15 Feb 2019

The Supreme Court has had its first opportunity in over 20 years to consider the correct approach to determining loss of a chance claims arising from lost litigation in a judgment just handed down in Perry v Raleys Solicitors [2019] UKSC 5. It is a decision of considerable interest to professionals and their insurers. 

Key points

The key issues arising from the judgment are: 

  • There is no change to the basic requirement that a claim in negligence for loss of chance requires proof that the loss has been caused by the breach of duty and that the claimant has lost something of value
  • There is no change to the dividing line established in Allied Maples Group Ltd v Simmons & Simmons [1995] 1WLR between those matters which must be proved by the claimant on the balance of probabilities and those matters that are assessed on the basis of a lost chance
  • Facts which it is fair for the claimant to prove on a balance of probabilities may be subject to full examination and trial in the professional negligence claim, even if they would have been subject to the same in the underlying claim
  • It remains generally inappropriate to conduct a "trial within a trial" of matters that are assessed on the basis of a lost chance. 
  • In addition to claims for nuisance value, dishonest claims will be not be recoverable against negligent professionals
  • There is no distinction for these purposes between "lost litigation" claims and claims for loss of a chance under other commercial transactions. 

Issues in the case

The Supreme Court judgment examines the causation principle established in Allied Maples, namely that a claimant must first prove, on the balance of probabilities, what they would have done if the professional had not been negligent; and secondly, to the extent their loss depends on the hypothetical actions of third parties, this is assessed as loss of a chance on a percentage basis. 

There is a general rule that for the purpose of evaluating loss of a chance, the court does not undertake a "trial within a trial" of the merits of the underlying claim (Hanif v Middleweeks (a firm) [2000] Lloyd's Rep PN 920). 

First instance decision 

The case concerned a claim by an ex-miner against his solicitors for loss of a chance to claim certain compensation for vibration white finger (VWF). It is particularly interesting because the trial judge found that the claim for compensation could not have been brought honestly; during a two-day trial in which the claimant and his family members gave evidence, the Judge found that the claimant was lying about the impact of his condition on certain activities. Acting honestly, the claimant would not have qualified for the compensation in the first place. 
The trial judge accordingly concluded that the claimant had failed to prove that the solicitors' negligent advice had caused him any loss.

Court of Appeal decision 

The Court of Appeal stated that the examination of the claimant and his family members in the professional negligence claim amounted to a "trial within a trial", which was not allowed under the established principle. The Court of Appeal reversed the trial judge's findings in law and (unusually) awarded damages to the claimant. 

Supreme Court decision 

The Supreme Court has overturned the Court of Appeal's ruling and reinstated the trial judge's decision. 

The Supreme Court took the view that there is no reason in principle why the judge should not have conducted a trial of the question whether the claimant would or could have brought an honest claim for compensation if given competent advice by his solicitors. This was something which the claimant had to prove on the balance of probabilities (the first limb of Allied Maples) and was capable of being fairly tried, the matters being within the claimant's own knowledge. 

Furthermore, the fact that the issue would have been investigated in the underlying claim did not prevent it from being tried in the negligence claim. This did not go against the principle that assessment of loss of chance should not entail a "trial within a trial" (the second limb of Allied Maples), as it was a matter to be decided on the balance of probabilities (the first limb).
 
The Supreme Court further stated that, if nuisance value claims are irrecoverable against negligent professional advisors (as established in Kitchen v Royal Air Force Association [1958] 1 WLR 563), then the same applies to dishonest claims. This is for obvious reasons, not least of which being that the court simply has no business rewarding dishonest claims. 

The Supreme Court made no distinction between claims relating to lost litigation and other claims for loss of a chance. 

The Court of Appeal's other findings of fact and law were also overturned by the Supreme Court. 

Implications of the decision 

The Supreme Court judgment provides helpful guidance on how to deal with issues of causation in claims for loss of a chance.  In essence a lost litigation claim is no different in principle from any other claim for the loss of a chance. A determination of facts in the underlying matter to assess whether the claimant has in fact lost anything of value is acceptable and does not constitute a “trial within a trial”.

For professionals and their Insurers it is comforting to note that those issues that can fairly be examined in professional negligence claims will be and that dishonest claims will be given short shrift. 

We look forward to receiving the next Supreme Court ruling in relation to loss of a chance claims expected later this year in Edwards v Hugh James Ford Simey [2018] EWCA Civ 1299.