Withers negligence case set to rumble on

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21 March 2014


RCJ: appeal bid

The negligence case brought against leading London law firm Withers – which led last week to a – is set to continue after its former client announced an intention to appeal a part of the claim that failed.

Mr Justice Nugee made the award over a drafting error in an LLP agreement that allowed Addax Bank, an investor in executive search company Wellesley Partners (WP), to withdraw some of its capital contribution earlier than had been intended.

However, he rejected three other heads of claim, including WP’s complaint about the advice, or lack of it, given by Withers when the error came to light 10 months later.

In a statement issued yesterday through its solicitors, Enyo Law, WP said: “Although Mr Justice Nugee found that, at that point, Withers had told Wellesley, in terms, that Addax Bank had presumably drafted the changes to the agreement, the judge found that this was ‘no more than a passing comment’ and that Withers had no duty to inform Wellesley of the true source of the error in the agreement or to correct the erroneous information which Withers had provided to its client previously. Wellesley intends to appeal this finding.”

The judge ruled that although the solicitor involved quickly discovered that he, rather than Addax, had in fact drafted the crucial clause, he thought that he did so on instructions and thus did not realise there had been a drafting error at all. This meant “it was not negligent in the circumstances not to tell [WP’s owner] that Withers had made a drafting error”.

Nugee J added: “The most that can be said is that when [the solicitor] shortly afterwards discovered that Addax was not in fact responsible, he could have corrected the position; but I do not think he was under any obligation to do so.”

Further, the client did not ask Withers to track down how the change had got into the agreement or advise on whether it could be corrected. “I do not consider in the circumstances that Withers were obliged to explore the question of rectification,” the judge said, noting that in any event it would have been difficult to establish a case of unilateral rectification.

The fact that the solicitor did not realise there had been an error meant he was under no obligation to advise the client to seek alternative advice, he continued.

The WP statement said more broadly that it was “delighted that Mr Justice Nugee upheld the central plank of its negligence case against Withers”.

It continued: “Withers had vigorously denied liability in this regard for over four years right up until judgment was handed down last week. Wellesley was awarded its costs in full as a result of its victory.”

Withers had no comment.



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