No one could ever say that practising law is easy and even the most careful solicitors are fallible. However, as one case showed, that in no way detracts from the benefits of taking legal advice in that clients who suffer loss due to professional negligence are entitled to compensation in full.
The case concerned tax mitigation advice given by a law firm to a client. In reliance on that advice, a valuable property owned by the client was made subject to a trust. The objective was that the property would pass to the client’s son on her death with substantially less Inheritance Tax (IHT) payable than if the property were bequeathed to him in her will.
The client was a trustee of the trust, together with her son and his partner, to both of whom the law firm also owed a duty of care. In breach of trust, however, the client later sold the property without the couple’s knowledge or consent. As a result, the son did not inherit the property on the client’s death as he would otherwise have done.
After the couple launched proceedings, a judge ruled that the law firm and one of its partners had been negligent in failing to register a restriction at the Land Registry in order to protect the son’s interest in the property. The Court of Appeal subsequently upheld the son’s right to compensation on the basis that, had that step been taken, the property could not have been sold without the couple’s consent.
Following a further hearing, the judge found that the son was entitled to damages equal to the £875,000 value of the property as at the date of his mother’s death. From that sum was deducted IHT of £124,683 that would have been payable. After the addition of interest, however, his award came to £985,299.