Greymalkin Ltd. v Copleys (a firm)

Where damages for negligent advice about title are assessed on a diminution in value basis, the claimant cannot recover additional interest or finance charges on sums representing the property’s true value or expenditure on works merely because proper advice would have led it to avoid the transaction. The claimant must prove each claimed loss. Expenditure is recoverable only where the evidence establishes that it was wasted or otherwise caused loss. Costs that conferred a benefit, such as insurance, or that would necessarily have been incurred in any event are not recoverable.

Greymalkin Ltd. v Copleys (a firm) appealed from an order of Lawrence Collins J in a negligence claim against its former solicitors. Liability was admitted. The solicitors had failed to disclose that charges would remain on a property bought for development. The High Court awarded £45,000, calculated as the difference between the property’s value with the expected title and its value subject to the charges, together with statutory interest.

The claimant sought further compensation for interest and finance charges, professional fees, insurance, building works and project-management payments incurred before the defect was disclosed. The central issue was whether those items should be added to damages assessed by diminution in value.

The appeal was dismissed with costs assessed at £9,778.

1. Assessment of damages. The judge was entitled to assess the loss by diminution in value: the difference between the property’s value with the title the claimant expected and its actual value subject to the charges. The judgment below had found no alternative basis capable of doing justice on the evidence.
2. No additional finance charges. Once damages were assessed on that basis, it would have been contrary to principle to add interest or finance charges on the part of the consideration representing the true value of what the claimant received. Statutory interest on the diminution compensated the claimant for retaining the property after completion. The same reasoning applied to finance charges incurred for builders’ work.
3. Proof of loss. The claimant bore the burden of proving the losses claimed. The Court of Appeal would not interfere with findings that professional fees advanced the development and were not wasted; insurance costs were not a loss because the claimant received the benefit of the cover; roof, window and guttering works were expenditure that would inevitably have been incurred; and the £35,000 spent on works and payments to the project manager had not been shown to be wasted or otherwise recoverable.
4. The finding that the claimant would not have completed the purchase did not establish that every subsequent expense was wasted or caused compensable loss. The appeal therefore failed on every permitted ground.

• Court of Appeal (Civil Division): Appeal dismissed with costs assessed at £9,778.
• High Court of Justice, Chancery Division: Lawrence Collins J awarded £45,000 damages, with interest of £36,665.75 under section 35A of the Supreme Court Act 1981.