Property solicitor negligence - but where’s the loss?
I had a call the other day from a businessman who wanted to know whether he had a claim for professional negligence against his previous solicitors. He had instructed them to act for him on the purchase of a property. He wasn’t sure about tax so he asked his solicitors whether he would be able to reclaim VAT on the property. The solicitors, after asking the other side, said yes, but did not make their own investigations.
He went on to buy the property for say, £400,000 and sometime later he proceeded to reclaim £80,000 VAT. However, he was later disappointed to receive a letter from HMRC telling him he had incorrectly claimed the VAT back and would have to repay the money to HMRC, so he got in touch to get advice on making a claim for property solicitor negligence for their incorrect advice. He felt they were at fault and had mistakenly told him VAT was recoverable. They had relied on what the other side had told them but should have sure for themselves rather than just rely on the sellers, resulting in wrong information being given.
Proving professional negligence
This was unfortunately an all too familiar case where there was apparent negligence on the part of the professional, yet no case to make against them. It’s often hard to explain to someone who feels they have had poor advice that proving negligence is only one part of the process of proving a professional negligence claim.
Each case has to satisfy 3 main conditions.
- Duty of care owed by the professional
- Breach of that duty
- Loss as a consequence of that breach of duty
In this case, the problem was condition 3. It seemed that despite the property solicitor negligence, the client had not actually suffered any real loss. There had been a solicitor mistake but the end result was the same; VAT was not properly recoverable for the transaction. Had he been told this initially, he would never have reclaimed it. As he had, he was obliged to repay it. However, no loss had resulted form the solicitors negligence. There was no suggestion the VAT question was central to whether he would proceed with the purchase, so he’d have bought the property whether or not VAT was recoverable.
I always try to give clients straightforward advice right at the outset, even if it involves breaking bad news! Better to know early if you have no case, even if it comes as a surprise after such a glaring error on the part of the previous solicitors. Naturally, where we were unable to recommend suing a solicitor we will do so and will fight valid cases with determination.
