Bacciottini & Anor v Goldsmith

A solicitor’s negligent failure to provide material information in a property transaction does not automatically make the client’s overpayment the measure of loss. The relevant question is the position in which the client would probably have been if properly informed, including the negotiations that would then have taken place.

For mitigation, the relevant act must have a direct causal connection with the breach. An act merely triggered by the breach, but resulting from an independent decision, is not necessarily mitigation. The question is fact- and context-sensitive. Where the claimant’s conduct is directly caused by the breach, a collateral reason for the same conduct does not necessarily break the causal link.

The claimants purchased a property after their solicitors negligently stated that an existing planning consent was free from adverse conditions. The property was in fact subject to a condition restricting occupation of the converted granary as ancillary accommodation to the main dwelling.

The solicitors admitted negligence but disputed causation and quantum. The claimants sought diminution in value, additional stamp duty land tax, mortgage interest and related expenses. After discovering the condition, they applied for it to be lifted, and the application succeeded. The central issues were the proper measure of loss, whether the application was an act of mitigation, and whether any recoverable loss remained.

1. Nature and purpose of the duty. The solicitors’ duty, as the claim was presented, was to provide information which would have enabled the claimants to decide whether to proceed with the purchase and, if so, on what terms. The duty did not guarantee that they would avoid paying more than the property’s unrestricted value. It gave them the opportunity to negotiate with knowledge of the material facts.
2. Measure of loss. Damages are compensatory. The proper comparison was between the actual transaction and the transaction that would probably have occurred had the claimants been informed. The evidence showed that informed negotiations were more likely than either a purchase at the unrestricted value of £450,000 or withdrawal from the transaction. An award of the full alleged overpayment would therefore overcompensate the claimants.
3. Mitigation and causation. The authorities establish no universal rule for causation in mitigation. The court must examine the facts and context closely. Conduct caused by the wrongdoing is mitigation; conduct merely triggered by the wrongdoing but resulting from an independent decision is not. The application to lift the condition was directly caused by the solicitors’ negligence. The claimants had no realistic alternative if they wished to continue occupying and realise the value of the property. The development project was a collateral reason, but it did not cause the application.
4. Outcome. The lifting of the condition eradicated the claimed overpayment, insofar as that was the correct measure of loss, and the special damages claim also failed. No evidence justified an award exceeding £250.