Harding Homes (East Street) Ltd & Ors v Bircham Dyson Bell (a firm) & Anor

In a professional-negligence claim involving loss of a commercial negotiating opportunity, the claimant must prove that, without the breach, it would probably have acted differently and that there was a real and substantial chance that the counterparty would have agreed a more favourable outcome. The court must assess the overall chance in the round. It should not mechanically multiply percentages for separate contingencies where those contingencies are interrelated. The evidential burden may fall on the negligent solicitor to show that the lost opportunity had no value, even where the negligence concerned commercial negotiations rather than litigation. A merely speculative or negligible prospect does not establish causation. The claimants therefore established breach but failed to prove recoverable loss.

The claimant company and three individual guarantors brought a professional-negligence claim against their solicitors. The solicitors admitted that they had mistakenly included an all-monies clause in a guarantee which should have been limited to interest shortfall and cost overruns.

The claimants alleged that the error impaired their negotiations with GMAC after a development-finance default. They claimed that, absent the error, they would probably have secured a cheaper buy-out or a moratorium, obtained funding, and earned greater profits. The central issues were causation, the assessment of a lost commercial chance, and the availability of funding.

1. Breach and governing approach. The defendant admitted breach of duty. Damages fell to be assessed on a loss-of-chance basis. Following Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, the claimants had to establish a real and substantial, rather than speculative, chance of the relevant counterfactual events.
2. Evidential burden. The principles in Mount v Barker Austin [1998] PNLR 493, supported by the authorities cited with it, were applicable beyond lost litigation. The evidential burden could therefore lie on the negligent solicitors to show that the lost opportunity had no value.
3. Assessment of contingencies. The court should assess the overall chances in the round rather than mechanically applying percentage upon percentage. This approach was preferred to treating the negotiations, counterparty agreement and funding contingencies as automatically independent. The alternative moratorium case was disregarded because no loss calculation had been provided.
4. Causation. The claimants would probably have negotiated differently without the defective guarantee. Nevertheless, they failed to demonstrate a real and substantial chance that GMAC would have accepted a buy-out at £2m or £3m, or that the resulting arrangement would have generated greater profit. GMAC’s negotiating position had not materially depended on the all-monies clause, and the prospects of success were negligible.
5. Funding and alternative findings. The claimants failed to prove a realistic prospect of funding from their own resources, buy-to-let borrowing or RBS. The court also held, alternatively, that there was no contributory negligence: clients are not generally contributorily negligent for failing to notice a clause which their solicitor failed to explain. Any interest would have been assessed at the investment rate.
6. Disposition. The claimants were entitled to judgment for the admitted breach and nominal damages only. Otherwise, judgment was for the defendants.