The law relies on a number of legal concepts to limit the circumstances in which damages will be recoverable by the claimant. First amongst these is the concept of causation which provides that loss is only recoverable by a claimant where it has been legally caused by the breach of duty of the defendant.
It is for the claimant to prove on a balance of probabilities that, as a matter of fact, his loss has been caused by the breach of duty. In most professional negligence cases this is answered, at least as a first filter, by the 'but for' test (ie but for the negligence, would the loss have occurred?). The claimant must prove on a balance of probabilities that he in fact relied on the advice and would have acted differently, had there been no breach of duty, to avoid the loss claimed.
So, in Rushmer v Mervyn Smith (t/a Mervyn E Smith & Co)1, although the defendant auditors accepted that the profit and assets of the claimant's company were negligently overstated in the accounts, because the court found that the claimant, from his knowledge of the company, did not believe the figures and therefore did not rely upon them, his claim failed.
In Floyd v John Fairhurst & Co2, the defendants were asked by the first claimant to advise on the capital gains tax implications of a prospective compulsory purchase of his land and negligently failed to advise on the availability of rollover relief under CGTA 1979, ss