No Claim If No Loss Demonstrated

Mistakes are mistakes, but in law, when a legal claim is made, the fact that a mistake was made is only the first step to obtaining damages. The second step is to prove that a loss has been suffered.

This point was at the core of a recent decision by the Court of Appeal. The case dealt with a claim of negligence brought against a substantial firm of solicitors by one of its clients. In 2005, the firm had been instructed to draft documents relating to a property development in which its client had an interest.

The client was to receive the proceeds of sale of the development, but the firm failed to include the correct provision in the agreement it drafted. The client discovered the omission in 2008 when the property was to be sold.

The client sought compensation for his ‘loss’ based on the value of the right to the proceeds in 2005. However, the Court ruled that any loss could only be calculated with reference to the 2008 value. By then the development was in negative equity and the value of the right to the sale proceeds was nil.

Unless there is evidence that a loss has been suffered, pursuing a claim similar to this will bring only a Pyrrhic victory. In this case, the claim was regarded as ‘wholly speculative’ and dismissed by the Court.