A leading firm has avoided paying out significant damages despite admitting negligence when it gave advice on the purchase of a £3.6m yacht.

Hill Dickinson had advised Cayman Islands businessman Michael Hirtenstein that the warranty on his new yacht was backed by a personal guarantee from the previous owner, property developer Christian Candy (pictured).

Hirtenstein, who had planned to propose to his girlfriend on board, bought the yacht in 2010 without a survey or sea trial, but with a warranty of the yacht’s condition by the seller.

Within an hour of the yacht’s purchase, its engine suffered a major failure 12 miles offshore. 

During a nine-day hearing at the High Court earlier this summer, Mr Justice Leggatt heard that Hill Dickinson partner James Lawson had made a ‘blunder’ in wrongly thinking he had obtained a personal guarantee from the seller which backed the warranty in the sale contract.

Hill Dickinson had advanced a claim for breach of warranty before it was realised the guarantee was flawed, leading to Hirtenstein and his Cayman Islands-incorporated company suing the firm for professional negligence.

Hill Dickinson admitted that Lawson had been negligent in believing he had obtained a personal guarantee which covered the condition of the yacht. But the firm denied that this negligence had any causative effect and said the claimant would have gone ahead with the purchase anyway.

Hill Dickinson further denied that the claimants suffered any loss as a result of entering into the transaction and also argued that the value of a claim under any personal guarantee would have been far less than the claimants maintained.

In his conclusions, Leggatt ruled that the claimants had succeeded on liability, but they suffered no loss and are therefore entitled to only ‘nominal’ damages.

He said the favourable price of the yacht meant Hirtenstein suffered a ‘comparatively modest loss’, £360,000, from the transaction.

Leggatt added: ‘The negligence of Hill Dickinson did not cause the claimants to purchase the yacht without a personal guarantee from Mr Candy of the yacht’s condition. It follows that the claimants have suffered no loss for which they are entitled to recover damages.’

A statement from Hill Dickinson said: ‘Hill Dickinson regrets that a mistake was made in this matter. The firm highlighted the error to the client as soon as it came to their attention and was satisfied that it had caused the client no loss.

‘This position has subsequently been vindicated in the judgment.’