High Court of Ireland Decisions

1. This is an action for damages arising out of a purchase by the Plaintiffs of a site for a dwellinghouse in circumstances where the Plaintiffs were unable to build due to a defective title in portion of the property sold. The First named Defendant, Michael J. Delaney, was the Solicitor for the Plaintiffs on the purchase. The Second and Third named Defendants, Martin Greene and Elizabeth Greene, were the vendors and the Fourth and Fifth named Defendants, Joseph F. Maguire and Della Power, were the Solicitors for the vendors.

2. The action came on for hearing before Hamilton P. (as he then was) on the 7th and 8th October, 1993. The hearing was further resumed on the 5th October, 1994. It was decided at the hearing that only liability would be determined and that in the event of liability on the part of one or more of the Defendants being found, the damages would be assessed on a later date. In a judgment of Hamilton C.J. (as he had then become) on the 12th September, 1995 he found the First named Defendant to be in breach of a duty of care owed to the Plaintiffs and he also found the vendors, Martin Greene and Elizabeth Greene, to be liable for breach of duty of care to the Plaintiffs including negligent misrepresentation. The Chief Justice absolved the Fourth and Fifth named Defendants, i.e., the Solicitors for the vendors, from all liability and dismissed the action as against them.

3. The Plaintiffs appealed to the Supreme Court against the finding of no liability on the part of the Fourth and Fifth named Defendants and the appeal was allowed. The High Court judgment is reported in 1996 1 I.L.R.M. 490 and the judgments in the Supreme Court of Keane J. and Barron J. (Barrington J. concurring) are to be found in 1998 2 I.L.R.M. 1.

4. The background facts are as follows. The Second and Third named Defendants who are the vendors had themselves started to build a house on the site in question pursuant to a planning permission which they had obtained from Wicklow County Council. They fell into dispute with an adjoining owner, a Mrs. McKimm, who alleged encroachment. Building work ceased and it was decided to apply for planning permission for a smaller house on the site and sell on the land with the benefit of that permission. The map accompanying the planning application wrongly included an area of ground measuring 54 square metres which was in the possession of Mrs. McKimm. This small piece of ground was vital for providing access to the builders in order to build a house. None of this dispute was communicated to the Plaintiffs on their purchase from the vendors and in fact the Plaintiffs were shown a map by Southern Estates Limited, the selling agents acting on behalf of the vendors, and were told that the maps represented the correct boundaries. The Plaintiffs were never told about Mrs. McKimm's claim. On advice, however, the Plaintiffs did request that the boundary be staked out but they were told by their own Solicitor that this was unnecessary and that the matter could be dealt with by inserting a clause in the contract requiring the production of an ordnance survey map which would delineate the property. However any such clause in the contract was itself objected to by the vendors on the grounds that the entire of the property comprised in the folio was being sold. The First named Defendant agreed to the deletion of the special condition without telling the Plaintiffs. A contract was entered into on the 12th September, 1990 for the sale of the property for the sum of £25,000.

5. In response to a requisition on title which asked whether there was any dispute with adjoining owners in relation to party walls or fences, the Fourth and Fifth named Defendants replied "vendor says no". In response to a further requisition as to whether there was any litigation pending or threatened in relation to the property or whether any adverse claim had been made in respect of it, the Fourth and Fifth named Defendants replied "vendor says none". The Fifth named Defendant had apparently known of the dispute with Mrs. McKimm but had been informed that it had been settled but she had made no enquiries as to the terms of the settlement.

6. The sale was completed on the 9th October, 1990 and the Plaintiffs commenced building operations on the 12th October, 1990 having engaged Ballymore Homes as builders. The Solicitors for Mrs. McKimm wrote to the builders informing them that they had encroached upon her land and demanded that they should desist from doing so. The small triangular area of land which Mrs. McKimm was claiming was vital to the building operations as the vehicles were unable to achieve access without it. There was an alternative route but that was via a private right of way and no permission from the owners was forthcoming. After exhaustive and unsuccessful attempts to resolve the boundary problem with Mrs. McKimm, the Plaintiffs were forced to resell the property for a sum of £20,000. At this stage they owed the builders over £18,000.

7. The Plaintiffs have claimed from all the Defendants the sum of £232,623.22 plus general damages.

8. The sum claimed for special damages comprises effectively eight items. These are:-

9. The claim for loss of earnings has been properly abandoned at the hearing as being too remote.

10. In order properly to assess the damages it is necessary to consider first what the precise basis of liability of each Defendant is. In doing so I will adopt the order followed by the Chief Justice in his judgment in the High Court and deal first with the liability of the vendors, the Greenes.

11. The Chief Justice found the vendors to be liable to the Plaintiffs on a number of different grounds. These can be summarised as follows:-

12. As a consequence of these breaches of duty by the vendors, the Plaintiffs were unable to gain access to the site for the purpose of building thereon and they therefore suffered substantial loss and damage. At the hearing of the action there was a good deal of discussion about distinctions between the measure of damages for breach of contract and the measure of damages in tort. There is of course a theoretical distinction but for the reasons which I will be demonstrating I do not think that it makes any practical difference in this case. If a party to a contract breaks that contract the other party is entitled to be compensated on the basis of what he has lost by reason of the contract not being performed. On the other hand the measure of damages appropriate for the tort of negligence is the loss sustained by reason of the breach of duty or in other words in the case of say negligent misrepresentation the plaintiff must be restored to the position he would have been if the misrepresentation had not been made. The hallowed phrase used is restitutio in integrum. These rules, whether it be the contractual measure or the tortious measure are always subject to the special principles of mitigation of damages and remoteness of damage. It has been urged on me by Mr. Geraghty, Counsel for the Fourth and Fifth named Defendants, that in relation to his clients at least, I should apply the decision of Finlay P. in Taylor -v- Ryan, (unreported judgment delivered the 10th March, 1983). I intend to consider first whether the approach to damages adopted in that judgment is appropriate when considering the liability of the vendors.

13. In fact the former President did not keep strictly to that measure in that he pointed out that the defect or want in the legal status of the premises arising from the negligence of the Solicitor whilst it existed at the time of the completion of the sale was not finally determined by him until much later and that it would be unjust for the plaintiff to have his damages assessed on the basis of the value at the date of the completion of the purchase when he was expressly advised by the solicitor up to that time that there appeared to be at least a reasonable chance of minimising the loss by various alternative applications under the Intoxicating Liquor Acts. In that particular case the plaintiff did not establish that there was any difference between the market value of the property without a licence and the price which he paid for them. In the event, the plaintiff was only allowed some damages in the form of interest on money lost. There were no complicated issues in respect of the measure of damages in that case. Still less was there any discussion as to the extent if at all that a Court can take into account impecuniosity on the part of a plaintiff in the assessment of damages whether in the context of mitigation or in the context of the date on which the loss should be valued. None of these questions arose in that case. If the damages were assessed on a Taylor -v- Ryan basis in this particular case, an injustice would be caused to the Plaintiffs in my view. Of course it sometimes happens that an injustice of sorts is caused in the measuring of damages in that part of a plaintiff's real loss may be considered by the law to be too remote to be recoverable even though he has in fact suffered such loss. In considering the proper measure of damages in this case therefore I must at all times bear that principle in mind and be careful not to assess damages which should be disallowed on the grounds of remoteness. But reasonably foreseeable loss flowing either from a breach of contract or from a negligent misrepresentation relied upon cannot be considered too remote. If I were to adopt the Taylor -v- Ryan measure in relation to the vendors' liability in this case, the measure of damages would be no different than that argued for by Mr. Geraghty on behalf of the Solicitors for the vendors (leaving aside any question of general damages) and would consist of the following items as suggested by Mr. Geraghty:-

14. But I fail to see how this would in any way represent the real loss of the Plaintiffs arising from the vendors' breaches of duty and negligent misrepresentations. At the time that the contract was being entered into the vendors were well aware that the Plaintiffs required the property as a site on which to build a house and they could have reasonably foreseen that if there was a bad title to the small triangular area which would be likely to be used for builders' access, a dispute would ensue with resultant loss to the Plaintiffs and in particular debt incurred to the builder without any return for it. It would have been also reasonably foreseeable to the vendors that a young couple such as the Plaintiffs, if they were going to incur loss of that kind, would neither themselves have the wherewithal nor have the capacity to procure loan finance to get an alternative site and build the house on it or buy a house of the kind that they wanted with whatever net proceeds would be left to them after liabilities would have been incurred both to the builder and their Solicitors (inter alias) arising out of the title problems. If the contract had been performed as intended, the Plaintiffs would have built the intended house and would probably still be living in it. By the same token if the truth had been told and the misrepresentations had not been made the Plaintiffs would have been able to and would in fact have lawfully rescinded the contract in advance of completion and would then have applied the monies available to them either in buying a suitable house or buying an alternative site and building a suitable house. It seems to me therefore that the same kind of losses flow from either breach of contract or misrepresentation and that the theoretical distinctions between the contract and tortious measure of damages do not, as is indeed so often the case, make any practical difference to the measure of damages in this case.

15. But what this Court must now consider is whether the Court is entitled at all to take into account the impecuniosity of the Plaintiffs in considering the real losses. There have been theories that losses arising from impecuniosity are separate losses and do not arise from the wrong of the Defendants. There have also been theories that losses arising from impecuniosity are too remote. It seems clear from McGregor on Damages that the English Courts have been gradually whittling away any idea that impecuniosity cannot be taken into account. I will illustrate this by reference to decided cases which are gone into in some detail in McGregor on Damages , 16th Edition, paragraphs 817 and 216.

16. Lord Wright went on to express the view that the damages had to be assessed as if the appellants had been able to go into the market and buy a dredger to replace the lost ship.

17. That this approach is not appropriate in every case became quite clear in later decisions. In Mohammed Issa el Sheikh Ahmad -v- Ali 1947 AC 414, the Judicial Committee of the English Privy Council permitted the plaintiffs' impecuniosity to be taken into account in measuring damages on the basis that on the facts of that case such impecuniosity was "not a separate and concurrent cause of the land being sold in execution". The basic facts of the case were that the respondents had agreed to sell certain lands to one H who made some part payments of the purchase price and by the contract the respondents undertook to pay H a certain sum of money by way of liquidated damages if they breached the contract. The land was not transferred to H and later the respondents undertook to sell the land to the appellants by an agreement which provided, inter alia, that the appellants would indemnify the respondents against all claims made by H up to a particular sum. After completion of the sale by the respondents to the appellants, H sued the respondents for damages for breach of contract and obtained judgment and an order for payment of the judgment debt by instalments. The appellants paid one instalment and to enforce his judgment H obtained an order for the sale of other land belonging to the respondents which was sold in execution proceedings after the commencement of the proceedings in question but before the case was heard at a price substantially below its value because of it being an execution sale and out of the proceeds H's judgment debt and interest were satisfied. It was held by the Judicial Committee that in the circumstances the loss resulting from the execution sale i.e. the difference between the value of the land and the price for which it was sold was not too remote and was also to be taken into account in assessing the damages recoverable.

18. The derogation from Liesbosch was further developed in Monarch Steamship Company Limited -v- Karlshamns Oljefabriker (A/B) 1949 AC 196. It is not necessary to go into the facts of that case which were totally different from this but some important principles of law in connection with the assessment of damages can be gleaned from it. I would again cite a lengthy passage from the speech in this particular case of Lord Wright:-

19. He then states the broad principle of compensation to which I have already referred and adds a reference to the ancillary duty of minimising damage. It is, I imagine, with language like that of Viscount Haldane L.C. in his view that Lord Atkin (then Atkin L.J.) in the Susquehanna says:-

20. Viscount Haldane, L.C. in the passage just cited had to deal with a case where, as he said, it was necessary 'to balance loss and gain' and no simple solution was possible. Again in Liesbosch (Owners) -v- Edison (Owners) , this House made some observations on the measure of damages which are of general import. The case was one of tort. The question there was what was the proper sum to award by way of compensation for the loss of a dredger. It was said:-

21. Earlier in the judgment it was said 'the dominant rule of law is the principle of restitutio in integrum and subsidiary rules can only be justified if they give effect to that rule'. In Liesbosch (Owners) -v- Edison (Owners) , it was held that loss due to the parties' impecuniosity was too remote and therefore to be neglected in the calculation of damages. It was special loss due to his financial position. A different conclusion was arrived at in Mohammed Issa el Sheikh Ahwad -v- Ali where damages consequent on impecuniosity were held not too remote, because, as I understand, the loss was such as might reasonably be expected to be in the contemplation of the parties as likely to flow from breach of the obligation undertaken (see the judgment of the judicial committee delivered by Lord Uthwatt). The difference in result did not depend on the differences (if any) between contract and tort in this connection. The 'reasonable contemplation' as to damages is what the Court attributes to the parties. The breach itself is, of course, objective. The constant necessity of picking out from a plurality of items that which is material is also remarked upon in the judgment in Liesbosch (Owners) -v- Edison (Owners) ."

22. It can be seen from these passages, therefore, that loss is not too remote if it could have been reasonably within the contemplation of the parties at the time of entering into the contract (in the case of breach of contract) or at the time of making the misrepresentation or committing the breach of duty (in the case of tort). The modern approach to impecuniosity was also adopted in Dodd Properties (Kent) -v- Canterbury City Council , [1980] 1 WLR 433 and Perry -v- Sidney Phillips & Son , [1982] 3 All E.R. 702.

23. Impecuniosity has been taken into account in the assessment of damages by Finlay P. in Quinn -v- Quality Homes Ltd. , [1976-77] I.L.R.M. 314 and by McWilliam J. in his second judgment in Riordan's Travel -v- Acres , [1979 I.L.R.M. 1]. Indeed, McWilliam J. makes trenchant criticisms of Liesbosch at p. 9 of the Report. In summary, therefore, while the prima facie measure of damages is that set forth in Ford -v- White & Co. as cited above and as approved by the former President in Taylor -v- Ryan, this measure is not appropriate where it would be reasonably foreseeable that the person damnified would as a consequence of impecuniosity have been unable to mitigate the loss until recouped by the offending party.

24. I find as a fact that the Plaintiffs in this case acted perfectly reasonably after the debacle had occurred and that losses flowing from their having to salvage the situation as best they could due to their inability to raise alternative funds to put them back in the position which they would have been but for the breaches of duty and misrepresentations are all reasonably foreseeable losses. Of course the Plaintiffs also alleged that the first named Plaintiff made certain decisions in connection with his business and incurred some financial losses in connection therewith which would not have been incurred but for the vendors' breaches of contract and torts but I already ruled at the hearing of the action and I think it has been accepted by the Plaintiffs that these particular losses are too remote.

25. If my analysis so far is correct, then the Plaintiffs must recover from the vendors a sufficient sum now to enable them to acquire the four bedroomed house which they had intended to have together with all other foreseeable losses such as the liability to the builder, cost of the abortive sale, costs owing to their solicitors in connection with trying to have the problems with Mrs. McKimm resolved and the possible exploring of alternative modes of access for the builders by using a private road. That road could only be used with the permission of the owners and in the event that could not be obtained. The Plaintiffs very nearly reached an agreement with Mrs. McKimm whereby she would have sold the necessary triangular portion of property but it then emerged that she herself did not have a marketable title and that there was no way in which such a title could be made. The Plaintiffs cannot be faulted for exploring all these avenues. In my view, they acted reasonably at all times. It might be suggested perhaps that the First named Plaintiff aggravated the situation by lodging opposition to a planning application of Mrs. McKimm's. While there is no doubt that this did not endear Mr. Doran to Mrs. McKimm, I think that if anything it did have the effect of speeding up the possible resolution of the disputes in that Mrs. McKimm became anxious to settle with Mr. Doran in order to have his opposition to her planning application withdrawn. In the event, however, a settlement was not possible due to Mrs. McKimm having no marketable title. But I do not think that Mr. Doran's opposition to the planning application can be regarded as either contributory negligence or a failure to mitigate his losses. I have indicated the general nature of the losses for which the vendors must be held liable. I will attempt to quantify them later on in this judgment.

26. But I turn now to the question of how the damages against the First named Defendant, Mr. Delaney, should be measured. The Chief Justice found him in breach of the duty owed by him to the Plaintiffs to ensure before the execution of the agreement for sale that such agreement "contains a condition which would clearly establish the extent of the boundaries of the land being acquired by the Plaintiffs, that the land being acquired was the land shown on the map presented to the Plaintiffs and that there was access to the land for the purposes of construction thereon". If the First named Defendant had performed his legal duty of care which was a duty arising both in contract and in tort the problem about the boundaries would have been discovered and the sale would never have been closed. The £25,000 could then have been put to analogous alternative use. There would of course have been no debt owing to the builders because matters would have never reached the stage where they would have attempted to enter the site. The losses which I have held were reasonably foreseeable as arising from the vendors' breaches of contract and tortious conduct equally flow from the negligence of the First named Defendant, Mr. Delaney, and it is immaterial whether one considers that negligence from a contractual or a tortious point of view.

27. Despite Mr. Geraghty's valiant attempt to argue otherwise, I cannot see that the losses flowing from the negligence of the Fourth and Fifth named Defendants, i.e. the solicitors for the vendor are any different either. To illustrate this, I think it appropriate to cite in full the second last passage of the leading judgment in the Supreme Court delivered by Keane J.:-

28. In my view, at the stage when the solicitors for the vendors replied to that requisition, they could have reasonably foreseen that the Plaintiffs would not be in a position simply to resell the property at a discount and to purchase and build on an alternative suitable site or purchase an alternative suitable house and they could also have reasonably anticipated that the Plaintiffs would incur indebtedness to their builders and solicitors. If the replies to the requisitions had been properly attended to the Plaintiffs would not of course have been able to have their contract performed. On the contrary, they would have rescinded it but they would have been in a financial position either to build or procure a similar house elsewhere. I can therefore find no legal justification for differentiating between the solicitors for the vendors and the other Defendants in the measure of the financial loss recoverable by the Plaintiffs.

29. I now turn to what that recoverable financial loss is. The Plaintiffs' claim is set out in detail in up to date particulars dated 8th June, 1998. There may be some room for argument as to how exactly the reasonably foreseeable financial loss incurred by the Plaintiffs ought to be calculated. The largest item of loss claimed is item No. 1 being the loss of the family home. The current market value of a four bedroomed house of the kind which the Plaintiff was intending to build is claimed as £225,000 and that accords with the evidence before me. A calculation has then been done which might possibly be criticised as somewhat artificial whereby the Irish Permanent Plc. have worked out the effects that the rental payments which the Plaintiffs have had to make in connection with their rented accommodation ever since would have had on their home loan mortgage of £50,000 had the rental payments been paid on foot of a home loan mortgage account instead. The balance that would be due on foot of this home loan mortgage account as of 31st December, 1998 (being the date to which the Plaintiffs are contractually obliged under their current tenancy agreement) would have been £49,629.23. In making their claim, the Plaintiffs are deducting that sum from the £225,000 and they are then making a further deduction of the £20,000 which was the original resale price of the site leaving a net balance of £155,370.77. A possible problem with this approach is that had the original scheme gone ahead as planned the mortgage payments would not have corresponded to the rental payments and what further complicates matters is that there would have been a tax allowance on the mortgage payments but not of course on the rental payments. The evidence of the witness from the Irish Permanent was to the effect that the amounts of the mortgage payments would have fluctuated considerably depending on interest rates and that at different times they could have been greater or less than the rental payments. Taking the tax allowance factor and all other factors into account it seems to me unlikely that the balance due on the mortgage if it had gone ahead as planned as of 31st December, 1998 would be greater than the sum just short of £50,000 which has been calculated. I think, therefore, that the Plaintiffs' approach can be accepted.

30. Item No. 2 is expenses incidental to land purchase and sale plus interest. In relation to this item I will allow the principal sum of £6,725.84 but not the interest claimed. It does not seem to me that there would be any cause of action to recover that interest though of course it can be regarded as a loss suffered. After hearing submissions from Counsel I will consider whether some element can be recovered by way of Courts Act interest.

31. I will not allow the full amount of item 3, that is to say, the sum of £18,041.38 due to Ballymore Homes Limited. On the evidence which I heard, it seems to me that that claim by the builder was excessive and it is of considerable significance that not one penny of it has ever been paid. I would expect that if the Plaintiff recovers a sum of £12,000 under that item Ballymore Homes Limited will be satisfied to accept it in discharge of their debt. I will therefore allow £12,000.

32. I am of course totally disallowing item 4 being loss of earnings as being too remote.

33. Having regard to the substantive basis of the Plaintiffs' claim relating the mortgage payments to the rentals I will not allow a separate claim for loss of tax relief as is contained in item 5. I will therefore totally disallow that item.

34. I will allow the whole of item 6 as it clearly represents the expenses which the Plaintiffs undoubtedly will incur in reinstating themselves in a family home of equivalent value. I will also allow item 7, the medical expenses, etc. and the figure of £1,000 for miscellaneous expenses does not seem to me to be unreasonable, i.e. item 8.

35. The total special damages being allowed amount to £192,198.56

36. I now have to consider the question of general damages. I am satisfied that both Plaintiffs have been put through a high degree of anxiety and upset as a consequence of the Defendants' negligence. Mrs. Doran, in particular, has been badly affected and her health has been undermined. On the other hand, I must take into account the fact that even if the requisitions on title had been accurately answered, there would have been some degree of upset because the sale could not then have been completed and I think that there would have been a good deal of the same hassle connected with trying to get the title cleared and seek alternative access, etc. Nevertheless, the big difference would have been that the Plaintiffs would not have parted with their money. In assessing damages, I am particularly having regard to the judgment of Carroll J. in Roche -v- Peilow (unreported judgment of 8th July, 1986). I would make a joint award as against all the Defendants of £10,000 general damages.

37. The total damages to which the Plaintiffs are entitled, therefore, amount to £202,198.56.

38. On apportionment of liability in relation to the indemnity/contribution claims I will hear Counsel further, though the Chief Justice has already held that the First named Defendant is entitled to be indemnified by the Second and Third named Defendants.