Trustees that were left in the dark when a law firm’s negligence allowed a property sale were held by the Court of Appeal to have suffered financial loss.

Lord Justice Patten said the married litigants, both Oxford University professors, would not have agreed to the sale and therefore should have succeeded in their claim for damages.

In the High Court, His Honour Judge Pelling QC had held that the defendant solicitors, former Manchester firm Halliwell Landau and its ex-partner Philip Laidlow, had been negligent in failing to register a restriction at the Land Registry in order to protect the claimants’ interest in a property. The London house was subsequently sold to a third party without their consent.

Allowing the appeal in Gosden & Anor v Halliwell Landau (a firm) & Anor, Patten said the judge had wrongly approached the issue of causation and should have looked at the likelihood of the claimants granting consent as the primary factor.
‘The only realistic and proper conclusion available to the judge was that the claimants would not have consented to the sale,’ said Patten. ‘The judge was therefore wrong in my view to have held that the defendants’ negligence had not caused the claimants any damage.’

The mother of one of the claimants, Dr Jean Weddell, had been a joint trustee in the property along with the claimants through what was known as an estate protection scheme, designed to reduce inheritance tax. The trust was executed in 2003 with the assistance of Halliwell Landau and Laidlow.

The scheme included registration of a restriction preventing any unauthorised sale. No restriction was in fact registered against the title by Halliwell Landau (which later became Halliwells, subsequently dissolved in 2010).

Dr Weddell remained the registered proprietor with all the powers of a full owner until October 2010 when the property was sold without the claimants’ knowledge or consent. When Dr Weddell died in 2013, the claimants were still not aware the property had been sold.

Patten said the judge had wrongly focused on whether Dr Weddell could have been persuaded to abandon the sale at the time. Deciding the claimants would have agreed to comply with Dr Weddell’s wishes, the High Court had therefore found they suffered no loss despite the negligence.

But the claimants insisted they would not have given consent to a sale, and the question of whether the mother could have been persuaded did not arise.

Patten added: ‘The assumption which the judge makes that the claimants would readily have consented to whatever Dr Weddell wished to do with the property because it originally belonged to her ignores the legal effect of the trust arrangements and assumes that the claimants should have regarded them and their duties as trustees as of no consequence or value. In fact, their evidence suggests the contrary.’

The Law Society Gazette

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