Keydon Estates Ltd v Eversheds LLP [2005] EWHC 972 (Ch) (20 May 2005)

Keydon Estates Ltd v Eversheds LLP [2005] EWHC 972 (Ch) (20 May 2005)

The diminution in value rule is not of universal application in solicitor's negligence cases. Where the solicitor knew the purpose of the transaction was to secure an income stream, and evidence shows that alternative investments were available, damages should be assessed by reference to the loss of the alternative income stream Keydon would have obtained, discounted to avoid overcompensation. The appropriate assessment date is the date of judgment, and damages are the difference between the likely result of an alternative investment and what actually transpired.

Citation
[2005] EWHC 972 (Ch)
Parties
Claimant: Keydon Estates Limited; Defendant: Eversheds LLP
Jurisdiction
England and Wales
Judgment Date
20 May 2005
Procedural Posture
Claim for Damages for Professional Negligence/breach of Contract / Judgment After Trial on Measure of Damages
Outcome
Claimant's claim for damages broadly succeeds. Damages awarded on the alternative investment loss basis, subject to inquiry on the loss of repairing covenant and deduction for car park income.
Legal Topics
Measure of Damages, Solicitor's Duty of Care, Loss Assessment, Diminution in Value Rule, Alternative Investment Loss, Breach of Contract, Negligent Advice, Causation of Loss
Professional Negligence Contract Law Property Law Measure of Damages Solicitor's Duty of Care Loss Assessment Diminution in Value Rule Alternative Investment Loss +3 more

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Parties

Keydon Estates Limited

Claimant

Eversheds LLP

Defendant

Procedural Posture

Claim for Damages for Professional Negligence/breach of Contract / Judgment After Trial on Measure of Damages

Legal Issues

  1. 1 What is the proper measure of damages recoverable by Keydon for Eversheds' admitted negligence in advising on the purchase of the Property?
  2. 2 Should damages be assessed by the diminution in value rule or by reference to loss of alternative investment income?

Ratio Decidendi

The diminution in value rule is not of universal application in solicitor's negligence cases. Where the solicitor knew the purpose of the transaction was to secure an income stream, and evidence shows that alternative investments were available, damages should be assessed by reference to the loss of the alternative income stream Keydon would have obtained, discounted to avoid overcompensation. The appropriate assessment date is the date of judgment, and damages are the difference between the likely result of an alternative investment and what actually transpired.

Court Disposition

Claimant's claim for damages broadly succeeds. Damages awarded on the alternative investment loss basis, subject to inquiry on the loss of repairing covenant and deduction for car park income.

Orders

  • Damages to date assessed at £310,294.31, subject to inquiry as to damages for loss of repairing covenant.
  • Deduction of £900 for car park income received.