Tamlura NV v CMS Cameron MckEnna

A solicitor instructed to implement an agreed commercial bargain is entitled to rely on clear instructions and is not generally required to invite the client to exploit an apparent drafting mistake by the other side. The solicitor must, however, give an accurate explanation where the circumstances require one. Whether further explanation is necessary depends on the clients’ experience, the nature of the instructions, the negotiations, the documents supplied and the urgency of the transaction. A solicitor is not required to explain every commercial consequence of a bargain which experienced clients have agreed and which the solicitor is implementing. Where the evidence establishes that the agreement was accurately reflected in the final document, a claim based on a more advantageous bargain allegedly intended by the client fails.

Tamlura brought a professional negligence claim against its solicitors, CMS Cameron McKenna, arising from the sale of Tamlura’s shareholding in Tamlura International Holdings BV to The Innovation Group plc. Part of the consideration was to be paid through shares allotted on completion, with further shares representing a retained amount to be allotted two years later.

The sale agreement valued the deferred shares by reference to the completion-date share price, while deductions for warranty and other claims used a later valuation. After the purchaser’s share price fell substantially, Tamlura received far less than it expected. It alleged that CMS had failed to implement an agreement for an allotment-date valuation, failed to explain an opposing draft, and failed to explain the final agreement. The central issue was whether CMS had acted negligently.

1. Claim dismissed. The agreement reflected the bargain recorded in the heads of agreement: the deferred consideration shares were to be valued by reference to the completion date, not the later allotment date.
2. The contemporaneous documents and meeting notes supported that conclusion. The court rejected the alleged agreement or assurance that Tamlura would receive shares worth £4 million at the later date. The later drafting which appeared to use an allotment-date valuation was treated as a mistake by the other side’s solicitor. It was corrected by CMS in accordance with its instructions.
3. A solicitor implementing clear commercial instructions is entitled to assume that the instructions remain operative unless they are changed. On the facts, CMS was not obliged to tell Tamlura that the other side’s draft appeared to contain a material mistake, or to ask whether Tamlura wished to take advantage of it. Doing so could have created risks concerning rectification, the shareholder circular and the transaction itself.
4. CMS had explained the relevant structure of the transaction and supplied drafts to experienced commercial clients assisted by an experienced financial adviser. In those circumstances, CMS was not required to explain the final agreement line by line or to explain every commercial consequence of the agreed valuation mechanism. It was sufficient that the agreement was accurately described and implemented.
5. The court therefore found no negligence in any form advanced at trial. Questions of loss of a chance, causation, contributory negligence and damages did not arise.