It is well-established law that in order for a claim of negligence to succeed, three elements must be demonstrated:
- The defender owed a duty of care to the pursuer, and has breached their duty of care.
- The pursuer has suffered a demonstrable loss.
- The defender's breach of duty was causative of the loss suffered by the claimant.
A claim will not be successful simply because a breach of professional duty has been held. As the recent case of Taray Investments Limited v Gateley Heritage LLP [2020] EWHC 716 demonstrates, proving a causative link remains a crucial task for a pursuer.
Background
Taray Investments Limited and Bellevue Homes Limited (the "Claimants", using the English terminology) entered into a joint venture in November 2012 with the intention to purchase the site of Clare Parsonage in London (the "Site"). The Claimants instructed Gateley Heritage LLP (the "Defendant") to act for the joint venture in respect of the acquisition of the Site.
The Defendant prepared a report on title for the Claimants which failed to identify that part of the Site encroached upon a footway. Therefore, for any development on the Site to proceed, a stopping-up order to extinguish the highway rights over the footway was necessary. The issue was only discovered several months later.
The timescale for obtaining a stopping-up order could have been in the region of 12 months. This added to the Claimants' funding difficulties and, crucially, Bellevue Homes Limited refused to provide the 10% deposit required for the purchase of the Site in the knowledge that the deposit could ultimately have been tied up for a year, with no guarantee that the order would then be granted. The transaction thereafter quickly fell apart.
Action
Bringing a claim in the High Court of England and Wales, the Claimants sought damages of £600,000 on the basis that had the Defendant highlighted the issue within the report on title, the Claimants would have had sufficient time to obtain a stopping-up order, thereby allowing them to negotiate a deal with the Site vendor. The Claimants alleged that, as a result of the Defendant's negligence, they lost the opportunity to purchase and develop the Site. The Defendant did not dispute that there had been a breach of duty but argued that, even had the report on title identified the issue with the footway, the Claimants would not have had the financial resources to proceed with the transaction.
Mrs Justice Tipples heard evidence from a number of witnesses of fact and several expert witnesses. She found that the Claimants would not have incurred any costs in respect of obtaining a stopping-up order nor did she accept that the Claimants would have persuaded the seller of the Site to enter into some form of exclusivity agreement with them while the stopping-up order was obtained. Further, she did not consider that the Claimants had demonstrated they would have taken the steps necessary to acquire and develop the Site as they did not have the financial means to do so. Mrs Justice Tipples noted that the prospect of the Claimants successfully acquiring and developing the Site was "fanciful in the circumstances".
Analysis
The decision in this case demonstrates that even where breach of duty is clear-cut or even conceded, establishing causation remains an essential element of a claim in order to succeed. Consider whether the loss would have been incurred regardless of the breach. Even the most obvious instances of negligence require a clear and demonstrable causal link with the loss suffered, otherwise the claim will fail.
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