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What does it mean when causation is not proved?
Elaine Phillips, a professional negligence expert in our commercial disputes team, outlines a recent case that shows what happens when causation isn’t proved.
Connaught Income Fund (CIF), a lender, lent money to a bridging loan company. The bridging loan company then lent these funds to a borrower, who wanted to purchase a leasehold property.
However, once he’d purchased the property, the borrower soon failed to make his loan repayments – and the property was repossessed. The property was eventually sold at a loss – leaving £744,000, most of the loan, unpaid.
CIF brought a claim against the solicitors involved. CIF argued that the solicitors hadn’t checked the property’s prior sale history, and therefore had failed to prepare the Certificate of Title properly. (Solicitors must sign a Certificate of Title to say that they’re satisfied that everything about the property that needs to be has been reported, or that there is nothing to report.)
CIF argued that if the solicitors had told them there was an issue with the history of ownership of the property, they wouldn’t have lent the money.
The solicitors, however, were instructed by the bridging loan company – not CIF. As a result, there was no contract between CIF and the solicitors. The solicitors argued this meant that no duty of care was owed to CIF.
When CIF brought the claim, the court considered the issues.
They felt that the solicitors did owe a duty of care and skill to the CIF, as the Certificate of Title was addressed to both CIF and the bridging loan company. The court agreed that the solicitors had breached this duty by failing to complete this Certificate properly.
However, the court felt that this breach did not lead to CIF’s loss. They were satisfied that, even if the solicitors had flagged up the issue, CIF would still have lent the borrower the money. Causation could not be attributed to the solicitors.
This case shows that, even where a duty of care exists, and has been breached, damages may not necessarily be recovered.
Parties bringing a claim must be able to show that loss they experienced flowed from the breach. It is not enough to simply show that the breach took place – causation must be attributable.