Amalgamated Metal Corporation Plc v Wragge & Co (A Firm) & Anor

An agent who exceeds actual authority is strictly liable for loss caused by the breach, but causation must still be established. The court must assess what would probably have happened without the unauthorised act. A solicitor retained in litigation must give sound advice on the claim and settlement offers; the retainer is not merely a watching brief. Where contemporary documents strongly establish the client’s instructions, unsupported reconstruction of conversations is insufficient to displace them. Loss may be assessed by reference to what would probably have occurred, rather than as a speculative loss of chance, where the evidence permits a sufficiently certain conclusion.

Amalgamated Metal Corporation Plc retained Wragge & Co in proceedings concerning compensation for unlawfully imposed advance corporation tax. Wragge accepted HMRC proposals agreeing the basis of compensation for utilised ACT, including pre-limitation claims, and AMC was removed from the relevant quantum issues. AMC contended that Wragge had acted without authority and had negligently failed to explain the effect of the settlement.

The claim concerned whether Wragge had authority, whether any breach caused the loss of compound-interest compensation, and how that loss should be quantified.

1. Authority. AMC proved that Wragge had no authority to settle the quantum of the pre-limitation utilised-ACT claims. The contemporary correspondence showed that AMC’s instructions were to preserve those claims. The court relied heavily on the documents and the overall probabilities. The evidence of a solicitor’s reconstructed recollection did not establish an instruction to settle.
2. Breach of duty. Wragge negligently failed to advise AMC on the issues in the group litigation, particularly the nature and merits of the quantum issues. AMC’s retainer required sound advice concerning the claim and settlement offers. It was not merely a watching brief.
3. Causation. An agent exceeding authority is strictly liable for loss caused by the breach. The loss must nevertheless be caused by the breach. Had Wragge not accepted the offer on 15 April 2003, it would have lapsed and AMC would have remained subscribed to the quantum issues. The probabilities overwhelmingly favoured the conclusion that AMC would not subsequently have withdrawn. The compound-interest claim was potentially worth millions, while the estimated costs were modest. The court also accepted that proper advice would, if necessary, have led AMC to continue pursuing the claim.
4. Quantum. The court rejected assessment on a speculative loss-of-chance basis. AMC’s approach was supported by the later agreed treatment of unutilised ACT, including the treatment of franked investment income and the applicable compound-interest rate. There was no good ground for concluding that HMRC would have adopted a materially different approach.
5. Disposition. AMC’s claim succeeded in the sum of £7,655,473.13.