Dear all,

Some of you may be interested in the decision of the Court of Appeal
in Ireland in Rosbeg Partners Limited -v- L. K. Shields (A Firm)
[2016] IECA 161, which was published today.

The case involved an appeal by the Defendant firm of solicitors
against a judgment of the High Court (Peart J.) in which he held the
defendants/appellants liable for professional negligence.

In brief, the Defendant had acted for the Plaintiff, when the
Plaintiff purchased certain property in 1994/1995 (the "Property").
The Defendant undertook to attend to the registration of part of the
Property (the "Registrable Lot") in the Land Registry, following its
acquisition (which would be standard conveyancing practice) and the
vendor's solicitors gave an undertaking (which is standard in Irish
conveyancing practice), to assist with queries) regarding to the
Registrable Lot which the Land Registry might raise.

The Defendant had not registered the Registrable Lot by 2007 and
admitted that it was negligent because it had failed to do so.
Apparently the Defendant had made efforts to do so and the Land
Registry raised boundary queries (which would not be unusual) which
were not addressed. The upshot was that the Registrable Lot was not
registered. (I do not find the Court of Appeal judgment as clear on
the sequence of events as it might be, no doubt because nothing turned
on the precise sequence of events in the Court of Appeal, in light of
the Defendant's concession. The High Court judgment is clearer.)

It is important to be clear that the Plaintiff had good title to the
Registrable Lot at all times. However, to have a markitable title, the
Plaintiff needed to have the Registrable Lot registered in the Land
Registry.

The Plaintiff was unaware that part of its Property had not been
registered in 2007, when it was offered €10,000,000 for its Property
at the height of Dublin's property bubble by a neighbouring land
owner.
That sale fell through and the property market crashed soon
afterwards, so the Property was not sold.

Both the High Court and Court of Appeal regarded the case as very much
turning on its own facts.

In findings upheld by the Court of Appeal, the High Court held that:

1. The Plaintiff had decided to accept the Defendant's offer of
€10,000,000 for the Property;

2. But for the title issue regarding the Property because the
Registrable Lot had not been registered, the prospective buyer would
have bought the Property for that price in October 2007;

3. It didn't matter, given the Plaintiff's decision to accept the
Defendant's offer for the Property that no formal binding contract had
been entered into; (This seems right)

4. The Plaintiff was not to be faulted because it had not explored the
possibility of entering into a conditional contract for the sale of
the Property to the buyer; (Conditional contracts are quite common in
Irish conveyancing practice - the buyer agrees to purchase conditional
on the seller obtaining good and marketable title by a given date by
say having property registered in the Land Registry)

5. On the facts the Plaintiff had not failed to mitigate its loss; and

6. The Plaintiff was entitled to damages for loss of bargain, the
difference between the €10,000,000 which it would have obtained if it
had sold the Property to the buyer in 2007 and what the Property was
worth at the date of judgment.

Comment:

The Court of Appeal concluded that this case involved the application
of well established principles of law to the facts.

I have to say that I think it surprising that:

1. Both the High Court and the Court of Appeal appear not to have
considered whether, in determining what the prospective purchaser
would have done if there had been no issue about the Registrable Lot,
they should apply the 'balance of probabilities but for' test (as they
seem to have) or should treat the case as involving the loss of a
chance by the buyer;

2. The Statute of Limitations did not figure prominantly either in the
High Court or Court of Appeal. (In Irish law, one has 6 years from
the date on which the cause of action accrues, whether one knows of
the wrong or not in a case of this sort, subject to conduct which
delays the running of time, including fraudulant concealment and
mistake. The Court of Appeal did not consider this point. The High
Court noted that the Statute was not relied upon with any vigor and
concluded that it was inapplicable because the Defendant ought to have
kept the Plaintiff informed of the difficulties in the Land Registry
and had not. However, the last engagement with the Land Registry
referred to in the High Court appears to have been in or around 1998,
so even if that is right, that negligence would have been barred by
2004/2005, unless the Plaintiff was under a continuing duty to ensure
registration, which the High Court does not hold that it was);

3. The Plaintiff's failure to offer to enter into a conditional
contract was not held against it, either as a matter of contributory
negligence or an issue going to mitigation. (As against that, the
prospective' purchaser's reaction given his rather unusual approach to
business of this kind could hardly be guaranteed and it might be said
that the Defendant's job was to ensure that the Plaintiff didn't need
to rely on such contracts - though as noted they are not unusual by
any means in Irish conveyancing practice); and

4. The very unusual collocation of the circumstances that (i) the
property bubble was at its height; (ii) the prospective purchaser was
interested in a quick deal or no deal at all and (iii) conditional
contracts were not considered for whatever reason was not regarded as
making the damage too remote to permit recovery.

See below a link to the judgment of the Court of Appeal:

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/799e0708c46d2f1e80257fcb004c5360?OpenDocument

And a link to the High Court Judgment:

http://www.bailii.org/ie/cases/IEHC/2013/H494.html

Comments welcome - apologies for the length of the email.

Kind regards

Ger