Bacciottini and Another v Gotelee and Goldsmith (A Firm)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Lloyd Jones,Lord Justice Underhill |
| Judgment Date | 18 March 2016 |
| Neutral Citation | [2016] EWCA Civ 170 |
| Docket Number | Case No: A3/2014/3688 |
| Court | Court of Appeal (Civil Division) |
| Date | 18 March 2016 |
[2016] EWCA Civ 170
Lord Justice Davis
Lord Justice Lloyd Jones
and
Lord Justice Underhill
Case No: A3/2014/3688
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
HH JUDGE SIMON BARKER QC
HC 2013 000094
Royal Courts of Justice
Strand, London, WC2A 2LL
David Halpern QC and Teresa Rosen Peacocke (instructed by Keystone Law) for the Appellants
Ian Gatt QC and Graeme Robertson (instructed by Herbert Smith Freehills LLP) for the Respondent
Hearing dates: 19 & 20 January 2016
Introduction
This appeal raises an issue on the applicable measure of damages. It arises out of the admitted negligence on the part of the respondent firm of solicitors. The appellants had acquired a residential property in May 2007. The respondent had negligently failed to advise them that there was a planning restriction attached to the property restricting its residential use. Subsequently, after the purchase had been concluded, the appellants successfully procured the removal of the planning restriction. The trial Judge awarded as damages to the appellants the sum of £250, representing the cost of the application to the local authority to remove the planning restriction. He awarded nothing more.
The appellants say that the Judge was wrong to do so. Their principal ground of appeal is that the Judge should have awarded them the sum of £100,000 (with interest) representing, as found, the difference between the value of the property in May 2007 without the planning restriction and the value of the property at that date with the planning restriction. The respondent, on the other hand, says that the Judge reached the right conclusion. It also seeks to support his reasoning by points advanced in a Respondent's Notice; and, in the alternative, raises a challenge to the finding that the diminution in value, if taken at May 2007, was £100,000.
Since the Judge ordered the appellants to pay the great amount of the respondent's costs it may be that this appeal has in reality become as much about costs as about damages. At all events, we were informed that previous attempts at mediation were unsuccessful.
Before us, the appellants were represented by Mr David Halpern QC, leading Mrs Teresa Rosen Peacocke. The respondent was represented by Mr Ian Gatt QC, leading Mr Graeme Robertson. I would pay tribute to counsel on both sides for their careful and thorough arguments.
Background facts
The background facts are these.
Mr Bacciottini is an experienced residential property developer. Over the years he had involved himself in a number of individual development projects, many of them in East Anglia. For a number of years he had for this purpose retained the services of the respondent firm, having a good working relationship with one of the partners there. When that partner left, he continued to instruct the firm through another partner to whom he had been introduced, Mr Mathers.
In 2004 Mr Bacciottini met Ms Cook. She had not herself previously been professionally involved in property development. But she was very interested in design and had herself developed a property in Suffolk on her own account and in due course also assisted Mr Bacciottini on a development project in Italy. The relationship became a personal one; and the couple proposed as a long-term aim to divide their time between Italy and Suffolk. It was also agreed that the two of them would look for a suitable property in England as a first shared development project for them to undertake.
As it happened, a property called "the Granary" at Church Common near Snape in Suffolk was on the market in early 2007. The guide price was £575,000. The Granary had formerly been part of the nearby Snape Hall. The agents' Particulars described the Granary as being "a unique property which offers a number of exciting possibilities." With the property there was a large barn of which it was said: "There is potential (subject to planning consent) to incorporate the barn as part of the residential accommodation or possibly as a self-contained annexe to the cottage." Also included in the sale was a further outbuilding known, for historical reasons, as "the Jam Factory." It was suggested in the Particulars that prospective purchasers might be interested in applying for a change of use to convert that building into some self-contained form of holiday accommodation.
The appellants were most interested. They retained the respondent firm. They made an offer at the asking price of £575,000 which was accepted. This was then increased by a further £25,000 in respect of an additional adjoining garage now to be included in the purchase.
With his experience, Mr Bacciottini was well alive to the importance of planning permissions and local searches. He instructed Mr Mathers in January 2007 to carry out the necessary searches. For reasons that did not really emerge there was then considerable delay in obtaining these searches.
The overall intention of the appellants, as explained to their solicitors, was to extend and renovate the Granary and also to develop the barn and the Jam Factory, with a view to then selling the properties. They proposed to live at the Granary while the works were being undertaken. To this end they undertook detailed preliminary appraisals and retained an architect.
A Deed was prepared to reflect the terms of the business partnership between Mr Bacciottini and Ms Cook on this project. This was signed on 27 April 2007. In addition, the Purchase and Sale Contract was signed with a view to forthcoming exchange, as the two were about to go to Italy.
Mr Bacciottini had been pressing Mr Mathers about the results of the searches. On the 10 May 2007 he and Ms Cook were told by Mr Mathers over the telephone, whilst they were in Italy, that the searches had arrived and everything was clear. Mr Bacciottini asked about a planning consent granted in 1974 for change of planning use for the Granary from agricultural to residential, of which he had been made aware. He was told that there were no adverse conditions.
They instructed exchange of contracts accordingly. This was effected on 14 May 2007. The purchase of the Granary was completed on 27 May 2007 at the price of £600,000. Significant mortgage borrowing of £495,000 was obtained for this purpose.
In the aftermath of the acquisition the appellants' development plans were sought to be implemented. Negotiations with neighbours arose which required some quite significant adaptations. Mr Bacciottini sold the house which he at that time owned and occupied as a residence and subsequently moved into the Granary permanently in May 2008. Previously the local property market had been strong but by then, as Mr Bacciottini put it in his witness statement, "clouds were gathering".
During the course of 2008 the appellants retained new solicitors in place of the respondent. To the appellants' utter shock they then discovered that the 1974 Planning Consent for the change of use of the Granary had been granted on the condition that the Granary was restricted to being a building ancillary to Snape Hall and could only be used for residential purposes in conjunction with the occupation and ownership of Snape Hall. But Snape Hall had been sold off as an independent residence a number of years previously.
Mr Bacciottini was well aware of the implications of this. He said this in the course of his witness statement:
"102. Had I obtained this information prior to purchase, regarding the Restriction, I would have been aware of the risks and the Second Claimant and I would have taken appropriate steps to protect our interests. I would have regarded the mortgage valuation as defective, the Second Claimant and I certainly would not have purchased The Granary at the price of £600,000.00. Only if I renegotiated the purchase price to reflect its negative planning history would I have been prepared to consider completing the purchase at the revised price. Even then, the Second Claimant and I might well have decided that the project was too risky for a first attempt at a joint development project.
….
123. Had I been notified of the Restriction before exchange, I would not have paid £600,000 pounds for The Granary. I would never have purchased The Granary without the results of local searches. I relied upon Mr Mathers to carry out the searches, as he said he had done, and to advise us clearly on what they revealed."
As was accepted by Mr Bacciottini at trial, he was at that stage, having been made aware of the restriction, advised by his new solicitors to apply for a lifting of this restriction. The general understanding was that there were good prospects of a successful application. In the meantime, the appellants continued to reside at the Granary.
In the event, Mr Bacciottini decided also to include in the planning application to remove the restriction his ongoing proposals to convert the barn and to extend the Granary. This combined application was submitted in January 2009. After some weeks it began to emerge that such a composite application would not be likely to succeed. Mr Bacciottini thought of selling up but rejected the idea as uneconomic. He consulted the planning department at the local District Council. It was suggested to him that he should first apply to lift the restriction, as a free-standing application, and then make other, sequential, applications for his and Ms Cook's proposed development.
On 8 September 2009 the...
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