Watson Farley and Williams (a firm) v Ostrovizky

An appellate court should interfere with a trial judge’s findings of primary fact only where satisfied that the judge was plainly wrong. The same restraint applies to the trial judge’s evaluation of the facts and the inferences drawn from them.

A professional negligence claimant must establish that the alleged breach caused the claimed loss. Causation fails where the claimant would not have acted differently had the suggested advice been given, or where independent commercial decisions and the conduct of others caused the loss.

A firm of solicitors claimed unpaid fees from a client who counterclaimed for approximately €13 million for professional negligence. He alleged that a partner in the firm had failed to draft agreements and advise him so as to secure sufficient control over Greek partnerships used for proposed solar energy projects.

Silber J dismissed the counterclaim in [2014] EWHC 160 (QB). He found no breach of duty, no causation and no recoverable loss. The client challenged the judge’s factual findings and the conclusions drawn from them, while confirming that the appeal raised no point of law. The central issue was whether those findings on breach and causation were open to the trial judge.

1. The appeal was dismissed. The appellant fell far short of showing that the trial judge’s conclusions on breach of duty and causation were not open to him. It was therefore unnecessary to consider quantum, contributory negligence or the respondent’s argument based on disclosure failures.

2. An appellate court should not interfere with a trial judge’s findings of primary fact unless satisfied that the judge was plainly wrong. That restraint also applies to the trial judge’s evaluation of the facts and the inferences drawn from them. The trial judge had heard extensive oral and expert evidence, assessed credibility and considered a much larger evidential record than the selected material presented on appeal.

3. The finding that the solicitor had advised the client’s agent about taking minority holdings was supported by her evidence, the agent’s own testimony and the parties’ conduct. The relevant clause allowed minority holdings to be taken immediately and provided protection against unilateral sale. The failure to take that protection resulted from the client’s and agent’s neglect, rather than negligent advice. The omission of the clause from later agreements, the scope of the proposed pledge and the retention of a redundant statutory-documents clause did not establish breach or causative loss.

4. The trial judge was entitled to consider breach and “but for” causation together when asking whether different drafting or advice would have changed the parties’ conduct. The evidence supported the finding that they would have acted in the same way. They did not take the minority holdings, provide the required guarantee, enforce the available pledge, terminate the agreements or seek to vindicate their contractual rights.

5. The alleged losses arose from independent commercial events. These included the local partner’s unwillingness or inability to finance the projects, the client’s voluntary assumption of additional funding obligations, subsequent renegotiations, delay and changed financial conditions. No project company was sold, and proposed sales failed for commercial reasons. The alleged defects in drafting therefore caused neither the loss of profits nor the additional expenditure.

1. Court of Appeal (Civil Division): The appeal in [2015] EWCA Civ 457 was dismissed. The findings that there was no breach of duty and no causation were upheld. Quantum, contributory negligence and the disclosure-based argument in the respondent’s notice did not require determination.

2. High Court, Queen’s Bench Division: Silber J dismissed the professional negligence counterclaim in [2014] EWHC 160 (QB). He found no breach of duty, no causation and no loss.