UK: A Chance, Ever So Small

Last Updated: 18 February 2004
Article by Andrew Blair and Steve Elam

We last looked at the law relating to loss of chance in the Winter 2001 Solicitors’ Liability Briefing, and noted then that claims relating to lost litigation are on the increase. Part of the reason for this is that claims for loss of chance arguably constitute an easier route to a successful award than proving a claim on the balance of probabilities. With the latter, success can lead to a full recovery whereas failure yields nothing; loss of chance claims offer the prospect of some recovery, arguably without the same burden of proof. The recent Court of Appeal decision in Sharpe v Addison shows that even a very small prospect of success in the original claim can be sufficient to found a successful claim against the solicitor who conducted that litigation.

A SMALL CHANCE IS ENOUGH

We assume that most readers will be familiar with the leading authorities on loss of chance, such as Kitchen v RAFA (1958) and Allied Maples v Simmons & Simmons (1991). The common thread underpinning this line of authorities is that the assessment of the chance that the Claimant has lost depends on the actions of a hypothetical third party. In lost litigation claims, the ‘independent third party’ is either the court (which will involve speculation as to what would have happened at trial) or the other party to the litigation (speculation about the basis on which the claim would have settled etc). In order to succeed, the Claimant has to show firstly that on the balance of probabilities, the litigation in question would in fact have proceeded, and secondly, that on the balance of probabilities there was a ‘real or substantial, rather than a speculative’ chance that the third party would have acted to confer a benefit on the Claimant (Stuart-Smith LJ in Allied Maples). Once the Claimant has established that the Defendant’s negligence deprived him of that ‘real or substantial’ chance, the valuation of that chance is purely a question of quantum, and can therefore, in percentage terms, be less than the balance of probabilities threshold which is 50%.

In Sharpe v Addison (2003), the Claimant pedestrian suffered serious injuries when struck by a taxi while crossing a road, and consulted the Defendant solicitor who brought an action against the driver on the Claimant’s behalf. However, the Defendant failed to notify the driver’s insurers pursuant to road traffic legislation with the result that insurers were released from their obligation to indemnify the driver. As the driver was of limited means, the claim was effectively rendered worthless. The Claimant brought an action against the Defendant in respect of the lost claim. The Defendant admitted negligence in respect of the failure to notify insurers but attempted to argue that the original claim was hopeless and that the Claimant had therefore lost nothing as a result of the negligence.

The Court applied the principles set out by Simon Brown LJ (also one of the Judges in Sharpe) in both Mount v Barker Austin (1998) and Sharif v Garrett & Co (2002). First, the legal burden lies on the Claimant to prove that there was a real or substantial rather than merely a negligible prospect of success. Secondly, the evidential burden lies on the Defendant to show that despite having acted for the Claimant and charged for the work, the claim was bound to fail. The Court emphasized that this evidential burden would be heavier when the Defendant solicitor had failed to advise the client of the hopelessness of his claim, as was the case in Sharpe, where both the Defendant and Counsel had advised the Claimant to bring the claim, and Legal Aid had been granted on that basis.

Despite this, at first instance, the judge found in favour of the Defendant, concluding that on the facts the original Road Traffic claim was worthless, primarily, it would appear, as a result of third party witness evidence indicating that once the driver had seen the Claimant there was insufficient time to avoid the accident.

The Court of Appeal reversed that decision. While the Court considered that the judge at first instance had correctly directed himself in the application of the principles in Mount v Barker Austin, it overturned his finding on the facts. Simon Brown LJ considered that there was, at the very least, a doubt as to whether the original claim was doomed to failure, and that in such circumstances, the benefit of the doubt should be with the Claimant (as he had previously observed in Sharif).

Simon Brown LJ also emphasised that it will not often be appropriate to value as nil a lost claim which the negligent solicitor had advised should be brought, and noted the unattractiveness of the argument that a solicitor who advised that Legal Aid be granted and then profited from that grant, having forfeited the claim through his negligence, should then assert that the earlier optimistic advice was itself negligent.

In justifying this outcome, the Court also made two points of particular note. First, Rix LJ drew an analogy between the test for a worthless claim for loss of chance purposes and the ‘no real prospect of success’ summary judgment test under CPR Part 24.2. Rix LJ asked himself whether the claim here would have been struck out under the latter test, and concluded that it would not, as to have done so would have required the Court to turn a trial on oral testimony into a paper exercise, an approach which has met with disapproval in the authorities on Part 24. Secondly, the Court considered the likely response of the insurer to the original claim had they been on risk, and thought that despite the very significant reduction for contributory negligence (see below), it would have been ‘far-fetched’ to consider that insurers would have proceeded to trial without the protection of some payment into court. It does not appear that there was evidence from the insurers in Sharpe, but no doubt enquiries will be made of them in future, similar cases.

Having found that the Claimant had established loss, the Court then went on to quantify that lost chance. Had the original claim proceeded, the Court felt that the Claimant’s contributory negligence would have been assessed at 75%. Of the remaining 25% of the value of the claim, Rix LJ assessed the recoverable percentage at 40% (giving a recovery of 10% of the amount claimed – 40% x 25%) on the basis that this was ‘less than half, …. as this would have been a very difficult case for the Claimant to win, to establish liability against the driver’. An overall loss of chance percentage of 10% in the original claim is extremely low. Arguably, it is too low to be considered a ‘real or substantial, rather than a speculative’ chance. Nevertheless, it was sufficient for the Claimant to succeed in this case. Although the Claimant’s original Road Traffic claim was undoubtedly weak, the Court of Appeal appears to have been influenced in its decision by the solicitor’s original advice to pursue the claim. Therefore, the Court seems to have been reluctant to conclude that the original claim did not have a value which could be quantified; but the 10% chance awarded reflected what was a very weak underlying claim.

There is no case law stating that a percentage is so low it amounts to a negligible prospect of success. It has previously been held that 20% (Hanif v Middleweeks (2000)), and 15% (Lloyds Bank PLC v Parker Bullen (2000),) is a sufficient chance of success to be more than negligible, but 10% is the lowest we have seen. Ironically, it seems that the claimant with a weak but not hopeless case may be in a better position if his solicitors are negligent in their conduct of his claim than if he takes the case to trial.

CONCLUSION

Sharpe provides further evidence of a solicitor’s difficulty in resisting lost litigation claims where the solicitor’s negligence is often not in dispute. The Courts will often be inclined to help the Claimant establish loss, and can use various tools to do so, including both the consideration of a likely payment into Court by insurers, and the Part 24.2 analogy above. In addition, the Courts will view as ‘unattractive’ arguments from solicitors asserting that an underlying claim was worthless when they had earlier advised that a claim be brought. The precise terms of advice given to clients as to the merits of a claim will clearly be important in such cases, and pessimistic advice, particularly if not fully heeded, might assist a Defendant. It appears, however, that this will continue to be a difficult area of claim for solicitors in which to avoid a finding that loss has been caused, even if the percentage might be extremely low.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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