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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Coudert Brothers v Normans Bay Ltd [2004] EWCA Civ 215 (27 February 2004) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2004/215.html Cite as: [2004] EWCA Civ 215

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
MR JUSTICE BUCKLEY

		Royal Courts of Justice Strand, London, WC2A 2LL
		27th February 2004

Lord Justice Waller:

1. This is an appeal from two judgments of Buckley J delivered on 19^th February 2003 and 20^th March 2003. The judgments are challenged in only limited respects, and the essential facts can be gleaned from the first of the judgments. I will accordingly attempt a synopsis hopefully sufficient to address the points in issue.
2. In late 1993 IML tendered for 49% of the shares in Bolshevichka a Russian suit manufacturer being offered for sale under the Russian Government's privatisation programme. The sale was administered by the State Property Committee (GKI), and it was GKI who issued two decrees, 763-r of 29^th April 1993, and 797-r of 6^th May 1993. By those decrees, GKI approved Bolshevichka's investment plan. In particular, decree 797-r approved a supplement to the plan to which was annexed the investment programme that the successful bidder would be required to implement. The Moscow Property Fund (MPF) acted as seller on behalf of GKI.
3. On 10^th November 1993, IML put in a bid referring to a total investment of US$5,500,000 over 5 years. There was one other bidder, a Russian Company Obergan which also put in a bid offering to invest US$5,500,000 over 5 years but demonstrating little ability to be able to do so. On 12^th November 1993, the MPF Tender Commission elected IML the winner, and that was announced on 16^th November.
4. Under the terms of the tender, IML was required to enter into a share purchase agreement within 30 days. Coudert became IML's advisers in relation to the completion of the Share Purchase Agreement. That agreement (the SPA) was concluded between IML and MPF on 16^th December 1993. Coudert also advised in relation to an Investment Agreement ultimately concluded between IML and Bolshevichka on 14^th February 1994.
5. During 1994 and 1995, Obergan unsuccessfully challenged the legality of IML's tender in the Russian courts. During this challenge GKI, MPF and in particular Mr Gurov of Boshevichka, supported IML. During this stage, there was no suggestion by anyone, that the investment plan approved by GKI, and as appended to Decree 797-r, provided for investment over 3 years, and not the 5 years offered by both tenders.
6. In late 1995 Mr Gurov of Bolshevichka and Mr Lewis of IML fell out. Mr Gurov became an implacable opponent of IML. IML also lost the support of GKI. Mr Gurov prompted the Public Prosecutor of the City of Moscow to challenge the legality of IML's tender and the agreements founded thereon. It seems, that the point relied on by Mr Gurov was, that the tender was invalid because it offered investment over 5 years and not 3, contrary to the investment plan approved by GKI. One might think this hardly a meritorious point for Mr Gurov to take, since on any view he had accepted, on behalf of Bolshevichka, the 5 year investment plan, in return for more beneficial licensing arrangements.
7. The challenge by the Prosecutor was ultimately based on two points. It was alleged first that the tender was defective, because it offered investment over 5 years, whereas, it was said, that the privatisation programme approved by GKI pursuant to Decree 797-r, had stipulated 3 years. It was alleged secondly that the transaction was invalid, because IML had failed to obtain approval for it from the Federal Anti-monopoly Committee of Russia. Coudert was no longer representing IML by this stage.
8. By a decision of the Moscow Arbitration Court dated 24^th April 1996, the decision of the tender committee, and the SPA and the IA, which rested on it, were declared invalid. The main point on which the court relied, was that since the tender offered 5 years, whereas the privatisation programme approved by GKI laid down 3 years, the tender was invalid and the agreements were invalid as a result. Mr Leggatt for IML before us accepted that that was the process of reasoning of the court. A second point was also relied on, which was that permission had not been obtained from the Federal Anti-monopoly Committee. IML appealed. On appeal by a written decision dated 22^nd July 1996, the Federal Court of Arbitration of the Moscow District rejected IML's appeal on both points. Again the reasoning of the court was first that the tender was invalid and that invalidity made invalid the agreements based thereon, and as a secondary point that anti-monopoly permission had not been obtained. Attempts to appeal that decision to the higher courts failed. By letter dated 14^th December 1996, the Deputy Chairman of the Supreme Arbitration court declined to enter a protest, and by a decision dated 7^th July 1997, the Chairman of the Supreme Arbitration Court declined to enter a protest. These latter two decisions referred only to the 3 –5 year point and the invalidity of the tender; they did not refer to the anti-monopoly point.
9. Thus it was that IML lost their investment in Bolshevichka.
10. IML commenced proceedings against Coudert seeking to recover their losses, or some part thereof. They asserted that Coudert's retainer included an obligation to investigate provisions of local law. They asserted in relation to the 3 year –5 year point, that a competent solicitor in the position of Coudert would have discovered that there was a Decree that stipulated 3 years, and that the advice of Coudert should have been, (1) that IML should accept as an express term of the SPA and the IA that their investment would be completed within 3 years; and (2) that IML should persuade GKI to take no point on the invalidity of the tender. IML asserted that they would have accepted that advice, and that they would have persuaded GKI to approve the transaction. On that basis, they asserted that there was a strong chance, that in the result the Prosecutor would not have been prompted to challenge the validity of the tender on the 3 year - 5 year point, or such challenge as a matter of Russian law would have failed.
11. In relation to the obtaining of permission from the Anti-monopoly Committee, IML originally asserted in their points of claim that Coudert was negligent, in failing to obtain or advise IML to obtain that permission, but that plea they abandoned by amendment, and their case then was that the decision of the Russian courts was wrong, and that permission was not in fact needed. On that basis, they asserted that it would not have had any effect on the chain of causation of damage flowing from the negligence relating to the 3-5 year point.
12. That having become IML's stance, Coudert then pleaded that anti-monopoly permission would have been necessary and that on that independent ground the transaction would have been declared invalid. Coudert asserted that broke the chain of causation. IML's response was to assert by their reply that permission was not needed, and in the alternative, if it was, the fault was Coudert's, and that Coudert could not rely on it as breaking the chain of causation. Coudert's rejoinder served early in the trial was that even if it was their fault, since any cause of action relating to the failure to obtain permission, was statute barred, Coudert could not rely on Coudert's negligence or fault in that regard.
13. Causation was an important issue at the trial. Coudert took the anti-monopoly point but other points as well. Paragraph 15 of their pleading put in issue whether even if they had been negligent any damage flowed from that negligence. They asserted (1) that the tender was irredeemably bad and thus that the transaction would have failed anyway; (2) they asserted that anti-monopoly permission was required and that the transaction would have failed on that ground independently of the invalidity point; (3) they asserted that the transaction did not comply with the voucher auction rule established by Presidential Decree No 1229, which required 80% of the shares of private companies be sold for privatisation vouchers, and that a waiver of that rule signed by the Chairman of GKI was ineffective as matter of Russian law; (4) that the falling out between Mr Gurov and Mr Lewis would in any event have lead to the transaction being doomed; and (5) that even if Coudert had drawn the attention of IML to the incompatibility of the term with the investment programme, Mr Lewis and IML would have proceeded just as they did.
14. Coudert also expressly put in issue the authenticity of the supplement to the privatisation plan relied on against IML in the 1996 proceedings as demonstrating approval by GKI to a 3 year investment plan, and of course relied on by IML in the instant proceedings.
15. Master Eyre had by consent on 16^th August 2001 ordered the trial of liability and causation, particularly the aspects of causation identified in para 14 and 15 above. Buckley J by his first judgment dated 19^th February 2003 dealt with the issue of liability, and causation. He found in summary, (1) that IML had established that it was a 3 year investment plan that was approved by GKI; (2) that Coudert was negligent in failing to discover that 3 year Investment Plan; (3) that if Coudert had found out about the three year plan, and its impact on the tender in Russian law, they would not have advised IML that the position was irredeemable; they would have advised IML to negotiate the terms of the SPA and the IA on the basis of the 3 year plan; that IML would have done that; and that MPF and Bolshevichka would have accepted that; (4) that the advice would also have been, to get the approval of GKI at that time, and that GKI would have approved those agreements as correcting any defect in the tendering procedure; and (5) that as a matter of Russian law, a Russian court would have been likely to reject any attack on the tender, and thus that the proper advice for Coudert to have given on the above basis, would have been that the transaction was reasonably safe; (6) that "he was entirely satisfied" that the Moscow prosecutor would not have challenged the transaction in 1994; and (7) that faced with the correct agreements, which GKI had supported in 1994, he regarded it as "improbable" that the prosecutor would have been prompted by Mr Gurov to prosecute in 1996, and thus that the "cure" would probably have succeeded.
16. He looked at the anti-monopoly point independently, and found first that any failure to obtain permission was due to Coudert's negligence and that it was not a point on which Coudert could rely to break the chain of causation or diminish the chance. He then found in any event that as a matter of Russian law "approval was probably not necessary", and that any challenge on this ground "would have been very unlikely".
17. The judge thus found Coudert liable in damages for negligence to be assessed by reference to the loss of a chance. By a judgment dated 20^th March 2003 he assessed that chance at 70%. Because of his finding, that if permission was needed from the Anti-monopoly Committee, Coudert was at fault, and his conclusion thus that Coudert could place no reliance on this factor, it did not figure in his calculation of the 70%. He indicated however that if he were wrong on that aspect, since it was even less likely that there would have been a prosecution by reference to this point alone, he would decrease the 70% by no more than 10%.
18. IML appeal with permission of the single judge. They do not challenge the findings of the judge, in relation to the terms of the retainer, nor in relation to his findings of negligence, either in relation to the 3-5 year point, nor the anti-monopoly point. Nor do they challenge save possibly in one respect the judge's findings as to what would have happened in 1994, if proper advice had been given. The one respect I am less certain about, is whether Coudert is fully accepting the judge's conclusion that the proper advice once all steps had been taken would have been that the transaction would be reasonably safe. But whatever the caveat, they certainly do not suggest that the only advice that could have been given was that the transaction was irredeemably bad. They accept that IML have established that, on the balance of probabilities, the steps of amending the agreements would have been taken, and that GKI's approval would have been obtained, and that would have had a chance of the transaction not being declared invalid under Russian law. I am, I should say, a little troubled about one further aspect. Putting that shortly for the present, if this is a loss of a chance case where the assessment is dependant on the hypothetical conduct of third parties, I do not see quite why the hypothetical conduct of Bolshevichka, MPF and GKI should be assumed to have been established on the balance of probabilities, as opposed to being factors for assessment in the loss of a chance.
19. In any event Coudert takes four points which can be summarised as follows. They take a fundamental point, which would undermine any finding of negligence as against Coudert; they assert the judge was wrong to accept that IML had established that GKI had approved a 3 year plan, as opposed to a 5 year plan, and thus wrong to find that if Coudert had inspected the relevant documents it would have discovered the 3 year plan.
20. In the alternative, they assert any negligence was not causative of any damage, because Coudert only commenced their retainer after the tender had been accepted, and if it was a 3 year plan that had been approved by GKI, IML's bid offering investment over 5 years was in the event incurably bad. It was found to be so (they say) by the reasoning of the Moscow Arbitration Court and the Federal Court on Appeal. They say that history shows that permission to appeal from those courts would have been refused. They say that it follows on the balance of probabilities that any attempt to cure would have failed. They argue primarily that this is not a loss of a chance case. They argue, that IML must establish on a balance of probabilities, that amendment to the agreements would have prevented the disaster that befell IML, or possibly putting it the other way round, that they can establish on the balance of probabilities that as events turned out even with amendment, the transaction would have been declared invalid. They assert that the reasoning of the Russian Courts goes to the invalidity of the tender, and that the amendments could not have cured that, and that thus IML's claim fails in toto. In the alternative they argue that if this is a loss of a chance case, the chance should be assessed at much less than 70%.
21. In any event Coudert assert the transaction failed for a cause independent of the pleaded cause of action in negligence – namely a failure to obtain anti-monopoly approval. This was found to be an independent cause of the transaction being struck down by the Moscow Arbitration Court and the Federal Court of Appeal. On the basis that this is not a loss of a chance case, Coudert assert that IML must prove on the balance of probabilities that anti-monopoly was not a cause, this they have not done and on this basis the claim must fail in toto. It is not legitimate for IML (say Coudert) to suggest that this factor should be disregarded on the basis that any failure to obtain permission was due to Coudert's negligence, because that would have the effect of allowing IML to recover damages in respect of a cause of action which was statute barred. Alternatively they say that if this is a loss of a chance case, it is a near certainty that the transaction would have failed on this independent ground, and that must reduce the loss of a chance by very much more than 10%.
22. In the further alternative, Coudert submits that the transaction was fatally flawed for a reason not given by the Moscow Arbitration Court or the Federal Court of Appeal, namely a failure to comply with privatisation voucher rules.
23. The first point and the fourth point were points on which we indicated at the hearing we need not trouble Mr Leggatt, save to the extent he felt there were factual allegations he would like to correct. I can deal with those points first and reasonably shortly.

Proof of 3 year plan

24. As regards the challenge to the very existence of a 3 year plan approved by GKI, the judge dealt with this point from paragraph 33 to paragraph 38 of the judgment. The judge found that Mr Swainston had by his points, summarised under nineteen subparagraphs, raised some doubts in his mind, but that in the end found "IML's evidence and any inference which may properly be drawn from it more persuasive". He said "I regard the two authorised copies provided by GKI's successor, and the finding of the Russian Courts in the 1996 proceedings as very powerful evidence that the GKI approved Investment Programme was indeed three years"… "The clear evidence to which I have referred and upon which Mr Leggatt was able to rely, to my mind cannot be overridden by the doubts that Mr Swainston has so skilfully engendered, but without any direct evidential support."
25. Mr Swainston accepted before us that there is no point taken by him in the court below with which the judge did not deal, other than what Mr Swainston termed the "DNA" letters. Mr Swainston sought to build on the failure to refer to those letters. Those letters were from two different ministries enclosing copies of the Investment Programme. They came to be written, because even at the commencement of the trial, those representing Coudert were pressing for the authenticated version of the Investment Programme. At a late stage in the trial, and after the recipient of the letters Mr Lugovsky had completed his evidence, someone in the Coudert team noticed that one paragraph in each of the letters was in identical terms, when the original Russian was examined. This fact was meant to lend some support to the possibility, that in some way there had been some impropriety in the production for the court of a three year plan.
26. I, like the judge, can see that there are some strange features to which Mr Swainston can point, but I do not think that the "DNA" letters add very much to the picture. The real difficulty for Mr Swainston is that authenticated copies have been produced; the only version of the plan in existence in 1995 before any dispute between IML and Coudert had arisen shows 3 years and not 5; and all the Russian courts in 1996 accepted that there was a three year plan at a time when IML and its advisers, and the Moscow Property Fund and its advisers, would if it had been possible have wanted to establish otherwise.
27. I would accordingly not interfere with this finding of fact by the judge. In addition I would add in a case where Coudert call no direct evidence on the point, it could be said to lie ill in their mouth to suggest that the finding against IML was fundamentally flawed, when evidence of what the plan actually said, is the very thing which they should have discovered.

Voucher point

28. As regards the fourth point, IML was faced with a challenge in the Russian Courts by an opposition keen to take any point that it could. If this point was not taken, as it was not, that is a strong indicator that the judge was right about it, and right that it would not in the different scenario which must be envisaged have been a point taken by the prosecutor.

Other points – is this loss of a chance case?

29. The other points are much more difficult. The first question is whether the claimants are entitled to have their damages assessed on the basis of loss of a chance. Mr Swainston submits that this is not a loss of a chance case, and that for the Claimants to be entitled to succeed, they must establish on the balance of probabilities, that the successful challenge to the transaction would not have occurred in any event. He would place the onus on the claimants, but he would also submit, that if Coudert could establish on the balance of probabilities that the challenge would have happened in any event, then it could not be right that IML should be entitled to recover anything. He would say that by Coudert establishing on a balance of probabilities that the challenge would have succeeded, that has established as a fact that the transaction was inevitably doomed, and Coudert's negligence has not actually made any difference. But, one might pose the question, would Mr Swainston for Coudert accept, that if either IML prove on the balance of probabilities that the transaction would not have been challenged successfully if proper advice had been given by Coudert, that IML should be entitled to recover 100% of their losses without diminution for the possibility that it might not have been so? Would he accept that if Coudert failed to establish on the balance of probabilities that the transaction would still have failed, that 100% of the losses should be recoverable? Logically if a decision on the balance of probabilities leads as in law it does to the fact being established, the argument of Mr Swainston seems to lead to 100% or nothing.
30. The question whether this is a loss of a chance case ought to depend on whether this is a case where the claimant has established a head of damage for "loss of a chance". This may appear to be a statement of the obvious, but whether a particular loss is recoverable depends on whether that is a loss for which a particular defendant should be held liable. Circumstances where the law allows for a head of damage "loss of a chance" assessed at a percentage of a claimant's full loss (where the claimant cannot prove on the balance of probabilities that the wrong alleged has caused the full loss), are circumscribed. There is an obvious tension between the fundamental rule that a plaintiff must prove on the balance of probabilities that the loss he claims has been suffered, and the court allowing the recovery of a percentage of that loss because the claimant cannot establish that the full loss would have been suffered. At all times however, the root question has to be what damage has the claimant suffered, what damage is the claimant claiming, and can the claimant establish on the balance of probabilities that the damage or loss he is claiming has been caused by the defendant's breach of duty? It is not always convenient to divide up the issues to be tried in a case as has happened here, and as happened in Allied Maples Group Ltd v Simmons & Simmons (a firm) 1995 4 All ER 907 between liability, causation and quantification because a division may take an eye off the ball for example as to what the claimant is actually claiming. But that solicitors' negligence can lead to damages being assessed on the basis of loss of a chance, is clearly established. It is a solicitors' negligence case in which the principles to be applied in deciding whether loss of a chance is the right approach, and how the assessment works have been laid down. I refer of course to Allied Maples. In the judgment of Stuart-Smith LJ with whose judgment as regards the principles Millett LJ (page 925) clearly agreed the relevant principles were defined on page 914 as follows:-

"(2) If the defendant's negligence consists of an omission, for example to provide proper equipment, or to give proper instructions or advice, 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 equipment had been provided or the instruction or advice given. This can only be a matter of inference to be determined from all the circumstances. The plaintiff's own evidence that he would have acted to obtain the benefit or avoid the risk, while important, may not be believed by the judge, especially if there is compelling evidence that he would not. In the ordinary way, where the action required of the plaintiff is clearly for his benefit, the court has little difficulty in concluding that he would have taken it. But in many cases the risk is not obvious and the precaution may be tedious or uncomfortable, for example the need to use ear defenders in noisy surroundings or breathing apparatus in dusty ones. It is unfortunately not unknown for workmen persistently not to wear them even if they are available and known to be so. A striking example of this is Cummings (or McWilliams) v Sir William Arrol & Co Ltd [1962] 1 All ER 623, [1962] 1 WLR 295; the employers failed in breach of their statutory duty to provide a safety belt for the deceased steel erector. But his widow failed in her claim under the Factories Act 1937 because there was compelling evidence that, even if it had been provided, he would not have worn it.


   Although the question is a hypothetical one, it is well established that the plaintiff must prove on the 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. In the present case the plaintiffs had to prove that, if they had been given the right advice, they would have sought to negotiate with Gillow to obtain protection. The judge held that they would have done so. I accept Mr Jackson's submission that since this is a matter of inference, this court will more readily interfere with a trial judge's findings than if it was one of primary fact. But even so, this finding depends to a considerable extent on the judge's assessment of Mr Harker and Mr Moore, both of whom he saw and heard give evidence for a considerable time. Moreover, in my judgment there was ample evidence to support the judge's conclusion. Mr Jackson's attack on this finding was, as I have explained, something of an afterthought and not, I think, undertaken with great enthusiasm. I am quite unable to accede to it.


   (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 the 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.


   In Chaplin v Hicks [1911] 2 KB 786, [1911–13] All ER Rep 224 the defendant's breach of contract prevented the plaintiff from taking part in a beauty contest and deprived her of the chance of winning one of the prizes. The Court of Appeal upheld the judge's award on the basis that while there was no certainty that she would have won, she lost the chance of doing so.


   In Kitchen v Royal Air Forces Association [1958] 2 All ER 241, [1958] 1 WLR 563 the defendant solicitors negligently failed to issue a writ against the tortfeasor with the result that the plaintiff's claim was statute-barred. The Court of Appeal upheld the judge's award of £2,000, which was two-thirds of the full liability value of the claim. The court firmly rejected the defendant's contention that she had to establish on a balance of probability that she would have won the action. Lord Evershed MR considered that she had 'lost some right of value, some chose in action of reality and substance' (see [1958] 2 All ER 241 at 251, [1958] 1 WLR 563 at 575). But Parker LJ put the matter more generally:

If the plaintiff can satisfy the court that she would have had some prospect of success, then it would be for the court to evaluate those prospects, taking into consideration the difficulties that remained to be surmounted’. (See [1958] 2 All ER 241 at 252, [1958] 1 WLR 563 at 576.)”

31. Mr Swainston has referred us to certain decisions in the medical negligence field; Hotson v East Berkshire Health Authority [1987] AC 750 and Gregg v Scott [2002] EWCA Civ 1471. They are cases in which the court was dealing with a claimant who was suffering from a condition at the time of the intervention of the doctor charged with negligence. In Hotson the judge had found that the claimant had, as a result of a fall prior to the intervention of the doctor, a 75% chance of a similar result. He found that there was a 25% chance that if the doctor had not been negligent, that the outcome would have been better, and had awarded damages for that "loss of a chance". The House of Lords held that damages could not be awarded for that 25% chance because the effect of the judge's finding as to the chances of the condition resulting from the fall being 75% was a finding in law that that would actually have been the result. In Gregg v Scott the claimant had developed a non-Hodgkin's lymphoma; it was negligently misdiagnosed and that led to its growing and spreading and to delay in its treatment. The judge found that the delay reduced the chances of survival by 25%, but refused an award of damages because the chances of survival were in any event less than 50% i.e. it was more probable than not that the claimant would not have recovered. The court of appeal dismissed the appeal by a majority, Latham LJ distinguishing Hotson, with Mance and Simon Brown LJJ feeling unable to do so. (Simon Brown LJ had been the judge at first instance in Hotson). Mr Swainston submitted that we should reconsider Allied Maples because he would suggest that there was an inconsistency between the principles being applied in the different areas of the law.
32. If there is an inconsistency, I am quite unpersuaded that the tendency should be to narrow the principle in those cases where "loss of a chance" has been recognised as a head of damage. My reaction to Gregg v Scott is one of some disquiet that the claimant can receive no damages for the chance that was lost in that case, but the question of whether Gregg v Scott must stand will be considered no doubt by the House of Lords. In Hotson, there was no suggestion that decisions recognising a head of damage for loss of a chance should not be followed ...see for example the speech of Lord Bridge at 782G).
33. I will examine the application of the principles for awarding damages a little further in the context of this case. First it could be said that when IML entered into agreements (as in fact they did) which gave no chance of defending the transaction if it was attacked, then prior to knowing whether an attack would take place they had already suffered damage. If the transaction were never attacked that damage might still be reflected in a reduction in Coudert's fees. Because in this case the transaction was attacked, that is not IML's claim. Second if the proper advice which Coudert should have given was that the transaction was doomed anyway, because the tender was invalid, and IML could have established that they would not have entered into the transaction on receiving that advice, the damages claimed might have been for the investment put into the company after the failure to receive that advice. That would not be a loss of a chance case. IML would be seeking the whole of their investment, and would have to establish (1) that the proper advice would have been that the transaction was doomed, and (2) that IML could and would have saved their investment. If however IML failed to establish on the balance of probabilities that they would have foregone the transaction, they could not have claimed their loss of investment nor any percentage of it, but again might have claimed a reduction in Coudert's fees. This again has nothing to do with "loss of a chance". Third if the proper advice would have been that the transaction would have been safe, if the agreements were amended in a certain way, and it could be proved, on the balance of probabilities, that as a matter of Russian law any attack on the transaction was bound to fail, then if IML could establish on the balance of probabilities that they IML would have been prepared to so amend the agreements, they would still have had to deal with whether Bolshevichka and MPF and indeed GKI would have agreed. This (as it seems to me) would be assessing the hypothetical action of third parties within the third principle in Allied Maples. If the chance of persuading Bolshevichka, MPF and GKI, were high then the claim would have been for a high percentage of the investment and even loss of profit, if the transaction failed. In this instance however if Coudert could establish that the transaction which failed would as a matter of Russian law in ordinary circumstances have not failed, but only failed because of the falling out of Mr Lewis and Mr Gurov, and (for example) Mr Gurov's influence on the Prosecutor, IML's claim would fail in toto.
34. I now come to what are the circumstances of this case. If the advice plus action of IML would simply have given IML a chance of defeating any attack on the transaction, but only then if Bolshevichka agreed and GKI approved, there are in my view two elements that make it a "loss of a chance" case. First what Coudert was contractually bound to supply but failed to supply was "the chance" that the transaction would not be defeated, and even that chance is dependant on a second element the hypothetical acts of third parties at the advice stage. It is of course also dependant on the hypothetical actions of third parties at the stage of assessing what the chances were of the transaction actually being safe. It seems to me that one thing ought to be clear, if under their contractual obligations this is a case where the chance should have been provided unless that chance is of no real value at all or totally incapable of being quantified, damages for that loss should be recoverable. In this instance it is still open to Coudert to demonstrate that however good a chance of safety the deal had in normal circumstances, it had no real or quantifiable chance in the circumstances that eventuated.
35. Chaplin v Hicks shows that a contract to provide a chance can be enforced, and that damages can be given for a failure to fulfil that contract if the chance has some real value. Kitchen shows that where negligent advice leads to the total loss of an action, provided the action had some value, damages for loss of a chance can be awarded.
36. How does one go about assessing damages for that chance in a case such as this? The judge has assessed the chances of Bolshevichka and GKI approving the amendments on the balance of probabilities and concluded thus that they would have happened. As indicated that may not be fair when ultimately assessing the correct percentage but it has not been challenged and at the very least in any event it demonstrates that there is a very high possibility that Coudert could as they should have, provided the chance.
37. How should the assessment proceed from there, particularly bearing in mind that the ultimate challenge to the transaction occurred following a prompting from Mr Gurov? The judge's approach is first to assess whether on the basis that the agreements would have been amended and approved by MPF and GKI, a challenge under Russian law applied if I can put it this way in normal circumstances, the transaction would have been declared invalid. He thought Mr Leggatt had the best of the arguments and concluded that the advice would have been that the transaction would be "reasonably safe". This he does from paragraphs 40 to 43. His conclusion is that given that Bolshevichka and GKI would have both agreed to the amendments and approved them, the Russian courts would have been likely to uphold the transaction, particularly because GKI would have approved the agreements. On that basis, the chance, which Coudert should have supplied, was one which Mr Sheedy would have described as "reasonably safe provided the stipulation was included in the SPA and the IA."
38. The judge then goes on to find, that even in the circumstances that actually eventuated, i.e. with Mr Gurov prompting the prosecutor, with GKI having supported the agreements in 1994, it was highly improbable that the prosecutor would have been persuaded to prosecute in 1996. It is difficult to fault the judge's analysis save in this possibly important respect. It is significant that in his judgment assessing the chance at 70%, he put the matter this way in paragraph 8:-

"Reverting to the three to five year point, I have indicated that I took a view on balance as to the position as it would have been regarded by the Russian Court, that balance being no more than a reasonably clear one in favour of the Claimant. But I would upgrade that to a not insignificant extent because of the much more difficult task that I think Mr Gurov would have had in persuading the Prosecutor to make a challenge. The other main factor of course, which is implicit in the judgment and in what I have already said, is that the Courts would then be looking at the matter on a different factual premise, namely the SPA and Investment Agreements having been completed as required by the Moscow Property Fund on a three year basis."

39. The point I am troubled by is the "upgrading" by reference to the likely attitude of the prosecutor. I will return to it when finally considering the 70% aspect below. But first I should deal with the anti-monopoly point.
40. The judge discounts the anti-monopoly point altogether on the basis that any failure to obtain permission was due to the negligence of Coudert and that thus they could not rely on their own negligence to break any chain of causation. There is no challenge to his finding of negligence. It is Coudert's case in the Court of Appeal, even more starkly than before the judge, that anti-monopoly permission was needed, that they were negligent, that the limitation period had expired before IML alleged the negligence in their reply, and that IML are now precluded from relying on the failure to obtain permission as Coudert's fault.
41. The judge on the basis he might be wrong on the "Coudert fault" point considered the anti-monopoly point quite separately from the 3-5 year point, and concluded that it was unlikely that there would have been a prosecution on this point alone. He found that no-one thought of the point before 1996. Mr Gurov it seems did not think of this point when prompting the prosecutor.
42. Can Coudert rely on the anti-monopoly point at all? If the limitation period had not expired, this point would not arise. There cannot be any doubt that in any ordinary case, where there are competing causes of damage to a plaintiff, a defendant will gain nothing from relying on a factor which would provide a separate cause of the damage, if that cause is due to the defendant's own negligence. In such a case, the claimant could have made the separate cause part of the claim against the defendant. In this case, IML could have relied on the 3-5 year point, and the failure to obtain permission, although the net effect of so doing would not be to increase their damages. The case would still remain that Coudert failed to provide the chance by amending the agreements, and that chance is still the same chance that they would have failed to provide by not obtaining anti-monopoly permission.
43. IML deliberately claimed on the basis of the loss of a chance simply by reference to the 3-5 year point. They did not want to continue with the claim based on the failure to obtain anti-monopoly permission, and since their Russian law experts were going to say that the permission was not in fact required, that may be the reason.
44. The question is whether, if IML can establish that Coudert should have provided them with the chance by reference to the 3 to 5 year point, Coudert can say in relation to the assessment of that chance, that it should be reduced by virtue of an "intervening" act of negligence by Coudert, because the "intervening act" gives rise to a separate cause of action in respect of which the limitation period has expired.
45. There is very little authority which assists. It is of interest that when one examines the index of Mayne & McGregor 17^th Edition on Causation whether in Contract or in tort, there are constant references to "intervening acts of the claimant" or "intervening acts of third parties" but no reference at all to "intervening acts of defendants". Mr Leggatt was however able to point to a passage in the speech of Lord Browne-Wilkinson in Bolitho where he said at 240:-

"However in the present case the answer to the question "What would have happened?" is not determinative of the issue of causation. At the trial the defendants accepted that if the professional standard of care required any doctor who attended to intubate Patrick, Patrick's claim must succeed. Dr. Horn could not escape liability by proving that she would have failed to take the course which any competent doctor would have adopted. A defendant cannot escape liability by saying that the damage would have occurred in any event because he would have committed some other breach of duty thereafter. I have no doubt that this concession was rightly made by defendants. But there is some difficulty in analysing why it was correct. I adopt the analysis of Hobhouse LJ in Joyce v. Merton, Sutton and Wandsworth Health Authority [1966] 7 Med LR 1. In commenting on the decision of the Court of Appeal in the present case, he said, at p. 20:

Thus a plaintiff can discharge the burden of proof on causation by satisfying the court either that the relevant person would in fact have taken the requisite action (although she would not have been at fault if she had not) or that the proper discharge of the relevant person's duty towards the plaintiff required that she take that action. The former alternative calls for no explanation since it is simply the factual proof of the causative effect of the original fault. The latter is slightly more sophisticated: it involves the factual situation that the original fault did not itself cause the injury but that this was because there would have been some further fault on the part of the defendants; the plaintiff proves his case by proving that his injuries would have been avoided if proper care had continued to be taken. In the Bolitho case the plaintiff had to prove that the continuing exercise of proper care would have resulted in his being intubated."

46. The Bolitho case could be said to be rather different from the instant case. I have quoted the passage to include the quotation from Hobhouse LJ because it would appear that what was being said in that case was, the plaintiff can prove the injury, if the plaintiff established, either that the baby would have been intubated as a fact, or (if he cannot show that) that it would have been negligent not to intubate. It would thus seem to have been part of the plaintiff's case to prove causation, that it would have been negligent not to intubate. In the loss of a chance case, such as the one we are dealing with, the failure to produce the agreements relating to the 3-5 year point has caused a loss of a chance. IML does not need to rely, and indeed does not seek to rely, on the failure to obtain permission, to establish the chain of causation of that loss of a chance. It is Coudert who want to reduce the value of the chance, by asserting they failed to do something which would have lowered the chance. Is there a principle which disallows a defendant from relying on a wrong which he has committed in order to reduce the damages that would otherwise flow from a tort or breach of contract? It seems to me that there should be such a principle, and that is what Lord Brown Wilkinson was recognising. It is quite difficult to say why it should be so, other than that it flows from public policy where it is a principle that a person should not be entitled to rely on their own wrong in order to secure a benefit. It is furthermore not unfair to apply such a principle . Damages would flow from the original act of negligence; why should Coudert be allowed to rely on a further act of negligence to reduce that damage?
47. Furthermore I am not sure it is right to categorise allowing IML to stop Coudert relying on their own negligence, as providing IML with a claim which is statute barred. IML are not seeking to recover damages for the failure to secure anti-monopoly permission, they are simply seeking to prevent Coudert breaking the chain of causation of the damages, which flow directly from the loss of a chance which they should have provided to IML. That is something surely they are entitled to do by way of reply as they have pleaded in this case.
48. If that were wrong, and IML must plead the anti-monopoly point in their points of claim, one would have to consider the question whether at this stage IML should be entitled to have leave to amend. Mr Leggatt frankly admitted that he did not take this point in the court below because he was unaware of Goode v Martin [2001] EWCA Civ 1899. That case concerned a claimant injured in a yachting accident. She put forward one version of how the accident happened, and alleged negligence against the owner of the yacht. The defendant put in a defence ultimately, which put forward a version of events different from the claimant's. The claimant after the limitation period had expired, applied to plead the defendant's version of events, and allege that if the accident happened that way, it was still due to the defendant's negligence. The application had to be made in reliance on CPR 17.4(2) which provides as follows:-

"The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

49. The District Judge and the Judge held that they had no power to allow the amendment. The Court of Appeal held that following the coming into force of the Human Rights Act they were at liberty to read the rule as follows:-

"The court may allow an amendment whose effect will be to add … a new claim, but only if the new claim arises out of the same facts or substantially the same facts as are already in issue on a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

50. In the judgment of Brooke LJ he expressed certain sentiments which I suggest also support the view on public policy which I have suggested should be applied, and which would be relevant to considering whether in the instant case leave to amend should be given if necessary.

"37. Mr Jervis Kay QC, who appeared for Mr Martin, encouraged us to adopt a narrow interpretation of both CPR 17.2 and s 35(5) of the 1980 Act. So far as the latter was concerned, he argued that the words 'the same facts as are already in issue on any claim' were not apt to embrace facts that were in issue on the defence to such a claim.

38. He did not explain to us why, as a matter of policy, the meaning of the words should be restricted in this way. We suggested to him that it seemed to be unfair, if a defence was served at the end of, or just outside, the primary limitation period, a claimant could not riposte by saying: 'Well even if, which I dispute, the accident happened in that way, you were negligent because …'. His reply was that the claimant would have to issue a new claim, incorporating an appropriate plea under the 1980 Act, and consolidate that claim with her existing claim. It is hard to reconcile that expensive and cumbersome procedure with the philosophy of the overriding objective contained in the CPR."

51. Goode v Martin is a different case from the present in some respects. The claimant in that case might not have proved any negligence on the way she had pleaded her case initially. She might have needed the defendant's version in order to succeed at all. It was not a case where permission to amend was being given simply to enable a causation case to be answered. On the other hand leave to amend was being sought before the trial commenced, and not in the Court of Appeal.
52. I would start by saying that if what was being asked for was leave to amend to plug a causation gap, it could be argued with some force that the original cause of action is all that is relied on, and no new cause of action is being alleged. It is still no part of IML's case that any independent damage was caused by a failure to obtain anti-monopoly permission and indeed it is still their primary case that no such permission was need. But if that is too narrow a view, the reasoning in Goode v Martin would have applied with even greater force than in Goode v Martin itself.
53. On that basis if (out of an abundance of caution) IML had sought leave to amend their particulars of claim prior to this trial, limited to asserting simply what they were already asserting in their reply, it seems to me that they should have got leave either on the basis that they were not pleading a new cause of action and thus did not need the assistance of CPR 17.4(2), or on the basis of CPR 17.4(2) as interpreted by Goode v Martin.
54. Mr Swainston submitted that the fact that this was a professional negligence claim against Coudert would have made it highly prejudicial to Coudert to have to deal with this point, if pleaded at a late stage. The answer to that point would seem to me to be, that Coudert chose to rely on the Anti monopoly point, and it would not be fair not to allow Coudert so to do without an investigation as to whose fault it was if permission was not obtained.
55. Permission to amend was not sought before the trial. That was despite Mr Swainston in submissions we have been shown making clear that he would take the point that IML had to plead it in their particulars of claim, if they were to be able to rely on the point. He was, of course, at the same time making clear, he would resist any amendment because the limitation period had expired. In that context Mr Leggatt stuck to his guns submitting it was only a causation point, and therefore he did not need to put the point in his points of claim. As I have said his team did not know of the decision in Goode v Martin.
56. Where a party has deliberately declined an invitation to apply for leave to amend before or at a trial, it must take very special and unusual circumstances for the court of appeal to allow him to change his mind in the court of appeal. I have concluded that the circumstances are very unusual and my reasons are as follows.

(i) Before the judge this was one of many points which both sides were having to consider at the moment the trial was coming on;

(ii) Coudert was wanting to rely on the point as breaking the chain of causation, and IML did not want to go further than saying even if Coudert established that permission was needed, the fact that permission was needed was their fault and that could not break the chain of causation.

(iii) Coudert was already prepared to meet the point including the question whether they were negligent by virtue of the reply.

(iv) Fairness in the Goode v Martin sense, should only allow Coudert to be entitled to run the Anti Monopoly point, if they would also allow IML to raise the issue of whether if permission was required, it was their fault; if raising the point by way of reply would be inappropriate (which in my view it was not), then pleading the same in the points of claim limited to providing an answer to the break in the chain of causation should be allowed.

(v) Coudert cannot point to any way in which they would have conducted the proceedings below differently if the point had been pleaded in the particulars of claim rather than in the reply.

57. This makes it unnecessary to consider whether the judge's finding as to whether as a matter of Russian law anti-monopoly permission was in fact required. I would simply say that I was not persuaded that the judge was wrong in the views he took on Russian law on this aspect. Certainly by the time the question of anti-monopoly got to the Higher Courts, IML had letters from the Anti-monopoly Committee dated 18^th July 1996 and 29^th November 1996 which seemed to affirm that in their view anti-monopoly permission was not needed [see pages 324 and 332]. Those letters would only act as guidance to the Russian Courts, but they certainly support the judge's view, and although the judge did not think Mr Leggatt could get much comfort from it, it seems possible that the lack of reliance on the anti-monopoly point by the Deputy Chairman and Chairman of the Supreme Arbitration Court in the letters from them, lend support to the arguments, that in reality Russian law did not require anti-monopoly permission. That being the position as found by the judge, it would clearly not be right to reduce the loss of a chance assessment any further than he had in mind.

Final Assessment

58. I must then finally stand back and ask whether given that the anti-monopoly point must be excluded, is the assessment at 70% the correct assessment? My starting point I admit is that it strikes me as a matter of fairness that for Coudert to be liable for 70% of IML's lost investment and/or possible profits in the events that happened seems high. If I had to articulate that feeling I would put it in the following way. First whatever chance they should have given IML it was by no means a 100% chance. One might think that the sort of events that happened were the very kind of unforeseen and unlikely circumstances in which failure might have had to be accepted i.e. a 100% loss to IML even on proper advice. Indeed one cannot help feeling that if the prosecutor had been persuaded to prosecute, the reasoning of the courts, whose decisions we have, would have been likely to prevail whatever the decision of the Higher Courts might have been if leave to appeal had ultimately been granted. Second, if one were to look on the case, as an attempt to calculate the difference between what IML had without the proper advice, and what IML would have had with the proper advice, the answer might be along the following lines. Without the advice, the transaction was if the support of Mr Gurov and GKI were maintained reasonably safe; Bolshevichka had agreed and indeed suggested the 5 year plan; MPF were happy with it; and even GKI seemed in 1994 happy with it and that was despite at least Bolshevichka, MPF and GKI being aware of the difference between the tender and the investment plan. It withstood the attack from Obergan. Without the falling out of Mr Lewis and Mr Gurov there simply would have been no attack which would have succeeded. But an attack by Bolshevichka which prompted the public prosecutor brought the transaction down. Is it really right to calculate the value of the chance that Coudert should have supplied on the basis of a "reasonably safe transaction" by upgrading it by the fact that the Prosecutor would probably not have prosecuted?
59. I am troubled that this way of calculating the damage confuses the calculation of a loss of a chance with the calculation of damages caused by a relevant event. I understand that the judge was reasoning that if the agreements had been changed then on the events that happened his view was that it was more probable than not that no prosecution would have occurred. But in my view that cannot upgrade the value of the loss of a chance that Coudert was contractually bound to provide. Firstly it seems to me to overlook that if the prosecutor did prosecute although in normal circumstances the amended agreements should have withstood the test, they might have suffered the same fate as the unamended actually did, with 100% loss. The reasoning used in the decisions of the lower courts could actually condemn the amended transaction on the basis that the tender was invalid.
60. If anything the falling out between Mr Lewis and Mr Gurov must down grade the chance of the transaction being safe, and I would have thought down grade it significantly. If reasonably safe has to be on the judge's calculation in the region of 60% chance, then it seems to me that on the facts as they turned out to be that chance must be downgraded by a factor which properly reflects the impact of Mr Gurov and Mr Lewis falling out, and the possible different attitude of the Russian courts if the Prosecutor had been persuaded to prosecute.
61. It may be said that to some extent I am disagreeing with the judge's assessment of it being highly improbable that the prosecutor would have prosecuted. I confess that I am more sceptical than he was but what I am trying to reflect is the proper value of the chance as compared with the chance that IML already had. What is a proper reflection of the difference in the chances of the first transaction being safe and the transaction as it should have been? I could not put that at higher than 40% and it is to that figure to which I would downgrade the assessment of the value of the chance lost by IML.
62. To that extent I would allow the appeal and replace the judge's figure of 70% with one of 40%.

Lord Justice Laws:

63. I agree that this appeal should be allowed to the extent proposed by my Lord Waller LJ and (save for a qualification as to leave to amend, which I will explain) for the reasons given by him. I concur also in the order he proposes. I desire only to add these following short observations on the issues arising in the appeal.
64. First, although I entertained considerable doubts about the matter while the case was being argued, I have reached the clear conclusion that in principle a defendant should not be allowed to rely on a wrong perpetrated by himself in order (in whole or part) to break the chain of causation put forward by the claimant to establish and quantify the damage sustained by him by reason of the defendant's breach of contract or tort. This may be seen (as Waller LJ expresses it: paragraph 46) as an application of the general rule of the common law that a party may not rely on his own wrong to secure a benefit, and I agree that some support is to be found for that approach in the speech of Lord Browne-Wilkinson in Bolitho. But I think it is also consonant with modern ideas of causation now being developed in the cases. Authority supports the proposition that the resolution of causation issues, certainly in the law of tort, is by no means merely a fact-finding exercise; in many instances it is an evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant. This seems to me to be vouchsafed in particular by the opinions of Lord Bingham and Lord Hoffmann in Fairchild [2002] 3 WLR 89 at paragraphs 10 - 12 and 52 – 54 respectively; to which may be compared, in the context of damages for loss of a chance, the observations of Kirby J in the High Court of Australia in Chappel v Hart [1999] Lloyd's Law Reports: Med 223 at 245, 246, cited by Latham LJ in this court in Gregg v Scott [2002] EWCA Civ 1471.
65. On this footing I am in complete agreement with Waller LJ's view (paragraph 47) that IML sufficiently raised this aspect of their case on causation by their pleading in reply. I take issue, with respect, only with what my Lord has said as to the alternative possibility that in order to rely in this context on what is said to be Coudert's own fault as regards the anti-monopoly point, IML might properly be allowed to amend their particulars of claim. In my opinion IML's case on causation in this respect properly arises, and only arises, by way of reply to Coudert's denial of causation: and of course that is exactly how the matter was in fact pleaded. Any amendment to the particulars to rely on Coudert's own fault in relation to the anti-monopoly point, if that were sought, could only have as its proper purpose a broadening of the front on which IML were putting their case as a matter of primary claim, not response to the defence. I would not have allowed any such amendment at this late stage in the proceedings. I acknowledge that my Lord's own view is that such an amendment is in fact unnecessary to raise the point being taken as to causation. But I should add that on the view I take, with respect nothing I think is owed to this court's decision in Goode v Martin [2001] EWCA Civ 1899.
66. I have mentioned the case of Gregg v Scott, which was a personal injury case. My disquiet at what was there decided is the focus of my second observation. My Lord Waller LJ refers to the case at paragraphs 31 – 32, and expresses his own disquiet at paragraph 32. In this passage my Lord is dealing with Mr Swainston's submission for the appellant (as I understood him) that the approach taken in Gregg should apply generally to claims for loss of chance damages, so that such damages should not be available unless the claimant proves that there is at least a 51% probability that whatever is the feared outcome would eventuate. Such an approach would gravely dislocate the mainstream learning on loss of chance represented by Allied Maples [1995] 4 AER 907, which is discussed in detail by Waller LJ in paragraph 30.
67. I have to say that I would gravely deprecate any extension of the approach taken in Gregg v Scott. In that case the claimant suffered from a cancer. But for the defendant's negligence he would have had a 42% chance of survival for five years from a date in 2001. The defendant's negligence reduced the chance to 25%. But this court held by a majority that he had not proved any recoverable damage, and his claim failed.
68. I understand and respect the reasons why the majority in Gregg v Scott held as they did, not least given the impact of the earlier decision of their Lordships' House in Hotson [1987] AC 750. But I am driven to an unhappy sense that the common law has lost its way. If a man's chance of a cure from a potentially fatal cancer has been reduced by another's negligence from 42% to 25%, would not a reasonable jury say that he had been grievously hurt by the negligence? The correctness of Gregg v Scott is, of course, for the House of Lords, or possibly the legislature, and not for us. But there is in my judgment no good reason to extend its application.

Lord Justice Carnwath:

69. I agree that the appeal should be allowed to the limited extent proposed by Waller LJ. Like Laws LJ, I would prefer to dispose of the anti-monopoly point by reference to principles of causation, and I agree with what he says on that issue. I take some comfort from Goode v Martin [2001] EWCA Civ 1899, in that it provides an answer to any concerns that a time-barred issue is being brought in by the back-door. However, I agree that on the view we have taken on the causation issue, an amendment of the particulars is unnecessary. Finally, I share Laws LJ's disquiet with the conclusion to which the majority was driven in Gregg v Scott [2002] EWCA Civ 1471, and like him I would not favour any extension of its ambit.
70. Subject to those points I agree fully with the reasons given by Waller LJ.
ADDENDUM

Lord Justice Waller:

71. After the judgment was sent to counsel in draft, a note was received from Mr Leggatt QC and Mr Adam for IML. It submitted that Coudert had not made the points the subject of paragraphs 63-66 of the draft judgment (paragraphs 58-61 of the final judgment) and thus IML had not dealt with them. It sought permission to place further arguments before the Court by reference to those paragraphs.
72. I am a little surprised at the protest of counsel for IML, since it was plain, I would have thought, that Coudert's arguments, challenging the judge's assessment of whether amending the agreements would have led to the transaction surviving following the fall out of Mr Lewis and Mr Gurov, fed through into a reassessment of the chance. Indeed this was expressly made clear in an exchange between the Court and Mr Swainston QC (see day 2, page 118). That Mr Leggatt appreciated that Coudert's argument could lead to a re-evaluation of the chance was made clear in his submissions at day 2 page 166.
73. Furthermore, the Court certainly raised with Mr Leggatt more than once whether the influence or impact of Mr Gurov had been taken into account by the judge (see e.g. day 3, page 12 and page 21); and the point that the transaction without amendments was reasonably safe until Mr Gurov influenced the prosecutor to take the point that was taken, was also raised from time to time (see e.g. day 3, page 43). The criticism of the judge that he upgraded by reference to the improbability of the prosecutor prosecuting is merely a reflection of a criticism that he did not take into account Mr Gurov's influence.
74. I have however, looked at the further submissions and reconsidered paragraph 63-66 of the draft judgment in light of those submissions, and the very unusual circumstances of this case. I am still unpersuaded that the judge's assessment which would enable IML to recover 70% of their losses from Coudert in the circumstances that prevailed was fair. That was and is my starting point. My reasoning, by which I reduced the 70% to 40%, which I hoped was clear, is not intended to be, nor could it be, a scientific exercise. It comes to this:

(1) Without Mr Gurov and Mr Lewis falling out, the original transaction was reasonably safe: a prosecution in unmeritorious circumstances was instigated by Mr Gurov, and the lower courts invalidated the transaction where one might have expected them not to; permission to appeal to the higher courts was refused.

(2) If the amended transaction had been considered by the lower courts in similar circumstances i.e. under a prosecution instigated under the influence of Mr Gurov, the same process of reasoning would have held the amended transaction to be invalid, and it is unclear whether permission to appeal would have been granted in such circumstances.

(3) The judge's calculation of the loss of a chance did not seem to take into account the impact of Mr Gurov's influence. He upgraded the value of the reasonable chance assessed by reference to normal circumstances (i.e. where no Gurov influence was present), by assessing that it would have been improbable that Mr Gurov's influence would have succeeded in persuading the prosecutor to prosecute.

(4) If anything, the Gurov influence, for which Coudert had no responsibility, should have downgraded the value of any chance.

(5) A crosscheck as to a fair assessment of the lost chance, can be provided by calculating the difference in the chance which the unamended deal had, with the chance the amended deal had. The only chance which Coudert should have supplied was that better chance.

(6) Whichever way one looks at it, to allow IML to recover 40% of their losses in the circumstances that prevailed, reflects a fair assessment of the chance which Coudert failed to supply.

Lord Justice Laws:

75. I agree.

Lord Justice Carnwath:

76. I also agree.