Advice failure means solicitors could be subject to group litigation
Failure to properly advise clients regarding onerous ground rent clauses could lead to litigation against conveyancing solicitors.
Becoming a common feature in media coverage, residential leaseholds have caused outrage from the owners, largely stemming from the conditions surrounding ground rent. Within the terms of the contract, certain clauses are included, which means that the rent will double every 10 or 25 years.
As a result, owners have found selling their property to be extremely difficult.
However, questions have been raised in regard to the solicitors involved; did they fail to advise their clients about these onerous clauses? Would the clients have entered into the lease if they had been aware of these terms?
Potential claimants for ‘group litigation’ are allegedly being sought out by Leasehold Law. Reports indicate that the total liability could be over £500 million.
Explaining the process and effect of a potential group litigation order was Sarah Clover and Tony Nurse Marsh. The partners at Law Firm Clyde & Co stated that it worked on an opt-in basis, with a need for claimants to actively decide to take part if they wished to receive a portion of any damages recovered. This is under part 19 of the Civil Procedure Rules, which determine the likelihood of a group litigation order (GLO) being granted.
Whether one is granted will also depend upon efficiency; the court will only grant a GLO if one would provide effective case management of the claims which are all intrinsically related. As Clover and Marsh explain, it is not certain whether litigation will proceed under a GLO until details of both parties and claims are known.
From the position of the defendants, Clover and Marsh explain that effective case management can actually be favourable through a GLO, mainly in terms of coordination and cost.
Enabling defendants to be proactive in their approach, group litigation procedures allow multiple claims to be handled simultaneously, proving far more efficient in the long run.
However, whilst this may save on costs, the grouping of claims can lead to greater uncertainty as to the outcome of the case. Clover and Marsh explain that given the varying nature of claims, claimants must clearly set out their common cause of action in order to have a chance at recovering damages.
The partners from Clyde & Co went on to highlight the potential problems which could face the leasehold owners concerned, stating that passage of time could be a barrier, as well as the extent of the advice given.
For the firms involved, the pair state that requests for files should be responded to appropriately, with proper consideration given rather than just a blanket rejection.