Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] EWCA Civ 17 (12 May 1995)

Allied Maples acquired businesses from the Gillow Group but received negligent advice from their solicitors regarding protection against contingent liabilities from assigned leases. The Court of Appeal established that where loss depends on a third party's hypothetical actions, a claimant need only prove a substantial chance of success, with evaluation of that chance being a matter of damages quantification.

Facts

Allied Maples Group Ltd sought to acquire retail businesses and properties from the Gillow Group. Due to restrictions on certain properties, the transaction was restructured to involve purchasing shares in Kingsbury Warehouses Limited rather than acquiring assets directly. The defendant solicitors, Simmons & Simmons, drafted the acquisition agreement but failed to advise the claimants about the consequences of deleting warranty No. 29, which would have protected against contingent liabilities arising from leases previously assigned by Kingsbury as first tenant.

Following completion of the transaction, substantial claims arose against Kingsbury from landlords of properties where assignees had defaulted on lease obligations. The claimants sued their solicitors for negligence.

Issues

Primary Issues

1. Whether the defendant solicitors were negligent in failing to advise on the significance of deleting warranty No. 29.

2. Whether causation was established, specifically what the claimants would have done if properly advised.

3. Whether the claimants could recover damages for loss of a chance to negotiate better protection from the vendors.

Judgment

The Court of Appeal upheld the finding of negligence and addressed the crucial question of how to assess causation where loss depends on the hypothetical actions of third parties.

Stuart-Smith LJ distinguished three categories of causation analysis:

1. Where negligence consists of a positive act, causation is a question of historical fact to be proved on the balance of probabilities.

2. Where negligence consists of an omission (such as failure to advise), the court must determine what the plaintiff would have done if proper advice had been given – also proved on balance of probabilities.

3. Where the plaintiff’s loss depends on the hypothetical action of a third party, the plaintiff need only show a substantial (not speculative) chance of success, with evaluation of that chance being a matter of damages quantification.

The Court found that the claimants had established they would have sought to renegotiate with the vendors if properly advised, and that there was a realistic chance such negotiations would have been successful.

On the evaluation of chances

Stuart-Smith LJ, citing Davies v Taylor, stated:

“You can prove that a past event happened, but you cannot prove that a future event will happen and I do not think that the law is so foolish as to suppose that you can. All that you can do is to evaluate the chance. Sometimes it is virtually 100 per cent: sometimes virtually nil. But often it is somewhere in between.”

The Court rejected the submission that claimants must prove on the balance of probabilities that the third party would have acted favourably.

Implications

This case established the leading authority on loss of a chance in professional negligence claims, particularly regarding solicitors. It clarified that:

• Where loss depends on third party actions, claimants need only demonstrate a substantial rather than speculative chance of a favourable outcome.
• The assessment of that chance is a matter of quantum, not causation.
• The chance need not exceed 50% to be recoverable.
• Courts can evaluate chances based on inference and available evidence without requiring direct evidence from the third party.

The decision has become fundamental to claims against professionals where the negligence deprives the claimant of the opportunity to obtain a benefit or avoid a loss that depended on third party conduct.

Verdict: Appeal dismissed. The Court upheld the finding of negligence and causation, ordering that the case proceed to assessment of damages on the basis of evaluating the claimants' lost chance to negotiate better protection against first tenant liabilities.

Source: Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] EWCA Civ 17 (12 May 1995)