The Court of Appeal recently gave its judgment in the case of Stoffel & Co v Ms Maria Grondona [2018]. Ms Grondona had made a claim for professional negligence against Stoffel & Co who had acted for her when she purchased the leasehold interest in a property from Mr Mitchell.
Stoffel & Co had failed to register the transfer at the Land Registry; on omission, which clearly amounted to negligence. However, Stoffel & Co defended the claim principally on the basis that Ms Grondona’s purchase was a sham transaction designed to release mortgage funds for the benefit of Mr Mitchell. Stoffel & Co argued that, in such circumstances, the transaction was tainted with illegality and Ms Grondona should not be allowed to pursue a claim.
The Court of Appeal considered the facts of the case and determined that, whilst there was an element of dishonesty in the transaction between Mr Mitchel and Ms Grondona, they did intend to transfer the interest and to accept the terms of the mortgage. These were the elements of the transaction that were determined to be important to the claim in negligence against Stoffel & Co. Ms Grondona was therefore permitted to recover £78,000 in damages for professional negligence.
Lady Justice Gloster explained as follows:
“I see no public interest in allowing negligent conveyancing solicitors…who are not party to, and know nothing about, the illegality to, avoid their professional obligations simply because of the happenstance that two of the clients for whom they act are involved in making misrepresentation to the mortgagee financier.”
Perry v Raleys Solicitors
In November 2018, the Supreme Court will consider another professional negligence claim involving issues of the claimant’s honesty. In Perry v Raleys Solicitors, Mr Perry is pursuing a case against his former personal injury solicitors for failing to advise him on the ability to add an additional element to his claim.
His Honour Judge Saffman found, at first instance, against Mr Perry on the basis that the additional element of the claim would have been dishonest and so could not have succeeded. The Court of Appeal reversed this decision, finding that the Judge should not have sought to determine whether the claim was honest or otherwise, only whether it could have been pursued with more than a negligible prospect of success. The Supreme Court’s decision on this issue will assist in giving further clarity to the issue moving forwards.
How Nelsons Can Help
Daniel Brumpton
is a Partner at Nelsons specialising in professional negligence claims against solicitors and barristers.
For more information, please contact a member of Nelsons’ specialist Professional Negligence team on 0800 024 1976 or via the online form.