Wright v Lewis Silkin [2016] EWCA Civ 1308

In negligence case Wright v Lewis Silkin [2016] EWCA Civ 1308, solicitors were successful on appeal: the client’s loss of chance was too remote and not within the scope of their duty. However, the case leaves open the question of calculation of loss of chance where the chance relies on several contingencies.

Facts

In 2008, Mr Wright was employed by an Indian company, DCSV, to run an Indian Premier League cricket franchise. Lewis Silkin, advised on and drafted the Heads of Terms of his employment.

The Heads of Terms included clauses that:

1. Mr Wright be paid a severance of £10,000,000 in the event of his dismissal. This payment was guaranteed by DCSV’s parent company, DCHL.
2. The agreement be governed by English law.

However, the Heads of Terms was silent on the question of jurisdiction.

Mr Wright was dismissed from employment in January 2009. DCSV not pay the severance, and neither did the guarantor company.

The underlying claim

Mr Wright issued proceedings in England against both DCSV and DCHL. The defendant companies in that action unsuccessfully disputed jurisdiction.

The companies did not attend at the final hearing on 16 July 2012 and Mr Wright was awarded judgment of over £10,300,000 plus indemnity costs.

However, Mr Wright was unable to enforce the judgment in India. In addition, by September 2012, the defendant companies appeared to be insolvent.

The professional negligence action

Mr Wright sought remedy in a professional negligence action against Lewis Silkin: [2015] EWHC 1897 (QB).

At trial, Hamblen J found that Lewis Silkin had failed to advise Mr Wright as to the inclusion of an exclusive jurisdiction clause. This was a breach of duty.

Hamblen J further held that had Mr Wright been properly advised he would have insisted on an exclusive jurisdiction clause for the courts of England; and had the Heads of Terms contained an exclusive jurisdiction clause, the litigation in the underlying claim would have proceeded without the jurisdictional challenges.

Accordingly, Mr Wright’s proceedings would have progressed more easily and more rapidly; he would have had judgment in June 2011, before the Indian companies were insolvent. Mr Wright contended that, despite evidence of delays and difficulties in enforcement in India, the Indian companies would have been pressured by external forces, and would have voluntarily settled with Mr Wright.

Hamblen J agreed there was a real and substantial chance of these contingencies coming to pass, but that the probability was low. He valued that probability at 20%. Accordingly, the value of the chance was £2,000,000, being 20% of the severance amount of £10,000,000. Further, Mr Wright had an 80% chance of saving costs in the jurisdictional disputes, and this was also recovered.

The Appeal

Issues on appeal

Lewis Silkin appealed the decision on three grounds, contending:

1. The judge was wrong in failing to identify the advice which Lewis Silkin ought to have given.
2. The judge was wrong in assessing Mr Wright’s lost chance of recovering the severance payment at 20%.
3. Mr Wright’s loss of chance of recovering the severance payment was too remote and/or outside the scope of the duty which Lewis Silkin owed in relation to the jurisdiction issue.

The appeal was dismissed on the first two grounds, but allowed on the third.

The decision

1. It was not necessary for the judge to set out the advice that Lewis Silkin should have given. Mr Wright had firm views about where he wanted litigation to take place. Lewis Silkin had given evidence about the advice it would have given, and that advice would not have dissuaded Mr Wright from insisting on the exclusive jurisdiction clause for English courts.
2. There was nothing wrong with the judge’s assessment of the value of the chance. The court correctly applied the loss of chance assessment as set out in Allied Maples v Simmons & Simons [1995] 1 WLR 1602. The trying court was best placed to decide if there was a real and substantial chance lost and the value of that chance; moreover, on the evidence as set out by Hamblen J, the judge correctly valued the loss of chance at 20% probability.
3. Reversing Hamblen J, Mr Wright’s loss was too remote. Defective drafting left open the possibility of a jurisdictional contest, which led to delay in judgment. As a result of that delay Mr Wright lost a chance that the Indian companies would pay the severance debt voluntarily, to preserve their reputation in circumstances where enforcement proceedings would be ineffective.  At formation of the retainer, neither party had in mind Mr Wright would lose such a chance.

The Court of Appeal briefly considered the alternative basis for their reversal, that Mr Wright’s loss of chance was not within the scope of Lewis Silkin’s duty. Consistent with its conclusion on remoteness, the court held that Mr Wright’s loss was outside the scope of the solicitor’s duty in the circumstances.

However, the unrecoverable costs which were wasted in the three contested jurisdiction hearings were exactly the loss that was to be expected. These were recoverable in full.

Discussion

Lawyers will welcome another example of remoteness in professional negligence.  In coming to its conclusion, the Court of Appeal applied the relatively recent Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146: the professional is liable for damages resulting from his breach if at the time of making the contract, a reasonable person in the professional’s position would have had damage of that kind in mind as being not unlikely to result from a breach.

Secondly, this case concisely sets out the established law on loss of chance calculations in solicitor’s negligence actions, summarising Allied Maples v Simmons & Simmons [1995] 1 WLR 1602:

Where a claimants’ loss depends upon what a third party would have done, the court… assesses damages on the “loss of chance” basis, provided that the lost chance was real or substantial, rather than speculative. (per Jackson at [53])

As is well known, the court hypothesises as to the actions of the third party, and then considers whether that hypothesis is “real and substantial”. If an event is purely speculative, there is no recovery. The court then determines the probability of the hypothetical event coming to pass, and makes a percentage deduction to account for that probability.

In this case, there were two dependent, contingent events: first, that pressure could be brought to bear on the Indian companies and, secondly, that those companies would voluntarily pay a settlement. Hamblen J carefully considered the evidence and found that each of these events had a real and substantial chance of occurring, but had a low probability. Not only was Hamblen J’s assessment of 20% undisturbed on appeal, it was positively endorsed.

One issue that remains unclear is the method of quantification where recovery depends on several hypothetical contingencies. Where there are a series of events, each must be considered separately: each may not have a real and substantial chance of happening and the probability of each must be ascertained.

In this case, the High Court looked at the circumstances in the round, and came to an assessment of overall probability. Hamblen J also stated that his conclusion would be the same if he were to consider each contingent chance progressively (paragraph [166]). Hamblen J is undoubtedly right on the facts of this case. Each contingent event has a real and substantial chance of coming to pass, and each event has a similarly low probability.

What is less clear is how a court should approach assessment where dependent contingent events are all real and substantial, but at vastly different probabilities: does the court consider each stage separately; or does the court take an overall view of the circumstances in the round? This remains unanswered.