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Solicitors admit “blunder” on super yacht purchase but pay minimal damages

Posted by , Associate

A firm of solicitors who admitted negligence in advising a client on the purchase of £3.5 million yacht get away with paying only minimal damages to their client.

A large firm of London based solicitors who promote their services as market leaders in the super yacht industry have admitted negligence in failing to properly advise a client on the purchase of a £3.5 million yacht but avoided paying out significant damages.

Background

The 200 foot yacht in question previously belonged to Christian Candy. In 2010 it was sold to Michael Hurtenstein, US based telecoms magnate, at the “bargain” price of £3.5 million. Hirtenstein engaged Hill Dickinson’s super yacht team in respect of the purchase.

On the yacht’s first outing with Hirtenstein one of the engines suffered a major failure 12 miles offshore after only an hour at sea. The costs of the repairs were said to be in excess of £1.6 million. Hirtenstein sought to rely on the warranty as to the boat’s condition which had been provided by Candy’s company at the point of sale. He was advised by his solicitors that the company’s warranty was personally guaranteed by Candy himself.

Shortly after the purchase Candy’s company became insolvent and it was discovered that the solicitors had failed to ensure that the personal guarantee was obtained. Hirtenstein was left with no remedy against the company or Candy.

Professional negligence claim

Hirtenstein issued a professional negligence claim against his solicitors on the basis that he was unable to sue Candy, stating that had he known there was no personal guarantee he would never have bought the yacht and therefore would have suffered no loss. The claim progressed all the way to trial, which lasted 9 days in the High Court.

Although the solicitors admitted negligence, the court agreed with the solicitors that their negligence had not in fact resulted in Hirtenstein suffering any “loss”.

The court considered that despite the solicitor’s negligence in procuring the guarantee, Candy would never have agreed to provide one and further, that Hirtenstein would have gone ahead with the purchase anyway because he bought it for such a good price. He was also criticised by the court for including refurbishment and improvement costs in the alleged “repair” costs.

Learning Points

Although we are not all in the habit of buying super yachts, the case serves as an important reminder of the principles of law required for a successful professional negligence claim.

  1. In order to sue any professional for an allegedly negligent act or omission, all four of the following steps must be met
    duty of care – this will usually exist between a paid professional and their client
  2. breach of that duty – the negligent act
  3. a link between the negligent act and foreseeable losses and
  4. damage or loss actually occurring.

In the case discussed above, although the negligent act was admitted, the solicitor successfully argued that this did not result in their client suffering anything more than “nominal” or minimal losses as a result.

It is essential when considering bringing a claim for professional negligence that all elements of the claim are considered from the very beginning. Even if a solicitor or professional advisor has been negligent, you will not be entitled to recover any damages or compensation if you didn’t actually suffer any loss as a result.

If you think that you have a professional negligence claim against a solicitor or any other professional and would like some expert independent advice, contact our team today on 0800 051 8057.

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