A Devon firm has won an appeal against a £186,000 damages award for professional negligence following a conveyancing row with a former client.
Helen Joyce had bought a £460,000 property overlooking the Torquay Marina in 2007. She had plans to build a major extension and to let out part of it.
But her solicitor, John Darby of Darby & Darby, had not advised her of a user covenant put in place 22 years before by the neighbours, and former owners of the property, preventing any change of use or external alterations without their permission.
An order made last March by Mr Recorder Mitchell at Exeter County Court gave judgment in Joyce’s favour and awarded damages of £186,007 – covering her mortgage repayments, insurance premiums, mortgage arrears, costs liability to the neighbours, money spent on the forbidden works and the £70,000 difference between purchase and ultimate sale price.
In the Court of Appeal, Lord Justice Rimer said Darby’s handling of the case in 2007 was a ‘disgrace’.
The judge said Darby should have identified a potential conflict of interest when Joyce first came back to him to say the neighbours had complained about building works they had not agreed.
The solicitor proceeded to discharge his retainer with ‘an unusual lack of professionalism’ – failing to make notes of meetings for example – and gave no clear advice to Joyce in the early weeks of the dispute about the effect of the alterations covenant.
But Rimer said Darby’s negligence had not caused Joyce to continue with building works into 2008, actions which eventually caused the neighbours to take out an injunction.
Indeed, Darby had made it clear in a letter in January 2008 that work should stop, otherwise expensive litigation would ensue.
The judge said: ‘Whilst I accept that Mr Darby had not previously given her comprehensive advice as to the effect of the covenant, I cannot accept that she did not understand the basis of the advice he was giving her on 10 January.’
Rimer said it was a ‘mystery to me’ how the recorder had calculated the damages figure, but he was correct to conclude that Joyce would not have bought the property had she known about the covenants.
The judge ruled that Darby’s appeal against the damages figure should stand and he set aside the recorder’s award.
He held that Joyce is entitled to damages representing the difference between the price she paid for the property and its then market value. The property was sold by way of what the recorder called a ‘distressed sale’ in March 2010 for £390,000.
Darby should also pay labour and material costs for work done to the property, with that amount set at a future hearing.
Lord Justice Tomlinson said he agreed with the judgment although he accepted that his ‘mind wavered’ in coming to his decision.
Lord Justice Longmore agreed with the award of the difference between the purchase price and distressed sale, but disagreed with his fellow judges that the damages should include the costs of injunction proceedings.