Darby & Darby (A Firm) v Joyce [2014] EWCA Civ 677 (20 May 2014)

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England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Darby & Darby (A Firm) v Joyce [2014] EWCA Civ 677 (20 May 2014)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/677.html
Cite as: [2014] EWCA Civ 677

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		Neutral Citation Number: [2014] EWCA Civ 677
		Case No: B2/2013/1068

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EXETER COUNTY COURT
Mr Recorder Mitchell
Claim No: 1EX90060

Royal Courts of Justice
Strand, London, WC2A 2LL

20/05/2014

B e f o r e :

LORD JUSTICE LONGMORE
LORD JUSTICE RIMER
and
LORD JUSTICE TOMLINSON
____________________

Between:

	DARBY & DARBY (a firm)	Appellant
	- and -
	HELEN JOYCE	Respondent

____________________

Mr Bernard Livesey QC and Mr Joshua Munro (instructed by Kennedys Law LLP) for the Appellant
Mr Guy Adams (instructed by WBW Solicitors) for the Respondent
Hearing date: 21 November 2013
____________________

HTML VERSION OF JUDGMENT
____________________

Lord Justice Rimer :

This appeal, by Darby & Darby ('Darby'), a firm of solicitors, defendants to the claim, is against an order made on 27 March 2013 by Mr Recorder Mitchell in Exeter County Court by which the recorder, so far as material, gave judgment in favour of Helen Joyce, the claimant/respondent, against Darby for: (i) damages for professional negligence for £186,007.94; (ii) an account of the cost of work carried out to the property the subject matter of the claim, for which account Darby was to be answerable; (iii) an assessment of interest, to be dealt with at the conclusion of the account; and (iv) costs.

Jackson LJ gave permission to appeal. Darby challenges the recorder's order on the grounds that he misdirected himself on causation and quantum. Darby was represented before us by Mr Livesey QC (who did not appear below) and Mr Munro, who did; and Ms Joyce by Mr Guy Adams, as below.

The case is heavily fact-based. I shall first summarise the facts as found by the recorder, supplemented by fuller references to the documents and to the written and oral evidence material to the issues on the appeal. I shall then deal with the issues.

The facts

Tamarisk, Hillesdon Road, Torquay was until 27 August 1985 part of a large plot owned by Gordon Hoyle and his wife Edwina ('the Hoyles'). On that day, the Hoyles transferred part of the plot to Mr and Mrs Shambrook, including the detached house known as Tamarisk, and then built a house called Marina View on their retained land, which they occupied. Both Tamarisk and Marina View enjoyed views over Torquay Marina.

Clause 2 of, and the third schedule to, the transfer of 27 August 1985 imposed 12 restrictive covenants on Tamarisk for the benefit of Marina View, including these two:

'1. Not to use any building for any purpose other than as or incidental to a single private dwelling. …

5. Not to make any alteration or addition to the exterior or external appearance of the Property [Tamarisk] or the buildings thereon nor to erect any walls, fences or buildings (whether temporary or otherwise) without first obtaining the written consent of the Transferor [the Hoyles], the Transferee being responsible for the Transferor's legal and surveyors' costs in connection with all matters arising out of any application for consent whether or not such consent is granted.'

The latter covenant ('the alterations covenant') is of major significance in the events that happened. The former covenant ('the user covenant') played a smaller role.

In March 2007, Ms Joyce agreed, subject to contract, to buy Tamarisk from the then owners, Mr and Mrs Owens. She instructed Mr John Darby of Darby to act for her on the purchase. The purchase was 'at more or less the height of the property market'. The Owens imposed pressure on its progress but the recorder correctly noted that that did not reduce Mr Darby's duty to act as a reasonably competent conveyancing solicitor. One of Ms Joyce's complaints was that he did not inform her of the existence of the covenants or (as follows) explain them to her. The charges register of Tamarisk did not set out the terms of the covenants: it simply recorded that covenants had been imposed by the 1985 transfer, but Mr Darby had a copy of the transfer and so he faced no difficulty in advising about them.

Ms Joyce had a 30-minute meeting with Mr Darby on 25 April. That was the only meeting they had during the conveyancing process. Mr Darby made no attendance note (an unprofessional omission that was a feature of all his dealings with Ms Joyce). Ms Joyce did make a note, which she agreed was not a complete record of all that was discussed. She denied that Mr Darby advised her about the covenants. Mr Darby had no memory of advising her about them: his case was that he would have done so because that is what he would normally have done. The recorder found that he did not advise Ms Joyce about them and so breached the duty expected of him as a reasonably competent conveyancing solicitor. The breach was both of his retainer and of the duty of care owed in tort.

Contracts were exchanged on 4 May at a price of £460,000. Completion was on 14 June. Ms Joyce borrowed £391,000 of the purchase price from Northern Rock on the security of a charge of Tamarisk. Her title was registered at HM Land Registry and on 11 July Mr Darby sent her a copy of the entries of the registered title. As noted, the charges register did no more than to refer to the fact of restrictive covenants having been imposed by the 1985 transfer; and Ms Joyce did not have a copy of that transfer.

Ms Joyce lived with a partner, Neil Casey. They intended to do both interior and exterior works to Tamarisk. No permission from the Hoyles under the alterations covenant was required for the interior works, but it was required for the exterior works. The latter works were intended to include the installation of a pool in the garden, a balcony extension, a new patio area, terracing and landscaping. It was Ms Joyce's case that at the time of the purchase she also intended to subdivide Tamarisk either to enable her parents and grandmother also to live there or, alternatively, to let out part of it on a commercial basis: either alternative would have generated funds to finance the purchase and the works (in the former alternative, the relatives would contribute to the mortgage payments). The recorder noted that this intention 'arguably brought into play' the user covenant.

Ms Joyce commenced the works in September 2007. By mid-October they were well underway. She was unaware of any complication because of the alterations covenant. Down to then, her relationship with the Hoyles was amicable.

Things then changed. Mr Hoyle, on 15 October, provided Mr Casey with an extract from the 1985 transfer, including the covenants, and made it clear that the works could only continue with his consent. Ms Joyce did not understand why there should be a problem and ignored the request.

Mr Hoyle instructed Hooper & Wollen, solicitors ('H&W'). On 25 October, they wrote to Mr Casey, enclosed a copy of the covenants, referred to the alterations covenant, noted that the proposed alterations included the installation of a pool, a new boundary wall, a new veranda and a new garage, and concluded by stating that:

'… unless works ceases [sic] immediately until you receive written permission from [the Hoyles], then we will need to apply for an injunction to stop further works. We therefore look forward to hearing from you within the next 5 days with your written application for permission when our client will consider the matter further.'

Ms Joyce read that letter at the time of its receipt and agreed in her oral evidence that its last paragraph 'could not be clearer' and that she was left in no doubt as to what the Hoyles were asking for.

Following receipt of that letter, Ms Joyce re-instructed Mr Darby, who visited Tamarisk on 29 October. In accordance with his practice to date, he made no note. The recorder found that (contrary to Ms Joyce's case) 'Mr Darby did not tell [her] that [the alterations covenant] was not a problem,' nor did he tell her to stop the work. What he did was 'to agree to look into the matter, to advise and to assist in obtaining any necessary consent from the Hoyles'. Following the meeting, Ms Joyce sent him an email, which provided some general information about the works and said that Mr Casey had explained to Mr Hoyle what repair works were being carried out. She said that Mr Luscombe, of the local authority, had also said that 'there was nothing contravening the building regulations'. Mr Darby did not reply to her email, nor did he give Ms Joyce any advice.

A second head of Ms Joyce's complaints against Darby, which the recorder dealt with at this point in the story, is that they should not have accepted her instructions in relation to the Hoyles' complaints about the alterations. The recorder found that Mr Darby must, or should, have considered the possibility that he had not previously advised Ms Joyce of the alterations covenant; that there was therefore the possibility of a negligence claim; and that he should have considered the possibility of a conflict of interest if Darby continued to act. The recorder inferred that Mr Darby's recognition of the possibility of a claim explained why he did not open a new file and did not intend to bill Ms Joyce for his advice and assistance. He said that:

'89. The fact that Mr Darby continued to act, without at least obtaining informed consent from his client, sowed the seeds for all that was to follow and the way in which the developing dispute with the Hoyles was handled.'

The recorder's view was that Darby should not have continued to act in the matter. He summarised the position as follows:

'91. Looking at the totality of the situation and how it unfolded, it seems to me that the reason that such clear and unequivocal advice was not given, at least in part, was that Mr Darby felt unable to do so due to his own potential vulnerability to a claim. He became drawn into a situation whereby he was attempting to keep Ms Joyce happy, which meant not unduly interrupting the work, on the one hand, whilst at the same time trying to extract the required consent from the Hoyles, on the other.'

Ms Joyce's third head of complaint against Darby is that they anyway handled the dispute with the Hoyles negligently.

On 30 October, Mr Darby wrote to H&W in response to the letter of 25 October. He said the new boundary wall was a replacement for the collapsing original, there was no garage and the pool and veranda were temporary structures. The thrust of his letter was that Ms Joyce had kept the Hoyles informed of the works, that the replacement wall complied with building regulations and that it 'ill becomes [Mr Hoyle] to complain about essential works for the benefit of both properties some six or seven weeks after he was notified of what was going on and after continuous and full consultation with him.' He proposed a meeting to discuss the remaining work. H&W's response on 2 November was that Mr Hoyle was willing to attend a meeting 'provided that any work that is happening at the moment stops immediately until the meeting has taken place'. H&W made the point that the boundary wall was twice the height of the original and said they did not understand how the veranda could be a temporary structure if it was attached to the wall. Unusually, Mr Darby forwarded that letter to Ms Joyce, with a short covering letter that gave no advice as to the alterations covenant or as to her vulnerability to a claim by the Hoyles.

H&W wrote again to Darby on 15 November. The recorder found that this letter indicated a serious escalation in the dispute. The Hoyles asserted 'serious breaches' of the alterations covenant, repeated a demand for an immediate cessation of work and complained that, despite repeated requests, the Hoyles had not been given a clear list of all the works Ms Joyce intended to undertake. If Ms Joyce refused to stop the works, injunction proceedings (described as a last resort) were threatened. Mr Darby did not copy the letter to Ms Joyce, although it did lead to a conversation with her. He did not advise her to stop the works. He wrote a 'holding reply' to H&W on 16 November, in which he promised to provide 'the full detail of the work which is proposed' and confirmed that certain digging works were continuing.

Mr Darby wrote a fuller reply on 21 November. He apologised for delays which he said were because of personal difficulties rather than any reluctance by Ms Joyce. He wrote that she had misunderstood the importance of obtaining Mr Hoyle's consent because she had considered that works of repair and support did not require consent. The recorder said that:

'94. … that letter did not accurately represent the reality of the situation. Ms Joyce had not recognised the distinction between repairs/support on the one hand, and alterations or additions, on the other. This was a distinction grasped by Mr Darby. Ms Joyce had simply been unaware of the covenant at all and at the date of this letter was still lacking clear advice from Mr Darby upon her position'.

A further complication had arisen in the meantime, relating to a party wall issue, as a result of which the Hoyles appointed a surveyor. There was a site meeting on 28 November, attended by Mr Casey, Mr Darby, Mr Hoyle and the surveyor. The party wall issue was resolved. Two other issues of concern to Mr Hoyle were discussed. First, the extent and ground level of the patio: Mr Hoyle feared his property might be overlooked. Second, the size of a replacement balcony. The surveyor asked for specifications for certain works, including retaining walls. The recorder said that 'subject to further information being provided, there appeared to be the basis for an agreement and the meeting was described as an amicable one.' He said it was, however, the high water mark of amicable relations: matters degenerated thereafter.

Mr Darby failed to make a note of the meeting or to advise Ms Joyce how the situation had been left. There was a misunderstanding as to who was to obtain the specifications and information required: Mr Darby and Mr Casey each thought the other was to deal with it. The recorder found that:

'101. There was also a disconnect between Ms Joyce/Mr Casey's understanding that they could continue with works, provided these did not extend to the areas that Mr Hoyle was particularly exercised about and Mr Hoyle's stance that no exterior work should continue at all until all matters had been resolved.

102. In my judgment, the impact of this disconnect could have been avoided had there been clear advice from Mr Darby as to Ms Joyce's vulnerability and that Mr Hoyle was demanding cessation of all exterior work pending overall agreement being reached.'

The recorder found that matters were allowed to drift. Following the meeting of 28 November, Mr Darby did not follow up matters with alacrity. H&W continued to press for progress. Ms Joyce went on holiday for a week. On 14 December, H&W wrote to Mr Darby saying the Hoyles wished to finalise the matter and asking to hear from him as a matter of urgency. On 19 December, Mr Darby wrote to her saying he needed to speak to her and Mr Casey, and that his office was closing on Friday 21 December until 2 January 2008.

On 20 December, H&W wrote Darby another warning letter emphasising that no exterior work should be carried out. The letter followed a conversation between Mr Wills of H&W and Mr Darby. It said:

'… we confirm that [Ms Joyce] should not be undertaking any work whatsoever in the garden of [her] property and to the main structure given that this would amount to a breach of the restrictive covenants …

… the only works that [the Hoyles] consented to were the essential underpinning works required to the rear elevation and no other works are consented to pending resolution of this matter.

[The Hoyles] wish to be reasonable but if [Ms Joyce] considers that she can continue to undertake works in the hope that the matter will be ignored then that will not be the case.

We would be grateful if you would kindly write to [Ms Joyce] in order to confirm that she should not be undertaking any work whatsoever until this matter has been resolved. …'

Mr Darby did not copy that letter to Ms Joyce. Following its receipt, he did, however, write her the following letter on 21 December:

'As we will now be closed until the New Year, I thought I should write to you.

I anticipate that little or no work will be carried out on the rear garden until the beginning of the New Year. It is vitally important, before work re-commences, that we get agreement with the Hoyles. As you know, following the meeting, virtually everything is agreed with the exception of the height of the patio at the Hoyles' side of the property. I think we should have a meeting very early in the New Year with a view to resolving the whole issue.

From speaking with the Hoyles' Solicitor I do not think there is any great difficulty but it is vital that we get his written consent because, otherwise, irrespective of whether they try to commence proceedings against you if we do not get consent, there will be considerable difficulties when you come to sell the house if you have not got written consent. As you are aware Mr Hoyle seems to be agreeing on everything, including the extended first floor balcony, however until we have his official consent you are still at risk.

The office re-opens on the 2^nd January and I suggest you contact me as soon as possible thereafter. …'

The recorder said that letter had to be seen in the context of a continuing lack of advice from Mr Darby regarding the enforceability and impact of the covenant, or any prior indication from him that all work had to stop. He said it did not convey the imperative language of H&W's correspondence. Ms Joyce said in her witness statement that the letter of 21 December did 'not tell us to stop work. It merely expressed the view that we must get agreement from the Hoyles; but that is not the same thing.' She accepted in cross-examination that she had no problem in understanding the letter and was not cross-examined on her explanation of that understanding in her witness statement. Mr Casey, in his witness statement, said that he recalled correspondence from Mr Darby 'before Christmas 2007 but he did not tell us to stop work'.

On 3 January 2008, H&W wrote again, saying:

'This matter does now need to be resolved as a matter of urgency and before any further works are undertaken at the property by [Ms Joyce]. The works include anything relating to the building itself or indeed works within the garden and which are covered by the restrictive covenants.'

H&W wrote two further letters on 9 January. The first asserted that Ms Joyce was in breach of the covenant. It recorded H&W's understanding that information would be forthcoming as to the specifications of the wall constructed on the rear boundary of Tamarisk and of the boundary wall, but that it had not. It stated that Mr Hoyle had confirmed that Ms Joyce was again undertaking works in her garden. It requested that all works stop immediately, failing which counsel would be instructed to settle proceedings for an injunction, damages and indemnity costs.

Mr Darby's evidence was that upon the receipt of that letter he telephoned Ms Joyce, spoke to Mr Casey, relayed its contents and that Mr Casey assured him that they would instruct the builder to stop the works, an assurance Mr Darby then conveyed to H&W. In cross-examination, Mr Casey agreed that Mr Darby had, in that conversation, told him to stop all the works, to which he, Mr Casey, responded 'Why have your changed your mind?' In re-examination, Mr Casey said that, in response to his own question, Mr Darby '… didn't really respond. He didn't really say anything of an explanation'.

Later in the day, Mr Wills of H&W wrote a further letter to Mr Darby (and faxed it at 3.43 pm), referred to their conversations that morning and said:

'Despite the fact that you have confirmed that you have spoken with [Ms Joyce/Mr Casey] and requested that they and/or their workmen desist immediately from works in the rear garden, we have now received a telephone call from [Mr Hoyle] timed at 3.20 pm confirming that [Ms Joyce's] workmen have continued to work throughout the course of the morning and early afternoon laying block work.

In the circumstances we write to confirm that we will now immediately instruct Counsel to settle an application for an injunction in the High Court to include a claim for damages/reinstatement as necessary together with all legal costs on an indemnity basis. Such an application for an injunction will be issued as soon as it is prepared and without further notice.'

Although, therefore, Mr Casey accepted that he had been told to stop all work, it had not stopped. The recorder held that the three letters of 3 and 9 January were ones that Ms Joyce should have seen, but none was copied to her. What did happen is that Mr Darby visited Ms Joyce and Mr Casey at Tamarisk on 10 January. That led to the signing by Ms Joyce of this undertaking:

'I Helen Joyce … hereby undertake with [the Hoyles] … not to carry out any further works on Tamarisk … until agreement is reached between us pursuant to the covenant in that regard [contained in the 1985 transfer]'.

Ms Joyce's case, supported by Mr Casey, was that she signed the undertaking 'under duress' and only on the basis that she could continue in the meantime with the works to which Mr Hoyle was not objecting (ie work other than in relation to the patio), and that 'it was her understanding that the undertaking would be amended accordingly'. Whilst Mr Darby agreed that Ms Joyce was reluctant to sign, he said he advised her that it was the only way to avoid litigation and she did sign. He denied agreeing to amend the undertaking.

Mr Darby's evidence about this meeting in his witness statement was not challenged in cross-examination. He there said:

'38. In some exasperation I went round to the Property the following morning, 10 January 2008, to speak to [Ms Joyce] and Mr Casey. I told them that if they did not agree to stop work there would be expensive litigation ensuing. In my view they were left with no doubt of the expensive repercussions of carrying out any more work. I took with me a typed form of undertaking which I had prepared beforehand … I explained to [Ms Joyce] the gravity of the situation and the risk of liability for the Hoyles' legal costs. She was concerned about the cost of laying off the builder, but I advised her that it would be cheaper to lay off the builder than to incur the costs of injunction proceedings in London and their possible consequences. I told her that all works must stop, even underpinning, and even those for which verbal agreement had previously been given, until consent was formally given. [Ms Joyce] indicated that she understood the position, and read and signed the undertaking. I did not agree to amend the undertaking before sending it on to the Hoyles's solicitors, as has been suggested by [Ms Joyce] in a draft statement prepared on her behalf in the injunction proceedings. I told her in clear terms that all works had to stop until agreement had been reached, otherwise the Hoyles would go to court.'

Ms Joyce said this about the undertaking in her witness statement:

'24. I recall John Darby coming to my house and asking me to sign a mandate to stop work. Initially I declined to sign this due to the verbal agreement that had previously been made which allowed us to do certain works. I can recall being pressured by John Darby and by [Mr Casey] to sign and I can recall [Mr Casey] telling me to do what your solicitor is advising. Very grudgingly I agreed to sign the paper on the understanding that John Darby amended it. He told me that he did not have time to go back to the office and return with an amended document. He asked me to sign it, telling me that he would return to his offices and amend it according to my instructions. I clearly remember him telling me that as Mr Hoyle had agreed to certain parts he would add the stipulation on his return to the office.'

Ms Joyce affirmed that account in cross-examination, emphasising that she refused three times to sign the undertaking: and that it was not to be sent until it had been amended. In re-examination, she agreed that Mr Darby had, on 10 January, told her that she should stop all works. She said her reaction to that was 'Why? We just agreed yesterday that we do this that and the other. Frustration, if I'm honest'. 'Yesterday' was 9 January, when Mr Darby had not spoken to Ms Joyce, but only to Mr Casey; and Mr Casey had agreed that Mr Darby had told him to stop all works.

Mr Darby sent the undertaking to H&W on the same day. His letter included the following:

'We explained to you that our client intends no work whatsoever to the small patio at your client's end of Tamarisk and we have obtained an undertaking which is copied with this letter.

The only work our client wishes to complete is the "footpath" immediately adjoining and supporting Tamarisk in concrete. It has to "mature" before slabs are laid on it. It is arguable that this is not covered by the restriction because it is a replacement rather than an alteration or addition. In fact, the footpath will be about an inch lower than the old one! But, be that as it may, our clients would like an understanding that the previous "agreement" that the rear path could be completed, is still in place.

The other work that was going on was the finishing of the patio at the far end of the property by the plunge pool. This is totally out of sight of your client's property because it is around the corner from your client's line of sight. Again, it does not involve any building; it is merely finishing the surface with slabs. …

Our clients did ask us to ask your clients whether they would be willing to release the covenant in so far as it affects Tamarisk, save for the area of the patio nearest your client's property. They would be perfectly willing to pay £10,000 for the remainder of the covenant to be released. No doubt you will take instructions.'

The recorder made no express findings as to what was said at the meeting of 10 January, save with regard to the undertaking and whether instructions were given for the £10,000 offer. He made no finding as to whether Mr Darby had, as he claimed, explained the gravity of the situation to Ms Joyce and impressed upon Ms Joyce and Mr Casey that they must stop all works. Bearing in mind that the cause of his apparently urgent, unsolicited visit was H&W's minatory letters of the day before, it might be thought surprising that Mr Darby would not mention such gravity.

As for the undertaking, the recorder made this finding:

'109. Ms Joyce's evidence is that she signed the undertaking effectively under duress. Ms Joyce told me that she only signed eventually on the basis that she could continue to proceed with work that Mr Hoyle was not specifically objecting to (i.e. work other than in connection with the patio) and it was her understanding that the undertaking would be amended accordingly. Mr Darby was to amend the document upon return to his office. Mr Casey supported that evidence.'

As for Mr Darby's offer of £10,000 to resolve the dispute, Ms Joyce denied having given any such instructions. The recorder preferred and accepted Mr Darby's evidence that he did have her instructions, which were given to him at the meeting earlier that day. He noted that the rejection of Ms Joyce's evidence on this particular matter went to her credibility, but it did not cause him to depart from the findings he had otherwise made.

The recorder went on to say that:

'112. The undertaking is, effectively, explained in this letter [of 10 January] by Mr Darby, in the context of no work being carried out to the patio, i.e. the area of particular concern raised by Mr Hoyle. The letter goes on to state works that Ms Joyce was looking to complete prior to an overall agreement being reached.

113. It seems to me that this letter is broadly in line with what Ms Joyce told me she thought she was signing up to. Mr Darby was effectively explaining the basis on which his client was proffering the undertaking. Thus seen, Ms Joyce's recollection that the undertaking was to be amended and Mr Darby's explanation (per his letter) of the context in which the undertaking was given, are not to my mind significantly different.'

I do not understand the recorder's double use of the slippery word 'effectively' in those paragraphs. As for paragraph 112, the letter did not explain the undertaking, 'effectively' or otherwise: the undertaking spoke for itself and did not need explaining. Nor do I understand the sense of the second sentence. What was written did not qualify, or explain, the undertaking. It made clear that no work was going to be done to the patio and that Ms Joyce 'wished' to complete the footpath – but did not say that, contrary to the undertaking, she was anyway going to do so although it did say that she 'would like an understanding that … [it] could be completed.'

I come now to further reasons for his decision that the recorder provided following the handing down of his draft judgment, a draft which had included paragraphs 109, 112 and 113, quoted above. Darby's solicitors asked the recorder to clarify what his findings were with regard to the suggested amendment of Ms Joyce's undertaking. The result was the recorder added to the order he made on 27 March 2013 the following 'additional reasons':

'(i) I accept the evidence of Ms Joyce that she eventually signed the Undertaking only on the basis that she could continue to proceed with work that Mr and Mrs Hoyle were not specifically objecting to (ie work other than in connection with the Patio). Her instructions in this respect were made clear to Mr Darby. In her own mind Ms Joyce assumed that the Undertaking itself would be amended accordingly. I do not find that there was a specific instruction to that effect.

(ii) Ms Joyce was entitled to rely upon Mr Darby to accurately convey to [H&W] what she was actually agreeing to and instructed him accordingly. He attempted to do so in his letter of 10 January 2008.

(iii) Mr Darby could have complied with his instructions either by amending the Undertaking itself or explaining carefully to [H&W] the basis upon which the Undertaking was given. Unfortunately, what transpired is that Ms Joyce believed she had agreed a relatively narrow restriction whereas Mr and Mrs Hoyle believed a much broader restriction had been conceded.'

My interpretation of the recorder's overall reasons in relation to the undertaking is as follows: (i) the suggestion in paragraph 109 that Ms Joyce gave express instructions to Mr Darby to amend the undertaking is wrong: she did not; (ii) she signed it in unqualified terms, but made it clear to Mr Darby that she 'could [and I infer would] continue to proceed with work of the nature that the Hoyles were not specifically objecting to', that is work other than in relation to the patio; (iii) she assumed, without making express reference to the point, that Mr Darby would amend her signed undertaking so as to reflect her intentions in that respect; (iv) she was entitled to assume that Mr Darby would convey to H&W what she was agreeing to; and (vi) Mr Darby could have complied with her instructions either by amending the undertaking, or by explaining to H&W the basis on which the undertaking was given, namely (I presume) that it did not mean what it said and that Ms Joyce intended to carry on with some of the work, although not the work on the patio.

H&W plainly understood that the undertaking meant what it said. They replied on the same day saying they would take the Hoyles' instructions and would revert and that, until they did, 'we would be grateful if no further work would be undertaken at all, in accordance with [Ms Joyce's] undertaking …'.

Ms Joyce did continue with some works after 10 January. She apparently thought this was all right as long as she did not work on the patio. Mr Hoyle took a different view. H&W wrote to Darby on 23 January complaining that the works had continued despite the undertaking. They continued:

'In the circumstances, your client must not undertake any further works whatsoever until a resolution has been reached in this matter or indeed until a court has adjudicated upon it. Further, unless we receive a copy of the engineer's report and plans for the balcony by 12 noon on Friday 25 January 2008 then we have our clients' instructions to proceed with instructing Counsel and applying for an injunction. Such application will also include an application for all costs incurred by our client in respect of this matter to be paid by yours.'

Again, Darby did not copy this letter to Ms Joyce. Following a telephone conversation with Ms Joyce, he replied to the letter on 25 January, saying that the only work 'being carried out by [Ms Joyce] this afternoon' was the levelling of an area to be grassed and that no work had been done to the patio area. He wrote to Ms Joyce on the same day, expressing disappointment that work had apparently continued after he had asked that no work be carried out that day. The recorder said:

'123. … This seems to have been too little too late. The lack of clear advice had led to Ms Joyce developing a mindset as to what she was and was not entitled to do.'

On 11 February 2008, the Hoyles commenced proceedings for an injunction. An interim injunction against Mrs Joyce was granted on 18 February. On 14 February, Ms Joyce had terminated Mr Darby's instructions and had instructed new solicitors, Samuels & Co. They alleged negligence by Mr Darby.

Discussions with the Hoyles 'meandered on', as the recorder said, until early 2009. No complete agreement was ever reached. By the spring of 2009, Ms Joyce's and Mr Casey's business had ceased. By the summer of 2009 Northern Rock had taken possession of Tamarisk. They sold it by way of what the recorder called a 'distressed sale' in March 2010 for £390,000.

The recorder's decision on liability

Having made the findings he did, the recorder concluded in paragraph 125 that Mr Darby failed in his duty of care in the autumn and winter of 2007/08 by: (i) failing to advise clearly on the meaning and effect of the alterations covenant, its enforceability and vulnerability of Ms Joyce's position; (ii) failing to copy important H&W correspondence to her that would have brought home the seriousness of her position; (iii) failing to make clear to her that all work needed to stop rather than works referable to the patio; and (iv) failing to make it clear who was responsible for the information/specification after the meeting of 28 November 2007 and to follow it up.

The recorder's decision on causation

The recorder considered first whether, if Mr Darby had advised Ms Joyce of the alterations covenant at the outset, she would have purchased anyway or would not have proceeded at all. In her statement in the injunction proceedings she said that, had she known of the covenant, she 'may' not have proceeded with the purchase. Her case was that, had she appreciated its existence and its possible impact on her plans, she would not have proceeded with the purchase.

The recorder recognised that evidence as self-serving, or advanced with hindsight. But he said that the court should be slow to assume that she would have proceeded when she was effectively deprived of the option of making an informed decision. Tamarisk was an attractive proposition to her, but its attractiveness lay materially in her plans for it, including the exterior works, although the scope of these developed over time. Her intention to subdivide Tamarisk was also important, since it provided the means of financing the project. The recorder noted that (as Ms Joyce also did not know) the covenants included a restriction on using Tamarisk other than for the purposes of single private dwelling (the user covenant). This added a further level of complication. Ms Joyce had not appreciated the potential effect of that covenant when she made her statement in the injunction proceedings.

The recorder discounted the possibility that Ms Joyce might have been able to obtain the Hoyles' consent in advance of the purchase or to renegotiate the purchase price. He said he had to decide the question on the balance of probabilities. He concluded that, had Ms Joyce been properly advised at the outset, she would not have proceeded with the purchase. He said:

'136. For reasons already given any competent solicitor in my judgment would have advised Ms Joyce on the existence and potential impact of the covenants both regarding exterior alterations and single private dwelling use and potential complications arising on that basis. Would Ms Joyce with the benefit of such advice have taken the risk or not? Given the relative centrality of her desire to carry out external works and the need to finance the project by subdividing [Tamarisk] in some way, in my judgment Ms Joyce would not have taken the risk in proceeding with the purchase, had she been appropriately advised.

137. Given this conclusion, it is not necessary for the Court to proceed to consider the separate causation (or indeed quantum) scenarios that have been ventilated and which are based on the proposition that Ms Joyce would have proceeded anyway (and in that event, what might have occurred if Mr Darby had not acted in conflict of interest or handled the dispute with the Hoyles competently).'

The recorder's decision on quantum

The recorder directed himself that the fundamental principle was that Ms Joyce was entitled to damages that, so far as possible, would put her in the position she would have been if Darby had discharged their duty. He said the starting point was to take the diminution in value of Tamarisk at the date of purchase by reason of the existence of the covenants. This was not necessarily the only approach. If Ms Joyce would not have purchased anyway, it might be appropriate to assess damages on the basis of what she had spent as a result of the transaction, plus the costs of extricating herself from the purchase, with credit being given for the residual asset value on disposal.

Ms Joyce's valuer, Mr Avery, put the diminution in value at the date of purchase at about 10%, or £45,000. Darby's valuer, Mr Woodhead, said the market had already taken account of the covenants in fixing the purchase price at £460,000. Ms Joyce's case was, however, that as a result of the transaction, she had incurred costs of some £340,000, including for the works, mortgage repayments, insurance premiums, the Hoyles' legal costs of the injunction proceedings and the difference between the purchase and eventual sale prices of Tamarisk. The recorder noted that some of the figures making up the £340,000 were untested, but said there could be no doubt that an award confined to the diminution in value at the date of purchase would not be fair or appropriate compensation and that it would be wrong to confine her to it. He also noted that it would, however, be different if he had concluded that Ms Joyce bore a substantial responsibility for the losses she had sustained.

In that context, Darby had argued that she did bear such a responsibility. Their point was that the obtaining of the Hoyles' consent remained a possibility, if not a probability, until January 2008 when Ms Joyce breached her undertaking. The recorder did not accept that argument, saying:

'148. … Given the context in which the undertaking was signed, I do not, for the reasons already set out, consider that [Ms Joyce] bears a significant responsibility for her own losses, certainly not to the extent that would cause the Court to limit her damages to diminution in value, or to disapply the costs of extrication approach, as the basis for assessment.'

Turning to Ms Joyce's costs of extrication, they were claimed under six heads: (i) mortgage repayments from April 2008 to May 2009, £37,863.40; (ii) 12 months' insurance premiums, £3,536.76; (iii) mortgage arrears and other expenses deducted from the sale price, £29,803.97; (iv) the costs liability to the Hoyles, £23,296.86; (v) the difference between the purchase and ultimate sale price, £70,000 (£460,000 less £390,000); and (vi) the amount spent by Ms Joyce on the works (including material and labour), plus the mortgage payments up to March 2008, which was said to total £186,007.94.

As to item (v), Darby made the point that Tamarisk was stripped of its fixtures and fittings prior to the sale, so justifying a credit for the consequential reduction in the price. The valuers agreed that the cost of refitting Tamarisk would have been about £40,000. There was an issue as to whether Ms Joyce was responsible for the stripping, in which case the credit would not be justified. Ms Joyce denied responsibility, as did Mr Casey. The recorder regarded this issue as in the nature of an assertion by Darby that Ms Joyce had, by stripping Tamarisk, taken a step amounting to a failure to mitigate her loss. He regarded the burden of proving that as being upon Darby, which he held Darby had failed to discharge. Ms Joyce was not, therefore, required to give credit for more than the £390,000 achieved on the sale.

As to item (vi), there was considerable dispute, which the recorder held was best resolved by directing an account to be taken. There remained one more point, namely that the expenditure on the Tamarisk works had been largely paid for by money derived from a defunct company that had been beneficially owned by Ms Joyce and Mr Casey. Mr Casey's evidence was that the money extracted was by way of a director's loan account. Darby's point was, therefore, that Ms Joyce had not herself spent this money and could not recover in respect of it. The recorder regarded that argument as unattractive and rejected it. He accepted Ms Joyce's submission that the money so used to pay the expenses had been advanced to and for her benefit and so she could claim in respect of the money so advanced.

The outcome was that, by reference to the list in [52] above, the recorder's order included an award of damages totalling £186,007.94. That figure is a mystery to me, because it is described in paragraph 159 of his judgment as representing Ms Joyce's expenses (both for labour and materials) in respect of the cost of the works, plus mortgage payments up to March 2008. Yet the recorder ordered an account as to the cost of the works, so the £186,007.94 figure cannot include such costs. Yet more curiously, although by paragraph 172 of his judgment he said that Ms Joyce was entitled to damages in the different figure of £180,669.79, it was the £186,007.94 figure that ended up in the order. I understand the lower figure to have included (or to have been intended to include) all six heads listed in [52] above apart from the costs of the labour and materials for the works.

The appeal

By reference to the four findings on negligence the recorder made in paragraph 125 of his judgment (see [45] above), Mr Livesey did not challenge conclusions (i), (ii) and (iv). They did not, he said, go to causation. His first submission was addressed to conclusion (iii), which he said did. His second submission was that the recorder was wrong to find that, had Darby explained the covenants to Ms Joyce at the outset of her proposed purchase, she would not have bought at all. His third set of submissions went to the damages awarded by the recorder. I deal with the submissions in the order they were advanced.

A. Did Darby fail to make it clear to Ms Joyce that all works needed to stop?

The negligence alleged is that Darby failed to handle the negotiations with the Hoyles appropriately, and in particular failed to inform Ms Joyce of the need to stop all works until written consent to them had been obtained. Mr Livesey made the general point that the Hoyles were at all material times prepared to consent to the carrying out of all exterior works except two: (i) a proposal to extend an upper level Juliet balcony so that it ran alongside the house and so overlooked the Hoyles' garden; and (ii) the extension of a new patio to the Hoyles' boundary, since its raised level would enable its users to look over the wall. He said that limiting both these alterations so as to accommodate the Hoyles was not a problem for Ms Joyce. The critical question on this part of the appeal was whether Ms Joyce made good her claim in negligence and, in particular, causation.

This issue arose under Ms Joyce's second retainer of Darby, which followed the raising by the Hoyles in October 2007 of the issue arising under the alterations covenant. Mr Livesey did not defend all Mr Darby's failings in the manner of the discharge of this retainer. Mr Darby was criticised, for example, for not copying important H&W correspondence to her and for failing to make attendance notes of meetings and conversations. But, said Mr Livesey, provided that he had at least done enough to make clear to Ms Joyce that it was vital that she did not go ahead with any works until written consent was obtained, then insofar as the claimed damages included losses following from the fact that she did not stop the work, resulting first in the grant of the injunction and then the consequential losses said to flow from that, it could not be said that all the claimed losses were caused by Darby's negligence.

More particularly, Mr Livesey submitted that the correct inference from the facts was that the Hoyles' consent to the works could have been obtained by about the beginning of January 2008; and if that had happened, none of the money invested in the works could be said to have been caused by any negligence on the part of Darby. The fact that it was not obtained was, he said, because Ms Joyce refused, despite Mr Darby's express advice, to stop the works without first obtaining the consent. She was therefore herself the cause of the incurring of all the losses claimed to have followed the purchase of Tamarisk. If so, the limit of Darby's liability in negligence was, said Mr Livesey, confined to the loss suffered by Ms Joyce from the fact that she bought Tamarisk in ignorance of the covenants.

Mr Livesey did not attempt to identify the giving by Mr Darby of any advice to Ms Joyce prior to his letter of 21 December 2007 (see [22] above) that she should stop all works until she had first obtained the Hoyles' written consent. It is clear that works had continued during this prior period, that Mr Darby knew that they had and that he had not given any advice to Ms Joyce that they must stop. Mr Livesey did, however, submit that the letter of 21 December made it unequivocally clear that she must stop the works until such time as she had the Hoyles' consent to them. Mr Livesey said the second and third paragraphs conveyed that it was vital to stop the work, or at any rate not to resume it after Christmas before consent was obtained, which came to the same thing. That letter marked a turning point in the story.

Mr Livesey referred next to the events of 9 and 10 January 2008. He referred to Mr Casey's evidence that he agreed that Mr Darby told him, in a telephone conversation on 9 January, that all works must stop, although H&W's second letter of 9 January shows that they did not. He referred to the obtaining by Mr Darby of the undertaking signed by Ms Joyce on 10 January and which Mr Darby had typed up in advance, and said Mr Darby's letter to H&W of 10 January enclosing the undertaking was typical of the sort of letter a solicitor would write after he had received such threats as were in H&W's letters of 9 January. It sought to explain and mitigate his client's actions and to put what Mr Livesey called a 'nice focus' on the work done. Overall, the thrust of the letter was that, whilst work had been carried on, Ms Joyce would 'like an understanding that the previous "agreement" that the rear path could be completed, is still in place'.

Mr Livesey focused on Mr Darby's unchallenged evidence in paragraph 38 of his witness statement. Mr Darby there said that, following H&W's second letter of 9 January, he went to Tamarisk on 10 January to tell Ms Joyce and Mr Casey that if they did not stop work they would face expensive litigation, and so went armed with the undertaking. He said he explained the gravity of the situation to them, which Mr Livesey said was consistent with the fact that he had made an uninvited and ostensibly urgent visit. The recorder, however, made no direct findings as to that. He dwelt only on the issues as to the undertaking and whether or not Mr Darby was to amend it, and as to whether or not Mr Darby had instructions to make the £10,000 offer, which he found that he did. The latter involved a rejection of Ms Joyce's and Mr Casey's evidence, but did not, so the recorder found, affect their general credibility. Mr Livesey questioned the soundness of that and submitted that Ms Joyce's account about the amending of the undertaking was incredible.

Mr Livesey criticised the recorder's reliance in paragraph 113 of the 'context' in which the undertaking was given. He criticised the recorder's failure to make clear findings as to what was said by whom and whom he believed and why. If he had got the context wrong, his findings were wrong. Mr Livesey reverted to Mr Darby's unchallenged paragraph 38 of his witness statement. If that evidence was accepted, it showed that Mr Darby had done all that a solicitor in his position could reasonably have done. He could do no more than advise, as he said he did: and his advice was that Ms Joyce should sign the undertaking and do no more work. He could not compel his client to accept his advice, and she plainly did not want to. She did sign the undertaking, but said she did so 'under duress'. That, said Mr Livesey, made Darby's case, and showed that Mr Darby gave the advice he said he did. What more could he do?

Mr Adams, in response, said the argument was a re-run of the case made by Darby at the trial. In paragraph 119, however, the recorder expressly rejected the case that Ms Joyce brought 'the situation that unfolded on herself, by continuing with certain works after giving the undertaking'. Critically, the recorder found that Mr Darby never advised Ms Joyce on the nature and effect of the alterations covenant, or on the need to obtain the Hoyles' written consent to the exterior works, and to stop all such works pending the obtaining of consent. The reason for his failure to give such advice was that Mr Darby felt unable to give it because of his own vulnerability to a claim by Ms Joyce. As the recorder put it:

'91. … He became drawn into a situation whereby he was attempting to keep Ms Joyce happy, which meant not unduly interrupting the work, on the one hand, whilst at the same time trying to extract the required consent from the Hoyles, on the other.'

The substance of the evidence was that Mr Darby thought he could sort it out, but as matters proceeded he found himself having to say one thing to H&W and another to Ms Joyce; and, as events unfolded, he found himself in ever greater difficulty. There was no doubt that Ms Joyce had left it to Mr Darby to sort it out, but he did not.

Mr Adams said that Mr Darby wrote the letter of 21 December in a context in which he had failed to progress the matter following the November meeting. H&W were, however, continuing to press him. Mr Darby had first written the letter of 19 December to Ms Joyce, which conveyed no sense of urgency. He then received H&W's letter of 20 December making it clear that Ms Joyce was not to continue with any works other than certain underpinning works without the Hoyles' consent. Mr Darby's consequential letter of 21 December to Ms Joyce made no reference to H&W's letter, but simply opened by saying 'I thought that I should write to you.' Whilst the letter included the 'vitally important' sentence, it did not explain why it was so important. Mr Adams said the 'vitally important' advice was somewhat buried in the letter, which included an odd reference to the potential difficulties on a re-sale. It was, said Mr Adams, not a responsible letter from a responsible solicitor in the light of the circumstances that had by then unfolded.

There followed the chasing letter from H&W on 3 January 2008, to which Mr Darby did not reply; and the letters and events of 9 and 10 January. I did not understand Mr Adams to challenge that Mr Darby made it unambiguously clear to Ms Joyce and Mr Casey at the meeting on 10 January that all works had to stop pending the reaching of agreement with the Hoyles. Nor, it seems to me, is the contrary arguable: Ms Joyce's 'duress' evidence shows that it is not. Mr Adams's answer to this was that the recorder said that it was 'too little too late', although the recorder in fact made that statement not in relation to the events of 10 January, but in relation to Mr Darby's letter of 25 January following the Hoyles' complaint that Ms Joyce had breached her undertaking. Mr Adams's further answer was that by 10 January Ms Joyce was in an emotional state over her dispute with her neighbours, and Mr Darby's advice to her amounted to an insufficiently explained volte face as compared with what she had understood from him previously, namely, that she was not required to stop all work. She was therefore presented with a confusing situation, one in which Mr Darby's early lack of clear advice had led her into a mindset that there was no absolute bar on continuing with the work, whereas now he was suddenly telling her that she had to down tools. Moreover, said Mr Adams, the recorder was entitled to find that the outcome of the meeting was that, despite the signed undertaking, Ms Joyce had made it sufficiently clear to Mr Darby that the only work that she was agreeing to stop immediately was that in relation to the patio. That is apparent from the paragraph of Mr Darby's letter to H&W of 10 January stressing that no work would be done on the patio, a statement that would have been unnecessary if the undertaking were intended to mean what it said; whereas the sense, in context, of what Mr Darby then wrote (even if it did not strictly say so) was that she would continue with the work on the footpath.

Conclusion on the causation issue

Mr Livesey's position is simple. Yes, Mr Darby had not advised Ms Joyce prior to 21 December that she must stop all works until agreement was reached, but he did give such advice by the letter of that day and by the same advice he gave on 9 and 10 January, when he made clear that if she did not take it, costly injunction proceedings would follow. Ms Joyce wilfully refused to accept his advice and insisted on carrying on with the works. If she had accepted it, there would have been no injunction proceedings, or therefore, the visiting upon her of the costs of them she was ordered to pay (£23,296.86). She was, therefore, herself the cause of the bringing of those proceedings.

Mr Adams's responsive submission was that the modern approach to questions of causation was not a mere fact finding exercise, but that in many instances, certainly in the law of tort, it engaged an evaluative judgment concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant; and for that proposition he referred to Normans Bay Ltd (formerly Illingworth Morris Ltd) v. Coudert Brothers (a firm) [2003] EWCA Civ 215, per Laws LJ at [64], with which Carnwath LJ agreed at [69]. He made the point that, particularly in professional negligence cases, the consequences of the initial wrong may be matters to which persons in addition to the wrongdoer have contributed, including the victim and third parties; all of their actions will inevitably be concurrent causes in the chain of events so long as the 'but for' test holds good. What the defendant should be held responsible for is, however, said Mr Adams, ultimately a question of fact. The chain of causation is not lightly broken, and the burden is on the defendant to show that it is. He said Darby had not discharged that burden here and there was no basis upon which this court should interfere with the recorder's conclusion.

I have come to the conclusion that the recorder was wrong to find that the bringing of the injunction proceedings was caused by Darby's negligence in the handling of the issue with the Hoyles over the alterations issue. I do not question his view that Mr Darby should not have taken on this matter at all. Once the problem had been explained to him in October 2007, he should have identified the potential conflict of interest that Ms Joyce's further instructions presented Darby with, and referred her to other solicitors. In the event he did not, he imprudently chose to take the matter on and proceeded to discharge his retainer with an unusual lack of professionalism. His failure to make attendance notes is one example. In addition, he did not, certainly in 2007, give any clear advice to Ms Joyce as to the nature and effect of the alterations covenant. He knew, at any rate down to 21 December 2007, that she was continuing the works; he had not told her to stop them; and his game plan, insofar as he had any, was apparently a hope that he could negotiate something with H&W, although he took no practical steps to do so. His handling of the case, in 2007, was a professional disgrace.

As Christmas 2007 approached, H&W upped the pressure on Ms Joyce and by their letter of 20 December made it plain that they expected her to stop all further work until agreement as to their nature had been made. That letter did not threaten injunction proceedings, but H&W had made it clear in their earlier letter of 15 November that they had instructions to bring such proceedings if Ms Joyce did not stop the works. The H&W letter of 20 December led to Mr Darby's letter of 21 December to Ms Joyce. The letter did not, as both Ms Joyce and Mr Casey said, actually tell them to stop the works. But their point to that effect appears to me, with respect, to amount to little more than casuistry. The clear message of the letter was that before any works was resumed in the New Year, it was 'vital' to obtain the Hoyles' consent to them. I accept that that letter was saying something Mr Darby had not previously said: but he was saying it now. Ms Joyce said she understood it and she can only have understood it as meaning what it said. Yet she did not stop work. Nor did she contact Mr Darby about it and ask for an explanation. She simply continued with the works, knowing she did not yet have the Hoyles' written consent.

There then occurred the events of 9 and 10 January 2008. It is clear that on 9 January Mr Darby told Mr Casey on the telephone that the works must stop, yet again they did not. It is also clear that on 10 January he told Ms Joyce that the works must stop. There is no dispute about that: Ms Joyce admits it by saying that she signed the undertaking 'under duress'. Mr Darby's unchallenged evidence in paragraph 38 of his witness statement was that, if they did not stop work, expensive litigation would ensue, that the situation was grave and that Ms Joyce would face a liability for the Hoyles' costs. But she was more concerned about the cost of laying off her builder.

The outcome of the meeting was, so the recorder found, that Ms Joyce refused to stop all work. She signed the undertaking, but was only prepared to stop work on the patio: she was not prepared to stop other works. The recorder found that she made an uncommunicated assumption that Mr Darby would amend the undertaking accordingly; and that she relied on him to explain to H&W that the signed undertaking did not mean what it said and that she either wished, or was proposing, to continue with at least certain works.

The recorder's findings about the undertaking are unsatisfactory. Paragraph 109 of his judgment is inconsistent with paragraph (i) of his additional reasons. His use of the 'could' in paragraph (i) is also unsatisfactory. I understand Ms Joyce's position to have been that she was making clear to Mr Darby that she would continue with non-patio work and in that respect she was rejecting Mr Darby's advice. The sense of Mr Darby's letter of 10 January was perhaps to convey that she would only continue with the non-patio works with the Hoyles' agreement.

The facts are, therefore, that despite Mr Darby's unequivocal advice, Ms Joyce was not prepared to stop all work, nor did she, whereas H&W had made it plain that if she did not the Hoyles would sue her, and Mr Darby had relayed that to her. She did not stop all the works and the Hoyles did sue her. That consequence is said to have been caused by Mr Darby, so that Darby should carry all the financial consequences that flowed from it.

I cannot understand why that should be. Granted that Mr Darby may well have previously indicated to Ms Joyce, expressly or impliedly, that despite the complaints by the Hoyles, she could in the meantime continue with the works. But, on 21 December 2007 and, specifically, on 9 and 10 January 2008, he made it clear to Ms Joyce that a point had been reached in the dispute at which, unless she stopped all work and attempted to reach agreement with the Hoyles, they would sue her. She refused to accept that advice, the direct consequence of which was that they did sue her. Mr Darby may strictly have been at fault in not conveying to H&W on 10 January that Ms Joyce's undertaking was not to be taken at face value and that she was proposing to carry on with works other than the patio works. But if he had, the likelihood is that the Hoyles' proceedings would simply have been brought earlier than they were.

I recognise that Mr Darby's advice of 21 December and 9 and 10 January may have represented a change from his prior stance, namely that in the meantime the works could be continued. But the position on the ground had changed by 21 December. The Hoyles were making serious threats and Mr Darby recognised that the time had come to advise his clients to talk rather than to provoke. His advice was, I consider, correct, although no doubt it was unwelcome. It was Ms Joyce's right to reject it, just as any client is entitled to reject his lawyer's advice, as many do, often to their cost. The clear inference I draw from this case is that from the outset Ms Joyce regarded the Hoyles' bid to control her actions on her own freehold as wholly unacceptable and that she thought she knew better. Whilst I accept that Mr Darby had not previously given her comprehensive advice as to the effect of the covenant, I cannot accept that she did not understand the basis of the advice he was giving her on 10 January. The point at issue was not complicated. She was being advised to stop work and reach agreement or else face litigation, and she cannot have failed to understand why she was being so advised. The advice was sound. She chose, obstinately, to reject it. She was, in my judgment, therefore the cause of the injunction proceedings and, in particular, their costs. I would hold that the recorder was in error to find otherwise.

B. Was the recorder wrong to find that, had she known of the alterations covenant, Ms Joyce would not have purchased Tamarisk at all?

I have summarised the recorder's reasons for this conclusion, which Mr Livesey challenged. The finding was a significant one since its consequence was that it led the recorder to conclude that it became open to Ms Joyce to claim damages on a so-called 'no-transaction' basis, whereas if she would have bought anyway the conventional measure of loss is the difference between the price paid for Tamarisk and its market value subject to the covenants. I note that in South Australia Asset Management Corp v. York Montagu Ltd [1997] AC 191, the House of Lords disapproved the distinction between so-called 'no transaction' and 'successful transaction' cases. The question of the appropriate measure of compensation is, I should have thought, in every case to be governed by the consideration of whether the loss claimed is that for which the defendant could reasonably be assumed to be taking responsibility and whether such loss was within the contemplation of the parties.

Mr Livesey said that, in arriving at the finding that he did, the recorder was wrongly influenced by the fact that Darby had negligently failed to advise about the covenants: his view was that, as Ms Joyce was deprived of the opportunity of making an informed decision, the court should be slow to assume that she would have proceeded anyway. Mr Livesey said this was tantamount to applying a presumption that Ms Joyce would not proceed, whereas the burden was on her to prove that on the probabilities.

It is also said that the recorder did not take account of the fact that, in her witness statement in the injunction proceedings in February 2008, Ms Joyce had not said that, had she known of the alterations covenant, she would not have bought, merely that she 'may have changed her mind' about doing so. The recorder did, however, have regard to this, as well as to the point that it might be that the alterations covenant was subject to an implied term that the Hoyles' consent could not be unreasonably withheld, although the recorder said that was not 'an entirely straightforward proposition'. Mr Livesey submitted, however, that it was clear law that the Hoyles' consent could not be unreasonably withheld and he said that the recorder was wrong to attach the weight he did to Ms Joyce's evidence before him that, had she known of the alterations covenant, she would not have proceeded at all. As regards the implication of a term that the Hoyles' consent could not be unreasonably withheld, Mr Livesey referred us to the decision of Mr George Bompas QC, sitting as a Deputy High Court Judge, in Rickman v. Brudenell-Bruce and Another, unreported, 27 June 1985.

The recorder also had regard to the fact that, although Ms Joyce only learnt of it in 2008, Tamarisk was also subject to the user covenant. It appears that she was advised in 2008 that this would or might, without consent, prevent her parents and grandmother occupying a separate floor of Tamarisk, although if, as appears to have been the intention, the proposal was that all family members would be occupying it as a single dwelling, it is unlikely that the covenant would have raised any such difficulties; whereas it would have done if Ms Joyce had instead wished to convert Tamarisk into two separate, self-contained flats for separate occupation, which the recorder found (in paragraph 15) was an alternative consideration that Ms Joyce had in mind at the time of the purchase. It is, however, easy after the event to say that the existence of such a covenant would be unlikely to present problems. A purchaser proposing to buy a property such as Tamarisk with a view to carrying out major exterior works of alteration, and who has plans for introducing into occupation other family members and an alternative intention of splitting the house into two self-contained flats, is likely to be concerned about any potential for the covenants to impose a restriction on his plans.

In my judgment, there is no basis for a conclusion that the recorder arrived at his factual conclusion by taking irrelevant matters into account or by failing to take relevant matters into account. Ms Joyce's case was that, had she known about the covenants, she would not have bought. The recorder found, on the probabilities, that she would not. He was not applying a presumption. I cannot see that his view was other than a proper one for him to come to on the evidence. I do not accept that was any error in his conclusion in this respect.

C. Damages

The damages awarded by the recorder included the costs of the injunction proceedings that Ms Joyce was ordered to pay the Hoyles (item (iv) in [52] above: £23,296.86). In consequence of my conclusion on the causation issue in relation to these proceedings, I would hold that this head of damages is not recoverable. It was damage brought on Ms Joyce by herself. Had she accepted Mr Darby's advice in January 2008, it cannot be known what would have happened; but at least one real possibility is that the carrying out of the works would have been the subject of agreement.

Once one arrives at this conclusion, I would also accept Mr Livesey's submission that the consequential matters that collectively led, or contributed to, the distressed sale of Tamarisk by Northern Rock in 2009 at a loss (namely, the £70,000 difference between the purchase price of £460,000 and the sale price of £390,000) were not caused by Darby either (head (v) of the damages). To the extent that Ms Joyce received no assistance from her parents to the mortgage payments, that was because they decided against moving into Tamarisk following advice from other solicitors that their occupation of Tamarisk together with Ms Joyce and Mr Casey would breach the user covenant. That, said Mr Livesey, was probably wrong advice; and bearing in mind the evidence as to the way in which Tamarisk was proposed to be co-occupied (namely, still as a single private dwelling), I am disposed to agree. But it was not advice from Darby and so they cannot be held responsible for its consequences. Nor were Darby responsible for the fact that the recession led to the collapse of Mr Casey's company, so raising further difficulties in Ms Joyce's path in meeting the mortgage instalments and leading to the ultimate re-possession and sale of Tamarisk by Northern Rock. In all the contributory circumstances, the loss on the sale was not, in my view, a loss of the nature for which Darby could be regarded as having accepted responsibility.

That conclusion makes it strictly unnecessary to consider, although I shall do so briefly, Mr Livesey's challenge to the recorder's conclusion that Ms Joyce should not have to give credit for the fact that Tamarisk had apparently been stripped of various fixtures and fittings by the time of the sale, a stripping which served to reduce its sale value by some £40,000. His submission was that, if wrong on his primary challenge to head (v) of the damages, at least this element of the re-sale loss was not caused by any breach of duty on the part of Darby, nor was such an element of loss reasonably foreseeable by them. They should not be held answerable for the stripping of Tamarisk in unknown circumstances by an unknown party that resulted in a lowering of its sale value.

I agree. The point here is not, as the recorder held, that Darby had failed to prove that, as regards the fact of the stripping, Ms Joyce had not mitigated her loss. The point is that loss of that nature is not the type of loss for which Darby could reasonably be regarded as having assumed responsibility. Nor, it seems to me, was it a head of loss within the reasonable contemplation of the parties at the time of the purchase.

If, however, as I would hold, the loss on the resale was not a recoverable head of loss, I would hold that Ms Joyce must at any rate be entitled to damages representing the difference, if any, between the (i) the price she paid for Tamarisk, and (ii) the value of Tamarisk, subject to the covenants, when she purchased it. The recorder made no finding as to what this difference was. Mr Livesey argued that there is sufficient material before us to decide that in fact the difference was nil, although I have noted that Mr Avery, Ms Joyce's valuer, considered it to be £45,000. I disagree with Mr Livesey that this court is in any position to assess the damages under this head. The case will have to be remitted to the recorder for its assessment.

Mr Livesey also challenged the recorder's award of damages in the sum of the mortgage repayments made, or which ought to have been made, by Ms Joyce, and insurance payments for Tamarisk: items (i) to (iii) in [52] above and the mortgage payments up to March 2008 (included in item [vi]). Mr Livesey's criticism of the inclusion in the damages award of these elements is that he said they amounted to compensating Ms Joyce for the cost of funding her occupation of Tamarisk, and so was unjustifiable. Prior to the purchase of Tamarisk, Ms Joyce owned a flat, which she retained after the purchase of Tamarisk and let out to tenants. She had wanted to purchase a larger property and had made an offer on another property prior to seeing Tamarisk, following which she withdrew the offer on the other property. Thus, Ms Joyce had wanted to buy another property in addition to her flat. In the event, she bought Tamarisk; and the mortgage and insurance costs referable to Tamarisk amounted to her cost of living in the larger accommodation that she had wanted to occupy. Had she not bought Tamarisk, she would have bought another property for which she would have incurred like accommodation costs during the relevant period. Thus, to require Darby to indemnify her against such costs was to put her in a better position than she would have been in had Darby committed no breach of duty.

Mr Adams accepted that the most difficult part of the recorder's award was that relating to mortgage payments. He said, however, that it did not follow that, had Ms Joyce not bought Tamarisk, she would have bought some other property and so incurred like costs anyway. Had she done something equivalent elsewhere, her family may well have moved in as well, and so halved her outgoings. She was being asked to give credit for her use of Tamarisk. But the outcome of her purchase of it was that what she was left with was an unfinished property that she tried to but could not sell, and which ended up being repossessed by the mortgagee, and so it was reasonable for the recorder to put no significant value on what she got out of it. It was in effect a dead loss. She was going to have to buy another property and would face mortgage commitments from the outset, which would give her a valuable asset. All that she paid out in respect of Tamarisk added up to nought. The inclusion of these heads of damage could not, therefore, be said to have overcompensated her. The recorder was entitled to include the mortgage payments as well, which fell within the reasonable margin of judgment allowed to a judge in a case of this nature.

As regards the mortgage payments and insurance premiums, I prefer and accept Mr Livesey's submissions. To compensate Ms Joyce for these liabilities was simply to compensate her for the cost of buying Tamarisk. If she had bought it for cash, the recorder would not, I apprehend, have compensated her for having lost the use of the cash during the currency of her ownership of Tamarisk: her cash payment would have represented the cost of her occupation of Tamarisk, and if she had not applied the cash in Tamarisk she would likely have applied it in buying another property. The fact that she did not buy for cash, but instead provided the purchase price by borrowing on mortgage cannot make a difference. Of course, if by reason of Darby's negligence by failing to advise her of the covenants she overpaid for Tamarisk, one measure of recoverable loss would be the difference between its market value subject to the covenants and the price she paid. Alternatively, if she would not have bought at all had she known of the covenants, it might be appropriate to compensate her for any loss on a sale by which she extricated herself from the unwanted property. I can, however, see no rational basis on which she can claim to be compensated for incurring expense which, if not incurred in relation to her enjoyment of the occupation of Tamarisk, would on the probabilities have been incurred in relation to her enjoyment of another property. There is no reason why Darby should be expected to contribute to the cost of her occupation of Tamarisk. The same goes for the insurance premiums. These were costs incurred for the purpose of protecting the property she chose to buy and occupy, and which would also have been incurred if she had chosen to buy and occupy another property. I would therefore set aside the recorder's award of damages under heads (i), (ii) and (iii), and that part of head (vi) referable to mortgage payments.

Finally, Mr Livesey criticised the recorder's conclusion that Ms Joyce was entitled to recover the costs of the works to Tamarisk. The expert evidence was that they did not increase the value of Tamarisk. It was not foreseeable by Darby that she would carry out the works she did. There was no reason why Darby should compensate Ms Joyce for the interior works, whose execution was not subject to any covenant. Moreover, there was no sufficient evidence to justify the recorder's conclusion that Ms Joyce had in fact paid for these works. That was because the evidence showed that the money for them had come from the company in which she and Mr Casey were shareholders, and there was insufficient evidence, in particular no documentary evidence, to support the recorder's finding that the money used to meet the costs of the works had been advanced 'to and for Ms Joyce's benefit'.

I have found the assessment of the correctness or otherwise of this head of damage more difficult, but have concluded that the recorder's award of it (and the carrying out of an account for its assessment) should be upheld. This head of damages needs to be considered against the recorder's finding that but for Darby's initial negligence, she would not have bought Tamarisk at all. In fact, because of their negligence, she did, and she incurred expense in doing works both to the exterior and to the interior that she would not, but for their negligence, have done at all. They did not enhance the sale price and so can be regarded as wasted; and to the extent that she continued with the exterior works after the initial objections from the Hoyles, it cannot be said that she thereby failed to mitigate her loss, because up until 21 December 2007, Darby were not advising her that she should stop them.

In my judgment, the incurring of wasted costs in carrying out works to Tamarisk was the type of loss for which Darby should be regarded as accepting responsibility, as well as being a type of loss within the contemplation of the parties at the time of the breach. I would therefore uphold the recorder's order in this respect. I would also not be prepared to hold that he was wrong to find that the recoverable damages represent costs incurred by Ms Joyce. The recorder made a finding of fact to that effect. The evidence relevant to the point does not appear to have been satisfactory, but I was not persuaded that this court should take a different view from the recorder.

Disposition

I would allow Darby's appeal, and, by reference to [52] above, set aside the recorder's awards of damages under heads (i), (ii), (iii), (iv), (v) and that part of (vi) relating to mortgage payments. I would uphold the recorder's order for an account in respect of Ms Joyce's labour and materials costs for her works to Tamarisk. I would hold that Ms Joyce is also entitled to damages representing the difference (if any) between the price she paid for Tamarisk and its then market value subject to the covenants, and would remit an inquiry as to such difference to the recorder.

Lord Justice Tomlinson :

I agree.

I confess that I have not found easy the question whether Mr Darby's undoubted negligence should be regarded as causative of Ms Joyce's incurring a costs liability to the Hoyles in relation to the injunction proceedings. My mind wavered on this point during the course of the argument and it has wavered still more whilst I have reflected upon the arguments in the light of my Lord's draft judgment.

Central to evaluation of this question is the Recorder's finding that Mr Darby never advised Ms Joyce on the nature and effect of the alterations covenant, or on the need to obtain the Hoyles' written consent to the exterior works. Rimer LJ at paragraph 70 above observes that "Mr Darby did not, certainly in 2007, give any clear advice to Ms Joyce as to the nature and effect of the alterations covenant". The Recorder also, tellingly, observed at paragraph 123 of his judgment that "The lack of clear advice had led to Ms Joyce developing a mindset as to what she was and was not entitled to do".

For my part, I also consider that the impact of Mr Darby's letter to Ms Joyce of 21 December 2007, set out at paragraph 22 above, in which he twice used the word "vital", was seriously compromised by the reference to the difficulties which might ensue on resale if written consent to the work had not been obtained. In the context of no prior explanation as to the nature and effect of the alterations covenant this was apt to blunt the message that it was vitally important to obtain Hoyles' consent before work recommenced, an importance which derived not from the possible difficulties on resale but from the Hoyles' cast-iron entitlement to the threatened injunction should they decide to institute proceedings.

The question as I see it is whether by the conclusion of the meeting on 10 January 2008 Mr Darby had done enough to bring to Ms Joyce's attention that it was vital that she did not go ahead with any works until written consent was obtained, because the Hoyles had a legally enforceable entitlement to stop her from doing any works to which they had not given their written consent.

Ms Joyce is not a lawyer but she is and was a woman of experience in business affairs. She had worked with evident success as a manager in the hotel and licensed trade and ran the "office side" of her partner's electrical contractor's business, which in early 2007 became a limited company. She was plainly not unintelligent. Copies of the covenants were supplied to her (and to Mr Casey) by the Hoyles' solicitors on 15 and 25 October 2007. The alterations covenant is not difficult to understand and it was Ms Joyce's evidence (see paragraph 12 above) that she read and understood the letter of 25 October 2007, the last paragraph of which "could not be clearer".

Although the Recorder made very sparing findings concerning what was said at the 10 January 2008 meeting, he did find that Ms Joyce at that meeting gave instructions to Mr Darby to make the offer set out in his subsequent letter to the Hoyles' solicitors to pay £10,000 for the release of the alterations covenant save insofar as it related to the area of the patio closest to the Hoyles' property – see paragraphs 32-35 above. Ms Joyce had of course denied giving such instructions, so the Recorder's finding is particularly telling and, as he himself noted, reflects adversely on her overall credibility. I do not consider that Ms Joyce would have authorised the making of this offer if she had not understood that the Hoyles had a legally enforceable entitlement to stop her doing works on her own freehold without their consent. Like Rimer LJ, therefore, I cannot accept that Ms Joyce did not understand the basis of the advice which Mr Darby was giving her on 10 January 2008 – see paragraph 77 above. There was also ample time for reflection, as the proceedings in which the injunction was granted were not issued until 11 February 2008. Ms Joyce knew that she had neither obtained consent to the works nor procured the agreement of the Hoyles to release the covenant in return for payment. She ignored advice the basis of which was simple, and which she cannot have failed to understand. As Rimer LJ observes, the point at issue was not complicated. I agree therefore that Ms Joyce's conduct after 10 January 2008 in disregarding Mr Darby's advice must in the circumstances be regarded as the cause of her having thereafter incurred the costs liability in the proceedings for an injunction which were launched against her, and that the causative potency of Mr Darby's negligence was by then spent.

I, too, would allow the appeal to the extent indicated by Rimer LJ and make the Orders which he proposes at paragraph 94 above.

Lord Justice Longmore :

I agree with Rimer LJ that Mr Darby's handling of Ms Joyce's case in 2007 was not only negligent but a professional disgrace. But, like my Lords, I have found it difficult to assess the damages flowing from his negligence. Unlike my Lords, I have concluded that the expenses of the injunction proceedings were attributable to Mr Darby's negligence. Those expenses seem to me to stem both from Mr Darby's failure to advise Ms Joyce at the end of October 2007 that she should go to other solicitors and from his negligence in allowing a situation to develop on or about 10^th January 2008 in which she felt she could still proceed with some works despite signing the undertaking not to carry out any further works until agreement had been reached with the Hoyles.

As to the first of these breaches of duty, any other solicitor instructed by Ms Joyce would have made clear to her from the beginning that the terms of the covenants were absolute and that, if she proceeded with the works, there would be heavy legal consequences. It is most unlikely that Ms Joyce, receiving firm advice from an independent source, would have proceeded especially if she had also been told that the cost of delays to her building works (if she was allowed to continue them at all) or wasted costs (if she was not) would probably be recoverable from her former solicitors.

As to the second breach of duty, while it may be the case that para 38 of Mr Darby's witness statement was not challenged in cross-examination, he nevertheless wrote to the Hoyles' solicitors, at the time he enclosed the undertaking, that Ms Joyce (1) wanted an understanding that she could continue work on the footbath adjoining and supporting Tamarisk and (2) intended to finish the patio next to the plunge pool because it was out of sight of the Hoyles' property. The only work, moreover, which that letter said that Ms Joyce intended not to do, was work to the small patio at the Hoyles' end of Tamarisk. Here Mr Darby can still be seen to be trying to extricate himself from his own problem rather than trying to solve his clients' problem. He is still being equivocal about the need to stop work altogether. This equivocation must naturally have spread to Ms Joyce and induced in her a belief that work could continue whatever she might have signed by way of undertaking.

It was Mr Darby's negligence which created the whole difficulty in the first place and the court should not, in my judgment be astute to blame Ms Joyce for failing to stop work when throughout his retainer Mr Darby had not, in my judgment, been giving her clear unequivocal advice.

I would for my part therefore wish to uphold the Recorder's conclusion that Ms Joyce should not have to bear significant responsibility for her own losses, as far as the costs of the injunction proceedings were concerned.

I would not however award the difference between the purchase price of £460,000 and the distressed sale of £390,000 since that loss cannot be regarded as a loss of a kind for which Mr Darby, as her solicitor, can be regarded as having accepted responsibility. My disagreement with my Lords is thus confined to the costs of the injunction proceedings and I agree with Rimer LJ's proposed order in para 94 of his judgment save that I would not myself have included head (iv) in the sub-paragraphs of the judge's order which he proposes to set aside.

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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Darby & Darby (A Firm) v Joyce [2014] EWCA Civ 677 (20 May 2014) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/677.html Cite as: [2014] EWCA Civ 677