Firm's negligence in Sheffield United deal did not cause loss, court rules

The High Court has dismissed a negligence claim potentially worth £150m over the disputed ownership of football club Sheffield United.

Sheffield United Limited (SUL) had brought proceedings against UK firm Shepherd and Wedderburn LLP over advice given in relation to its agreement to sell the club and its assets to Prince Abdullah bin Mosaad bin Abdulaziz Al Saud of Saudi Arabia. 

Disputes arising from the sale agreement led to a trial in 2019 before Mr Justice Fancourt in which the judge found largely in favour of the prince’s company. The claimants’ attention then turned to the solicitors who acted in relation to the agreement and subsequent litigation. United’s former owner Kevin McCabe sued the firm for negligence and breach of fiduciary duty and two partners personally for alleged breaches of personal duty of care.

In Cutlers Holdings Ltd & Anor v Shepherd and Wedderburn LLP, Mrs Justice Bacon found that the advisers had acted negligently in the drafting of the initial investment and shareholders’ agreement. But these mistakes made no material difference and the subsequent litigation would have happened anyway. The claims for breaches of fiduciary duty were dismissed.

The judge found that by failing to identify a flaw on the face of a clause of the contact, and accordingly failing to warn SUL of the risk from that wording or to suggest alternative drafting, Shepherd and Wedderburn breached its duties to the client.

It was argued by the claimants that, without this mistake, they would most likely have sold the shares and related properties to a third party and avoided the litigation. The firm submitted it was ‘fanciful’ to suggest Prince Abdullah would have agreed to any significant change in the drafting of the rogue clause, and that SUL would have conceded the point if pushed, as it did in relation to almost all of the prince’s demands during the negotiation. The litigation would not, therefore, have been avoided. 

The judge concluded it was ‘very likely’ that the prince would have agreed a redraft of the clause without significant dispute but that the litigation still would not have been avoided.

She added: ‘In the unlikely event that the prince had objected to the alternative drafting, I consider that SUL would have accepted the position, and events would then have unfolded as they did in fact. ‘Ultimately, in both cases, the parties would have been in the same positions as they were in by January 2018, and SUL would not have avoided the litigation which ensued.’

The judge further ruled that the firm had been negligent in the drafting of the option relating to the Sheffield United stadium, but this did not cause the claimants any loss. The firm was also negligent in failing to advise SUL there was an own interest conflict and to advise the client to seek independent legal advice, but there was no conscious or deliberate breach of solicitors’ duties.

Claims against managing partner Andrew Blain and litigation partner Philip Sewell were also dismissed.

Following the ruling, a spokesperson for Shepherd and Wedderburn said: 'We welcome the court’s decision that all of the claims against us failed. From the outset, our position was that these claims would not, and should not, succeed. While there are aspects of the judgment with which we disagree, we are pleased that the claims have been defeated.’