I'VE LOST £5 MILLION AND ITS ALL MY SOLICITOR'S FAULT: WHEN THE CLIENT BLAMES YOU FOR THEIR OWN BAD DECISIONS

September 11, 2016 · by · in Avoiding negligence claims, Civil evidence, Professional negligence,, Uncategorized

 This post is unusual in that it deals with a case from a different jurisdiction (Northern Ireland) and a professional negligence action against a conveyancer not a litigator.  However the decision of Deeny J in Eden (NI) Limited -v- Mills, Selig, a Firm [2016] NIQB 71 illustrates some universal issues. A party seeking to blame its conveyancing solicitor for poor commercial decisions, and the importance of keeping attendance notes even in non-contentious work.

THE CASE IN BRIEF

The claimants had purchased some land. The land was worth far less than they paid. They blamed their solicitors and brought an action for damages.

THE DETAIL (FOR THOSE THINKING OF GOING INTO PROPERTY INVESTMENT)

The sums involved are eye watering given the actual “value” of the property, it gives an idea of the febrile state of the property market at the time.

  • The land had been purchased for £3.3 million three months before the sale to the claimants.
  • The claimants paid £5.4 million.
  • There was a valuation that supported a price of £6.5 million.
  • After the bank appointed receivers they sold the land (back to the original owners) for £455,000 (and there was no suggestion that this sale was at an undervalue).

THE ACTION AGAINST THE SOLICITORS

The claimants brought the action against their conveyancing solicitors stating:

  • The solicitor had said it was a “good deal”.
  • The solicitor failed to inform them that the price had been purchased for £3.3 million three months earlier.

The claimants alleged that they would not have entered into the contract if they had not had the assurance from the solicitor that this was a “good deal” and they had known of the price their own vendor had paid.

ASSURANCES FROM THE SOLICITOR

The judge considered the evidence and found that the words this was a “good deal” had never been stated by the solicitor.

JUDGMENT ON THE “GOOD DEAL” POINT

This was a straightforward issue of witness credibility.

“A good deal”
[78] The plaintiff relies on the evidence of Ronan and Canice Mallaghan to give the factual basis for this first plank in their claim. Ronan Mallaghan while a confident witness generally was not convincing in my view when he came to this part of his evidence. There was a discernible alteration in demeanour. If I had nothing further to rely on I would not be convinced by his evidence.
[79] In fact as can be seen from the outline above his evidence generally he was not precise as to dates, times and details. He was not even sure of the month in which certain things happened. He claimed to have signed the contract in the office of Mills Selig when that was not the case. He may never have been in that office. I find that the first meeting with Mr McCann was in February 2007 not 2006.The quality of Ronan’s evidence generally was not such as to give a sound foundation for such a claim.
[80] In 2011 he had been referred to Mr Brian Walker, solicitor. This gentleman is a very experienced and careful lawyer. He wrote a letter of claim on 31 October 2011. It is a perfectly good letter of claim but it makes no assertion that the Mallaghans entered into this transaction because of some kind of encouragement, warranty or opinion from Mr McCann to the effect that it was a good deal. It seems to me most unlikely that if Ronan Mallaghan was instructing his new solicitor to make a letter of claim that he would not have told him of this important part of his case. It seems inconceivable that Mr Walker would not have raised it in his letter of claim if he had been instructed about it.
[81] I note that the writ of summons was actually only issued on 14 December 2012 which would suggest no great enthusiasm on the part of the plaintiffs. Furthermore, in breach of the rules, the statement of claim was only served on 17 October 2013. By then learned counsel, Mr McEwen, does include in the statement of claim the allegation about the good deal. But interestingly his instructions would appear to be that this was said once whereas in their evidence the two Mallaghans claimed that it was said twice.
[82] As Mr Hanna ably explored in cross-examination the divergence between the oral evidence and the pleaded case increases when one examines the carefully drafted replies served on behalf of the plaintiffs.
[83] The plaintiffs also called in aid the evidence of Mr Canice Mallaghan. Again, I thought his demeanour changed when he came to this part of his evidence which he seemed anxious to get out, no doubt aware of its importance. His evidence, although perhaps somewhat less perforated than that of his brother was far from perfect either. I do not believe him, for example, when he says he was not the source of the note on the Bank of Ireland file described by Mr Horwood saying that Canice had spent two years with Jones Lang Lasalle. I believed Mr Horwood that Canice had given the impression that he had experience in property which he now says that he did not have.
[84] Mr Bill McCann gave evidence in the case. He denied using such an expression either once or twice. I believe him. I believe he was an honest witness.
[85] It would be a most surprising thing for a solicitor, as Mr McCann put it, to put his head on the block by giving some kind of endorsement to a transaction by his client, especially when he had in truth no means of knowing whether or not this was a good deal or not. He had not been provided with a valuer’s opinion. He had not visited the site. He was not familiar with the locality.
[86] It is true that Mr McCann did visit the Lough Macrory site with Ronan Mallaghan and that he did discourage him from purchasing it. But giving cautionary advice to a client is in the nature of a solicitor. It differs significantly from endorsing a client’s proposition about which knows virtually nothing. I do not believe this happened here. I find that Mr McCann did not either volunteer or answer that the Seskinore proposition was a good deal, either once or twice.
[87] In those circumstances it is neither necessary nor appropriate to go into the other interesting submissions of counsel if I had found that these words had been used by Mr McCann. Suffice it to say that there might well be merit in Mr Hanna’s submission that the use of such words would not justify a claim of this sort. Mr Orr justifiably pointed out that Mr McCann had omitted to limit his retainer in any way at the commencement of the proceedings, but even allowing for that the plaintiffs here would have had a significant hurdle to overcome even if I had found otherwise than I have done on the facts.”

FAILURE TO INFORM THE CLAIMANTS OF THE PREVIOUS SALE FOR £3.3 MILLION

The solicitor could not state whether or not  he had informed the claimants of the previous sale price.  The judge found that this failure could be a breach of duty.  However the judge found that the claimants would have proceeded with the purchase in any event. The claimants were only entitled to nominal damages.

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