Somatra Ltd. v Sinclair Roche & Temperley

Permission to appeal is issue-specific. A challenge to a factual finding may properly be refused where the evidence amply supports the finding and there is no reasonable prospect of reversal. Permission may nevertheless be granted where accepted facts raise an arguable question whether a solicitor’s conduct at a settlement meeting fell below the required standard. In professional-negligence litigation, causation may require examination of whether the client would have rejected a settlement absent the breach, whether the breach caused acceptance of a lower settlement, and whether the loss should be assessed by reference to a lost chance of settlement or trial success. A stay may be conditioned on adequate security, particularly where the proposed guarantor is outside the jurisdiction.

Morison J awarded Somatra damages exceeding $5 million against its former solicitors, Sinclair Roche & Temperley, for breaches of duty in litigation concerning the loss of a tanker. The judge refused permission to appeal, treating the decision as substantially factual. SRT applied to the Court of Appeal for permission to challenge findings concerning a solicitor’s conduct at a settlement meeting, the authority for a proposed 75 per cent settlement, causation and the assessment of loss. Somatra sought permission on further breach, damages and trial-outcome issues. The central question was which proposed challenges raised sufficient arguable points for permission to appeal.

Permission to appeal was granted in part and refused in part. Lord Justice Jonathan Parker agreed with Lord Justice Waller’s reasoning and proposed order.

1. Permission was refused to challenge the finding that Mr Williams had lied about whether lay representatives had been invited to a meeting. Although serious, the finding was supported by ample material, and there was no reasonable prospect of persuading the Court of Appeal to reverse it ([7]–[10]).
2. Permission was granted to challenge the finding of breach arising from the settlement meeting of 29 March 1994. Even though SRT did not challenge the judge’s factual account, there was a reasonable prospect that the Court of Appeal might conclude that the conduct, having regard to the nature of the meeting, did not fall below the solicitor’s required standard ([11]–[12]).
3. The Court identified arguable issues concerning remoteness, foreseeability and causation. These included whether Somatra would have rejected the 66⅔ per cent settlement without the breaches, whether loss of confidence caused acceptance of that settlement rather than insistence on 75 per cent, and whether the judge had adopted the correct approach to causation ([13]–[23]).
4. If the evidence concerning the 75 per cent offer failed, the Court considered it arguable whether the loss should be assessed by trying the underlying action or by valuing a loss of chance, including the relevance of contemporaneous advice and the underwriters’ offers ([21]–[23]).
5. Permission was also granted on the alleged breach concerning Mr Smallwood, Somatra’s argument for adding the loss of a chance of obtaining a 100 per cent trial result, and challenges to individual findings bearing on the judge’s conclusion that Somatra would have won at trial ([24]–[27]).
6. The indemnity-costs issue was to be reviewed on the appeal. A stay was ordered, or the monies were to remain where they were, unless security was provided by a first-class bank acceptable to SRT or, if necessary, to the court. The costs of providing the guarantee were costs in the appeal ([28]–[30]).

• Court of Appeal (Civil Division): On 28 March 2003, granted permission on specified grounds, refused permission on the challenge to the invitation finding, and made directions concerning the stay, security and costs.
• High Court, Queen’s Bench Division: Morison J awarded Somatra damages exceeding $5 million against SRT and refused permission to appeal, considering the decision substantially factual.