Supreme Court Refuses to allow a Claim against Lawyers for Loss of a Dishonest Claim
On 13 February 2019 the Supreme Court handed down judgment in its first decision on loss of chance principles for 14 years (in Perry v Raleys Solicitors  UKSC 5).
It held in favour of the lawyers and overturned all of the findings of the Court of Appeal. It held that there is a burden of proof on a claimant to demonstrate on the balance of probabilities that the claim that she or he would have brought would have been an honest one and that a court is entitled to determine that issue on a full forensic examination of the facts at trial. It also provided a clear and balanced statement of the principles for determining cases against professionals involving some element of third party or future contingency.
The defendant lawyers acted for the claimant on his claim for compensation for vibration white finger under a government backed scheme. A settlement was concluded for general damages of £11,600. The claimant alleged that he had lost the opportunity of pursuing a claim for a Services Award as a result of the lawyer's failure to advise him about it. The Services Award provided compensation for lost or reduced ability to perform certain domestic tasks.
The defendant accepted that it had failed to give appropriate advice about the Services Award but said that it had not caused the claimant any loss. It contended that the claimant had not been in a position to pursue the Services Award honestly because the claimant had a pre-existing condition unrelated to the vibration white finger that affected his ability to isolate the impact of it on the relevant activities. The issue for the Supreme Court was whether the claimant had to prove that such a claim would have been honest.
First Instance and Court of Appeal Judgments
The claimant lost his claim before the judge at first instance because the judge found that he had not been able to demonstrate that his claim for a Services Award would have been honest. The judge heard evidence on that issue and reached a view on the balance of probabilities. After a two day trial which included cross-examination of the claimant and his family the judge concluded that the claimant's vibration white finger had not caused him any significant disability in performing the relevant domestic tasks such that he could have made an honest claim for the Services Award. The Court of Appeal allowed the claimant's claim saying that the trial judge had made two errors of law. In determining whether the claimant would have brought an honest claim he had fallen into the trap of conducting a "trial within a trial" (and thereby determining whether the claimant's claim for a Services Award would have succeeded),. He had also required the claimant to prove that he would have brought a successful claim rather than assessing the prospects of success on a 'loss of chance' basis.
The judgment of the Supreme Court was given by Lord Briggs (with all four other members agreeing).
He first considered whether the Court of Appeal was correct in saying that the trial judge had conducted an impermissible 'trial within a trial' on the honesty of the claimant's lost claim. He held that it was wrong so have so concluded. In doing so he reviewed the key cases setting out the principles to be applied in the assessment of 'loss of chance' claims. He set out the basic principle that the court, in some cases, departs from the usual burden of proof on the claimant in relation to counter-factual and future events. The reason for this is that it would sometimes produce an absurd result and in some cases it is simply unfair on the claimant where the quality of the evidence has diminished.
However, none of that meant that a claimant is relieved from the obligation to prove that loss has been caused by the breach of duty. In an important summary of the principle Lord Briggs said this (at paragraph 19):
"But none of this means that the common law has simply abandoned the basic requirement that a claim in negligence requires proof that loss has been caused by the breach of duty, still less erected as a self-standing principle that it is always wrong in a professional negligence claim to investigate, with all the adversarial rigour of a trial, facts relevant to the claim that the client has been caused loss by the breach, which it is fair that the client should have to prove."
He went on to set out the clear and common-sense dividing line between those matters that the claimant must prove and those which are to be assessed on the evaluation of a lost chance (at paragraph 20).
"... To the extent (if at all) that the question whether the client would have been better off depends upon what the client would have done upon receipt of competent advice, this must be proved by the claimant upon the balance of probabilities. To the extent that the supposed beneficial outcome depends upon what others would have done, this depends upon a loss of chance evaluation. ..."
He held that two important consequences flowed from the balance of probabilities test in relation to the claimant's own actions. This first is that if the claimant fails to demonstrate that he would have brought the claim his claim fails completely. Equally, if he succeeds - even by a narrow margin - he suffers no discount by reason of that particular uncertainty. The second (arising out of the all or nothing nature on this causation issue) is that there is no reason that either party should be deprived of the full benefit of an adversarial trial on that issue.
In applying that principle to the claimant's case Lord Briggs held that the claimant had to prove on the balance of probabilities that he would have taken any necessary steps required to convert competent advice from his lawyers into some financial advantage. As part of this the claimant also had to prove that his claim would have been an honest one. He gave three reasons for this.
- First, a client would not ordinarily be advised to pursue a dishonest claim by his or her lawyers.
- Second, "... the court when appraising the assertion that the client would, if properly advised, have made a personal injuries claim, may fairly presume that the client would only make honest claims, and the client would not be permitted to rebut that presumption by a bald assertion of his own propensity for dishonesty ...".
- Third, "the court simply has no business rewarding dishonest claimants".
There was no unfairness in requiring the claimant to be subject to a full forensic of the facts relevant to the honesty of the putative claim and the existing authorities were not inconsistent with that approach.
Lord Briggs also rejected the Court of Appeal's second criticism of the trial judge's approach. The Court of Appeal held that the trial judge had wrongly imposed on the claimant the burden of showing that his claim would have been successful. Lord Briggs rejected this. On a full analysis of the trial judge's judgment he was satisfied that he had assessed the prospects of success on the conventional loss of chance basis.
The Court of Appeal was critical of the manner in which the defendant, its lawyers and insurers had conducted the defence of the claim by subjecting it to full forensic examination. The Supreme Court has sent out a strong message that the Court of Appeal was entirely wrong on this. Lord Briggs was clearly influenced by the principle that "the court simply has no business rewarding dishonest claimants". The judgment sets out a balanced restatement of principles underlying the assessment of loss of chance claims and corrects some of the tendencies of lower courts to apply the existing law in favour of claimants. Its emphasis on the policy of declining to reward dishonesty is also likely to be applied in the assessment of Lord Toulson's criteria in Patel v Mirza for determining the engagement of the illegality defence (see RPC's illegality article here).