In his last blog, Jamie Apted provided an overview of the test to be applied when determining whether a professional was negligent. Later on this month, Jamie will be focussing on negligence claims against solicitors. This blog, on the other hand, will look at what actually needs to be established to recover the losses complained of.
The short answer, annoyingly, is that it depends. It depends on what lawyers describe as “the remoteness and foreseeability” of those losses. Courts will only award losses that can be said to have been in the parties’ mind at the time the contract or working relationship was entered into.
What does this really mean? As an illustration, let’s look at a case where you instruct solicitors to act for you in a conveyancing transaction involving a five acre plot of land. The lawyers, negligently, fail to convey the entire plot of land and leave out an one acre strip of land at the north edge of the plot valued at £7,000. If later on you are unable to recover that strip of land, then you are able to claim against your solicitors for the value of the one acre strip. This is because the amount of £7,000 would have reasonably been in both parties’ minds as a likely loss if the entire plot of land was not properly conveyed to you. This type of loss is referred to as a direct loss.
However, if a year down the line the one acre strip of land is used as a set for a major Hollywood blockbuster and the owner of the land (who should have been you had your lawyers not been negligent) is paid thousands of pounds for allowing the film crew to film on it, then it is unlikely you would recover the money you would have earned from the film crew. That is because it cannot be said to have been reasonably foreseeable at the time of the conveyancing transaction that the plot would be used in a year’s time as a set for a major Hollywood film generating a nice income for the land owner.
Having said that, if at the time of purchasing the 5 acre plot of land (i) you knew that a Hollywood film crew was interested in filming on that specific one acre plot of land and (ii) you made your solicitors aware of that, then it is quite possible that you will recover those losses too. That is because both you and your solicitors could be said to have reasonably foreseen that if that one acre piece of the land is not transferred to you then you will lose out on the funds generated from allowing the film crew use it. This type of loss, flowing from you not having the one acre piece of land, is referred to as consequential loss.
As the above example illustrates, foreseeability depend on what the parties knew or could reasonably be said to have known or contemplated as a likely loss if the transaction was not carried out as planned. Each case will be decided on their facts but usually the more far fetching the losses are, the less likely they are to be recovered. It is also worth mentioning that proving consequential losses can be quite a hard and costly exercise. By way of illustration, while not every property business was bound to fail during the economic crash, it definitely will be an uphill task proving that a property business would have gone off to make large profits between 2008 and 2013 while a lot of similar property businesses were going under. It is not to say it will not be possible but simply that it will not be easy.
It is sometimes also possible to advance claims for solatium (compensation) for inconvenience, anxiety and mental distress caused by the negligence. Whether solatium is considered remote, and as a result recoverable, will largely depend on the facts of the case, however, the general approach appears to be that solatium is less likely to be awarded in purely commercial transactions. Furthermore, the amount of solatium awarded does not usually tend to be more than a few thousand pounds.
If you believe you may have a claim arising from professional negligence, please contact our Dispute Resolution team on 0131 226 8200.