Offer-Hoar & Ors v Larkstore Ltd & Ors

An assignment of a bare cause of action is valid where the assignee has a genuine commercial interest in enforcing the claim and the transaction does not offend the law of champerty. An assignee takes the assignor’s rights, but may recover damages assessed by reference to the loss recoverable had the assignment not occurred. A professional adviser owes a duty in respect of economic loss only where the advice was given for a known purpose, to a known recipient or ascertainable class, with reliance without independent enquiry reasonably contemplated. Physical damage to adjoining property is distinct from economic loss in the defective development itself.

The claim arose from a landslip during development works in Kent. The property owners claimed against Larkstore Limited, the freehold owner, and Bess Limited, the contractor. Larkstore brought Part 20 proceedings against Technotrade Limited, which had prepared a geotechnical report for the former site owner, Starglade Limited.

The court determined three preliminary issues: whether Starglade’s later assignment enabled Larkstore to recover; whether Technotrade owed duties to the neighbouring property owners; and whether it owed duties to Larkstore. The central questions concerned champerty, the recoverability of assigned claims, and the scope of liability for negligent professional advice and physical damage.

1. Assignment. The assignment was valid. Larkstore had a genuine commercial interest in enforcing rights arising from the report, notwithstanding the agreement to share recoveries. The principle stated in Trendtex Trading Corporation and Another v Credit Suisse [1982] AC 679 was applied.
2. An assignee cannot recover more than the assignor could have recovered, but that principle protects the debtor and does not create a legal black hole in which the wrongdoer escapes liability. The approach in Dawson v Great Northern & City Railway Company [1905] 1 KB 260, GUS Property Management [1982] SLT (HL) 583 and Linden Gardens Trust Limited v Lenesta Sludge Disposals Limited 57 BLR 57 was accepted. Larkstore could recover contractual damages, with repair and stabilisation costs relevant to assessment. No tort cause of action had accrued to Starglade because the damage occurred after the transfer.
3. Duty to Larkstore. Applying the principles in Caparo Industries v Dickman [1990] 2 AC 605 and Smith v Bush [1990] 1 AC 831, Technotrade did not owe Larkstore a duty in respect of economic loss. Technotrade had not known of Larkstore or of any ascertainable class of later developers, and could not reasonably have contemplated that the report would be repeatedly reused without further investigation.
4. Technotrade did owe a duty in relation to physical damage to the adjoining properties. Such damage was recoverable and constituted the same damage for which Larkstore might be liable, although the causes of action differed. The existence of nuisance or rights of support did not exclude a concurrent duty of care where physical damage had occurred.
5. Accordingly, preliminary issue 1 was answered yes for contractual loss only; issue 2 was answered yes; and issue 3 was answered yes for physical damage to adjoining property but no for economic loss.