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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Joyce v Bowman Law Ltd [2010] EWHC 251 (Ch) (18 February 2010)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2010/251.html
Cite as: [2010] EWHC 251 (Ch), [2010] PNLR 22, [2010] 1 EGLR 129

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Neutral Citation Number: [2010] EWHC 251 (Ch)
Case No: HC08C01373

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
18/02/2010

B e f o r e :

MR JUSTICE VOS
____________________

Between:
Paul Joyce
Claimant
- and -

Bowman Law Limited
Defendant

____________________

Mr Simon Williams (instructed by Ross & Craig ) for the Claimant
Ms Eva Ferguson (instructed by Beachcroft LLP) for the Defendant
Hearing dates: 8th, 9th, 10th and 11th February 2010

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Vos:

    Introduction

  1. The Defendant, Bowman Law Limited ("Bowman"), a firm of licensed conveyancers, acted for Mr Paul Peter Anthony Joyce ("Mr Joyce"), the Claimant, when he purchased Warren Cottage, Severals Road, Bepton, West Sussex (the "Property") for £360,000 from Dorothea Elizabeth Bannister Chesters (the "Vendor") on 2nd September 2005. A somewhat dilapidated cottage, dating back between 200 and 300 years ("Warren Cottage"), stood on the Property in a plot of 0.12 hectares or 0.30 acres.
  2. The Property had been advertised with an option for the buyer to purchase the lower end of the existing garden (the "Additional Land") for £20,000 within 12 months, if the Vendor's application for planning permission to erect one dwelling on that land was unsuccessful. The Additional Land extended to 0.09 hectares or 0.22 acres. The Property and the Additional Land, therefore, together amounted to 0.21 hectares or 0.52 acres.
  3. Contracts for the sale of the Property were exchanged (the "Contract"), and completion ("Completion") took place simultaneously on 2nd September 2005. At that time, Mr Joyce thought that the Contract contained an option in the form that it had been advertised. It fact, it contained a seller's option instead.
  4. On 3rd February 2010, Bowman admitted negligence in failing to appreciate the nature of the option that the Contract contained, and in advising Mr Joyce wrongly that, if the Vendor failed to obtain planning permission within 12 months of completion, he (Mr Joyce) would be able to purchase the Additional Land. Bowman also admitted that it was negligent in permitting Mr Joyce to enter into the Contract when, in fact, it contained a seller's option rather than a buyer's option.
  5. The question that arises in these proceedings is what, if any, damages, Mr Joyce is entitled to recover from Bowman for its negligence.
  6. Background facts

  7. The sales particulars for the Property, which were "subject to contract", included the following wording:-
  8. "A picturesque character cottage adjacent to woodland and offering scope for modernisation and extension (subject to the usual consents) …
    Important Note
    (Subject to Contract)
    The lower end of the garden is being retained by the vendor and a planning application for the erection of one dwelling is to be submitted. Should this prove unsuccessful, both on application or any subsequent appeal that might be considered, then the purchaser will have the option within 12 months of completing the purchase of Warren Cottage to purchase the additional area of garden at the price of £20,000 …"
  9. As it stood, Warren Cottage had a total floor area of 182 square metres and an external footprint of 142 square metres, both including garages and outbuildings, and a height of between 6.5 and 7 metres. The footprint without the garage was 118 square metres, and the upper floor had an area of 40 square metres.
  10. Mr Joyce made an offer of £385,000 for the Property on 5th June 2005, expressly indicating that he wished to take up the option to purchase the Additional Land if the Vendor were unable to obtain planning permission. On the 6th June 2005, King & Chasemore, the Vendor's agents, prepared a Memorandum of Sale recording the sale "subject to contract" and including the following: "option for the purchasers to acquire remainder of the garden for £20,000 (see sales particulars)".
  11. Mr Joyce was first represented in the purchase transaction by George Ide Phillips, Solicitors ("GIP"). GIP was replaced by Bowman in mid-August 2005. On 16th August 2005, MacDonald Oates, solicitors for the Vendor, asked Bowman whether the option contained in draft special condition 5 was acceptable to Mr Joyce. In due course, Mr Joyce commented on the period of the option (asking that the period be reduced from 2 years to the one year advertised in the sales particulars), but the Contract was exchanged and completed with the terms of the clause otherwise unchanged. Special Condition 5 (the "Option Clause") provided in part as follows:-
  12. i) "5.1 In this Clause: … 5.1.5 "the Option Notice" means the Notice served by the Buyer pursuant to clause 5.3"

    ii) "5.2 In consideration of [£1] paid by the Seller to the Buyer … the Buyer grants to the Seller the Option to require the Buyer to buy the freehold interest in the Additional Property [the "Additional Land"] at the Additional Purchase Price [£20,000]".

  13. Mr Joyce raised the purchase price of the Property by mortgaging it to Northern Rock Building Society to raise £306,720. The balance of the purchase price of the Property came from the Birmingham Midshires Building Society, and was charged on Mr Joyce's existing family home at Yew Cottage, Charlton Road, East Dean, Chichester, West Sussex PO18 0JA ("Yew Cottage"). Mr Joyce contributed no cash towards the purchase of the Property from his own resources.
  14. At some time during August 2005, Mr Joyce instructed Mr Barrie F Morse MRICS FCIOB FASI ("Mr Morse") of Wilkins, a firm of Chartered Surveyors, Project Managers and Construction Cost Consultants, to advise him in connection with Warren Cottage. The date of Mr Joyce's first meeting with Mr Morse is rather unclear, but it was certainly before the Contract was concluded on 2nd September 2005.
  15. Mr Joyce claims that at about this time he prepared a sketch plan of the large house, with dimensions noted of 12 meters by 18 metres, that he wished to build on the Property (the "Sketch Plan"), once he had been able to exercise the option to acquire the Additional Land.
  16. Shortly before the Contract was executed, Mr Joyce negotiated a reduction in the contract price from £385,000 to £360,000 on the grounds that he had discovered that a sand quarry landfill site was proposed close to the Property.
  17. In the period leading up to Completion, Mr Joyce dealt mostly with Mr Keith Curran ("Mr Curran"), an experienced conveyancer then employed by Bowman. Mr Joyce says that he also spoke to Mr Simon Bowman ("Mr Bowman"), the principal of Bowman. Mr Bowman now admits that he met Mr Joyce briefly on the morning of Completion, and Mr Joyce undoubtedly met Mr Curran that morning to sign the Contract and to discuss the transaction. Mr Joyce phoned Mr Curran from the airport (whence he was leaving for France) at lunch-time that day to confirm that the transaction had gone through.
  18. As I have said, the Contract that was exchanged and completed on 2nd September 2005 contained the Option Clause allowing the Vendor to require Mr Joyce to buy the Additional Land for £20,000 during the period of one year ending on 2nd September 2006. There was, also as I have said, no option allowing Mr Joyce to require the Vendor to sell the Additional Land to Mr Joyce.
  19. An exchange of correspondence immediately after the sale between Mr Eddie Lintott of King & Chasemore, and Mr Martin Chesters, the Vendor's nephew ("Mr Chesters"), who was handling the sale on her behalf, shows that both Messrs Lintott and Chesters were relieved that the sale had gone through.
  20. It appears that, on 3rd September 2005, whilst Mr Joyce was in the South of France), he e-mailed Mr Morse as follows:-
  21. "very nice to meet you on Friday, e-mail as promised with full address of the [Property] … Can you please arrange TPOs orders on the trees asap as I dont have the luxury of time … I will forward you a file on [Yew Cottage] asap and send it to you r.e. the new planning application".
  22. On 5th September 2005:-
  23. i) Mr Morse replied to Mr Joyce explaining how he was progressing the Tree Preservation Orders on the Additional Land (which Mr Joyce had instructed him to obtain in order to obstruct the Vendor's intended application for planning permission), and saying that a survey would be necessary and that "[t]he latter information will be required when we prepare a scheme to extend the present house [on the Property]".

    ii) Mr Morse also sent Mr Joyce a letter explaining his charges in detail. Almost the entire letter is premised on the proposed extension to the existing Warren Cottage to make it into a 5/6 bedroom house.

  24. On 9th September 2005, Mr Morse wrote again to Mr Joyce enclosing his proposed plans for such an extension, and saying that retaining the original portion of the building incurred problems "low ceiling heights, poor thermal qualities and damp ingress", and that "[i]t may be prudent to consider demolishing the whole of the [Property] (upon receipt of planning approval) and erect a purpose-designed house to comply with modern standards. You would also save VAT, as new properties are zero-rated".
  25. On the 9th September 2005, Mr Joyce emailed Mr Morse as follows: "… think we may have a misunderstanding wanted to object to the planning on the extra piece of garden. Seems like a major project, as regards to the house if i wanted a modern one i would have looked elsewhere as it stands if i built new with the price i paid i would be looking at another project. If the way forward is to obtain outline planning thats fine, but im not ready to build …".
  26. I should say at once that I do not accept Mr Joyce's explanation for this email, which was that he had his wires crossed with a proposed extension project at Yew Cottage. It seems clear to me that this email expresses Mr Joyce's honestly held views about his proposals in relation to the Property at the time it was written. In essence, Mr Joyce had instructed Mr Morse to submit an application for planning permission for an extension to Warren Cottage, and also to obtain tree preservation orders on the Additional Land. At that stage, Mr Joyce had certainly not decided that he wanted to demolish the existing house and build a new one.
  27. On 19th September 2005, Mr Morse submitted a planning application to Chichester District Council ("CDC") to alter and extend Warren Cottage to a floor area of about 250 square metres (the "Planning Application"), including a new garage, but did not involve the Additional Land.
  28. On 2nd November 2005, Mr Andrew Runciman ("Mr Runciman"), the Planning Officer of CDC, faxed Mr Morse expressing his concerns about the scale and size of the proposed extension, and suggesting that the application should be withdrawn and that "following discussions with the writer, a more appropriate scheme is submitted, smaller in scale and in keeping with the setting and character of the area". The Planning Application was refused on 14th November 2005 on the grounds that "the proposed extensions would result in development which by virtue of their size, bulk and mass are considered to relate unsympathetically to the existing building and unacceptably increase its visual prominence within the sensitive landscape of the locality resulting in development that would be seriously detrimental to the character and appearance of the Sussex Downs Area of Outstanding Natural Beauty…".
  29. In November 2005, Mr Joyce instructed Mr James Lacey of Vail Williams, property and planning consultants, to advise in relation to the Property.
  30. On 10th November 2005, MacDonald Oates wrote to Bowman alleging that the Contract provided that Mr Joyce would erect a fence along the boundary with the Additional Land (which it did not), and saying that the Vendor wished to do so anyway at her own expense. The letter required Mr Joyce to remove a chicken cage, which straddled the boundary by 18th November 2005. A fence was duly erected.
  31. Mr Joyce was unhappy about these events, which made him feel that something was wrong with the option he thought he had obtained, and he and/or Mr Graham Thompson ("Mr Thompson"), his uncle acting on his behalf, contacted Mr Bowman.
  32. On 17th November 2005, Mr Bowman wrote to Mr Joyce saying that he would register "the option against [the Vendor's] unregistered title". He continued: "I am confident that this tactic will prevail and secure you the benefit of the registered option". Mr Bowman was suggesting registering a caution to protect a buyer's option that did not exist, but by doing so (as he eventually did), he was (on his own assessment) reassuring Mr Joyce.
  33. In December 2005, Mr Joyce consulted Mr David Bennett, a solicitor with GIP, about the option, and was told for the first time that the Option Clause in the Contract did not operate in Mr Joyce's favour.
  34. On 16th December 2005, the Vendor applied for planning permission to build a new 2 bedroom dwelling on the Additional Land. On 18th January 2006, Smiths Gore wrote on behalf of someone supposedly called "Mr Graham Joyce", who was said to be Mr Joyce's father, making detailed objections to the Vendor's application, relying on the Tree Preservation Orders that Mr Joyce had procured. In fact, Mr Joyce's father died long ago, but Mr Thompson told me that he sometimes uses Mr Joyce's father's name, and had done so on this occasion.
  35. On 23rd December 2005, Vail Williams wrote to Mr Runciman concerning a proposal to replace the existing dwelling with a new house having a footprint of 7 metres by 15 metres. On 6th January 2006, Mr Runciman of CDC wrote to Vail Williams saying: "the principle of a replacement dwelling on the above site is in my opinion something which could be supported by officers and would not conflict with Local Plan policies … A footprint for the new house of approximately 7m by 14m is probably on the upper limit of what would be considered appropriate for this location, a smaller footprint would be preferred".
  36. In January 2006, Mr Joyce consulted another firm of solicitors, Thomas Egger in Chichester, and they again advised him that the Option Clause in the Contract did not operate in Mr Joyce's favour.
  37. The Vendor's application for planning permission was eventually rejected on 13th February 2006.
  38. On 17th February 2006, Vail Williams submitted some plans dated January 2006 to Mr Runciman, along the lines he had suggested, for his consideration (the "January 2006 Plans"). They related to a new 4 bedroom house with a footprint of 7 metres by 15 metres, and a floor area of 210 square metres. This proposal also did not involve the Additional Land. It was not, however, pursued after 20th February 2006, when Mr Joyce seems to have instructed Vail Williams to submit a larger scheme.
  39. In February/ March 2006, Mr Joyce sought advice on the option from another firm of solicitors in Brighton. Once again, he was told that the Option Clause was a vendor's option and that he had a claim against Bowman.
  40. On 31st May 2006, Bowman wrote again to Mr Joyce about the option. He sought to reassure Mr Joyce that all was well. He wrote, somewhat enigmatically: "As you are aware at the time of the purchase the seller was looking to obtain planning permission on [the Additional Land] and it was agreed that if their planning application failed you would have the option to buy that land for the benefit of the cottage".
  41. In June 2006, Mr Joyce consulted yet another solicitor about the option. This was the fourth time he had asked the same question. That firm, Green Wright Chalton Annis, gave the same advice as the three previous firms he had consulted.
  42. On 31st July 2006, the Vendor applied again for planning permission to build on the Additional Land. This application was refused on 17th November 2006, and the Vendor's appeal was dismissed on 29th November 2007. I am told that the Vendor has since died aged about 98, but that her estate has continued to deal with the Additional Land through Mr Chesters.
  43. On 25th August 2006, Bowman purported to serve a notice on the Vendor's solicitors exercising Mr Joyce's supposed option to purchase the Additional Land for £20,000 pursuant to the Option Clause. Prior to that, Mr Joyce had provided Bowman with £20,370 at Mr Bowman's request.
  44. On 3rd September 2006, Mr Joyce completed the sale of his previous family home at Yew Cottage at a price of £585,000. He received some £42,472 from the proceeds of sale. It was at this point that Mr Joyce moved with his family to Warren Cottage, despite its dilapidated state.
  45. On 4th September 2006, the Vendor's solicitors wrote to Bowman pointing out that the Option Clause in the Contract was not exercisable by Mr Joyce, but only by the Vendor.
  46. On 6th September 2006, Bowman wrote to Mr Joyce, again somewhat enigmatically saying: "However, having studied the option more closely it is ambiguous in that Clause 5.1.5 the Option Notice is defined as a Notice that has to be served by yourself as the buyer whereas in clause 5.3 the indication in that the option is exercisable by the seller", and "I am sure that the seller will indicate that the option is for his benefit and there is clearly a legal argument to be made in your favour". He concluded by saying that his firm did not undertake litigation and could not give a definitive answer as to how the Contract would be construed.
  47. On 6th November 2006, Mr Joyce took still further legal advice on the option. This time he met Mr John Bridger, a partner at Preston Redman, who had been recommended by Mr Curran, who told me he was keen to help Mr Joyce sort out the problem created by his mistake if he could. Mr Curran also attended the meeting. Mr Joyce told Mr Bridger that Mr Bowman had told him that the "intention of the parties was of paramount importance". Mr Bridger told Mr Joyce that that was "nonsense", and said unequivocally that the option did not operate in his favour, and that he had a claim for damages against Bowman. Mr Curran admitted his error in the course of this meeting.
  48. On 25th January 2007, Preston Redman wrote to the Vendor's solicitors saying that Mr Joyce was minded to instruct them to seek rectification and asking whether the Vendor would anyway be prepared to sell the Additional Land to Mr Joyce for £20,000. Preston Redman had informed Mr Joyce that they had sent this letter two months earlier, but it eventually turned out that they had mistakenly failed to do so. The Vendor's solicitors rejected the intimated rectification claim, and said that Mr Joyce's complaint was against Bowman. They also said that the Additional Land was not then for sale as the Vendor intended to appeal the rejection of planning permission.
  49. On 1st February 2007, Mr Bowman wrote to Mr Joyce recording that Mr Joyce had telephoned him to say that he intended to sue Bowman for negligence, and returning the £20,350 that Mr Joyce had paid him to exercise the option.
  50. The Claim Form in these proceedings was issued against Bowman on 23rd May 2008.
  51. In March 2009, Mr Morse prepared plans (the "March 2009 Plans") for a new larger dwelling with a footprint of just less than 12 metres by 18 metres (192 square metres plus a garage of 54 square metres) to be built in place of the existing Warren Cottage. The March 2009 Plans showed a total floor area of 370 square metres for the house and 94 square metres for the garage block (totalling 464 square metres).
  52. Despite Mr Joyce's attempts to persuade the Vendor to sell the Additional Land to him, the Vendor's estate has recently sold the Additional Land to a third party for an unknown sum.
  53. Overview of the damages claim

  54. Mr Joyce claims damages for breach of the contract by which he retained Bowman to act for him on the purchase of the Property, and in tort for damages for the negligent advice he was given.
  55. Mr Joyce has not, however, adduced any evidence to show that the Property was worth less than he paid as a result of the absence of the buyer's option he had wanted, nor has he argued that the buyer's option he expected was inherently valuable in the sense that the £20,000 option fee was below the market value of the Additional Land.
  56. Instead, Mr Joyce has claimed the profit (put originally in the Particulars of Claim at £620,000) that he says he would have made, had he been able to redevelop the Property and the Additional Land together, by building a large new detached house (eventually as shown in the March 2009 Plans) in place of the dilapidated Warren Cottage. He originally estimated the value of that new house at £1.4 million, from which he deducted the purchase price of £380,000 (including the option fee) and £400,000 for estimated development costs.
  57. The values of the Property and the Additional Land based on the March 2009 Plans are now agreed, having been valued by the single joint expert instructed by the parties, Mr Kieran Godkin. The present day value would be £1,025,000, and the value in the 4th quarter of 2007, when Mr Joyce says he would have been able to sell the new property, was £1,155,000. Mr Godkin also estimated the costs of constructing the new house according to the March 2009 Plans at £375,000. No VAT arises on that sum (or at least on the bulk of that sum) as it would be a new building. Thus, Mr Joyce's basic claim is for £400,000 as at the end of 2007 (£1.155m less £380,000 for the purchase and £375,000 for the development cost), or £270,000 if the values are taken as at today.
  58. Mr Simon Williams, counsel for Mr Joyce, accepts that these sums need to be reduced first to take account of any failure to mitigate (although he says there was in fact no such failure), and secondly to take account of the chances that a buyer's option in suitable form would not have been negotiated, that such an option would not have become exercisable, that Mr Joyce might not have been able to fund the redevelopment, and of the possibility that planning permission would not have been granted. He invites me to find that there was no failure to mitigate, and to take a single percentage for all these uncertainties. He puts that percentage at 75%. In the result, therefore, Mr Joyce contends that, since he would have been able to develop the Property and the Additional Land, absent Bowman's negligence, by late 2007, he should recover damages of £300,000 (75% x £400,000).
  59. Ms Eva Ferguson, counsel for Bowman, argues in response that none of these alleged consequential losses are recoverable as a matter of law, because they were not within the scope of Bowman's duty of care, were not caused by the negligence, were too remote, and, as a matter of fact, there was no real and substantial chance that Mr Joyce would have obtained or been able to exercise a buyer's option, or obtained planning permission for, or been able to fund the development of the Property and the Additional Land based on the March 2009 Plans, as he maintains he would. Even if all that were wrong, Ms Ferguson says that Mr Joyce has failed to mitigate his loss, in that he failed to develop the Property by building a smaller new house along the lines of the January 2006 Plans, which she says he could have done even without purchasing the Additional Land. Had he done so, he would have made a profit of £245,000 (£815,000 being the agreed value for the 4th quarter of 2007, less the purchase price of £360,000 and less £210,000 being the construction costs of the smaller property estimated by Mr Godkin). Bowman contends that Mr Joyce should give credit for this profit that he could have made. Finally, Ms Ferguson argues that the percentages for the uncertainties that I have recorded above should be assessed individually and multiplied together. She says, therefore, that, if Mr Joyce is entitled to anything, he cannot have more than £400,000 less £245,000 multiplied by a very small percentage (assuming, which she also contests, that the end of 2007 is the right date to assess Mr Joyce's loss).
  60. Loss of a chance

  61. The principles in Allied Maples v. Simmons & Simmons [1995] 1 W.L.R. 563 per Stuart Smith LJ at page 1614D, and Hobhouse LJ at page 1621A are common ground between the parties. It is useful, however, to set out these dicta as follows:-
  62. i) Stuart Smith LJ said: "… the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other. I do not think that it is helpful to seek to lay down in percentage terms what the lower and upper ends of the bracket should be".

    ii) Hobhouse LJ said: "The plaintiffs have satisfied the court that the loss they have suffered is not nominal. They are not obliged to prove more than that they have lost something of substance. This they have done by showing that they had a measurable chance of negotiating significantly better terms. They are entitled to an assessment of their damages.

    I agree with Stuart-Smith L.J. that the correct approach is that summarised by Lord Reid in Davies v. Taylor  [1974] A.C. 207, 213:
    "You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can. All that you can do is evaluate the chance. Sometimes it is virtually 100 per cent.: sometimes virtually nil. But often it is somewhere in between"".
  63. Ms Ferguson also relies on a dictum of Mance LJ at paragraphs 33 and 34 in Hanif v. Middleweeks unreported 19th July 2000 as showing that the percentage prospects of any future event that depends on the hypothetical actions of third parties are cumulative and should be multiplied together, at least insofar as they relate to separate considerations that do not overlap. That case, when both the judgments of Mance and Roch LJJ are considered, makes clear that a mathematical approach is not always appropriate. There were, in that case, three putative defences to an action that the claimant had lost the chance of bringing. The Court of Appeal held that the Judge ought not to have disregarded the first two defences (which had high probabilities of failing) and taken only the percentage he assessed for the defence that was most likely to succeed. In essence, however, Hanif shows that it is permissible, indeed appropriate, to take a less than entirely mathematical approach where the factors affecting the cumulative future events overlap or are affected by the same considerations. I will consider how these propositions affect the facts in this case under issue 4 below.
  64. The issues

  65. Against this background, it seems to me that the following main issues arise for determination:-
  66. i) Is Mr Joyce entitled to recover consequential losses based on the building profit that would have been made?

    ii) What did Bowman know about Mr Joyce and his intention to develop the Property?

    iii) Had Mr Joyce been properly advised, was there a real and substantial chance that:-

    a) Mr Joyce would have been granted the buyer's option?
    b) Mr Joyce would, in the event, have been able to exercise that option, had it been granted?
    c) Mr Joyce would have been able to obtain permission for the March 2009 Plans, had the buyer's option been granted and exercised?
    d) Mr Joyce would have been able to obtain the funding for the development of the March 2009 Plans?

    iv) What were the percentage chances that Mr Joyce would have succeeded in surmounting these four hurdles?

    v) What would Mr Joyce's profit have been from building out the March 2009 Plans, and when should they be assessed?

    vi) Has Mr Joyce failed to mitigate his loss?

    vii) What damages is Mr Joyce entitled to?

    Witnesses of fact

  67. Mr Paul Joyce was not an entirely satisfactory witness. In some respects, however, he had a good recollection of what occurred, and I bear in mind that this project was, and remains, extremely important to him. I am sure that he has turned over the events in his mind over many years, and has, in some ways 'obsessed' about the option problem with which he was faced. This has led him, I think, to persuade himself that certain things happened, when I am now fairly sure they did not. Nonetheless, I did not regard him as deliberately untruthful, and in some important respects, I have preferred his recollection to that of Mr Bowman and Mr Curran. The stark contrast between their evidence and that of Mr Joyce was that they were talking years after the event about one of many hundreds of transactions upon which they had been engaged, whilst Mr Joyce was talking about something that formed a major part of his life. Mr Joyce's recollection of the events that occurred was, therefore, far better.
  68. There are two matters that Mr Joyce gave evidence about that I do not accept:-
  69. i) First, he told me expressly that he had, right from the beginning, wanted a newly built house with a footprint that was 12 metres by 18 metres.

    ii) Secondly, as I have already mentioned, he explained his 9th September 2005 e-mail to Mr Morse saying he did not want to build a new house at all, by saying that he or they had got their wires crossed.

  70. Both these pieces of evidence are classic examples of the phenomenon that I have described above. The first suggestion of a newly built house came from Mr Morse, probably when they first viewed the site and certainly in his 9th September 2005 letter. It was, at first, rejected by Mr Joyce. Moreover, Mr Joyce did not think of building a new house as large as 12 metres by 18 metres until later on. What is clear, however, is that he wanted, from before Completion, to extend Warren Cottage as much as he possibly could, and that he was hoping to produce something like the property next door to Warren Cottage, called Woodlands (which was extended to a footprint of 171 square metres, and a floor area of 335 square metres, both including a garage block). Thus, by the time Mr Joyce bought the Property, he had both the comparison with Woodlands and a 5/6 bedroom extended house in mind. This, I think, is what he told Mr Morse, and what Mr Morse, in due course, passed on to Vail Williams. Mr Joyce may have staked out an extended Warren Cottage when he first visited the Property, but not with any specific dimensions in mind. Nor do I think that Mr Joyce prepared the Sketch Plan before Completion.
  71. As for the way in which Mr Joyce's plans developed, they are explained largely by the documentation that I have recited above and do not need to be repeated here. Mr Joyce left matters largely in the hands of Mr Morse and Vail Williams, and, as he told me, he quickly became absorbed by the option problem – probably from early to mid-November 2005 onwards. I accept that Mr Joyce was considering a staged approach to the planning, in that he hoped and expected that he would get planning (initially pursuant to the Planning Application), and that, when he later acquired the Additional Land, he would be able to extend the extent of his existing permission. I do not think that he had made any decision not to build a new house based on the January 2006 Plans at the time, but I accept that he was happy to receive Mr Runciman's letter of 6th January 2006, which effectively gave the green light to fairly substantial new development even without the Additional Land. He was still hoping at that stage to be able to extend the permission when he acquired the Additional Land. Of course, he knew by then that the option was not in his favour, but I am sure that he wanted to believe it would all be alright, and it was for that reason that he believed Mr Bowman's reassuring messages about the registration of the caution and the intention of the parties being the most important thing. Moreover, it might, at that stage, have turned out alright, since Mr Chesters might have wanted to sell the Additional land for £20,000 even without an option requiring him to do so. It was for that reason that Mr Joyce, somewhat misguidedly in my view, thought that he should do whatever he could to stop the Vendor getting planning permission. His aggressive conduct in obtaining Tree Preservation Orders and opposing the Vendor's planning application was probably not as clever as Mr Joyce thought it was. It seems to have engendered a hostility in Mr Chesters that resulted in his being unwilling to sell the Additional Land to Mr Joyce at any price. Had Mr Joyce played his cards more cautiously, it might have turned out that the Vendor's planning application would anyway have been refused, and Mr Chesters would have been happy to sell to him.
  72. As Mr Joyce told me, he put the planning applications for the Property on the back burner in early 2006, as he became more and more concerned about the option. I accept that he did not want to spend more money on advisers than he needed to, until he had sorted out the option position.
  73. I shall deal later on with what Mr Joyce told Mr Bowman and Mr Curran before the Contract was entered into.
  74. Before leaving Mr Joyce's evidence, however, I should consider whether he was, as he half-heartedly contends, a 'property developer'. In my judgment, he was not a commercial property developer in the sense that that term is often understood, but he was a private individual who was buying the Property with the objective of turning a profit. Mr Joyce had, in September 2005, renovated and extended one property at Yew Cottage and invested in another. He was one of many such private individuals who wanted to try to take advantage of the (then) rising property market by buying, improving and selling on properties in which he and his family could sometimes, but not always, live along the way. As one would expect of such an individual, all the mortgages he obtained were in the domestic retail market, and he never took any kind of commercial loan. But that does not means he was not buying the Property to make a profit. In my judgment, he undoubtedly was.
  75. Mr Graham Thompson, Mr Joyce's uncle, sought to support Mr Joyce's evidence in a number of respects. The two most important aspects, on which this support was given, were in relation to Mr Joyce's suggestions that he had always wanted to build a new house with a footprint of 12 metres by 18 metres, and in saying that Bowman was well aware of Mr Joyce's development plans. I did not find Mr Thompson a particularly impressive witness, and I think that he was mistaken to suggest that 12 metres by 18 metres had been mentioned before Completion. That said, Mr Thompson was obviously a great help to Mr Joyce, and was much involved with the project. He was, therefore, to a large extent involved in the same process as his nephew, namely of making himself believe that some things had happened that had not. Mr Thompson did, however, give some important evidence about his contact with Bowman, to which I will return.
  76. Mr Morse, Mr Joyce's architect or designer, was a reasonably reliable witness. At the outset in cross-examination, he told me that he understood that his brief was primarily to maximise the development of the site. He said that his preference was the possibility of two smaller units, but when he first looked at the Property before the Contract: "the discussion then was bouncing ideas off each other as to what could be done and what could be achieved". He said that he had suggested demolition and replacement on 9th September 2005, but the size of 12 metres by 18 metres was not fixed, even later on. His January 2006 Plans (based on a footprint of 7 metres by 15 metres) were as close as possible as he could achieve to meet his client's wishes at that stage. He supported Mr Joyce's evidence in several important respects, all of which I accept. First, he said that Mr Joyce had told him from the beginning that he wanted, in effect, to emulate what had been done at Woodlands. Secondly, he endorsed what Mr Joyce had said about the 'stepped' approach to the planning process. Thirdly, he supported Mr Joyce in thinking that "the Additional Land would be a planning point in his favour as the size of the plot can determine the size of the build". Finally, Mr Morse was clear that Mr Joyce wanted a big property from the outset – he described it in his initial letter as 5-6 bedrooms.
  77. I turn then to the witnesses for Bowman.
  78. Mr Curran was the conveyancer in charge of Mr Joyce's transaction. There is no doubt that his negligence that has been admitted in this case was astonishing. I am constrained to wonder whether Mr Curran can ever have read the Option Clause, since he admitted that he knew that Mr Joyce wanted a buyer's option, and yet the Option Clause quite obviously gives him nothing of the sort. But all this is now water under the bridge in the light of Bowman's admissions, save in one important respect. It seems to me that the crass nature of Mr Curran's breach of duty gives a hint as to his credibility and carefulness in giving his evidence. I am afraid I am unable to accept that he gave any proper attention to Mr Joyce's case, and I therefore view his evidence with the greatest caution. I simply do not accept that he has any real recollection of what happened prior to Completion, beyond what the papers have revealed to him after the event. I accept Mr Joyce's recollection of his taciturn nature in the meeting on 2nd September 2005.
  79. Both Mr Curran and Mr Bowman told me that it was the firm's practice not to make or keep any attendance notes. I am bound to say that I found this evidence extraordinary. I cannot understand how a professional firm can possibly offer a proper service without noting down the oral instructions they are given, and important events that occur in meetings and telephone discussions. The absence of any note of any discussion with Mr Joyce in this case has been an important factor in the decision I have reached as to what actually occurred between Mr Joyce and Bowman before the Contract.
  80. Mr Simon Bowman, managing director of Bowman, was a cool customer. He was keen to answer questions as briefly as possible. On certain crucial matters I found his evidence evasive. His witness statement was exiguous and inaccurate. It made no attempt to explain his undoubted relationship with Mr Thompson, Mr Joyce, and Mr Richard Criddle, the mortgage broker who introduced them to him, or indeed to give any background to the transaction. He simply denied having any contact with Mr Joyce "regarding the file". I have no doubt that that evidence was false. He had extensive contact with Mr Joyce after the transaction and, as I shall explain later, some contact with both Mr Joyce and Mr Thompson before the transaction.
  81. He gave but one insight into how his firm worked, when he told me that all his clients have his mobile telephone number, and that they use it, in effect, to bypass the system and to make sure that the conveyancer handling the case actually calls them back. The implication was that they would not otherwise be able to get hold of the conveyancer.
  82. His evidence, which I am unable to accept, was that Mr Joyce did not make clear to him what he was going to do with Warren Cottage. He accepted, however, that he knew that Mr Joyce was re-mortgaging Yew Cottage, and did not think that Mr Joyce was moving to Warren Cottage at that time.
  83. Mr Bowman also accepted that it was fairly clear with hindsight that the option was a seller's option, and not a buyer's option.
  84. The evidence of the planning consultants

  85. Both experts did their best to assist the Court, and demonstrated real expertise in their fields. Bearing that in mind, it is slightly surprising that they were so far apart in their assessments of whether the March 2009 Plans would have been likely to receive planning permission: their evaluations varied between a 5% chance on appeal because of the possibility of a maverick inspector, to a "strong possibility" of the plans being approved on appeal.
  86. Mr David Lander MRTPI of Bowyer Planning gave evidence for Mr Joyce. He gave his evidence carefully. Both he and Mr Tetlow reviewed the planning policies found in the Structure Plan and the Local Plan. I do not intend to set out that analysis here. Suffice it to say that Mr Lander thought that the most important issue in this case was whether the second criterion set out in the CDC's Policy H12 could be satisfied. That criterion was that the property "does not detract from the rural character and appearance of the existing dwelling and/or the surrounding area particularly in Areas of Outstanding Natural Beauty where proposals should not detrimentally increase the bulk of the building visible from public vantage points".
  87. Mr Lander thought this criterion could be satisfied, although he was closely questioned about the height and bulk of the building envisaged in the March 2009 Plans, and its proximity to Severals Road. Whilst he accepted that it would be closer to the road than any of his comparable properties nearby (Woodlands, Loxley Chase or Broadland Court), and that it would have covered 11.7% of the plot, whereas those other properties only covered 2.0%, 7.7% and 8.1% of their plots respectively, he thought that it could be effectively screened. His main point was that the Additional Land provided screening as one approached the Property from the South up Severals Road, and that the existing Warren Cottage already presented a bulky profile from heavily wooded area to the North of the Property, and the new building would be farther back from the Northern boundary than the existing. He also drew a distinction between a relatively narrow flank wall without habitable windows close to the road, and the Southern elevation which was the main rear of the house to the rear garden providing the principle amenity space.
  88. Mr Lander explained also that Policy H12 says that, in calculating the scale of any permissible increase, one should exclude garages, completely glazed conservatories and outbuildings. He said that the CDC uses that interpretation as they are evidently concerned to restrict the spread of development.
  89. Mr Robin Tetlow MSc Dip Surv FRTPI FRICS FCIH FRSA of Tetlow King Planning gave evidence for Bowman. He too gave his evidence carefully.
  90. He told me that he and Mr Lander did not differ much on the planning policies that would be applicable, although he thought one needed to look at the policies relating to the Area of Outstanding Natural Beauty and the wider policies on character and quality before one looked at the local Policy H12. He agreed that the latter policy was the principal one.
  91. Mr Tetlow said that the house shown in the March 2009 Plans would be more noticeable than the existing Warren Cottage, because there was a very significant difference in the height. He estimated the height of the new house at 10 metres, although he thought the same conclusion would apply even if the height were 9.5 metres as Mr Lander estimated. He accepted that there was scope for boundary planting, but he said that the proposed house was big and bulky and difficult to screen.
  92. Mr Tetlow accepted that the main issue in planning terms was the harm that the proposed development would do, but he defended stoutly his conclusion that there was only a 2% chance of obtaining planning permission from CDC for the March 2009 Plans, and only a 5% chance of success on appeal. He placed considerable reliance on the large footprint on a relatively small site and fact that the building was very close to both the West boundary and the Eastern road boundary.
  93. He said that the advice that Vail Williams gave regarding achieving a height of 7.5m was good planning advice, and he thought that something along the lines of the January 2006 Plans would have been approved, but he thought it was stretching imagination to think that Mr Runciman could have recommended a much larger scheme. He did not think an appeal would have succeeded, even though 1 in 3 appeals do succeed across the country.
  94. Finally, Mr Tetlow said that he thought the size of the plot was irrelevant in this case. The March 2009 Plans would have been rejected with or without the Additional Land. He said that the March 2009 Plans represented over intensive development.
  95. Factual findings

  96. As the issues that I have described above demonstrate, I need to evaluate to some extent, not only what the parties knew and understood, but also what could have been expected to happen, in order properly to assess damages in this case.
  97. Mr Joyce had not decided what exactly he wanted to do with the Property by the time he bought it. Undoubtedly, he wanted to develop it into as large a building as possible, but his initial objective was to extend and renovate the existing Warren Cottage, rather as had happened to Woodlands. He was uncertain in my view about whether he would eventually live in it, let it, or sell it on. It was Mr Morse that suggested demolishing the old Warren Cottage and building afresh. Mr Joyce was initially unwilling to consider rebuilding, as his 9th September 2006 e-mail clearly shows, but he quickly came round, preferring one large new house to the two smaller ones that Mr Morse favoured. He always intended to make a 'stepped approach' to the planning authorities, expanding the size of the development once the Additional Land was acquired.
  98. Having seen Mr Joyce and Mr Thompson, I am quite satisfied that they would have been talking volubly about their plans for the Property to anyone who would listen. I do not accept that Mr Bowman was the kind of person who would not listen. It seemed to me that he was putting on a show in the witness box. In reality, he has built up his clientele by being approachable, as his revealing comment about his clients having his mobile telephone number demonstrated. I am quite satisfied, therefore, that Mr Joyce and indeed Mr Thompson spoke to Mr Bowman before Completion about Mr Joyce's plans. I also find that Mr Joyce spoke to Mr Curran about his plans at the 2nd September 2005 meeting if not before.
  99. I am quite satisfied also that the option promised in King & Chasemore's sales particulars was important to Mr Joyce. Mr Joyce and Mr Morse understood from the beginning that the Additional Land would make it easier to obtain permission to extend Warren Cottage. And as soon as a new build was suggested, they thought that it would enable them to build a bigger house. If permission had been obtained for the January 2006 plans, they would have sought to increase the footprint, and put rooms in the roof, once the option was exercised.
  100. As for the option, the conduct of the Vendor (not herself, but through her agents) was surprising. They had promised a buyer's option, and then drafted a seller's option. It is extraordinary that they were not discovered in what seems to have been a try-on. Indeed there is a further remarkable irony in that Mr Joyce noticed that they had extended the option to 2 years, and required that it come back to one year. The two years for the seller's option as drafted was actually rather beneficial to him, but his insistence on one year for what he thought was a buyer's option does show the importance he attached to obtaining the Additional Land in a short timescale.
  101. Had Bowman or Mr Joyce noticed what had happened, I think the Vendor and Macdonald Oates, her solicitors, would have been in a weak position. It is true that Macdonald Oates had been pressing for early exchange and completion, and that they had expressed frustration and mistrust for Mr Joyce, but Mr Joyce would have had the upper hand in any negotiations about the option, had their attempt to move the goalposts been detected. Moreover the post-Completion correspondence between Mr Lintott and Mr Chesters shows how happy they were with the deal. I am, therefore, satisfied that there was a real and substantive prospect that, had the matter been brought to attention, the Vendor would have conceded an option of the kind intimated in the sales particulars.
  102. The next problem is to try to predict what kind of buyer's option that would have been. This is a little more difficult. The wording of the sales particulars is not clear. The real issue is whether the buyer's option would have been watertight, in the sense that it could be exercised automatically unless planning permission had been granted to the Vendor within a year from Completion, or whether it would have given the Vendor room for manoeuvre by, for example, pursuing an appeal and thereby defeating the option. I think that Mr Joyce would most likely have been able to negotiate a watertight option, because the other purchasers had by late August 2005 left the scene, and, as Mr Chesters' 6th September 2005 letter reveals, he was reassured to have the put option he had negotiated: in other words he would have wanted to be able to sell the Additional Land for £20,000 if the planning application failed. Moreover, it seems to me that the result might have been matching options with both the Option Clause and a suitable buyer's option included.
  103. Had matters progressed as Mr Joyce had wanted and expected, then, he would probably have been granted a satisfactory buyer's option and would have exercised it on 2nd September 2006. This leaves a further difficult question, namely what planning permission would he have applied for and what would he have obtained.
  104. One thing is clear as to planning. Mr Joyce would have stood a good chance of obtaining permission to build on a 7 metres by 14 (or 15) metres footprint along the lines of the January 2006 Plans, even without the Additional Land. Both experts confirmed this. It is hard to speculate, but Mr Joyce probably failed to pursue this smaller project for a variety of reasons including (a) the fact that he became focussed on the option (or lack of it) and on pursuing Bowman rather than the building project, and (b) the fact that he did not have huge resources easily to build the project out, and only wanted something that would give him a large profit. The fact that Mr Joyce moved his family to Warren Cottage in September 2006, when he sold Yew Cottage, was not really a contributing factor, as he could have remained living in Warren Cottage, whilst the new house was built in the garden, only demolishing the old house once the new one was completed. Moreover, whilst Mr Joyce was clearly never flushed with cash, I think he could have obtained a mortgage advance to build the new house, whether based on January 2006 or the March 2009 Plans, had he sought to do so in September 2006 or thereabouts. At that time, the property market remained strong, and I am sure that Mr Thompson would have assisted him to obtain finance if there was otherwise a problem.
  105. The final and most important question, then, is whether Mr Joyce would have obtained planning permission for a large house on a 12 metre by 18 metre footprint, even if he had been able to purchase the Additional Land in September 2006. I have looked carefully at the correspondence with Mr Runciman of CDC, and heard the careful expert evidence which I have described above. I have no doubt that Mr Runciman would have opposed such a proposal, and that other factors would have been against it, for example:-
  106. i) The Property is situated in an Area of Outstanding Natural Beauty.

    ii) Even with the Additional Land, the site was very small at only just over half an acre.

    iii) The Planners were very sensitive about height as well as footprint.

    iv) The Planners were also keen to see a sensitive development of the cottage type. Mr Joyce's proposed house would have been bulky and somewhat obtrusive. It would have been larger than the adjoining Woodlands that Mr Joyce was, on his own analysis, originally seeking to emulate.

  107. Despite all these factors, I have concluded that Mr Joyce would have had a real chance of obtaining planning permission for something like the March 2009 Plans. He might well have had to have made some changes, and even reduced it marginally in size, but I think he had a real possibility of building something rather large on the entire site including the Additional Land. I will not conceal my own aesthetic view, which is that such a building would have been brash and bulky and really rather out of character, but having seen the photographs of Loxley Chase and Broadland Court, I am not convinced that the chances of success would have been anything like as low as Mr Tetlow thought. I confess to agreeing with Mr Tetlow, which was I think the thrust of his evidence, that the chances should have been as low as he said. But I do not think they actually were. The true position falls somewhere between the views of the two experts.
  108. First Issue: Is Mr Joyce entitled to recover consequential losses based on the building profit that would have been made?

  109. In County Personnel (Employment Agency) Ltd v. Alan R. Pulver & Co [1987] 1 WLR 916, Bingham LJ said this as to the assessment of damages in a solicitors' negligence case:-
  110. "The principles to be applied in assessing damages in this case are, in my judgment, these.
    (1) The overriding rule was stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 and has been repeated on countless occasions since: the measure of damages is—
    'that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.'
    As Megaw LJ added in Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 All ER 928 at 934, [1980] 1 WLR 433 at 451:
    'In any case of doubt, it is desirable that the judge, having decided provisionally as to the amount of damages, should, before finally deciding, consider whether the amount conforms with the requirement of Lord Blackburn's fundamental principle. If it appears not to conform, the judge should examine the question again to see whether the particular case falls within one of the exceptions of which Lord Blackburn gave examples, or whether he is obliged by some binding authority to arrive at a result which is inconsistent with the fundamental principle.'
    (2) On the authorities as they stand the diminution in value rule appears almost always, if not always, to be appropriate where property is acquired following negligent advice by surveyors. Such cases as Philips v Ward [1956] 1 All ER 874, [1956] 1 WLR 471, Pilkington v Wood [1953] 2 All ER 810, [1953] Ch 770, Ford v White & Co [1964] 2 All ER 755, [1964] 1 WLR 885 and Perry v Sidney Phillips & Son (a firm) [1982] 3 All ER 705, [1982] 1 WLR 1297 lay down that rule and illustrate its application in cases involving both surveyors and solicitors.
    (3) That is not, however, an invariable approach, at least in claims against solicitors, and should not be mechanically applied in circumstances where it may appear inappropriate. In Simple Simon Catering Ltd v J E Binstock Miller & Co (1973) 228 EG 527 the Court of Appeal favoured a more general assessment, taking account of the 'general expectation of loss'. In other cases the cost of repair or reinstatement may provide the appropriate measure (see Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 All ER 928 at 938, [1980] 1 WLR 433 at 456 per Donaldson LJ). In other cases the measure of damages may properly include the cost of making good the error of a negligent adviser: examples are found in Braid v W L Highway & Sons (1964) 191 EG 433 and G & K Ladenbau (UK) Ltd v Crawley & de Reya (a firm) [1978] 1 All ER 682, [1978] 1 WLR 266.
    (4) While the general rule undoubtedly is that damages for tort or breach of contract are assessed as at the date of the breach (see, eg, Miliangos v George Frank (Textiles) Ltd [1975] 3 All ER 801 at 813, [1976] AC 443 at 468 per Lord Wilberforce), this rule also should not be mechanically applied in circumstances where assessment at another date may more accurately reflect the overriding compensatory rule. The Dodd Properties case both affirms this principle and illustrates its application.
    (5) On the facts of the present case the diminution in value rule would involve a somewhat speculative and unreal valuation exercise …
    (6) Even after an appropriate measure has been found to reflect damage recoverable under the first limb of the rule in Hadley v Baxendale (1854) 9 Exch 341, [1843–60] All ER 461, there will be cases in which a plaintiff will not be adequately compensated unless he receives damages to reflect his loss under the second limb also…".
  111. It is common ground that Mr Joyce can only recover the damages he seeks under the second rule in Hadley v. Baxendale supra, namely that damages for breach of contract should be "such as may reasonably be supposed to have been in the contemplation of the both parties at the time they made the contract as the probable result of it". As Asquith LJ put the matter at page 539 in Victoria Laundry (Windsor) Limited v. Newman Industries Limited [1949] 2 K.B.528: "But to this knowledge, which a contract breaker is assumed to possess whether he actually possesses it or not [under the first rule] there may have to be added in a particular case knowledge which he actually possesses of special circumstances outside the "ordinary course of things" of such a kind that a breach in those special circumstances would be liable to cause more loss. Such a case attracts the operation of the "second rule" so as to make additional loss recoverable".
  112. In addition to her argument that Bowman had no knowledge of special circumstances such as to engage the second rule (to which I will turn under the second issue), Ms Eva Ferguson has argued that Mr Joyce should only be entitled to damages based on the reduced value of the Property as a result of the option not having been re-negotiated. She relies in this regard on Mr Joyce being a property developer, as to which point I have made findings above, and upon Jenmain Builders Limited v. Steed & Steed unreported 20th March 2000. In that case, the Court of Appeal rejected a developer's claim to assess damages against its negligent solicitors based on the profit it would have made had it been able to buy and develop the intended property as it should have done. Chadwick LJ said this at paragraphs 33 and 35:-
  113. "33. This was a property with development potential. It is common ground that this property was no longer to be used as a village hall. It would have to be used for some other purpose; and there would have to be some development so that it could be used for that purpose. The question was: for what development could planning permission be obtained and how valuable would the property be on completion of that development? But those are the factors which a properly informed market will take into account in fixing the market value of property. The profit potential of the property is an element to be taken into account in fixing its market value. It is not suggested that there was anything special about this property to the appellants as purchasers. It is not suggested that there were not other developers in the market for property of this nature who could have made a proper assessment of the value of this property. The problem for the appellants in the present case is that they never sought to persuade the judge - and never adduced evidence to establish - that the market value of this property, Dukes Hall, was anything greater than the £67,500 which the Parish Council was seeking. It is for those reasons that the claim for loss of profits is one which the court could not entertain in this case.
    35. In the present case, there is no evidence that these appellants would not have been able to purchase other property in the market which they could develop profitably with the use of the money which they did not lay out in the purchase of Dukes Hall. There is no evidence that the respondents, insofar as their duty lay in contract, were aware of any special circumstances which made it impossible for the respondents to employ their funds in the ordinary course of their business, or of any circumstances which suggested that this property was being sold at an under-value. Indeed, in the circumstances that they were acting for the vendors, the Parish Council, it would be most unlikely that they would regard the property as being sold at an under- value rather than at market price".
  114. In this case, as in Jenmain, Mr Joyce has not suggested that the value of what he bought without the option was less than he paid. Nor has he suggested that the option was worth more than the £20,000 he would have (putatively) to have paid to exercise it. What he says is that he has sustained consequential losses as a result of the loss of the chance of having and being able to exercise the option he wanted.
  115. Mr Joyce was in some measure locked in to the transaction in this case, unlike the situation in Jenmain. Indeed, he was, in my judgment, locked in by the conduct of Bowman itself, even if no claim was made against Bowman in respect of its post-Completion conduct (c.f. Smith New Court Securities Ltd v Scrimgeour Vickers [1997] AC 254 in relation to damages for fraudulent misrepresentation). Even though Mr Joyce received repeated advice from December 2005 onwards that the option was not what he had expected, and was not a buyer's option at all, he continued to believe that he might nonetheless be able to exercise it. He did so in material part at least because Mr Bowman told him so in the way I have described above. It does not, therefore, easily lie in Bowman's mouth to argue that Mr Joyce should be deprived of damages for consequential losses properly flowing from the fact that he retained the property through at least to early 2007, when he finally realised that he would, for certain, be unable to obtain the Additional Land.
  116. I do not think that Jenmain is strictly applicable here. First, Mr Joyce was not a 'property developer' with cash to invest commercially in the way envisaged in Jenmain. Secondly, Mr Joyce was in some measure locked in to the Property until early 2007. It does not lie in this contract-breaker's mouth to say that Mr Joyce ought to have been more sensible and sold the Property instantly he became aware of the problem. And when it came to 2007, his circumstances had changed and he had moved in to the Property with his family. By then, if he had suffered any consequential loss, it was too late to rectify it by a sale.
  117. In these circumstances, I am satisfied that there is no reason in principle why Mr Joyce cannot recover consequential losses in addition to the difference in value (which latter he does not claim). As I have said, however, he will only be able to recover such damages if they fall within the second rule in Hadley v Baxendale (1854) 9 Exch 341.
  118. Issue 2: What did Bowman know about Mr Joyce and his intention to develop the Property?

  119. Ms Ferguson has argued that, to come within the second rule, Mr Joyce has to show that Bowman knew that:-
  120. i) It was Mr Joyce's intention was to develop the Property for profit;

    ii) A specific development was contemplated; and

    iii) The Additional Land was necessary for that development.

  121. Ms Ferguson bolsters this submission by contending that, if Mr Joyce had no fixed idea of what he wanted to develop, he could not have had any fixed idea about the importance of the Additional Land.
  122. I have already found that Mr Joyce spoke to both Mr Bowman and Mr Curran about his plans before Completion, but it seems to me that these conversations have to be either at the time of the Retainer or at least far enough ahead of the Contract to enable Bowman to take account of its knowledge in performing its contractual duties.
  123. Mr Joyce was clear in his evidence that he had told Mr Bowman during telephone calls with him between 16th August 2005 and Completion about his development plans and about the importance of the Additional Land to him. I accept that he did so. I do not, of course, accept that he mentioned a new building or something as specific as a new house with a footprint of 12 metres by 18 metres. But I am sure he would have mentioned the adjoining cottage, Woodlands, and a major extension of that kind, in addition to his quite transparent intention to turn a profit, and that he did so when he first instructed Bowman or soon afterwards.
  124. Ms Ferguson argued that the mortgage application forms on Bowman's files showed that this was a domestic conveyancing transaction, and that they had no reason to suppose anything else. But this ignores the reality of the kind of people that Mr Thompson and Mr Joyce are. They are, without any disrespect being intended, 'wheelers and dealers', and Mr Bowman must have known that. I have no doubt he was told what Mr Joyce was plainly excited about, namely his plan to develop the Property and make a profit, in part by acquiring the Additional Land.
  125. Whilst it is unnecessary for the purposes of Mr Joyce's claim, I also accept that Mr Curran was told the same things on 2nd September 2009 just before the Contract was signed. I am sure Mr Thompson also mentioned the same matters to Mr Bowman in his conversations with him during August 2006.
  126. I do not think that it was necessary for Bowman to be aware of the precise scale of the intended development in order to have the special knowledge necessary to bring Mr Joyce within the second rule. The fact that Mr Bowman knew about the intention to make a profit from developing the Property and about the role to be played by the Additional Land (about which Mr Joyce was particularly concerned), is enough to give Bowman "knowledge … of special circumstances outside the "ordinary course of things" of such a kind that a breach in those special circumstances would be liable to cause more loss".
  127. Issue 3: Had Mr Joyce been properly advised, was there a real and substantial chance that (i) Mr Joyce would have been granted the buyer's option? (ii) Mr Joyce would, in the event, have been able to exercise that option, had it been granted? (iii) Mr Joyce would have been able to obtain permission for the March 2009 Plans, had the buyer's option been granted and exercised? (iv) Mr Joyce would have been able to obtain the funding for the development of the March 2009 Plans?

  128. I have already dealt above with these 4 questions. I am entirely satisfied for the reasons I have given that there was a real and substantial, rather than a speculative, chance of:-
  129. i) Mr Joyce being granted a buyer's option that he could have exercised after one year if planning permission had not, by then, been obtained.

    ii) Mr Joyce actually exercising that option in September 2006, since planning permission would not have been obtained by the Vendor.

    iii) Mr Joyce being able to obtain permission for the March 2009 Plans; and

    iv) Mr Joyce obtaining the funding for the development of the March 2009 Plans.

    Issue 4: What were the percentage chances that Mr Joyce would have succeeded in surmounting the four hurdles?

  130. This issue is, perhaps, the most difficult as it requires an evaluation of all the evidence in the case. It is, therefore, very much a balancing exercise, and it is hard to set out in full detail everything that one has taken into consideration.
  131. I will deal first with my percentage evaluations of the chances of each of these 4 events occurring and then with the question of how I have obtained a single figure from those percentages.
  132. The chances of Mr Joyce obtaining a suitably watertight buyer's option was, in my judgment, 85%. The correspondence, some of which I have described above, is informative. I think Mr Chesters wanted to sell, thought he was getting a good price, and that, had his scheme to replace the promised buyer's option with a seller's option been rumbled, he would have done what had been promised in the Sales Particulars and the Sales memorandum. The fact that he had tried it on, in the way that he had, would have put him in a weak negotiating position, and would have made Mr Joyce (who was very keen to have the promised option) all the more astute to make sure that the option was watertight and that Mr Chesters could not wriggle out of it by, for example, appealing the planning decision, within the year. I think it is fairly certain that Mr Joyce would have got the buyer's option he wanted.
  133. The chances of Mr Joyce actually exercising that option in September 2006 were also very high. We know that the Vendor could not get planning permission, and that Mr Joyce found the £20,000. I think the chance of his exercising the option, had he got it, was 100%.
  134. The third chance concerning planning permission is the most difficult. I have sought to explain my approach to the expert evidence above. I am by no means sure that Mr Joyce would have got the precise permission he wanted, but on the assumption that something close to what is shown in the March 2009 Plans would have satisfied him and enabled him to go ahead, I judge the prospects of getting such a permission, at least on appeal, as being 40%.
  135. As for the chance of Mr Joyce obtaining the funding for the development of the March 2009 Plans, I accept that Mr Joyce was by no means cash rich, but he did seem able to borrow when he wanted to, and I think it likely that Mr Thompson would have helped him out. The chances of funding such a development, had he got planning permission, would have been 85% in my view.
  136. I have fed in the overlaps between these chances as I have progressed through them. For example, the second chance is assessed at 100% because it assumes that the first chance has already been realised. Likewise, the fourth chance is assessed at 85% on the assumption that the March 2009 Plans were passed. Thus, I think it is appropriate here to undertake the mathematical exercise that was not precisely appropriate in Hanif. This gives 28.9%, which I propose to round up to 29%.
  137. Issue 5: What would Mr Joyce's profit have been from building out the March 2009 Plans, and when should they be assessed?

  138. As I have already mentioned, Mr Joyce's putative profit is largely agreed. But it is dependent on timing. To get planning permission for the March 2009 Plans, I think Mr Joyce would have had to go to appeal. Mr Runciman was very opposed to the idea of such a grand development. That would have taken time. It is hard to say how much, but it would very likely have delayed the project by 6-9 months. Taken with the 7 month development period, and some time to get funded and geared up, I doubt that Mr Joyce would have completed the new house and made it ready for sale before mid-2008. Thus, I need to take the figures agreed for that period, rather than those I have mentioned above.
  139. The value of the house at mid-2008 figures would have been £1,135,000. That figure less £380,000 purchase costs and £375,000 build costs, amounts to a basic profit of £380,000.
  140. Issue 6: Has Mr Joyce failed to mitigate his loss?

  141. Mr Williams argued that Mr Joyce should not have his damages reduced because he failed to mitigate his loss. He argued that it was not reasonable for Mr Joyce to be forced to undertake a smaller project. I disagree. This is not a matter of weighing in fine scales how an injured party should behave (see Banco de Portugal v. Waterlow [1932] AC 452 at page 506), nor is it equivalent to requiring a claimant to embark on speculative and costly litigation (see Pilkington v. Wood [1953] 1 Ch 770 at page 777). It is simply requiring that Mr Joyce do what he always wanted to do, namely develop the Property to the greatest level possible. It has not been suggested that he would not have been able to develop the Property profitably on the basis of the January 2006 Plans and I think that he must give credit for the profit he would have made had he done so. He could, in my judgment, have obtained permission without the Additional Land for the January 2006 Plans, by early 2007, and could have completed the building and got it ready for sale by the end of 2007. Had he done so, he would have made a profit of £245,000 as I have explained above.
  142. Issue 7: What damages is Mr Joyce entitled to?

  143. For the reasons I have explained above, therefore, it seems to me that Mr Joyce has lost a profit of £375,000, less the profit he could have made of £245,000, making £130,000. Mr Joyce is entitled to recover 29% of that balance for the loss of the chance that he would have been able to make the additional profit had he been able to acquire the Additional Land, which he could not acquire because of Bowman's negligence.
  144. Checking back, as suggested by Megaw LJ in Dodd, I am satisfied that this sum of £37,700 (£130,000 x 29%) conforms with the requirement of Lord Blackburn's fundamental principle, in that it puts Mr Joyce in the position he would have been in, had he not sustained the wrong or had the contract been performed by Bowman, and the buyer's option had been granted to him. It reflects the chance that he would have built out a bigger development on the scale of the March 2009 Plans. The figures are not so exact that it is appropriate to make a further reduction for the possibility that the March 2009 Plans might have had to be slightly reduced in size. Mr Joyce cannot, however, blame Bowman for the fact that he did not develop the Property to the lesser extent that was available to him, and make the £245,000 profit he could have achieved from that process.
  145. Conclusion

  146. I, therefore, award Mr Joyce damages of £37,700 (£130,000 x 29%) together with interest from 30th June 2008 by which time he should have realised that additional profit. I will hear counsel on the rate of interest applicable and costs.


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URL: http://www.bailii.org/ew/cases/EWHC/Ch/2010/251.html