Kingsley Napley LLP v Harris (Rev1)

In a professional-negligence claim based on loss of a litigation opportunity, causation requires a two-stage inquiry. The court must first decide, on the balance of probabilities, whether the claimant would have taken the relevant step and, where appropriate, whether a third party had a real chance of acting as alleged. It must then assess whether the claimant lost a real and substantial chance of a better outcome and quantify that chance. Generous evidential allowances apply principally where negligence has deprived the claimant of the ability to pursue the underlying litigation. They do not apply where the evidence and legal arguments were actually available for assessment. Settlement value may be assessed by reference to the parties who would probably have negotiated, without an additional discount for the risk of settlement failure where that risk is already reflected in the settlement valuation.

Kingsley Napley LLP claimed unpaid professional fees from Mr Steven Harris and Danriss Group Holdings Ltd. Mr Harris counterclaimed in professional negligence concerning advice and drafting in relation to a claim against Ingram Winter Green. The present trial concerned only the IWG matter.

Kingsley Napley admitted that it was negligent to draft a standstill agreement naming IWG LLP without making further inquiries, but denied that the breach caused loss. The central issue was whether the ambiguity deprived Mr Harris of a real and substantial chance of achieving a better settlement of the underlying claim.

1. Loss of a chance. Applying Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, as affirmed in Perry v Raleys Solicitors [2020] AC 352, the court separated causation into two stages. First, it determined whether Mr Harris would have issued proceedings against TP Bennett in time and whether the relevant third parties would have acted as alleged. Secondly, it assessed whether there was a real and substantial chance of a better result and, if so, its percentage value.
2. The court accepted that Mr Harris would have issued proceedings against TP Bennett if necessary to preserve the opportunity to negotiate. In a lost-litigation case, Mount v Barker Austin [1998] PNLR 493 supports making appropriate allowances in the claimant’s favour. That principle is confined to cases where negligence has deprived the claimant of the opportunity to adduce relevant evidence and advance the claim. It does not apply where the evidence and arguments were in fact available, or where the issue is a legal question.
3. The appropriate third parties were IWG and TP Bennett, together with their insurers, because the likely outcome was settlement rather than trial. Following Hanbury v Hugh James Solicitors [2019] PNLR 25, no further discount was required for the risk of failing to settle where the settlement value already reflected litigation risk and the parties’ assessment of the merits.
4. The underlying claim had some value and was worth pursuing, but the delay claim had no realistic prospect of success and the remaining claims were worth substantially less than the sum sought. The pre-existing offers represented the best available outcome. The standstill agreement’s ambiguity therefore caused no loss and there was no chance of a better settlement.
5. The court dismissed the counterclaim. The parties were directed to agree an order dealing with the conclusion and consequential matters, including costs.

First-instance judgment. The judgment records an earlier private-hearing determination at [2021] EWHC 137, but no appellate decision.