Allied Maples Group Ltd v Simmons & Simmons

Where negligent advice deprives a claimant of an opportunity involving an independent third party, the claimant need not prove that the third party would probably have acted favourably. The claimant must establish that the opportunity had a real or substantial chance, rather than a speculative one. The chance is then valued as part of the assessment of damages and may be compensable even if it was below 50%.

The claimant must still prove on the balance of probabilities what the claimant would have done if properly advised. Direct evidence from the third party is not essential; a real chance may be inferred from the surrounding circumstances.

Allied Maples Group Ltd v Simmons & Simmons concerned solicitors' negligent advice during a commercial acquisition. A proposed warranty protecting the purchaser against contingent liabilities on previously assigned leases was deleted without adequate advice. After completion, several such liabilities materialised.

Turner J decided a preliminary issue in the purchaser's favour. His finding of breach of duty was not appealed. The solicitors appealed against his causation findings, contending that the purchaser had to prove on the balance of probabilities that the vendor would have agreed to replacement protection.

The central issue was whether the vendor's hypothetical response formed part of causation to be proved as probable, or whether a real chance of a favourable response was sufficient, with its value assessed as damages.

1. Appeal dismissed by a majority. Stuart-Smith LJ delivered the leading judgment. Hobhouse LJ agreed with his proposed order and reasons. The purchaser had established a sufficient causal connection between the negligent omission and the loss of an opportunity to negotiate better protection.

2. Where negligence consists of an omission, the claimant must prove on the balance of probabilities what the claimant would have done if properly advised. If that is proved, the court does not discount the result merely because the balance was narrowly satisfied. The judge was entitled to find that proper advice would have caused the purchaser to reopen negotiations.

3. Where the resulting loss depends on the hypothetical conduct of an independent third party, the claimant need only establish a real or substantial chance of a favourable response. A probability exceeding 50% is unnecessary. Once that threshold is crossed, the degree and value of the chance are matters of quantification. The majority applied the approach in Davies v Taylor [1974] AC 207.

4. Direct evidence from the third party is not indispensable. The prospect of success may be inferred from all the circumstances. The commercial negotiations were sufficiently structured and informed by the parties' interests to permit a finding that the purchaser had a measurable chance of obtaining either a warranty restricted to identified properties or an indemnity capped at £2.18 million.

5. The judge had gone further than necessary by finding that a favourable outcome was probable. His findings were varied to state only that there was a realistic chance of obtaining one of the specified protections. The precise percentage and value of that chance were left for the assessment of damages, at which further evidence could be admitted.

6. Millett LJ agreed with the governing distinction between the claimant's own hypothetical conduct and that of a third party, but dissented on evidential sufficiency. He considered the vendor's response to be pure speculation on the evidence then available, although the procedural history justified allowing the purchaser a further opportunity to prove a substantial chance.

7. Hobhouse LJ further emphasised that preliminary issues must be clearly defined and reflected accurately in the resulting judgment. The appeal was dismissed, the respondents received two-thirds of their costs, and permission to appeal to the House of Lords was refused.

1. Court of Appeal: In Allied Maples Group Ltd v Simmons & Simmons [1995] EWCA Civ 17, reported at [1995] 1 WLR 1602, the solicitors' appeal was dismissed by a majority. The findings were varied so that the purchaser had established a realistic chance of negotiating specified protection, while valuation of that chance remained for the damages hearing.

2. Queen's Bench Division (Turner J): On 8 June 1993, following trial of a preliminary issue, the judge found breach of duty and causation in the purchaser's favour and ordered damages to be assessed. No reported citation is stated in the judgment.