Thousands of owners and investors who were the subject of either bogus or failed holiday home developments abroad will be able to recover their losses in full after a High Court ruling last month.
The decision in AIG Europe v OC320301 LLP & Ors is a blow for insurers who have argued for some years 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 £3m.
David Greene, Edwin Coe litigation partner and NLJ consultant editor says that the threat of this argument usually forces consumers into accepting low offers from the insurers.
“The court has decided, however, that the insurer’s argument is wrong and the clients of law firms are entitled to the cover of £3m each allowing them to make a full recovery of their loss. This is great news for consumers and a real blow for the insurers.
“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.”
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