PEARSON v SANDERS WITHERSPOON (A FIRM) AND ANOR

A solicitor’s retainer ordinarily requires litigation to be conducted with due expedition. The solicitor is not automatically liable for the risk that a judgment will become unenforceable because of the defendant’s insolvency. Extending the duty to that kind of loss requires more than foreseeability. The court must consider the solicitor’s knowledge, proximity, and whether extension of the duty is fair, just and reasonable.

Where a claim is lost through professional negligence, the value of the loss of chance must be assessed by considering the material risks in as much detail as the evidence permits. The court must evaluate separately the prospects of liability, quantum and enforcement, while standing back to assess the overall result.

The claimant’s solicitors negligently delayed proceedings against Ferranti International Plc concerning defective petrol-pumping equipment. The claim was eventually tried after administrative receivers had been appointed, and the resulting judgment was irrecoverable.

The claimant sued both his former solicitors for professional negligence. Gage J held that the first defendant owed a duty to guard against the risk of Ferranti’s insolvency and awarded £315,000. The second defendant was not liable because it could not have secured a trial date before the receivership.

The first defendant appealed, challenging causation and the assessment of the lost chance. The claimant cross-appealed, arguing that the award was too low. The central issues were the scope of the solicitor’s duty and the proper valuation of the chance of recovering damages.

Appeal allowed; cross-appeal dismissed. The award against the first defendant was reduced from £315,000 to £30,000, together with agreed interest. The first defendant was liable for negligent delay, but only for loss falling within the properly defined scope of its duty.

1. The ordinary duty arising from a retainer to conduct litigation is to protect the client’s interests by proper means, including acting with due expedition and avoiding delay. The loss ordinarily within that duty is loss flowing from the loss of the right of action, such as striking out for want of prosecution.
2. The inability to enforce a judgment because of the defendant’s impecuniosity is a different kind of loss. Foreseeability alone does not extend the solicitor’s duty to that loss. The court must consider the solicitor’s knowledge and whether, having regard to proximity, reasonableness, fairness and justice, the duty should be extended.
3. Here, general knowledge of Ferranti’s financial difficulties in 1989 and 1990 was insufficient. The August 1991 report that Ferranti’s future looked dubious, which was passed to the solicitors, materially changed the position. From then they had a fresh duty to act swiftly. On the assumed timetable, judgment could have been obtained in June 1993.
4. The lost chance had to be evaluated by considering the material risks in detail. The court assessed the individual heads of damage, the prospects of establishing liability, and the prospect of enforcement. It reduced the recoverable underlying claim to £100,000, applied a 75 per cent chance of success and a 50 per cent chance of recovery, and deducted Ferranti’s outstanding costs of £7,759.
5. The resulting award was rounded in the claimant’s favour to £30,000. Interest was to run at the court special account rate from 22 March 1988.

• Court of Appeal (Civil Division) allowed the first defendant’s appeal, dismissed the claimant’s cross-appeal, and substituted an award of £30,000 plus agreed interest.
• Queen’s Bench Division, Gage J, on 3 July 1998, awarded the claimant £315,000 against the first defendant. The claim against the second defendant failed.