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“Professional disgrace” does not guarantee full compensation

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Posted by Susan Hopcraft on 23 June 2014

Susan Hopcraft Partner

Compensation is only awarded for solicitor negligence if the poor work causes loss. However, it can be difficult to establish what loss has been caused by a solicitor’s failures, as this recent case shows, where the three Court of Appeal judges could not reach a settled view between them.

Facts

In March 2007, Helen Joyce instructed Darby & Darby solicitors to advise her on a purchase of a property in Torquay. She bought the property for £460,000, but the solicitors failed to advise her of restrictive covenants that prevented her from changing the use of the property or making any external alterations.

Ms Joyce planned to make major alterations to the property and to let it out, both of which, unknown to her, required permission from her neighbours, Mr and Mrs Hoyle. Ms Joyce commenced works in September 2007 and received a letter from her neighbours in October asking her to cease immediately until she had obtained permission.

Perplexed, Ms Joyce contacted Darby & Darby again, who agreed to look into the matter and to assist in obtaining the necessary consent from Mr and Mrs Hoyle. However, no advice was given to explain the need to suspend building works until consent was in place. It was not until late December that Ms Joyce was advised that consent was needed and the consequences of not obtaining it. She was not then expressly advised to stop the work although in January she signed an undertaking to stop, after a further meeting with her solicitor. Ms Joyce nonetheless continued the work and was served with an injunction by Mr and Mrs Hoyle. Following this the work was left unfinished and the house was eventually sold as a distressed sale.

‘Professional disgrace’

In this case, the solicitor was at fault for a number of reasons. The appeal judges branded his work “a professional disgrace” for:

  1. failing to advise Ms Joyce of the existence of the covenants. If she had known about them she may have negotiated a reduced price, invested in a different property or obtained permission from Mr and Mrs Hoyle prior to beginning the works.
  2. continuing to represent her when asked about the covenant in late 2007. This was a clear conflict of interest when his negligent advice had led to the current situation. 
  3. failing to advise Ms Joyce at an early stage that it was important to cease works until consent was obtained and of the impact failure to obtain consent would have on her plans. His failure led to Ms Joyce believing that she was entitled to continue works and inhibited her ability to reach an agreement with Mr and Mrs Hoyle. 

Did these breaches cause loss?

Yet, when advised of the consequences of the covenants in December 2010 Ms Joyce continued to work on the property. Effectively she ignored the (late) advice and it was therefore difficult to be sure that the third failing above caused loss. It could easily be said that, even if she had been advised clearly and promptly to stop the works, she would have ignored it. The appeal court decided that the solicitor ought not to be responsible for her £23k in costs for defending the injunction that followed. They decided she had brought those losses on herself. This was the decision of one law lord; another “wavered” on the point but agreed. 

However, the third decided that, because of the sloppy course of dealing that had preceded, which gave Ms Joyce misplaced confidence in her ability to proceed, the solicitor ought to bear responsibility for the injunction costs. He was outvoted, although his stance was attractive.  

They also reconsidered other losses and awarded damages for the first two failings set out above. These damages were to compensate the costs of the initial works as Ms Joyce would not have incurred these costs if she had been properly advised of the existence of the restrictive covenants. She also obtained damages for the difference between the price of the property when she bought it and the true market value (with the burden of the covenants).  

Summary

This case illustrates the difficulties of assessing losses stemming from negligence. The court assesses what would have happened if advice had been properly given. If it would have been ignored then no matter how negligent the advice, damages will not be awarded for the consequences. However, the difference between the three law lords shows how difficult it can be to define those consequences in the professional negligence arena. 

About the author

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

Susan Hopcraft

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

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