Nicholson v Knox Ukiwa & Co (a firm) & Anor

A professional negligence claim arising from settlement advice fails where the claimant understood the material terms of the settlement when accepting it. The court determines that issue on the balance of probabilities, assessing the contemporaneous documents, witness evidence and the claimant’s conduct. A solicitor’s breach is not established merely because the claimant later regrets the settlement or disputes its terms. The court also considered, on an alternative and academic basis, the valuation of a lost claim. Damages for injury to a company’s credit may be substantial without proof of special damage. In a lost-litigation claim, factual uncertainty may justify a generous assessment, but legal issues must be decided by applying legal principles rather than discounted speculatively.

The claimant sued his former solicitors and the second defendant for breach of contract. He alleged that the second defendant failed to ensure that he understood that a settlement of £105,000 included interest. He said that, had he understood the term, he would have rejected the settlement and pursued his claims against earlier solicitors.

The defendants contended that the term had been made clear during mediation and that the settlement exceeded the value of the underlying claims. The central issue was whether the claimant knew, when the settlement was accepted and the Tomlin Order signed, that the £105,000 was inclusive of interest.

1. Claim dismissed. The claimant understood when the Tomlin Order was signed that the settlement sum of £105,000 included interest. The defendants therefore had not breached their contractual duty in the manner alleged.
2. The issue was decided on the balance of probabilities. The court preferred the second defendant’s evidence, supported by contemporaneous notes, to the claimant’s account. The mediation records showed that the earlier offer of £70,500 was inclusive of interest and that the £105,000 offer was made to settle all claims inclusive of interest and costs. The Tomlin Order expressly recorded that the sum included interest.
3. The claimant’s subsequent objection did not outweigh the contemporaneous evidence. His involvement in the litigation, knowledge of its value, participation in discussions about the settlement terms, and failure to raise any outstanding issue about interest when leaving the mediation supported the defendants’ case.
4. The court rejected any suggestion of deliberate misleading conduct. Such conduct would have been fraudulent, but fraud was not alleged and the evidence did not support it.
5. As an alternative, and expressly because detailed submissions had been made, the court assessed the underlying lost claims. Damages for injury to a company’s credit were not limited to nominal damages and could be awarded without proof of special damage. The appropriate assessment for the bank claim was £15,000 at the notional 1984 trial date.
6. The court applied no speculative discount to the bank claim for legal uncertainties where the relevant issues could be decided as matters of law. It allowed a discount of no more than 25 per cent for the separate claim involving significant factual and litigation risks. The court also considered interest and assignment issues, but those conclusions were academic in light of the factual finding disposing of the action.