unrealistic and the prospects of them actually acquiring the site were "fanciful".  She rejected the argument that the vendors, as advised by their solicitor, would have agreed to an option/exclusivity agreement, dependent on the stopping up order.  Instead, she found that what did happen in May 2013 (when the requirement for the stopping up order was identified) would have happened in December 2012 ie. the Claimants would not have agreed to pay a 10% deposit and enter into a conditional contract to purchase the property conditional on the stopping up order being obtained. One of the Claimant's witnesses had confirmed as much on cross examination. The judgment also underscored the difficulty faced by a court hearing evidence from witnesses about events which took place several years previously and the reliance often placed by a court on contemporaneous correspondence and documents.

Summary

This decision is a further example underlining that, even where a defendant has admitted breach of duty, claimants still have to overcome the often insurmountable hurdle that the admitted breach of duty has caused loss and / or that a claimant has lost something of value. It serves as a reminder that even in cases of admitted breach of duty courts will carefully consider the available evidence whether oral or documentary to determine whether a claimant can satisfy the requisite tests .

Contact

For more information please contact Sheona Woods, Partner Sheona.woods@dwf.law or Harriet Edwards, Solicitor Harriet.Edwards@dwf.law

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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