Professional Negligence Solicitors

The above title aptly captures what the indemnity insurers for Lewis Silkin LLP would have felt following the handing down of the judgment in the case of Wright v Lewis Silkin LLP by the Court of Appeal on 21st December 2016.

What was the case all about?

The Claimant, Mr Wright was offered the job of chief executive of Deccan Chargers Sporting Ventures (DCSV) Limited, owner of a cricketing franchise in the newly formed Indian Premier League, in May 2008. DCSV was a subsidiary of Deccan Chronicle Holdings Limited (DCHL), a media group, which owned the Deccan Chronicle, the fourth largest English language newspaper in India. The offer included an initial £300,000 annual salary and 3.5% of the equity of DCSV. Mr Wright instructed Lewis Silkin to advise and assist him with the employment contract negotiations with Deccan Chronicle Holdings Limited (DCHL) and its subsidiary, DCSV. Mr Wright also wanted a severance guarantee in the sum of £10million in the event of his employment being terminated.

Mr Wright was concerned with the offer from Mr Iyler, the managing Director of DCHL, and sought advice from an individual who was not named in the judgment but was known and referred to throughout as “the wise Indian”. On 9th May 2008, Mr Wright went to see the wise Indian. The wise Indian advised Mr Wright that he was in a strong position and, amongst others, stated that Mr Wright should also ensure that any dispute was resolved in England. The wise Indian reiterated this advice to Mr Wright as follows: “because, as you know, India very slow, no good, must be here".

Lewis Silkin drafted the contract, which included a severance guarantee in the sum of £10million, in the event of the termination of Mr Wright’s employment, and a clause that the terms in the contract were governed by English law. Mr Wright signed the contract with DCHL and commenced employment in June 2008. Due to differences between Mr Wright and DCSV, Mr Wright left the company in January 2009. He then sued for the severance payment of £10million, which was not forthcoming. After obtaining judgment in the High Court, Mr Wright was unable to enforce the law against DCHL, as the company had serious financial problems as that time. Mr Wright then turned to Lewis Silkin and brought the claim for negligence on the basis that the contract did not confer jurisdiction on the English Court, an issue with which he was particularly concerned at the negotiation stage and which he had expected Lewis Silkin to address. He stated that Lewis Silkin did not advise him properly regarding the severance guarantee.

The claim was issued in the High Court and the trial took place in June 2015, before Mr Justice Hamblen. After hearing evidence from both sides, Mr Justice Hamblen gave judgment in favour of the claimant to the sum of £2million, which represented 20% of the £10million severance guarantee the claimant desired. The learned judge considered that Lewis Silkin breached their duty to Mr Wright by not including an exclusive clause that would have conferred jurisdiction on the English Court.

The defendants appealed the decision and the appeal was heard by both Lord Justice Jackson and Lord Justice Patten on 21st December 2016. Suffice to say, the defendants were successful in setting aside Mr Justice Hamblen judgment in relation to £2million. LJ Jackson’s view was that the £2million was too remote as the loss is not damage of a kind that either party in May 2008 would have had in mind as not unlikely to result from the omission of an exclusive jurisdiction clause. However, he found that the wasted cost of £40,000 spent by Mr Wright due to the defective drafting was recoverable from Lewis Silkin. His view was that Mr Wright would not have spent that money if the exclusive jurisdiction clause was drafted properly.

An important factor in this decision stems from the earlier court of appeal decision in the case of Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146; [2016] Ch 529, which was heard in the Court of Appeal four months after Mr Justice Hamblen’s decision. Wellesley was a solicitors' negligence case in which there was concurrent liability and the Court of Appeal held that where there were contractual and tortious duties to take care in carrying out instructions, the test for recoverability of damage should be the same, and it should be the contractual one. On that basis, the contractual as opposed to the test in tort, was applied and it is well known that a Defendant will only be liable for damage resulting from his breach if, at the time of making the contract, a reasonable person in the defendant’s position would have had damage of that kind in mind as not unlikely to result from a breach.

While it has been reported that Mr Wright considers the judgment of the Court of Appeal to be perverse, it is not clear if he had sought permission to appeal to the Supreme Court. In any event, following that overturn of Mr Justice Hamblen’s judgment, the partners of Lewis Silkin and their indemnity insurers would have had a Merry Christmas.

Anthony Okumah is a Director and Head of the Civil Litigation and Dispute Resolution Department at Duncan Lewis. He specialises in acting for claimants in professional negligence actions against solicitors, surveyors and architects and has a strong practice in multi-jurisdictional matters.

Duncan Lewis Solicitors' professional negligence litigation team has a niche claimant practice acting for individuals against legal (solicitors, barristers) and construction (architects, surveyors) professionals. The team can help clients who have suffered as a result of professional negligence to recover financial compensation for losses incurred. For expert advice on professional negligence claims, please call Duncan Lewis on 033 3772 0409.