The High Court has recently revisited how loss of chance damages will be quantified in professional negligence claims.

The case, Chweidan v Mishcon de Reya [2014] EWHC 2685 (QB), concerned a failure to cross-appeal in time an Employment Tribunal decision relating to the dismissal of a former JP Morgan trader following a skiing accident with a client in 2007.

The facts

The dispute between the former employee and his lawyers began when the Defendant firm was instructed by the Claimant in 2008 to bring a claim before the Employment Tribunal as a result of his bonus being cut. The claim was initially successful with the Claimant being awarded around £550,000 for his unfair dismissal and discrimination claims. The discrimination claim was, however, overturned on appeal – but the Claimant's cross-appeal was not lodged in time, his compensation was reduced to £68,000 and he became responsible for a costs bill far in excess of that sum.

The Defendant accepted blame for the breach but the Claimant proceeded to bring a claim against the firm – alleging that the Defendant had also failed to advise or assist him in bringing his allegations against JP Morgan within the statutory grievance procedure. The Defendant argued that the prospects of success in the Claimant's appeal were so low that the failure to lodge a cross-appeal in time had not caused the Claimant to lose an opportunity of any value.

The decision

Simler J found that whilst the firm had been negligent in failing to lodge the cross-appeal in time, the Defendant was not in breach of any of the other allegations posed by the Claimant.

In considering the Claimant's lost opportunity, Simler J summarised her approach in the following 6-point process:

  1. The Claimant must prove that the underlying claim has a real and substantial prospect of success.
  2. If it has, the court will evaluate that prospect, making a realistic assessment of what would have been the Claimant's prospects of success had the original litigation proceeded.
  3. The court should assess the likely level of damages that the Claimant would most probably have recovered in the underlying action and discount that sum to reflect the uncertainties of recovering it.
  4. In some loss of chance cases it may be appropriate to view the prospects on a fairly broad brush basis while in other cases it may be correct to look at the prospects in greater detail.
  5. The availability of oral and documentary evidence and the possibility of settlement also had to be factored in.
  6. Where there were "separate hurdles" to overcome, the percentage prospects on each should be multiplied together to give an overall lower percentage prospect of success.

In this case, Simler J calculated the Claimant to have had:

  • A slightly less than 50% chance of winning his appeals against the tribunal's refusal to order specific disclosure and its rejection of his age discrimination claim;
  • At best, a 33% chance on winning his unlawful age discrimination claim in the underlying action.

On that basis, the Claimant's overall prospect of success was 16%, which when taking into account the possibility that success at cross-appeal may have resulted in the Claimant's former employer viewing the underlying claim differently, was increased slightly to 18%. When applied to the net amount the Claimant would have received from his award had it not been overturned (c.£360,000), this resulted in the Claimant being awarded c.£65,000.

Comment

The decision follows earlier decisions and reiterates that for loss of chance claims:

  • The legal burden remains on the Claimant to prove that, in losing the chance to pursue claim that had a real and substantial prospect of success, they have lost something of value;
  • The evidential burden rests on the Defendant to show that, despite them having acted for the Claimant (and likely to have considered and advised on the prospect of success at the relevant time), the Claimant's prospects were so negligible that nothing of value has been lost.

Clearly a Defendant firm who has previously advised that the underlying claim has good prospects of success will face a heavier burden – with any Claimant likely to focus on representations made to them as to their likelihood of succeeding in the underlying action. Indeed, the Defendant may find itself in the somewhat uncomfortable position of trying to argue that its initial assessment of the prospects of success was wrong and that, on that basis, the damages awarded in the loss of chance claim should be less.

The 6-point process should, however, provide Defendants with some clarity in terms of how the level of damages will be decided – it being confirmed that where a Claimant has a number of hurdles to overcome, the amount of damages may be significantly reduced once each hurdle has been considered.