Allied Maples v Simmons & Simmons

Facts

Allied Maples was acquiring part of the business and assets of a retail group and was advised on the transaction by Simmons & Simmons. The solicitors negligently failed to advise on the exposure of Allied Maples to contingent liabilities under leases attached to the business, and failed to seek a warranty or similar protection from the seller. Allied Maples later suffered loss from that exposure and sued the solicitors, claiming that if properly advised it would have negotiated protection from the seller.

Issue

How a claimant must prove that a solicitor's negligence caused loss where the loss depends on what the claimant would have done and on how a third party would have responded to a request that was never made.

Held

The appeal was allowed. The claimant had to prove on the balance of probabilities that it would have tried to negotiate protection, which it did, and it needed to show only a real or substantial chance that the seller would have agreed, so it was entitled to damages for the loss of that chance, assessed according to its value.

Ratio

• A claimant must prove on the balance of probabilities that the defendant's negligence caused the loss, including that, properly advised, the claimant would have taken the step that would have averted the loss.
• Where the loss depends on the hypothetical action of a third party, the claimant need not prove that the third party would more probably than not have acted favourably; it is enough to show a real or substantial chance, not a merely speculative one, and damages are assessed by reference to the percentage chance.

The judgments

Key reasoning

• The cases on loss of a chance, such as Chaplin v Hicks [1911] 2 KB 786, concerned the value of the opportunity to obtain a benefit dependent on third parties, whereas Hotson v East Berkshire Area Health Authority [1987] AC 750 concerned a question of past fact, whether the injury caused the harm, to be proved on the balance of probabilities; the two lines are reconciled by this distinction.
• A claim that depends on what a third party would have done cannot be proved with certainty, and denying recovery where the chance is real would allow the negligent defendant to benefit from the uncertainty its own breach created.
• The chance must be real or substantial rather than speculative, and the damages must reflect its value, so a small chance would produce a small award or none.

Where it fits in the module

On the FHS Tort list under factual causation. Allied Maples is the main authority on proof of causation where the loss depends on a hypothetical third party response, and on the dividing line between the balance of probabilities for facts and a percentage for chances. It ties into Hotson, Gregg v Scott, and the debates about probabilistic recovery and the all-or-nothing nature of the but-for test. Candidates should ask why chances are recoverable in negligent advice but not in medical negligence, and whether that distinction is principled.

Criticisms

• The distinction between proving past facts on the balance of probabilities and valuing hypothetical events as chances does not reflect a principled reason for treating similar evidential uncertainty differently, and Hotson and Allied Maples sit uneasily together.
• Recovery for any real or substantial chance departs from the rule that the claimant must prove loss on the balance of probabilities, and the threshold of a real or substantial chance is itself vague.
• Where the claimant's own conduct is in issue, proof on the balance of probabilities is required, yet claimants' accounts of what they would have done are retrospective and difficult to test.