Case No: HC 03 000620
Neutral Citation Number [2003] EWHC 3159 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 19 December 2003
Before :
THE HONOURABLE MR JUSTICE DAVID RICHARDS
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Between :
 	PATRICK PAUL LESLIE WADE & JEAN WADE 	Claimants 	
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 	POPPLETON & APPLEBY 	Defendants 	
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JOHN MACDONALD QC & Nicola Allsop (instructed by Ralph Davis) for the Claimant
RICHARD SHELDON QC & David Marks (instructed by DLA) for the Defendant
Hearing dates : 28-31 October, 3-5,7,10-11,13-14 November
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Judgment

Mr Justice David Richards : 
Introduction
1.	The claimants in this case seek damages against the defendant firm for alleged negligence in the course of giving advice. The claim is made both for breach of contract and for breach of a common law duty of care. There is also a claim based on a breach of fiduciary duty which it is suggested was owed by the defendants. 
2.	The claimants, Leslie Wade and his wife Jean Wade, were the sole shareholders of Wade & Hotson (Sheffield) Limited ("Holding Co.") which wholly owned a trading subsidiary, Wade & Hotson Limited ("Trading Co.") (together "the Companies"). Mr Wade was a director of both companies. Trading Co carried on a specialist engineering business from premises owned by Holding Co. In early 1997 Trading Co faced acute cash flow difficulties. It was insolvent and on 21 February 1997 two partners in the defendant firm were appointed by Yorkshire Bank PLC ("the Bank") as administrative receivers of Holding Co and Trading Co under debentures held by the Bank. 
3.	The defendants, Poppleton & Appleby are a firm of insolvency practitioners. On 18 February 1997 they were introduced to Mr Wade to give insolvency advice. It is the advice which they gave or failed to give and their conduct between 18 February and 20 February 1997 which is the subject of this action. No claim is made in respect of the conduct of the administrative receivership. The partner principally involved in that period was Jeremy Priestley, assisted in one respect by Philip Revill. Mr Priestley does not hold the qualification necessary for appointment as an administrative receiver, and it was Mr Revill and another partner who were appointed receivers on 21 February 1997. 
4.	It was common ground at the trial that by the time of Poppleton & Appleby’s involvement, there was no prospect of Trading Co avoiding receivership or liquidation. It is whether Holding Co could have avoided receivership and the steps taken or not taken by Poppleton & Appleby in that respect which are central issues in this case. 
5.	Mr and Mrs Wade bring this action both in their own right for breach of duties which they say were owed to them personally and as assignees of claims by Holding Co and Trading Co. Poppleton & Appleby’s case is that they were engaged to advise the two companies and their directors in their capacity as directors and they accept that they owed to the Companies contractual duties to use reasonable care and skill. They deny that they were engaged to advise Mr and Mrs Wade in a personal capacity, whether as shareholders or as employees of one or both of the Companies or otherwise and they deny that they owed any duties to them. The assignments of the Companies’ claims were made by the liquidators and they are restricted to claims arising from events prior to the appointment of administrative receivers. The validity of the assignments was not challenged at trial and the only issue on them arises in relation to the claim for breach of fiduciary duty. 
Evidence
6.	Before considering the claims, I will set out the background facts and the events up to the middle of February 1997, followed by a detailed chronology of the events of 18-20 February 1997 when Poppleton & Appleby were involved. It will include my findings as to those events, and I will indicate any significant differences in the evidence. 
7.	The action was commenced on 17 February 2003, the last day of the limitation period relevant to these claims. Although there was an angry meeting between the parties in the week after the appointment of the administrative receivers in February 1997, there was no intimation of claims against Poppleton & Appleby until a letter before action in November 2002. 
8.	The main consequences of this delay have been a lack of any direct recollection of the relevant events by a number of witnesses who gave oral evidence and the absence of most of the Bank’s internal documents which had been destroyed. However, there remains a significant number of contemporary notes and other documents which enable the sequence of events to be pieced together in some detail. In particular, the Companies accountant, Kevan Tingle, made short notes of all telephone conversations which state their date and time. A solicitor engaged at a late stage by Mr Wade, James Powell, also made attendance notes of those meetings which he attended and of his telephone conversations. There are also other contemporaneous notes. Most of the witnesses were dependant on notes and other documents for their evidence. Not surprisingly Mr Wade had more independent recollection than Mr Priestley. For Mr Priestley the meetings and conversations concerning Mr Wade and the Companies were just part of his ordinary business and he had virtually no independent recollection. For Mr Wade, however, this was a unique and traumatic period when he saw the business which he had built up over many years collapse. Even in Mr Wade’s case, however, I am satisfied that his recollection is by no means perfect. Over six years after the relevant events, it is very difficult to be sure in differentiating one meeting from another. He also had a tendency to express himself as being absolutely positive or 100% certain on matters where it later became clear that his recollection was wrong. He was not deliberately wrong in his evidence, and indeed he frequently accepted points which were against him or admitted it when he could not remember. Nonetheless, perhaps because of a strong sense of grievance and brooding over the events in the intervening years, I formed the view that he had come to believe in a particular version of certain events which was not in fact correct. The same applies to Mrs Wade who, like her husband, was in many ways a strong and impressive witness but whose recollection was also at fault in certain respects. Mr Tingle had little memory of precise events and Mr Powell readily acknowledged that he had none. 
Background
9.	Mr Wade started and built up the business of Wade & Hotson over many years as a result of his own considerable technical skills and the hard work of himself, his wife and others working in the business. At all times the business was operated from South Yorkshire. Mr Wade trained as a welder after leaving school. In 1966 he met Ron Hotson, a mechanical fitter, and they set up in business together, forming Holding Co as a trading company in November 1966. The business involved pipe fabrication. Their first premises was a shed in Mr Hotson’s back garden, an arrangement which caused some surprise to a representative of British Nuclear Fuels when he insisted on inspecting their "manufacturing facilities". The first formal trading premises were acquired in the late 1960’s and by mid 1970’s the company had a firm foothold in the steel fabrication market with a number of major clients including the Central Electricity Generating Board, British Nuclear Fuels and ICI. The company’s work was at the specialist end of the market, involving complex tube bending, the manufacture of high pressure systems and boilers and even construction of an entire gas-fired power station excluding the turbines. Unlike many competitors, the business could offer a full range of on-site installation services as well as the manufacture of products. It is clear from the unchallenged evidence of a number of people who did business with Mr Wade that he and his company were held in high regard for their technical expertise and innovation. 
10.	In the early 1980’s ill health forced Mr Hotson to retire and his shares were bought by Mr and Mrs Wade. They have since then been the only shareholders, with Mr Wade owning 59,500 shares and Mrs Wade owning 6,500 shares. 
11.	The business continued to expand, with the support and assistance of the Bank. At all times the Companies banked with the Firth Park branch in Sheffield. In the mid-1970’s Holding Co purchased land on a trading estate in Rotherham and built a factory. By the early 1990’s the business had outgrown those factory premises, in some cases manufacturing boilers and power generation equipment so large that it was difficult to manoeuvre them out of the factory without severe traffic problems. In August 1991, Holding Co purchased the first of two properties which feature in this litigation. Rockingham House, Wentworth Industrial Park, Tankersley, Barnsley ("the Barnsley Property") comprised 23,000 square feet of factory space and 13,000 square feet of offices. It also included an adjacent two acre site on which Mr Wade intended to erect much larger manufacturing facilities. The purchase price was funded from the sale of existing properties, working capital and a loan of £500,000 from the European Coal and Steel Community arranged through 3i plc ("the 3i loan") which was guaranteed by the Bank. 
12.	Mr Wade had identified a factory unit in a Sunderland shipyard, purchased and dismantled it and moved it to the Barnsley Property for erection on the two-acre site, when a property at Fenton Road, Rotherham ("the Rotherham Property") came on the market. It offered 50,000 square feet of purpose-built fabrication facilities, with the particular advantage for the Wade & Hotson business of an exceptional eaves height enabling virtually anything, including power stations, to be constructed in it. The business had just received a substantial order for a new power station, which required larger premises than the existing factory at the Barnsley Property and Mr Wade calculated that he would save about £500,000 by purchasing the Rotherham Property rather than erecting a new facility at Barnsley. The Rotherham Property was accordingly purchased for £525,000 funded by working capital, a loan of £378,000 from West Bromwich Building Society secured by a first charge on the property and a grant of £75,000 from the Department of Trade & Industry (previously earmarked for the proposed construction works at the Barnsley Property). 
13.	Both properties were purchased by Holding Co. Trading Co had been established in 1988 to carry on the business and from then on Holding Co acted as holding company, owning properties used in the business and receiving a management charge to cover its own outgoings, which included Mr Wade’s remuneration. It was explained in evidence that the purpose of this arrangement was to insulate the property assets from the trading business, so that in the event of failure of the business Holding Co and hence its shareholders would retain the properties. Critically for the events in issue in this action it was not possible to implement this policy fully, as the Bank required cross guarantees and debentures from each company. 
14.	The audited accounts of Trading Co for the years between 1991 and 1995 show a trend of rising turnover but declining profitability. From pre-tax profits of £330,650 on a turnover of just under £2.4 million in 1991, the results for 1995 showed a pre-tax loss of £61,204 on a turnover of £4,147,000 in 1995. In the intervening years there had been profits of £220,698 in 1992 and £57,324 in 1994 and a loss of £73,556 in 1993. Over the same period the net assets of Holding Co stated in its audited accounts declined from £680,807 to £423,044. 
15.	These results reflected the combined effects of more difficult trading conditions with increased outgoings, associated partly with the two property acquisitions. They resulted in a deteriorating position as regards bank borrowings. By May 1995 the Bank had identified Trading Co as a problem account. Its difficulties included a failure to pay an instalment of £21,000 to 3i on the loan guaranteed by the Bank, and it was referred to the Bank’s "intensive care unit". The overdraft facility was temporarily increased by £150,000 to £675,000 in June 1995 against a personal guarantee by Mr and Mrs Wade limited to the temporary increase. The temporary facility was repaid by November 1995. A new overdraft facility for both companies with an aggregate net debt limit for both companies of £575,000 and a maximum aggregate gross overdraft limit of £675,000 was put in place on 03 November 1995, to expire on 31 March 1996. The Bank, as guarantor of the 3i loan, was concerned to learn in November 1995 that Holding Co was unable to meet the first capital repayment of £125,000 due at that time. Agreement was reached with 3i for it to be rescheduled and paid over the following 12 months. The group overdraft facility was renewed on 18 April 1996 with the same limits as before. This facility letter remained in force until the appointment of administrative receivers on 21 February 1997. The evidence of the Companies’ accountant, Mr Tingle, was that the Bank closely monitored the position of the Companies from May to September 1996 but after a meeting between Mr Wade, Mr Tingle and representatives of the Bank on 9 October 1996 their interest lessened. At the meeting the Bank requested a further cash flow and year-end accounts by mid-January 1997. An internal Bank credit memorandum dated 10 July 1996 noted that while the Companies’ position was not entirely satisfactory and that they were still facing difficulties, there was a vast improvement on the position six months earlier. 
16.	A concern raised by the Bank’s representatives at the meeting on 9 October 1996 was the over-reliance of Trading Co on one source of business, Nooter Eriksen Limited, a wholly-owned subsidiary of a US corporation. A schedule of orders as at December 1995 produced for the Bank had shown that six out of eleven orders had been placed by Nooter Eriksen, with an aggregate value of £3,412,000 out of a total of £4,600,000 for all orders. The largest order related to Conoco which was carried out in 1996 with payments being made during that year. Two linked orders placed by Nooter Eriksen in August 1996 precipitated the problems which led ultimately to the appointment of the administrative receivers. They related to power stations in Italy, Nera Montoro and Cologno Monzese. 
17.	The orders were the subject of a letter of intent dated 22 August 1996 from Nooter Eriksen to Trading Co. The letter recorded Nooter Eriksen’s intention to place sub-contracts with Trading Co at firm base prices of £1,380,352 and £788,245. Payment terms were to provide for staggered payments to follow the expenditure by Trading Co, with settlement of applications for payment being 60 days and 95% of value, with the remaining 5% being held as a retention. The "first fire" dates stipulated in the main contracts were 8 January 1997 for Nera Montoro and 13 February for Cologno Monzese. Once work started on the contracts it quickly became apparent that these dates could not be achieved. Both Nooter Eriksen and Trading Co encountered significant problems with performance of the contracts, including in particular problems stemming from the need to conform to Italian standards which differed from those in the UK. This led to very large cost overruns for both companies and in the case of Trading Co, severe cash flow problems. 
18.	The letter of intent was never replaced by formal sub-contracts. The letter was not contractually binding, except that paragraph 7 provided as follows: 
"It is agreed that in the event of a Sub-Contract not being entered into, Nooter Eriksen Ltd are prepared to accept reasonable costs incurred, in order to maintain the integrity of the Sub-Contract programme in accordance with the key dates contained within the programmes detailed in item 4 of this letter. In return Wade & Hotson Ltd agree to execute the work as if the Contract were entered and to identify all equipment and materials procured whether delivered or not".
Mr Wade and other witnesses for the Claimants were cross-examined on the basis that the absence of any formal sub-contracts left Trading Co dangerously exposed. Mr Christopher Wells, the Managing Director of Nooter Eriksen, took the view that paragraph 7 was, if anything, favourable to Trading Co because it amounted to a "cost plus" provision. In consequence, he said, Trading Co had a strong bargaining position with Nooter Eriksen because its involvement was essential to the latter’s own performance of the main contracts. Mr Wells’ evidence was also that, apart from the first order placed with Trading Co which related to a power station in Brunei, all or most of the subsequent orders had proceeded on the basis of letters of intent and no formal sub-contracts had been agreed. I doubt that the lack of a formal sub-contract contributed significantly to the problems which developed for Trading Co with respect to these orders. The cost overruns were on a scale which would have exceeded the proposed fixed prices and it may well be that the orders would on any basis have produced serious losses for Trading Co. It is certainly the case that Trading Co was exposed to the need to persuade Nooter Eriksen that its costs were reasonable and to persuade Nooter Eriksen to make payments to it. By the end of January 1997, when Nooter Eriksen made clear that it was not prepared to make further payments to Trading Co, it had paid very substantial sums to Trading Co in respect of the two Italian orders.
January to mid-February 1997
19.	It was apparent by the beginning of January 1997, and no doubt earlier, that there were disagreements between Nooter Eriksen and Trading Co as to the amounts which should be paid to Trading Co. In a letter dated 14 January 1997 Nooter Eriksen stated that its assessment of the progress on the Italian orders and the Conoco order fell short of Trading Co’s own assessment. It released £200,000 on 10 January 1997 instead of the full amount claimed. It made clear that it intended to honour its "obligation to cover justifiable expenditure over and above the agreed budget, if this is of re-assurance", but warned 
"At the moment we believe we have released monies within 30 days of invoice and at times almost immediately but cannot release monies in advance of progress without N/E Inc agreement, which is not likely without much further analysis, certainly not for the amounts of money required over a very short duration".
20.	A meeting was held on 14 January involving representatives of Nooter Eriksen, Mr Wade and Mr Robert Bramhill, the other Director of Trading Co, to discuss the difficulties on the Italian orders and Trading Co’s need to receive payments. Some reassurance was given by Nooter Eriksen representatives and in a letter dated 15 January it confirmed that paragraph 7 of the letter applied and continued 
"In consideration of unanticipated difficulties on the project we have made payments to you in advance of the due dates and will consider continuing to do so during the critical stages of the project. To enable us to assist in this manner we will of course require you to continue to provide detailed accounts information as agreed.
We trust this gives you the necessary re-assurance to maintain your full commitment to the projects".
At the meeting Nooter Eriksen was sympathetic to Trading Co’s cash flow situation and undertook to release an immediate payment of £100,000 and agreed to release a further £304,000 during the remainder of January. A letter dated 17 January 1997 from Nooter Eriksen summarising the discussions recorded that neither party was at that stage able to determine reasonable costs to date on the Italian orders, and that further detailed discussions would take place at a later date. While making clear that any payment would have to be made against demonstrable progress, it was also stated that
"It is our intention to assist you in trying to manage the situation, recognising that you had a substantial amount of creditors before making any commitments or expending any costs on these contracts and a difficult task ahead due to lack of load of work"
The undertaking to release further funds together with the generally supportive attitude shown by Nooter Eriksen at the meeting and in these letters reassured Mr Wade who believed that the difficult position faced by Trading Co could be managed.
21.	There was a stark change of attitude at a further meeting with Nooter Eriksen on 28 January 1997. For Trading Co it was stated that the additional costs not covered by payments to date were £920,000 on the Italian orders and £211,000 on the Conoco contract. Mr Wells made it clear that the US parent company was not sympathetic to Trading Co’s position and that no further monies would be released in the near future. 
22.	Mr Tingle’s contemporaneous notes include the following: 
"Thinks no future if pay further funds. W & H life elongated but suggests go into liquidation and come back in three months after shedding problems."
In evidence Mr Tingle said that this recorded a comment by Mr Wells. Mr Wade’s evidence is that in a private conversation between Mr Wells and himself at this meeting, Mr Wells also said that he would renegotiate the terms of the Italian orders with Holding Co if Trading Co became insolvent. Mr Tingle’s evidence is that after the meeting Mr Wade told him about this conversation. I will return later to this aspect of the matter.
23.	This meeting was a turning point. Until then Mr Wade and Mr Tingle believed that Trading Co could cope with its financial difficulties, but this depended on the continued release of payments by Nooter Eriksen. With the change of attitude by Nooter Eriksen, there was no readily available source of funding for Trading Co or, as Holding Co was funded by management charges made to Trading Co, for Holding Co. 
24.	The intention had been at the end of January to have a meeting with the Bank at which a cash flow forecast from February 1997 could be presented. The forecast, however, was in turn dependant on agreement with Nooter Eriksen as to payments to be made. The Bank continued to be concerned that Holding Co had not paid the first capital repayment to 3i. It had been in correspondence with Mr Tingle in December about the overdraft and the financial position of the companies, enquiring whether there were problems with creditors and whether they were up to date with their PAYE and NIC payments. Mr Tingle’s evidence was that they were probably not up to date with those payments. 
25.	Following the meeting with Nooter Eriksen, Mr Tingle pointed out to Mr Wade the extremely vulnerable position of Trading Co and that insolvency was a very real possibility. He advised Mr Wade that he should seek advice from an insolvency practitioner. Mr Wade sought that advice from a company called Phillip James plc, which carried on business as insolvency practitioners. Mr Wade had previously dealt with Phillip James plc in relation to the liquidation of a non-trading subsidiary, Wade & Hotson (International Construction) Limited. Stuart Davies, a director of Phillip James plc, advised that Holding Co was solvent but that there should be an application to the Court for an Administration Order for Trading Co, with a view to a company voluntary arrangement. During the first ten days or so of February there were discussions involving Mr Wade, Mr Tingle and Mr Davies and information was provided for the preparation of the application. Mr Tingle thought that the cash flow forecasts underpinning the advice to promote a creditors’ voluntary arrangement were overly optimistic. Mr Davies warned Mr Wade that Trading Co might need to arrange some form of bridging finance if both companies were to survive and on about 10 February Mr Davies made a personal offer of a loan of £400,000 to Holding Co. Mr Wade was very surprised to receive an offer of finance from Mr Davies personally rather than from a bank or other commercial lender. Mr Tingle advised that under no circumstances should Holding Co accept the loan. He advised that the terms were prohibitive, involving interest payable at a rate of 0.5% per week, an arrangement fee of 6.75% payable on drawdown and a redemption fee of 6.75% payable on repayment. 
26.	Although Mr Wade lost trust in Mr Davies and Phillip James plc as a result of this offer, he did not immediately reject the offer and work continued on the possible application for an administration order. Mr Wade continued to seek alternative sources of finance. During February he had discussions with a number of different parties. The most important for the purposes of this case was Mr Tony Lavin. In addition, he had continuing discussions with Mr Paul Ross who ran a metal dealing company called CAS Industries Limited with which Trading Co did some business. As discussions continued the idea evolved that there might be some sort of joint venture between Trading Co or more probably a successor company and CAS Industries Limited, which would take over and complete the Italian contracts. Mr Wells of Nooter Eriksen became involved in these discussions and appeared supportive of the idea, indicating that Nooter Eriksen might be willing to make an advance payment for future work under the contracts. These discussions continued after the appointment of administrative receivers on 21 February. It has not been suggested that a joint venture with CAS Industries Limited would have provided a solution to the financial problems of Trading Co or Holding Co. 
27.	There were also discussions with Irwin Mitchell & Co, a firm of solicitors, and a financial broker about the possibility of an advance from a commercial lender called Davenhams, but no firm offer was received. They were interested in loans in excess of £500,000, would charge interest at a rate of 20% APR and would require a first charge on the properties. The time needed for their decision-making process in any event meant that finance would not be available from them within the timescales required by the Companies. 
28.	It was through Mr Ross that Mr Wade met James Powell, a partner in Graysons, a firm of solicitors. Graysons were Mr Ross’ solicitors and it was in that capacity that Mr Wade first met Mr Powell on 13 February. Later, when Mr Wade was dealing with Poppleton & Appleby, Mr Powell acted as solicitor to the Companies and to Mr and Mrs Wade. Mr Powell was alive to the potential conflict of interest which faced him and was careful to ensure that no problem in fact arose. 
29.	By mid-February, the financial position of Trading Co had seriously deteriorated. Significant numbers of creditors were not being paid. At least nine writs were issued by unpaid creditors in late January and February. Statutory demands were served by unpaid creditors on 11 February and 13 February and a winding-up petition was threatened by a further unpaid creditor on 14 February. On 13 February a winding-up petition presented by Pipelines International Limited for an undisputed debt of £88,524 was served on Trading Co. Notice of its presentation had been given on 10 February. By 24 February there were supporting creditors of some £160,000, although it had yet to be advertised. 
30.	On 17 February Mr Wade had a meeting with Mr Powell and gave formal instructions to see what could be done with regard to the debts of Trading Co. He gave Mr Powell copies of various writs and acknowledgements of service and the winding-up petition. He also gave copies of Mr Davies’ loan offer and other documents prepared by Phillip James plc in relation to the possible application for an administration order. Mr Powell advised Mr Wade that before proceeding with these proposals he should consult Poppleton & Appleby. 
31.	Immediately after this meeting Mr Wade spoke to Mr Tingle who made a note of the conversation. It is apparent from this note that Mr Wade had thought that, whatever the problems with Trading Co, Holding Co was in a secure position. He thought that he had sorted out Holding Co’s position with the Bank by obtaining a promise of a further £300,000 from Nooter Eriksen. Mr Tingle explained that if Holding Co’s overdraft was cleared with funds obtained from Trading Co there would be a resulting liability from Holding Co to Trading Co. Mr Tingle also explained that because a press shop had been built at the Rotherham Property using Trading Co labour, there was a liability of £110,000 from Holding Co to Trading Co. Mr Wade’s immediate reaction was to think that the situation was hopeless. This must have related to both companies. However, Mr Wade mentioned a possible offer of finance from Mr Lavin and also that he might have someone interested in finishing the Nooter Eriksen contract with him and renting the Rotherham Property. 
32.	In a telephone conversation the following morning, Mr Wade reported that he had no loans available. Mr Wade asked Mr Tingle if there was any way of making the liability of £110,000 disappear and Mr Tingle advised that it could only be done by increasing the management charges paid by Trading Co. 
33.	Mr Wade had a meeting with Mr Paul Ross and Mr Powell on the morning of 18 February, followed by a meeting with Mr Ross and Mr Wells of Nooter Eriksen. At this stage Mr Wade was still considering a joint venture with Mr Ross and the meeting with Mr Wells was to discuss the basis on which the Italian contracts might be continued. Mr Tingle made a note of a telephone conversation with Mr Powell at 10.30am which records Mr Powell as saying that Nooter Eriksen considered that only £300,000 was due to Trading Co and that they were happy with the work and wanted Wade & Hotson to continue, but that "Trading Co is unlikely to carry on". The possibility of a meeting with Poppleton and Appleby that afternoon was mentioned. 
34.	There is no documentary evidence of the discussions at the meeting with Mr Wells. However, it seems clear from Mr Wells’ oral evidence that from the time of the meeting on 28 January, Nooter Eriksen was not prepared to continue dealing with Trading Co. He regarded its demand for £900,000 as having no justification. He thought it likely that it would go into liquidation and his instructions from the US parents were not to make further payments to it. They envisaged that the contract could be completed by a different company controlled by Mr Wade. In his witness statement, Mr Wells states that he had an agreement with Mr Wade that "his holding company" would complete the Italian contracts. Mr Wells expanded on that in his oral evidence and said that he anticipated that the contracts would be completed by Holding Co and that the US parent would have agreed a down-payment of about £300,000 to Holding Co on account of work to be done. Mr Wade’s evidence was that Mr Wells told him privately at the end of the meeting on 28 January that he was prepared to make a significant sum available to either Holding Co or a new trading company to enable the contract to be completed. In his witness statement, Mr Tingle states that Mr Wade told him that Mr Wells promised to negotiate the Italian contract with Holding Co. Contemporary notes by Mr Tingle and Mr Powell which reflect comments made by Mr Wade or Mr Wells suggest that a new company rather than Holding Co was envisaged for this role, but I do not consider that in the end this much matters. What is clear is that any payment by Nooter Eriksen would only be a down payment for work to be done. 
Poppleton & Appleby’s involvement: 18-20 February 1997
18 February 1997
35.	Mr Wade, Mr Tingle, Mr Powell and Mr Ross met at Mr Powell’s office early in the afternoon on 18 February. The main topic discussed was the position in relation to the winding-up petition. Mr Powell reported that the petition was being transferred from the Stoke-on-Trent County Court to Barnsley County Court. It seemed that it could be advertised on Friday 21 February but as papers had not yet been received in Barnsley he could not confirm it. Mr Powell recommended that there should be a meeting with Poppleton & Appleby as soon as possible. Mr Wade agreed and Mr Powell rang Mr Priestley and fixed a meeting at Poppleton & Appleby’s offices for 3.30 that afternoon. 
36.	The meeting with Mr Priestley lasted about an hour. It was attended by Mr Wade, Mr Tingle and Mr Ross and by Mr Priestley as the partner in Poppleton & Appleby who was to deal with the matter. This was the first contact that Mr Priestley had with Mr Wade, the Companies and their financial problems and he started the meeting with no prior knowledge. All the witnesses are agreed that there was no discussion at the meeting or at any later meeting as to the identity of the clients for whom Mr Priestley was acting. Mr Priestley says that he assumed he was acting for the Companies, whereas Mr Wade, Mr Tingle and Mr Powell all assumed he was also advising Mr and Mrs Wade personally as shareholders. I will return later to this issue. 
37.	It was essentially a briefing meeting for Mr Priestley. He was told something of the financial problems facing Trading Co and in particular that a winding-up petition had been presented which might be advertised on Friday 21 February. It was realised by all concerned that Trading Co might well not survive and that it might be difficult to avoid the appointment of receivers by the Bank. It was clear that Mr Wade’s main concern was, if possible, to save Holding Co. Mr Priestley advised that in order to have the best chance of persuading the Bank not to appoint a receiver over Holding Co, it was important to prepare a package of information and proposals to put to the Bank. Mr Priestley also advised that it was important to approach the Bank before the winding-up petition was advertised. This was for two reasons. First Trading Co’s bank account would be frozen as a result of the advertisement. Secondly, the Bank would be concerned if the first it heard of the petition was through advertisement rather than being told directly. It was appreciated by all present that as the petition might be advertised that week, an approach to the Bank was a matter of urgency. 
38.	Mr Priestley was given some explanation as to the position regarding the Italian contracts. He was told that Trading Co was owed some £750,000, but that there was no formal contract for the work. He was told that Nooter Eriksen was desperate to complete the power stations in Italy on time and that it might be possible for Trading Co to continue with the work but it was clear that there would have to be a very significant payment on account in the meantime. Mr Wade did not tell Mr Priestley about his discussions that morning with Mr Wells involving the possibility of continuing the Italian orders in a new company or in Holding Co or that Mr Wells had indicated that Nooter Eriksen was prepared to make a payment in the order of £300,000 on account. Mr Priestley’s evidence on this, which I accept, is that he would have been concerned that this would involve the diversion to a different company of money due to Trading Co. 
39.	Mr Priestley was told about the two properties owned by Holding Co and about an expression of interest from a company called Elder Steel to purchase the Barnsley Property for £950,000. It is likely that the amounts due to the Bank and secured on the properties, as well as on the other assets of Holding Co and Trading Co, were discussed. At this meeting and with very limited information, Mr Priestley was uncertain whether Holding Co was solvent. 
40.	There was probably some discussion of outside sources of finance. The possibility of an offer from Mr Lavin may have been mentioned but if not mentioned at this meeting on 18 February it was raised at the next meeting which was held the following morning. There was however no suggestion at this meeting, or indeed at any other meeting, that Mr Priestley should become involved with Mr Wade’s attempts to raise finance. Mr Priestley’s role at this point was to deal with the Bank with a view to avoiding a receivership of Holding Co and Mr Wade agreed in evidence that essentially Mr Priestley’s role did not change after this meeting. There was no suggestion at this meeting, nor at any other time, that Mr and Mrs Wade might personally put funds into Holding Co, nor did Mr Priestley at any time mention it as a possibility. As will appear, the lack of any prompting by Mr Priestley lies at the heart of the negligence case. 
41.	It was agreed therefore that information and proposals to put to the Bank would be prepared as a matter of urgency and that a meeting would be arranged with the Bank. The aim would be to try to persuade the Bank that Holding Co could survive. Mr Priestley agreed in evidence that Mr Wade made it clear that he wanted to be involved in the approach to the Bank and I accept that Mr Wade understood from Mr Priestley that he would be able to review and comment on a draft of the proposals prepared for the Bank. It was agreed that a further meeting should take place at 8.30 the following morning to provide more information for the purpose of preparing proposals to the Bank. 
42.	It was also agreed that Mr Powell should write to the petitioning creditor’s solicitors with a view to persuading them at least to delay the advertisement of the petition. Mr Powell faxed a fully reasoned letter to the solicitors on 19 February. As Pipeline International’s debt was not disputed, there was no legal bar to a winding-up order, but in his letter Mr Powell relied on the transfer of the petition from Stoke-on-Trent to Barnsley and on commercial considerations as reasons why advertisement should be delayed. 
43.	Later on 18 February, after the meeting with Mr Wade, Mr Priestley spoke by telephone to William Ballman, a partner in Addleshaw Booth & Co. They are a firm of solicitors who were the main legal advisors to the Bank and regularly acted for receivers appointed by the Bank. Mr Priestley has no direct recollection of the conversation but Mr Ballman made a contemporaneous note and Mr Priestley does not dispute its accuracy. In his witness statement and in his oral evidence, Mr Priestley said that the purpose of the call was to enquire whether the Bank would be likely to allow Holding Co to survive if it appointed receivers to Trading Co. It is unlikely that this was the purpose of the call. It is not mentioned in Mr Ballman’s note and it was in fact the purpose of a further call made the next day to Mr Ballman. There has been no clear explanation for this call. There was no suggestion in the evidence that Mr Priestley mentioned to Mr Wade that he intended to call Mr Ballman or asked for his consent to do so. Nor is there any evidence that he ever told Mr Wade that he had made the call to Mr Ballman. 
19 February 1997
44.	The main purpose of the meeting at Poppleton & Appleby’s offices which started at 8.45 on Wednesday 19 February was to provide more information for the package to be prepared for the Bank. It was attended by Mr Wade, Mr Tingle, Mr Priestley and one of his partners Phillip Revill whose role was to draft the proposals. Mr Revill’s notes of the meeting record that he was given details of actual and contingent liabilities to the Bank, some information about the Italian orders, that £950,000 of extra expenditure had been incurred but only £100,000 was recognised by Nooter Eriksen, and details of other assets and liabilities. His notes record that he was told that Mr and Mrs Wade had previously provided personal guarantees in favour of the Bank for £75,000 each. 
45.	There was general agreement at this meeting that there was no alternative but for Trading Co to go into receivership, and it was the evidence of Mr Tingle and Mr Wade that Mr Priestley indicated that partners in Poppleton & Appleby might well be appointed as the receivers. There was discussion that a new company would need to be formed for future contracting work, and some discussion of the position as regards the outstanding contracts with Nooter Eriksen. 
46.	Offers or indications of outside finance were discussed. The notes of both Mr Tingle and Mr Revill contain reference to Mr Ross. Although not mentioned in the notes, the participants at the meeting are agreed that an offer of finance from Mr Lavin was also mentioned. The offer was not in writing and Mr Priestly understood that it was still in the course of negotiation. I will deal later with the discussions of Mr Lavin’s offer. 
47.	The strategy at this meeting remained to put together a package of information for the Bank with a view to persuading it not to appoint receivers over Holding Co so as to enable the indicated offer for the Barnsley Property from Elder Steel to be pursued. Mr Priestley expressed the view that Holding Co was probably solvent and should survive, if the Bank did not appoint receivers over it. Although an approach to the Bank had to be made urgently, Mr Wade did not want to meet the Bank until he had written confirmation of Mr Lavin’s offer. Mr Tingle agreed in evidence that the Lavin offer was seen as a fall back position, or a lending of last resort, to pay off the Bank if the Bank would not stay its hand. Mr Wade made it clear that he wished to be involved in any approach to the Bank and it was understood by all that a draft of the proposed report or letter to the Bank should first be seen by Mr Wade and Mr Tingle. 
48.	Following the meeting Mr Revill started work on the letter to be sent to the Bank and made telephone calls to Mr Tingle for further information in the course of the morning. Mr Priestley gave oral evidence, which is not challenged, that he made an appointment with the Bank for 9.30am on Friday 21 February, which appears as an entry in his diary. 
49.	Early in the afternoon Mr Powell rang Mr Wade to say that the winding-up petition had been transferred to Barnsley County Court and that there was now every likelihood that the petition would be advertised on Friday 21 February. Mr Wade passed this information on to Poppleton & Appleby and to Mr Tingle. There is a difference of evidence between Mr Wade and Mr Priestley as to their reaction to this development. Mr Wade’s evidence was that he told Mr Priestley that he no longer wanted to wait for a formal offer of outside finance but instead wanted to see the Bank as soon as possible and that Mr Priestley was against doing so until the report had been finalised and sent to the Bank. Mr Priestley’s evidence was that he urged that they should see the Bank as soon as possible but that Mr Wade wanted more time to pursue outside finance. I am inclined to accept Mr Wade’s version, but nothing turns on this difference, as a meeting was held with the Bank’s representative the next day. Looked at objectively, both finalisation of the report to the Bank and obtaining a written offer from Mr Lavin were good reasons for waiting a day before meeting the Bank. 
50.	Mr Revill completed the draft of the letter to the Bank which was faxed to the Bank in the afternoon on 19 February. Mr Priestley gave evidence that he believed that he would have shown it to Mr Wade and Mr Tingle before sending it, but they gave evidence that they did not see it. There was no further meeting with Mr Priestley on 19 February so it would have been necessary to send it to them. If a copy had been sent to Mr Wade or Mr Tingle, they would certainly have discussed it and one or both of them would have been likely to remember it. It is also highly likely that a copy would be on Mr Tingle’s files together with a note of any discussions of it with Mr Wade, Mr Priestley or Mr Revill. There is no copy of it or any reference to it in Mr Tingle’s files and I find that it was not sent or shown to him or to Mr Wade. Mr Priestley has no recollection of what happened and therefore no explanation for this omission but I think it likely that given the urgency of the situation Mr Priestley overlooked the need to send a draft to Mr Wade and Mr Tingle, or perhaps assumed that Mr Revill had already done so. It has not been suggested that Mr Priestley deliberately kept Mr Wade in the dark about the contents of the letter. Criticisms are made of the letter which I will consider later in this judgment. 
51.	One oddity of the letter is that it begins with the words "Further to our meeting to discuss the affairs of the above named companies", suggesting that Mr Priestley had already had a meeting with Mr Macdonald, the relationship manager. Mr Wade did not see this letter until these proceedings and these words not unnaturally led to suspicions that Mr Priestley had dealings with the Bank unknown to him. It is, however, now clear that there was no prior meeting and Mr Revill believes that he was intending to refer to the meeting arranged for 9.30am on 21 February. In the circumstances I think it the most likely explanation. 
The Lavin Offer
52.	A written offer from Mr Lavin was received by Mr and Mrs Wade in the evening on 19 February. The original of Mr Lavin’s letter was brought to them at home by a mutual friend, Phil Acres. It was signed by Mr and Mrs Wade and taken away by Mr Acres to be returned to Mr Lavin. It is common ground that Mr Wade had a copy of the letter with him at the meeting on 20 February and showed it to Mr Priestley. There was, however, a dispute as to whether that copy had been signed by Mr and Mrs Wade. Mr Wade said that he was absolutely positive that it was signed by them, whereas Mr Priestley believed it was not. This led to some detailed exploration in cross-examination of the precise circumstances in which this copy of the letter was obtained by Mr and Mrs Wade, which involved contradictory accounts being given by them. This dispute has no bearing on the issues in this case and in closing it was accepted on behalf of Mr and Mrs Wade that the probability is that the copy of the letter at the meeting had not been signed by them. 
53.	Mr Lavin’s offer is central to Mr and Mrs Wade’s case and I shall therefore set out its terms in full. It is addressed to "Mr and Mrs Wade, Wade & Hotson (Sheffield) Limited" and reads as follows:- 
"Dear Mr and Mrs Wade,
SUBJECT TO CONTRACT
WENTWORTH WAY AND FENTON ROAD ("THE PROPERTY")
Further to our meeting and subject to the conditions referred to in this letter, my wife and myself are prepared to purchase Wentworth Way, for the sum of £560,000 and £420,000 for the purchase of Fenton Road. Total £980,000.
We will grant to you an option to repurchase the properties for a maximum period of three years, however should you repurchase the properties within six months an arrangement fee of £50,000 will be payable, if later than six months a monthly arrangement fee of £8,333 will be added to the arrangement fee of £50,000.
Our Solicitors setting out all the principal terms of the purchase will prepare the Agreement and this must be entered into in a form entirely acceptable to Eversheds, our Solicitors, prior to the completion of the Agreement. The principal conditions of our offer are as follows:-
1.	We are to receive a valuation in our favour, prepared by Valuers who will be appointed by us but paid for by you. The matter will only proceed if the Properties are valued at £1,300,000 or more. 
2.	If this transaction does not proceed for whatever reason and in any case if you sign this offer letter but do not complete the agreement, you shall pay a cancellation fee of 2.5% of the total offer, plus a further sum equivalent to the costs and expenses we have and will incur to the date that the transaction shall be terminated. 
3.	You agree to rent the properties at £11,933 per month paid in arrears. 
4.	If you accept these conditions, please sign and return this letter as provided for. If your signed approval of the terms of this offer shall not have been returned to us by 12.00pm Thursday 20th February 1997 this offer shall lapse. 
5.	Your liability in respect of your obligations to us as a result of the conditions set out in this letter or otherwise shall be joint and several. 
6.	We reserve the right to require any further conditions which may become necessary. 
7.	This letter is governed by English Law but save for the obligation contained at clause 2 hereof, the provisions contained herein are entirely subject to Contract and you will pay the commitment fee costs and expenses referred therein if this transaction does not proceed. 
8.	Signing this letter will create legal obligations. We would recommend that you take legal advice regarding the terms of this letter. However, it is entirely up to you whether you decide to do so. 
9.	You will be required to pay my legal fees, at the time of drawdown. 
Yours faithfully
Mr AT Lavin
We Mr and Mrs Wade hereby agree to the terms of your offer set out above and in consideration of your proceeding I agree to be responsible for the cancellation fee referred to above in the event that I do not take out the loan."
There are then spaces for Mr and Mrs Wade’s signatures and a date.
54.	It is convenient to give here a little background to Mr Lavin’s offer. Mr Lavin was one of the possible sources of finances approached by Mr Wade during February 1997, after it was clear that Nooter Eriksen were not prepared to make further payments and Mr Wade realised that Trading Co was in a precarious position. He was recommended to Mr Lavin by Mr Acres, who told him that Mr Lavin was sometimes able to lend large sums, albeit at high rates of interest. Mr Wade met Mr Lavin on Saturday 8 February and explained the position, including Holding Co’s ownership of the Properties and the amounts secured against them. Mr Lavin explained that it was his policy to structure his money lending transactions by taking legal title to properties, free of any legal charges, with an option in favour of the borrower to repurchase within a stipulated time. Mr Lavin says in his witness statement that he makes clear to those that approach him that he is a lender of last resort. 
55.	Within the next week or so Mr Wade met Mr Lavin again and showed him valuation reports on the Properties provided by Weatherall Green & Smith in December 1996. Mr Lavin said that he was satisfied that the Properties provided sufficient security for an advance of £980,000. In his witness statement Mr Wade says that he pointed out to Mr Lavin that he would be left with only a few thousand pounds for working capital and asked Mr Lavin whether he was prepared to make a further £300,000 available. He says that his recollection is that Mr Lavin agreed to this, but Mr Lavin does not recollect this and believes that, while Mr Wade may have raised the issue informally in some way, he may have misinterpreted a neutral response from Mr Lavin. He would only have agreed to make such further sum available against additional security such as Mr Wade’s house. It is clear that Mr Lavin did not agree to any such proposal. 
56.	Discussions continued between Mr Wade and Mr Lavin on 17-18 February and by 19 February Mr Wade had concluded that, if it was necessary to pay off the Bank, Mr Lavin was likely to be the only available source of finance available within the time needed. Mr Lavin as a possible source of finance to repay the Bank was discussed with Mr Priestley, perhaps at the first meeting on 18 February but more probably at the meeting in the morning of 19 February. 
57.	At that meeting there was no written offer or proposal from Mr Lavin. It was common ground that the basic elements of an offer of finance from Mr Lavin, i.e. a sale of the Properties to Mr Lavin for a total price of £980,000 with an option in favour of Holding Co to repurchase, was made known to Mr Priestley at the meeting on 19 February. It is common ground on the pleadings that Mr Priestley advised at that meeting that the Lavin offer was open to challenge in a liquidation of Holding Co as a possible transaction at an undervalue unless all creditors of Holding Co were paid in full. Mr Wade gave evidence confirming this in a witness statement in an interim application in these proceedings. However, in his oral evidence, Mr Wade insisted that Mr Priestley did not give this advice at the meeting on 19 February and that it was only towards the end of a meeting on 20 February that he gave this advice. Mr Priestley confirmed in his evidence that he thought he gave this advice at the meeting on 19 February as well as on 20 February. 
58.	In my view the resolution of this issue of timing is directly linked to the point at which the basic terms of the Lavin offer were made known to Mr Priestley. The Lavin offer involved a sale of both the Properties for £980,000 when, as Mr Priestley had been told, Elders Steels had expressed interest in purchasing just the Barnsley Property for £950,000. Whether or not there was an option to repurchase, there was a clear risk that a sale to Mr Lavin on these terms would be open to challenge as a transaction at an undervalue. This was obvious to Mr Priestley as an insolvency practitioner and he also knew that the only safe way of undertaking it was to ensure that all liabilities were discharged. There is no suggestion that he himself needed first to obtain advice on these points before advising Mr Wade. It appears to me very likely that he gave this advice to Mr Wade as soon as he was told the basic features of Mr Lavin’s offer. If, as appears to be accepted by both parties, he was told those features at the meeting on 19 February it is in my view likely that he first gave his advice at that meeting. The advice did not however deter Mr Wade from obtaining Mr Lavin’s offer in writing. No doubt until it was in writing, there would be doubts as to whether Mr Lavin was seriously prepared to provide finance and as to the exact terms on which he would do so. 
20 February 1997
59.	First thing in the morning on 20 February Mr Priestley rang the Bank to enquire whether it had received the letter from Poppleton & Appleby. He was told that Coopers & Lybrand, the accountancy firm, was involved for the Bank in dealing with the Companies and that he should send a copy to them. Mr Priestley rang Mr Wade and told him that the Bank had called in Coopers & Lybrand and that he wanted Mr Wade and Mr Tingle to attend a meeting. He also rang Mr Tingle whose note of the conversation recorded that the Bank wanted Poppleton & Appleby to put their proposals to Coopers & Lybrand, that the Bank did not want the Wade & Hotson account and that Mr Priestley thought that the Bank was about to freeze the account. Mr Wade agreed that this was likely to be what he too was told by Mr Priestley. They arranged to meet later that morning at Poppleton & Appleby’s offices. 
60.	The meeting at Poppleton & Appleby’s offices began at 12.15, lasted until about 2.15 and was in three phases. It started with Mr Priestley, Mr and Mrs Wade, Mr Tingle and Mr Grey and continued until 1 o’clock when Mr Dean Ardron of Coopers & Lybrand joined the meeting. He was present for 20-30 minutes and the meeting then continued without him until about 2.15. Notes of the meeting were made by Mr Priestley, Mr Tingle, Mr Grey and Mr Ardron. All those present at the meeting accepted in evidence the general accuracy of Mr Priestley’s note, subject to two points, and Mr Ardron’s note so far as it recorded discussions at the meeting, although neither of them is necessarily comprehensive. Both notes are in the form of attendance notes prepared after the meeting. Mr Tingle’s and Mr Grey’s notes were written during the meeting and are jottings of some of the points made. 
61.	There was a discussion in the first phase of the meeting about the position of Trading Co and agreement that there was no alternative to a receivership of Trading Co. There was discussion of the Italian contracts and the difficulties with Nooter Eriksen. It was agreed that the strategy with regard to the Bank should continue to be to persuade it not to appoint receivers of Holding Co for 4-6 weeks so that a sale of the Barnsley property could be pursued. It was thought that the offer for the property from Elders Steel was a strong offer but it needed to be in writing from Elders Steel. With the agreement of those present Mr Priestley rang Mr Ballman of Aldershaw Booth & Co for advice as to whether the Bank could serve demands on both companies and appoint a receiver of Trading Co but not appoint a receiver of Holding Co. Mr Ballman advised that this was possible but also said, as summarised by Mr Priestley, that he thought that "the Bank would not be agreeable to this because the Group was already in the "scheme"." The reference to the "scheme" was to a scheme very recently established by the Bank under which it engaged Coopers & Lybrand to advise on its exposure to "problem" customers and to make recommendations as to the Bank’s best course of action. 
62.	It is agreed that Mr Lavin’s offer was discussed during the meeting. Mr Wade’s evidence was that it was not discussed until the third phase of the meeting and Mr Priestley’s note clearly records a discussion of it at that stage. However, Mr Priestley’s note also records a discussion during the first phase which is likely to refer to Mr Lavin’s offer and it is accepted for Mr and Mrs Wade that it is probable that Mr Lavin’s written offer was produced and discussed in the first phase of the meeting. Having obtained Mr Lavin’s offer in writing since his last meeting with Mr Priestley, Mr Wade would almost certainly have wished to show it to Mr Priestley as soon as possible in view of its importance, and I find that it was produced during the first phase of the meeting and discussed then, as well as being discussed at the end of the meeting. Mr Grey gave evidence that the letter was never produced at any time during the meeting but that must, I think, be wrong. 
63.	It is common ground that Mr Priestley skimmed through the letter and advised that the offer, if accepted and implemented, would be open to challenge as a transaction of undervalue unless all creditors of Holding Co were paid. All are also agreed that Mr Priestley advised Mr Wade that in the event of liquidation there could be serious consequences for him personally if he proceeded with the offer. Mr Priestley mentioned proceedings for breach of fiduciary duty and may also have mentioned directors’ disqualification proceedings. Mr and Mrs Wade say that Mr Priestley warned that Mr Wade might be committing a criminal offence and could face imprisonment. These were not in fact consequences that could result and Mr Priestley denies that he mentioned them. Neither Mr Tingle nor Mr Grey has any recollection that he did so. I find that Mr and Mrs Wade are mistaken on this point. 
64.	Mr Tingle and Mr Grey also had reservations about the Lavin offer on financial grounds and advised Mr and Mrs Wade not to proceed with it. They were concerned about Holding Co’s ability to make the payments stipulated in the offer. Mr Priestley’s notes records Mr Grey or Mr Tingle referring to the offer as "out of the frying pan into the fire". Mr Grey agrees that it is a phrase which he uses and which summarised his view of the offer, and I find that he made the comment at the meeting. Mr Priestley’s note of the meeting records the reservations and advice of Mr Tingle and Mr Grey and states that "on the advice of their Accountant who was present it was felt this was not a viable alternative". It was common ground that to be accurate the note should have referred also to Mr Priestley’s advice. 
65.	At some point during the first phase of the meeting Mr Priestley rang Coopers & Lybrand to invite a representative to attend and be briefed about the position of the Companies and the proposal for Holding Co. Mr Ardron arrived at about 1 p.m. Although Mr Tingle and Mr Grey seem to have been in some doubt about Mr Ardron’s role, Mr Wade was clear that he was there on behalf of the Bank. 
66.	Mr Ardron’s note records that the background of the Italian orders from Nooter Eriksen were explained to him, together with proposals agreeable to Nooter Eriksen for a phoenix company operated by Mr Wade to complete the contracts and for an assignment of the contracts by a receiver of Trading Co. It records the proposal that receivers should not be appointed to Holding Co to allow a sale of the Barnsley property to be pursued. Mr Ardron’s response to this is recorded in Mr Priestley’s note: 
"Dean Ardron indicated he could not see any benefit to the bank doing this who were not happy with the financial affairs of the Group in total. The reason for this is that the Bank saw the holding company as the only means of recovering any funds whatsoever and saw no recovery from the subsidiary."
Mr Tingle notes Mr Ardron saying "Why not execute on both accounts" and Mr Wade recalls him saying "Why not put both down together." It was left that Mr Ardron would report back to the Bank with his recommendations and that they were likely to hear soon from the Bank as to its proposed course of action.
67.	There is one point of disagreement in the evidence in relation to the phase of the meeting attended by Mr Ardron. Mr Wade was sitting next to Mr Priestley and says that twice he mentioned to Mr Priestley that he wanted to bring Mr Lavin’s offer to Mr Ardron’s attention. He says that Mr Priestley told him not to, adding that he could get much cheaper money for him. Mrs Wade gives the same evidence. Mr Priestley denies it. Mr Grey was sitting at the other end of the table and Mr Wade says that he caught his eye and, half pulling the letter out of his pocket, gestured that he wanted to show it to Mr Ardron but that Mr Grey indicated that he should put the letter away. Mr Grey remembers this gesture by Mr Wade. I think Mr Wade may well have wished to show Mr Lavin’s letter to Mr Ardron and there is no reason to doubt that Mr Grey indicated to him to put the letter away. As to the conversation with Mr Priestley, I consider on balance it is likely that Mr Wade tried in some way to suggest to Mr Priestley that he should show the letter to Mr Ardron and that, consistently with the advice on the terms of the offer already given by himself, Mr Tingle and Mr Grey, he indicated that Mr Wade should not do so. I am however satisfied that he did not comment that he could obtain cheaper money for Mr Wade elsewhere. There is no suggestion that Mr Priestley was at any stage involved in advising Mr Wade on sources of finance or in obtaining finance for Mr Wade, nor any evidence that Mr Priestley had access to sources of finance. 
68.	It is submitted for Poppleton & Appleby that the evidence suggests that the existence of third party finance to repay the Bank was mentioned to Mr Ardron. Mr Priestley’s note records under a heading "Holding Company": 
"Looked at the offer for Barnsley and was informed that there may be someone who could take the Bank out."
Mr Ardron’s note records that
"Mr Wade indicated that he had finance available from a third party to finance initial working capital for the new company"
but does not record any mention of outside finance to repay the Bank. Finance for initial working company capital for the new company could not be an accurate reference to Mr Lavin’s offer, which was to enable Holding Co to repay the Bank. Mr Ardron’s evidence was, as one would expect, that if he had understood that Mr Wade had an offer of third party finance to repay the Bank, he would have put it in his report to the Bank and probably recommended a further meeting. The fact that he did not do so demonstrates that, if there was some reference to Mr Lavin’s offer, it was not in terms which registered with Mr Ardron as an offer from which the Bank could be repaid. This is consistent with Mr Tingle’s note of conversation with Mr Wade on 22 February 1997, which states that Mr Wade
"Thinks that if Tony Lavin deal had been put before Coopers & Lybrand on Thursday bank would not have been called. I said that it could have worried bank even more if that kind of money was being considered."
I find that while Mr Ardron was present there was no direct reference to Mr Lavin’s offer or to any offer available to repay the Bank.
69.	The meeting at Poppleton & Appleby ended at about 2pm and Mr Tingle and Mr Grey went back to their offices with Mr and Mrs Wade. Mr Tingle took the steps necessary to acquire an off the shelf company for Mr Wade as a new trading company. 
70.	Shortly before 3.30pm Mr Priestley received a call from the Bank and was told that the Bank wished to appoint receivers of both companies. Mr Priestley rang Mr Grey, told him what had happened and asked to speak to Mr Wade. The bare facts of what then followed are that at Mr Priestley’s request Mr Wade, accompanied by Mrs Wade, went to Mr Priestley’s office that afternoon and there signed board minutes for each of the Companies inviting the Bank to appoint receivers. The Bank served demands on both companies and appointed receivers of both of them the next day. 
71.	There is a sharp difference of evidence between Mr and Mrs Wade on the one hand and Mr Priestley on the other hand as to what Mr Priestley told Mr Wade and what Mr Wade understood he was signing. In short Mr Wade says that in signing the documents at Mr Priestley’s office he did not know, and Mr Priestley did not explain to him, that they were invitations to the Bank to appoint receivers or indeed that they had anything to do with receivers or their appointment. The receivers appointed were Mr Revill and another partner in Poppleton & Appleby but Mr Wade says he did not know that until after their appointment on Friday 22 February. 
72.	When Mr Priestley spoke to Mr Grey at 3.25pm he told him that the Bank had decided to appoint receivers of both companies. According to Mr Priestley’s witness statement, he then told Mr Wade what the Bank had told him and suggested that Mr Wade should come to Poppleton & Appleby’s offices to sign an invitation to appoint receivers. Mr Priestley prepared a note of this conversation which is consistent with his evidence and which is put forward as contemporaneous. A note made by Mr Priestley of his later meeting with Mr Wade was specifically challenged and the two notes are closely linked. As I explain in relation to the later note, I am not prepared to find that it was concocted nor am I prepared to do so in relation to the note of the telephone conversation. According to Mr Wade’s witness statement, Mr Priestley said that he had a couple of forms he wanted Mr Wade to sign and that Mr Wade should return to Mr Priestley’s office as quickly as possible. He made clear in cross-examination that he knew the Bank wanted to appoint receivers of both companies but repeated that Mr Priestley did not indicate that the forms to be signed related to the appointment. Mr Wade agreed that before leaving Mr Priestley’s offices there was some discussion about the Bank’s decision to appoint receivers. Mr Grey, in his witness statement, said that when Mr Wade put the telephone down he said that Mr Priestley had asked him to return to Poppleton & Appleby’s offices to sign some forms. In his oral evidence Mr Grey agreed that he had a discussion with Mr and Mrs Wade about the appointment of receivers of both companies. As for Mr Wade going back to Poppleton & Appleby’s offices he said that he could not remember Mr Wade reporting exactly what he had to go back to Poppleton & Appleby for and he was not totally sure whether Mr Wade said to him that he had resolutions to sign. Mr Tingle says in his witness statement that he never for one moment thought that Mr Priestley was asking Mr Wade to go back to his offices to sign documents requesting the Bank to appoint receivers. 
73.	I find it likely that in the telephone conversation Mr Priestley did make clear to Mr Wade that the documents to be signed were for the purposes of the appointment of receivers and I also find it unlikely that Mr Wade did not appreciate that there was at least some connection between the documents and the appointments. 
74.	After some discussion with Mr Tingle and Mr Grey and a telephone call to Mr Powell, Mr and Mrs Wade left for Mr Priestley’s offices. In the course of the written and oral evidence there was considerable disagreement as to the timing and circumstances of Mr and Mrs Wade’s visit to Mr Priestley. While Mr Priestley said that Mr Wade arrived at about 4.45 (he has no note or recollection of Mrs Wade’s attendance) and left after about 10 minutes, the evidence of Mr and Mrs Wade was that they did not get to Poppleton & Appleby’s office until after 5.30pm, that the offices were closed and in darkness and that Mr Priestley was waiting to let them in. In cross-examination Mr Wade said that they must have arrived after 5.00pm because the offices were closed. Mrs Wade accepted that her evidence as to time might be wrong but she remembered the offices were closed when they arrived. Mr Priestley gave unchallenged evidence that Poppleton & Appleby’s offices close at 5.30pm. 
75.	I am satisfied that Mr Priestley’s evidence on this question of time is correct. There is a handwritten note by Mr Bramhill, who had been Managing Director of Trading Co, of a meeting on 20 February at the Rotherham Property with Mr Wade which he records as beginning at 5.15 and ending at 7.00. There is no reason to doubt the note which was written later that evening. Mr and Mrs Wade gave evidence that it would take 15-20 minutes to drive from Poppleton & Appleby to the Rotherham Property, which would fit with them leaving Mr Priestley at about 4.55. The following day Mr Wade had a meeting with Mr Powell who recorded in his notes taken during the meeting 
"P&A – appointed as Receivers by Yorkshire Bank on 20th Feb.
(Les has signed forms put to him by Priestley)
(at 5pm)"
The only contemporaneous evidence going the other way is that a fax from the Bank setting out the terms of the resolutions is timed at 4.50. They would then have been typed at Poppleton & Appleby as formal board minutes. In view of the strength of the other contemporaneous evidence, I think it likely that the timer on the fax machine was wrong. Nothing turns directly on this question of time but if Mr and Mrs Wade had been correct it would have cast considerable doubt on a file note made by Mr Priestley of the meeting at which Mr Wade signed the resolution.
76.	At the meeting Mr Wade signed two documents which were resolutions of the boards of each Company inviting the appointment of receivers. Mr Wade’s written and oral evidence was that he did not know what the documents were, that he did not read them before or after he signed them, that Mr Priestley gave no explanation as to what they were and that, he added in his oral evidence, he thought they were letters of engagement. I am unable to accept that Mr Wade did not understand the resolutions which he signed. First, I have already found that Mr Wade probably knew from his earlier telephone conversation with Mr Priestley that the documents were connected with appointment of the receivers. Secondly, and more importantly, Mr Powell’s note quoted above of what Mr Wade told him the following morning shows clearly that he knew that the forms signed by him "at 5pm" related to the appointment of the receivers. Thirdly, even making full allowance for Mr Wade’s distress by this time, I find it unlikely that he did not read the documents when he signed them. They are short and straightforward and it was his usual practice to read documents before signing them. Fourthly, Mr Priestley made an attendance note of this meeting which records that there was discussion about the purpose of the documents and that Mr Wade "begrudgingly" signed them. The note was put forward as a genuine and contemporaneous record. It was suggested to Mr Priestley in cross-examination that the attendance note records what should have happened rather than what did happen, a suggestion denied by Mr Priestley. While I have been concerned by the somewhat self-serving contents of the attendance note, it is a serious allegation that it was a deliberate concoction, for which there is no evidence except the recollection of Mr and Mrs Wade. Their recollection is, as I have found, unreliable as to some aspects of this meeting and I have concluded that the note reflects the substance of the conversation. 
The Bank’s decision to appoint receivers
77.	So far the Bank’s decision-making process is concerned, neither Mr Wade and his advisors nor Poppleton & Appleby had access to the Bank’s procedures. Although most of the Bank’s relevant internal records had been destroyed before these proceedings were started, Mr Ardron and two Bank executives gave evidence and it is possible to come to conclusions as to how and why the decision the Bank’s decision to appoint receivers of both Companies was made. 
78.	As detailed earlier in this judgment, the Companies had for some time been identified by the bank as presenting problems. In late 1996 and early 1997, it was concerned about the position with Nooter Eriksen and the failure to pay an instalment due on the 3i loan. In January 1997 the Bank introduced a "scheme" or "asset quality project" under which accounts were referred to Coopers & Lybrand for review in cases where the Bank had concerns about recovery. The Companies’ accounts were referred for review as part of this project in early February 1997 and, as was usual, they were not informed. A review was conducted by Mr Ardron and his report was for review by the relevant internal committee on 19 February 1997. 
79.	In his witness statement Mr Rushfirth, a senior Bank executive who was head of its secured recoveries and credit restructuring department, states; 
"I cannot tell from the Bank records specifically why receivers were appointed to both the Trading Company and the Holding Company although it would be normal practice to appoint over all companies within a group, where security was common to all group companies."
He was asked in cross-examination whether the Bank could have appointed a receiver of Trading Co but allowed a little time for Holding Co. He replied:
"We could have but I have never known it happen in my experience. Where two companies are so closely linked, both in terms of lending, security and income, it would have been the Bank’s normal policy at the time and now to appoint over both."
In his witness statement Mr Ardron said that:
"The freehold properties [owned by Holding Co] were the Bank’s principal security, and in my opinion there would have been little benefit for the Bank to allow the directors to remain in control of its principal security in a situation where the trading company was to go into liquidation or receivership as a result of a winding up petition."
Mr Ardron’s oral evidence was to the same effect. Mr Ardron’s report of his meeting at Mr Priestley’s offices on 20 February would in line with usual procedures have been passed to Mr Lyn Vardy, a Bank executive, who would have discussed it with Mr Rushfirth or the credit committee. Mr Rushfirth or the credit committee would make the decision on behalf of the Bank as to the appointment of receivers. There is no reason to suppose that these procedures were not followed in this case. 
80.	It is clear from Mr Ardron’s report that Mr Wade wished to avoid the appointment of receivers of Holding Co so as to allow time for the sale of the Barnsley Property, while accepting that the appointment of receivers of Trading Co was unavoidable. Mr Priestley was criticised in cross-examination for giving Mr Ardron the impression that Mr Wade was nonetheless "happy for demands to be made against each company". However, Mr Ardron and the Bank well understood the difference between demands and the appointment of receivers. While a demand may be a pre-condition to the appointment of receivers, it need not and does not lead inevitably to their appointment. When asked in cross-examination whether it would have changed the Bank’s mind if it had known Mr Wade was not happy for a demand to be served on Holding Co, Mr Rushfirth said no. 
81.	I am satisfied that once it was decided to appoint receivers of Trading Co the Bank was in fact certain to appoint receivers of Holding Co. This was thought likely to be the case by Mr Ballman and Mr Ardron on 20 February 1997, and Mr Rushfirth’s evidence is clear on the point. 
82.	Other than paying off the Bank, there was nothing that Mr Wade or Mr Priestley could have done or said which would have persuaded the Bank to take a different course. Mr Priestley is criticised for not arguing with the Bank in the afternoon of 20 February when he was informed by the Bank that it had decided to appoint receivers of both Companies. I am satisfied that there was nothing that he could have said which would have altered the decision. 
83.	In his witness statement Mr Rushfirth stated, and he confirmed it in his oral evidence, that: 
"It was not the Bank’s normal practice to appoint receivers without the directors’ request unless there were doubts as to the integrity of the directors or there were reasons to believe that the Bank’s security needed protecting."
In this case not only had a winding-up petition been presented against Trading Co, but Mr Wade and his advisers agreed that its position was hopeless and that it would not avoid receivership. Mr Rushfirth said in cross-examination that even if Mr Wade had not signed resolutions for appointment of receivers of the Companies, it was quite possible that the Bank would have appointed receivers. Given that Trading Co was in any event going into receivership, the evidence of the Bank’s usual practice in relation to groups of companies and the commercial commonsense of the Bank’s policy of appointing receivers of the company holding the available security leads me to conclude that it would have made no difference if Mr Wade had not signed a resolution of Holding Co requesting the appointment of receivers of that company.
Holding Co’s liabilities on 20 February 1997
84.	It is convenient here to deal with the amount which would have been needed to pay off Holding Co’s creditors in addition to the Bank. For this purpose, the claimants in closing submitted a schedule which is not significantly different from figures put forward on behalf of the defendants. It shows £320,750 due to West Bromwich Building Society and secured by a first legal charge on the Rotherham Property. The amount actually or contingently due to the Bank was £734,041 which included contingent liabilities in respect of guarantees provided by the Bank for the 3i loan (£327,000), and in favour of an Italian contractor Danieli (£15,000) and Mannesman Seiffert (£49,419). In order to sell the two properties to Mr Lavin, free of charges in favour of the Bank and West Bromwich Building Society, a total of £1,054,761 needed to be found. It must be assumed that the Bank would require cash deposits for the full amount of its guarantee liabilities before it would release its security. Mr Lavin’s offer was £980,000, leaving therefore a shortfall of £74,761. Mr Macdonald submitted that it was reasonable to assume that Holding Co would be able to find substitute guarantees for Danieli and Mannesman Seiffert once it re-banked, but I do not consider that this assumption can be made and it certainly does not reduce the amount which Mr Wade would have needed to find in the short term. 
 
85.	Other liabilities comprised £62,000 of preferential liabilities and £375,000 of non-preferential creditors. The latter figure includes a Government grant of £75,000 which might well not have been repayable if Holding Co avoided receivership and business had continued at the Rotherham Property. It also includes a corporation tax liability of £55,000 some or all of which was not in any event payable until September 1997. It includes a liability for insurance premiums but a substantial amount (perhaps 90%) was payable in respect of employees of Trading Co and so might be properly set off against a liability to Trading Co. Excluding also amounts due to Mr Wade (£2000) and Brian Gray & Co (£10,000), the amount of non-preferential debts for which Mr Wade would have to provide funds was £237,000. 
 
86.	Mr Wade would therefore have need to find immediately a total of some £374,000 to pay creditors, comprising 
Secured liabilities (balance) 74,761
Preferential liabilities 62,000
Non-preferential liabilities 237,600
In order to render Holding Co solvent at the date of a transaction with Mr Lavin, he would also need to have put funding in place for the Corporation Tax, if any, due in September 1997, either paid or secured the waiver of the amounts due to Brian Grey & Co and himself, and ensured funding for the rent of £11,933 per month payable under the Lavin offer.
 
Scope of Poppleton & Appleby’s engagement
87.	There is some uncertainty as to the extent of Poppleton Appleby’s role due perhaps to the lack of any engagement letter. The claimants plead (particulars of claim para. 30) that the Companies and Mr and Mrs Wade personally 
"consulted P & A in its capacity as a firm of insolvency practitioners and Mr Priestley as an expert in the insolvency field in order to obtain professional, specialist advice generally on the options available to each of them in light of the financial difficulties being faced by Trading Co."
 
Leaving aside the issue of whether Poppleton and Appleby were advising Mr and Mrs Wade personally as well as the Companies, this is an accurate summary which is not in substance disputed by Poppleton & Appleby who plead (defence para.30) that Mr Wade on behalf of the Companies
"instructed [P&A] to advise him on behalf of the directors of [Holding Co] with regard to the financial difficulties faced by both companies….."
 
88.	In addition the claimants plead (particulars of claim para 33) that it was agreed orally that Poppleton & Appleby would provide expert advice on 
 
(i) any offer of financial assistance, from Mr Lavin or others;
(ii) how best to achieve the aim of ensuring the survival of Holding Co, repayment of the Bank, and the breathing space required by Holding Co to restructure itself in order to take over Trading Co’s business, in particular the Italian contracts with Nooter Eriksen;
(iii) how best to deal with the winding-up petition against Trading Co and how best to salvage something from Trading Co’s position;
(iv) putting together a proposal and information package for the Bank.
 
89.	There was discussion on 18 February about the winding-up petition and the impact of its advertisement: it was agreed that Mr Powell would write to the petitioning creditor with a view to persuading it to delay advertisement. As to (ii) and (iv), Mr Priestley advised on the approach to be taken to the Bank and agreed to prepare a letter on behalf of Holding Co to be submitted to the Bank; Mr Wade agreed in evidence that advice on dealing with the Bank and preparation of the letter was the principal task for Mr Priestley by the end of the meeting on 18 February and that the position did not change significantly after that. On 19 and 20 February Mr Priestley did give advice from an insolvency perspective on the Lavin offer, and there were no further offers of finance put to Mr Priestley for his consideration. 
 
90.	In the short time that Poppleton & Appleby were engaged before the appointment of receivers, the advice and service that they were to provide did not go further than I have described above. As events developed there simply was not time for Poppleton & Appleby 
"to carry out an independent business review in relation to both Companies in order to familiarise P & A with the business thereof and the precise financial position thereof….."
or
"to make a proper investigation into and consideration and evaluation of the respective businesses and prospects of Holding Co and Trading Co, and an adequate analysis of the statements of affairs prepared for the Companies."
 
as is pleaded in the particulars of claim as being part of their duties. It was agreed by all concerned that the position of Trading Co was hopeless and that it would have to go into receivership. The urgency was such that Poppleton & Appleby had to rely on the information provided to them by Mr Wade and Mr Tingle in preparing a letter to the Bank.
 
91.	Two further responsibilities of Poppleton & Appleby were pleaded by the claimants, more clearly and directly in the reply than in the particulars of claim. The first was that they should have considered and evaluated the merits of Trading Co’s legal and commercial position with Nooter Eriksen and the possible transfers of the existing contracts to Holding Co or a new company. It was never discussed that Mr Priestley should be investigating these issues and he was not well placed to do so. His experience related to insolvency matters, not engineering contracts. In any event, in the time available, there was no realistic prospect of Mr Priestley sufficiently mastering the details of the position in order to give advice to Mr Wade, who was himself very familiar with all aspects of the Nooter Eriksen contracts. Still less would it have been sensible for Mr Priestley to have direct negotiations with Nooter Eriksen at this point, as was suggested to him in cross-examination, nor was it ever agreed or discussed at the time that he should do so. 
 
92.	The second additional responsibility which is pleaded as part of Poppleton & Appleby’s remit was to seek or procure sources of finance for Holding Co. Again I reject that this was within the scope of their engagement. There is no evidence that it was ever discussed or agreed and I am satisfied that it was never contemplated by Mr Priestley that he should have this responsibility. Poppleton & Appleby adduced expert evidence from David Buchler, a leading insolvency practitioner, who said that in his experience insolvency practitioners rarely get directly involved in raising finance, although they might well be involved in suggesting potential sources of finance at a later stage in an engagement, after survival of the company had been secured in the short term. The Claimant’s insolvency expert, Mr Paul Stanley, agreed with this view. 
93.	It is clear that by 19 February 1997 all parties were agreed that Trading Co could not survive and would have to go into receivership. The case as originally pleaded included allegations that because of Poppleton & Appleby’s alleged negligence Trading Co did not survive or did not enter into a voluntary arrangement with its creditors and claims for damages for loss said to have been suffered by Trading Co. The particulars of claim were amended shortly before trial and none of these claims was pursued. 
Negligence: liability
94.	There is no dispute that Poppleton & Appleby owed a duty to exercise reasonable skill and care in giving advice over the period 18-20 February 1997. There is dispute as to whether the duty was owed to Mr and Mrs Wade as shareholders of Holding Co and as employees of one or both of the Companies, but there is no dispute that the duty was owed to each of the Companies. This issue does not affect the nature and extent of the duties nor whether there was any breach which caused loss, and I shall address it later in the judgment. 
95.	It was common ground that Mr Wade’s aim by 19 February 1997 was, if possible, to save Holding Co so that it would still own the Rotherham Property from which the business previously carried on by Trading Co could be continued either by a new company or possibly by Holding Co. Mr Priestley agreed that he understood this to be Mr Wade’s objective. The complaint against Poppleton & Appleby is that they failed to give advice or take the steps which would have enabled Holding Co to survive or would have given it a substantial chance of doing so. 
96.	Before considering in detail the various specific complaints made by the Claimants, it is appropriate to identify the central issues which in my judgment determine the outcome of this case. Holding Co could only survive if the Bank did not exercise its right to appoint receivers. It was appreciated by all concerned that this could be achieved in only two ways. First, the Bank might be persuaded that although Trading Co could not survive it should stay its hand as regards Holding Co to give it a chance to sell the Barnsley Property and use the proceeds to repay the Bank. An attempt was made to persuade the Bank to adopt this course but it decided nonetheless to appoint receivers of Holding Co. The first major issue is therefore whether Poppleton & Appleby failed to give advice or take steps which would or might have led to a different decision by the Bank. 
97.	The alternative means of avoiding receivership of Holding Co was to repay the Bank. This required finance of some £1,054,750, £734,000 for the Bank and £320,750 for West Bromwich Building Society which had a first charge on the Rotherham Property. The only substantial offer of finance available during the period of 18-20 February 1997 was the Lavin Offer. It is agreed that Mr Priestley advised that the Lavin Offer was at least open to challenge as a transaction at an undervalue and that it could only be safely accepted if all the other liabilities of Holding Co were paid. It is not suggested that this advice was wrong, and in my view it was plainly right. This in turn meant that additional funds of some £300,000 had to be raised in a short time. Mr Wade was at this time approaching as many sources of finance as he could identify. Apart from Mr Lavin he was unable to raise any funds, and Mr Lavin was himself a lender of last resort. It is accepted that in reality the only possible source of additional funds were Mr and Mrs Wade themselves. Mr and Mrs Wade say that they would have been prepared to provide the necessary finance; this is not accepted by Poppleton & Appleby. The prior issue, though, is whether Mr Priestley was negligent in not suggesting to Mr and Mrs Wade that they should consider putting their own money into Holding Co. This is the second major issue. 
98.	While the Claimants rely on a series of instances of alleged negligence by Mr Priestley, Mr Macdonald for them made clear that it was a continuing course of negligent conduct which they alleged and Mr Priestley’s conduct had to be looked at as a whole. In particular, he relied on four cards which he said should have been played by Mr Priestley. They were the Lavin Offer, the willingness of Mr and Mrs Wade to provide the necessary additional finance (if the need to do so had been brought to their attention), the potential sale of the Barnsley Property and the position of Nooter Eriksen. A fifth card, the ownership by Holding Co of certain essential plant and equipment, was later added but it is not suggested it would assist Holding Co to repay the Bank and pay off all its liabilities. 
99.	As to these four cards, I have identified the significance of the Lavin Offer and additional finance from the Wades. A potential sale of the Barnsley Property was significant as a means of persuading the Bank not to appoint a receiver of Holding Co. If, however, the Bank was not persuaded by the prospect of a sale, it had no further use as a means of avoiding receivership beyond, perhaps, giving the Wades some comfort if they decided to provide the additional finance. Nooter Eriksen’s position was very important with regard to a continuation of the underlying business. But the most it may have been prepared to do was to make an advance payment of the order of £300,000 on account of future work. Even this would raise significant problems as to agreement with Trading Co and its receivers and as to whether there was sufficient working capital for the continuation of the business. More fundamentally, it was accepted that any payment by Nooter Eriksen would not be available to repay creditors of Holding Co or therefore assist in avoiding a receivership of Holding Co. 
100.	With that overview, I shall now consider the complaints made against Mr Priestley, on a chronological basis. On 18 February 1997 it was agreed that Mr Powell would write to the solicitors for Pipeline International Limited the creditor which had petitioned to wind up Trading Co. The purpose of this approach would be to try to persuade the petitioner at least to delay advertisement of the petition. This might in turn give more time for a solution to be found. Mr Priestley is criticised for leaving this task entirely to Mr Powell. It is said, rightly, that Mr Powell was not an insolvency expert and that Mr Priestley should have brought his expertise to this approach. 
101.	I do not think that this criticism can be made out, for a number of reasons. First, the letter which Mr Powell in fact wrote on 19 February included all that could sensibly be said at that stage, given that the petitioner’s debt was not disputed and Trading Co was not then able to pay it. No suggestion has been made as to how Mr Priestley could have improved the letter, and I do not consider that there are any significant changes which could have been made to it. Secondly, it was not a letter which required any insolvency expertise as such. It was an approach to a creditor to delay proceedings, taking such commercial and procedural points as might be available. It was well within the competence of a solicitor with a general practice and it was a sensible division of resources at a time of great pressure to leave it to Mr Powell. Thirdly, in light of the general agreement that a receivership of Trading Co could not be avoided there was not very much which could be said to persuade Pipeline International not to advertise. 
102.	Two further criticisms are made in relation to the handling of the winding-up petition. First, it is suggested that Mr Priestley should have realised that it was unlikely that the petition would be advertised as early as Friday 21 February 1997. It was said that it is usual for petitioning creditors to delay advertisement for a considerable time. In my judgment, no such assumption could safely be made. There is in truth no standard practice among petitioning creditors on this point. More importantly, the petitioning creditor in this case made clear, in its solicitor’s letter faxed on 20 February in reply to Mr Powell’s letter, that it intended to advertise the petition on 21 February. Moreover, Mr Priestley advised, and everyone agreed, that an approach had to be made to the Bank before advertisement. If there was a real prospect of advertisement on 21 February, the approach to the Bank had to be made within a short time. 
103.	A second criticism is that Mr Priestley should have looked into the possibility of paying off the petitioning creditor. It is suggested that this would have relieved the time pressure for finding a solution for Holding Co. The problem is again that Trading Co was insolvent, was facing a mass of legal actions and statutory demands and could not properly pay one unsecured creditor, Pipeline International, in those circumstances. 
104.	After the meeting on 18 February 1997, Mr Priestley spoke to Mr Ballman, a partner in the Bank’s solicitors. I have found that he did so without the knowledge or consent of Mr and Mrs Wade and that there is no evidence that he later told them or their advisors about the call. Mr Priestley’s reasons for making this call remain unclear. It was not, as he said in his witness statement, for guidance as to whether the Bank would appoint a receiver of Trading Co without also appointing a receiver of Holding Co; that was the point of the call from the meeting on 20 February and it does not feature in Mr Ballman’s attendance note of the earlier call. The most likely explanation is that Mr Priestley wished to alert to Mr Ballman to a problem on which the Bank might soon instruct him. There might be some benefit to the Wades in doing so, at least in terms of saving time. In my judgment Mr Priestley was wrong to make this call without the consent of his client. He passed to Mr Ballman information which had at that stage been given to him in confidence. Mr Ballman was likely to be instructed for the Bank and disclosure to him was therefore particularly sensitive. Moreover, Mr Wade had made it clear, and Mr Priestley knew, that Mr Wade wanted to be involved in any approach to the Bank. Mr Priestley believed that Mr Ballman would treat the conversation as confidential and there is no evidence to suggest that Mr Ballman at any stage informed the Bank of what Mr Priestley had told him. I conclude therefore that the call played no part in the Bank’s later decision to appoint receivers of both Companies or that it in any other way caused loss to the Companies or Mr and Mrs Wade. Mr Macdonald described the call as distinctly odd but rightly did not suggest that it led to any loss. 
105.	The meeting in the morning of 19 February 1997 was held to provide information to Mr Revill for the letter or report to be sent to the Bank. Mr Revill produced a draft after the meeting. It was agreed by Mr Priestley and faxed to the Bank that afternoon. No version of it was seen by Mr Wade or his accountants and it was sent without their knowledge or consent. Mr Priestley agreed in evidence that it should have been shown to them and it would be wrong to send it without Mr Wade’s consent. While he felt that he would never have sent the letter without his client’s consent, it appears to me clear and I have found that he did so. This was a breach of duty on his part, although I do not think that he had any sinister motive for not showing it to Mr Wade and it was probably the result of the time pressures under which everyone was working. 
106.	The issue is whether the letter would have been materially different if it had been shown to Mr Wade and his accountants. Mr Wade’s principal criticism was that it contained no reference to the Lavin Offer. On 19 February 1997 there was no written offer from Mr Lavin and, without an offer in writing to demonstrate both Mr Lavin’s commitment and the precise terms of any offer, it would have been most unwise to refer to it. To this Mr Wade could reasonably respond that the letter should have been delayed for long enough to enable him to obtain a written offer from Mr Lavin, which he did in the evening of 19 February. The real issue is whether it would have made any difference to the Bank’s conduct if the written offer had been mentioned in the letter. This is the same issue as arises from the complaint against Mr Priestley for not drawing Mr Ardron’s attention to the Lavin Offer at the meeting on 20 February. I shall deal in detail with the issue at that stage, but my conclusion is that failure to draw the Bank’s attention to the Lavin offer either in the letter or at the meeting on 20 February made no difference to the Bank’s conduct and would only have done so if finance was available to pay off all the creditors of Holding Co. 
107.	Apart from the omission of any reference to the Lavin Offer, the evidence of Mr Wade and Mr Tingle was that they had no criticisms to make of the letter to the Bank. Mr Wade agreed that, leaving to one side the Lavin offer, the letter fairly set out the position. Mr Tingle also criticised the lack of any reference to the Lavin offer but it was otherwise "generally along the lines that I would have expected" and he continues in his witness statement that: 
"Had I seen the letter dated 19th February 1997 at the time, I would have been reasonably encouraged that Les Wade would be able to achieve his aim of saving Holding Co, restructuring the Wade & Hotson business generally and retaining the important Fenton Road trading premises."
108.	Notwithstanding that evidence Mr Macdonald for the claimants criticised the letter on two further grounds: for setting out only what was wrong with the Nooter Eriksen contracts, not the positive side that Nooter Eriksen was desperate to finish the main contracts, and for not setting out a strategy for saving Holding Co. 
109.	The summary of the position as regards Nooter Eriksen is in paragraph 2.5 of the letter which is as follows: 
"[Trading Co’s] current financial difficulties have arisen in connection with a contract with Nooter/Eriksen Ltd ("NE") to build a power station in Italy. The cost associated with this contract has exceeded original expectations of NE and [Trading Co] by approximately £900,000. NE is not prepared to meet those additional costs and as a formal written contract was not entered into [Trading Co] is experiencing some difficulty in claiming the extras."
110.	A fair summary of Mr Priestley’s knowledge at the time of the Nooter Eriksen position is contained in Mr Ballman’s note of his conversation with Mr Priestley late on 18 February 1997: 
"Apparently the trading company is involved in the construction of a power station in Italy. The main contractor and employer is the UK subsidiary of an American company. Wade and Hotson is owed some £750,000 and it is their cashflow problems resulting from non-payment of the £750,00 which has brought the company to its knees. Apparently there is no written contract for the work which they have undertaken in Italy because various draft contracts produced did not reflect the original agreement negotiated. As a result, various drafts of new contracts were produced but by this time the construction etc. in Italy was underway and the matter was never finalised. The Americans are desperate to complete the power station on time and it may be possible to continue with the contract though clearly there will have to be a very significant payment on account in the meantime and contract terms need to be clearly established."
111.	I cannot see that the omission of the points in the last sentence of Mr Ballman’s note would have made any difference to the Bank’s attitude. They do not provide any basis for optimism that the Bank will be repaid or any reason for not appointing a receiver of Holding Co if, as agreed, Trading Co had to go into receivership. Mr Wade had not mentioned to Mr Priestley or Mr Revill that Mr Wells of Nooter Eriksen had suggested that an advance payment of £300,000 might be made to a different company to continue the contract. Nor would even that have provided any grounds to the Bank for believing that it would be repaid as the money would be needed to fund performance of the contract. 
112.	More generally, Mr Priestley was criticised for sending a letter which was no more than "tentative" and failed to put forward a strategy for saving Holding Co. Apart from immediately repaying the Bank, the only and indeed the preferred strategy was to persuade the Bank to give Holding Co time to sell the Barnsley Property. This option is put to the Bank in paragraph 5 of the letter and the relevant facts concerning the Barnsley Property are given in paragraph 4.4, with a copy of the agents’ letter confirming the indicative offer from Elders Steel attached to the letter. The facts are laid before the Bank, as a prelude to a meeting which Mr Priestley had arranged for 9.30am on 21 February. It is difficult to see that a more bullish presentation would have been either appropriate or convincing. 
113.	My conclusion is therefore that Mr Priestley’s failure to show the letter in draft form to Mr Wade or Mr Tingle and to obtain their approval to it did not make any difference to the subsequent course of events or lead to any loss to Mr and Mrs Wade or to Holding Co. 
114.	At the meeting on 20 February 1997 the opportunity arose to show the letter containing Mr Lavin’s offer to Mr Ardron, representing the Bank. If it provided a workable means of repaying the Bank and thereby avoiding the appointment of receivers to Holding Co, it should have been shown to Mr Ardron, or brought to the Bank’s attention later that afternoon. 
115.	However, Mr Priestley had already advised that the Lavin offer was open to challenge by a liquidator of Holding Co as a transaction at an undervalue, under section 238 of the Insolvency Act 1985, and that its acceptance could expose Mr Wade to serious personal consequences for breach of his duty as a director, unless all other creditors were also paid. There is, as I understand it, no challenge to this advice, nor in my judgment could there be. The offer involved a sale of Holding Co’s two properties at an undervalue of at least £320,000. The option to repurchase the properties, which I shall assume was intended to be exercisable at the same price, provided a means available to Holding Co of reversing the sale at an undervalue. If the option were exercised, the transaction could be characterised in commercial terms as a financing transaction, not a sale. 
116.	This characterisation would be appropriate at the time of entering into the agreement with Mr Lavin only if there could be confidence that Holding Co would be able to exercise the option. Otherwise Holding Co would be selling the properties at a significant undervalue with no more than in practice a dubious chance of being able to repurchase them at the same price. Unless additional substantial funding were available to Holding Co, it was a near certainty that Holding Co would not be able to exercise the option. It did not have the means to pay its other creditors and there were very serious doubts that it could meet the other liabilities imposed by the Lavin offer. It was for these commercial reasons that Mr Tingle and Mr Grey advised Mr Wade not to accept the Lavin offer and that Mr Grey described it as jumping out of the frying pan into the fire. Their advice would strongly suggest that acceptance of the Lavin offer would in any event have involved a breach by Mr Wade of his duties as a director. Mr Macdonald suggested briefly that the Lavin offer might have escaped avoidance under section 238 by reason of the defence under section 238(5). The onus to establish that defence lies on the respondents to a liquidator’s application. In the light of the assessment and advice of Mr Tingle and Mr Grey, let alone an objective assessment of Holding Co’s financial position, there would be little chance of success. 
117.	Mr Priestley did not advise that the Lavin offer was definitely a transaction at an undervalue, only that it was open to serious challenge. There can in my judgment be no serious challenge to that advice. As such there can have been no negligence in not bringing it to the attention of Mr Ardron or the Bank, if it was all that Mr Wade and Holding Co had to offer. They could not properly have accepted it in order to pay off the Bank, and Mr Ardron and the Bank are likely to have been concerned about its terms. If the Bank accepted payment from funds which it knew to have been raised in this way, it might well itself face a claim for repayment from a liquidator. The evidence of Mr Rushfirth was that if presented with the Lavin offer the Bank would have taken legal advice. I have no doubt that the Bank would have received similar advice to that given by Mr Priestley. 
118.	Mr Priestley advised that the Lavin offer could be accepted without risk of challenge as a transaction at an undervalue, only if all the liabilities of Holding Co were discharged. In that event, Holding Co would be solvent and the transaction would not be open to challenge by virtue of section 240(2). I note in passing that even then there would still be a problem unless it could be demonstrated that Holding Co was able to meet the liabilities arising under the terms of the Lavin offer itself: section 240(2)(b). 
119.	Mr Macdonald accepted that the Lavin offer did not by itself provide a solution to Holding Co’s problems. It is accepted that Holding Co needed also to raise the funds required to pay all its creditors in addition to the Bank. It is said that it was negligence on the part of Mr Priestley that the necessary extra funds were not raised or at least that Holding Co lost a serious opportunity of doing so. Mr Priestley’s alleged negligence in this respect is said to comprise one or both of the following. First, he should have asked Mr and Mrs Wade if they were willing personally to provide the necessary finance. Secondly, he should have put the Lavin offer to Mr Ardron and the Bank so that there could then be a discussion of the problem from which a solution was likely to emerge. 
120.	In considering the first of these suggestions, it must be noted that Mr Wade had himself during February been very active in trying to raise finance. In addition to Mr Lavin, he had been having and was continuing to have discussions with Paul Ross. He had approached Irwin Mitchell and through them a finance broker, who had put his case to Davenhams, a Bermuda-based finance company. Mr Wade said in evidence that on 19 February the only offer that would be available in time was Mr Lavin’s "but I know for a fact that I was still trying to keep everybody that might be interested in an offer to assist". He knew that finance needed to be raised and he had personally set about trying to raise it. He was told in clear terms by Mr Priestley that the Lavin offer was not enough and that further funds were needed to pay off the other creditors. He thought that Mr Lavin’s offer was likely to be the only one available in time and that Mr Lavin was a lender of last resort. He did not need Mr Priestley to tell him that the only possibility was for Mrs Wade and himself to provide the funds if they were willing and able to do so. In my judgment that would have been obvious to anyone in Mr Wade’s position and must have been obvious to Mr Wade. There was no need for financial sophistication or insolvency expertise for this to be clear. In fact Mr Wade was in no sense an inexperienced businessman and by previously giving a personal guarantee to the Bank he had practical experience of personally providing financial support for the Companies. It may also be noted that Mr Tingle and Mr Grey also knew that the extra finance was needed, but they too did not suggest to Mr Wade that he should personally provide it. 
121.	In my judgment Mr Priestley was entitled to assume that if Mr and Mrs Wade were prepared personally to provide the necessary finance they would have said so. I do not believe that they were in fact willing to do so. If, as Mr Wade said in evidence, he was prepared to do anything to save Holding Co, it was all the more improbable that he did not give some consideration to providing the necessary finance himself. This is not just based on their failure to suggest it. Later in 1997, Mr Wade’s new trading company was offered finance to buy the Rotherham Property conditional on a personal guarantee and a charge on Mr and Mrs Wade’s home. Mrs Wade discussed this with Mr Priestley and told him her principal concern was to safeguard the matrimonial home and to have sufficient income to pay their 14 year old son’s school fees. While she says that she would leave the final decision to her husband, she made her own views clearly known and he always took this into account. It is to be noted that it was not pleaded either that Mr and Mrs Wade were willing to put their own assets at risk or that Mr Priestley was negligent in not raising it with them. 
122.	The alternative suggestion that Mr Priestley should have raised the Lavin offer with Mr Ardron and the Bank so that the matter could be discussed and a solution found cannot assist the Claimants’ case, unless Mr and Mrs Wade were prepared to provide the funds personally. There was no other solution. 
123.	Overall it was the Claimants’ case that Mr Priestley had been instructed to put together a package of proposals for the Bank which would work and which the Bank would consider and that his negligence consisted in not asking the questions necessary to put that package together. On the facts the only relevant question was whether Mr and Mrs Wade were willing to raise the finance personally and for the reasons given above it was in my judgment for Mr and Mrs Wade themselves to make that proposal. 
124.	Mr Macdonald submitted that this was the kernel of the case and I agree. Unless negligence on Mr Priestley’s part can be established on the issue of raising the extra funds needed to make the Lavin offer acceptable, the whole claim for damages for negligence must fail. In my judgment no such negligence can be established and the claim fails. 
To whom did Poppleton & Appleby owe a duty of care?
125.	It is common ground that Poppleton & Appleby advised the Companies and Mr Wade in his capacity as a director of the Companies. No formal terms were agreed, either as to the services provided or as to the consideration to be paid. There is however no doubt that it was agreed that some advice would be given and a letter for the Bank prepared, and it is implicit that the scope of advice and further work would be agreed as the engagement continued. Equally Poppleton & Appleby would be entitled to payment of reasonable remuneration for their services. There was therefore in my view a contract between the Companies and Poppleton & Appleby which included an implied term that Poppleton & Appleby would exercise reasonable skill and care in the provision of advice and other services. 
126.	There is disagreement as to whether Poppleton & Appleby were also providing advice and services for the benefit of Mr and Mrs Wade and whether any duty of care was owed to them. There was no engagement letter which would have identified the clients. There is no evidence that there was ever any discussion of the point. Mr and Mrs Wade say, and I accept, that they assumed that Poppleton & Appleby were advising them personally as well as the Companies. They did not see that there was real distinction to be drawn between them. Mr Powell, who introduced the Wades to Poppleton & Appleby, regarded himself as advising the Wades personally as well as the Companies and likewise assumed that Poppleton & Appleby would be doing the same. The approach of Mr Tingle and Mr Grey was the same. Mr Priestley’s evidence was that where he was approached to advise an insolvent company he only ever advised companies and their directors, and did not advise the shareholders or employees personally. He assumed the position to be the same in this case. He knew that Mr Powell, Mr Tingle and Mr Grey were advising Mr and Mrs Wade personally, as well as the Companies, and he said that as they already had their own advisors, it strengthened his view that he was advising the Companies alone. 
127.	There is no documentary evidence from the period 18-21 February which sheds any light on this question. However, on 28 February 1997, after complaints of Mr Priestley’s conduct had been raised by Mr and Mrs Wade and an angry meeting between them had taken place on 24 February, Mr Priestley wrote a letter dated 28 February 1997. It was addressed to "the directors and shareholders", and at the start of the letter Mr Priestley wrote that he was asked "to advise on the affairs of the above two companies" at short notice on 18 February. With regard to the Lavin offer he wrote 
"My advice to you, bearing in mind your respective positions as directors and shareholders of both WHSL and WHL was not to accept the offer from the third party…"
128.	This is a strong indication, written very shortly after the relevant events, that Mr Priestley understood that he was advising Mr and Mrs Wade as shareholders, as well as Mr Wade as a director on behalf of the Companies. This was put to him in cross-examination and he did not in my judgment deal with it satisfactorily, for the most part avoiding the issue. In answer to questions from me, he said that it was not his intention when writing the letter to indicate that he had been advising the shareholders personally as well as Mr Wade as a director. I do not find this answer convincing. I consider that the letter dated 28 February 1997 does establish that he knew that during the previous week that he had been advising Mr and Mrs Wade personally. This conclusion is strengthened by his admitted knowledge that Mr Powell, Mr Tingle and Mr Grey were advising both the Companies and Mr and Mrs Wade. They came to him as an additional, not an alternative, adviser, for his expertise as an insolvency adviser. There is no reason to think that as an additional adviser his clients would not be the same as theirs. 
129.	I conclude therefore that Poppleton & Appleby were engaged by Mr and Mrs Wade personally, as well as by the Companies, to provide advice and that they owed a contractual duty of care to all of them. I should add that if I had concluded that Mr Priestley had not thought that he was advising Mr and Mrs Wade personally the circumstances, including in particular his knowledge that the other advisers were acting for Mr and Mrs Wade personally as well as for the Companies, were such that he should have realised that they were expecting him to do likewise and therefore he would in any event have owed a duty of care in tort to them. 
Negligence: damages
130.	In the light of my decision on liability, the question of damages does not arise. However, there was evidence and argument directed to damages and I will therefore set out my views. 
131.	The claim for damages must proceed on the basis that Mr and Mrs Wade would, if prompted by Mr Priestley, have provided some £374,000 to pay all liabilities not discharged out of the funds provided by the Mr Lavin. The claim as advanced in counsel’s closing speech is for the loss of the chance thereafter of 
i.	a profitable continuation of the business previously carried on by Trading Co; 
ii.	a sale at some future date of the Rotherham Property (the Barnsley Property being sold to repay Mr Lavin and so regain ownership of the Rotherham Property); and 
iii.	the payment of premiums to Mr Wade’s pension policies. 
132.	This involves a considerable narrowing of the claim as pleaded and, to a lesser extent, as opened by counsel. In particular, no claim assigned by Trading Co is pursued, as it is accepted that receivership was unavoidable. In addition, no claim is now advanced for loss of remuneration by Mr and Mrs Wade, no doubt because it appeared from the evidence that their income in the years following the collapse of the Companies was greater than in the years immediately before it. 
133.	The true claimant, in the sense of the person who suffered the alleged loss, is Holding Co in the case of the second head of claim, but its claims have been assigned to Mr and Mrs Wade. The third head of claim is one brought by Mr Wade personally. 
134.	The true claimant in respect of the first head of claim is less clear. It could be Holding Co if the evidence established that it was Holding Co which either itself or through a subsidiary was going to carry on the business. I think it very unlikely that Holding Co itself would carry on the business, because the purpose of the original group structure was to separate ownership of property assets from the risks of the business. It might however have established a subsidiary which would carry on the business. Alternatively, Mr and Mrs Wade might have owned the trading company directly, and it is the case that in the afternoon of 20 February 1997 an off-the-shelf company, Probil limited, was acquired by Mr Tingle for them personally not for Holding Co. By then, however, there was the substantial risk that Holding Co would go into receivership. It is clear that Poppleton & Appleby could owe no duty to the new company, so any claim would be by Holding Co or Mr and Mrs Wade personally for loss of the chance to own a profitable and therefore valuable trading company. While this loss is in one sense reflective, the decision in Johnson v. Gore Wood [2002] 2 AC 1 does not prevent its recovery by Mr and Mrs Wade or by Holding Co, because it results from an alleged breach of duty owed to them and because there is no risk of double recovery as no duty was owed to the new company: See the second preposition identified by Lord Bingham of Cornhill in [2002] 2 ACI at 35. 
135.	It was clearly understood by Mr Priestley that the aim was to avoid a receivership of Holding Co, so that the Rotherham Property could be retained and the engineering business continued by a new company using that site. Loss of the chance to rebuild a profitable business and to retain ownership of the Rotherham Property are not therefore too remote, whether advanced by Mr and Mrs Wade in their own right or as assignees of Holding Co’s claims. Mr Wade’s claim for the loss of chance of the payment of pension premiums is essentially in the same category as the loss of the chance of ownership of a profitable business. As owners they could decide how to extract value, whether through salaries, pension contributions or dividends or by building up capital value with a view to sale or, most probably, through a mixture of these means. This claim is also, therefore, for a loss which is not too remote. 
136.	The three heads of loss claimed are all closely linked. The claims for the loss of a profit-making business and for the loss of the pension premiums presuppose that the business could have been continued successfully. It is probably also true of the claim for the loss of the chance to sell the Rotherham Property because without a successful business it may well not have been possible to repurchase it from Mr Lavin, but I will consider it separately. 
137.	In order for the business to be carried on, Holding Co would have accepted Mr Lavin’s offer and Mr and Mrs Wade would have paid £375,000 out of their own funds to pay off the other creditors. Mr Wade would then have had to procure a sale of the surplus Barnsley Property. Unless he did that, Holding Co could not regain ownership of the Rotherham Property. The Barnsley Property was in fact sold in December 1997 for £682,000. The sale was handled by Raymond Lambe, of Lambert Smith Hampton, who gave evidence. He pursued the offer received from Elders Steel but it withdrew its interest after it purchased the adjacent property in June 1997 for £660,000. In the meantime the property was fully marketed and attracted a number of offers and expressions of interest. Mr Lambe’s evidence in cross-examination was that the sale price would have been no better even if there had been no receivership and more time to market the property. 
138.	Barry Seal, the expert called by the Claimants on the value of the Barnsley Property, gave evidence that he would have hoped to achieve a sale in 1997 of £950,000. He did not disagree with Mr Lambe’s view that a better price would not have been achieved by leaving it on the market beyond December 1997 and, when asked whether the fact it was a sale by a receiver would have had any impact on the sale price, he said it was difficult to say and while there was a perception in the market place that people may sometimes get a bargain with a sale by a receiver, it is not always the case. Mr Seal’s market value of £950,000 in 1997 must, I think, be too high: there was no interest at anywhere near that figure. There is nothing in his other evidence to cast serious doubt on Mr Lambe’s view, which reflects his actual experience of selling the Barnsley Property in 1997. I conclude therefore that the Barnsley Property would have been sold by Holding Co, as in fact it was, for £682,000 in December 1997. At that stage, Holding Co would have needed a total of some £1,063,000 to pay to Mr Lavin (comprising £980,000 plus £50,000 plus 4 months at £8,333 per month). Holding Co would therefore have needed to raise an additional amount of about £380,000. It would be able to offer the Rotherham Property as security for a loan of this amount and Mr Lambe’s evidence, based again on his experience of marketing and selling it in 1997, indicates that it then had a market value of the order of £750,000. It would seem likely that it could have been used to raise some £380,000. There would, however, have needed to be a business with income to service the loan. 
139.	There was a need for working capital recognised by Mr Wade and Mr Tingle. During the afternoon of 20 February 1997, Mr and Mrs Wade, Mr Tingle and Mr Grey discussed the likely costs for a new company. Mr Tingle’s notes suggest labour costs of £12,200 per week, or £635,000 in a year, and overhead costs of £402,000 p.a. or £232,000 if salaries of £170,000 were excluded. It does not include the costs which would arise if Mr Lavin’s offer had been accepted. Mr Tingle’s oral evidence was; 
"I would say that there would have been a very substantial requirement of working capital to continue any work that was available".
140.	It is very unclear whether the requisite level of working capital could have been raised, and no evidence was given which suggested either that it could be raised or that there was any likely source to provide it. It was suggested in argument that Holding Co or a new company could have "re-banked", but there is no basis in the evidence for concluding that a bank would have been prepared to advance the necessary level of working capital. The experience with the Bank was not encouraging and given that the Rotherham Property would need to be used as security to raise the balance to repay Mr Lavin it could not support a very significant level of further borrowing. If, contrary to my findings, Mr and Mrs Wade had themselves been prepared to put in money in February 1997, to pay existing liabilities of Holding Co there would have been little or no scope, or in my judgment willingness, on their part to provide further funds. What is clear is that any advance payment by Nooter Eriksen would have been against work to be carried out and would not have been available as working capital. Mr Wade’s own evidence on this was: 
"A.…..it would have been in their interest, in view of the fact that had I been able to keep the workforce together and the premises, it would not have cost them anything near as much.
Q. But there was a lot of ifs, were there not, because you had to get the premises to ensure that you kept the premises, you had to ensure that you kept the workforce, you had to make sure that the business had necessary working capital?
A. Correct.
Q. And that was not going to come from Nooter Eriksen, was it? Nooter Eriksen was only going to pay against the value that you produced.
A. That is certainly the case. All Nooter Eriksen were going to give us was the work effectively."
141.	In closing Mr Macdonald put forward a schedule of figures designed to show that the trading business had a viable future. These figures assumed that the Property could be sold within a year for £950,000 and that the Rotherham Property would be available to secure total borrowings of £564,343 which would be used (i) to repay a balance due to Mr Lavin and (ii) to repay the funds provided by Mr and Mrs Wade. Even on this basis there is no scope for raising working capital, but in any case I have concluded that the Barnsley Property would not have been sold for more than £682.000 so that the Rotherham Property could not have been used to raise significant amounts either to repay Mr and Mrs Wade or to provide working capital. 
142.	A further major area of uncertainty is whether the revived business would have attracted a flow of profitable contracts. There is good reason to think that Nooter Eriksen would have been willing to place a contract for completion of the work on the Italian power stations. It faced significant claims if it did not complete its own contracts and it made obvious sense to place the work with a business run by Mr Wade. It did in fact place it with Whiteley Road Limited which retained Mr Wade as a consultant. 
143.	Beyond completion of the work on the Italian contracts, the position inevitably becomes much more speculative. There is no doubt that Mr Wade was well-regarded in his industry, but the issue is whether there would have been profitable contracts available to him. A close relationship had developed with Nooter Eriksen and considerable emphasis is placed by the claimants on the prospect that Mr Wade’s business would become its preferred contractor. In his witness statement Mr Wells, the managing director of Nooter Eriksen in the UK, states that by early 1996 it had decided to pursue a closer working relationship with Trading Co, but that he had to be absolutely sure of its financial position so that "it would not go bust halfway through a contract". In cross-examination Mr Wells agreed that before placing work with Holding Co or a new company established by Mr Wade he would have to be satisfied that it was a sound company with a secure financial base. 
144.	The loss of a chance to own a profitable business depends on showing both that the claimants would have done all that they could do to make it a reality and that there was a substantial, not speculative, chance that their efforts would have succeeded: Allied Maples Group Ltd v. Simmons and Simmons [1995] 1 WLR 1602. I am not satisfied on this latter aspect that there was a substantial chance of building up a successful business. There is nothing in the evidence which can establish that there was a real prospect of raising the working capital required for the business, even assuming that there was profitable work to be done on which the evidence is, perhaps inevitably, light. It must be remembered that this was not a case in which a successful business was suddenly and unexpectedly brought down by one contract that went wrong. The business had not been performing well for some time and the Bank had already been very concerned about its exposure to it. 
145.	There was also no evidence of any substance as to what the level of any profits might have been. Again this is not surprising given that Mr Wade operated in a sector described by one of his expert witnesses as "fairly volatile" and given that in the financial years immediately before receivership profitability had been, in the same expert’s words, "erratic". Trading Co made pre-tax losses of £74,000 and £61,000 in the years to 30 November 1993 and 1995 and a profit of £57,000 in the year to 30 November 1994. 
146.	There remains the claim for loss in respect of the sale of the Rotherham Property. It was sold in August 1997 for a total price of £900,000 which included also the plant and machinery on site. Mr Lambe, who was handling the sale for the receivers, thought that the property alone would fetch £750,00 whereas the sale attributed a price of £700,000 to the property and £200,000 to the plant and machinery. However, a sale of the plant and machinery alone would have realised only £50-60,000, so that overall this sale represented the best available deal and better value than a sale of the site alone. From the evidence it is clear that the Rotherham Property did not significantly rise in value until some years later when a change of user and planning permission became a real possibility. Four years later, in February 2001, it was sold for £800,000. The vendor was in financial difficulty but the evidence shows that this did not materially affect the price. The purchaser was a property developer and builder with considerable experience in the area. The director responsible for the transaction, Mr Robert Rusling, gave evidence that, although he knew that the vendor was under pressure to sell, there were other developers interested in the property and he thought the price paid reflected market value at this time. 
147.	It was common ground that as a general rule damages are to be calculated by reference to market value at the date of breach, but it was submitted for the claimants that this should not apply in claims for damages for loss of a chance, which necessarily require some investigation into later events. I cannot myself see any ground for creating this exception. The underlying reasons for the general rule apply as much to loss of a chance cases as to other claims for loss. Investigation into later facts may well be required, but only to determine whether there was at the time of breach a substantial chance, and if so, to assist in the qualification of the damages for its loss. In any event, a sale at a higher price at a much later date (after February 2001) would have required Holding Co to have retained the property until then. This would have been possible only if the trading business had been continued successfully and, as I have already said, I am not satisfied that there was a substantial prospect of that. 
Fiduciary duty
148.	The particulars of claims have from the start pleaded that Poppleton & Appleby owed fiduciary duties, as well as duties in contract and tort, to the Companies and to the claimants. For the most part, however, this averment of an additional duty did not affect the relief claimed in the action. The various heads of loss were equally well capable of recovery in contract or tort. During the trial application was made to add a further claim for 
"fees received by P & A as administrative receivers of Holding Co as a result of their allowing themselves to be placed in a position of conflict of interest in accepting appointment as administrative receivers of Holding Co and Trading Co".
This claim is maintainable only if there was a fiduciary relationship between Poppleton & Appleby and the Companies and Claimants.
149.	There is a short answer to the claim. Even if there was a fiduciary relationship, the claim in respect of the fees could not lie if the Companies consented to the appointment of Poppleton & Appleby as receivers. I have found that when on 20 February 1997 Mr Wade signed the resolutions requesting the appointment of receivers he read them and knew what he was signing. Mr Tingle’s evidence, accepted by Mr Wade, was that at the meeting on 19 February 1997 Mr Priestley stated that Poppleton & Appleby might be appointed as receivers of Trading Co; and Mr Wade raised no objection. At 4 pm on 20 February Mr Powell dictated a note covering the events of the previous few days. He records that the last event before dictating the note was a conversation with Mr Wade and Mr Tingle. His note states 
"On Thursday, 20 February P & A let it be known that the Yorkshire Bank would be serving demands no doubt later on 20 February if not 21 February and appoint P & A as receivers."
This conversation took place and Mr Powell dictated the note after Mr Priestley had rung Mr Tingle and Mr Wade at about 3.25 pm and before Mr Wade signed the resolutions for the appointment of receivers at 4.45-4.55 pm. I have found that he read and understood the resolutions before he signed them and it is clear from this note that he knew at that stage that the receivers would be partners in Poppleton & Appleby.
150.	In any event I do not consider that there was any fiduciary obligation on Poppleton & Appleby to decline appointment by the Bank as receivers. They were engaged as advisers to the Companies, and as I have found to Mr and Mrs Wade, in a commercial context. I have held that they carried out their duties in that capacity and that, once the Bank had decided to appoint receivers, there was nothing further which they could do or were required to do. Their acceptance of the appointment did not affect or undermine the work which they had previously done or in any other way create a conflict with the performance of their duties. I do not see anything in the relationship between Poppleton & Appleby and their clients which would call for the imposition of the strict rules of equity applicable to trustees, under which trustees may become accountable for profits even though the profit could not have been made by their beneficiaries and is made in circumstances which cause no loss to their beneficiaries. 
151.	A further point was taken by the defendants, that this was a claim of Holding Co which had not been assigned to Mr and Mrs Wade under the terms of the Deed of Assignment. The subject of the assignment was "the Claim" which is defined as 
"the rights of action for breach of contract, or breach of duty and/or negligence or breach of fiduciary duty referred to in the draft particulars of claim set out in Schedule 1 of this Deed which arise out of the advice given by P & A and the steps taken by the Company, Trading Company and Assignees prior to 21 February 1997 when the Company and Trading Company were placed into Administrative Receivership…"
Recital (6), describing the allegations made against Poppleton & Appleby, includes the following
"Further, it is alleged that P & A breached various fiduciary duties which it owed to the Company, the Holding Company, the Director and the Assigness, particularly in relation to circumstances in which two partners of P & A were appointed as Administrative Receivers of both the Company and the Trading Company.
152.	The point taken by Poppleton & Appleby is that the claim for payment, by way of account of profits or otherwise, of the fees paid to partners in Poppleton & Appleby as receivers is not pleaded in the draft particulars of claim scheduled to the Deed. It is true that it is not spelt out as such, but fiduciary duties are pleaded including a duty on Poppleton & Appleby not to put itself in a position of conflict of interest. It is expressly pleaded that the acceptance by partners in Poppleton & Appleby of appointment as receivers involved a conflict of interest and duty and was in breach of fiduciary duty. It is clear from the scheduled particulars that they are in draft form and are clearly subject to significant amendment. In my judgment, the claim in respect of the receivers’ fees as ultimately formulated fell within the rights of action assigned by the Deed. 
Conclusion
153.	I conclude that the claimants do not establish their claims for damages for breach of the duty of care owed by Poppleton & Appleby or their claim for breach of fiduciary duty. 
154.	I have great sympathy for Mr and Mrs Wade in the loss of the business which they worked so hard to build up over many years and which was in its time very successful. Mr Wade and his business had a well-deserved reputation as innovative and reliable engineers. The causes of the collapse of the Companies do not, however, in my judgment lie with Poppleton & Appleby. They were engaged over a brief period by which time the trading company was in a hopeless position. There is nothing which they did, or failed to do, which caused the collapse of either of the Companies. 
155.	There are perhaps two aspects of the matter which are close to the sense of grievance felt by Mr and Mrs Wade. First, they had unrealistic expectations of what could be achieved at such a late stage. Secondly, they were shocked when the firm which they approached for advice on survival of at least the holding company finished as its receivers, although as I have found Mr Wade knew of and consented to their appointment. This litigation might have been avoided by an engagement letter which set out Poppleton & Appleby’s functions and made clear that they could, or alternatively could not, accept appointment as receivers or other office holders. It would certainly have avoided any dispute as to the clients for whom they were acting.