High Court dismisses negligence claim in Larkfleet vs Armstrong Energy

Background and Context

The High Court, presided over by HHJ Worster, recently ruled on a complex commercial dispute between Larkfleet Limited and Armstrong Energy Limited. The case revolved around claims of negligence and breach of contract, with Larkfleet seeking damages arising from a Novation Agreement and a separate claim known as the 'Thornborough claim'.

The Claims

Larkfleet's primary claim was for damages in negligence, alleging that Armstrong Energy had provided negligent advice leading to Larkfleet entering a Novation Agreement on 5 July 2017. The potential liability under this claim was approximately £7 million. Additionally, Larkfleet pursued a separate claim for £145,973.20, related to an alleged agreement concerning the Thornborough Solar Limited project.

Defendant's Defence

Armstrong Energy denied the claims, challenging the factual basis of Larkfleet's allegations and disputing any liability. The defence argued that the negligence claim was time-barred and that there was no duty of care owed to Larkfleet. Furthermore, Armstrong Energy contested the existence of any assurances or advice that Larkfleet claimed to have relied upon.

Summary Judgment Application

Armstrong Energy applied for reverse summary judgment, arguing that Larkfleet's claims had no real prospect of success. The application focused on five grounds, including the time-barred nature of the negligence claim and the absence of any credible evidence supporting Larkfleet's allegations.

Judgment and Analysis

HHJ Worster dismissed the negligence claim, finding that Larkfleet could not establish a duty of care owed by Armstrong Energy. The court emphasised the need for reasonable reliance on any alleged advice or assurances, which Larkfleet failed to demonstrate. The judge noted that the circumstances had significantly changed between the original advice in 2015 and the Novation Agreement in 2017, making it unreasonable for Larkfleet to rely on the earlier advice.

Thornborough Claim

However, the court allowed the Thornborough claim to proceed, as there was a triable issue regarding whether an agreement existed for the repayment to be offset against LEL's liability. The judge recognised that this aspect of the case required further examination and was suitable for the Shorter Trial Scheme.

Conclusion

The ruling underscores the importance of clear evidence and reasonable reliance in claims of negligence, particularly in complex commercial relationships. The decision also highlights the court's willingness to strike out claims that are deemed unwinnable, ensuring judicial resources are not wasted on cases with no realistic prospect of success.

Learn More

For more information on contractor law, see BeCivil's guide to Contractor Law.