Funnell & Anor v Adams and Remer (A Partnership)

Damages for negligent professional advice ordinarily aim to restore the claimant to the position that would have existed without the breach. Where negligence places a claimant in a financial predicament, a reasonable attempt to escape it does not break causation. Losses resulting from that attempt remain recoverable if reasonably foreseeable and causally linked to the negligence.

The claimant must nevertheless prove that the loss would not have occurred without the breach. Damages cannot compensate for losses which would have been suffered even if correct advice had been given. Wasted expenditure may be recovered, subject to credit for benefits received and deductions reflecting benefits obtained during the period of use.

The claimants, operators of a tree surgery and landscaping business, sued their former solicitors for admitted negligence in connection with a 25-year commercial lease. The solicitors failed to advise that works intended as optional improvements had been included as tenant obligations, causing the improvements to be reflected in later rent reviews.

The claimants assigned the lease before the first rent review and claimed the costs of entering, performing works under, and escaping from the lease, less the assignment premium. The principal issues were the proper measure of damages, causation, the appropriate rent valuation, and the recoverability of individual heads of loss.

1. Measure and causation. The conventional measure was the difference in value between the lease as granted and the lease that should have been obtained. In the circumstances, however, the parties properly treated the reasonable costs of extrication and wasted expenditure as the appropriate measure, applying the principles discussed in South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191.
2. A reasonable attempt to escape a predicament caused by negligence does not break the chain of causation. The resulting loss is recoverable where it was reasonably foreseeable. That principle does not remove the requirement for a causal link. The claimant cannot recover loss which would have occurred even without the negligence.
3. The assignment was a reasonable response to the unexpectedly high rent produced by the defective rent-review provision. The evidence established that the rent-review problem, rather than the general performance of the business, triggered the decision to leave. Had the lease been properly drafted, the claimants would probably have continued with it despite a rent of approximately £12,600 per annum.
4. The proper rent at the first review, on the assumption that the additional works were not rentalised, was approximately £12,600 per annum. The court preferred the claimants' valuation evidence and the evidence of transactions concerning the actual site.
5. The recoverable loss comprised wasted expenditure and reasonable costs of assignment and removal, subject to appropriate deductions. Expenditure on works was discounted by 12.5 per cent to reflect the benefit obtained during the first four years. Claimed profit margins, unsupported managerial time, speculative material losses, and duplicated interest were excluded.
6. Judgment was entered for the claimants in the sum of £44,960.39, after crediting the £45,000 assignment premium.