The Court of Appeal has recently confirmed the importance of establishing causation to be successful in a professional negligence claim.
Darby & Darby (the “Appellant”) appealed against a decision which gave judgment to Helen Joyce (the “Respondent”) against the Appellant for damages for professional negligence.
The Respondent instructed the Appellant to act for her in the purchase of a property. It was the Respondent’s intention to complete both interior and exterior works to the property and to subdivide it. However, the Appellant failed to advise the Respondent of two restrictive covenants: (1) not to use the building for any purpose other than as a single private dwelling; and (2) not to make any alteration or addition to the exterior or external appearance of the property, without first obtaining the consent of the transferor.
The Respondent commenced the works, following which the transferor advised that works could only continue with his consent. However, unaware of any reason why there should be a problem, the Respondent ignored the request. Subsequently, the transferor engaged solicitors and explained that he intended to apply to Court for an injunction to stop further works unless they stopped immediately and the transferor’s consent was obtained. The Respondent reinstructed the Appellant to deal with the dispute, but the Appellant failed to advise of the problems associated with the covenants and did not immediately tell the Respondent to stop the works. Negotiations about the nature and extent of the works ensued, but the Respondent continued to fail to stop works at the property. The transferor again advised that if works did not cease then injunction proceedings would be commenced. The Appellant later advised the Respondent to put the works on hold while negotiations continued, but she refused with the result that the transferor obtained an interim injunction against the Respondent. The Respondent subsequently alleged negligence against the Appellant.
At first instance, it was held that the Appellant had failed in his duty of care to the Respondent by failing to advise clearly on the meaning and effect of the covenants; failing to emphasise the seriousness of the Respondent’s position; and failing to ensure works at the property stopped. At first instance the Recorder considered first whether, if the Appellant had advised the Respondent of the covenants at the outset, she would have purchased anyway or not at all and held, on the balance of probabilities, that had the Respondent been properly advised she would not have proceeded with the purchase. In relation to quantum, the Recorder held that the fundamental principle was that the Respondent was entitled to damages that, so far as possible, put her in the position she would have been if the Appellant had discharged its duty and that the starting point was to take the diminution in value of the property by reason of the existence of the covenants. However, the Recorder held that to limit damages to this amount would not be fair and appropriate compensation and awarded various other heads of compensation also, including the costs of the injunction proceedings.
The Appeal Court’s Decision
On appeal, it was the Appellant’s case that the Respondent bore a substantial responsibility for the losses she sustained. The Appellant argued, and the Appeal Court agreed, that although it did not immediately tell the Respondent to stop the works, such advice was eventually given and if the advice was accepted, injunction proceedings would not have started. The Respondent was therefore the cause of her own loss.
It was argued that the Recorder’s decision that the Court should be slow to find the Respondent would have proceeded anyway was tantamount to a presumption that she would not have proceeded, whereas the burden was to prove on the balance of probabilities. However, the Court held that the Recorder took the decision on the evidence before him and was not applying a presumption. Accordingly, the Appeal Court held that there was no error in the Recorder’s decision in this respect.
With regard to the damages payable, at first instance, the Court awarded the Respondent damages in respect of the costs of the injunction proceedings. However, as a result of the Appeal Court’s decision it was held that this was not recoverable as this was damage brought on the Respondent herself. Instead, the Appeal Court held that the Respondent was entitled to damages representing the difference between the price she paid for the property and the value of the property, subject to the covenants and an account of costs for the cost of the works undertaken at the property.
Although the Appeal Court found that the Appellant’s conduct was a “professional disgrace”, this decision reiterates the importance of establishing causation when bringing a professional negligence claim and the importance of considering claimable heads of loss. It emphasises that professional negligence claims are complex and fact specific and can often turn on the Court’s analysis of the factual scenario.
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