February 14, 2019

Supreme Court decision on “lost litigation” issues

The Supreme Court has given judgment on an important case dealing with the always complex analysis of causation and loss of chance principles in a case relating to a lost opportunity to pursue a claim against a third party. In this briefing we consider the case and its implications.

Background

The Claimant, Mr Perry, had worked as a miner between 1966 and 1994 and had developed Vibration White Finger ("VWF") as a result of using vibratory tools at work. In 1996, Mr Perry instructed the Defendants, Raleys Solicitors ("Raleys"), to pursue a claim for damages against the Department for Transport and Industry ("DTI"), which had assumed the liabilities of the National Coal Board. In 1999 DTI established a compensation scheme for VWF and Mr Perry's claim was subsequently pursued under this scheme. In November 1999 Mr Perry's claim was settled for £11,600. The severity of Mr Perry's VWF meant that he was entitled to an award for services, if he had previously carried out tasks such as gardening, DIY or car maintenance (the "Services Claim"). However, Mr Perry's settlement did not include any damages for a Services Claim.

Mr Perry pursued a negligence claim against Raleys, alleging that Raleys had negligently failed to advise him of the possibility of pursuing a Services Claim and, therefore, his claim had been settled at an undervalue. Shortly before the trial, Raleys admitted negligence but argued that their negligence had not caused Mr Perry any loss.  The judge found that Mr Perry could still perform the relevant services without assistance and so could not honestly have pursued a Services Claim. Mr Perry's claim was dismissed on the basis that, if Raleys had advised on the Services Claim, Mr Perry would not have pursued it.  

The Court of Appeal allowed Mr Perry's appeal on the basis that: (1) the trial judge was wrong in his analysis of whether Raleys had caused Mr Perry any loss and (2) the trial judge made various errors in considering the evidence, leading him to find incorrectly that Mr Perry had been ineligible to pursue a Services Claim. Lady Justice Gloster added that there were public policy reasons that supported her decision, stating in particular that "it is far too easy for negligent solicitors, or perhaps more pertinently, their insurers, to raise huge obstacles to claimants… the latter are required, effectively to prove in the litigation against solicitors that they would have succeeded in making such a claim against the third party".

The Supreme Court's ruling

In a judgement given by Lord Briggs, the Supreme Court unanimously allowed Raleys' appeal and restored the first instance decision.

The Supreme Court found that, although the passage of time and simple practicalities of bringing a claim against the professional (such as the availability of documents and availability of relevant witnesses) may sometimes mean that it is unfair to impose upon the Claimant the same burden of proving facts in the underlying claim as part of his claim against the professional, this does not mean "that the common law has simply abandoned the basic requirement that a claim in negligence requires proof that loss has been caused by the breach of duty".

Lord Briggs confirmed that the correct approach is set out in Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602. A claimant must prove, on the balance of probabilities, that he would have taken any necessary steps required of him to convert the receipt of competent advice into some financial (or financially measurable) advantage to him. This is an essential (although not necessarily sufficient) element of the chain of causation and the claimant will be best placed to assist the court with the question of whether he would have taken the requisite steps. This does not, however, mean that the claimant must prove that their claim would have been successful. It is sufficient for the claimant to show that the claim had more than negligible prospects of success.

The Supreme Court also held that the first instance judge was correct to impose the additional requirement that the claim was made honestly. Lord Briggs explained that: (1) a claimant giving an honest description of his or her condition to a solicitor would not be advised to bring a claim if the facts were insufficient; (2) a court may fairly presume that the claimant would only make honest claims; and (3) the court should not reward dishonest claimants. Although the court will not undertake a trial within a trial whilst evaluating the loss of chance, Lord Briggs confirmed that it was not wrong in law or in principle for the first instance judge to have considered whether Mr Perry would (or could) have brought an honest Services Claim, if given competent advice by Raleys. Mr Perry was required to establish this proposition on the balance of probabilities and Raleys were entitled to test this with "all the forensic tools available at an ordinary civil trial". 

The Supreme Court also considered the circumstances in which an appellate court should interfere with a trial judge's findings of fact. Lord Briggs held that "the question for an appellate court is therefore whether there was material upon which the judge could have reasonably reached that affirmative conclusion". The credibility of oral evidence is always a matter on which the trial judge will be best placed to review and "the fact that an appellate judge might, if trying the case at first instance, have preferred or required the matter to be put to Mr Perry differently or more directly is neither here nor there".  The trial judge had the benefit of hearing from the witnesses and was obliged to weigh in the evidential balance his perception of their credibility. As such, his findings should not have been interfered with.

Comment

The Supreme Court has now given clear and welcome guidance that, as part of the chain of causation in a 'lost litigation' claim, a claimant must show that he would have brought an honest claim if he had been properly advised. This will inevitably include an assessment of the prospects of success of the underlying claim. Although a trial within a trial will not be permissible, the defendant is entitled to challenge whether the claimant would (or could) have brought such a claim. This was a relatively straightforward exercise in this case as the facts to be tested were within Mr Perry's own knowledge. It is unclear how the court will apply this proposition to cases where the evidence from the underlying claim is not so freely available to be tested.

The Supreme Court was also clear that a claimant does not have to prove that their underlying claim would have been successful, and that this was not the standard that the first instance judge had applied. The test in Allied Maples remains applicable and a claimant is only required to show that the claim had a more than negligible prospect of success.  This appears to be a rejection of the public policy reasoning deployed in the Court of Appeal.

Authors: Tom White and Beth Jenkinson