Cohen v Kingsley Napley & Anor

In assessing loss in a professional-negligence claim arising from a lost cause of action, the court must consider both whether the underlying action would have been struck out if an application had been made and whether there was a substantial chance that the opposing party would not have made that application. A claim capable of being struck out may retain value if it could in fact have proceeded to trial. The hypothetical conduct of the opposing party is a factual issue to be assessed under ordinary damages principles, not assumed away. A claimant bears the legal burden of proving loss, but the defendant solicitor bears the evidential burden of showing that the lost litigation had no value.

The claimant sued her former solicitors for professional negligence in relation to a substantial counterclaim brought against architects. The High Court held that most of the counterclaim had no value by 21 November 1996 because it would have been struck out for abuse of process. It entered judgment for the solicitors on all claims except a basement-flooding counterclaim, and refused permission to amend to plead deliberate concealment under section 32 of the Limitation Act 1980.

The claimant sought permission to appeal and, if granted, pursued an immediate appeal. The central issue was whether the value of the earlier counterclaim could be assessed on the assumption that the architects would have applied to strike it out following a notice of intention to proceed.

1. Permission was granted and the appeal was allowed in part. The court allowed the appeal against the order entering judgment for the solicitors on the claims other than the basement counterclaim. It refused permission to appeal against the refusal to permit the proposed amendment based on section 32 of the Limitation Act 1980.

2. The court agreed that, if a strike-out application had been made in early 1997, the counterclaim would have been struck out. Its prosecution had involved more than ordinary procedural delay. There had been serious and deliberate disregard of procedural obligations, including failures concerning discovery. A protective writ based on the pleaded claims would likewise have been struck out.

3. That conclusion did not determine the value of the claim. In a solicitor-negligence claim, the court must first consider whether the underlying action would have been struck out if an application had been made. If it would, the action may nevertheless retain value where there is a substantial chance that the opposing party would not have made the application. The court must assess that hypothetical conduct on the evidence, applying the ordinary principles governing a third party’s hypothetical actions, as in Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602.

4. The judge had erred by assuming that the architects would have applied to strike out immediately after a notice of intention to proceed. The evidence raised a triable factual issue as to whether they would instead have allowed the counterclaim to proceed. The claimant bore the legal burden of proving a lost valuable claim, but the solicitors bore the evidential burden of showing that the litigation had no value. The factual inquiry was therefore required.

5. The proposed amendment alleging deliberate concealment was properly refused. A failure to tell a client of a perceived limitation of a retainer does not necessarily amount to deliberate concealment rather than carelessness or inadvertence. The application was very late, the disclosed documents did not support concealment, and the prospect of further supporting material was speculative.

• Court of Appeal (Civil Division) — granted permission to appeal against paragraph 3 of the High Court order and allowed the appeal to the extent stated; refused permission to appeal against refusal of the proposed amendment: [2006] EWCA Civ 66.
• High Court of Justice, Queen’s Bench Division — Tugendhat J entered judgment for the solicitors on all claims other than the basement counterclaim and refused permission to amend the particulars of claim to plead deliberate concealment.