Mitigation and Cost of Cure

March 13, 2026

Damages in Conveyancing Negligence: Diminution in Value, Cost of Cure and Mitigation

In professional negligence claims arising from conveyancing transactions, the usual starting point in a no-transaction case is the difference between the price paid and the actual value of what was acquired at the date of purchase. That measure is not immutable. The court will assess damages so as to give effect to the compensatory principle and may therefore take account of subsequent events, available cures and mitigation. In an appropriate case, the reasonable cost of cure, or the reasonable cost of extricating the claimant from the transaction, may better reflect the claimant’s true loss. Authority also shows that where a defect can be cured simply, cheaply and effectively, the recoverable loss may be reduced to the cost of that cure.

General Principles of Damages in Conveyancing Negligence

A claimant in a solicitors’ negligence claim is entitled, so far as money can do it, to be put in the position they would have been in had the solicitor performed the retainer with reasonable skill and care. That compensatory principle applies whether the claim is framed in contract or in tort.

Conveyancing transactions provide a straightforward illustration of this principle. In Oates v Anthony Pitman & Co [1998] PNLR 683 (CA), the purchasers bought Chatsworth Holiday Flats. Their solicitors negligently failed to discover that there was no planning permission for use as holiday flat-lets and that the property could lawfully be used only as a hotel unless further permission was obtained.

The Court of Appeal treated the diminution claim, in principle, as the difference between the market value of the property at the date of purchase with and without the relevant planning position. The case illustrates the orthodox starting point for assessing loss in conveyancing negligence. Claims for other forms of loss, including lost profits based on a different commercial use, were not recovered on the facts. The decision therefore demonstrates the ordinary valuation approach rather than establishing any inflexible rule excluding alternative heads of loss.

The Date of Assessment

Many solicitors’ negligence claims are no-transaction cases in which the claimant says that, absent the negligence, the transaction would not have been concluded at all. In such cases the usual starting point is to measure loss by reference to the transaction date. In the case of a property purchase, that will often mean the price-value differential as it stood at completion.

However, that approach is not absolute. The court may take account of later events where this is necessary to identify the claimant’s true compensable loss. Subsequent facts may therefore increase recovery, but they may equally reduce it. Authority confirms that the court is not required to ignore a later cure, a later variation, or other later facts demonstrating that the claimant’s alleged transactional loss has not in fact crystallised.

Cost of Cure Versus Diminution in Value

The Ruxley Principles

The leading authority on the choice between cost of cure and diminution in value remains Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344. The House of Lords held that the cost of reinstatement will not be the appropriate measure where the expenditure is out of all proportion to the benefit to be obtained. In such a case diminution in value may be the correct pecuniary measure even if the market difference is slight or nil.

Ruxley also demonstrates that damages are not confined strictly to market value. As later explained in Farley v Skinner [2001] UKHL 49, where the market difference does not capture the real deprivation suffered by the claimant, a modest award for loss of amenity or other non-pecuniary loss may in an appropriate case be justified.

The principal considerations in the reasonableness analysis are proportionality and the claimant’s genuine intention to effect the cure. Proportionality is not a purely mathematical comparison between two figures. The court must consider the practical benefit of the work, including aesthetic or amenity value. The fact that the cost of cure exceeds the diminution in value does not automatically render the cure unreasonable.

Intention is also relevant. A claimant who is bound to undertake the remedial work, or who can demonstrate a genuine and practical plan to do so, is in a stronger position than a claimant for whom the cure remains purely theoretical. Absence of a genuine intention to cure is a powerful factor against awarding reinstatement costs.

Application to Solicitors’ Negligence

An analogous illustration appears in Fulham Leisure Holdings Ltd v Nicholson Graham & Jones [2006] EWHC 2017 (Ch). The claimant alleged that, because of its solicitors’ negligence, it had lost a contractual right to dilute minority shareholders and had therefore been forced to buy them out for £7.75 million. The claimant characterised that expenditure as the cost of cure.

Mann J accepted that, in principle, a cost-of-cure or cost-of-extrication analysis may be apt in a solicitors’ negligence case. However, he held that the buy-out claimed there went beyond any true cure. Cure would have consisted in restoring the lost dilution right rather than purchasing the minority interest outright. Applying the proportionality reasoning reflected in Ruxley, the expenditure claimed was wholly disproportionate.

Although the decision was later reversed on liability on appeal, the reasoning provides a useful illustration of the limits of the cost-of-cure analysis in professional negligence claims.

The Bacciottini Decision: Cure and Actual Loss

Facts

The respondent solicitors negligently failed to advise the appellants that there was a planning restriction affecting the residential property they acquired in May 2007 which limited its residential use. After completion, the appellants successfully applied to remove the restriction.

The appellants argued that they should recover £100,000 representing the difference between the value of the property at the purchase date with and without the planning restriction. The trial judge instead awarded £250, representing the cost of the planning application required to remove the restriction.

The Court of Appeal’s Reasoning

The Court of Appeal rejected the argument that the price-value differential at the transaction date represents an immutable principle in capital loss cases. It is merely a starting point which must yield where it does not reflect the claimant’s true loss.

Once the planning restriction had been removed for £250, the appellants had suffered no continuing capital loss requiring compensation. The appropriate award was therefore the modest cost required to eliminate the defect.

The court also considered mitigation. On the findings of fact, an application to remove the restriction was likely to succeed and was simple and inexpensive. In those circumstances it was reasonable to expect the appellants to take that step. The law did not permit them to ignore the available cure and instead claim an historic diminution in value which no longer represented any real loss.

The court further observed that the successful application to remove the restriction was not a collateral transaction. It was the direct and reasonable means of eliminating the very defect created by the negligent conveyancing.

Mitigation Principles

Mitigation plays an important role in determining the appropriate measure of damages in conveyancing negligence claims.

A claimant cannot recover damages for loss that could reasonably have been avoided. The duty arises after the breach and requires the injured party to take reasonable steps to minimise the consequences of the wrongdoing.

In LSREF III Wight Ltd v Gateley LLP [2016] EWCA Civ 359, solicitors failed to warn a lender that the lease offered as security contained an insolvency forfeiture clause. At the date of the transaction the defect reduced the value of the security. Before trial, however, the landlord offered to remove the clause by variation for £150,000.

The Court of Appeal held that the lender had acted unreasonably in failing to accept that proposal. Because the defect could have been cured through the lease variation, the court assessed the recoverable loss by reference to the reasonable cost of that cure rather than by reference to the historic diminution in value. The award therefore reflected the cost which would reasonably have been incurred to remedy the problem rather than the earlier transactional valuation difference.

Where a defendant alleges that the claimant has failed to mitigate, the burden of proof lies on the defendant. Nevertheless, a claimant who declines to pursue an available cure would ordinarily be expected to explain that decision by evidence.

Residual Diminution in Value

In some cases the cost of cure may not fully address the claimant’s loss. Even after remedial works have been carried out, the property or asset may remain affected by stigma or residual blight. In such circumstances the court may consider whether a further award is required to reflect any remaining diminution in value.

Where cost of cure is not sought or is unreasonable, diminution in value remains the conventional pecuniary measure of loss. In Ruxley, the market difference between the pool as built and the pool as promised was nil. The claimant did not recover reinstatement costs but did recover a modest award for loss of amenity.

Farley v Skinner confirms that non-pecuniary loss may in appropriate circumstances be recoverable where the contractual or advisory obligation was directed at securing a particular amenity or avoiding a particular interference with enjoyment.

Non-Pecuniary Loss

As to damages for distress or vexation, the general rule remains restrictive. Where the interest the solicitor was retained to protect is purely financial or commercial, such damages are ordinarily not recoverable.

However, the law is not confined to contracts whose object is peace of mind. As explained in Watts v Morrow [1991] 1 WLR 1421 and Farley v Skinner [2001] UKHL 49, modest non-pecuniary damages may be recoverable for physical inconvenience, discomfort or loss of amenity.

In Hayes v James & Charles Dodd (A Firm) [1990] 2 All ER 815, where solicitors negligently advised that a lease carried a right of way which in fact did not exist, damages for distress were refused. Likewise, Johnson v Gore Wood & Co [2002] 2 AC 1 confirms that mental distress damages are not ordinarily recoverable in an ordinary commercial solicitors’ negligence claim.

Practical Considerations

Cases of this kind ultimately turn on the facts. In assessing damages, the court will commonly consider the extent of the price-value differential at the transaction date, whether the defect can be remedied and at what cost, the likelihood of successfully remedying the defect, whether the claimant genuinely intends to effect the cure, the claimant’s duty to mitigate the loss, and whether subsequent events have altered the true loss suffered.

Although damages are often assessed at the date of breach, there is no rigid rule to that effect in negligence. The controlling question is what assessment most fairly gives effect to the compensatory principle in the circumstances of the particular case.

Further Reading

• Professional Negligence 
• Limitation Period and Date of Knowledge in Solicitor Negligence Claims
• Conveyancing Negligence 
• Solicitor Negligence 

Contact Carruthers Law

Carruthers Law advises on professional negligence claims, including conveyancing negligence, surveyor negligence and other property-related disputes.

If you believe you may have suffered financial loss as a result of negligent conveyancing advice, our solicitors can advise on whether a claim is viable and the likely measure of recoverable damages.

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