Supreme Court guidance on loss of a chance claims -  Perry v Raleys Solicitors

This is the first occasion that the Supreme Court has had the opportunity to consider a claim for a loss of a chance in a professional negligence claim relating to a lost litigation opportunity, since the Court of Appeal’s judgment in Allied Maples Group Ltd v Simmons & Simmons (1995). The Supreme Court has provided guidance on how these claims should be approached.

Background

Between 1999 and 2011, a scheme for the compensation of miners with Vibration White Finger syndrome settled nearly 170,000 claims and paid £1.7 billion in compensation. Mr Perry’s claim was one of those, and it was settled by his solicitors, Raleys, in the first year of the scheme. It was not until 2009 that Mr Perry sought to bring a professional negligence claim against Raleys. He argued that the settlement of £11,660 for general damages represented an under-settlement of his VWF claim, because it had not included a claim for a ‘services award’ under the scheme, relating to his ability to carry out manual tasks such as DIY, and he had lost the chance to pursue that claim because of Raley’s negligence. In its ruling, the Supreme Court therefore had to consider loss of a chance principles.

Loss of a chance principles

Allied Maples was a ‘lost transaction opportunity’ case (as opposed to a ‘lost litigation opportunity’ case such as Perry). The claimant claimed it had lost the opportunity to enter into a better transaction. The Court of Appeal held that where a claim depended upon what the future/theoretical actions of a third party would have been, the approach to be taken is as follows (assuming breach of duty is established):

1. The claimant must prove their case as to what they would have done, if non-negligently advised. The claimant has to establish this to the usual balance of probabilities standard (greater than 50%). If the claimant cannot show that their actions would have been as they assert, the claim fails.
2. If that is shown, can the claimant then show that there was a ‘real or substantial’ chance that the third party would have acted in the way the claimant asserts? If not, again the claim fails on causation and only nominal damages will be recovered where breach of duty can be shown.
3. If that is shown, the court proceeds to the final stage, and assesses loss by reference to the percentage chances of success. So if the claimant has lost the opportunity to obtain an advantage of £1,000,000 but had only a 30% chance of obtaining it, the claimant would recover £300,000.

In lost litigation cases, the courts have tended toward an approach where, once the claimant has shown how they would have acted and the real and substantial chance, the defendant solicitors would have the burden of proof of showing that a claimant had not lost something of value, and any uncertainty in ascertaining the strength of the underlying claim should be resolved in favour of the claimant, not the defendant solicitors.

The decisions at first instance and on appeal

At first instance, Mr Perry’s claim failed. The judge found that he had not been able to demonstrate that he would have made the claim for a services award, because having considered his evidence, his disability was not sufficient for him to be able to make that claim (on an honest basis). The judge found that Mr Perry lacked credibility as a witness, for example because despite his evidence as to his disability, this was contradicted by medical evidence and photographs of him on social media. Mr Perry could not show that, if non-negligently advised, he would have advanced a claim for a services award.

The Court of Appeal reversed the judge’s findings, and found that he had made two errors in law:

• The judge should not have conducted a ‘trial within a trial’ in relation to whether Mr Perry would have made a claim for a services award.
• The judge wrongly imposed the burden on Mr Perry to establish that he would have made that claim on the balance of probabilities.

The Supreme Court’s decision

The Supreme Court has reinstated the decision of the trial judge, reversing the Court of Appeal decision. The following points are relevant guidance for future loss of a chance cases:

• There should not be any distinction in principle between a lost litigation opportunity case and a lost transaction opportunity case. In either case, a claimant will have to satisfy the court as to what they would have done, if non-negligently advised. The claimant’s evidence will be important in establishing this.
• That is a balance of probabilities test, and has an all-or-nothing outcome – if a claimant can prove that they would have proceeded as alleged, then the recovery will not be discounted purely because there was a real chance that they would not have done. Conversely, if that claimant does not succeed on the balance of probabilities, the claim fails entirely.
• Since proving that issue is of such fundamental importance, neither party should be deprived of the opportunity of a full trial of the issue. In this case, Mr Perry’s credibility and other evidence as to his disability were all relevant to that balance of probabilities test.
• There is a presumption that such claims will be pursued on an honest basis. A claimant, acting honestly (here, as to the extent of his injuries) would not be advised to pursue a bad claim. The court has no business rewarding dishonest claimants.
• The loss of a chance stage of the evaluation (point 3 above) is not applied to whether a claimant would have brought a claim (point 1, assessed on a balance of probabilities), but only to the assessment of the lost chance in the claim (or transaction, as appropriate). It is at this stage where a ‘trial within a trial’ is inappropriate.
• The Supreme Court also held that the high bar for an appellate court interfering with a trial judge’s finding of fact was not met in this case, and reversed the Court of Appeal’s findings in this respect also.

Comment

This is helpful guidance from the Supreme Court, particularly the clarification that the embargo on a ‘trial within a trial’ does not mean that professionals and their insurers cannot defend such a case by adducing (and/or robustly challenging) evidence as to the claimant’s case on what they would have done if non-negligently advised.

This case is not about dishonesty, but clearly where a claimant’s version of events is in issue – particularly where the court is trying to assess what a claimant would have done in properly advised – defendants may seek to challenge a claimant’s credibility through evidence or cross examination, and the court may make findings accordingly. This may not just be relevant in relation to lost litigation opportunity claims, but potentially also claims in relation to lost transaction opportunities.

If you would like to discuss the implications of this ruling for your business, please contact a member of the team.

Further reading:

Perry v Raleys Solicitors [2019] UKSC 5.

Allied Maples Group Ltd v Simmons & Simmons [1995] EWCA Civ 17.