Mitigation: has the loss been reduced in a professional negligence claim?

1 April, 2016
by: Cripps Pemberton Greenish

 

Planning restriction

 

The recent professional negligence case of Bacciottini and another v Gotelee and Goldsmith (a firm) [2016] EWCA Civ 170 serves as a reminder to carefully consider the correct measure of loss and any potential mitigation of loss when pursuing a professional negligence claim.

The Claimants’ solicitors failed to advise them that the property the Claimants were purchasing was subject to a planning restriction. However, once the property had been bought and the restriction was discovered, the Claimants successfully applied to have the restriction removed.

The Claimants sought to recover £100,000 in damages as a result of the negligence. £100,000 was the difference in the value of the property at the time of the purchase with and without the planning restriction. The Claimants argued that, had they been aware of the planning restriction, they would have sought a reduction in the purchase price.

However, the court of appeal awarded the Claimants damages of just £250 (which was the cost of the application to remove the planning restriction) on the basis that the Claimants had effectively mitigated their loss.

Although the reduction in value (the capital loss) is often the appropriate basis of an award for damages in professional negligence cases, it is not always the case and should not be applied mechanistically. In this instance, to award the Claimants £100,000 for a problem that cost them only £250 to put right, would have overcompensated them for the loss.

The Claimants were, in any event, under a duty to mitigate their loss and the steps required to do so in this case were not particularly onerous. As Davis LJ commented:

‘In my judgment the [Claimants] were indeed under a duty to take steps to seek to remove the restriction. To do so was not out of the “ordinary course of things”: to the contrary. This was not equivalent to, for example, having to engage in lengthy, costly and uncertain litigation. On the contrary, the [court at first instance] found as a fact that there was as at May 2007 a “very high” likelihood that an application to lift the restriction would be accepted (and as was borne out by events).  He found as a fact that the step of applying to lift the restriction – a step which the appellants had been professionally advised to take – was a “simple” one.  He found as a fact that such a procedure was “simple, obvious and cheap”.  There is no basis whatsoever for interfering with those findings of fact.’

 

For more information, see Cripps Pemberton Greenish’s brief guide to professional negligence claims or contact one of our team.