A law firm found in breach of duty to its client escaped paying damages after the Claimants failed to establish causation.

Brearley & Ors v Higgs & Co (a firm) [2021] EWHC 2635 concerned an opportunity to develop a Jaguar Land Rover dealership in Wolverhampton known as the “Wolverhampton Opportunity” which the Claimants alleged was lost due to the Defendant solicitors’ negligence.

Background

The lead Claimant was Mr Brearley, a former senior employee of an automotive dealership group, Pendragon Plc. Pendragon had initially pursued the Wolverhampton Opportunity whilst Mr Brearley remained a senior employee. Land was sourced and architects’ plans were drawn up however Pendragon did not proceed with the dealership.

Mr Brearley left Pendragon in August 2013 with the intention of pursuing the Wolverhampton Opportunity in his own interest. Mr Brearley entered into a retainer with the Defendant in January 2015 to provide all necessary legal advice in relation to the Wolverhampton Opportunity.

Pendragon became aware of Mr Brearley’s plans in September 2015 and served a ‘cease and desist’ letter on Mr Brearley threatening to issue proceedings unless Mr Brearley provided undertakings. No undertakings were given and Pendragon sought injunctive relief and damages. The Defendant terminated the retainer in February 2016 and following the instruction of a new firm, the claim was eventually settled and Mr Brearley agreed to cease pursuing the Wolverhampton Opportunity.

The Claimants alleged that the Defendant had failed to advise of Mr Brearley’s contractual obligations and other fiduciary duties owed to Pendragon and how these might negatively impact upon the Wolverhampton Opportunity. A claim was made for substantial lost profits relating to the inability to pursue the Wolverhampton Opportunity and for wasted costs in respect of proceedings brought by Pendragon.

Issue

The Court held that the Defendant should have done better to advise Mr Brearley of his fiduciary duties and the need for consent from Pendragon in order for him to pursue the Wolverhampton Opportunity.

The Judge was therefore required to consider causation and what Mr Brearley would have done had he received competent advice. The Court’s view was that Mr Brearley would have been reluctant to accept the advice given his clear instructions to be ‘as robust as possible’ and would have continued to pursue the Wolverhampton Opportunity. 

The Court was not persuaded that there would have been any substantial chance of Pendragon consenting to the Claimant’s pursuit had it been approached following the receipt of competent advice by the Defendant. The claim was dismissed.

Comment

Cases such as this, where the Court finds the Defendant to have breached its duty of care but holds that no loss has been suffered, are relatively rare although the above case and the recent decision in Prime London Residential Development Jersey Master Holding Ltd v Withers

LLP [2021] EWHC 2401 (Comm), suggests that the Court is seriously considering causation defences, placing the onus on the Claimant to prove that it had a real or substantial chance of obtaining a better outcome had negligence not occurred.