Bacciottini & Anor v Gotelee and Goldsmith (A Firm)

In a professional-negligence claim concerning a defect in acquired property, the normal date-of-purchase diminution-in-value measure is only a convenient starting point. It must yield to the compensatory principle where later events show that no loss remains. A claimant must take a simple, inexpensive and highly likely remedial step. If the claimant in fact takes it, the resulting benefit is brought into account even if the step was not strictly required, provided it arose from and was sufficiently connected with the breach rather than being a wholly independent transaction. The inquiry is fact-sensitive. Damages compensate actual loss, not a theoretical overpayment which a remedial step has eradicated.

The appellants bought a residential property after the respondent solicitors negligently failed to advise them of a planning condition restricting its independent residential use. Liability was admitted. The trial judge found that the condition reduced the property's purchase-date value by £100,000, but that there had been a very high prospect of removing it.

After discovering the condition, the appellants applied successfully for its removal at a cost of £250. The High Court awarded that sum only, holding that the application mitigated and eradicated any overpayment loss. The appellants appealed, contending that they were entitled to the purchase-date diminution in value and that their later planning application was an independent development decision.

The central issue was whether the subsequent removal of the planning condition had to be taken into account when assessing damages for the admitted negligent advice.

1. Appeal dismissed unanimously. The judge reached the correct result. Applying the compensatory principle in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, the appellants suffered no continuing diminution loss once the planning condition was removed. They therefore required no compensation beyond the cost of its removal.

2. Philips v Ward [1956] 1 WLR 471 did not impose an immutable rule that a capital loss is fixed at the date of purchase. Its diminution-in-value measure is a convenient starting point, but must not be applied mechanically. Subsequent events may be considered where necessary to assess loss realistically. The court rejected any general rule that such events are irrelevant in a so-called capital-loss case.

3. The appellants were under a duty to seek removal of the condition. The trial judge was entitled to find that this was a simple, obvious and cheap step, professionally advised, and one with a very high prospect of success. It was ordinary mitigation rather than a burdensome, speculative or independent venture.

4. Further, even if no duty to mitigate had arisen, the appellants actually took the step and thereby avoided their putative loss. Under the British Westinghouse principle, that benefit had to be brought into account. The relevant inquiry is whether the remedial act arose out of, or was sufficiently connected with, the breach. The successful application was the reasoned response to the undisclosed restriction and was not a collateral transaction independent of the negligence.

5. The authorities concerning later repairs or transactions did not compel a different result. Whether a later benefit is collateral depends on the facts. Here, the elapsed time was immaterial: part of the delay resulted from the appellants initially combining the application with other planning proposals, and the free-standing application was granted promptly.

6. The court did not uphold the trial judge's speculative reasoning about hypothetical negotiations with the vendors. That reasoning did not affect the conclusion that the only recoverable loss was the £250 cost of removing the condition.

• Court of Appeal (Civil Division) — The appeal was dismissed. The court upheld the award of £250 only.

• High Court of Justice, Chancery Division — HH Judge Simon Barker QC held that the appellants' successful application to remove the planning condition mitigated and eradicated their claimed diminution-in-value loss.