Negligent advice — Mitigation of loss — Causation — Barrister negligently advising landlords that lessee entitled to new leases — Proceedings compromised and leases granted — Whether compromise amounting to failure to mitigate loss — Claim dismissed
The defendants were, respectively, a firm of solicitors and a barrister who had advised the claimants in respect of the leases of three flats in a building of which they owned the freehold. Upon expiry of the leases, the lessee claimed the right to new leases pursuant to section 42 of the Leasehold Reform, Housing and Urban Development Act 1993. Although the claimants initially disputed that right by way of counternotices, proceedings were compromised on the basis that these were of no effect, and the lessee was entitled to new leases of two of the flats. Subsequent proceedings, in which the lessee contended that new counternotices served by the claimants were also invalid, were settled, with the claimants agreeing to grant long leases of the two flats for a premium of £190,000 each.
The claimants brought negligence claims against the defendants. The second defendant admitted negligence in having failed to advise the claimants that the lessee had no right to acquire new long leases of the three flats, because each had been granted for a term of less than 21 years and, therefore, did not constitute qualifying lease for the purposes of the 1993 Act. On the issue of damages, however, the second defendant contended that the claimants had failed to mitigate their loss. He submitted that they should not have compromised the claims, but should have allowed a leasehold valuation tribunal to determine the premium to be paid by the lessee. Had they done so, he argued, the claimants would have obtained the full market value for their interest in the flats, and would not then have suffered the loss arising from the negligence complained of.
Held: The claim was dismissed.
The difficulties that arose over the counternotices could not be said to be a reasonable attempt to cope with the consequences of the second defendant’s breach of duty. It was those difficulties that had led the claimants to settle the claims, not the second defendant’s negligence in conceding the lessee’s entitlement. Those were matters that would have arisen irrespective of whether the correct advice had been given. It followed that, in calculating the claimants’ loss, it was insufficient to give credit to the second defendant merely for the £190,000 obtained for the two flats. The proper figure for which credit had to be given was the figure at which the LVT would have valued the flats.
Mark Wonnacott (instructed by Davenport Lyons) appeared for the claimants; Andrew PD Walker (instructed by Weightmans) appeared for the second defendant. The first defendant did not appear and was not represented.
Sally Dobson, barrister
