The Supreme Court has clarified how claims for loss of chance against negligent advisors will be assessed, in a decision that will be relevant to any claim by a bank or lender who is considering taking legal action against third party suppliers who have failed to provide adequate advice on a potential litigation matter.
On 13 February 2019, the Supreme Court overturned the Court of Appeal's decision in the case of Perry v Raleys Solicitors  UKSC 5.
Mr Perry is a retired miner who suffers from Vibrating White Finger ('VWF'). In 1996, Mr Perry instructed Raleys Solicitors ('Raleys') to pursue a claim against his former employer. In 1999, due to a large number of claims for VWF being pursued against British Coal, the Department for Trade and Industry set up a compensation scheme (the 'Scheme').
Applicants to the Scheme were assessed for entitlement to both general and special damages. The special damages could include a Services Award to qualifying miners.
To be entitled to receive a Services Award, applicants had to demonstrate that, as a result of suffering from VWF, they were to longer able to carry out specific domestic tasks without assistance.
In November 1999, Mr Perry settled his claim for general damages for £11,600. In February 2009, Mr Perry brought a claim against Raleys for negligent advice resulting in loss of opportunity to claim a Services Award.
Raleys admitted breach of duty but denied that their breach caused Mr Parry any loss. Mr Perry was unsuccessful at trial. The trial judge concluded that the VWF Mr Perry suffered from did not prevent him from performing any of the specified domestic tasks without assistance; and, that he was unable to make an honest claim for a Services Award.
Court of Appeal
Mr Perry appealed the decision. The judgment was overturned by the Court of Appeal based on factual grounds and two errors of law. The errors of law included that:
- The judge had wrongly conducted a 'trial within a trial' of whether Mr Perry required assistance in carrying out domestic tasks which he had previously carried out unaided; and
- The judge wrongly imposed the burden on Mr Perry to prove that fact on the balance of probabilities.
The Supreme Court overturned the Court of Appeal's decision and upheld the original judgment.
The Supreme Court held that, if a question of whether a claimant would have benefitted financially is dependent on what the claimant would have done upon receipt of competent advice, the claimant must prove what action he would have undertaken on the balance of probabilities. The claimant is best placed to assist the court in answering such a question.
If proving that the claimant would have taken certain steps upon receiving advice is of fundamental importance to the claim, neither party should be deprived of having this issue examined at trial.
The Supreme Court also held that, for a loss of chance claim to succeed, the claim that would have been pursued must have been an honest claim.
In this claim, Mr Perry was best placed to provide evidence on the action he would have taken had he been in receipt of competent advice and the extent to which his VWF prevented him from completing the specified domestic tasks.
Mr Perry's claim failed as, at the time he initially instructed Raleys, he could not have honestly provided the firm with information which would have resulted in him being entitled to a Services Award.
This case clarifies how claims for loss of chance will be treated at trial.
This case is relevant any claim by a bank or lender who is considering taking legal action against their third party suppliers who have failed to provide adequate advice on a potential litigation matter.
The burden of proof will be on the bank or lender to evidence what action would have been taken had the professional provided competent advice. It is important to retain sufficient evidence to prove the underlying claim, including documents and witnesses.