Court of Appeal reminds of importance of proving causation
AW Group Limited v Taylor Walton (a firm)
Court of Appeal
Lidia McCarthy considers the Court of Appeal decision in AW Group Limited v Taylor Walton (2014) which serves as a reminder that a claim will not succeed unless the claimant establishes that its loss was caused by negligent advice, and emphasises that it is not open to the claimant to admit fresh evidence on appeal where such evidence was available, or should have been available, to the claimant before trial.
The claimant was the owner of business premises . It ran a “truck stop” from the site, providing parking places for heavy goods vehicles, a restaurant and overnight accommodation for the drivers. In 2005 the claimant sold the property to a developer for £6.2 million. Sale of the site would secure the claimant a large capital gain for which it was anxious to obtain roll-over relief. This required that it continued its business on an alternative site.
The claimant agreed to buy Packhorse Place as an alternative site for its business for £2.8 million and paid £140,000 deposit (against the defendant’s advice) before the defendant started investigating the title.It also agreed to buy an office block.
The defendant failed to advise the claimant that there were issues with planning permission in relation to Packhorse Place and that the parking area which was necessary for the claimant’s business had no planning permission at all.
Following completion, the claimant ran into difficulties with the planning authority. The claimant was obliged to cease using the parking area. In due course, the claimant’s associated companies closed their business and went into liquidation but not until sufficient business continuity was established at Packhorse Place to enable the claimant successfully to claim roll-over relief as planned.
The claimant’s case at trial was that, had the defendants given adequate advice about the existing planning consents and the prospects of getting satisfactory planning permission, the claimant would have decided not to proceed with the purchase of Packhorse Place and would if necessary have resigned itself to the loss of the deposit and sought alternative premises elsewhere.
At first instance the judge found that the defendant had acted in breach of duty in failing to give appropriate planning advice, and that the claimant paid £730,000 more for Packhorse Place than it had been worth at the time. However, he dismissed the claimant’s claim because the claimant had failed to prove that the defendant’s negligence caused it any loss. He gave five reasons for his conclusion that the claimant was already too committed to the purchase of Packhorse Place by the time the defendant ought to have warned it of the planning difficulties, to be able to back out:
The claimant obtained permission to appeal but only on one ground, that the judge reached the wrong decision on causation due to his failure to consider two specific issues raised by the claimant, namely the likely attitude of its bank had proper planning advice been given, and the financial circumstances of the claimant’s two associated companies.The claimant had had to borrow money from a bank in order to pay the combined purchase prices of the office block and Packhorse Place. The claimant argued that the bank would only have been prepared to lend £2 million if had been informed about the planning difficulties. This brought into play both the claimant’s financial position and its relationship with Natwest,The claimant had failed to provide evidence in support of this assertion despite being criticised by the defendant’s solicitors before trial that it’s disclosure in respect of its banking relationship with NatWest was inadequate.
On Appeal the Court of Appeal refused the claimant’s application to admit fresh evidence ( as to the claimant’s financial position and NatWest’s lending) It found that such evidence was or should have been available to the claimant by the time of the trial . It would not be right to permit the claimant to admit such evidence on appeal as this would amount to giving an unsuccessful claimant a second bite of the cherry.
It was held that the five reasons provided by the first instance judge amounted to a compelling basis for the judge’s conclusion that the claim failed on causation grounds. Even if one or more of the claimant’s grounds for appeal succeeded, this would have been insufficient to persuade the Court of Appeal that the judge’s overall conclusion was incorrect.
For further information please contact Lidia McCarthy, Solicitor on 020 7280 8968.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.