'All's Well That Ends Well': Measure Of Damages And Mitigation In The Spotlight

Claimants cannot have their proverbial cake and eat it, so the Court of Appeal found by dismissing the appeal in Bacciottini & Anr v Gotelee and Goldsmith (A Firm) (2016). In circumstances where the claimants had successfully mitigated their position at a cost of just £250 and in a straightforward manner, the Court agreed that their claim for damages for diminution in value plus interest should fail.

The facts

The claimants (B) instructed solicitors (G) to act in a purchase of a residential property which they acquired in May 2007 for £600,000. The property comprised a cottage and other buildings in the grounds of a country house which had been sold separately. B intended to reside in and redevelop the property, although it did not have planning consent at the time. G incorrectly reported to B that the searches were clear when they were not - they contained a 1974 planning restriction providing that the property could only be occupied in conjunction with the occupation and ownership of the country house.

B initially submitted an informal planning application which covered the redevelopment of the property and removal of the restriction. Having received an indication that the joint application would not succeed, B made a separate application to remove the restriction at a cost of £250 and the restriction was lifted in November 2009.

Nevertheless, by the time of trial in September 2014 B alleged they had suffered a loss of £100,000 and interest representing the diminution in value of the property at the time of purchase as a result of the restriction (the original claim having been for some £300,000). Breach of duty was admitted by G but causation and loss remained in dispute. G asserted that B's loss was £250, at most, being the cost of their application as a result of which B had ultimately received what they had bargained for - a property with clear title. To award further damages would, G submitted, overcompensate B. The trial judge agreed and awarded B only nominal damages of £250 (see the first instance judgment). B was also ordered to pay the majority of G's costs. B appealed.

The appeal decision

The Court of Appeal unanimously agreed that the trial judge had reached the right conclusion. Its reasons can be summarised as follows:

Citing the core principle that damages should put an injured party back into the position he would have been in but for the defendant's negligence, the removal of the restriction effectively extinguished any...