A super yacht broke down 12 miles out at sea just one hour after it was bought by a wealthy purchaser. The new owner was unable to recover the cost of repairs against the seller and sued his solicitors for damages for failing to secure an adequate warranty

The solicitor admitted liability, but was only found liable for negligible damages as the new owner would have gone ahead with the purchase of the yacht whether a warranty had been provided or not.

The case reaffirmed that professional firms can defend themselves against claims of negligence if their client has not suffered a loss as a result under the legal principle of ‘causation’. See Brunel News, October 2014.

America businessman Michael Hirtenstein bought the 47m luxury yacht from Candyscape Ltd. Hill Dickinson solicitors were instructed to act on the purchase urgently as the yacht was being sold at a very low price. After contracts were exchanged, but before completion, Hill Dickinson informed its client that the yacht came with a warranty of its condition that was backed by a personal guarantee from Mr Christian Candy, the beneficial owner of the selling company.

After the purchase completed the yacht’s engine failed and cost around $2.5m to repair. Mr Hirtenstein tried to recover the cost of the repair under a warranty from Candyscape, but was unsuccessful as the company had gone into liquidation. He then claimed under the personal guarantee from Christian Candy, only to discover that no such guarantee existed.

He sued Hill Dickinson for negligence for failing to obtain a guarantee. It admitted liability but denied that this mistake had caused Mr Hirtenstein’ losses. The judge, Mr Justice Leggatt, agreed, “Although the claimants have succeeded on liability, they have suffered no loss and are therefore entitled to judgment for only nominal damages,” he said.

“This case yet again proves that professionals can successfully defend themselves against claims of negligence where it is clear that their client has suffered no loss as a result,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “In an intriguing twist to this case, however, the judge ruled that Hill Dickinson would have been unable to rely on a clause limiting its liability had it been found liable for significant damages. This was because Hill Dickinson had not provided its terms of business to its client until three days after it had started acting on the case – and Mr Hirtenstein initiating the work by a telephone call on a Sunday afternoon notwithstanding. This underlines just how important it is for professional firms to agree their terms of business at the outset if they hope to rely on them later in court.”

Further details of the case, have been published in The Lawyer and reported by law firm Wright Hassall.