Kristian Siem & Ors v Womble Bond Dickinson (UK) LLP

A professional-negligence claim fails where the alleged advice and conduct represented reasonable professional judgment in the circumstances. A solicitor is not obliged to survey every possible contractual protection or predict that a counterparty will react adversely to a measured negotiating position.

Causation requires a counterfactual involving the minimum change necessary to comply with the duty. The claimant must prove, on the balance of probabilities, the relevant hypothetical conduct. Where loss depends on a third party, the claimant must establish a real and substantial chance of the benefit. An implied retainer requires necessity, and assumption of responsibility to a non-client depends on objective reliance and all the circumstances.

The claimants sought substantial damages from their solicitors for alleged negligence during negotiations for the acquisition of shares in a company holding a London property and the proposed redevelopment of that property.

They alleged negligent advice concerning warranty protection, failure to follow instructions in negotiations, and an inaccurate summary of the transaction. They also alleged that duties were owed to claimants who had no express retainer. The defendant disputed breach, causation, duty, planning prospects and the effect of contractual exclusions.

The central issues were whether the defendant breached duties owed to the claimants and, if so, whether that caused the lost redevelopment opportunity.

1. Disposition. The claims were dismissed. The court decided breach first, assuming in the claimants’ favour that the same duties were owed to all three claimants.
2. Warranty advice. The solicitor reasonably advised that tracing provisions without a retention could leave the buying side exposed. He was entitled to recommend a £1m retention as a proportionate negotiating solution. He was not required to canvass every possible guarantee, undertaking or personal warranty, and was not obliged to foresee that the sellers would regard the retention as unacceptable.
3. Instructions and later email. The evidence did not establish that instructions had been given to concede the completion date or retention issue. The later summary of negotiations was a diligent account and was not misleading. None of the four alleged breaches was proved.
4. Causation. Even assuming breaches, the claimants failed to establish either counterfactual. The purchaser would not have accepted tracing provisions alone, and would have continued to insist on a substantial interval between exchange and completion. The seller would probably still have halted negotiations. The purchaser’s January 2018 withdrawal was caused by his assessment of risk and reward, including market conditions and confidence in the proposed development, not by the later email.
5. Planning. The proposed schemes lacked a real and substantial chance of permission. The basement policy was construed in context and prevented further basement development where the existing basement had been constructed after 1 July 1948. The proposed demolition also carried a 60% risk of refusal, although that issue was unnecessary to the result.
6. Duties. No implied retainer or assumption of responsibility was established for the purchaser’s warranty advice, because he deliberately relied on separate solicitors. The court considered it reasonably foreseeable that the defendant assumed responsibility for implementing instructions in relation to him. For Chapters, the court left open whether responsibility arose after the structural change, but accepted that reliance on warranty advice was reasonably foreseeable. No final determination was necessary.
7. The court did not decide the enforceability of the exclusion clause or quantum. A further hearing was directed for the form of order and consequential matters, including costs.