Rosbeg Partners Ltd v L. K. Shields (A Firm)

• Jurisdiction: Ireland
• Judge: Mr. Justice John MacMenamin
• Judgment Date: 01 June 2016
• Neutral Citation: [2016] IECA 161
• Date: 01 June 2016
• Court: Court of Appeal (Ireland)
• Docket Number: [Record No. 2014/1394] [Article 64 Appeal]

MacMenamin J.

Finlay Geoghegan J.

Irvine J.

BETWEEN:

ROSBEG PARTNERS LIMITED

RESPONDENTS

AND

L. K. SHIELDS (A FIRM)

APPELLANTS

[2016] IECA 161

MacMenamin J.

[Record No. 2014/1394]

[Article 64 Appeal]

COURT OF APPEAL

Civil

Professional negligence – Factual causation – Mitigation of loss – Respondents seeking damages for professional negligence – Whether the trial judge was entitled to reach his conclusions on the evidence

Facts: The respondents, Rosbeg Partners Ltd, in February, 1994, bought Unit 520, Western Industrial Estate, Naas Road. They retained the appellants, L. K. Shields, to act for them in the sale. The purchase was completed on the 6th May, 1994. The property comprised five lots, made up of five separate titles. A deed of transfer was executed by the vendor regarding the five lots. The deed was stamped on the 8th June, 1994. The appellants undertook the task of registering the transaction with the Land Registry. The vendor?s solicitor did not sort out the mapping problems. As a consequence, and as a result of human error, the difficulty was never addressed, and this omission came to light in September, 2007. In 2007 Rosbeg Partners owed considerable sums of money to its bank, AIB. Their property was next to property owned by a Mr Harris on the westside of Dublin. On the 15th September, 2007, Mr Harris offered ?10 million for Rosbeg?s property. Rosbeg claimed that they accepted the ?10 million offer. Rosbeg did not communicate acceptance of the offer. The High Court (Peart J) held the appellants liable for professional negligence.?The trial judge held that the negligence had caused substantial losses, and that there had been no failure to mitigate damage. He held that Rosbeg were not to be criticised for not having explored with Mr Harris the possibility that he might enter into a conditional contract. He doubted that the potential purchaser would have agreed to such a course of action. The appellants appealed to the Court of Appeal against that judgment contending that Rosbeg had never made a final decision to accept the ?10 million, and that there was evidence that Rosbeg?s directors were undecided as to whether or not they would accept the ?10 million, or whether they were looking for ?10.3 million, or whether, in fact, they were looking for ?12.5 million.

Held by MacMenamin J that the conclusions of the trial judge were based upon findings of fact and inferences properly drawn from those facts, based on credible evidence, and hence they may not be interfered with by the Court on appeal.

MacMenamin J held that he would dismiss the appeal and uphold the judgment of the High Court.

Appeal dismissed.

Judgment of Mr. Justice John MacMenamin dated the 1st day of June, 2016

Introduction

1 This is an appeal against a judgment of the High Court (Peart J.) wherein he held the defendants/appellants liable for professional negligence. In February, 1994 the plaintiffs (hereinafter ?Rosbeg?), who are the respondents to this appeal, bought Unit 520, Western Industrial Estate, Naas Road. They retained the appellants to act for them in the sale. The purchase was completed on the 6th May, 1994. The property comprised five lots, made up of five separate titles. The relevant lot was described as ?Lot 3?. This comprised both lands which were registered title, (part of Folio 23011F, County Dublin), as well as unregistered title.

2 Had matters proceeded in the normal way, the transfer and conveyance in respect of the entire of Lot 3 would have been part of the documents lodged in the Land Registry. This would have recorded the change of ownership. A new folio would then have been opened in respect of that part of Folio 23011F, which Rosbeg had acquired. This would have left the balance of Folio 23011F in the ownership of the vendor. Each folio would then have shown, by reference to a marked map, what was comprised in that folio, and what remained in Folio 23011F. Unfortunately, this did not occur. A deed of transfer was executed by the vendor regarding the five lots. The deed was stamped on the 8th June, 1994. The correct course of action would have been that the appellants would have lodged both the deed and the other necessary documents, in the Land Registry, in or about 1994 or 1995.

3 The Land Registry raised questions regarding boundaries. Part of the property had not been registered by the time the sale was completed. The appellants undertook the task of registering the transaction with the Land Registry. Despite significant efforts made by a number of solicitors employed by the appellants, the vendor's solicitor did not sort out the mapping problems. As a consequence, and as a result of human error, the difficulty was never addressed, and this omission only came to light in September, 2007, in circumstances which will now be described. There is no issue that there was negligence.

4 In 2007 Rosbeg Partners owed considerable sums of money to its bank, AIB. Their property was next to property owned by Mr. Pino Harris on the westside of Dublin. On the 15th September, 2007, Mr. Harris offered ?10 million for Rosbeg's property. This offer was put in writing on the 21st September, 2007. The offer was open until the 28th September, 2007. The offer was subject to confirmation of a total site area of 2.56 acres.

5 One of the key issues in this appeal is whether Rosbeg actually decided to sell for ?10 million. The appellants say no such clear decision was ever made, and that Rosbeg were looking for ?12.5 million. The trial judge found that on the 24th September, 2007, Rosbeg's financial controller, a Mr. Paul McConvey, wrote to A.I.B., looking for the title deeds of the subject property.

6 Peart J. was ? completely satisfied? that Rosbeg had decided on the 24th September, 2007 to accept the ?10 million offer. The judge observed that it would have been necessary for Rosbeg to satisfy Mr. Harris regarding the precise acreage. Nonetheless, he held that it was ? an overwhelming probability? that, had it not been for title problems, the sale would have been completed rapidly. These title issues were, first, that the subject property had not been properly registered by the time of the offer, because Rosbeg's ownership of part of Folio 23011F was not apparent from inspection of the records, and, second, that the potential purchasers had become aware of these facts. The judge assessed Mr. Harris, who gave evidence, as a person who liked to do business speedily, and concluded, having heard that evidence, that he would have withdrawn his offer, and ? taken a step backwards?, if the deal could not be done rapidly.

7 As matters transpired, Rosbeg did not communicate acceptance of the offer, even after an extension of the deadline to the 5th October, 2007. The judge held that the acts of negligence caused significant losses to Rosbeg. The issues of factual causation and mitigation of damage are key factors in this appeal. So, too, is the role of a trial judge in making findings of fact and drawing inferences therefrom.

8 At the trial, there was expert evidence from conveyancing solicitors on both sides. The judge noted that there was consensus that a deal could have been completed, whereby the terms of a contract could have been agreed, which would have contained special conditions regarding the purchaser being satisfied as to the acreage. However, matters did not turn out this way. Instead, Rosbeg took it on themselves to sort out the problem regarding the registration of title.

9 The trial judge held the negligence had caused substantial losses, and that there had been no failure to mitigate damage. He held that Rosbeg were not to be criticised for not having explored with Mr. Harris the possibility that he might enter into a conditional contract. He doubted ? very much? that the potential purchaser would have agreed to such a course of action.

10 Both in this appeal, and at trial, counsel for the appellant contended that Rosbeg had never made a final decision to accept the ?10 million, and that there was evidence that Rosbeg's directors were undecided as to whether or not they would accept the ?10 million, or whether they were looking for ?10.3 million, or whether, in fact, they were looking for ?12.5 million.

11 Peart J. rejected the proposition that Rosbeg were holding out for more money. He held that, if the firm had truly been looking for a greater sum than ?10 million, their financial controller, Mr. Paul McConvey, would not have contacted Mr. John Reynolds, Rosbeg's relationship manager in AIB, and told him that the property had been sold for ?10 million. Among the witnesses for Rosbeg were Mr. Robert Stewart, the owner of the company, Mr. McConvey, and Mr. Ben Pearson, a valuer who acted on their behalf. The judge held that, if he were to accept the appellants' contention that Rosbeg were looking for more money, he would have to ? reject the evidence of evidence of Mr Stewart, Mr McConvey and Mr Pearson.? On this, he explicitly stated ? I do not reject that evidence.? Elsewhere, he remarked that he did not doubt the ? veracity? of the respondent's witnesses.

12 This appeal is highly fact-specific. It does not raise new issues of law, but rather the application of well established principles. One of the main questions is, whether the judge was entitled to reach the conclusions he did on the evidence. He held that the fact that the contract had not been concluded was not the decisive factor in causing the loss, but rather that Rosbeg had decided to accept the offer, but was prevented from doing so. The judge held:

?44. I am satisfied to decide this case not by whether or not a contract had been finally concluded following an offer and a full and unconditional acceptance, but on the basis that the...