Mark Smith v Mark Cunningham & Ors (Approved)

Factual and Procedural Background

The Plaintiff purchased a dwelling-house in July 2006 for €240,000. The property, situated in The County, had been constructed in breach of several conditions of the planning permission granted by the local authority. The Plaintiff retained the Defendant Solicitors to complete the conveyance and to secure a good, marketable title.

In 2008 the Plaintiff agreed to sell the house for €280,000. During the purchasers’ planning searches the local authority confirmed that the dwelling was an unauthorised development and threatened enforcement action. The purchasers rescinded the contract in October 2008 and recovered their deposit. Retention permission was ultimately obtained in November 2008, but by then the property market had collapsed; the house was valued at less than €100,000 in 2010 and was later repossessed.

The Plaintiff issued negligence proceedings against the Defendant Solicitors in May 2014. A preliminary issue on limitation was tried:

• High Court ([2018] IEHC 600): held the claim was not statute-barred; distinguished between a latent “defect” (July 2006) and actionable “damage” (contract rescission, October 2008).
• Court of Appeal ([2021] IECA 268): reversed; ruled that an immediate “blot on title” arose on purchase, so the action was time-barred.
• Supreme Court granted leave ([2022] IESCDET 86) and, in this judgment ([2023] IESC 13), determined the appeal.

Legal Issues Presented

1. When does a cause of action in negligence against a solicitor, arising from conveyancing work that results in pure economic loss, “accrue” for the purposes of s. 11(2)(a) of the Statute of Limitations 1957?
2. Does a title defect amount to actionable “damage” upon completion of the purchase, or only when the defect causes a later financial consequence (e.g., abortive resale)?

Arguments of the Parties

Plaintiff’s Arguments

• The relevant “damage” did not occur until October 2008, when the resale contract collapsed and the property’s value fell.
• Before that date the planning defect was merely a latent contingency; it could have been regularised at minimal cost, so no measurable loss existed on purchase.
• Brandley v. Deane requires a distinction between “defect” and “damage”; only on contract rescission did damage become “manifest”.

Defendant Solicitors’ Arguments

• The Plaintiff suffered measurable loss on 12 July 2006 because he acquired a property worth less than the price paid and exposed himself to enforcement risk.
• Applying Maharaj v. Johnson, Gallagher v. ACC Bank and Cantrell v. AIB, the limitation period runs from completion of the flawed transaction, even if the plaintiff later discovers the defect.
• The action, issued in May 2014, was therefore statute-barred.

Table of Precedents Cited

Court's Reasoning and Analysis

Justice Murray, delivering the unanimous judgment, adopted the five-point synthesis from Cantrell and applied it to conveyancing negligence:

1. The Statute of Limitations requires actual, measurable damage, assessed objectively; mere exposure to risk is insufficient.
2. A purchaser who receives a property afflicted by a planning “blot on title” acquires an asset immediately worth less than the contract price and is exposed to enforcement action; that constitutes real, present loss.
3. The fact that retention permission might later be secured does not convert the existing diminution into a future contingency, especially where remediation depends on third-party cooperation and may entail significant cost.
4. The High Court’s “defect versus damage” distinction misapplied Brandley; in pure economic-loss claims the defect is the damage once it depresses value.
5. Accordingly, the cause of action accrued on 12 July 2006 when the conveyance completed. The six-year limitation expired on 11 July 2012, well before proceedings were issued.

Holding and Implications

APPEAL DISMISSED – CLAIM STATUTE-BARRED.

The Supreme Court affirmed the Court of Appeal, holding that negligence claims against solicitors arising from conveyancing transactions accrue when the flawed title is acquired, not when later consequences materialise. The decision clarifies Irish limitation law for pure economic loss in property transactions and emphasises a pragmatic, objective test anchored to actual diminution in value. While significant for conveyancing practice, the judgment does not create a new discoverability rule; plaintiffs must act within six years of completion, even if the defect is discovered later.