Timothy Wright (Respondent/Claimant) v Lewis Silkin LLP (Appellant/ Defendant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,Lord Justice Patten |
| Judgment Date | 21 December 2016 |
| Neutral Citation | [2016] EWCA Civ 1308 |
| Docket Number | Case No: A2/2015/2855 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 2016 |
[2016] EWCA Civ 1308
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM High Court, Queen's Bench Division
Mr Justice Hamblen
HQ14X01420
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Jackson
and
Lord Justice Patten
Case No: A2/2015/2855
Justin Fenwick QC & George Spalton (instructed by DWF LLP) for the Appellant/Defendant
Nicholas Davidson QC & Muhammed Haque QC (instructed by Rosenblatt) for the Respondent/Claimant
Hearing date: Tuesday 6th December 2016
Approved Judgment
This judgment is in seven parts, namely:
Part 1 – Introduction
| Part 1 – Introduction | Paragraphs 2 – 5 |
| Part 2 – The facts | Paragraphs 6 – 33 |
| Part 3 – The present proceedings | Paragraphs 34 – 41 |
| Part 4 – The appeal to the Court of Appeal | Paragraphs 42 – 44 |
| Part 5 – First ground of appeal: The advice issue | Paragraphs 45 – 51 |
| Part 6 – Second ground of appeal: The lost chance | Paragraphs 52 – 59 |
| Part 7 – Third ground of appeal: Remoteness and scope of duty | Paragraphs 60 – 75 |
This is an appeal by solicitors against a judgment holding them liable for professional negligence in the sum of £2.04 million. The principal issue in this appeal is whether the bulk of the claimant's loss is too remote and/or outside the scope of the duty which the solicitors owed to the claimant.
The claimant in this action and in certain related proceedings is Timothy Wright. The defendant solicitors are Lewis Silkin LLP ("LS"), a substantial firm of solicitors based in the City of London.
This litigation concerns the Indian Premier League. The Board of Control for Cricket in India ("BCCI") administers the Indian Premier League. It sells off the franchises for teams representing the major Indian cities. The Indian Premier League's season is usually April to May in each year. During the season there is a series of Twenty20 cricket matches. These are extremely popular and generate huge returns for the franchisees. The inaugural season of the Indian Premier League was in 2008.
The Indian companies which will feature in the narrative are Deccan Chronicle Holdings Limited ("DCHL") and Deccan Chargers Sporting Ventures Limited ("DCSV"). DCHL was at the material time a media group which owned the Deccan Chronicle. That was India's fourth largest English language newspaper. DCSV was a subsidiary of DCHL, formed in 2008. Where appropriate, I shall refer to DCHL and DCSV collectively as "Deccan".
Part 2 – The facts
The Indian Premier League was established at the beginning of 2008. The BCCI sold off franchises to organisations which were fielding teams for the major Indian cities.
DCHL purchased the franchise for Hyderabad for US $107 million. DCHL agreed to pay that sum to the BCCI in ten annual instalments. DCHL formed a team to represent Hyderabad and called it the "Deccan Chargers". The team logo was a charging bull.
Mr P. K. Iyer was the managing director of DCHL. He caused DCHL to transfer the Hyderabad franchise to DCSV in August 2008. Mr Iyer had ambitions to extend the activities of DCSV beyond the realm of cricket.
The claimant is a man with long experience of sports management, both in India and elsewhere. In April 2008 he received approaches from Mr Iyer concerning Deccan's future plans.
In the course of three meetings between 20 th and 30 th April 2008, Mr Iyer explained that he intended to create a "sports city". This would comprise a stadium on the scale of Wembley and a sports/entertainment arena on the scale of London's O2.
On 7 th May 2008, Mr Iyer offered the claimant the position of Chief Executive of DCSV. The plan was that the claimant would run the Deccan Chargers team and also take forward the sports city project. Mr Iyer offered an initial salary of £300,000 per annum and 3.5% of the equity of DCSV. If the claimant accepted the proposal, he would work for part of the time in England and part of the time in India.
The claimant took time to think about the offer and take advice. A friend recommended that the claimant should talk to an individual who had offices at Clifford Street in London. The individual's name was not revealed until a later stage, but apparently he was an Indian man of much wisdom and business experience. Both parties and the judge have referred to him as "the wise Indian" and I shall follow suit.
The claimant went to see the wise Indian on 9 th May 2008. The wise Indian advised the claimant that he was in a strong position. The claimant should require a signing on bonus of £250,000. He should also ensure that any dispute was resolved in England. The wise Indian said "because, as you know, India very slow, no good, must be here". He tapped on his desk as he said "here".
On 12 th May 2008 there was a further meeting between the claimant and Mr Iyer to discuss the proposal. After that meeting the claimant contacted LS in order to take legal advice. He had been a client of that firm for many years.
Later that day the claimant spoke to Mr Burd, the joint head of LS's employment department. He told Mr Burd the gist of Deccan's offer and said that the headline terms were agreed. Since there was some urgency about the matter, Mr Burd suggested drawing up "Heads of Terms", rather than a detailed employment contract. Mr Burd made a handwritten note of the conversation. This included:
"Making a rather seductive offer…"
"Went to see wise Indian guy".
On the 13 th May the claimant sent two emails to Mr Burd. The first email set out the headline commercial terms in greater detail. The second email forwarded a note from someone called "PRR". This commented on the individuals running DCHL and stated that some of them had bad reputations.
After sending those two emails the claimant spoke to Mr Burd by telephone. After that phone call the claimant sent an email to Mr Burd stating:
"English law or otherwise, can we just give some thought to how we would enforce the provisions of the contract on a company based in Singapore? Talk after 4.00 pm."
The claimant sent this email because, following the wise Indian's advice, he wanted any future litigation to be in England.
Mr Burd's opinion was that there were "pros and cons" for including such a clause and that it would be better to leave the question of jurisdiction open. He did not, however, express that opinion to the claimant or discuss the jurisdiction issue with him.
Later on the 13 th May a terrorist bomb exploded in Jaipur, India, killing 63 people. This caused the claimant to have second thoughts about committing himself to Deccan. Despite those misgivings, after talking to Mr Iyer on 14 th May, he agreed to go ahead. One of the matters which persuaded the claimant was Mr Iyer's promise of a guaranteed severance payment of £10 million in the event of dismissal. Mr Iyer also agreed to pay a signing on bonus of £250,000.
On the 15 th May 2008 the claimant had a long meeting with Mr Burd for the purpose of drafting. Mr Burd prepared a Heads of Terms, which set out all the matters agreed between the claimant and Mr Iyer. Mr Burd included a number of terms to protect the claimant's position. These included the following:
" Severance Guarantee
In the event that TW's employment is terminated by the Company (including as a result of a constructive dismissal) at any time, TW will receive the immediate payment (to include contractual notice entitlement and the value of then vested equity ("total package")) of the higher of the then value of his total package or £10 million.
Tax efficiency
The parties will cooperate in the structuring of these arrangements to achieve optimal tax efficiency for TW.
Guarantee
Any financial obligations to TW arising out of these arrangements to be guaranteed by Deccan Chronicle Holdings Limited.
Law
These terms to be governed by English law."
Unfortunately, there was a misunderstanding about one matter. The claimant thought that the effect of the last quoted clause was that the English courts would have exclusive jurisdiction. That was not correct. But since Mr Burd did not specifically discuss the jurisdiction issue, he did not correct the claimant's misapprehension.
Subsequently there were further meetings and drafting amendments, none of which are material for present purposes. In relation to the choice of law clause, Mr Iyer was quite content that English law should apply. He commented: "You may have English law or Timbuktu law for all I care. I don't intend to break this contract."
The parties signed the final version of the Heads of Terms on 24 th May 2008. The terms which I have set out in paragraph 20 above remained in the final version, subject to some additional and beneficial provisions in respect of severance.
The claimant commenced his employment with DCSV in early June 2008. He received the agreed signing on bonus and salary, but he never received the promised share of DCSV's equity.
As is well known, Lehman Brothers collapsed in September 2008 and financial turmoil ensued. The prospects of creating a large scale sports city in India receded. At the same time there were differences between the claimant and Mr Shankar, the chairman of DCSV, as to which of them was in charge of the company. Matters escalated from there. The claimant's employment ended in late January 2009 in circumstances which, it is common ground, constituted constructive dismissal. Deccan did not make the guaranteed severance payment of £10 million to the claimant.
On 26 th January 2009 the claimant instructed new solicitors to act in his dispute with Deccan. On 2 nd February he issued proceedings against DCSV as his former employers and DCHL as guarantors. He obtained permission to serve out of...
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