Solicitors that gave professionally negligent advice on the purchase of a luxury yacht managed to escape lightly after a court awarded only nominal damages to the claimant.
The recent High Court case revolved around the sale of a 200 foot yacht by luxury property developer, Christian Candy, to US telecoms magnate, Michael Hurtenstein, which suffered major engine failure within an hour of the purchase.
Michael Hirtenstein had bought the £3.6m yacht under the impression, supported by his solicitors’ advice, that its seller had personally guaranteed the condition of the yacht through a warranty in the contract.
After the Yacht suffered the engine failure, and when no such guarantee was found to exist, Hirtenstein commenced a claim for professional negligence against his solicitors.
Coming Adrift Advising on Warrantees
Mr Hirtenstein had purchased the luxury yacht with a plan to propose to his girlfriend once on board. However, it broke down on its ill-fated first journey under Mr Hirtenstein’s ownership.
Following repairs estimated at £360,000, Mr Hirtenstein’s solicitors were forced to prepare a claim against Mr Candy, as owner of Candyscape Ltd, personally after the company as the original seller was forced into liquidation. It was only at this point that the firm realised that the terms of the personal guarantee did not cover any breach of warranty regarding the condition of the Yacht.
The defendant law firm admitted liability for negligence in the recent High Court case but the claimant was awarded only nominal damages.
Why Only Nominal Damages for Professional Negligence?
The substance of the case makes for a fine example in how all the elements of a successful claim in negligence (being: duty of care, breach, and causation) need to be present if the sought after damages are to be recovered.
Although negligence was admitted by the law firm, that its advice to its client, Michael Hirtenstein, that the yacht’s warranty was personally guaranteed by Candy, Mr Justice Leggatt ruled that on the balance of probabilities the firm’s negligence did not in law cause Hirtenstein to purchase the yacht.
Justice Leggatt found that it was highly improbable Mr Candy would have given any such personal guarantee and that, even if Mr Candy had explicitly declined to give such a guarantee, Mr Hirtenstein would have purchased the yacht anyway. Justice Leggatt also made clear that causation was not fully satisfied: Hirtenstein had suffered no loss as a result of the law firm’s negligence.
The case demonstrates that, while liability may be admitted by a defendant, damages are in no way guaranteed unless there is a causal link leading from the damages to be recovered back to the defendant’s putative negligence. Nominal damages will be awarded as a token symbolising any admission of liability, in this case as admitted by a reputable solicitors firm.