Joyce v Bowman Law Ltd

Consequential loss based on a lost development opportunity may be recoverable in a professional negligence claim even where no diminution in the property’s value is claimed. The claimant must establish that the loss falls within the second rule in Hadley v Baxendale, including actual knowledge of special circumstances making the additional loss foreseeable. A loss-of-chance claim requires a real and substantial, rather than speculative, chance. The court assesses the chance by reference to the relevant contingencies, allowing a less mathematical approach where factors overlap. A claimant must give credit for a profitable alternative development reasonably available as mitigation.

Bowman Law Limited admitted negligence in failing to identify that a contractual option was exercisable by the vendor rather than by Paul Joyce. Mr Joyce claimed damages for the lost opportunity to acquire adjoining land and develop the combined site for profit.

The claim raised issues concerning recoverability of consequential loss, Bowman’s knowledge of Mr Joyce’s development intentions, the real and substantial chances of obtaining the option, planning permission and funding, the appropriate valuation date, and mitigation.

1. Recoverability of consequential loss. The absence of evidence that the property was worth less without the buyer’s option did not prevent recovery of consequential loss. The diminution-in-value approach was not mechanically applicable. Loss based on the proposed development was recoverable in principle if it fell within the second rule in Hadley v Baxendale: the loss had to be a probable result of breach in circumstances known to the defendant.
2. Special knowledge. Bowman knew, or ought to have known, that Mr Joyce intended to develop the property for profit and that acquiring the Additional Land was important to that plan. It was unnecessary for Bowman to know the precise design, dimensions or scale of the proposed development.
3. Loss of a chance. Applying Allied Maples v Simmons & Simmons, Mr Joyce established real and substantial chances of obtaining a suitable buyer’s option, exercising it, obtaining permission for a substantial development and obtaining finance. The chances were assessed at 85%, 100%, 40% and 85%. Because the assessments were conditional and incorporated overlap between the contingencies, the court calculated a combined chance of 29%.
4. Mitigation and quantum. Mr Joyce could reasonably have pursued the smaller January 2006 development without the Additional Land. He had to give credit for the £245,000 profit available from that course. The recoverable additional profit was therefore £130,000, multiplied by 29%, producing £37,700.
5. Judgment was entered for Mr Joyce for £37,700, with interest from 30 June 2008. The rate of interest and costs were left for further argument.