The plaintiff loaned money on the basis of a negligent survey by the defendant. The borrower subsequently defaulted, and the lender issued a writ. The defendant said that the claim was time barred.
Held: The court allowed the plaintiff’s appeal. A cause of action against surveyor arose only when the loss was sustained and crystalised, and it was not sustained on the survey.
Saville LJ said: ‘To my mind it would be wrong simply to take the debit side of the deal and to describe it as loss or damage flowing from the breach of duty without taking into account the credit side of the deal. The reason for this is that the inquiry is as to what loss or damage (if any) has been sustained through making the deal and when such loss or damage has been incurred. On this basis, on the evidence, I am quite unpersuaded that in July 1983 the plaintiffs were, to put it colloquially, out of pocket in respect of these expenses as a result of making the deal. They had no doubt incurred some expenditure but they had also received some benefit and there is nothing to show that the former exceeded the latter.’ and
‘At the hearing and in the judgment much reliance was placed on the cases where the claimant entered into a transaction which through a breach of duty owed to the claimant provided the claimant with less rights than should have been secured, or imposed liabilities or obligations on the claimant which should not have been imposed. Examples of these cases are: Forster v Outred and Co [1982] 1 WLR 86, Iron Trade Mutual Insurance Co Ltd v J K Buckenham Ltd [1990] 1 All ER 808, and Bell v Peter Browne and Co. [1990] 2 QB 495. In all those cases, however, the court was able to conclude that the transaction then and there caused the claimant loss, on the basis that if the injured party had been put in the position he would have occupied but for the breach of duty, the transaction in question would have provided greater rights, or imposed lesser liabilities or obligations than was the case; and that the difference between these two states of affairs could be quantified in money terms at the date of the transaction.’
‘At the hearing and in the judgment much reliance was placed on the cases where the claimant entered into a transaction which through a breach of duty owed to the claimant provided the claimant with less rights than should have been secured, or imposed liabilities or obligations on the claimant which should not have been imposed. Examples of these cases are: Forster v Outred and Co (a firm) [1982] 1 WLR 86, Iron Trade Mutual Insurance Co Ltd v J K Buckenham Ltd [1990] 1 All ER 808 and Bell v Peter Browne and Co (a firm) [1990] 2 QB 495. In all those cases, however, the court was able to conclude that the transaction then and there caused the claimant loss, on the basis that if the injured party had been put in the position he would have occupied but for the breach of duty, the transaction in question would have provided greater rights, or imposed lesser liabilities or obligations than was the case; and that the difference between these two states of affairs could be quantified in money terms at the date of the transaction. By contrast, in the present case, as in UBAF Ltd v European American Banking Corp [1984] QB 713 (and indeed Wardley Australia Ltd v State of Western Australia (1992) 109 ALR 247) it seems to me that whichever of the legally recognised kinds of loss is examined, it is impossible on the material available to conclude that the plaintiffs suffered such loss at any time more than six years from the date of their writ. For the reasons given, it has not been shown that they lost the amount of their advances at that time, or incurred expenses in respect of which they were out of pocket at that time; or at that time lost other transactions or the opportunity to make other transactions of a value greater than the deal they made.’ and ‘It is the law that a cause of action for the tort of negligence only arises when there has been a breach of duty resulting in actual (as opposed to potential or prospective) loss or damage of a kind recognised by the law.’
Judges:
Saville LJ
Citations:
Times 27-Jan-1995, Independent 14-Feb-1995, [1995] 2 All ER 673
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Forster v Outred and Co CA 1981
A mother signed a mortgage deed charging her property to H as security for a loan to her son. She claimed the solicitor had been negligent in his advice. The solicitor replied that the claim was out of time. The loss accrued not when demand for . .
Cited – Iron Trade Mutual Insurance Co Ltd v J K Buckenham Ltd 1990
The negligence of the plaintiffs’ insurance brokers led to the insurance policies being voidable for non-disclosure.
Held: The plaintiffs suffered immediate damage on entering into the policies because they did not get the protection they . .
Cited – Bell v Peter Browne and Co CA 1990
Mr Bell asked his solicitors to transfer the matrimonial home into his wife’s sole name. He was to receive a one-sixth interest of the gross proceeds on a sale. His interests were to be protected by a trust deed or mortgage. The solicitor drafted . .
Cited by:
Helpful – Law Society v Sephton and Co (a Firm) and Others HL 10-May-2006
A firm of solicitors had a member involved in a substantial fraud. The defendant firm of accountants certified the firm’s accounts. There were later many calls upon the compensation fund operated by the claimants, who sought recovery in turn from . .
Cited – Pegasus Management Holdings Sca and Another v Ernst and Young (A Firm) and Another ChD 11-Nov-2008
The claimants alleged professional negligence in advice given by the defendant on a share purchase, saying that it should have been structured to reduce Capital Gains Tax. The defendants denied negligence and said the claim was statute barred.
Cited – Axa Insurance Ltd v Akther and Darby Solicitors and Others CA 12-Nov-2009
The court considered the application of the limitation period to answering when damage occurred when it arises under an unsecured contingent liability. The claimant insurance company had provided after the event litigation insurance policies to the . .
Lists of cited by and citing cases may be incomplete.
Limitation, Negligence
Updated: 09 December 2022; Ref: scu.80562
