Buying a house is the biggest investment most people ever make and that is why it is so very important to have the assurance of professional advice before proceeding. In one case in which advice received was negligent, a disappointed buyer at least had the comfort of being guaranteed full compensation for her loss.
The woman, who lived abroad, had agreed through her company to purchase a house in London for £25.75 million. She had never visited the property herself, nor had she had it professionally valued or surveyed. She exchanged contracts with the vendors after her solicitors reported that the latter’s answers to pre-contract inquiries had not revealed anything that might adversely affect the property’s value.
Prior to exchange, her solicitors had commissioned a report that revealed a number of planning applications affecting the area. Had they carried out a proper search of local authority records in the light of that report, they would have revealed plans for a major development of two school sites within a short distance of the property.
After hearing of the proposed development, the woman pulled out of the purchase. She recovered only half of her deposit and sustained other losses in connection with the abortive deal. She launched a professional negligence claim against the solicitors, who were found liable to compensate her by a judge on the basis that her losses were the foreseeable result of their breach of duty.
In dismissing the solicitors’ challenge to that ruling, the Court of Appeal found that the judge’s conclusions were unassailable. They were under a clear duty to inform the woman of the proposed development and to ask her if she wished the matter to be investigated further. The judge had reached the wholly unsurprising conclusion that, had it not been for the solicitors’ negligence, she would have withdrawn from the purchase prior to exchange of contracts and suffered no loss.