Negligence – Breach of duty – Measure of damages – Defendant solicitor admitting negligence in negotiating commercial lease – Claimants assigning lease – Whether defendant’s duty extending to reasonable consequences of claimants extrication from predicament – Whether claimants establishing sufficient causal link between negligence and loss – Claim allowed
Since 1991, the claimants had carried on a business as tree surgeons and landscape gardeners from a succession of premises held on licence. By 1997, they had outgrown their premises and identified a more suitable site. They instructed the defendant firm of solicitors to act for them in negotiating a commercial lease of the premises.
The premises, which consisted of around 3,300 m2, comprised a long thin strip of land near a railway with access at one end. The lease was to be for 25 years, subject to five-year rent reviews, the rent to be fixed in a sum for which the premises might reasonably be let in the open market.
By clause 4.31 of the lease, the tenant was obliged to perform and complete certain specified new works. In the course of negotiations, the claimants indicated that they wished to perform further works for the purpose of their business. The landlords agreed but required them to be included in clause 4.31 as new works. The effect of that requirement was that the additional items of work became an obligation that the claimants were obliged to perform under the lease, and the improvement in the land effected as a result of those works fell to be reflected in the rent review. The defendant obtained the claimants’ agreement to that condition but had negligently failed to give any advice to the claimants about its effect, and did not object to it.
When they became aware of the problem, the claimants assigned the lease to a third party and moved to smaller premises. They claimed damages against the defendant for negligence, which was not disputed. It was agreed that the appropriate measure of the claimants’ loss was the cost of extricating themselves from their predicament, together with the wasted costs incurred in a venture that had been aborted at an early stage as a result of the defendant’s negligence. However, the defendant contended that the claimants had suffered no loss since the real reason for their actions was the underlying performance of their business, which made the tenancy unviable, whatever its rent review terms, so that the losses would have been incurred regardless of the defendant’s negligence.
Held: The claim was allowed.
The mere act of extricating oneself by taking reasonable steps from a predicament did not break the chain of causation. Accordingly, if the consequences of flowing from that course of action were reasonably foreseeable, they were in principle recoverable. However, that could not undermine the primary principle that there had to be a causal link between the loss suffered and the fault giving rise to the claim. Any other conclusion would place the claimants in a better position than they would have been in had the negligence not occurred, because they would be compensated for a loss that they would still have suffered even if the defendant had not been negligent: South Australia Asset Management Corporation v York Montague Ltd [1996] 2 EGLR 93; [1996] 27 EG 125 considered.
On the evidence, there was a causal link between the defendant’s negligence and the losses suffered by the claimants in abandoning the lease and moving to smaller premises. It was plain that the cause of the decision to assign the lease and abandon that size of premises with that level of security had been triggered by the news concerning the rent review clause and the unexpected high rent that would be payable from the time of the first five-year rent review resulting from the defendant’s negligence.
Robert Clay (instructed by DMH Stallard) appeared for the claimants; David Halpern QC (instructed by Mills & Reeve) appeared for the defendant.
Eileen O’Grady, barrister
