Negligent legal advice has resulted in a £1.1million fine for a firm of solicitors who failed to advise a property developer about a surge in Edinburgh house sales during 2007.

Managing Director of Kirkton Investments, Alan Berry, was instructed by VMH LLP of Edinburgh to stall his plans to sell his development after a ventilation duct preventing odour contaminating the site from a neighbouring fish and chip was deemed inadequate.

The firm was ordered to pay the damages as a subsequent slump in the housing market, succeeding the sub-prime crisis, soon followed. The court found that a duty of care had been breached by the solicitors as the time taken to resolve the issue meant the 19 townhouses and eight apartments located in Slateford, a prime city Edinburgh location, had been severely devalued. 

Planning for the development was issued on the condition that a ventilation duct to replace the existing one at the Codfather Chipshop was installed. However, upon taking the advice from VMH LLP, Mr Berry refused to pay the shop owner £75,000 in installation costs.

Some months later, VMH LLP ceased representation of Kirkton Investments and Mr Berry still needed to pay for ventilation upgrade. Finally, the installation was implemented, but at a cost of £324,000. Not only had the price of the vent escalated, but stalling the sale of the properties for almost a year meant they were not sold at their elevated market value due to the downturn.

Mr Berry sued VMH LLP for over £2 million but the value of the damages was disputed. The court ruled that the true value of his losses was £1,135,327. The firm admitted they were responsible for the rise in installation price but claimed that the reason the sale prices dropped was because the properties were unattractive to buyers. However, they were held accountable for Mr Berry’s loss of £545,000 in sales.

Reported by the Scotsman, Lord Doherty commented: