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Damages Settlement ‘Not Connected’ To Alleged Breach Of Duty

Judg's gavel
24th September 2014

A High Court challenge was defeated over a claim for professional negligence by solicitors involving the sale of a commercial office premises and an alleged failure to properly advise with regards unacceptable planning conditions. The Judge ruled that the burden was on the claimant to “prove on the balance of probabilities what it would have done if non-negligent advice had been provided.”

Following the sale of a commercial office premises in Susses to developers, the claimant - who lost £1.9 million in the lengthy land sale - sued the solicitors for failing to properly draft and advise on the definition of what planning conditions would not be acceptable.

£4.4 million purchase price had been agreed subject to the granting of planning consent for residential development, which was to be sought after exchange of contracts with completion depending on planning consent with acceptable conditions being granted. Following arbitration, however, a compromise price of £2.5 million was reached because of a decline in the commercial property market at the time.

As a result, the claimant argued that the planning conditions imposed between exchange of contracts and the date of intended completion were unacceptable and therefore, they were entitled to treat the contract as over. The company claimed “loss as damages for breach of the retainer and/or professional negligence.”

“Legal not commercial issues”

The defending solicitors argued that its retainer was “limited to legal rather than commercial issues” and denied it had been negligent in drafting the agreement. Even if negligence could be proved, the claimant could not show a loss had been caused as the claimant would have sought to agree different terms given the state of the property market at the time of completion.

The defendant  further argued that the arbitration and its subsequent settlement would inevitably have occurred whether the defendant had acted in breach of its duties or not. Therefore, there is no causal link between the alleged failings of the defendant and the losses allegedly suffered by the claimant.

At the court hearing, Judge said the burden was on the claimant to prove “on the balance of probabilities” what it would have done if non-negligent advice had been given “where the result depends on what a third party would have done in a hypothetical situation...”

As the settlement was ‘not connected’ to the alleged breach of duty, the judge decided that the claim was dismissed.