LSREF III Wight Ltd v Gateley LLP [2016] EWCA Civ 359

The Court of Appeal has handed down judgment in LSREF III Wight Ltd v. Gateley LLP [2016] EWCA Civ 359, a case which concerned what, if any damages had been caused by solicitors' negligence and whether the claimant had failed to mitigate its loss where liability had been admitted.

Background

In September 2007, Gateley LLP solicitors (Gateley) failed to draw to a bank's attention an insolvency forfeiture clause in a lease of a property, over which a first legal charge was granted as security for a loan facility. The forfeiture clause seriously impaired the charge as security, but the issue only came to light when the bank sought to enforce its security in 2012. During the proceedings brought by the bank for negligence against Gateley, the bank assigned its rights to LSREF III Wight Ltd, a special purpose vehicle or SPV. At the trial, Gateley asserted that the bank and latterly the SPV had failed to mitigate its loss, by failing to negotiate a variation of the lease