Livingstone v Mitchell

The dispute in Livingstone v Mitchell involved the plaintiffs, who engaged the defendants as their solicitors for a conveyancing transaction. The plaintiffs purchased a property with the intention to redevelop and sell it in the short term. The property had owner-builder work that was defective, and there was a failure in the conveyance process as a certificate of insurance for the owner-builder work was not attached to the contract for sale. This omission provided the plaintiffs with the right to rescind the contract, a fact the defendants failed to advise them of. The defendants admitted to breaching their duty of care.

The central legal issues the court needed to address included whether the plaintiffs would have rescinded the contract had they known of their right, the measure of damages for the solicitor's negligence, and whether the plaintiffs could recover the cost of rectifying the defects in the owner-builder work. Additionally, the court had to consider whether the plaintiffs were contributorily negligent by not obtaining a more detailed pre-purchase inspection report and whether they failed to mitigate their losses by not selling the property upon discovering the defects.

The court ruled that the plaintiffs' evidence regarding what they would have done if properly advised was inadmissible as it was speculative. However, the court allowed evidence from a non-plaintiff regarding what he would have done but for the defendant's negligence. The court found that the plaintiffs could recover the cost of rectifying the defects in the owner-builder work. The measure of damages was determined to be the amount that would have been recoverable under the insurance policy for the owner-builder work, not limited to the diminution in the value of the land. The court also held that the plaintiffs were contributorily negligent and failed to mitigate their losses, which reduced the damages awarded.

The final orders of the court included a determination that the defendants were liable for the cost of rectifying the defects in the owner-builder work, subject to a reduction for contributory negligence and failure to mitigate. The court also clarified the measure of damages and the admissibility of certain evidence in relation to the plaintiffs' potential actions had they been properly advised.