Allied Maples Group Ltd v Simmons & Simmons
Court of Appeal
Citations: [1995] 1 WLR 1602; [1995] 4 All ER 907; [1996] CLC 153; (1995) 145 NLJ 1646; [1995] NPC 83; (1995) 70 P & CR D14.
Facts
The claimant, Allied Maples, were a retail company seeking to purchase shops from another group of companies (Gillow Group). Simmons & Simmons acted as their solicitors in this matter. Simmons & Simmons wrote up a contract containing a warranty clause. This clause allowed Allied Maples to acquire part of Gillow Group without being bound by Gillow Group’s previous liabilities. However, during negotiations the warranty was deleted and replaced with a clause which did not provide this protection. This left the claimant open to substantial liability. Simmons & Simmons negligently failed to advise the claimant on the effect of the replacement clause.
Simmons & Simmons argued that they should not be liable for their negligent advice, because it had not caused any loss. In particular, they argued that Allied Maples could not prove factual causation. This is because Allied Maples could not prove that if they had been properly advised, they would have successfully negotiated a better warranty clause (thereby avoided the loss). The trial judge disagreed, and held for the claimants.
Issue(s)
- What must the claimant show to establish factual causation where the loss depends on hypothetical future decision-making by an independent third-party?
Decision
The Court of Appeal dismissed the appeal. They held that causation was established. This was because there was a real and substantial chance that a better clause would have been negotiated.
This Case is Authority For…
Where the loss depends on hypothetical future decision-making by an independent third-party, the claimant does not need to show that but for the breach, the loss would have been avoided. They only need to show that there is a real and substantial chance that the loss would have been avoided.
This appears to be an exception to the rule that ‘loss of a chance’ is not recoverable in negligence. The basis for this exception is disputed. Some argue that it applies whenever the loss is economic. This is because all the cases where loss of a chance has been recoverable have been economic loss cases. Lord Neuberger (writing extra-judicially) argues that it applies whenever the occurrence of the loss is inherently indeterminate. Implicit support for both views can be found in the leading judgement of Stuart-Smith LJ.
Other
Millett LJ dissented. While he accepted that a loss of a chance was theoretically recoverable, he did not think it was possible in this case. He argued that what the third-party might have done in the present case was pure speculation. This was because because there was no objective criteria which the court could use to determine how Gillow Group might have behaved if Allied Maples had been properly advised. Millett LJ therefore thought that causation could not be established.
