High Court rules in solicitors’ favour in £865,000 property negligence claim

In Taray Investments Ltd & Anor v Gateley Heritage LLP the Honourable Mrs Justice Tipples DBE ruled that property developers could not prove a loss of investment opportunity caused by their solicitors’ mistake.

The Claimants, Taray Investments Limited and Bellevue Homes Limited had entered into a joint partnership in 2012 to purchase a site in Rotherhithe, London (“the Rotherhithe Site”) which they considered a valuable development opportunity. They instructed solicitors Gateley Heritage (part of Gateley LLP) and a partner at the firm who had more than 20 years experience in advising on commercial property development.

Solicitor’s negligence in failing to properly assess conveyancing plans

In August 2012, the instructed partner of the Defendant firm informed the Claimants that they had carried out the relevant usual conveyancing searches in relation to the site the Claimants wished to acquire and would report in due course. On 16 October 2012, the Defendant sent the Claimants the report on title in respect of the Rotherhithe Site. On 25 October 2012, the vendor’s solicitors sent the Defendant a draft contract for sale of the Rotherhithe Site.

In May 2013, the Claimants discovered that the Defendant had failed to spot that part of the site the Claimants were seeking to purchase encroached on a footway and in order for any development to proceed, a stopping up order would have to be obtained.

The Claimants claimed that as a result of the solicitor’s negligence they lost the opportunity to purchase and develop Rotherhithe Site and claimed damages of £865,000 from the Defendant firm.

There was no dispute that in the report on title, the partner of the Defendant had failed to identify the discrepancy between the Land Registry and the Highways plans, which showed that part of the footway encroached on the Rotherhithe Site.

The Defendant admitted its breach of duty of care owed to the Claimants, in failing, on 16 October 2012, to advise the Claimants on the discrepancy in the report on title for Rotherhithe Site however denied the Claimant’s claim for loss of opportunity. The Defendant argued that if the Claimants had the correct information in the report on title, they would never have taken steps to proceed with the transaction primarily due to a lack of financial resources to do so.

Claimants’ claim for loss and damages over £800,000

The Claimants claimed that had they been informed of the discrepancy on the report on title in October 2012 (when the report was obtained by the Defendant), they would have had sufficient time to resolve issues by obtaining a stopping order.

By only discovering the discrepancy seven months later in May 2013 the Claimants did not have sufficient time to arrange the stopping up order or take any other action necessary before the proposed date for exchange.

As a result of their solicitors’ negligence, which included:

  • failing to discover the discrepancy and bring it to the Claimants’ attention; and
  • upon discovering the discrepancy, failing to provide any or any adequate advice to the Claimants as to the necessary steps to be taken to ensure the opportunity to purchase the Rotherhithe Site was not lost i.e. how to obtain a stopping order;
  • upon discovering the discrepancy, failing to take any or adequate steps to ensure the opportunity to purchase the Rotherhithe Site was not lost.

The Claimants alleged they had suffered loss and damage, namely the profits for the proposed developments, totalling £865,000. The Claimants also claimed interest and costs.

Claim Form & Particulars

Loss of opportunity issues to be determined at trial

  1. In failing to advise on the discrepancy between the Land Registry Index Map and Highway Authority Search Plan, when did the Defendant first breach its duty of care to the Claimants?
  2. What would have subsequently happened if the Defendant, in accordance with the duty of care owed to the Claimants, had brought the discrepancy to the attention of the Claimants?
  3. If the Defendant had advised the Claimants appropriately, would the Claimants have proceeded to acquire and develop the Rotherhithe Site?
  4. If the Claimants had taken the necessary steps to purchase the Rotherhithe Site, was there a real and substantial chance that the Claimants would have succeeded in doing so?
  5. If the Claimants would have succeeded in purchasing and developing the Rotherhithe Site, (i) what further discount from the Claimants’ damages is appropriate to allow for general development risk; (ii) over what period; and (iii) at what rate should any interest be awarded?

Judge’s assessment: there was no loss of opportunity

The Court considered the relevant law and issues in the cases of Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, CA, which was upheld in Perry v Raleys Solicitors [2019] 2 WLR 636, SC.

Tipples J held that the Defendant was in breach of its duty of care to the Claimants but agreed with the Defendant that the Claimants would not have proceeded even if they had been advised appropriately. It was held that the Claimants would not have incurred any costs in relation to obtaining a stopping up order and would not have proceeded with the transaction to purchase the Rotherhithe Site. This provided answers to the aforementioned issues considered at trial and in particular, that no damages were owing.

Tipples J further concluded that the Claimants’ case was ‘unrealistic’ and the prospect of the Claimants succeeding in acquiring and developing the Rotherhithe Site was ‘fanciful’ in the circumstances.

The High Court dismissed the claim.

Credibility of witness evidence at trial

The High Court heard evidence from four witnesses and six expert witnesses in this case.

The events of this case occurred over seven years ago and in determining the factual findings, Tipples J stated:

1. The most important clues in relation to what did or did not happen, and what would have happened, are in the contemporaneous emails and other documents

2. It is necessary to consider whether the witnesses can actually remember what happened 7 years ago and, to the extent they can recall what happened, whether that recollection is, or is likely to be, true.

3. I have to form a view as to the credibility of the witnesses, and decide which of the evidence I have heard is, after such a long passage of time, actually reliable and most likely to be true.

The Judge commented on the Defendant’s evidence and that the Defendant’s partner was a ‘careful and measured witness’ and was satisfied that he had given truthful answers during cross examination however she did not find the same for the Claimants’ witnesses. The Judge found the director of the Claimant’s witness evidence to be untrue and held it was not accepted unless supported by other independent evidence.

This case provides a useful reminder on the importance of credible witness evidence, particularly where the facts of the case are historic.

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