Court of Appeal holds law firm negligent in failing to register property restriction causing financial loss

In Christopher Hugh Gosden and others v Halliwell Landau and others [2020] EWCA Civ 42 the Court of Appeal overturned a High Court decision concluding that the judge’s approach to Claimant’s causation was wrong.

The Claimants were husband and wife and both senior professors at the University of Oxford. The First Claimant, Christopher Godsen was the only child of Jean Weddell who died aged 85 on 10 March 2013. The Judge found a strong and happy relationship between Dr Weddell and her son which led to her making a number of gifts to him during her lifetime.

In 2003, the First Claimant’s mother, Dr Weddell, had instructed St James’s Place Plc (a firm marketing a scheme for mitigation of IHT known as the Estate Protection Scheme), to set up a trust under which she would pass her property in Kennington, in which she resided, worth £1.25 million to her son, the Claimant. St James’s Place Plc instructed two firms of solicitors, one of which was the First Defendant firm, Halliwell Landau. The letter of engagement described the work to be undertaken by Halliwell Landau as “the preparation and completion of all appropriate documentation to implement St James Place Estate Protection Scheme 1 based on information supplied by [SJP] and shall not extend to advice given by [SJP] in relation to that scheme”. The Defendant was provided with a guide on implementing the scheme and the Claimants and Dr Weddell believed that the scheme would be carried out precisely as set out in the guide. This included the registration of a restriction to prevent any unauthorised disposition of the registered title to the Property.

Solicitors’ negligence in failing to register restriction

Notwithstanding the terms of the Guide, no restriction was in fact registered against the title by Halliwell Landau. Dr Weddell remained the registered proprietor with all the powers of a full owner until October 2010 when the Property was sold without the Claimants’ knowledge or consent to an unconnected third party purchaser.

In 2013, the First Claimant’s mother passed away and the First Claimant discovered that the property had in fact already been sold, leaving a net estate of only around £5,000. It became apparent to the First Claimant that the Defendant had failed to register the restriction at the Land Registry. The First Claimant brought a claim against the Defendant alleging the solicitor firm’s failure to register the restriction at the Land Registry was negligent and had enabled the sale of the property without the Claimants’ knowledge and consent.

The Claimants were successful in showing that the Defendant had been negligent however the High Court held that whilst the Defendant firm had been negligent, the First Claimant had not established any loss. HH Judge Pelling QC determined that had the Claimants known about the sale, they would not have been able to prevent the sale. At the time of the sale, the property was solely owned by the First Claimant’s mother and the Judge concluded that the First Claimant and his family would have agreed for his mother to sell the property and keep the proceeds of sale and therefore suffered no loss as a result of the sale.

Limitation

The Claim form was issued on 26 October 2016. The Defendant challenged Judge Pelling’s finding that the Claimants were entitled to rely on the extended limitation period provided for under section 14A Limitation Act 1980. If successful in their challenge, further issues would need to be considered whether the six year period of limitation under section 2 Limitation Act 1980 commenced: (i) in 2003 when the breach of duty occurred; (ii) on 29 October 2010 when completion of the Property took place; or (iii) much later in 2013 when the Claimants discovered the breach.

The Judge considered that it would not have been reasonale for the Claimants to have made enquiries into Dr Weddell’s estate until after the memorial service on 5 April 2013. On this basis, they were not likely to have acquired all of the knowledge necessary for bringing the claim much before the end of February 2014. Judge Pelling based this on the fact that it would not have been sufficient for the Claimants merely to discover that the Property had been sold. In order to know that damage had been caused by an act or omission of the respondents, the Claimants would have needed to know that the restriction had not been registered and they could not reasonably be expected to have discovered this without the assistance of solicitors.

The Claimants had contacted St James’s Palace (“SJP”) in 2015 asking whether the EPS trust arrangements were still in place. SJP informed them that the individual handling the case had moved to Gately Plc. At this point, through an internet search the Claimants discovered the property had been sold however understood the trusts to still be in place.

Upon contact by the Claimants, in September 2015, Gateley Plc wrote to the Claimants outlining the possible claims which might be brought against Dr Weddell’s estate. At this stage, no mention was made of the Defendant’s failure to register the restriction on the property.

In January 2016, Gateley Plc informed the Claimants that they could no longer act in the matter as a result of a conflict of interest because the Defendant firm had acted for Dr Weddell and they had subsequently acquired parts of the Defendant’s firms business. They referred the Claimants to another firm of solicitors who could assist and the Claimants instructed this firm who issued the claim form on 26 October 2016.

It was only upon making enquiries and retrieving files from storage in January 2016, instructing new solicitors in May 2016 and being advised on any course of action that the Claimants were able to issue proceedings via their solicitors on 26 October 2016.

The Judge’s view was that the Claimants had acted reasonably in pursuing the matter and even if they had commenced the process after the memorial service in April 20143, there was not reason to suggest that it would have taken any less than the 10 months which passed between April 2015 and January 2016 when Gateley indicated they could not act together with the time required by the new solicitors to obtain the Claimants’ instructions and issue the proceedings. If the starting date is any later than 26 October 2013 then the claim was brought in time.

Upon appeal, Lord Justice Patten held that the Claimants had acted reasonably in following a chain of enquiries after April 2013 through the relevant individuals (SJP and Gateley). The Court held that Judge Pelling was right to conclude that the Claimants had established their case for relying on the extended period of limitation under s.14A LA 1980.

Court of Appeal highlights Court’s error in treating this as a loss of chance claim

The First Claimant appealed on the basis that his claim was not brought on the basis of whether or not he had a real or substantial chance of persuading his mother not to proceed with the sale. His loss had been pleaded as the loss of power to prevent the sale.

Upon appeal, the Court of appeal agreed with the Claimants and held that the High Court Judge was wrong to treat the case as a loss of chance claim and that the evidence at trial presented a case that the Claimants would not have consented to the sale when notified by the Land Registry, had the restriction been registered. Lord Justice Patten stated that Judge Pelling had wrongly approached the issue of causation and should have looked at the likelihood of the claimants granting consent as the primary factor. LJ Patten stated the Judge had been:

“wrong to treat this as a claim based on a loss of a chance unless the starting point of the claimants had been that they would, as a matter of course, have consented to whatever Dr Weddell ultimately wished to do with the Property but would have attempted to persuade her to change her mind.”

the assumption which the judge makes that the claimants would readily have consented to whatever Dr Weddell wished to do with the Property because it originally belonged to her ignores the legal effect of the trust arrangements and assumes that the claimants should have regarded them and their duties as trustees as of no consequence or value. In this case, in my view, the necessary evidential foundation for his conclusions about consent was missing. The judge, it seems to me, fell into error by approaching the issue of causation in terms of whether Dr Weddell could have been persuaded to abandon a sale and of treating the consent of the claimants to what she decided as a given.”

Following the Claimant’s success upon appeal, the case has been returned to the trial Judge to make a determination on the loss the Claimant suffered and therefore the damages he should receive.

Comment

This case highlights a common mistake made by licensed conveyancers, property solicitors and property advisers. Failing to register a restriction at the Land Registry is a common example of conveyancer negligence in addition to:

  • Coveyancer fails to properly check title deeds, official copies of title;
  • failure to recognise the existence of a restrictive covenant;
  • negligent negotiation of restrictive covenant insurance; for example on discovery of the restrictive covenant, the conveyancer alerts the person with the benefit before seeking restrictive covenant insurance;
  • failure to spot any physical or latent defects;
  • failure to do the proper checks e.g. failing to notice that the seller of the property had failed to get planning permission, building regulations, listed building or conservation area consent;
  • problems with rights of way e.g. the right of way is not appropriate for the buyer’s needs;
  • failure to make further enquiries following seller’s replies or property search results;
  • drafting incorrect provisions in the sale deed or contract;
  • acting without authority or not properly adhering to instructions from the buyer or seller client;
  • failing to give proper advice on a surveyor’s report.

If you have purchased a property, you will either seek the advice and representation of a solicitor specialising in conveyancing or a licenced conveyancer. If you have relied on a conveyancer’s services and the advice and work done has (for example) resulted in a purchase or sale falling through or the price of the property to decrease, then you may be able to claim compensation for conveyancing negligence for your financial loss.

We are specialist professional negligence lawyers with expertise in claims against specialist property solicitors and licenced conveyancers. If you have a claim, contact our expert team as soon as possible as all litigation has strict time limits which you must adhere to.

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