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Former Withers client awarded extra £375k professional negligence damages by Court of Appeal

The Court of Appeal has awarded a further £375k in damages against Withers while dismissing the firm’s appeal of the case brought by former client Wellesley Partners (WP).

In March 2014 Withers was told to pay £1.6m in damages by the High Court following a nine-day trial in October 2013.  The case concerned the drafting of an LLP agreement in 2008.

In 2014 Withers confirmed it would challenge the decision while WP also launched an appeal against the judgment on that basis that one part of its claim was not upheld by Mr Justice Nugee.

The original dispute arose after Withers acted for executive search company WP in adding new members to the partnership.

As part of the agreement, Bahraini bank Addax Bank was to make a significant capital contribution (about £2.5m) and acquire a 25% interest in the partnership. This subsequently required the drafting of a new LLP agreement, which was completed on 14 May 2008.

It was agreed between WP’s founder Rupert Channing and Addax that the bank should have an option to withdraw half its capital contribution. The LLP agreement allowed Addax to exercise that option at any time during the first 41 months of the agreement. However, WP alleged that its instruction to Withers was that Addax’s option should only kick-in after 42 months (as an earlier draft had provided) and that Withers altered this provision without any instructions to do so. Withers’ defence was that it made those changes on Channing’s instructions.

The additional claim of negligence concerned a complaint around events on 3 February 2009, concerning ‘advice given, or not given at the moment when Addax first intimated that it was thinking of exercising the option.’

Lord Justice Longmore, who heard the case alongside Lord Justice Floyd and Mr Justice Roth in the Court of Appeal,  said in the judgment:

‘It must have been very time consuming (as well as very frustrating) for Mr Channing (and thus WP) to discover that he had become embroiled in an entirely unnecessary dispute with Addax as a result of his own solicitor’s negligence.’

In a statement, Withers said: ‘We take our responsibilities to our clients very seriously and take the utmost care in recording clients’ instructions. However, we respect the court’s judgment in this case and regret that on this occasion we fell short of our high standards.’

WP instructed Enyo Law and was represented in court by Fiona Parkin QC of Atkin Chambers while Withers engaged Reynolds Porter Chamberlain which instructed Michael Pooles QC of Hailsham Chambers.

Read the full decision here.