To Mitigate Or Not To Mitigate – That Is The Question!

If you suffer loss as a result of negligent advice, do you have a duty to mitigate? If yes, what does that duty look like in practice? How far do you need to go in attempts to reduce the loss you have suffered? This was the subject of a recent decision of the Court of Appeal in LSREF III Wight Limited –v- Gateley LLP [2016] All ER (D) 145. The case confirms that mitigation issues are multifaceted questions but that there is a level of reasonableness to be applied. In this article we consider what the decision of the Court of Appeal might mean for real estate investors and their lenders and suggest some practical steps to be taken.

The Facts

The case concerned a development loan facility, provided by a bank which was to be used mainly for the development of a single property, the security for which was a first ranking legal charge over a newly granted 199 year lease of that property in favour of a special purpose vehicle company, the bank's borrower.