England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
MR JUSTICE UNDERHILL
Case No. TLQ/07/0201

		Royal Courts of Justice Strand, London, WC2A 2LL
		05/05/2009

Lord Justice Sullivan :

1. Introduction
   After a trial lasting 6 days Underhill J. found that the Appellants, Mr Susman QC and Mr Batcup, leading and junior counsel who had been instructed by the Respondent, Pritchard Joyce and Hinds ("PJH"), a firm of Solicitors, on behalf of clients called Mr and Mrs Fox had been professionally negligent in that they had failed to advise Mr and Mrs Fox of the time limit applicable to a potential claim against their former Solicitors, Messrs Wellers. The deadline for making the claim was the end of October 1997. The possibility of a claim against Wellers did not occur to either of the Appellants before the end of October 1997. Underhill J. believed that it should have done (134).^[1]
2. In challenging that conclusion the Appellants recognise that they have an uphill task. There was no dispute between the parties at the trial as to the applicable law. The lengthy judgment, which extends to 146 paragraphs, is a meticulous reconstruction of the protracted and involved history of what was, from Mr and Mrs Fox's point of view, a sorry saga of their involvement with the legal profession over a period of some 20 years.
3. At the conclusion of his consideration of the question whether the Appellants had been negligent Underhill J. said that he had striven to avoid hindsight, and referring to Moy v Pettman Smith [2005] UK HL 7, [2005] 1 WLR 581 at paragraph 19, reminded himself that the question was not whether he, or other barristers in the Defendants' position, might have given the advice in question, but whether any reasonably competent barrister should have done so (141).
4. In a nutshell, the Appellants contend that, notwithstanding this correct self-direction, on examination of the judgment it can be seen that Underhill J. did in fact apply his own meticulous standards when considering whether the conduct of both Wellers and the Appellants was negligent, and that he did so based upon his own reconstruction of events with the benefit of hindsight conferred upon him by the large volume of material produced at the trial.
5. In brief outline, the Respondent had settled a claim for negligence brought against it by Mr and Mrs Fox. The Appellants were counsel instructed in relation to the same matter. Mr and Mrs Fox did not proceed against the Appellants. Having settled Mr and Mrs Fox's claim the Respondent contended that the Appellants had also been negligent and were responsible for the same loss, and accordingly sought a contribution from them under the Civil Liability (Contribution) Act 1978. If Underhill J. was correct in concluding that the Appellants were negligent his apportionment of the contribution as 75:25 between the Appellants and Respondent is not challenged.
6. The negligence alleged by Mr and Mrs Fox against the Respondent, and by the Respondent against the Appellants, was their failure to advise Mr and Mrs Fox of the time limit applicable to a potential claim against their previous Solicitors, Wellers. Underhill J. summarised this claim as follows:

"The lost claim against Wellers would itself have been a claim for negligence in failing to advise Mr and Mrs Fox of the time limit applicable to a claim against another firm of solicitors, Lindars Leech (and/or the responsible partner, Mr Alan Leech)("LL"). The lost claim against LL would have been for negligent advice given to Mr and Mrs Fox which it was said led to them losing the opportunity of the favourable settlement of a complicated dispute arising out of a property development project in Spain. The advice in question was given in late October 1985, and….the settlement opportunity was lost by the end of that month. Accordingly any claim for that loss would prima facie have had to have been brought by the end of October 1991, and any action against Wellers for failure to advise Mr and Mrs Fox of that deadline would have had to have been brought by the end of October 1997: that is the deadline which it is said [the Respondent] and the [Appellants] failed to draw attention to." (2)

7. For those wishing to read the full story of Mr and Mrs Fox's travails with the law over twenty years the facts are set out in great detail in paragraphs 5-107 of the judgment [2008] EWHC 20 (QB). It should be noted that although Underhill J. heard oral evidence from the two Appellants and from two partners in the Respondent, Ms Hartwell and Mr Hinds (Mr Fox was not available to be cross examined) he said that his "fairly full account" of the history was derived very largely from the contemporary documents and that he only occasionally needed to refer to the witness statements and the oral evidence (4). In these circumstances, the Respondent's contention that this appeal is, in substance, a challenge to the Judge's evaluative judgment loses much of its force: this Court is in much the same position as the trial judge if his conclusions are very largely based on the contemporary documents rather than oral evidence.
8. The original dispute
   In 1970 Mr and Mrs Fox undertook a development of holiday apartments in Spain but the project ran into difficulties having absorbed most of Mr Fox's savings. To rescue the project he entered into an agreement with a company called Rantlodge Limited ("Rantlodge") whereby in return for shares in an English company his interest in the project would be vested in a Spanish company controlled by Rantlodge, and in order to secure borrowing by Rantlodge he would deposit £70,000 in an account in its name with a Spanish bank. The individuals behind Rantlodge were referred to in the judgment as "the Hanson interests". Rantlodge went into liquidation. Mr Fox never received the shares or the return of his deposit. He believed that he had been cheated by the Hanson interests.
9. Stoneham Langton & Passmore
   The first firm of solicitors instructed by Mr Fox, in 1984, was Messrs Stoneham Langton & Passmore ("SLP"). Mr Fox had the benefit of legal aid. His case was handled by Mr Lines, an experienced managing clerk at SLP. At this stage there were two aspects of the dispute with Rantlodge/the Hanson interests. In November 1984 Mr Fox had learnt that the £70,000 he had deposited had been transferred by the Spanish bank to an account in London in the name of a Panamanian company called Fontana Holdings Inc. ("Fontana"). He issued proceedings against Fontana for the recovery of the money and obtained a Mareva injunction which was effective to freeze the assets held by the bank. Fontana instructed Titmuss, Sainer & Webb ("TSW"), who also represented the Hanson interests, and was given leave to defend in June 1988. A Defence was served in July 1985 ("the Fontana action").
10. Mr Fox also wished to bring proceedings against the Hanson interests based on what he believed was their dishonest conduct towards him since 1980. This, "the Hanson action", would have been a much larger claim. Settlement discussions took place which Mr Fox regarded as unsatisfactory. He was advised by Mr Jolyon Grey of counsel in August 1985 that he should not litigate the two actions but should obtain what he could by way of settlement.
11. Mr Fox rejected this advice: he was prepared to settle on the right terms, but the terms then on offer were inadequate. After negotiations directly between Mr Fox and Mr Farnsworth representing the Hanson interests, a without prejudice letter dated 8^th September 1985 from Mr Fox to Mr Farnsworth stated that settlement proposals had been agreed in principle.
12. The structure of the settlement was that Mr Fox would be paid £125,000 on completion of the agreement and four payments of £80,000 payable yearly over a period of four years. The instalment payments were to be "suitably secured and guaranteed". In return, Mr and Mrs Fox were to give a number of undertakings: to acknowledge that they had no claim against Fontana; to cease to communicate with, or comment on the affairs of, the Hanson interests; and not to interfere with a named development in Mallorca.
13. Discussion of the detailed terms of the settlement agreement then followed between Mr Lines and Mr Thomas of TSW. A number of drafts passed between them. Two aspects of the settlement agreement were of particular concern to Mr Fox and Mr Lines: the mechanics whereby the four future payments totalling £320,000 would be secured, and a provision which would allow the Hanson interests to resile from the agreement, and would require Mr and Mrs Fox to repay any payments that had already been paid, if they breached the terms of any of their undertakings.
14. A "first draft" of the agreement was sent by TSW to SLP. After discussions between Mr Lines and Mr Thomas a "second draft" was sent by Mr Lines to Mr Grey for his comments. The "third draft" of the agreement incorporated Mr Grey's comments on the second draft. After further discussions between Mr Lines and Mr Thomas minor changes were made and Mr Lines sent his marked up copy of the "fourth draft" to Mr Fox. As at 15^th October 1985, it was proposed that the four payments of £80,000 would be secured by Fontana depositing four non-discountable Bills of Exchange for £80,000 drawn by Fontana on the Swiss Volksbank ("SV") Moorgate Branch. Each Bill was to be "guaranteed" for payment by SV. As Underhill J. pointed out in paragraph 21 of his judgment:

"SV had neither itself confirmed to SLP that it was willing to give such a guarantee nor supplied a draft. The absence of that crucial element means that it is not strictly accurate to describe the Hanson interests as having made an offer – at least in the contractual sense. Nevertheless, in commercial terms there was a deal on the table, albeit one whose acceptability could only be assessed once SV's position had been confirmed; and I refer elsewhere in this judgment to the settlement "offer" in that sense. The terms of the guarantee which SV was prepared to offer were not simply a matter of mechanics. If it was framed as a guarantee in the strict sense, it would have protected Mr Fox against the risk of "mere" non-payment as a result of insolvency or otherwise, but it would not have assured him of payment if the Hanson interests chose to assert that he was himself in breach of his obligations under cl. 4.1 and to invoke their rights under cl. 4.2. That risk, of which Mr Lines was aware, could only be precluded if SV were willing to accept an independent obligation to pay. That seems unlikely, and it would indeed have been inconsistent with the mechanism under which the bills were to be "held" by SV and only released on their clients' authority: it may also be significant in this context that TSW had departed from the proposal that SV accept the bills. The absence of such protection would not have rendered the proposed guarantee from SV worthless, but it meant that Mr and Mrs Fox could not rely on having a summary remedy if Fontana failed to pay."

15. Mr Fox was by the weekend of 12^th/13^th October 1985 beginning to have second thoughts. After discussing the matter with his family, and with a Mr Cutting who was also engaged in litigation against the Hanson interests, he decided that he needed to take a second opinion. On Mr Cutting's recommendation he decided to seek advice from another Solicitor, Mr Leech of Lindars Leech (LL). Mr Fox rang Mr Lines on 15^th October. Mr Lines tried in vain to dissuade him, but later that day Mr Fox went to see Mr Leech. In paragraph 24 of his judgment Underhill J. said that the broad picture of Mr Fox's account of his meeting with Mr Leech was corroborated by the contemporary documents, particularly two letters written by Mr Fox the following day (see paragraphs 17 and 18 below):

"In summary, Mr Fox's account is that Mr Leech gave him "forceful" advice that the terms of the draft Agreement were unacceptable, both because the undertakings being sought from himself and Mrs Fox were too wide (and thus gave scope for the Hanson interests to raise spurious allegations of breach) and because the mechanisms proposed for ensuring payment of the future instalments were inadequate. He seemed to know something about Mr Fox's dealings with the Hanson interests already, apparently from Mr Cutting and/or Mr Woods. He emphasised, from his own experience of dealing with the Hanson interests, that they could not be trusted. He made it clear that he believed that, because of that experience, he thought he would be better at dealing with them than SLP. Mr Leech's manner was "dominant" and inspired confidence. In the course of the meeting he asked to speak to Mrs Fox on the telephone, and he summarised to her in strong terms the points which he had made to Mr Fox."

16. After referring to differences in Mr Fox's various accounts of the meeting, Underhill J. said that:

"I need not seek to resolve those differences here, save to say that I am sure from the overall history and from his contemporary letters that Mr Fox was still very willing to settle if he could get reasonable assurance of payments of the future instalments. It is at least clear that Mr Leech advised Mr and Mrs Fox in strong terms that the Agreement as it then stood was unacceptable and that in consequence of that advice they decided to transfer the handling of the matter forthwith from SLP to LL."

17. Lindars Leech
    On 16^th October Mr Fox wrote two letters. His letter to Mr Lines, in terms drafted by Mr Leech, asked Mr Lines to transfer the papers to LL. He gave his reasons, as follows:
    

"I have expressed to you my deep concern about the terms of settlement being offered by Fontana/Hanson etc; I am particularly concerned about the extensive undertakings which are being required from me and the fact that payment is being spread over 4 years on terms that would give the opposition scope for argument over whether there had been proper compliance with these extremely wide undertakings.

I am apprehensive that they could use this as an excuse for non-payment of stage payments as they fall due. I am also concerned that if I was to proceed on these terms I would be in constant peril of an action to try and snatch back any money actually paid to me.

You must be aware that the entire cause of my complaint about the persons who make up the opposition in this case is that their professed bona-fides are never to be taken at face value and I have no trust whatsoever in any of them."


Mr Fox said that he knew that it was Mr Lines's strong view that the
settlement terms should be accepted and that it was not possible to obtain a second opinion, funded by legal aid, while SLP continued to act for him; and
that accordingly a transfer to another firm was the only option. His letter
continued:


"I am not closing my mind entirely to the prospect of
settlement but simply wish to ensure that I get the possible
terms.

In this context it is important that I should feel secure and
that my wife and I have peace of mind in the knowledge that
we have done the best thing.

I cannot proceed with confidence on the terms currently on
offer.

I and my wife are aware of the risks of delaying acceptance
of the terms and of seeing to negotiate further if we are
advised to do so. However we consider the risks of
proceeding with the terms on offer to be far greater.

We have considered the position very carefully before
arriving at this conclusion and we hope you will not take it
amiss or as a reflection on your own abilities."

18. In his letter to Mr Leech, Mr Fox said:

"Further to our meeting in your office yesterday when I sought your advice regarding the proposed financial settlement of my claim against Rey/Hanson/Fontana etc, I am now enclosing a copy of the latest Draft Agreement [the fourth draft] that includes the Swiss Volksbank Guarantee, plus other amendments, all of which my present solicitors, Messrs Stoneham Langton & Passmore, have approved.

After my wife and I spoke to you yesterday we both thought you understood our problem of being very anxious to proceed with the completion of the Fontana Agreement but being a little hesitant due to our mistrust of Mr Hanson and our fear of his clever trickery.

However, we both thought you were so definite and convincing in advising us not to sign the Fontana Agreement that in accordance with your instructions I have today posted off to Mr Lines the letter you prepared for me.

I will though, definitely telephone you tomorrow to obtain your views and opinions on this latest Draft Agreement and to discuss your proposal to take over my litigation and to issue Writs for Conspiracy to Defraud against Mr Rey, Mr Hanson, Mr Cobb and others.

I will then be able to telephone Mr Lines of SLP to discuss the contents of the letter I have sent to him and what the latest position is with the Fontana proposals."

19. On 21^st October TSW wrote to SLP stating that they required "a draft form of variation order" so that there could be an appearance before a Judge in Chambers to vary the terms of the injunction. The letter recognised that SLP required a copy of the guarantee to be provided by SV, said that it would not affect the drafting of the variation order to which the agreement would be attached, and explained:

"Swiss Volksbank have confirmed that the Guarantee will be provided as soon possible, and they apologise for the delay, however they are having technical problems with their word processors."

20. After further telephone conversations with Mr Fox, Mr Leech sent him a letter of advice dated 23^rd October 1985. Because of its importance in these proceedings it is necessary to set out the terms of that letter in full:

"I refer to our various recent conversations and confirm that Stoneham Langton & Passmore have indicated to me that they require no further written authorisation from you in relation to changing the conduct of the dispute from them to me and they are writing to the Law Society today indicating their consent to an amendment to the Certificate showing that my firm now has conduct of the matter. I enclose a copy of my letter to the Secretary to the General Committee

Following my last telephone conversation with you, Mr Lines and I spoke again by telephone (overcoming the difficulties of the power cut which had apparently affected his office) and discussed the mechanics of hand over and the letter he had received from Mr Thomas from Titmuss Sainer and Webb this morning. That letter was in essence chasing for response and reciting, with variable degrees of accuracy, a telephone conversation Mr Thomas and Mr Lines had had last week. I told Mr Lines, and he agreed, that it was not appropriate for him to respond to that letter but he is sending a copy, noted with his comments, so that I may make a full response when notifying Titmuss Sainer and Webb of the change of solicitors, which I propose to do tomorrow. The only principal matter of interest in the letter is that Thomas has come up with an excuse for not supplying the form of Guarantee which it is proposed the Swiss Volksbank will give in support of the terms of the settlement on offer. We are told that they are having problems with a word processor so the terms are not available at present!

As I have advised you in conversation I consider that there are a number of extremely serious defects in the draft agreement currently under discussion. Principally these go to the clauses demanding the handover by you of all the documents relating to the matters in dispute and the persons involved, which I think is a far too onerous commitment for you. If any documents are to be handed over, that is an obligation which should be severely curtailed. As to the so called Bills of Exchange, it is in my view that reference to Bills of Exchange in the Agreement are a complete red herring. Unless the Bills are delivered to you (and it is proposed that they should be withheld from you) they would be practically valueless because you would not be in a position to sue on them unless you were the holder. It is not enough that they are held on deposit by an independent party who is susceptible of being subverted by an instruction not to part with them. Furthermore, unless the bills are going to be endorsed by a responsible party, there is no point whatever in having Bills of Exchange. Certainly you do not want to be in a position where the only possible target for an action on the Bills of Exchange (if you were able to obtain possession of them) would be Fontana Holdings Inc, so that you would have to undertake the same rigmarole of serving Fontana as you did when the current action commenced.

If there is to be no delivery of properly endorsed bills to you, it would be far more honest of the opposition and to your advantage that a Court Order is made specifically in terms that payment of whatever instalments are agreed should be made on particular days so that that order could be enforced immediately on default without having to embark on subsequent fresh litigation. That order itself could form the subject of a Guarantee given by a suitable person, possibly Swiss Volksbank, as security for the payments.

I also take the seriously considered view that the Undertakings being required from you are far too wide and susceptible to further argument. However, if Titmuss Sainer wish to insist on wide undertakings, there is a method of accommodating them to a large extent if the sanction backing up the Undertaking were changed. Rather than permitting Fontana and the guarantor bank to withhold payment from you as the Bills fall due and even to claw back payments already made, the undertakings you give could be made to the Court itself so that if the opposition wanted to make a fight over breach of undertaking, their only proper route to do so would be by way of contempt proceedings against you. That would mean they would have to air their grievances in front of a judge as soon as they make them, as opposed to putting in spurious Defences and Counter Claims as is their normal tactic when Bills of Exchange they have given in the past are bounced by them, or issuing writs with specious Statements of Claim in an effort to terrorise an opponent smaller than themselves into an unfavourable out of Court settlement. In my years of experience of litigating against Mr Rey and his associates, I have seen both tactics used by them to reasonably good effect. It is essential that every effort is made to avoid falling into any trap so that such tactics are available to them in your case.

There are other grounds for objecting to the terms, which we have discussed. I certainly do not like the idea of the only person on the opposition's side being bound by the agreement as Fontana when at the same time, you are being asked to enter obligations for the benefit of Rey and all of his associates (even those who have not been named). Certainly a promise by Fontana that you would not be sued for defamation is worthless as any of the others would be quite free to do so. I know that this is not a particular fear of yours, since you feel you can justify anything you have said by pleading that it is all true or fair comment. On the other hand, libel suits are expensive and one can foresee a further weapon being added to the Rey armoury if this provision were allowed to go through without comment.

After several discussions with you, I believe you appreciate that there can obviously be no guaranteed outcome of the change of solicitors and it may well be that, knowing me well as John Cutting's solicitor, Titmuss Sainer & Webb initially refuse to negotiate further with me on your behalf and try to call the whole deal off. If they were to do so there can be no real certainty when negotiations may resume, if at all. However, if that is the line the opposition adopt, I shall be more than happy to continue the litigation against them with the full force available to me and you can be assured of my commitment to pursue the matter on your behalf.

I shall keep you advised of all developments as they occur."

21. Mr Leech's warning that the Hanson interests' response to his being instructed might be to "try to call the whole deal off" proved to be correct. On 28^th October 1985 TSW wrote to SLP:

"We refer to our telephone conversation of the 25^th October 1985 when you confirmed that Mr Fox wished to change his solicitors and instruct Lindars Leech. We have not heard from Lindars Leech confirm [sic] this as yet and we are therefore writing to you.

Our clients have instructed us to inform you that because Mr Fox now intends to raise certain issues that have always been considered by our clients to be non-negotiable, and because Mr Fox now intends to change his solicitors and indeed this is yet another example of his lack of seriousness and genuine desire to negotiate a settlement of the whole matter, all offers made to date, where without prejudice or otherwise, are withdrawn.

If necessary, please draw this letter to the attention of your client and to Lindars Leech." (34)

22. Underhill J. said that it was unclear what had prompted TSW's letter:

"In this uncertain state of the facts it is impossible now to decide whether Mr Fox, or LL on his behalf, are to be regarded as having rejected the settlement offer – either explicitly or by raising significant new points – or whether what occurred was in substance a withdrawal by the Hanson interests, albeit because they (rightly) anticipated an attempted re-negotiation. Ultimately, it does not much matter: by one means or another it was plainly the advice given by Mr Leech which led to the breakdown in negotiations." (34)

23. Eventually, in March 1988, LL issued a generally indorsed writ against no less than sixteen Defendants in the Hanson action. The proceedings had to be abandoned, or were struck out, against all of the Defendants other than Mr Hanson himself. The legal aid certificate which had been transferred from SLP to LL did not cover the issue of proceedings, so Mr Fox had no protection against the costs liabilities to the Defendants against whom the action had been dismissed or discontinued.
24. LL took no further steps in the Fontana action. On 21^st July 1989 Auld J. discharged the Mareva injunction on the grounds that the underlying action had not been proceeded with. An appeal to the Court of Appeal was procedurally defective and LL failed to respond to an invitation to show cause why it should not be dismissed. Following the formal dismissal of the appeal on 13^th December 1989 LL made a fresh application for summary judgment, and a fresh application for Mareva relief without disclosing the earlier history. Both applications were allowed. Fontana appealed. In March 1991 the Court of Appeal allowed Fontana's appeal against summary judgment and discharged the Mareva. It was highly critical of the delay in prosecuting the Fontana action between 1985 and 1989 and described LL's conduct in obtaining the second Mareva as "outrageous". The discharge of the Mareva meant that the Fontana action, against a Panamanian company with no assets within the jurisdiction, was now worthless.
25. "The lost settlement claim"
    It was clearly arguable, to put it at its lowest, that LL had negligently mishandled both the Fontana and the Hanson actions. However, the present proceedings are not concerned with that negligence, but with what the Respondent said was a discrete claim arising out of the advice given by Mr Leech, and any associated acts or omissions, in October 1985. In paragraph 42 of the judgment Underhill J. identified the nature of the Respondent's claim as follows:

"that the criticisms made by Mr Leech of the terms of the settlement offer were misconceived, and that the consequent advice which they say that he gave that the offer should be rejected was unreasonable. It is their case that the only proper advice to Mr Fox was that given by SLP, namely that the offer should be accepted subject to an acceptable guarantee being offered by SV – which there was no reason to believe would not be forthcoming. Mr Leech's negligent advice, it is said, set in train the sequence of events which led to the offer being withdrawn."

26. This was referred to in the judgment as "the lost settlement claim". Time began running for such a claim from the end of October 1985. (43) Underhill J. accepted that it was necessary to be on the look-out for possible confusion in the use of the term "lost settlement claim" because the chance of settling the Fontana and Hanson actions at some subsequent date between the end of October 1985 and 1991 was one of the losses suffered as a result of LL's mishandling of those actions, but he regarded the term as useful shorthand, provided it was understood that it referred to:

"a discrete claim that as a result of negligent advice given by Mr Leech in October 1985 Mr Fox lost the opportunity to settle the claim for £445,000 at that time, being a claim in respect of which time started to run at the end of October 1985." (44)

27. Wellers
    Mr Leech was the subject of disciplinary proceedings in late 1990. He was struck off and LL was dissolved on 31^st January 1991. In January 1991 Mr Fox instructed Wellers and asked LL to transfer their papers. The negligence alleged against Wellers is their failure to advise on the expiry of the time limit for suing LL in relation to the lost settlement claim. It was common ground before Underhill J. that at no time prior to the end of October 1991 did Wellers appreciate that there might be a relevant time limit or give any advice in relation to it. (45)
28. Following the decision of the Court of Appeal in the Fontana action (paragraph 24 above) Miss Nickson, the partner handling the matter at Wellers, advised Mr Fox to seek legal aid to bring proceedings against LL. The statement in support of his legal aid application, drafted on Mr Fox's instructions:

"complained of the conduct which had led to the loss of the Mareva in the Fontana action and of Mr Leech's dilatoriness and incompetence to initiating the Hanson action; but there was no complaint, express or implied, about the advice given in October 1985. Wellers did not at that stage have full papers from either SLP or LL: they received the former in December 1991 and the latter in March 1992." (46)

It is to be noted that there was no complaint in the statement that Mr Leech
had advised Mr Fox to change solicitors, Mr Fox merely said:

"For various reasons [I] felt it would be helpful to change solicitors."

29. In response to a request from Miss Nickson for further information in connection with his legal aid application Mr Fox on 6^th May 1991 sent her what was referred to in the judgment as "the ten-page note". The ten-page note sets out in some detail Mr Fox's account of the history of the matter, beginning in 1983 when he instructed SLP. Having referred to Mr Cutting's suggestion that a second opinion on the proposed settlement agreement should be obtained from Mr Leech, the ten-page note continues:

"I informed Stoneham Langton & Passmore of our intention and proceeded to arrange a meeting at the office of Lindars Leech in Kensington, London. At this meeting Alan Leech told me he already had a clear understanding of my litigation and knew about my financial difficulties and I confirmed to him that my actions were being undertaken under the Legal Aid Scheme.

Following consideration of the Fontana agreement Alan Leech told me that there were serious defects in the settlement arrangements and that he strongly advised me not to proceed with the matter. During the meeting he also telephoned my wife to emphasise his opinion that we should reject the agreement and let him undertake on our behalf the litigation against Fontana/Rantlodge et al.

On the 23^rd October 1985 Alan Leech wrote to me confirming his views in no uncertain terms, following which I and my wife were persuaded to change solicitors. On 24^th October Stoneham Langton & Passmore wrote to the Law Society stating they had no objection the transfer to Lindars Leech of the two Legal Aid Certificates Numbers 1/1/83/5465R and 1/1/84/9304K.

I think it is relevant to record that during the initial meeting and discussions with Alan Leech concerning the agreement, my wife and I clearly indicated that the settlements of £125,000 down and the 4 annual payments of £80,000 each were, with the undertakings, quite satisfactory but his adamant opinion that we would never receive the annual payments and would be in danger of having to repay the £125,000 had persuaded us to take his advice.

Amazing though it might appear now I must recall that the initial letter from Alan Leech of the 23^rd October 1985 is the one and only written communication I have received from him during the five years he had acted for us. This has not been through the want of asking as many times he has been requested to give us his views or opinions in writing and he has even refrained from replying to my letters."

30. The next five pages of the note set out Mr Fox's criticisms of Mr Leech's conduct of the Fontana and Hanson actions. The final page of the note reads as follows:

"It was now apparent from his conduct and comments that Alan Leech was hoping to frighten Mr Rey/Hanson/Cobb into offering me once again the very same settlement terms that he had advised my wife and I to reject in 1985 by issuing a Statement of Claim for Conspiracy to Defraud that he had been strongly advised by three separate Barristers "could not be pleaded and would be struck out".

This was a gamble that Alan Leech was determined to take without any thought, care or attention to the consequences or what the resulting effect would be for me and my family.

Combined with this neglect was the careless failure to pay attention to the prosecution of the action against Fontana Holdings Inc., which he had completely ignored for four years despite our continual requests to Alan Leech to activate the action.

Alan Leech has been negligent in the conduct of the litigation matters of my wife and I and this has resulted in the following losses…

A. The benefit of the Settlement Offer made to us in
October 1985 by Fontana Holdings Inc.

B. The loss of our funds deposited at the Banco de
Bilbao, London branch

C. The costs awarded to Mr Rey which resulted in a
charge on our house, impending eviction with distress,
anxiety & misery."

In her reply on 8^th May Miss Nickson asked for copies of two letters which
had been referred to in the note. Mr Fox sent the two letters, one of them
being Mr Leech's letter dated 23^rd October 1985, by return.

31. On 31^st July 1991 Wellers sent instructions to Mr Batcup to advise on a claim for damages against LL and to draft proceedings if he felt able to do so. Wellers had still not received Mr Leech's file, but the instructions said that on the basis of the papers so far available "the areas of possible negligence" were two fold: the conduct leading to the loss of the Mareva in the Fontana action, and the dilatory and incompetent handling of the Hanson action leading to the costs liabilities to the Defendants against whom proceedings had been dismissed or discontinued. Underhill J. concluded that Mr Batcup's instructions probably included the ten-page note. (50)
32. Mr Batcup gave initial advice by telephone on 6^th August 1991, but said that he needed a conference. No further information of any significance was supplied by Mr Fox. By the time the conference took place on 27^th November the limitation period for proceeding against LL on the lost settlement claim had expired. (51)
33. Was Wellers negligent? The best way to minimise the danger of hindsight is to pause at this point in the narrative and consider the position of Wellers in 1991. Underhill J. recognised that any case that Wellers had been negligent in failing prior to the end of October 1991 to identify the possibility that Mr Fox had a discrete cause of action arising out of the advice given in October 1985 and thus to advise on the limitation period applicable to such a claim:

"would need to depend largely on the ten-page note. That was the only documentary material before Wellers that might arguably have put them on notice of the lost settlement claim." (52)

34. When considering precisely what was the claim of which Wellers might arguably have been put on notice, it is necessary to bear in mind the fact that the term "the lost settlement claim" is used in the judgment as a convenient shorthand. Prior to, and during the trial before Underhill J. the Respondent had argued that Mr Leech had been negligent in a number of respects. The Respondent's Particulars of Claim dated 2^nd November 2006 dealt with this issue in two paragraphs:

"By a letter dated 23 October 1985 Mr Leech further advised Mr Fox in writing about the potential difficulties with the draft settlement terms. However Mr Leech in fact took little or no steps to negotiate any revisions to the draft agreement and by a letter dated 28 October 1985 TSW withdrew Fontana's offer.

In summary, the Foxes' case against the Respondents was that:

(a) As a result of Mr Leech's negligent advice not to
accept the settlement offer in October 1985 they lost
the settlement;

(b) Had Mr Leech advised them properly, the Foxes would
have entered into the settlement agreement proposed
and agreed in principle by Hanson and Fontana …. and
would have received all of the monies due under it;…"

35. A further explanation of the manner in which Mr Leech had been negligent was provided in paragraph 4 of the Respondent's Reply dated 8^th January 2007:

"(a) Mr Fox's case was that when he saw Mr Leech on 15
October 1985, he was advised by him in the clearest
possible terms not to sign the proposed agreement and
that during the course of the said meeting Mr Leech
had telephoned Mrs Fox and given her the same
advice;

(b) Mr Leech had further advised the Foxes that:

i. he had years of experience of dealing with
Mr Rey and his associates who ultimately
controlled Fontana and that he was aware
of the tactics they might use to avoid
payments under the proposed Agreement;

ii. He was experienced in dealing with Mr
Hanson, that he had experience in litigating
against Mr Rey, who he described as a
dishonest man, and that the Foxes would
be intimidated by his approach;

iii. he was more experienced in dealing with
Rey, Hanson etc than SLP;

iv. he could secure a more favourable
settlement for the Foxes than the one
currently on offer;



(c) in reliance on those assertions, the Foxes instructed Mr
Leech to take over conduct of the matter;

(d) thereafter, Mr Leech negligently continued to advise
the Foxes against acceptance of the settlement but had
failed to secure a settlement better than that on offer or
any settlement at all which it was asserted he had
advised the Foxes he would secure;

(e) the terms of the proposed agreement sent by Mr Fox
on 16 October 1985 ….provided by way of
amendment that the bills of exchange were to be
"guaranteed for payment" by Swiss Volksbank. Such
an arrangement was acceptable to the Foxes and could
and should have been accepted on their behalf by Mr
Leech;

(f) Mr Leech in fact did nothing with regard to seeking
any improvement or adjustment to the terms of the
settlement agreement (and indeed did nothing at all)
with the end result that the agreement was lost; …."

36. The Respondent's written opening submissions described Mr Leech's negligence as follows:

"a. see Mr Leech's oral advice on 15^th October 1985:
paras. 17 to 34, 60 to 62 of Mr Fox's statement para.
13 of p/c in Leech action; paras. 6 and 7 of Mrs Fox's
witness statement:"

b. Mr Leech's letter of 23^rd October 1985 did not give
balanced or proper advice, was superficial and
contained numerous errors:…. [the numerous errors
were set out in some detail in five sub-paragraphs]

c. Thus the draft settlement was not strikingly convoluted or disingenuously worded as Mr Leech advised. The
fundamental point which Mr Leech should have understood and advised the Foxes of was that the settlement agreement contained provisos of enormous benefit to the Foxes and in particular:
i. they were to get a banker's draft for £125,000;
ii. they also had the benefit of bills of exchange
guaranteed by Swiss Volksbank and held by the
bank under standing instructions to hand them
over on the anniversary dates.

d. This was far preferable to the alternative of
commencing highly costly and speculative
litigation against Hanson and his associates.
e. ….

f. Mr Leech did nothing with regard to seeking any
improvement or adjustment to the terms of the draft settlement agreement and, indeed, did nothing at all with the end result that the agreement was lost;"

37. In Ms Carr QC's oral opening submissions on 6^th November 2007

she said, in response to a question from Underhill J. that it was

"important not to take the letter as a standalone problem". She referred

to points c and d in paragraph 135 of her written opening (above) and

said that:

"The fundamental point which Mr Leech should have understood and advised the Foxes, was that the settlement was of enormous benefit – contained provisions of enormous benefit to the Foxes, in particular the banker's draft for 125, the benefit of the bills of exchange and the guarantee, which was far preferable to the alternative of commencing and pursuing the highly costly and speculative litigation against Hanson and associates.

So it is a combination of the advice that, "I will do better for you, I know these people, I will get you a better deal. This deal is no good, overstated. Let's proceed with the litigation". And then doing nothing on the settlement front at all.

So it's almost a four-step situation, and the letter by itself doesn't stand alone. It's part of the matrix…….there are neat points on the letter as a standalone, but in context it's one of a number of factors."

38. The fourth step in the "four-step situation" was the impression that Mr Leech appeared to have given Mr Fox on 15^th October:

"which is: I will get you a deal. So there is an identified risk of the thing falling apart, but the overwhelming impression is: I will secure you a better deal than this, trust me. And Mr Leech did absolutely nothing at any stage to secure a deal for Mr Fox."

39. In Ms Carr's closing submissions she argued that at the meeting with Mr Leech on 15^th October 1985 Mr Fox had been given "strong and unbalanced" advice not to accept the settlement. No consideration had been given to the risks of litigation and positive assertions had been made by Mr Leech that he could improve on the settlement terms then available. This was coupled with a submission that the advice in the letter dated 23^rd October 1985 had been "unbalanced" in nature. "It is not suggested that all the points are bad, or that the agreement was perfect in every way. It is suggested that Mr Fox was not given competent advice overall. No proper consideration of alternatives, or of the consequences of full blown litigation…."
40. Underhill J. explained in paragraphs 113-116 why he considered that the lost settlement claim against LL had substantial value as at October 1991 when it was lost:

"113. I should start by saying that the substantive points made in Mr Leech's letter of 23^rd October 1985, taken by themselves, seem unimpeachable. The various problems which he identified with the draft Agreement were, as discussed at para. 21 above, real. The only way of ensuring payment of the future instalments, within the framework as agreed at that date, would have been for SV's "guarantee" to take the form of an undertaking to pay in the event of default irrespective of any alleged breach of the Agreement. No such undertaking from SV had been proffered, and it was unlikely that the promised guarantee when (or if) tendered would go that far.

114. It does not however follow that the only sensible course for Mr and Mrs Fox was to reject the offer. It remained to be seen whether the SV guarantee in fact materialised and if so what its terms amounted to. And even if, as seemed likely, they did not give 100% protection, a judgment would have to be made as to whether the risks of default (which would not necessarily mean ultimate non-payment but would entail further litigation) outweighed the risks of continuing with the litigation. All agreements involving deferred payments carry some risk of default, and all agreements involving mutual obligations carry the risk that the other party will allege breach and claim damages in consequence. These risks were inevitably inherent in an agreement of the kind which Mr Fox had negotiated with Mr Farnsworth. Mr Lines and Mr Grey both believed that the risks of litigation against the Hanson interests. Thus the real question about Mr Leech's advice is not whether his analysis of the draft Agreement was wrong but whether it was negligent of him to have advised as emphatically as he apparently did that Mr Fox should seek to re-negotiate and should be prepared to litigate if re-negotiation proved impossible; and, importantly, that for those purposes he should (immediately) change solicitors.

115. I believe that there is a serious argument that that advice was indeed negligent. Mr and Mrs Fox had been receiving careful advice from competent solicitors and counsel who had had every opportunity not only to consider the Agreement but also to assess the risks of the alternative course of embarking on further litigation. Mr Leech was in no position to form any useful view on the latter element in the equation. He knew about the merits (and value) of the claim against the Hanson interests only what Mr Fox could tell him in a single meeting (supplemented by what he may have already heard from Mr Cutting and/or Mr Woods – who, however, may not have been entirely disinterested). In those circumstances, for Mr Leech to give the advice which Mr Fox says that he did may have been not just bold but reckless. It is arguable that any prudent solicitor should have advised at least that Mr and Mrs Fox should continue to retain SLP until the terms of the SV guarantee were known, and should have taken advantage of the interval to acquaint himself more fully with the real prospects of the potential claim against the Hanson interests. Mr Leech was well aware that the mere fact that he had been instructed in place of SLP might lead the Hanson interests to withdraw: he told Mr Fox so in the letter of 23^rd October. The fact that he warned him of that risk, even if he did so before the die was cast (as to which there is no evidence), would not necessarily be enough to "save" his substantive advice if that was otherwise negligent.

116. Even if it was not negligent for Mr Leech to give the advice which he did between 15^th and 23^rd October, there is the further question of his communications, or the lack of them, with TSW in the days following Mr Fox's decision to instruct him. As explored in para. 34 above, the facts are obscure. But if Mr Leech did indeed make no attempt to contact TSW, thus leaving the negotiations effectively in limbo at a crucial point, that too was arguably negligent. Whatever the deficiencies of the draft Agreement, the priority, from the point of view of Mr Fox's interests, was to see if they could be remedied; and it appears that that was what Mr Leech told Mr Fox he intended to do."

41. It will be noted that Underhill J. did not accept the Respondent's contention that Mr Leech's letter dated 23^rd October 1985 "did not give balanced or proper advice was superficial and contained numerous errors". Nor did he accept the Respondent's contention that the settlement agreement contained "provisions of enormous benefit" to Mr and Mrs Fox or that those benefits included the benefit of bills of exchange guaranteed by SV. His view was that the substantive points in the letter, taken by themselves, seemed "unimpeachable"; that the various problems which Mr Leech had identified with the draft settlement agreement were "real"; and that the agreement did not give Mr and Mrs Fox the benefit of a "guarantee" from SV.
42. I have set out in paragraphs 34-39 above the way in which the Respondent was putting its case as the proceedings progressed, from which it can be seen that it was never alleged by the Respondent that even if the advice in Mr Leech's letter dated 23^rd October 1985 was unimpeachable and the problems he had identified with the draft settlement agreement were real, and there was in fact no "guarantee" from SV, there was nevertheless a serious argument that Mr Leech was negligent simply on the basis that his tactical advice, given orally, was negligent in that he should not have advised "as emphatically as he apparently did [on 15^th October] that Mr Fox should seek to re-negotiate and should be prepared to litigate if re-negotiation proved impossible; and importantly that for those purposes he should (immediately) change solicitors". (114) While the allegedly defective advice in the letter had not been put forward by the Respondent as a "stand-alone problem", nor had it been suggested that Mr Leech's oral advice might be regarded as a "stand- alone problem". The alleged defects in the letter of 23^rd October 1985 had always formed part of the "matrix" in which Mr Leech's "overall advice", the combination of his written and oral advice, was said to have been negligent.
43. In paragraphs 122 and 123 of his judgment Underhill J. recognised that it did not follow from his conclusion that the lost settlement claim had a substantial value that Wellers were negligent in failing to advise about it prior to the end of October 1991. He said:

"122. That depends on what they were told by, or should reasonably have elicited from, Mr Fox about the events of October 1985. I can see a powerful argument that Wellers were not told enough to put them on notice of the potential claim until after the crucial date. They were initially instructed for the purpose of conducting the Fontana and Hanson litigation. Although it became clear from an early stage that the way in which that litigation had been handled gave rise to a potential claim for negligence against LL, there is nothing either in Mr Fox's witness statement for the purpose of the PJH proceedings or in the documents before me to suggest that he explicitly raised with Wellers an allegation that the advice given in October 1985 was negligent. His application for legal aid referred only to negligence in the handling of the litigation. Although the ten-page note, which Mr Fox sent to Miss Nickson in May 1991, did give Wellers an account of the events of October 1985 it fell short of clearly alleging negligent advice or raising the lost settlement claim. It was not until May 1993 that he explicitly did so.

123. On careful consideration, however, I am not prepared to say that there was no real prospect that a claim against Wellers could have succeeded. I think that it is at least arguable that Mr Fox's account in the ten-page note of the advice which he was given in October 1985 should have put Wellers on notice that there might be grounds for criticising that advice and that it was necessary carefully to go over what had happened with Mr Fox. (In this connection it is interesting to note that on reading the ten-page note Miss Nickson did in fact ask for, and receive, a copy of Mr Leech's letter of 23^rd October; but she does not appear to have pursued her enquiries further.) If that point is reached, it almost certainly follows that Wellers should have appreciated that any such review needed to be conducted before the end of October 1991. If there had been a focused discussion of the point, either between Mr Fox and Miss Nickson or in an earlier conference with Mr Batcup, it is likely that the criticisms which Mr Fox eventually made in May 1993 would have been raised earlier and that appropriate advice about limitation given would have been given. Mr Stewart emphasised to me that Mr Fox was a man who knew his own mind and that if he had wanted to make a claim against LL based on negligent advice in October 1985 he would have done so. But even clear-thinking and decisive clients need to have their minds focused by their lawyers. The germ of the complaint which emerged in May 1993 was present in the ten-page note: it is arguable that Miss Nickson should have spotted the claim that was latent in Mr Fox's criticisms even if he had not yet spotted it himself."

44. On reading the ten-page note, Miss Nickson had asked for and received a copy of Mr Leech's letter dated 23^rd October 1985. Underhill J's conclusion that Wellers were arguably negligent depends upon his conclusion that, arguably, Miss Nickson should have pursued her enquiries further, and that had she done so a focussed discussion would have elicited the point which Mr Fox eventually made in May 1993 in time for appropriate advice about limitation to have been given. Should Miss Nickson have pursued her enquiries further?
45. The question is not whether a particularly diligent solicitor after having received a copy of the letter dated 23^rd October 1985, might have pursued further enquiries before the end of October 1991, but whether any reasonably competent solicitor would have done so. Since the letter was referred to in the ten-page note any reasonably competent solicitor would undoubtedly have asked for a copy. If the advice in the letter had been on the face of it, as the Respondent alleged at the trial, unbalanced, superficial or erroneous, that too would have prompted any reasonable solicitor to make further enquiries. If, on the other hand, the advice in the letter appeared to be "unimpeachable" why was there any need to make further enquiries unless there was some indication that the letter did not present the full picture as to what Mr Leech's earlier oral advice had been? Underhill J. considered that Mr Fox's account in the ten-page note of the advice which he was given in October 1985 "should have put Wellers on notice that there might be grounds for criticising that advice and that it was necessary carefully to go over what had happened with Mr Fox". However, the ten-page note, having referred to Mr Leech's advice at the meeting on 15^th October, had said that the letter had confirmed Mr Leech's views "in no uncertain terms" (see paragraph 29 above). The letter itself referred to "our various recent conversations" and then purported to set out what Mr Leech had advised in those conversations (paragraph 20 above).
46. Underhill J. said in paragraph 30 of the judgment that the letter:

"is full and explicit and prima facie the best evidence of [Mr Leech's] definitive and considered advice on the matters which it covers."

It was also, on its face and on Mr Fox's own account in the ten-page note, the best evidence of what Mr Leech's earlier oral advice to Mr Fox had been. There is nothing in either the ten-page note or the letter to suggest that Mr Leech might have given other, erroneous, oral advice in October 1985. The letter said in terms that Mr Fox appreciated that the negotiations might well not proceed if he changed solicitors to Mr Leech.

47. When considering whether a reasonably competent solicitor would have treated the letter as sufficient evidence of Mr Leech's advice to Mr Fox in October 1985 or would have made further enquiries, it is important to bear in mind that Mr Fox was far from being an inarticulate litigant. He was well able to, and had at Miss Nickson's request, set out his complaints against Mr Leech in some detail. He had already given instructions on the basis of which Miss Nickson had been able to draft a statement for the purposes of his legal aid application in respect of LL's negligent handling of the Fontana and Hanson actions. She had then asked Mr Fox for further information and received in response the ten-page note which, as the Judge found "fell short of alleging negligent advice or raising the lost settlement claim".
48. On its face the ten-page note was a comprehensive catalogue of Mr Fox's complaints against Mr Leech. The focus in the trial before Underhill J. in 2007 was the lost settlement claim. In 1991 the focus in the ten-page note was on Mr Leech's negligent conduct of the Hanson and Fontana actions. If the ten-page note had not contained any viable criticisms of Mr Leech's conduct of those actions, then a reasonably competent solicitor might well have made yet further enquiries to see whether, if Mr Leech's conduct of the litigation could not be criticised, there might still be some other, as yet unidentified, ground on which his professional conduct might be criticised. Given that there appeared to be considerable force in Mr Fox's complaints about Mr Leech's handling of the two actions, which included his failure either to litigate or to settle them on appropriate terms so that the benefit of the settlement offer which had been made in October 1985 was "lost", it is difficult to see why any reasonably competent solicitor would have thought it necessary to pursue their enquiries yet further to see whether there might be some additional and as yet undisclosed complaint about Mr Leech's earlier advice. In concluding that it was arguable that Miss Nickson should have pursued her enquiries further in 1991 Underhill J., in my judgment, applied his own meticulous and exacting standards, and did so against the background of the conclusion that he had reached that there was arguably a "lost settlement claim" based on Mr Leech's oral advice even though the advice in his letter dated 23^rd October 1985 had been unimpeachable.
49. As mentioned above, this possibility – that Mr Leech's oral advice might have been negligent even if his advice in the letter dated 23^rd October 1985 was correct – did not occur to the Respondent even with the benefit of hindsight at the conclusion of the trial. The Respondent's case was always grounded on the submission that the advice in the letter itself was flawed, and that this flawed advice was part of Mr Leech's "overall advice", which was negligent. It is true that the Respondent was not contending that the advice in the letter was a "stand-alone problem", but neither was it ever suggested that Mr Leech's oral advice might be capable of being "a stand-alone problem" if the advice in the letter was not flawed. It is a counsel of perfection to criticise Miss Nickson for not having been put on notice by the ten-page note in 1991 that there might be a "stand-alone problem" with Mr Leech's oral advice, when that possibility did not occur to the Respondent even with the benefit of hindsight.
50. Mr Wadsworth QC's advice in 1993
    It is also instructive to see what happened in May 1993 when Mr Fox made the criticisms that Underhill J. said he would have raised earlier if Miss Nickson had pursued her enquiries further in 1991. (123) Mr Wadsworth QC was instructed to advise on the prospects of the Hanson action and the proposed proceedings against LL. In a written Opinion dated 31^st March 1993 he advised that the Hanson action had insufficient prospects of success to justify the continuation of legal aid, but that there was sufficient prospect of success in a claim against LL to justify further investigation. In paragraph 55 of the judgment Underhill J. described Mr Fox's reaction to this advice:

"55. Mr Fox was very disappointed by Mr Wadsworth's
advice on the Hanson action and confirmed that he
would like a consultation in order to discuss that
advice. He also, however, saw the consultation as an
opportunity to raise a further issue. On 18^th May he
wrote to Wellers as follows:

At our forthcoming meeting with Mr Wadsworth QC I
would like to obtain his opinion on the fateful meeting
I had with Alan Leech on the 16^th [sic] October 1985
and if the advice he gave me was negligent and in
breach of his duty of care.

I have tried to abbreviate the matter to the enclosed
single page statement which may or may not help.

However, I will certainly not refer to this subject at the
meeting if you do not approve or consider it
unhelpful."

Underhill J. said that the enclosure was a one-page statement along similar (though not identical) lines to the passage from the ten-page note which I have set out at paragraphs 29 and 30 above:

"It contained no explicit criticism of Mr Leech's advice not to settle on the terms of the draft Agreement; but of course the covering letter made it quite plain that Mr Fox was raising – for the first time in unambiguous terms – a potential allegation of negligence on the part of LL in October 1985 and thus in practice the lost settlement claim." (55)

51. The consultation took place on 8^th July 1993. Mr Wadsworth dealt primarily with the merits of the Hanson action. He maintained the view in his Opinion, to the chagrin of Mr Fox, but he also answered the question raised in Mr Fox's letter of 18^th May. Wellers' note of the consultation records that:

"Leading Counsel did not think that Leech had been negligent in advising Mr Fox to reject the offer of settlement in the Hanson matter."

Underhill J said that it was unclear what material Mr Wadsworth had about the events in 1985 (57), but he could be confident "that he did not have the issues as fully explored with him as I have." (119)

52. Whatever information was given to Mr Wadsworth in 1993 he clearly felt that it was sufficient to enable him to advise Mr Fox that Mr Leech's advice in October 1985 to reject the offer of settlement had not been negligent. He did not suggest that there was a need to make further enquiries about the advice, and if he explored the matter further with Mr Fox during the consultation, Mr Fox's answers were sufficient to satisfy Mr Wadsworth that, however negligent Mr Leech may have been in other respects, his advice to reject the offer of settlement had not been negligent.
53. If this was the reaction of a very experienced leading Counsel (who is one of the few lawyers in this saga whose conduct had not been criticised) shortly after the complaint had emerged for the first time in "unambiguous terms" in May 1993, it is difficult to see how Miss Nickson could fairly be criticised for not spotting in 1991 that the "germ of the complaint" was latent in Mr Fox's account in the ten-page note of the advice which was given in October 1985.
54. There remains the further question of Mr Leech's communications, or the lack of them, with TSW once he had been instructed by Mr Fox. Underhill J. dealt with this issue in paragraph 116 of the judgment (paragraph 40 above). As I read that paragraph, Underhill J. did not feel able to make any finding as to whether Mr Leech had contacted TSW before the settlement offer was withdrawn in TSW's letter dated 28^th October 1985 (34), but he said that "If Mr Leech did indeed make no attempt to contact TSW thus leaving the negotiations effectively in limbo at a crucial point, that too was arguably negligent". Should the possibility of such an argument have occurred to Miss Nickson? There was nothing in the ten-page note to suggest that the settlement negotiations might have foundered because Mr Leech had failed to contact TSW prior to TSW's letter of 28^th October 1985. That letter did not contain any such suggestion, and said that the settlement offer was withdrawn because Mr Fox was intending to raise new issues and to change his solicitors (see paragraph 21 above). There might have been some force in this point if Mr Leech had identified only a few minor defects in the proposed settlement agreement which might have been capable of speedy resolution. But his letter dated 23^rd October 1985 had raised a number of "root and branch" objections to the draft Agreement. If the various problems he had identified were, on the face of it, "real" problems, there was nothing in the ten-page note when read together with the letter of 23^rd October 1985 that might reasonably have suggested to Miss Nickson that an attempt by Mr Leech to contact TSW in the few days prior to their withdrawing the offer on 28^th October might have saved the negotiations.
55. Underhill J. found it "not…altogether easy" to decide whether a claim that Wellers had been negligent had a real prospect of success. For the reasons given above I do not consider that it was open to him to conclude that it was arguable that any reasonably competent solicitor in Miss Nickson's position in 1991 would have pursued their enquiries further. It follows that neither Mr Batcup nor Mr Susman QC can be criticised for not appreciating before the end of October 1997 that there might be a claim which had a real prospect of success against Wellers: there was no such claim. That is sufficient to dispose of the appeal in their favour, but I must also consider Underhill J.'s findings that Mr Batcup and Mr Susman QC were or should have been aware that the lost settlement claim formed part of the claim which Mr Fox wished to bring against LL.
56. Mr Batcup's Involvement
    I have dealt with the consultation in July 1993 with Mr Wadsworth QC, at which Mr Batcup was present, in paragraphs 51 - 53 above. On 7^th May 1996, by which time the Respondent had taken over Mr Fox's claim against LL, Mr Batcup supplied a draft Statement of Claim. A Statement of Claim conforming to his draft was served shortly afterwards. (73) The terms of the Statement of Claim are set out in some detail and discussed in paragraphs 74 and 75 of the judgment. In paragraph 76 Underhill J. said:

"76. I do not believe that the Statement of Claim raised, or was intended by Mr Batcup to raise, an overt claim that the advice given by Mr Leech in October 1985 was negligent, or that the settlement offer represented by the draft Agreement was lost as a result of that negligent advice. I believe that Mr Batcup intended only overtly to plead a claim along the lines of the ten-page note – that is that, having advised Mr Fox to reject the offer, Mr Leech was under a duty to achieve a better result by progressing both the Fontana and Hanson action, and that he failed to do so. That pleading may not be entirely logical, since Mr Leech would have been under a duty to handle both claims competently whether or not he had advised rejection of a settlement previously offered, but one can see how, that fact might be said, at least rhetorically, in some way to intensify his obligations., And the "lost" amount of the offer would remain relevant on this basis as a measure of the amount lost by LL's negligence."

He continued in paragraph 77:

"77. However, Mr Batcup would – and in any event certainly should – have been aware that the case as so pleaded fell short of the claim that Mr Fox wished to advance, i.e. a case of negligent advice in October 1985 leading to the loss of the offer at that time. That would (or should) have been apparent to him from head 1 of Mr Fox's "Matters for Statement of Claim" note, possibly reinforced by the further discussion in the two conferences which he had had (see paras. 68 and 72 above); and such a claim was indeed made in the general indorsement. He would of course also have been aware that any such claim was prima facie statute-barred. It is true that he had never clearly been asked to advise on that question, nor had he done so; but the point was as plain as a pikestaff."

57. Was the point as plain as a pikestaff? Mr Fox and Mr Simister of Wellers, who had taken over the conduct of the matter from Miss Nickson, had discussed at a meeting on 6^th February 1995 a note prepared by Mr Fox headed "Negligence Action against Lindars Leech Solicitors – Matters for the Statement of Claim". Four matters were listed, the first of which was:

"1. The loss of the settlement offer made by Fontana Holdings Inc in 1985 which was rejected by reason of the recommendation of Mr Alan Leech but which was revealed as being negligent advice made without due care and attention to the best interests of Mr & Mrs Fox."

Heads 2 and 3 were claims for the loss of the amount secured by the Mareva in the Fontana action, and for Mr Fox's liability to costs in the Hanson action. Head 4 was a general claim for damages for distress.
Underhill J. said this about head 1:

"Thus Mr Fox was quite explicitly seeking to revive the lost settlement claim which he had first clearly adumbrated in his note for Mr Wadsworth (see para. 55 above). Again, the allegation of negligence is completely unparticularised, and the formulation "which was revealed as" may suggest that at least part of Mr Fox's thinking, as in the ten-page note, may have been that the decision to reject the offer was only "wrong" because of Mr Leech's subsequent incompetence. Nevertheless, it is on its face a clear allegation of negligent advice in October 1985." (62)

58. While the words "negligent advice" are used, the formulation "which was revealed as being negligent advice" is also consistent, as Underhill J. recognised, with the complaint in the ten-page note which was not that the advice to reject the settlement offer had been negligent, but that the negligent conduct of the litigation had resulted in the loss of the benefit of the settlement offer (because Mr Leech had failed either to litigate or to secure a better offer). I do not accept that it should have been apparent to any reasonably competent counsel in Mr Batcup's position, i.e. a reasonably competent counsel who was familiar with the ten-page note, that Mr Fox was indicating in another note in February 1995 that he wished to advance a claim that had not been included in the ten-page note, and if it was intended to be a complaint of negligent advice, was the very complaint that had been rejected by Mr Wadsworth QC some 18 months earlier in a consultation at which Mr Batcup had been present. Whatever recollection Mr Batcup had of that consultation over ten years later when he provided his first witness statement in these proceedings, it would be unrealistic to suppose that he would have completely forgotten about the consultation in 1993 when he was drafting the Statement of Claim in 1995.
59. Underhill J. said that the message conveyed to Mr Batcup by head 1 of the February 1995 note would possibly have been reinforced by the further discussion in the two conferences he had on 17th October 1995 and 25^th April 1996 but the judgment does not suggest that Mr Batcup was given any new information at those conferences which might have clarified Mr Fox's complaint in head 1. After the second conference Mr Fox sent Mr Batcup and the Respondent a witness statement from Mrs Fox about her telephone conversation with Mr Leech on 16^th October 1985, but the fact of that conversation had been mentioned in the ten-page note (see paragraph 29 above).
60. Underhill J. was also of the view that the claim which Mr Batcup had not pleaded in the Statement of Claim had been made in the general indorsement on the Writ. Mr Batcup had been sent instructions to settle a general indorsement for a writ against LL on 30^th June 1995. His instructions had included the February 1995 note and "an unsigned statement from Mr Fox which confirms how the financial settlement of the claim against Rey/Hanson came to be refused on the advice of Mr Leech in late 1985". If head 1 in the February 1995 note was an indication by Mr Fox that he wished to pursue an additional complaint it might be thought that this would have been made clear in that statement. Underhill J. described the statement as follows:

"This was a two-page document, clearly drafted by Mr Fox himself, giving a rather fuller account of the events of October 1985 than had previously been given in the ten-page note or the document supplied to Mr Wadsworth, though along similar lines. Like those, it did not make any explicit allegation of negligence. There is however a clearly detectable undercurrent of criticism, partly to the effect that Mr Leech had been over-emphatic and overbearing in his advice but partly again to the effect that he had made promises about how he would proceed if the settlement did not go ahead on which he then failed to deliver. Although the Instructions did not explicitly ask Mr Batcup to consider including in the writ, or to advise on, a claim that Mr Leech gave negligent advice which resulted in the settlement being lost, I think that such a request could clearly be inferred from the terms of those enclosures, and most particularly from head 1 of "Matters for Statement of Claim"." (65)

61. This led Underhill J. to conclude that "By one route or other, therefore, Mr Batcup plainly understood that the lost settlement claim now came within his instructions". (65) It was not Mr Batcup's evidence that this was his understanding, and insofar as paragraph 65 of the judgment is to be understood as Underhill J's conclusion that Mr Batcup should have understood that the "lost settlement claim" (as defined by Underhill J.) was being made by Mr Fox and that it now came within his instructions I do not accept that head 1 was, when considered in conjunction with the ten-page note and the two-page statement from Mr Fox, neither of which had made any explicit allegation of negligent advice in 1985, sufficient to put any reasonably competent barrister on notice that, although he was not being asked to consider including it in the writ, or to advise upon it, Mr Fox was now advancing the lost settlement claim.
62. The general indorsement drafted by Mr Batcup was in these terms:

"The Plaintiff's claim is for damages and interest thereon pursuant to Section 35A of the Supreme Court Act 1981, against the Second Defendants, a firm of solicitors, and the First Defendant a partner in the said firm for loss and damage for negligence and/or breach of contract as solicitors for the Plaintiffs, suffered as a result of negligent advice between 1985 and 1991 in proceedings eventually issued in the Chancery Division under Ch 1988 F No 2360 and in the Queens Bench Division under 1984 F No 18, on behalf of the Plaintiffs whereby inter alia the Plaintiffs:-

(i) Lost a settlement offered by parties to the litigation;

(ii) Sustained losses of fees paid to the Defendants and to
counsel for an inadequately pleased case;

(iii) Sustained losses for costs orders made against the
Plaintiffs in favour of parties wrongly or negligently
joined to the said actions at a time when the Plaintiffs
should have had the benefit of being legally aided;

(iv) Failed to ensure the actions were proceeded with, with
due diligence and expedition and in compliance with
directions of the Court so that a Mareva injunction in
the Queen's Bench action was discharged on the 21^st
July 1989 so that funds frozen were lost to the
Plaintiffs;

(v) Failed to ensure the Plaintiffs were at all stages legally
aided in the said proceedings."

63. Commenting on the general indorsement, Underhill J. said:

"In my view, though it is (perfectly properly) wholly unparticular, in the light of Mr Batcup's instructions as summarised above, head (1) can only have been intended by him to refer to negligent advice given by Mr Leech in October 1985 leading to the loss of a settlement available at that time." (66)

This conclusion illustrates the dangers of hindsight. Having defined "the lost settlement claim" in a particular way, and having concluded that head (1) was Mr Fox's attempt to revive that "lost settlement claim", it is then said that head (i) in the general indorsement can only have been intended to refer to that claim. Head (i) in the general indorsement is, however, entirely consistent with the complaint in the ten-page note that the settlement was "lost" because Mr Leech, having advised Mr and Mrs Fox to reject the settlement agreement, failed to obtain a better result by litigation or negotiation. Such an interpretation of the general indorsement is the more likely not merely because it is consistent with the ten-page note but also because it is consistent with what Underhill J. found to have been Mr Batcup's intention when pleading the Statement of Claim a year later:

"Mr Batcup intended only overtly to plead a claim along the lines of the ten-page note – that is that, having advised Mr Fox to reject the offer, Mr Leech was under a duty to achieve a better result by progressing both the Fontana and Hanson actions and failed to do so". (76)

64. Paragraph 45 (ii) of the Statement of Claim included a claim for "the….loss of £445,000 in settlement of the …. Fontana action". Underhill J. said that the explanation for the:

"somewhat fuzzy formulation of the pleading is that Mr Batcup had decided that to plead the lost settlement claim in overt terms would inevitably flag up that it was statute-barred but that he could in practical terms keep it in play by pleading the essential facts as if they were material to a loss which continued beyond July 1989; that is indeed broadly the explanation he himself gives in his first witness statement (see paragraph 38) and repeated in cross-examination." (77)

65. Mr Batcup had said in paragraph 38 of his first witness statement that:

"The case I formulated as to the lost settlement claim was that Mr Leech had been negligent in that he "continued to advise against acceptance of the settlement, but failed to secure a settlement better than that on offer". This formulation created a potential way around limitation in that it could be argued that it was not any original rejection of a settlement offer that was the issue, but Mr Leech's failure thereafter to secure a settlement as an alternative to the issue of further proceedings or the lack of follow-up in the Fontana action."

66. Underhill J's reliance on this statement is an example of the potential for confusion in the use of the term "lost settlement claim". Mr Batcup was not referring in his witness statement to the lost settlement claim that Underhill J. found that Mr Fox was wishing to advance in 1995. Mr Batcup had explained in paragraphs 31-34 of his witness statement what his thinking was when drafting the general indorsement, and what he was referring to in his witness statement as the "lost settlement claim":

"31. First, when I came to draft the relevant endorsement for the Writ for the claim against Mr Leech, I did include a criticism against Mr Leech that related to a failure to obtain settlement of the Hanson action (although I describe below why this criticism was not the same as the contention that Mr Fox later came to make). However difficult a client Mr Fox might have been I admit I had some sympathy with him over his dealings both with Hanson Interests and some members of the legal profession in the previous ten years. I was also concerned as to whether I might have received all the relevant papers, but that is not to say that I had any reason to suppose that Wellers had failed diligently to pass on to me all the papers they had been given by their client.

32. So, it was as a precautionary step that I included in the endorsement to the Writ a claim based on a failure to achieve settlement of the Hanson action.

33. The second point is that I am sure, either before or after the written instructions to me of 30^th June 1995, I did discuss with Mr Simister the risk that a claim against Mr Leech based on a failure to achieve early settlement might be statute barred. Indeed, it seemed that Mr Fox was already aware of his problem.

34. That said, I did consider it the right course to preserve this ground of claim against Mr Leech by including it in the Writ. From now on in this statement, I will use the term 'the lost settlement claim' to refer to this ground of claim against Mr Leech. However, I describe below how I came to formulate that claim in the Statement of Claim and how the claim changed in focus following the service of Mr Leech's Defence." (emphasis added)

67. There was no inconsistency between the claims in the Writ and the Statement of Claim: both pleaded a "lost settlement claim" but that claim was not that Mr Leech's advice at the "fateful meeting" to reject the draft settlement agreement had been negligent, it was that Mr Leech had "lost" the settlement because he had thereafter failed to secure a better settlement either by litigation or negotiation. Such a "lost settlement claim" might still face limitation problems since a Court might conclude that there was a limited "window of opportunity" for securing a better settlement by litigation or negotiation. There was therefore a risk that a claim "based on a failure to achieve an early settlement might be statute barred".
68. Mr Batcup's evidence was that he was not aware that the lost settlement claim as defined by Underhill J. formed part of the claim which Mr Fox wished to bring against LL. For the reasons set out above, it could not be said that it would, or should, have been apparent to any reasonably competent solicitor or barrister in Ms Hartwell's or Mr Batcup's position from the "Matters for Statement of Claim" that Mr Fox wished to pursue the lost settlement claim as defined by Underhill J. Nor do Mr Batcup's pleadings demonstrate that he had such an understanding. The pleadings are consistent with each other, with the way Mr Fox had put his case in the "ten-page note", and with Mr Batcup's own evidence.
69. It follows that neither Mr Batcup's own evidence nor the documents provided any basis for Underhill J's conclusion in paragraph 129 of the Judgment that:

"129. From at least the receipt of his instructions dated 30^th June 1995 onwards Mr Batcup was, and in any event should have been, aware that the lost settlement claim formed part of the claim which Mr. Fox wished to bring against LL. That was apparent in particular from the terms of the "Matters for Statement of Claim" note included with those instructions: .... His understanding to this effect is apparent (though admittedly not always readily apparent) in the way that he pleaded the case….. It preceded, and was independent of, the introduction by Mr Fox in September 1996 of his allegations about Mr Leech's concealment of the revised draft of the settlement offer."

70. A Defence on behalf of Mr Leech was served by Wansbroughs Willey Hargrave (WWH) on 11^th September 1996. Paragraph 1 of the Defence pleaded that any cause of action arising prior to 19^th July 1989 was statute-barred. Mr Fox was asked for his comments on the Defence and he instructed Ms Hartwell of PJH that in October 1985 he had been aware of only the first draft of the proposed settlement agreement, in which the Bills of Exchange were to be guaranteed by UBI, not SV. Mr Fox said that neither Mr Lines nor Mr Leech had shown him the later drafts of the agreement, and having now seen the second draft he and his wife felt that they would have accepted it with the amendments which had been incorporated. Mr Fox's recollection was wrong: Mr Lines had sent Mr Fox both the third and the fourth drafts of the settlement agreement, and Mr Fox had given both of these drafts to Mr Leech. However, Mr Fox's faulty recollection caused Mr Batcup to rely on Mr Leech's alleged failure to tell Mr Fox about the revised drafts of the agreement when he came to draft the Reply to Mr Leech's Defence. The Reply, which was served on 23^rd October 1996, averred that Mr Fox did not have the necessary knowledge for the purposes of section 14A of the Limitation Act 1980 until after 19^th July 1989, and further alleged that there had been deliberate concealment by Mr Leech. Paragraph 4 of the Reply said:

" The Plaintiffs were unaware until on or about the 14^th September 1996 that the First Defendant had received a second draft of the Agreement (referred to in paragraphs 12 and 13 of the Statement of Claim herein) which had resulted from further negotiations between Mr Lines of SLP and Mr Thomas of Titmuss Sainer & Webb on the 15^th October 1985. They believed the advice they received was as to the first draft and were denied the opportunity of considering and accepting the terms as amended."

71. Underhill J. considered that the terms of the Reply:

"confirm[ed] that Mr Batcup was in late 1996 hoping, by one means or another and despite the absence of any explicit pleading, to advance the lost settlement claim: he appreciated that that claim was prima facie statute-barred, but it now appeared that there was a possible answer to the limitation defence." (83)

This conclusion overlooks the distinction between the lost settlement claim as defined by Underhill J. – negligent advice in October 1985 – and the lost settlement claim that Mr Batcup had in mind when drafting the Writ and Statement of Claim. Put simply, that lost settlement claim was Mr Leech's failure after the settlement "offer" had been withdrawn to obtain a better deal for Mr and Mrs Fox by litigation or further negotiation. It was arguable that the time limit for such a lost settlement claim would have expired before 19^th July 1989 if the Court took the view that, realistically, the chances of obtaining a better deal receded as Mr Leech's delay in pursuing the Fontana and Hanson actions lengthened. The alleged concealment by Mr Leech of the later drafts of the settlement agreement was a wholly new, and as it turned out wholly inaccurate, allegation by Mr Fox, but understandably it assumed a considerable importance in the minds of PJH and Mr Batcup at the time. WWH served a Request for Further and Better Particulars.

71. Ms Hartwell's response included the following Particulars:

"After the Plaintiffs had disinstructed their former solicitors SLP on or around 16^th October 1985 the First Defendant received from SLP a substantially revised form of the proposed form of Agreement to be entered into between Mr Fox and Fontana Holdings Inc. The revised terms had been negotiated between Mr Lines of SLP and Mr Thomas of TSW in a telephone conversation on 15^th October 1985 and were incorporated in a second draft Agreement.

The First Defendant failed to notify the Plaintiffs of the terms of the second draft Agreement or to submit a copy of the same to the Plaintiffs for their consideration. The revised terms of the Agreement dealt with the defects which had concerned the First Defendant on 15^th October 1985 and which had caused the First Defendant to advise the Plaintiff to reject the terms of the original draft Agreement, the terms of which were acceptable to the Plaintiffs, and upon which they could have proceeded to reach a negotiated settlement with Fontana Holdings Inc.

Furthermore, in a letter the First Defendant wrote to the Plaintiffs on the 23^rd October 1985 and, in addition, a letter that the First Defendant prepared, drafted and instructed the Plaintiffs to send to the Law Society on the 19^th December 1985, the First Defendant made no reference at all to the revised form of Agreement and improved terms and concentrated on quoting the terms contained in the first draft of the Agreement as a justification for the advice which he gave to the Plaintiffs on the 15^th October 1995.

The First Defendant, upon receiving instructions to act for the Plaintiffs, should have taken steps to conclude the terms of the proposed Agreement to be entered into between Mr Fox and Fontana Holdings Inc. to the best possible advantage of the Plaintiffs."

It will be noted that it was not being alleged that Mr Leech's advice on 15^th October 1985 was wrong. It was alleged that, having subsequently received the later drafts of the settlement agreement, which dealt with the defects which had concerned him on 15^th October 1985, Mr Leach had failed to tell Mr Fox about them, and had failed to refer to them in his letter dated 23^rd October 1985.

72. On 30^th April 1997 WWH informed PJH that they proposed to apply to strike
    out those parts of the Statement of Claim which were statute barred. In the
    event, WWH applied on 16^th July 1997 for the question of limitation to be tried
    as a preliminary issue.

74. Mr Susman QC's involvement
Mr Susman was instructed to advise in consultation on WWH's application for
the trial of a preliminary issue. He was provided with a bundle of the pleadings
in the claim against Mr Leech, but he was not sent the full papers available to
PJH. The consultation took place on 22^nd August 1997. Underhill J. said in
paragraph 90 of the judgment that "the main focus of the consultation was Mr
Leech's pending application rather than the ultimate prospects of the action, and
definitive advice on the merits was not required". Underhill J. noted the
following points about the consultation:

"(1) It seems, in particular from Mr Susman's note, that he
understood the "essence" of the claims pleaded at
paras. 7-22 of the Statement of Claim to be that "the
Defendant was instructed because he indicated that he
could procure a better offer, but he failed to do so, and
failed to progress the action at all". That of course
broadly reflects my own analysis of the pleading ….it
does not cover any claim that Mr Leech's advice in
October 1985 was itself negligent. His advice was that
the claim as so understood ought not to be held to be
statute-barred because damage would not crystallise
until the Fontana and/or Hanson actions collapsed."

(2) It seems, however, that Mr Susman at least considered
the possibility of a claim based on negligent advice in
October 1985. He is recorded in Ms Hartwell's note of
the consultation as saying:

1985 - contractual lim. Has well expired. Would
need to commence by
1991 - contract lim. gone.


It is hard to make sense of that statement except on the
basis that Mr Susman was addressing, however
parenthetically and briefly, a claim that the advice
given by Mr Leech in October 1985 was negligent.
There is nothing surprising about his doing so, given
the terms of the Reply and of the Further and Better
Particulars which he will have seen.

(3) Ms Hartwell also notes someone – apparently either
Mr Susman or Mr Batcup – saying:

Loss of deal (Fontana) – one view that this had long
since gone

The natural interpretation of this is that it is at least
well arguable that any claim based on the loss of the
settlement offer was now statute-barred.

(4) There was some discussion of the terms of the
settlement offer made by the Hanson interests in
October 1985 and of the different drafts. The
discussion was in the context of the "knowledge" and
s. 32 answers to the limitation point pleaded in the
Reply. The note is not explicit as to what the cause of
action which those answers might or might not "save"
was understood to be.

(5) Mr Susman is recorded in Ms Hartwell's note as
giving his view that there was a "good claim for £70k
– but highly speculative [claim] for the alleged half a
million". The "half a million" is a reference to the lost
settlement offer. Read by itself that need not be a
reference to the lost settlement claim, since the
settlement amount had been pleaded by Mr Batcup as a
measure of the value of the lost Fontana action; but in
the context of the earlier references it seems more
likely that the lost settlement claim was being referred
to. If so, the note does not state why Mr Susman
described it as "speculative"; but the most obvious
problem about it was that it was prima facie statute-
barred, and Mr Susman had not been asked, or put in a
position, to advise definitely on the merits of the claim.

In my view it is clear from those references that Mr Susman and Mr Batcup and Ms Hartwell, understood that the lost settlement claim in the sense that I have defined it at para. 44 above was part of the claim that Mr Fox wished to pursue."

73. I have explained in paragraphs 57 to 69 above why I do not accept that either Mr Batcup or Ms Hartwell understood, or should have understood, prior to the consultation that the lost settlement claim as defined by Underhill J. was part of the claim that Mr Fox wished to pursue. Mr Susman correctly identified the "essence" of the claim that was being made against Mr Leech: that having indicated that he could procure a better offer, he "failed to procure a better offer and failed to progress the action at all". This was the lost settlement claim as defined by Mr Batcup (see paragraph 66 above). The pleadings did not claim that Mr Leech's advice at the meeting on 15th October 1985 was itself negligent because Mr Fox did not, and certainly did not sufficiently clearly, attempt to revive that claim in 1995 after it had been rejected by Mr Wadsworth QC in 1993. If the claim was not raised in the pleadings, or in any other document before Mr Susman, there is no reason why it should have occurred to him on the first occasion on which he was involved in the proceedings that Mr Fox wished to pursue such a claim.
74. Underhill J. based his conclusion that Mr Susman, contrary to his own evidence as to his understanding of the claim at that time, had understood that the lost settlement claim (as defined by Underhill J.) was part of the claim that Mr Fox wished to pursue, on the three references in Ms Hartwell's notes referred to in sub-paragraphs 90(2), (3) and (5) of the judgment (see paragraph 74 above). However, each of those three references is entirely consistent with the claim as it had been pleaded and had been understood by Mr Susman: the continuing failure to procure a better offer and to progress the litigation after October 1985. It is not hard to make sense of the note that records Mr Susman as saying:

"1985 -- contractual lim. Has well expired. Would need
to commence by
1991 -- contract lim gone."

in the context of Mr Leech's continuing failure since October 1985 to secure Mr Fox a better deal by one means or another, since there was a danger that the Court would take the view that the prospects of such a deal would have rapidly diminished as Mr Leech allowed time to pass after October 1985.

75. As Underhill J. said, the natural interpretation of Ms Hartwell's note that either Mr Susman or Mr Batcup said "Loss of deal (Fontana) – one view that this had long since gone" is that it was arguable that any claim based on the loss of the settlement offer was now statute barred. However, it does not follow that the loss of the settlement offer was a reference to the lost settlement claim as defined by Underhill J. The pleadings were not putting forward such a claim; they were contending that the settlement offer had been "lost" because of Mr Leech's dilatory and negligent conduct since October 1985.
76. Underhill J. accepted that, by itself, Ms Hartwell's note that Mr Susman had said that there was a "good claim for £70k – but a highly speculative claim for the alleged half a million" need not be a reference to the lost settlement claim "since the settlement amount had been pleaded by Mr Batcup as a measure of the value of the lost Fontana action…." His conclusion that "in the context of the earlier references it seems more likely that the lost settlement claim was being referred to" depends upon those earlier references being interpreted as references to the lost settlement claim as defined by him and not as references to the claim for the loss of the settlement offer as it had been pleaded. In my judgment, it is far more likely that Mr Susman's advice related to the claim for the "loss of the settlement" as it had been pleaded, rather than the "lost settlement claim" which, as defined by Underhill J., had not been pleaded. As I have sought to explain, it had not been pleaded because neither Ms Hartwell nor Mr Batcup had understood that Mr Fox, having failed to persuade Mr Wadsworth in 1993 of the merits of such a claim, had wished to revive it in 1995.
77. Mr Susman's description of the claim for the alleged half a million as "highly speculative" would be more consistent with understandable concerns about the value of the settlement that had been "lost" because of Mr Leech's failings after October 1985, rather than with a concern that a claim based on negligent oral advice in October 1985 was statute barred. The prospects of such a claim, if it was statute barred, would have been worse than "highly speculative".
78. An examination of the documents, therefore, provides no basis for supposing that, contrary to their own evidence, either Mr Susman or Mr Batcup at the consultation on 22^nd August 1997 understood that the lost settlement claim as defined by Underhill J. was part of the claim that Mr Fox wished to pursue even though it had not been pleaded, nor was there any reason why any reasonably competent counsel should have had such an understanding.
79. WWH's application on behalf of LL for the determination of a preliminary point was refused on 15^th October 1997. Mr Susman advised that further investigations should be made as to whether or not Mr Fox had seen the later drafts of the settlement agreement. By the time these investigations had been completed, and it had been established that Mr Fox's recollection was mistaken, and that he had seen them, the limitation period for any claim against Wellers for failing to advise Mr Fox of the time limits applicable to the lost settlement claim had expired.
80. Events after November 1997
    Underhill J. dealt with events after the end of October 1997 "to the extent that they cast light on the thinking of the parties during the period up to the end of October 1997". (95) His conclusion that it was apparent to Mr Batcup from 19^th June 1995 onwards, and to Mr Susman from, at the latest the date of the consultation on 22^nd August 1997, that the lost settlement claim formed part of the claim which Mr Fox wished to bring against LL relied in part upon his interpretation of Ms Hartwell's notes of Mr Susman's advice in consultation (see paragraph 74 above); and in part upon two subsequent events in particular:

"it is confirmed by his note of 24^th November 1997 (see para. 96) and by the way in which he analysed and presented the claim in the period leading up to the trial in 1999 (see para. 99). So far as the latter points are concerned, they of course post-date the relevant period, and I accept that by the time that Mr Susman came to prepared the opening he had much fuller papers than he had had in 1997; but the fuller detail which was available was not such as fundamentally to change the nature of the claim. It is true that Mr Susman, like Mr Batcup in the pleadings fought shy, in his drafting both of Ms Hartwell's affidavit in 1997 and of the opening in 1999, of explicitly advancing such a claim; but there were particular tactical reasons for taking that course."

81. The context in which the note dated 24^th November 1997 came to be written, is explained in paragraph 96 of the judgment:

"On 24^th November 1997 Ms Hartwell telephoned Mr Susman to discuss a problem which had arisen with Mr Fox who was asking PJH to instruct Mr Lines not to speak to WWH and also seemed to be wanting to influence the substance of his evidence. Because the issue was evidently a delicate one Mr Susman made a note of his advice about how that problem should be dealt with. But he then went on to say something about the impact of Mr Lines's evidence on the merits of the claim. His note reads:

[6] I said that even if Mr Leech did not conceal the offer from Mr Fox, the allegation remained that Mr Leech advised him not to accept it. That was the originally pleaded case, and in my view remained a good case of negligence.

That characterisation of the claim is inconsistent with Mr Susman's earlier analysis of the "essence" of the case (see para. 90 (1) above) because it appears to treat the "originally pleaded case" as focusing not on LL's failures between 1985 and 1991 but on the advice given by Mr Leech in October 1985. It is fair to bear in mind that Mr Susman was writing this note without access to the papers (although the hearing had only been some six weeks previously). It was also written currente calamo and it may be no more an ill-expressed version of the point that, having advised Mr Fox to reject the offer, LL were under a duty so to handle the litigation as to secure a better offer. But on balance I think that it evidences a recognition on the part of Mr Susman that Mr Fox regarded Mr Leech's advice in October 1985 as negligent and that allegation, however ambiguously pleaded, was one which was intended to be advanced in the action so far as possible. That is consistent with the comments recorded from the consultation on 22^nd August (see para. 90 (2)-(3) and (5)) and – as will appear – with how Mr Susman in due course sought to present the claim at trial."

82. In his oral evidence Mr Susman said that:

"Taken literally [paragraph 6 of the note] is clearly wrong, and is contradictory of my evidence. It is also in contradiction to everything else I had done up to that point."

Underhill J. recognised that to interpret the note as a recognition by Mr Susman that Mr Fox wished to pursue the lost settlement claim would be inconsistent with the "originally pleaded case", the "essence" of which Mr Susman had correctly understood on 22^nd August 1997, and which did not include such a claim.

83. He also recognised that the note "may be no more than an ill expressed version" of the point that had been pleaded: that "having advised Mr Leech to reject the offer, LL were under a duty to handle the litigation so as to secure a better offer". The note is a brief record of a short telephone advice, and the two sentences relied on by Underhill J. were not concerned with the immediate problem: that Mr Fox was trying to prevent Mr Lines giving evidence which would demonstrate that Mr Fox had undoubtedly seen the later drafts of the settlement agreement. In these circumstances the omission of words to the effect "and failed to get a better offer" at the end of the first sentence of paragraph 6 of the note would not be in the least surprising. Underhill J. believed that his interpretation of the note was "consistent with the comments recorded from the consultation on 22^nd August", but those comments were entirely consistent with "the originally pleaded case". (see paragraphs 76 - 80 above).
84. If Mr Susman had understood on 22^nd August that the lost settlement claim was part of the claim that Mr Fox wished to pursue then it would be reasonable to interpret the note on 24^th November as evidencing the same understanding some three months later. By the same token, if Mr Susman's understanding on 22^nd August was that Mr Fox's complaints against Mr Leech were encapsulated within the "originally pleaded case", there is no reason to interpret the note as a belated recognition that Mr Fox wished to pursue some other claim, since nothing had occurred in the intervening three months which might have given Mr Susman that impression.
85. Underhill J. also relied on his understanding of the note dated 24^th November 1997 being consistent with the way in which Mr Susman had presented the claim at trial. If hindsight is to be avoided it is necessary to exercise particular care when considering whether Mr Susman's understanding of the case in April/May 1999, when he had much fuller papers than he had in 1997, casts any light on his understanding of the case in 1997. While Underhill J. said that "the fuller detail was not such as fundamentally to alter the nature of the claim", the focus of the proceedings had inevitably shifted from what had been the immediate concern in August 1997 – WWH's application for limitation to be dealt with as a preliminary issue – to the overall merits of the claim. In the event the trial date was postponed to 4^th May 1999. In a consultation on 6^th April 1999 Ms Hartwell took a note of Mr Susman's advice. There was discussion as to an appropriate settlement figure. Underhill J referred to part of the note in which Mr Susman is recorded as having advised:

"If it goes wrong and you get nothing ? that will be the end of it. No appeal. Unless you have some hope with Wellers ? will lose everything. Emphasise the fact that you may get nothing."

Paragraph 98 of the judgment continues:

"Mr Susman accepted in cross-examination that the reference to "some hope with Wellers" was plainly a reference to the possibility of suing Wellers for failing to advise him to issue proceedings earlier in relation to the parts of the claim that were statute-barred, i.e. the lost settlement claim."

86. However, it is clear that the parts of the claim that were statute-barred were not, in Mr Susman's view, the lost settlement claim as defined by Underhill J. Rather, the earlier passages in Ms Hartwell's note demonstrate that Mr Susman was referring to the "loss" of the settlement agreement as it had been pleaded. For example, she had earlier recorded Mr Susman as saying:

"Real allegation is that Leech did nothing"

"1985 Deal on table

You know about it

You didn't accept – negligently advised

that he said he would chase and pursue.

He did none of those things"

"They will argue that you suffered damage

From 1985 ? had until 1991. Didn't commence
until 1995. Negligent in not pursuing Fontana action."
(emphasis added)

87. Mr Susman's written opening for the trial on 4^th May is analysed in paragraph 99 of the judgment. Underhill J. recognised in paragraph 130 of the judgment that Mr Susman's opening, like Mr Batcup's pleadings, "fought shy of explicitly advancing" the lost settlement claim, but he said that there were "particular tactical reasons for taking that course". Those "tactical reasons" assume that Mr Batcup and Mr Susman realised that there was a lost settlement claim and also realised that it was statute barred. Another, and more plausible, reason why the written opening, like the pleadings, did not explicitly advance the lost settlement claim as defined by Underhill J. was that, according to Mr Batcup and Mr Susman, their understanding of Mr Fox's complaint was that the settlement had been "lost" not because Mr Leech had given negligent advice in October 1985, but because he had failed thereafter to secure Mr and Mrs Fox a better settlement by failing effectively to litigate or settle the Fontana and Hanson actions.
88. It is true that the written opening said that Mr Leech had an obligation to exercise reasonable care and skill when advising on whether the draft settlement was a satisfactory compromise of Mr and Mrs Fox's claims, but significantly the sole reason given as to why Mr Leech had been in breach of that particular obligation was that:

"The compromise proposed by the Hanson Interests fairly represented the value of the Claims, and Swiss Volksbank's acceptance and/or guarantee of payment of the bills of exchange was an adequate safeguard for Mr and Mrs Fox, and Mr Leech should have told them so."

89. Thus, even at that stage of the proceedings in May 1999 Mr Leech's advice to reject the proposed compromise was being criticised only on a narrow ground: that the settlement fairly represented the value of the claims and Mr Leech should have advised that SV's acceptance and/or guarantee of the Bills of Exchange was an adequate safeguard for Mr and Mrs Fox. That allegation had not been made in the Statement of Claim or the Further and Better Particulars. It is likely that the significance of SV's "guarantee" was brought into greater prominence by Mr Fox's (erroneous) claims, made most recently in his witness statement dated 20^th April 1998, that Mr Leech had concealed from him the later drafts of the settlement agreement in which SV had replaced UBI as guarantor, and that had he been shown the later drafts, including SV's "guarantee" he would have accepted the compromise. This issue had been discussed at some length in the consultation on 6^th April 1999:

"Leech's letter of 23/10 refers to Swiss Volksbank Guarantee

In statement you say something different

Went through statement with Mr Fox

Mr Fox not saying that he hadn't seen terms of agreement with Swiss Volksbank – but hadn't actually seen typed version of the agreement….

In 1996 – found the typed agreement – looked more solid than what I had seen before."

90. In these circumstances it is readily understandable that by May 1999 Mr Susman would have focussed on SV's "guarantee" and submitted, albeit erroneously in the light of Underhill J's conclusion that there was no "guarantee" from SV (see paragraphs 21 and 113 of the judgment), that it was an adequate safeguard for Mr and Mrs Fox. The fact that Mr Susman realised this on all the material available to him in May 1999 does not reinforce, much less does it confirm, the conclusion that he realised on 22^nd August 1997 that Mr Fox wished to pursue "the lost settlement claim" even though it had not been pleaded.
91. For the sake of completeness when considering events after the end of October 1997 I should mention Underhill J's view that his own assessment that arguably a claim against Wellers had a real prospect of success was supported to a limited extent by the fact that Mr Mathias of counsel had advised in June 2000 that there would, but for limitation, have been a good claim against Wellers (126). This is another illustration of the difficulties inherent in looking at events after the end of October 1997. Mr Mathias had described the lost claim against Wellers as "beautifully simple", but he had done so on the basis of Mr Fox's wholly erroneous instructions that Mr Leech had been in breach of duty in October 1985 because he had failed to inform Mr Fox that the agreement had been renegotiated so that the bills were to be guaranteed by SV. Mr Fox had said to Mr Matthias that he was "totally unaware" of the re-negotiated agreement "which would have been satisfactory to him". (106) In these circumstances, Mr Mathias's advice in conference on 19^th June 2000 does not provide any support for Underhill J's conclusion that there was a real prospect that a claim against Wellers could have succeeded.
92. Overall Conclusions
    The possibility of a claim against Wellers in respect of the lost settlement claim did not occur to Mr Batcup and Mr Susman before the end of 1997. Should it have done? The question is whether the possibility of such a claim would have occurred to any reasonably competent junior and leading counsel at that time: see Saif Ali v Sydney Mitchell & Co. [1980] AC 198 per Lord Diplock at pp 22O D – 221A.
93. In my judgment the answer to that question must be 'No'. There was nothing to indicate that Miss Nickson might have been less than diligent in 1991 in eliciting a full account of Mr Fox's complaints against Mr Leech. The best evidence of Mr Leech's oral advice on 15^th October 1985 was to be found in his letter dated 23^rd October 1985 which she had asked for and received. The problems with the draft settlement agreement that Mr Leech had identified in the letter were real problems. On its face, the advice in the letter was unimpeachable. Until Underhill J. so concluded in the judgment there had been no suggestion that even if Mr Leech's advice in the letter was unimpeachable there was, potentially, a "stand-alone" negligence claim in respect of his earlier oral advice at the meeting on 15^th October. Such a claim was not made in the ten-page note. On the only occasion on which a complaint about Mr Leech's advice at the "fateful meeting" was made, to Mr Wadsworth QC in 1993, he had rejected it.
94. It would not have been apparent to any reasonably competent counsel in 1995, and Mr Batcup did not realise when he drafted the pleadings, that Mr Fox in his note in February 1995 was indicating that he wished to "revive" the claim that had first been made, only to be rejected in 1993. Since the pleadings did not advance that claim there was no reason why Mr Susman should have appreciated at any time before the end of October 1997 that there was another claim that Mr Fox wished to pursue which Mr Batcup had not included in the pleadings. The contemporaneous documents do not provide any support for Underhill J's conclusion that, contrary to their own evidence on the point, Mr Batcup and Mr Susman did realise that the lost settlement claim as defined by Underhill J., as opposed to the loss of the settlement because of Mr Leech's negligent failure to litigate or re-negotiate a better settlement, formed part of the claim which Mr Fox wished to bring against LL. Neither do the later documents provide any support for such a conclusion.
95. Standing back from the mass of detail in this case it is useful to remind oneself that the question is not whether the Appellants' understanding of Mr Fox's complaints against Mr Leech turned out to have been mistaken, it is whether they fell into an "error that was so blatant as to amount to negligence": see Saif Ali at p.221A. If there were any errors on the part of Miss Nickson of Wellers, or Mr Batcup or Mr Susman, and for the reasons set out above I am not persuaded that there were, they could not reasonably be described as "blatant" errors, the kind of errors that no reasonably competent solicitor or barrister would have made. Even if it is too simplistic to expect that a blatant error should "leap out of the page", the need to carry out a minutely detailed reconstruction with the assistance of thousands of documents of events going back over many years before any finding could be made even as to what the error might have been, is perhaps a pointer to the conclusion that if error there was, it was certainly not so blatant as to amount to negligent professional conduct.
96. For these reasons I would allow the Appeal.

Lord Justice Dyson

97. I agree.

Lord Justice Sedley

98. Lord Justice Sullivan has set out in detail why, in his judgment, with which I agree, Underhill J. set an over-exacting standard for the professional duty owed to Mr and Mrs Fox by the counsel they had instructed. While these reasons are sufficient to require us to allow the appeal, I take the liberty of adding two comments of my own.
99. First, I do not consider that the lost settlement claim as defined by the judge was ever a viable claim. Mr Leech was not, on the evidence, a venal ambulance-chaser, and Mr Fox was not a gullible client. Mr Fox consulted Mr Leech precisely because he was unhappy, and for good reason, with the settlement which was taking shape. Mr Leech for his part was candid about what would happen if he was instructed: the other side would pull out of the negotiations, and it would be necessary to press on with the claim in order to secure a better compromise than the one on offer.
100. There are many criticisms that one can now make of this bullish advice, but it was advice that Mr Fox welcomed because it echoed his own mistrust of the Hanson interests, and he acted on it with his eyes open. It is entirely unsurprising that in the years that followed, although he blamed Mr Leech for many things, he did not blame him for this. And for my part, while I recognise readily that no solicitor can excuse negligent advice on the ground that it was what the client wanted to hear, I find it impossible to place Mr Leech's advice to Mr Fox beyond the pale of professional competence. It was an aggressive and risky response to a slippery and risk-laden offer, as Mr Fox, a very experienced businessman, well knew.
101. Secondly, in a system which populates its senior bench from the practising profession, an outside observer might discern equal and opposite risks of excessively sympathetic and excessively critical appraisals of the conduct of legal practitioners. In holding, as this court does, that Underhill J. has erred in the latter of these directions, we ought also to recognise his desire to maintain a high standard of professional trustworthiness. The law does not, however, demand either omniscience or infallibility in lawyers any more than it does in doctors or architects. The law's standard of reasonable competence means not only that there will be errors which are not compensable but that legal advisers are not expected to divine every claim that a client may theoretically have. In the course of his evidence to the judge Mr Susman said to counsel cross-examining him for the claimant firm:

"You are suggesting that it was my obligation to tell Mr Fox that he might have an action against somebody who I thought had not been negligent for losing something which I never thought he had. I don't think that was my obligation."


I consider that answer to have been legally and factually sound.

Note 1   References in parenthesis are references to the paragraph numbers in Underhill J’s judgment.    [Back]