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On appeal from: [2016] EWCA Civ 661.

The appeal related to the loss occasioned in a re-financing situation, where a second loan had been advanced on the basis of a valuation that was assumed negligently made.

Held: allowing the respondent’s appeal, on reasons sensitive to the facts, including those that were assumed for the purposes of the appeal. The basic measure of damages is the sum which restores the claimant as closely as possible to the position that he would have been in if he had not been wronged – subject to qualification which limit recoverable losses.  Generally, where a claimant has received some benefit attributable to the events which caused his loss, it must be taken into account in assessing damages unless the benefit is collateral. Collateral benefits are generally “those whose receipt arose independently of the circumstances giving rise to the loss”. The discharge of the existing (first loan) indebtedness was not a collateral benefit. First, the refinancing part of the second loan was neutral in its effect, rather than beneficial: it both increased the claimant’s exposure and reduced its loss under the first loan by the same amount. Secondly, the terms of the second loan required the indebtedness under the first loan to be discharged, so that outcome was not collateral to the second loan.

For judgment, please download: [2017] UKSC 77
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (6 Nov 2017 morning session) (6 Nov 2017 afternoon session)