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Wise Indians, unwise advice and the perils of lengthy litigation: Court of Appeal considers remoteness of damage following failure to advise on jurisdiction clause

Time and tide wait for no man; they certainly don’t wait for litigants. The Court of Appeal’s judgment in Wright v Lewis Silkin LLP reminds us of the truth in that aphorism: Mr Wright learned the inherent value in litigation proceeding timeously, a lesson quite literally knocked home for him by “the wise Indian” who forms one interesting part of the interesting whole of the facts in the case.

The essential point was this: the claimant (C) was concluding a contract with A. The defendant (D) did not advise C about an exclusive jurisdiction clause (C thought the choice of law clause would have had the same effect). If he had had that advice, he would have insisted on including an exclusive jurisdiction clause in a contract he was concluding, in part because of advice from the unnamed wise Indian about the treacle-like pace of the Indian courts. If there had been such a clause, A would not have been able to challenge the jurisdiction of the English courts: accordingly, C would have had judgment at a time when A was solvent. By the time C got judgment, A was insolvent: the High Court concluded that C had lost the chance (with 20% prospects) of a solvent A paying the judgment debt without enforcement proceedings being necessary. It awarded C 20% of £10 million and £40,000 in costs arising from the arguments over jurisdiction.

The appeal was successful on remoteness (Patten LJ giving the substantive judgment in a two-judge Court of Appeal). Prior to the hearing in the Court of Appeal, judgment had been given in Wellesley Partners LLP v Withers LLP. As the party names suggest, that was another solicitors’ negligence claim: the Court of Appeal decided that where (as so often) there is concurrent contractual and tortious liability, the test for remoteness is the contractual one (what damage was in the reasonable contemplation of the parties at the point of contracting), not the tortious one (what loss was foreseeable as possible at the point of breach (see The Heron II)). The contractual test is harder to satisfy than the tortious one.

Patten LJ took the view that the prospect of the litigation being delayed so long that the other contracting party would become impecunious and therefore unwilling to satisfy a judgment debt was not within the parties’ reasonable contemplation at the point of contract: it was therefore too remote.

While that is a respectable conclusion applying Wellesley, it is perhaps surprising that the Court of Appeal felt able to make what is an evidential conclusion on the parties’ contemplations. It may be that the Court of Appeal had in mind a discrete type of loss that is not fully explained in Patten LJ’s short and accessible judgment, but (again) categorising the type of loss is a process more typically the domain of the first instance court. Arguably, for instance, the chance of delay in achieving satisfaction of a dispute is the obvious consequence of allowing ambiguity to enter into a contract where that ambiguity allows the other party to make mischief.

C’s counsel in Wright reserved the right to challenge Wellesley in the Supreme Court, although I am unsure whether or not any such challenge is going ahead. The Court of Appeal took a position that the loss of a chance in question in Wright was not within the scope of D’s duty in any case; however, that was strictly obiter and the court opted not to embark on a detailed analysis of the point since judgment is awaited from the Supreme Court in Hughes Holland (in substitution for Gabriel) v BPE Solicitors LLP. As ever, watch this space…

Littleton Chambers Grahame Anderson

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