Watson Farley and Williams (a firm) v Ostrovizky [2015]

The case of Watson Farley and Williams (a firm) v Ostrovizky [2015] EWCA Civ 457 (12 May 2015) reiterates the Court of Appeal’s approach when it is asked to look at findings of fact in professional negligence cases. The original proceedings in July 2011 were commenced for unpaid fees £25,000 (including interest) and the Defendant counterclaimed for £13m by claiming that a partner in the Claimant firm had been negligent when drafting three agreements. The partner in the Claimant firm had acted for the Defendant then and afterwards in the years following.

It was agreed that the England and Wales Courts had jurisdiction in deciding whether the partner in the Claimant firm “acted as a reasonably competent Greek lawyer in drafting and advising on the agreements. Causation and quantum were governed by English law”.

Evidence was heard over eight days with experts from each side on Greek law, under which the Agreements were made and, in respect of Greek solar energy workings being the subject of the Agreements.

Mr Justice Silber gave a summary of his conclusions:

  • The Claimant was not negligent;
  • Even if the Claimant had produced the 2007 Agreements with the rights and remedies which it is said by the Defendant should have been included and advised in the way in which it is said by the Defendant that the Claimant should have acted, the Defendant would not have taken advantage of or used any of those rights and remedies…. or followed that advice;
  • The Defendant has not established that he has suffered any of the alleged loss of profits or incurred any of the alleged wasted expenditure ; and that
  • Even if the Defendant has established that he has suffered a loss of profits and/or incurred any wasted expenditure, this was not a consequence of the Claimant’s negligence or any aspect of the 2007 Agreements but a consequence of a variety of other factors.These factors include (but are not limited to) (i) the Defendant’s decision to promise to make payments to Mr Rinis to which he is not entitled under the 2007 Agreements which, as I have explained, his counsel has described in an understatement as “slightly naïve”; (ii) thereby removing the incentives set out in the 2007 Agreements for Mr Rinis to perform his duties so as to receive more than the small initial payments until he had performed his duties under each of the 2007 Agreements and thereby radically amending the entire basis of the carefully constructed agreements which protected the interests of the Defendant; (iii) the failure of the Defendant to pay the sums promised to Mr. Rinis at the appointed time and in some instances at all.

The appellant, contested each of the Judge’s conclusions. His Counsel said there was no point of law in the appeal but that the Judge’s findings of fact should be overturned.

The position as to facts had been restated in McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477

  • “It was a long settled principle, stated and restated in domestic and wider common law jurisprudence, that an appellate court should not interfere with the trial judge’s conclusions on primary facts unless satisfied that he was plainly wrong.”

In Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5; [2014] ETMR 26.The reasons given for this approach were

  • “The expertise of the trial judge in determining what facts are relevant to the legal issues to be decided, and what those facts are if they are disputed.
  • The trial is not a dress rehearsal. It is the first and last night of the show.
  • Duplication of the trial judge’s role on appeal is a disproportionate use the limited resources of an appellant court, and will seldom lead to a different outcome in an individual case.
  • In making his decisions the trial judge will have regard to the whole of the sea of evidence presented to him, whereas an appellate court will only be island hopping.
  • The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence).
  • Thus even if it were possible to duplicate the role of the trial judge, it cannot in practice be done.”

Lord Justice Burnett stated in the Court of Appeal that Mr Justice Silber had, in the earlier proceedings, concluded that there was no breach of duty in the 2007 Agreements. He considered the Defendant would not have acted any differently, even if he had, as he had promised, made payments outside of those contained in the agreements to the person dealing with the Greek authorities, which had exposed the Defendant when he could not keep his promise to that person, who had failed to finance the projects provided for in the Agreements.

The Greek partner had not been a choice of the partner in the Claimant firm who had drafted the Agreements but the choice of the Agent who had been employed to find partners suitable to the project.

Mr Justice Silber had found that even if the partner in the Claimant firm had provided more advice which had been followed, the losses would have still prevailed. The Greek partner had not been reliable and his inability to finance the projects was not anything to do with the advice given by the Claimants’ partner who drafted the 2007 Agreements.

Lord Justice Burnett noted the findings of Mr Justice Silber and his observations that the 2007 Agreements did not provide for the Defendant to make payments to the Greek partner, he did so when he discovered that the Greek partner did not or could not provide funds to the project. He continued that nothing that followed including the credit crunch of 2008 and the variation of agreements signed in November 2008 were anything to do with the drafting of the agreements in 2007.

Lord Justice Burnett considered that whatever the difficulties in enforcing the contractual rights in the Courts in Greece, the Defendant did not do so whilst he remained under the influence of the Greek partner and that the Defendants problems with the Greek partner emanated from him not complying with the 2007 Agreements.

He had hoped to make a substantial profit and in his attempts to do so was prepared to shoulder the Greek partner’s financial obligations. Lord Justice Burnett in his judgment agreed with Mr Justice Silber’s conclusion that what befell the Defendant could not be linked to the Claimant partner’s drafting of the Agreements or the way she had acted in the matter.

Lord Justice Burnett considered that Mr Justice Silber was right to conclude that upon examining the evidence before him the Claimant partner was not negligent and had not played any part in the difficulties the Defendant and his Agent had with their Greek partner, he accordingly dismissed the Appeal.

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