Professional negligence claims: loss of a chance, or all-or-nothing?

Monday 25 February 2019

Authors: David Friar and Himmy Lui

​​​​​​​​​​​​The UK Supreme Court this month considered the difficult question of when a claim against a negligent solicitor should be determined on loss of a chance principles, and when it must be proven on the balance of probabilities. The decision will be of significant interest to insurers and professionals alike.

Facts

Mr Perry was a retired miner who suffered a condition known as vibration white finger, which he developed using vibratory tools at work. Under a United Kingdom government scheme, miners who suffered from vibration white finger could claim general damages, and those with a high level of severity could claim a Services Award by filling out a questionnaire to show which of six prescribed tasks he or she was no longer able to undertake without assistance.

Mr Perry engaged Raley Solicitors to act for him in his claim. As a result of Raley Solicitors' negligent advice, Mr Perry only settled for general damages, and did not make a claim for a Services Award within the available timeframe.

Mr Perry sued Raley Solicitors, claiming that he had lost the opportunity to claim a Services Award because of Raley Solicitors' negligent failure to give him appropriate advice. Raley Solicitors admitted a breach of duty, but denied that it had caused him any loss.

Lower Courts

The trial judge considered whether, if Raley Solicitors had given proper advice about the availability of the Services Award, Mr Perry would have been able to prove that his vibration white finger qualified for a Services Award. The trial judge ruled that Mr Perry could not prove this, because he lacked all credibility when giving evidence in relation to his underlying claim. Accordingly, the trial judge dismissed his claim.

In the Court of Appeal, the Court ruled that the trial judge erred in law for two reasons:

​(a) The trial judge placed the burden on Mr Perry to prove that he would have brought a successful claim, rather than assess the claim on a loss of a chance basis.

(b) The trial judge had conducted a "trial within a trial" about whether if Mr Perry had made a claim for a Services Award, he would have succeeded in showing that he was incapable of performing the six tasks without assistance.​

Supreme Court

The UK Supreme Court overruled the Court of Appeal on both grounds.

Loss of a chance or all-or-nothing?

The Supreme Court ruled that the ordinary burden of proving loss on a balance of probabilities is on the claimant. That said, sometimes the Court will depart from this test where it would be absurd to decide the claim on an all-or-nothing basis, such as where the claim involves uncertain outcomes based on a counter-factual analysis.

In relation to cases of solicitors' negligence, the Court set out the following dividing line:

(a) If whether the claimant would have been better off on receipt of competent advice depends on what the claimant would have done, then the claimant must prove that outcome on the balance of probabilities, resulting in an all-or-nothing analysis.

(b) If whether the claimant would have been better off on receipt of competent advice depends on what other people would have done, then the Court will undertake a loss of a chance analysis.

The Supreme Court ruled that Mr Perry's case fell within the all-or-nothing category, so it was his burden to prove on the balance of probabilities that he would have claimed a Services Award.

Trial within a trial?​

In relation to the Court of Appeal's objection to a "trial within a trial", the Supreme Court ruled that if the answer to whether the client would have taken steps to obtain a financial gain depends on the merits of the underlying claim, then there is no reason not to conduct a trial on the underlying claim.

In Mr Perry's case, it was necessary to examine the merits of the Services Award claim because if the claim was found to have less than a negligible chance of success, then either he would have been advised not to make the claim, or he would have made the claim dishonestly. In the first case, Mr Perry would have failed to show that he had suffered any loss as a result of the negligent advice. In the second case, "the court simply has no business rewarding dishonest claimants".

The Court further observed that in this case, it was not unfair to require Mr Perry to prove his actual physical condition at the relevant time or about his habitual patterns of going about the prescribed tasks, given that these are not matters of counter-factuality that are impossible to prove.

Accordingly, it rejected the Court of Appeal's objection to the trial judge's "trial-within-a-trial", and ruled that Mr Perry's claim should be dismissed.

Comment

The UK Supreme Court's decision to draw a bright line between claims that are determined on a loss of a chance basis and claims that must be proven on an all-or-nothing basis provides welcome clarity to professional negligence claims. The Court's requirement that claimants prove that they would have taken a particular course of action if they had received competent advice is well-reasoned, as it does not require the claimant to prove any external uncertainties, only what is within the claimant's own knowledge.

If you have any questions about professional negligence, please get in touch with the authors or your usual Bell Gully advisor.​


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • David Friar

    Partner Auckland
  • Tim Smith

    Partner Wellington
Related areas of expertise
  • Litigation and dispute resolution
  • Insurance