Case No. 0LS79020

129. The question under consideration at this stage is one of causation. Questions of quantification arise, if at all, at a later stage of the analysis.130. It helps to reduce the Trust’s case to its barest essentials. TTPM should have advised the Trust that its position would be properly protected not by letters of intent but only by a signed contract containing the liquidated damages provision and that suitable efforts should be made to procure such a contract. The questions then arise (a) whether the Trust would have taken that advice and (b) whether Kier would have signed the contract. Subject to the answers to those questions, it is necessary to consider whether a signed contract would have materially improved the Trust’s position and to place a value on any such improvement.131. In Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 W.L.R. 1602 the plaintiff entered into a corporate takeover agreement with the vendor. The trial judge held that the defendant, the solicitors who had acted for the plaintiff in respect of the agreement, had failed to give to the plaintiff appropriate advice to the effect that a further provision was required in the agreement in order to protect the plaintiff against the risk of certain liabilities to third parties. The trial judge also found that, if the appropriate advice had been given, the plaintiff would have sought to negotiate with the vendor with a view to obtaining contractual protection against those liabilities. Neither of those findings was disturbed on appeal. But the defendant contended that it could not be shown on the balance of probabilities that the vendor would have agreed to give the contractual protection sought. The Court of Appeal held that such a thing did not have to be shown on the balance of probabilities.132. Although the facts of the Allied Maples case were different from those of this case, I do not accept that there is any distinction of principle between them, at least for the purposes of this stage of the analysis. In both cases the questions are: (a) what would the client have done in the face of advice that it required further contractual protection and (b), if the client had sought that further protection, what would the counterparty—in that case, the vendor; in this case, Kier—have done? The fact that one case concerned a solicitor and the other a project manager is irrelevant to any principled approach to the issues that arise. There is no distinction in principle between the chance of avoiding a liability and the chance of gaining a benefit: cf. the Allied Maples case, per Stuart-Smith LJ at 1611 F. Further, confusion will be avoided by putting to one side any difference there might be, on the facts of different cases, regarding the approach to the subsequent exercise of the quantification of loss—for example, the fact that in one case the relevant contractual protection might lead to the certainty of a benefit, whereas in another case it might lead to the chance of a benefit or to a combination of benefits and burdens.133. In the Allied Maples case, in a lengthy passage beginning at 1609H, Stuart-Smith LJ, with whose reasoning and conclusions Hobhouse LJ agreed, said this:“In these circumstances, where the plaintiffs’ loss depends upon the actions of an independent third party, it is necessary to consider as a matter of law what it is necessary to establish as a matter of causation, and where causation ends and quantification of damage begins.(1) What has to be proved to establish a causal link between the negligence of the defendants and the loss sustained by the plaintiffs depends in the first instance on whether the negligence consists of some positive act or misfeasance, or an omission or non-feasance. In the former case, the question of causation is one of historical fact. The court has to determine on the balance of probability whether the defendant’s act, for example the careless driving, caused the plaintiff's loss consisting of his broken leg. Once established on balance of probability, that fact is taken as true and the plaintiff recovers his damage in full. There is no discount because the judge considers that the balance is only just tipped in favour of the plaintiff; and the plaintiff gets nothing if he fails to establish that it is more likely than not that the accident resulted in the injury. (2) If the defendant’s negligence consists of an omission, … causation depends, not upon a question of historical fact, but on the answer to the hypothetical question, what would the plaintiff have done if [the defendant had done what it omitted to do]? This can only be a matter of inference to be determined from all the circumstances. … Although the question is a hypothetical one, it is well established that the plaintiff must prove on balance of probability that he would have taken action to obtain the benefit or avoid the risk. But again, if he does establish that, there is no discount because the balance is only just tipped in his favour. …(3) In many cases the plaintiff’s loss depends on the hypothetical action of a third party, either in addition to action by the plaintiff, as in this case, or independently of it. In such a case, does the plaintiff have to prove on balance of probability, as Mr. Jackson submits, that the third party would have acted so as to confer the benefit or avoid the risk to the plaintiff, or can the plaintiff succeed provided he shows that he had a substantial chance rather than a speculative one, the evaluation of the substantial chance being a question of quantification of damages?Although there is not a great deal of authority, and none in the Court of Appeal, relating to solicitors failing to give advice which is directly in point, I have no doubt that Mr. Jackson’s submission is wrong and the second alternative is correct.” At 1614 E Stuart-Smith LJ continued: “[I]n my judgment, the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other. I do not think that it is helpful to seek to lay down in percentage terms what the lower and upper ends of the bracket should be.”134. In my judgment, the correct approach in the present case is accordingly as follows.(1) In order to establish causation of loss, the Trust must prove on the balance of probabilities:(a) that, if it had received appropriate advice, it would have acted in accordance with that advice; (b) that, if it had done so, there would have been a real or substantial chance, as opposed to a speculative chance, that Kier would have signed the contract including the liquidated damages provision; but it does not have to prove that Kier would have signed the contract; (c) that the signed contract would materially have improved the Trust’s position as against Kier; (d) that the Trust would have availed itself of its improved position.(2) If the Trust discharges the burden of proving that it has suffered loss, the court must assess the amount of that loss. The process of quantification of damages will require both (a) a valuation of the benefit that the Trust would have obtained if it had a contract and (b) an assessment of the size of the chance that Kier would have signed the contract.