Anthony King & Ors v DWF LLP & Ors

Professional advisers are not negligent merely because advice later proves unsuccessful. The court assesses the advice in light of the information available and the circumstances at the time, allowing for the exercise of professional judgment in a complex and rapidly developing case.

Trial counsel must not advance allegations of fraud without reasonably credible material establishing an arguable case. Once the available evidence no longer provides a proper basis for the pleaded case, counsel may be professionally obliged to stop advancing it. A solicitor may rely on properly instructed counsel’s advice, provided that reliance is not blind and the advice is not obviously wrong.

A litigation mistake creates a conflict only where it materially impairs objective advice or causes loss. An error which merely overstates an unquantified alternative claim, and is exposed and corrected at trial, does not necessarily create a conflict.

The Kings brought claims against their former solicitors, DWF LLP, and former barristers, alleging breaches of duty in the conduct of earlier misrepresentation proceedings against Primekings. They alleged that the legal team wrongly advised them to discontinue that claim during the tenth day of trial, apologise publicly and accept indemnity costs.

The present claims included allegations of fraud, conspiracy, conflicts of interest, fiduciary breach and negligence. Central to the case was an alleged mistake concerning whether deferred consideration was payable through redeemable B shares issued by the company. The court had to determine whether that mistake affected the legal team’s conduct, whether the advice to discontinue was professionally justified, and whether the advice on apology and costs was negligent.

1. The claims were dismissed. The allegations that the legal team conspired with the opposing side, acted to conceal the B Shares Mistake, or deliberately sacrificed a valuable claim were unsupported by the evidence.
2. The B Shares Mistake had no material effect on the primary claim for rescission. It concerned only the alternative damages case and overstated that case because the same B Share mechanism had been present in the Initial Deal. The mistake caused no loss and was exposed during the earlier trial. It therefore did not create an own-interest conflict requiring the defendants to cease acting.
3. The evidence emerging during the earlier trial seriously undermined the Kings’ case. Anthony King gave late and contradictory evidence about the alleged Fisher Representations. His evidence conflicted with James King’s evidence and with the pleaded case. The evidence from GE also supported the substantial truth of the position attributed to Mr Swain and left no viable case in misrepresentation, fraud or conspiracy.
4. The barristers were professionally entitled, and in substance obliged, to conclude that they could not continue advancing a fraud case without reasonably credible supporting evidence. Medcalf v Mardell and the applicable professional rules precluded continuing in the hope that cross-examination might produce a case. The advice to discontinue was therefore correct, or at least within the range of decisions available to a reasonably competent practitioner.
5. DWF was entitled to rely on the trial counsel’s advice. The case involved a complex professional judgment, and the advice was not obviously or glaringly wrong. The advice to apologise and to accept indemnity costs was also reasonable. The apology served the legitimate aim of rebuilding the parties’ relationship, while indemnity costs were the foreseeable consequence of abandoning serious fraud allegations after the evidential collapse of the case.
6. The court rejected the allegations that the defendants misled the Kings about the judge’s views, professional misconduct, the need to analyse the evidence, or the defendants’ subjective views of their conduct. It also rejected the complaints concerning disclosure, the cash-flow spreadsheet, Mr Wilson’s corrections and the timing of Howard Smith’s evidence.
7. Even if liability had been established, the lost claim had negligible, realistically zero, prospects of success and no settlement value by the time of discontinuance. No equitable compensation or damages would therefore have been recoverable.