Summary

In assessing the appropriate measure of damage for loss arising from negligent legal advice, in respect of the purchase of a commercial property, the diminution in value rule could be departed from if the facts demonstrated that its application would work an injustice to a claimant, contrary to the fundamental rule in Livingstone v Rawyards Coal Co. (1880) 5 App. Cas.24.

Facts

The claimant commercial property investor (K) sought damages for professional negligence and alternatively for breach of contract from the defendant firm of solicitors (E). E accepted liability for loss arising to K from negligent legal in respect of the purchase of a commercial property for investment. E knew that K's purpose in buying the property was to acquire a secure income stream. E claimed that the proper basis for assessment of damages was that of the diminution in value of the property. K submitted that its rent loss and accumulated interest on it substantially exceeded the totality of damages that would be recoverable under the diminution in value rule, and that a different and more just method of assessment should be used.

Held

The law on the appropriate measure of damages in cases of solicitors' negligence was reviewed in Greymalkin Ltd v Copleys (a firm) (2004) EWHC 1155 (Ch) , (2004) PNLR 44 considered. It showed, inter alia, that the fact that a claimant would not have purchased a property but for the defendant's negligence did not mean that the latter was necessarily liable for all the consequences that would not have happened but for the negligence. The defendant was liable for the foreseeable consequences of the fact that the claimant purchased the property as a result of the negligence, South Australia Asset Management Corp. v York Montague Ltd (1997) AC 191 applied. The assessment of damages was ultimately a factual exercise to compensate a claimant for a civil wrong, and legal rules might have to give way to the particular facts of a case, Reeves v Thrings & Long (1993) EGCS 196 applied. Although prima facie the diminution in value rule was the appropriate one, it should not be applied in assessing the damages due in the instant case, as the facts demonstrated that its application would work an injustice to K contrary to the fundamental rule in Livingstone v Rawyards Coal Co. (1880) 5 App. Cas.24 applied.

Damages assessed.