Awards of damages provide powerful ammunition for insurers

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Awards of damages in three recent cases — Clack v Wrigleys Solicitors LLP; AIB Group (UK) plc v Mark Redler & Co; and Whalley v PF Developments — provide powerful ammunition for insurers when seeking to reduce their claims exposure.

A claimant who made a £600,000 loan to a third party based upon the security of shares in a company without conducting adequate checks on the financial standing of the company could not recover the whole of his resultant loss from the solicitors he had retained to draft the loan and security documents relating to the transaction. The judge held, following the decision in SAAMCo, that although the solicitors were found to be negligent in not providing adequate advice in respect of the effectiveness of the security, they were “…not liable for the consequences of risks that Mr Clack would have taken upon himself even if they had performed their duty”. The claimant was therefore awarded just £30,000, which was what the judge considered the claimant would have been paid (as a director of the company) had there been an effective charge over the shares…

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