‘No Transaction’ Damages In Professional Negligence Cases

Author:Ms Sharon Daly and Valerie Shaw
Profession:Matheson
 
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Introduction A series of recent High Court decisions have considered the concept of 'no transaction' damages in cases involving professional negligence. When a court makes an award of damages in breach of contract and tort cases, that award is designed to return the injured party to the position that it would have been in had the tort or breach of contract not occurred. In some cases it is clear that had it not been for the professional's negligence no transaction would have taken place. These cases are referred to as 'no transaction' cases. The Irish courts, following a similar line to the UK authorities, have confirmed that the correct approach to the assessment of damages is to determine whether the negligent act resulted in the occurrence of the transaction. If it did, then all loss associated with entering into the transaction will be recoverable. If not, then it is only the loss arising from the negligent act itself that will be recoverable. For example, if a financial institution instructed its solicitor to put security in place and that solicitor's negligence resulted in a failure do so, it is the loss flowing from the lack of security that would be recoverable and not the full cost of the loan. ACC Bank v Johnston ACC Bank suggests that even in a no transaction case, in order for the loss suffered in going ahead with the transaction to be fully recoverable, that loss must also be causatively linked to the actual breach of duty on the solicitor's part. ACC instructed its solicitor to transfer loan moneys to a borrower, but only after a legal charge over the property being purchased had been obtained in favour of ACC. The solicitor negligently allowed the loan moneys to be released before ensuring security was in place. The court found that had the solicitor not been negligent, ACC would not have entered into the transaction. However, the court did not confine its assessment of damages to an analysis of what ACC's position would have been had it not loaned the moneys. Instead it found that even in no transaction cases not all losses arising from the transaction will be recoverable necessarily if those losses are not directly attributable to the solicitor's negligence. The court considered the UK authorities of Banque Bruxelles SA v Eagle Star (SAAMCo) and Bristol and West BS v Fancy & Jackson. It noted that these decisions were authority for the fact that where a professional who was under a duty to take reasonable care to provide information on which someone else would decide a course of action was negligent in the provision of that...

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