Hinc & Anor v Warren Rees & Co (A Firm)

In a professional-negligence claim, the claimant must prove actual loss and that the breach was its effective cause. Benefits are credited only where they flow from the breach. The benefit of occupying property acquired with defective title, and liability for mortgage borrowing, do not ordinarily flow from a solicitor’s failure to perfect title. A loss-of-equity claim fails where the claimant’s plans changed independently of the breach and no causal link is established. An unsuccessful sale also produces no recoverable loss where completion would have left the claimant in negative equity.

Mr and Mrs Hinc appealed against the assessment of damages following an admitted conveyancing negligence claim against Warren Rees & Co. The solicitor had failed for many years to procure a transfer giving them good title to a building plot and the house constructed on it.

His Honour Judge Moseley awarded £3,077.68 for the cost of obtaining title and related expenses, but rejected claims for loss of equity, mortgage interest and costs associated with an abortive sale. The appeal concerned whether the claimed losses were caused by the delay in perfecting title.

The Court of Appeal unanimously dismissed the appeal. Lord Justice Mummery gave the first judgment, with Mr Justice Longmore and Lord Justice Morritt agreeing.

1. Loss and causation. In professional negligence, it was not enough to establish breach of duty. The claimants also had to establish actual loss and that the particular breach was the effective cause of that loss. The relevant question was what loss had been established as resulting from the unreasonable delay in procuring good title.
2. Occupation. The claimants did not have to give credit for the benefit of occupying the house. That benefit flowed from their purchase of the plot and their being put into possession by the vendor. It did not flow from the solicitor’s breach in failing to procure the transfer of good title.
3. Mortgage liability. The claimants’ liability to repay the loan and pay mortgage interest resulted from their borrowing from the bank. They would have incurred that liability even if they had obtained good title, so it was not loss caused by the negligence.
4. Loss of equity. The earlier attempts to sell the house had failed for reasons unconnected with the title defect. The claimants later changed their plans, withdrew the property from the market and pursued another property. Their evidence did not establish a causal link between the negligence and the alleged reduction in equity.
5. Abortive sale. The later proposed sale would have left the claimants with negative equity because the mortgage exceeded the sale price. By trial, the property had increased in value and represented positive equity. The abortive sale therefore caused no recoverable loss. Damages were properly limited to £3,077.68. The claimants’ costs were subject to detailed assessment on the standard basis for the purposes of the Legal Aid Act 1988 and the Access to Justice Act 1999.

1. Court of Appeal (Civil Division): unanimously dismissed the appeal.
2. Cardiff District Registry: His Honour Judge Moseley, sitting as an additional Judge of the Chancery Division, admitted liability but awarded £3,077.68 only, by judgment dated 11 September 2001 and order dated 3 October 2001.