Levicom International Holdings BV and another v Linklaters, [2009] EWHC 812 (Comm), [2009] All ER (D) 158 (Apr)
Queen’s Bench Division, Commercial Court, Smith J, 21 April 2009
Bolitho v City and Hackney Health Authority [1997] 4 All ER 771 provides the
correct test of causation where a lawyer is negligent in forming his opinion upon legal or other questions in order to advise or to act for his client.
Justin Fenwick QC and Ben Patten (instructed by Manches) for the claimants. Stephen Moriarty QC and Derrick Dale (instructed by Clyde & Co) for the defendant.
The claimants were Dutch companies which owned the Levicom group, which had interests in telecommunications businesses throughout the Baltic States. The defendant was a leading firm of London solicitors. The proceedings concerned advice given by the defendant to the claimants about a dispute the claimants had with two Swedish companies.
Share purchase agreements had been entered into in January 1999 regulating the agreement between the claimants and the Swedish companies. Clause 13 of one of the agreements imposed restrictions on the Swedish companies’ ability to be engaged or interested in competing cellular networks in the Baltic States. The claimants considered that the Swedish companies had breached that agreement.
By, inter alia, letters of January and March 2001, the defendant gave advice as to the claimants’ prospects of establishing a breach of cl 13, about the remedies available to the claimants, and about the positions taken by them and by the Swedish companies in exchanges about settlement. According to the claimants, acting on the defendant’s advice, they did not settle the dispute but brought arbitration proceedings which, having incurred considerable costs, they settled in June 2004 on unsatisfactory terms. The claimants also considered that the defendant had been too optimistic in its advice. They issued proceedings in negligence.
Andrew Smith J:
The claimants’ case was not only that they relied upon the advice given in the January and March letters but that they would have acted differently if they had been given proper advice.
That involved considering how the claimant would have acted in the hypothetical circumstances that the defendant’s advice was not negligent: the claimant had to show how they would have acted on the balance of probabilities, and also that there was a substantial chance that the Swedish companies would have agreed to settle on terms that the claimant would have accepted: Allied Maples Group v Simmons & Simmons [1995] 4 All ER 907.
His lordship would apply the principles in Allied Maple Group to the instant case as follows: the claimants had to show on the balance of probabilities that, had they received proper advice, they would have adopted a different negotiating stance, and, if they showed that, the court had to assess the chance of that bringing about a response from the Swedish companies that on the balance of probabilities the claimant would have accepted by way of settlement of the dispute. One corollary was that if, on the balance of probabilities, the claimants would with proper advice have accepted the first offer, or settled on the terms of the first offer after 2 March 2001 when it had lapsed, there would have been a settlement.
For that purpose it was to be supposed that the claimants had received “proper” advice. His lordship turned to consider what was the “proper advice” that it was to be supposed that the defendants had given.
In Bolitho v Hackney and City Health Authority Bolitho v City and Hackney Health Authority [1997] 4 All ER 771 it was held that “… a plaintiff can discharge the burden of proof on causation by satisfying the court either that the relevant person would in fact have taken the requisite action (although she would not have been at fault if she had not) or that the proper discharge of the relevant person’s duty towards the plaintiff required that she take that action”. Thus the defendant argued that the question whether damage was caused by negligence depended upon how the defendant would have behaved if he had not been negligent either as he was or in some other way: that was to say, how the defendant would have advised and what it would have done had it not been negligent.
The claimants submitted that Bolitho (a medical negligence case) had no application in the instant case. They argued that causation depended upon what the claimants would have done if the defendant had given the “correct” advice, the advice that should have been given by a solicitor such as the defendant in the situation in which they was and with the clients and information that it had. It cited South Australia Asset Management Corp v York Montague Ltd [1996] 3 All ER 365.
His lordship also referred to Flenley and Leech on Solicitors’ Negligence and Liability (2008).
The authorities did not clearly establish the correct test of causation where a lawyer was negligent in forming his opinion upon legal or other questions in order to advise or to act for his client. If it were necessary to decide the point, his lordship would adopt the test in Bolitho. There the court was not concerned with deciding what conduct to attribute to the defendant instead of her negligent act: she should obviously have attended instead of negligently failing to do so.
The question was what the court was to suppose she did when she attended. But was not a distinction that in principle justified adopting a different test. Nor should a different test for causation be adopted in principle for cases of medical negligence from that in other cases of professional negligence. Bolitho reflected the law’s recognition that in matters of
professional judgment there were a range of views properly held or courses of action properly adopted and did not generally select which of them was the correct one. The South Australia Asset Management case did not suggest otherwise.
His lordship considered further the facts of the instant case and concluded that, while the defendant had been negligent, that had not caused the claimants any loss. The claimants would accordingly recover only nominal damages of £5.
