The judge decided in favour of the company on causation, but limited the award of damages to the diminution in value of the hotel as a result of the negligent advice, which was in this case the difference in value between the hotel with a clear title and the hotel subject to the charges. The judge accepted that he could award further compensation for losses arising from the existence of the defects in the hotel's title, such as the costs of maintaining the hotel pending their resolution, but found that any such losses in this case were too speculative to be recoverable.
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*Full case details
Greymalkin Ltd vs Copleys (A Firm), 18 May 2004, High Court, Chancery Division, Judgment of Mr Justice Lawrence Collins
The result of the judge's decision on the measure of damages to be applied was that the company recovered just £45,000 on a claim for £635,218, which in the early stages it had been led to believe might be worth £1m.
The judge's figure represented the financial consequences of the information on title to the hotel being wrong. He held that the solicitors were not under a duty to advise on the wisdom of the transaction in general, but only to provide the specific information or advice the company needed in order to decide whether or not to proceed.
Had he held otherwise, the solicitors would have been responsible for all the foreseeable loss that was a consequence of that action having been taken. This would also have been more limited than all the consequences which would not have happened but for the negligence.
There is a warning here for claimants who rely upon litigation to recover compensation for situations which they find themselves in as a result of mistakes by advisers. The scope of the advice given needs to be considered against the overall transaction. Fresh advice from a new source should be sought as soon as possible, so that no irrecoverable losses are incurred.