High Court decides in favour of the Consumer

The decision by the High Court on Friday is being hailed by consumer champions as a substantial victory for the clients of law firms advising on the purchase or investment in holiday homes abroad. The decision will affect thousands who were the subject of either bogus or failed developments in Spain, Italy and elsewhere. In the AIG Europe v OC320301 LLP & Ors AIG, insurers to many law firms, argued that because clients paid deposits to the same solicitor for similar transactions the claims should be aggregated into one claim and thus subject to a limit of cover which would have paid back clients a small proportion of the deposit. The High Court concluded that this was wrong and the clients were each entitled to the minimum cover for their individual claims.

David Greene, Edwin Coe litigation partner commented: “This is great news for consumers and a real blow for the insurers; the clients of law firms which advised on the purchase of the holiday homes in European resorts. It’s so often the classic tale of the dream home turning into a nightmare for purchasers. In the Giambrone case, in which the Court has recently found the lawyers liable to its clients, the developments being sold turned out to be the subject of a conspiracy between the IRA and the Calabrian mafia.”

“For some years the insurers such as AIG have been arguing that clients of law firms which breach their obligations to them are only entitled to a small proportion of their loss because the claims are all aggregated within the minimum cover of £3 million. Usually the threat of this argument forces consumers into accepting low offers from the insurers. The Court has decided, however, that the insurers argument is wrong and the clients of law firms are entitled to the cover of £3 million each allowing them to make a full recovery of their loss.”

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