Loss of Chance – following breach of contract

You may have a loss of chance/opportunity claim if you enter into a contact which is then breached.

A recent Supreme Court decision in the case Perry v Raleys Solicitors [2019] UKSC 5 clarified the law relating to loss of chance.

This post examines the legal position should an opportunity be thwarted, through the negligence of another person or organisation and are  damages available if you lose out on a chance?

The answer is yes; however, strict criteria must be met.

An Oxford University graduate, had claimed “inadequate” teaching cost him the chance of a lucrative career as a solicitor and his case was dismissed.  The judge examined whether the teaching the student received was adequate and concluded it was.

In his judgement he said “None of this evidence supports the conclusion that the teaching of the gobbets paper that year fell below reasonable standards even if under-achievement by an individual (or even group of individuals) can of itself constitute evidence of negligent teaching. Generally speaking, it cannot do so. The matter was put thus by Lord Nicholls of Birkenhead in Phelps v Hillingdon London Borough Council [2001] 2 AC 619, 668, in connection with such an allegation in relation to the teaching of children

“Proof of under-performance by a child is not by itself evidence of negligent teaching. There are many, many reasons for underperformance”.

When can loss of chance/opportunity  apply?

There are no defined limit on circumstances whereby a claim for a loss of chance can be brought, certain actions lend themselves better than others and these include:

Loss of chance claims for professional negligence

Loss of chance claims are often brought in relation to solicitor negligence, whether it be through providing negligent advice or the negligent handling of litigation.

In Thomas v Albutt [2015] EWHC 2187 (Ch), a barrister was found to have been negligent after failing to advise claimants to prepare and serve certain evidence for a hearing. Damages were awarded for the loss of the chance that, with better evidence, the hearing might have gone in their favour.

Loss of chance in breach of contract

Damages for loss of chance can also be claimed in cases involving a breach of contract on the basis that had the default not occurred, the claimant may have obtained a benefit or avoided loss.

Loss of chance due to general negligence

One of the reasons Mr Siddiqui’s claim failed against Oxford University was because a breach of duty by the defendant could not be established. As well as establishing a breach of duty, for a loss of chance claim to succeed it must also be proved, on the balance of probabilities, that the defendant owed the claimant a duty of care and they suffered damage because that duty was breached.

Loss of chance due to economic tort and restitution

In McGill v Sports and Entertainment Media Group [2016] EWCA Civ 1063, the claimant football agent negotiated a transfer of a player from one club to another pursuant to an oral agency contract he had with the player.

Prior to the contract completing, the defendant, a rival agency, persuaded the player to breach his oral contract with the claimant, then completed the club transfer on the same terms. The claimant brought proceedings against multiple defendants, primarily based on economic torts and restitution, claiming the defendant’s actions had cost him £300,00 in loss of commission.

The Court of Appeal reviewed the cases dealing with loss of chance and followed the principles laid out in the two leading judgments of Allied Maples Group Limited v Simmons and Simmons [1995] and Wellesley Partners LLP v Withers [2015] which are:

  • in loss of chance cases which involve the hypothetical acts of a third party, the claimant must prove there was a real, not merely speculative, chance the third party would have acted in a way
  • that would have resulted in a benefit being conferred on the claimant
  • once the above has been established, the claimant must then prove that the defendant’s act or omission caused the loss of chance
  • if causation is established, the loss of chance will be quantified as a percentage of the damages awarded

In McGill, it was held there was a real possibility that the claimant would have successfully negotiated the player’s transfer contract with the club, therefore, his claim for breach was established.

The Supreme Court decision in Perry v Raleys Solicitors

In February 2019, the Supreme Court gave a landmark ruling on loss of chance. In Perry v Raleys Solicitors, the Claimant, Mr Perry, a former miner, had developed vibration white finger (VWF). He sought compensation through a government scheme. The scheme provided for general and special damages; special damages could include a Services Award in respect of tasks such as gardening and DIY. Advised by the Respondent solicitors, Mr Perry settled his claim for general damages only. He subsequently sued Raleys Solicitors on the grounds that their negligent advice had cost him the loss of chance to an award of special damages.

After a two-day trial, which included cross-examination of Mr Perry, his wife and his two sons, the judge in the County Court concluded that Mr Perry had failed to prove that Raleys’ admitted negligent advice had caused him any loss. Judge Saffman’s main reason for dismissing the claim was that Mr Perry’s lack of credibility as a witness led to the conclusion that he could not have made an honest claim for a Services Award.

For example, Mr Perry’s claim that he was unable to perform certain domestic tasks (gardening, decorating, DIY, car maintenance, car washing and window washing) without assistance was contradicted by medical evidence.

He was also photographed fishing at a time when he claimed he had to give up the sport due to VWF.

Note – social media photographs can provide strong evidence at trial, so when bringing a case, be careful to ensure your evidence is not contradicted by social media posts.

The Court of Appeal had reversed the County Court decision. The Supreme Court allowed the appeal and reinstated the original County Court judgment. The Supreme Court’s decision takes the law on loss of chance back to the principles set out in Allied Maples stating they were a “sensible, fair and practicable dividing line”.

In addition, the Supreme Court held that in cases of loss of chance, if a Claimant argues they would have pursued a claim, that claim must be an honest one as “The court simply has no business rewarding dishonest claimants”.

The doctrine is used to determine causation and assess damages in cases where the claimant has lost the opportunity to pursue a course of action, which they contend would have been pursued and had a “chance” of achieving some (usually monetary) benefit. Common examples are “lost litigation” cases where a claimant has lost the chance of pursuing another party and “lost transaction” cases where a claimant asserts they missed out on securing a better deal with another, because of negligent solicitors’ professional advice.

Loss of chance cases are assessed in two stages.

The claimant is subject to the usual “but for” test on the question of whether the chance would have been taken in the first place, but for the breach and will need to establish they would have taken the chance on the balance of probabilities.

However, the courts diverge from the “but for” test when assessing the prospects of a claimant being successful in recovering a benefit against the third party.

This is because the evidence required by the claimant to prove (but for the breach) they would have secured some benefit, is outside the claimant’s knowledge and control and the third party would have to speculate on the hypothetical outcome which would have been dependent on a different set of facts. This is referred to as the “counterfactual”, in effect, predicting the past.

If the court accepts the chance would have been taken by the claimant and the prospects of securing some benefit were “real and substantial” by reference to the doctrine in the Court of Appeal decision of Allied Maples Group Ltd v Simmons and Simmons [1995] 1 W.L.R (more than 10% chance of securing a better outcome), the court then calculates damages based upon the chances of success in percentage terms.

For example, if the court assess a claimant’s chances of securing £500,000 damages in a case of “lost litigation” at 40%, then the claimant would receive £200,000.

In damages claims for loss of chance, questions of causation which depend on what the Claimant would have done are considered on the “balance of probabilities”.

Questions of causation dependent on what a third party would have done, are assessed on the “loss of a chance” basis.

One of the reasons for this distinction (per the Supreme Court in Perry v Raleys), is the likely difficulty in obtaining relevant evidence from third party witnesses.

In this High Court case, the third party actually gave evidence at trial and the Court considered what effect this had on the way in which it approached the question of causation.

In a judgment likely to be reassuring for prospective Claimants, the Court concluded the appropriate test remains the “loss of chance”, irrespective of the fact that the third party can give direct evidence on the point.

Moda brought a professional negligence and breach of contract claim against Gateley LLP for loss of chance. Two questions arose on causation: 1) what would Moda have done had they discovered the true position at the relevant time; and 2) what would a third party have done at the relevant time? In defence of the claim, Gateley summonsed the third party to give evidence at trial, seeking to establish that on the balance of probabilities, Moda’s claim should fail.

Notwithstanding the fact that the third party’s evidence did not explicitly support Moda’s claim, the Court concluded that the correct test remained that of “loss of a chance”. Moda was not obliged to prove its case was “more likely than not”, only that that the lost chance was a “real or substantial” one. In reaching its decision, the Court highlighted the following:

  • There is an important distinction between the level of engagement of a third party witness, and a party to litigation. Only the latter has to give disclosure.
  • If the test for causation depended on whether or not third party evidence was available, this would be difficult to appraise.
  • The Court needs to remain pragmatic where it is impractical to have full disclosure.

Claiming for loss of chance

Because loss of chance cases often rely on establishing the hypothetical decisions of a third party, causation can be difficult to prove.

Legal advice is required from the outset to have a chance of a successful result.

We can advise and represent you on claiming loss of chance damages. For more information, please call our office.

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