Wright v Lewis Silkin LLP

Factual and Procedural Background

This case concerns an appeal by solicitors, Company A, against a judgment holding them liable for professional negligence in the sum of 2.04 million. The principal issue is whether the majority of the claimant's loss was too remote and/or outside the scope of the duty owed by the solicitors to the claimant.

The claimant, an experienced sports management professional, entered into negotiations in 2008 with Company B, an Indian media group and its subsidiary, regarding an employment contract related to a cricket franchise in the Indian Premier League administered by the Board of Control for Cricket in India (BCCI).

The claimant was offered a Chief Executive position, with terms including a guaranteed severance payment of 10 million and a signing bonus of 250,000. Legal advice was sought from Company A solicitors, who drafted "Heads of Terms" including an English law choice of law clause but did not specifically include an exclusive English jurisdiction clause.

Following the claimant’s constructive dismissal and failure to receive the guaranteed severance payment, the claimant commenced proceedings against Company B and its guarantor in English courts, obtaining judgment but facing enforcement difficulties in India. The claimant alleged that Company A was negligent in failing to advise on jurisdiction and enforcement protections, resulting in loss.

The trial judge found breach of duty in failing to advise on jurisdiction but assessed the claimant’s loss as a 20% lost chance of recovering the severance payment, awarding damages of 2.04 million plus interest. Company A appealed.

Legal Issues Presented

1. Whether the bulk of the claimant's loss was too remote and/or outside the scope of the duty owed by the solicitors to the claimant.
2. Whether the solicitors breached their duty by failing to advise on or include an exclusive English jurisdiction clause.
3. Whether the loss of a 20% chance of recovering the severance payment was causally linked to the solicitors’ breach.
4. Whether the loss of that chance was recoverable as damages or too remote.
5. Whether the scope of the solicitors’ duty extended to the loss of the chance of voluntary payment of the judgment debt.

Arguments of the Parties

Appellant's Arguments

• The trial judge erred in failing to identify precisely the advice the solicitors ought to have given regarding jurisdiction.
• The judge erred in assessing the claimant’s lost chance of recovery at 20%, asserting that even with an exclusive jurisdiction clause, there was no realistic chance of recovery.
• The loss of a 20% chance of recovery was too remote and/or outside the scope of the duty owed by the solicitors.
• The solicitors would have advised against including an exclusive English jurisdiction clause for various reasons, and the claimant would not have ignored such advice.

Respondent's Arguments

• The claimant would have insisted on an exclusive English jurisdiction clause if properly advised, based on his personal experience and advice from a trusted advisor ("the wise Indian").
• The additional litigation costs caused by the absence of such a clause were recoverable damages.
• The loss of the 20% chance of recovering the severance payment was causally linked to the solicitors’ breach.
• The scope of duty included the loss of the chance to recover the judgment debt voluntarily.
• The argument that the loss was outside the scope of duty was not raised at trial and should not be admitted on appeal.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed whether the solicitors breached their duty by failing to advise on the inclusion of an exclusive English jurisdiction clause. It accepted the trial judge's finding that the solicitor did breach this duty, as he did not correct the claimant’s misunderstanding that the choice of law clause included choice of jurisdiction.

The court found it was open to the judge to conclude that the claimant would have insisted on an exclusive English jurisdiction clause if properly advised, based on his experience and the advice of a trusted advisor.

Regarding causation, the court upheld the trial judge’s approach to valuing damages on a "loss of a chance" basis, assessing a 20% chance that the claimant would have recovered the severance payment if the exclusive jurisdiction clause had been included.

However, applying the remoteness test from contract law and the binding precedent in Wellesley Partners LLP v Withers LLP, the court held that while the additional litigation costs (40,000) caused by the absence of the clause were recoverable, the loss of the 20% chance of voluntary payment was too remote. This loss was not of a kind that the parties would have contemplated as likely at the time of contracting.

The court noted an inconsistency in the trial judge’s findings regarding the solvency of Company B at the relevant time, reinforcing that the loss of the chance of voluntary payment was not within the scope of the duty owed.

The court also considered but did not decide the scope of duty argument based on SAAMCO principles, noting that the Supreme Court was soon to address this issue. It allowed the solicitors to raise the scope of duty argument on appeal despite it not being raised at trial, given that the evidence was fully before the court and the argument closely related to remoteness.

Ultimately, the court based its decision on remoteness grounds, concluding that only the wasted costs were recoverable.

Holding and Implications

The Court of Appeal allowed the appeal on the ground of remoteness and set aside the award of 2 million in respect of the lost chance of recovering the severance payment. The only damages recoverable were the 40,000 in wasted litigation costs plus appropriate interest.

DISPOSED OF

The direct effect is a significant reduction in damages payable by the solicitors to the claimant. The court did not set new precedent on the scope of duty issue, leaving that matter to the Supreme Court. The ruling clarifies that loss of a chance to recover a judgment debt voluntarily may be too remote to recover in professional negligence claims against solicitors for contract drafting omissions, emphasizing the application of established remoteness principles in such contexts.