Talisman Property Co (UK) Ltd v Norton Rose (A Firm)

In a professional negligence claim involving a lost commercial opportunity, damages are assessed by identifying the real chance lost and valuing it according to the evidence. The claimant must prove its own hypothetical conduct on the balance of probabilities. Where the outcome depended on a third party, the court assesses the probability of that outcome in percentage terms.

The court may consider events occurring after the breach where that is necessary to assess the actual loss. It need not apply an artificial set-off for a merely speculative worse outcome. A landlord’s service of an opposed notice may cause loss by removing the opportunity to negotiate on the basis that statutory compensation is not payable.

Talisman acquired the freehold reversion of commercial premises occupied by Wyko Industrial Services Ltd, although the lease was held by its dormant group company, Lewis DMR Ltd. Talisman instructed Norton Rose to serve an unopposed notice under the Landlord and Tenant Act 1954, but Norton Rose served an opposed notice relying on the redevelopment ground.

The negligence was admitted. Wyko and Lewis DMR later discontinued their renewal proceedings, Wyko vacated, and statutory compensation was set off against dilapidations. Talisman claimed compensation for the loss caused by the opposed notice, including the lost chance of avoiding or reducing the compensation and the loss of a beneficial new lease.

The principal issues were the identity of the tenant, whether Wyko had become tenant by estoppel, and the proper assessment of loss of chance.

1. Tenant. Section 42(2) of the Landlord and Tenant Act 1954 treated occupation and business carried on by an associated group company as occupation and business by the tenant. The section did not require the named tenant to retain possession or carry on business. Lewis DMR therefore remained entitled to statutory protection and could apply for a new tenancy.

2. Estoppel. There had been no assignment or surrender and re-grant by deed. The relevant doctrine was estoppel by representation, requiring representation and detrimental reliance. Wyko’s occupation and payment of rent were equivocal because the lease permitted occupation by an associated company. The letter stating that the premises were leased by Wyko was not an unequivocal representation of an assignment, and no detrimental reliance was established. Lewis DMR remained the tenant.

3. Loss of chance. Applying Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602, Talisman had to establish a real chance, its own hypothetical conduct on the balance of probabilities, and the probability of a favourable third-party outcome. The court was entitled to consider events known by trial and rejected an unsupported set-off for the chance that Talisman might have been worse off.

4. The opposed notice gave Wyko a vested right to compensation and deprived Talisman of the opportunity to argue that no compensation was payable. Although a new tenancy was unlikely, there was a real chance that Wyko would have accepted a reduced set-off to compromise the litigation risk. That chance was assessed at 30 per cent of £179,000, producing damages of £53,700, plus interest from 26 March 2004.

This was a first-instance assessment of damages. The judgment records that Lindsay J refused Norton Rose’s earlier application for summary judgment and ordered the claim to proceed to trial.