Taray Investments Ltd & Anor v Gateley Heritage LLP

In a professional negligence claim involving a lost property-development opportunity, the claimant must establish both the counterfactual steps that would have been taken if proper advice had been given and a real and substantial chance of achieving the proposed transaction. The court assesses those questions against the contemporaneous evidence, the claimant’s financial position, the conduct of relevant counterparties and the practical contingencies affecting the transaction. A claimant cannot recover loss of opportunity where, on the evidence, it would not have incurred the necessary expenditure or proceeded with the transaction. The claim failed because the claimants would not have pursued the stopping-up process or continued without vendor commitment and finance.

Taray Investments Limited and Bellevue Homes Limited claimed damages from their solicitors, Gateley Heritage LLP, arising from a failed proposed purchase and development of a property in Rotherhithe. Gateley admitted that its report on title failed to identify an encroachment onto an adopted footway and that a stopping-up order was required for the planned development.

The claimants contended that, with timely advice, they would have secured the property, obtained the stopping-up order and obtained development finance. The central issues were what they would have done if properly advised, and whether there was a real and substantial chance that they would then have acquired and developed the site.

1. Disposition. The claim was dismissed. The court held that the defendant was first in breach of duty to Taray on 16 October 2012 and to Bellevue on 4 January 2013. The remaining loss-of-opportunity issues therefore had to be determined on the counterfactual evidence.
2. The applicable principles were those formulated in Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 and upheld in Perry v Raleys Solicitors [2019] 2 WLR 636. The claimant had to show what would probably have happened if the advice had been correct and, where the proposed outcome depended on third-party decisions, a real and substantial chance of success.
3. The claimants’ proposed counterfactual was unrealistic. Taray could not proceed without a joint venture partner with development expertise. Bellevue would not have spent money on a stopping-up application without a firm commitment from the vendor. A vendor properly advised by solicitors would have required a conditional exchange of contracts, rather than an option or exclusivity arrangement without financial commitment.
4. If the discrepancy had been identified by January 2013, the claimants would have learned that the stopping-up process could take between three and twelve months, involved uncertain objections and required substantial costs. Titlestone would not have provided an open-ended facility while the issue remained unresolved. Bellevue had not yet accepted the facility and would have incurred little financial loss by withdrawing.
5. The contemporaneous documents and the claimants’ financial circumstances showed that they would not have paid the application fee, legal costs or costs associated with removing the objection. They therefore would not have proceeded with the joint venture or the acquisition and development. The prospect of success was consequently fanciful, and the questions of development risk and damages did not arise. The court also referred to Moda International Brands Ltd v Gateley LLP [2019] PNLR 27 as a helpful illustration of the relevant principles.