Allied Maples Group Ltd v Simmons & Simmons  4 All ER 907
Solicitor failure to advise on protection clause; causation; quantification of losses
Allied Maples Group (AMG) instructed Simmons & Simmons (S&S) to act in a takeover of the Gillow group of companies. S&S failed to advise AMG of certain potential liabilities arising under leases forming part of the transaction. No warranty against such liabilities were obtained. The transaction completed and the risk materialised, leaving AMG liable for substantial sums. AMG brought an action to recover damages from S&S for their negligent advice.
S&S argued there was no duty to investigate the potential liability under the leases, and even if they had been in breach of duty, their failure to do so had not been causative of AMG’s losses. Even if they had been advised of these potential liabilities, AMG could not establish on a balance of probabilities that Gillow would have provided indemnity. Further, even if they had been advised of the liabilities, AMG would have proceeded with the transaction on the same terms in any event. AMG argued that but for the negligent failure to advise them of the risk of liability, they would have entered into negotiations with Gillow regarding the provision of an indemnity against such losses. This lost opportunity to enter negotiations and/or obtain other such protection from liability caused them significant losses which were caused by S&S’ failure to appropriately advise.
AMG were successful in their claim. Where the quantification of losses depended on an assessment of future uncertain events, the court had to assess the likelihood of the risk materialising. AMG were entitled to succeed because they established there was a real and substantial chance, and not merely a speculative one, that Gillow would have afforded an indemnity but for S&S’ omission.