The Court of Appeal (CoA) has denied an appeal by Withers over a ruling that it must pay its former client Wellesley Partners £1.6m in damages.

The judgment handed down on Thursday (12 November) simultaneously upheld part of a cross-appeal by Wellesley Partners (WP) relating to its claim Mr Justice Nugee was “wrong to find that Withers’ conduct on 3 February 2009 was not negligent”.

The CoA said: “I would accordingly allow the appeal on the issues of negligence on the 3 February 2009 and, to the extent indicated, of the diversion of Mr Channing’s time, but otherwise dismiss the appeals.”

WP was represented by Atkin Chambers’ Fiona Parkin QC and Mischa Balen, instructed by Enyo Law partner Simon Twigden.

The Withers team was composed of Hailsham Chambers’ Michael Pooles QC, instructed by RPC partner Paul Castellani and lawyer Caroline Shiffner. 

The appellate court ruling relates to a spat that began when WP accused its longstanding advisors Withers of misdrafting its LLP agreement in 2008, causing it hefty company losses. 

In a ruling last March Nugee J held that an associate “misremembered what he had been instructed” or “misunderstood an instruction” when drafting an LLP agreement.

He decided the firm had caused the company £1.5m in losses by misdrafting the agreement. Withers launched an appeal on grounds related to WP’s US losses.

Withers contended Nugee J was “wrong to apply the tortious test for remoteness and should have adopted the contractual test. It followed that the damages of £1,057,290 for loss of the Nomura mandates were wrongly awarded”.

Nugee J’s judgment last year upheld one but dismissed three other claims of negligence against the firm. Damages were awarded of £1,057,290 for US loss of profits, £430,023 for London loss of profits and £125,000 for “diversion of [WP co-founder Rupert Channing’s] time”.

The legal line-up:

For the claimant, Wellesley Partners LLP

Atkin Chambers’ Fiona Parkin QC and Mischa Balen instructed by Enyo Law partner Simon Twigden and associate Charlie Morris 

For the defendant, Withers LLP

Hailsham Chambers’ Michael Pooles QC instructed by RPC partner Caroline Shiffner