Court of Appeal upholds £250 damages award over law firm’s negligence

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22 March 2016

Court of Appeal: appellants suffered no loss

Court of Appeal: appellants suffered no loss

Two former clients of Suffolk law firm Gotelee who were only awarded £250 in damages after a finding of negligence have failed in their bid to increase this to £100,000.

The firm – then called Gotelee & Goldsmith – admitted that it negligently failed to advise the developer claimants that there was a planning restriction attached to a £600,000 property they bought which stopped its residential use.

However, the claimants successfully removed the restriction, and after they sued Gotelee, HH Judge Simon Barker QC awarded them just £250 in damages. This was the cost of the application to the local authority to remove the restriction.

On appeal, the claimants said the judge should have awarded them £100,000, representing the difference between the values of the property with and without the restriction.

Giving the judgment of the Court of Appeal in Bacciottini & Anor v Gotelee and Goldsmith (A Firm) [2016] EWCA Civ 170, Lord Justice Davis observed: “Since the judge ordered the appellants to pay the great amount of the respondent’s costs, it may be that this appeal has in reality become as much about costs as about damages.”

He said it turned out there was “rather less to this case than possibly first meets the eye and which doubtless prompted leave to be given on the papers by the single judge”.

Davis LJ explained: “By reason of the subsequent removal of the restriction, the appellants have suffered no loss and there is nothing in respect of which they require to be compensated. That is the nub of it.”

He rejected the notion that the loss was fixed on the date the property was purchased: “There is no reason why subsequent events necessarily should be precluded… Consideration of issues such as mitigation and avoidance of loss necessarily will be geared to events occurring or steps taken after the date of breach and after the cause of action has accrued…

“I would myself regard the present case as an illustration of ordinary principles of mitigation. In my judgment the appellants were indeed under a duty to take steps to seek to remove the restriction.”

And even if there had not been a duty to do it, Davis LJ added, “the fact remains that they did take such a step, thereby avoiding their putative loss”.

The court rejected the argument that this action was an independent decision pursued for the appellants’ own benefit and taken at their own risk, and was not impressed by the argument that the appellants had been deprived of the opportunity to acquire the property, with the restriction, at a reduced price and then have it removed, thereby increasing the value of the property and generating a profit.

Davis LJ said there was no firm evidence that the claimants would have done this, that they would have been able to secure a mortgage, or what the vendors would have done had the problem been raised with them.

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Legal Futures Blog

Joint (ad)ventures in the legal sector

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We all know that nothing in life is certain. As the actor, director and philosopher Clint Eastwood once said: “If you want a guarantee, buy a toaster.” He also said he’d tried being reasonable and didn’t like it. They should teach this kind of philosophy in law school. One thing in life is reasonably certain though. If you’re a law firm worth your salt, at some point you will be approached by another entity (most probably a work introducer) with a whizzy idea to ‘partner’ with you to ‘help you accelerate your growth’. In commercial speak this means, ‘we’d like to keep feeding you work but we’d also like to share in your profits’. The arrangement may be pitched to you as a joint venture – a win-win no less.

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