TLT loses appeal against order to pay nearly £10m to client due to negligence

TLT LLP admitted negligence but denied that any loss had been sustained as their client had a nil or negligible chance of success in the proceedings, which the commercial judge ought to have held rendered the loss of a chance percentage as nil. The respondent, Centenary 6 Ltd, cross appealed in relation to quantification of damages.

The appeal was heard in the Inner House of the Court of Session in Edinburgh by the Lord President, Lord Carloway, with Lord Tyre and Lord Boyd of Duncansby.

Mathematical approach

C6 had instructed TLT in relation to proceedings under section 212 of the Insolvency Act 1986 against the joint liquidators of Centenary Holdings III Ltd, of which it was the sole shareholder. In short, it averred that the joint liquidators, in entering into an agreement with the landlord (Deka) of CH III’s London office relating to the sale of the building, had failed to exercise the skill and care reasonably expected of ordinarily competent litigators.

The court ordered C6 to lodge caution. However, despite multiple extensions to the deadline, TLT failed to do so. As a result, the section 212 note was refused on 5 May 2017, with the refusal upheld by the Inner House the following year. A commercial judge assessed C6’s chances of success at 65 per cent, having regard to advice previously given by TLT to C6 that the chance was over 60 per cent, and taking the view that there was a 100 per cent chance of establishing that the claim had not prescribed.

It was submitted for TLT that the commercial judge erred by not taking a mathematical approach to the contingencies bearing upon the loss of a chance percentage as determined. If any of the contingencies were nil or negligible, as a matter of arithmetic the overall lost chance was nil. TLT had been unaware of certain issues C6 faced in proving their case against the joint liquidators, which meant that the advice it had previously given about chance of success was not a useful cross-check.

For C6 it was submitted that TLT’s criticisms were without substance. There was no rule of Scots law requiring a judge to take the so-called mathematical approach of multiplying all the chances in the issue together. There was no need for the judge to give elaborate reasons for reaching the percentage he did, and on the contrary his brevity in dealing with the issue was commendable.

The same contingency

Lord Tyre, delivering the opinion of the court, said of the commercial judge’s approach: “The commercial judge assessed C6’s chances of success as 100 per cent on three of the alleged uncertainties. That left three issues relevant to assessment of the loss of a chance percentage, namely C6’s prospects of establishing the joint liquidators’ breach of duty, the likelihood of the joint liquidators reaching a settlement with Deka at a lower figure, and the availability of a surplus for contributories.”

He continued: “The commercial judge rejected the application of a mathematical approach on the ground that these were not independent contingencies but rather facets of the same contingency.”

On whether the commercial judge should not have taken the approach he did, Lord Tyre said: “The court is not persuaded that he erred in doing so. Although there may be circumstances in which it would be appropriate to adopt a mathematical approach to the loss of a chance, it is less obviously attractive in the context of litigation risks. It is not, for example, the approach that would be adopted by experienced counsel when advising a client on prospects of success or on the level at which a settlement offer ought to be made or accepted.”

He added: “As the commercial judge observed, the uncertainties in the present case would in practical terms have been regarded by the parties to the section 212 note as facets of one question, namely whether C6 were likely to succeed.”

On the cross appeal, Lord Tyre concluded: “There is no basis for distinguishing between first instance and appellate expenses. Neither depends upon any uncertainty as to what others would have done; both are part of the consequential loss flowing from TLT’s negligence. The commercial judge erred in applying the loss of a chance percentage to the sums that he would otherwise have held to be payable.”

The reclaiming motion was therefore refused, with the cross appeal allowed only to the extent specified.