By Fraser Barnstaple, Underwriter
(Estimated reading time: 3 minutes 3 seconds)
In recent years, there has been a trend towards higher ground rents and, consequently, a sharp rise in cases concerning them. In 2012, the European Court of Human Rights in Lindheim v Norway held Norwegian law, allowing lessees to extend ground rent clauses, as contrary to Protocol 1 Article 1 of the ECHR.
Although ground rent clauses in England and Wales are a different matter, it is not inconceivable that they attract a human rights claim in the future. For now though, claimants find compensation in the form of claims pursued on the basis of professional negligence from conveyancing solicitors who negligently failed to advise them about the existence and consequences of ground rent clauses – a matter which Temple has insured on various occasions.
What makes a successful claim?
Like any other professional negligence claim, the governing principles for these cases were set forth by the Supreme Court in Manchester Building Society v Grant Thornton LLP. Within these principles there some key indicators, specific to ground rent cases, of a successful claim.
One indicator is how onerous the ground rent clause was. The more onerous and unreasonable the clause – the greater the expectation on the advisor to flag this up with their client. Clauses that determine the ground rent should double every time a certain amount of years pass (so called ‘doubling’ provisions) are a classic example of an onerous clause.
The CMA recently obtained undertakings from 15 developers who agreed to remove such provisions, which means the focus of ground litigation may shift to more subtle yet still onerous clauses. For example, clauses which attach themselves to the RPI – which may be particularly harsh given the recent and seemingly future rise in inflation.
Another important consideration is what was said by the advisor. Silence from the advisor regarding the existence of an unconscionably onerous ground rent clause will constitute a strong and potentially straightforward claim. For a claim to be successful, there must be sufficient warning. Therefore, even if it is mentioned by the advisor, the consequences and irregularity of the clause must be properly outlined to the client.
Additionally, it is important that claims are brought within 6 years of the problem being identified. However, if this expires, claimant may be given the three year fall back, courtesy of s14A, Limitation Act 1980 if they can prove they had no knowledge of the issue within the first six years.
Why use ATE and why use Temple?
ATE insurance in these cases greatly benefits clients. They receive certainty over how much they will pay out in the event of a loss. They will also avoid adverse costs, which sometimes far exceed the cost of the premium.
- Here at Temple, we are experienced insurers of professional negligence cases and, specifically, those involving ground rent clauses. Bringing legal action against legal professionals can be a daunting prospect for claimants but with ATE insurance, they can have peace of mind as they know what their costs will be should they lose.
- All of our commercial underwriters have legal qualifications which allows us to provide fast, sensible and informed decisions. Additionally, our existing legal knowledge base means we guarantee a maximum of a 5-10 working day turnaround for processing referrals which will give you and your clients a clear answer quickly.
- Temple also offers contingent, deferred and structured premiums which very accurately reflect the stage the case is at, which gives the insured comfort in knowing that if the case settles at an early stage, a lesser premium will be payable.
To ensure you and your clients are properly informed about ATE insurance for these cases and professional negligence cases in general please call Matthew Pascall on 01483 514428 or via email to email@example.com.
Fraser is an underwriter within the Personal Injury, Clinical Negligence and Commercial teams.
He joined Temple in 2022 following the completion of his LLM Laws degree at University College London. The study of litigation funding and dispute resolution during his masters led to his interest in the legal insurance industry and in working for Temple.
Fraser graduated in 2021 with a First-Class LLB Law (Hons) degree from the University of Leicester. Alongside his role at Temple, he currently studies part-time at City, University of London on the Bar Vocational Studies course with the assistance of various scholarships.
Fraser’s academic background has given him a vast knowledge base in numerous areas of law, which allows him to be versatile in dealing with whatever legal issues may arise. He strives to provide support throughout the legal process through a speedy, efficient and accurate underwriting service.
Read articles by Fraser Barnstaple