The High Court has ruled that Mark Smith’s negligence and breach of duty claim against the fourth named defendant was not statute barred. The ruling decided a preliminary limitation issue only; it did not determine whether the solicitor was negligent or whether Smith is entitled to damages.
Mr Justice Meenan said the cause of action accrued on 16 October 2008, when purchasers rescinded a contract to buy a property after Smith could not complete the sale. Smith had issued proceedings on 26 May 2014, within six years of that date.
The case arose from a property at Gubardorish, Drumlish, County Longford. Smith and his then wife bought it in July 2006 for €240,000, purportedly relying on a certificate issued by the first named defendant, an engineer, stating that construction complied with planning permission and building regulations. The property had been built by the second and third named defendants under planning permission granted by Leitrim County Council in March 2004.
In May 2008, Smith and his then wife contracted to sell the property for €280,000. The following month, Smith learned that planning conditions had not been met and that the council considered the property an unauthorised development. The proposed purchasers served a 28-day notice requiring completion by 12 October 2008. They rescinded the contract on 16 October.
Smith’s claim alleges that the fourth named defendant, a solicitor, failed to ensure he obtained marketable title and that legal preconditions were met. He also pleaded breach of contract. For the limitation issue, both sides accepted that the alleged negligence occurred in July 2006; they disputed when damage occurred. The fourth named defendant argued that damage arose when Smith bought the property. Smith argued that loss arose only when the sale contract was rescinded.
Applying the Supreme Court’s approach in Brandley v Deane, Mr Justice Meenan distinguished the defect in title from the later damage said to result from it. He said the purchasers could have completed the sale despite the defect, in which case Smith would have suffered no loss. The alleged damage occurred when they chose to rescind.
The court therefore dismissed the fourth named defendant’s preliminary limitation argument as to the negligence and breach of duty claim. The judgment did not decide the underlying allegations or the separately pleaded breach of contract claim.