Claims against solicitors often require the courts to speculate on what would have happened had the solicitor provided appropriate advice. In essence the courts look to evaluate the chance of a particular event occurring.

The Court of Appeal revisited loss of chance issues in McGill v The Sports and Entertainment Media Group [2016]. The claimant entered into an oral contract with Gavin McCann (McCann), a professional footballer contracted to Aston Villa, to act exclusively as McCann's agent in negotiating a transfer to Bolton Wanderers (Bolton). The contract was not reduced to writing and, under relevant Football Association Regulations, would have been unenforceable. The claimant argued that, on a balance of probabilities, the oral agreement would have been reduced to writing by the close of the transfer deal.

Shortly before the transfer the defendant persuaded McCann to breach his contract with the claimant and complete the transfer using the defendant's agency. The transfer agreement was on similar terms to those negotiated by the claimant and the defendant received £300,000 in commission from Bolton.

In the Court of Appeal it was argued that the judge erred when he found it was necessary for the claimant to prove on a balance of probabilities that McCann would have signed a written contract by the close of the transfer deal. The claimant argued that the case was one of a kind where the loss was properly analysed as the loss of a chance to obtain a pecuniary advantage which depended on the future actions of a third party (ie either Bolton who would pay commission or McCann who would pay a fee in the event Bolton refused to pay). Either way the claimant's ultimate entitlement to payment of a fee would depend on the future actions of McCann and Bolton and on the final terms of a transfer deal. Accordingly, the correct analysis was that the claimant lost the opportunity of being paid a commission.

The Court of Appeal accepted this analysis and, in doing so, summarised key principles underlying the loss of chance doctrine. In particular:

  • Where the claimant's loss depends on the hypothetical acts of a third party, the claimant will need to prove on a balance of probabilities that there was a real and substantial (rather than negligible) chance that the third party would have acted so as to confer the benefit in question;
  • Thereafter, the evaluation of the loss of chance is a matter of quantification in percentage terms. The measure of damages is the sum which would have been recovered by the claimant in the underlying claim multiplied by the percentage chance of the claimant making that recovery. So, for example, if the claimant would have recovered £100,000 in the underlying action and he had a 40% chance of making that recovery, damages would be assessed at £40,000.

The Court of Appeal also considered remoteness and loss of chance in the recent decision of Wright v Lewis Silkin LLP [2016] EWCA Civ 1308. The judge at first instance found that solicitors were liable to pay £2m to the claimant for failing to advise in relation to jurisdiction in drafting an employment contract between the claimant and a foreign company. The claimant argued that, had such a clause been included, he would have obtained judgment for a £10m severance payment much sooner. The claimant alleged that the absence of an exclusive English jurisdiction clause led to a delay in the litigation, with the underlying defendant becoming insolvent by the time of enforcement.  

On appeal the solicitors argued that the claimant's 20% loss of chance of recovering the severance payment by voluntary payment was too remote and/or outside the scope of the duty which the solicitors owed in relation to the jurisdiction issue.

The Court of Appeal applied the principle that, where there is concurrent liability in contract and tort, the narrower contractual test of remoteness of damage applies (Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146). In so doing it held that the solicitors were liable for damage resulting from their breach if, at the time of making the contract, a reasonably competent solicitor would have had damage of that kind in mind. In respect of this contract, the underlying defendant was a substantial business with valuable assets and the Court of Appeal found that the solicitors could not reasonably contemplate that, within a few years, the underlying defendant would be unable to meet its debt.

The Court of Appeal also stated obiter that, on the basis of South Australia Asset Management Corp v York Montague Limited [1997] AC 191, loss of a 20% chance that the underlying defendant would voluntarily meet a judgment debt to preserve its reputation was not a loss within the scope of a solicitor's duty.

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.