Edmund Kelleher and Joan Kelleher -v- Don O'Connor practising as Don O'Connor Company. High Court, Neutral Citation IEHC 313, Judgment was delivered on July 16th, 2010 by Mr Justice Clarke.
Judgment
The plaintiffs were entitled to €43,678 damages against Mr O’Connor due to negligence in his handling of their purchase of a restaurant premises.
Mr O’Connor should have advised his clients to make contact with health authorities officials about compliance of the premises with the Food Hygiene Regulations 1950. They were entitled to damages on the basis they would not have proceeded with the sale if properly advised.
Background
In 2001, the plaintiffs were interested in buying a restaurant premises, Pat’s Chat, at No 1 Parkwest, Mallow, as an investment with the intention of letting it to a restaurant operator.
They retained Mr O’Connor as their solicitor.
A contract was signed but problems later emerged with the health authorities and the restaurant did not open as planned.
The plaintiffs carried out alterations to the premises after discussions with health officials and the premises was then registered, with limitations, under the Regulations.
It opened through tenants but was later run by Mrs Kelleher, who continues to operate it.
Due to the limited certification, the premises could seat 24, not 40 as it had previously. Limitations were also imposed on the type of food served.
The health authorities had expressed concerns to the previous owner of the restaurant but the plaintiffs were unaware of that before the sale.
At the time of the contract for sale, the restaurant was properly registered for the purpose of the Regulations with no limitations on its ability to trade.
The plaintiffs claimed Mr O’Connor was negligent relating to conveyancing and other issues and was obliged to either himself conduct inquiries into the food hygiene situation at the restaurant or to advise them to do so.
Mr O’Connor’s counsel argued he had fulfilled any duty of care he might have by raising the appropriate requisitions and there was no causal link between any alleged inaction on Mr O’Connor’s part and any adverse consequences for the plaintiffs.
Decision
Mr Justice Clarke accepted evidence from Áine Hynes, author of the Law Society's Complex Conveyancing Manual, that it is proper conveyancing practice for a solicitor to raise food hygiene matters as a pre-contract requisition.
He found Mr O’Connor was negligent in not making further inquiries after receiving a reply to one of his requisitions to the
effect there was no evidence available of registration of the premises with the Health Authority.
As the premises were in fact registered without limitations and Mr O’Connor would have established that had he made the further inquiry, there was no causal link between this undoubted negligence and any adverse consequences for the Kellehers, the judge found.
A solicitor’s obligation was to ensure proper registration was in place and no adverse notices had been served or contemplated at the time of sale.
Practical questions as to how a restaurant was actually going to operate were more properly dealt with between a proprietor and health officials, and they should have been advised in relation to this.
While Mr O’Connor was not negligent in not making such inquiries himself, he was negligent in not advising the plaintiffs to do so.
Mr Kelleher had no experience in the food business, had specifically asked Mr O’Connor to ensure all was right in relation to the Regulations and compliance with those Regulations was of considerable importance for those purchasing restaurants.
Had it not been for that negligence, the plaintiffs would have discovered the problems coming down the road relating to the restaurant, including the kitchen being too small with an extension not viable, and would not, the judge believed, have gone ahead with the sale.
The judge said there were serious issues in the case is relation to damages with significant controversy both as to fact and principle.
Accounts for the years in which Mrs Kelleher ran the restaurant business herself were wrong and misleading and contained a purported significant sum for rent when in fact no rent was paid.
The evidence of the Kellehers’ accountant Gerard Piggott in this regard was highly unsatisfactory.
This was a "no transaction" case such as he had analysed in ACC -v- Johnstonin which he noted a solicitor does not contract with a client to procure a successful conclusion of a conveyancing transaction but rather to carry out a proper professional job on a conveyancing transaction.
If the proper conduct of the conveyancing transaction should have led to the client not proceeding at all, the proper approach of the court to assessment of damages was to examine what would have happened had there been no completed transaction.
If Mr O’Connor had not been negligent, the sale would not have proceeded. Because there was nothing Mr O’Connor could have done to have solved the Regulations problems, the couple were entitled to damages on a “no transaction” basis.
The property was bought for €120,000 and was worth €15,000 less after purchase because of the limitations on its registration. The plaintiffs then spent €26,000 altering it to satisfy the requirements of the Health Authority.
There was no basis to suggest that money was well spent and the property was still partially impaired.
It was not open to the couple to place on Mr O’Connor the greater losses flowing from their decision to carry out such works.
The proper measure of damages, as of 2001, was €20,000 as the plaintiffs would have lost that amount had they sold the property then.
They were also entitled to interest, bringing the total award to €43,678. An award for general damages was not appropriate.
The full judgment is on www.courts.ie
Joe Revington SC and Gerard Kiely SC, instructed by Tom O’Sullivan Solicitors, Co Cork, for the plaintiffs; Willis Walshe SC and John Lucey BL, instructed by Ernest J Cantillon, Cantillon Co, Cork, for the defendant.