Herrmann & Anor v Withers LLP

A solicitor is not negligent merely because a court later rejects a reasonably arguable construction. Where the legal issue is difficult and the client’s decision materially depends on it, competent advice must identify a substantial risk that a court may take a different view. An unequivocal assurance can therefore be negligent even though the preferred construction is defensible. For mitigation, the defendant bears the burden of proving that a reasonable step would have reduced loss; the standard is practical and not exacting. Damages are limited to the loss that would have remained after mitigation, including reasonable costs of taking the mitigating step. Litigation costs incurred in mitigation are not automatically confined to the standard basis. A contract for professional advice may also justify modest damages for loss of amenity and disappointment where pleasure, relaxation or peace of mind is a major or important object, in addition to distinct financial loss.

The claimants bought a London house after the defendant solicitors advised that it carried statutory garden rights under the Kensington Improvement Act 1851. Earlier proceedings established that the Act did not apply to the property. The claimants therefore alleged that the solicitors had negligently given unequivocal advice and failed to warn of the risk of a contrary construction.

The court considered the standard of care, causation, mitigation, valuation, recovery of legal costs and damages for loss of amenity, anxiety and disappointment.

Claim succeeded. The claimants were entitled to damages and related costs.

1. Negligence. A solicitor is not negligent merely because a court later adopts a different interpretation, provided the advised construction was reasonably arguable. However, the Kensington Improvement Act 1851 was difficult to construe, the conveyancing information was equivocal, and there was a substantial risk that the property did not qualify for statutory garden rights. The solicitors should have warned the purchasers of that risk. Their unequivocal advice was negligent. The approach was analogous to Queen Elizabeth’s Grammar School Blackburn Ltd v Banks Wilson [2001] EWCA Civ 1360, [2002] PNLR 14.
2. Causation and mitigation. The evidence established that, if properly warned, the claimants would not have proceeded with the purchase. The defendant bore the burden of proving failure to mitigate. The standard was not demanding, but the claimants should reasonably have pursued a licence under the Open Spaces Act 1906. Such a licence would substantially have restored the practical and market benefits of garden access and could have been pursued alongside their statutory claim.
3. Damages and costs. Damages were limited to the loss that would have been suffered had the claimants taken the licence. That included the licence premium and reasonable legal costs of negotiating it. Legal costs incurred in reasonable mitigation were recoverable on the indemnity basis. The court declined to follow the approach in British Racing Drivers’ Club Ltd v Hextall Erskine & Co [1996] PNLR 523, because the proportionality requirements in CPR 44.4 had changed the relationship between standard and indemnity costs.
4. Non-pecuniary loss. Applying Farley v Skinner [2001] UKHL 49, [2002] 2 AC 732, the retainer had a major or important object of securing pleasure, relaxation or peace of mind. Modest damages for loss of amenity and disappointment were therefore recoverable in addition to diminution in value. The separate pecuniary and non-pecuniary losses did not constitute double recovery.
5. Order. The court awarded £104,600, interest on the additional £65,000, the claimants’ legal costs up to 31 May 2009 on the indemnity basis, and appropriate statutory interest.

The judgment records earlier proceedings against the Borough and the Garden Committee. Sir William Blackburne held on 9 July 2010 that the Kensington Improvement Act 1851 did not apply to the property. The present negligence proceedings were issued on 23 November 2010 and were determined at first instance by Mr Justice Newey.