Aylwen v Taylor Joynson Garrett (A Firm)

Where solicitors’ negligence causes the loss of a replaceable property interest, damages are ordinarily assessed by the asset’s market value at the relevant breach date. Development potential forms part of that value. A claimant who had funds to reinvest cannot ordinarily claim later market gains from retaining the particular property. The duty to mitigate arises only after the recoverable loss has been identified.

On an appeal, fresh evidence and amendments advanced to avert summary dismissal remain subject to the Ladd v Marshall principles, adapted where necessary to the summary procedure. The overriding objective does not displace the need for finality. A late tax-loss amendment may be refused where the proposed duty is not tenable on the available documents. The statutory issues under section 35 of the Limitation Act 1980 need not be decided where the amendment fails in any event.

The claimant alleged that her solicitors negligently failed to protect and register her interest in 39 Green Street, to transfer mortgage obligations, and to inform her of possession proceedings. The mortgagee sold the property in 1993. The claimant alleged losses including payments made in relation to the property, lost development profit, alternative accommodation costs, and proposed United States tax losses.

Deputy Master Weir dismissed the defendants’ application to end the claim and permitted an amendment. Lloyd J allowed the defendants’ appeal and entered summary judgment for them. The claimant appealed, seeking also to adduce further evidence and to amend her pleading to add tax-loss claims. The central issues were the proper measure of loss, the admissibility of fresh appellate evidence, and whether the proposed amendment should be permitted.

1. Appeal dismissed unanimously. Lady Justice Arden gave the principal judgment, with Lord Justice Kay and Lord Justice Peter Gibson agreeing. The claimant had no real prospect of recovering the alleged later increase in the property’s value.

2. The lost asset was the claimant’s beneficial interest in the property. Its value, including its development potential, was represented by its market value when the loss crystallised. The claimant could not obtain a value fixed at a later date of her own choosing by asserting that she would have retained and developed the property. On the facts, she had funds available to reinvest and no basis was shown for treating the property as irreplaceable. The court therefore applied the breach-date measure of loss.

3. The court rejected the contention that the defendants first had to plead and prove a failure to mitigate. Mitigation becomes relevant only once the legally recoverable loss has been ascertained. The alternative-accommodation claim could not assist because the cost of retaining the property’s substantial borrowing or tying up equivalent capital would have exceeded the claimed accommodation cost.

4. Fresh evidence on appeal was refused. The court applied the Ladd v Marshall [1954] 1 WLR 1489 conditions as relevant under the CPR, consistently with Hertfordshire Investments Ltd v Bubb [2000] 1 WLR 2318. The evidence was available below, lacked sufficient explanation and credibility, and would not have had an important influence on the result. The same disciplined approach applied to amendments first sought on appeal to avert dismissal under CPR provisions for striking out or summary judgment.

5. The proposed tax-loss amendment was also refused. The documents did not establish an assumed conveyancing duty to secure the claimed United States tax outcome, and showed that the relevant deadline could not have been met. The court therefore did not finally determine the further issues under section 35 of the Limitation Act 1980. The appeal was dismissed with costs, subject to detailed assessment.

• Court of Appeal (Civil Division): The claimant’s appeal was dismissed, and her applications to adduce further evidence and amend her particulars of claim were refused: [2001] EWCA Civ 1171.

• Chancery Division (Lloyd J): On 20 December 2000, Lloyd J allowed the defendants’ appeal from the deputy master and entered summary judgment for the defendants on the whole claim.

• Deputy Master Weir: On 17 August 2000, the deputy master dismissed the defendants’ application to dismiss the action and permitted amendment of the particulars of claim.