A disgruntled ex-client was right to feel aggrieved at his solicitor’s poor advice but this was not enough to win a professional negligence claim, the High Court has ruled.

Richard Farnhill, sitting as a deputy judge of the Chancery Division in Gordeno v Irwin Mitchell, said the advice on a property development from national firm Irwin Mitchell was wrong, but that did not mean it had caused a loss.

Nightclub owner Jeremy Gordeno had owned the property near Basingstoke in Hampshire, which included a large Edwardian house and substantial gardens. In 2016, he sold the property to a developer, Glo Homes, for an initial £2m, which a further £13m payable if planning permission was granted for the land around it.

Irwin Mitchell advised Gordeno that the future payments on land called the Pasture Overage would potentially be unenforceable if Glo became insolvent, but that the deal could survive such an insolvency. The special purpose vehicle did indeed go into administration in 2018. 

The advice that the financial arrangement would survive an insolvency was wrong, and Irwin Mitchell admitted breaching its duty of case and skill in giving it. But the firm denied that the breach had caused Gordeno any loss and the case went to a week-long trial in November.

Farnhill’s ruling, published this week, conceded that the temptation was to assume that a breach of duty must have caused the losses suffered by Gordeno.

The judge said the client had a ‘moral right’ to feel aggrieved, particularly after paying £30,000 for legal advice which was wrong. But he added: ‘A moral right to feel aggrieved is not the same as a legal right to damages, however. In my view, even had Mr Gordeno been properly advised of the risk to the Pasture Overage on a Glo insolvency he would have seen that risk as being a minor one.’

He said that had Irwin Mitchell advised him that he was exposed to a credit risk on Glo, Gordeno would still have have taken that option, confident that it would have come good. Even on a broader version of the scope of duty, which the judge also rejected, he had not established causation in respect of this part of his claim.