Posted: 15/04/2019
As the long winter drew to a close, the Supreme Court handed down a unanimous judgment in Perry v Raleys Solicitors [2019]: a case on the principles of loss of a chance in claims involving negligent advice, and one with profound implications for solicitors and other professionals.
A landmark judgment, and the first at this level since the House of Lords decision in Gregg v Scott [2005], Perry tackles the thorny conceptual and practical issues that surround the assessment of causation and loss in professional negligence.
The respondent, Frank (of the House of) Perry, is a retired miner. Like many miners, he developed vibration white finger (VWF), a condition caused by excessive exposure to vibratory tools. VWF can, although does not always, cause loss of grip strength and manual dexterity, preventing the sufferer from carrying out routine domestic tasks such as DIY, car maintenance or gardening unaided.
Following the test case of Armstrong v British Coal Corporation [1998] in which negligence was established, the Department of Trade and Industry founded a tariff-based compensation scheme, enabling large volumes of VWF claims to be effectively processed (the scheme). The scheme contemplated two types of award, corresponding broadly with general and special damages in personal injury. Special damages could include a ‘services award’. To qualify for a services award, a claimant had to establish that before developing VWF they had undertaken one or more of six domestic tasks without assistance; that, due to VWF, they could no longer undertake those tasks without assistance; and that they indeed received such assistance.
Miners who qualified for a general damages award and were proven to suffer a certain severity of VWF were entitled to a rebuttable presumption in their favour that they also qualified for a services award, which they could then pursue by completing a questionnaire regarding the six domestic tasks. Compensation was paid to qualifying claimants, with deductions made in cases where a miner’s reduced ability to perform the six tasks was caused in part by contributory medical conditions (described as ‘co-morbidity’).
Mr Perry, represented by the respondent, Raleys Solicitors (Raleys), pursued a claim under the scheme. Examination of Mr Perry indicated a severity of VWF not only sufficient for him to obtain general damages, but also entitling him to a rebuttable presumption in his favour in the event that he sought a services award. However, in 1999 Mr Perry settled his claim for a payment of general damages only and did not claim a services award.
Nearly a decade later, Mr Perry issued proceedings against Raleys claiming that because of Raleys’ failure to advise him appropriately, he had lost the opportunity to claim a services award.
Although Raleys admitted breach of duty shortly before trial, they denied that such breach would have caused Mr Perry loss, arguing that Mr Perry could not have brought an honest claim for a services award, and any claim he did bring would have failed. The scene was thus set for a storm of swords.
Trial by combat being unavailable, Mr Perry took his chances in a two-day County Court trial in which he was cross-examined, along with his wife and two sons who alleged to have assisted him with the six tasks.
Despite their testimony, the first instance judge found that Mr Perry had failed to prove that Raleys’ negligent advice had caused him loss. This was because, he considered, Mr Perry’s VWF had not caused him any significant disability in performing any of the six tasks sufficient to have enabled him to make an honest claim for a services award.
Although the medical evidence regarding the severity of Mr Perry’s VWF was in his favour, it was undermined by his contemporaneous medical records (which showed no complaints of lack of manual dexterity), evidence that he engaged in fishing at a time when he claimed to have had to give it up, his failure to offer any credible explanation for these disparities, and a lack of credibility in his family’s evidence.
In a judgment described by the Supreme Court with approval as ‘detailed and lucid’, the first instance judge referred to Mr Perry’s ‘complete lack of credibility as a witness’ (para 10), which led to him concluding that Mr Perry would not have been able to make an honest claim for a services award.
Consequently, the claim was dismissed with costs. Matters looked dire(wolf) for Mr Perry.
Notwithstanding that ruling, the trial judge also set out the findings that he would have made on quantum had Mr Perry’s claim not failed on causation – no doubt with a pragmatic eye to avoiding an expensive retrial should his decision be overturned. Accepting the evidence of the single joint expert, Mister (Maester) Tennant, as to the impact of Mr Perry’s chronic back troubles on his ability to perform the six tasks, the judge assessed the prospects of success in a services award claim, after discounting for co-morbidity, at 80%.
Mr Perry took the battle to the Court of Appeal, and here, his claim found a more favourable reception. The Court of Appeal reversed the trial judge’s decision, holding that his approach to causation was, in its view, fundamentally flawed.
In addressing causation, the Court of Appeal held that the trial judge had wrongly conducted a ‘trial within a trial’ regarding the impact of the VWF on Mr Perry’s ability to perform the six tasks. In doing so, it found that he had wrongly imposed the burden on Mr Perry to prove that fact on the balance of probabilities. The correct question that the trial judge should have asked, it held, was whether the claimant would have acted differently if advised correctly. It also relied on two further grounds based on what it considered to be shortcomings in the trial judge’s appraisal of the evidence.
The Court of Appeal considered that the trial judge’s alternative findings on quantum were sufficiently reliable to render a retrial unnecessary, and it assessed damages in the sum of 14,556.15 Golden Dragons, plus interest and additional amounts pursuant to Part 36.
In giving judgment, the Supreme Court reviewed the authorities in detail, and set out a number of guiding principles in relation to loss of a chance claims. Loss of a chance damages have developed to address the difficulties that arise in cases where the court needs to assess future or counter-factual – ie ‘what-if’ – scenarios (here, ‘what if the claimant had received competent advice?’). The Supreme Court considered in particular where the evidential burden in this type of case lies.
The basic principle remains that a negligence claim requires proof that the breach caused the loss. However, in future or counter-factual scenarios, the court will occasionally depart from the ordinary burden on a claimant to prove the facts required to succeed on the balance of probabilities, instead assessing the claim on the basis of the loss of a chance.
The courts have developed a pragmatic approach as to matters that a claimant must prove, and those that may be better assessed on the basis of the loss of a chance. For example, the loss of a chance concept may apply where it would be absurd to decide a claim on an all-or-nothing basis (ie giving nothing if the prospects of success were 49% and everything if they were 51%), or where it would be unfair to visit that evidential burden upon the claimant (perhaps due to the passage of time, or simply because it is impracticable to prove).
Crucially, the Supreme Court affirmed that the correct approach is that laid down in the Court of Appeal case of Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] (later approved by the House of Lords in Gregg). Allied Maples sets out a clear and common-sense dividing line between those matters which the claimant must prove, and those which may be better assessed on the basis of the loss of a chance. The dividing line is that the claimant must prove what he or she would have done on the balance of probabilities, whereas what others would have done (to the extent that this is relevant) depends upon a loss of a chance evaluation.
These principles apply both to claims such as that in Allied Maples, concerning loss of opportunity (due to negligence) to achieve a more favourable outcome in a negotiated transaction, and to claims such as Raleys, concerning loss of an opportunity to bring a legal claim. Lord Briggs, giving judgment in Raleys, explained (para 22):
In both cases the taking of some positive step by the client, once in receipt of competent advice, is an essential (although not necessarily sufficient) element in the chain of causation. In both cases the client will be best placed to assist the court with the question whether he would have taken the requisite initiating steps. He will not by the defendant’s breach of duty be unfairly inhibited in proving at a trial against his advisor that he would have done so, save perhaps where there is an unusual combination of passage of time and scarcity of other probative material, beyond his own unaided recollection.
This balance of probabilities test as to what the claimant would have done gives rise to an all-or-nothing outcome, in the usual way. It is therefore of such fundamental importance to the claim that neither party should be deprived of the full benefit of an adversarial trial on the issue. The forensic rigour of a trial should not be foregone, even if the question whether the client, properly advised, would have taken the requisite initiating step may be illuminated by facts which would (if disputed) have been investigated in the underlying claim. That has an important bearing on the extent of the general rule that for the purpose of evaluating the loss of a chance, the court does not undertake a trial within a trial.
In the present case, the step required by Mr Perry once in receipt of competent advice would have been to make a claim, in time, for a services award under the scheme. To that test, the trial judge had added that it would have to have been an honest claim, a requirement with which the Supreme Court agreed: dishonest claims fall outside the category of lost claims for which damages may be claimed in negligence against professional advisers (as do nuisance value claims).
For Mr Perry to have made an honest claim for a services award, he would have had to truly believe that by reason of developing VWF he now needed assistance in carrying out some or all of the six tasks. Such facts regarding Mr Perry’s actual physical condition and activities fell squarely within his own knowledge, and as such did not constitute either a counter-factual or a future scenario to which a loss of a chance assessment might be appropriate.
The applicable test was that of the balance of probabilities, and it was not therefore wrong, in law or in principle, for the trial judge to have conducted a trial on the question of whether Mr Perry, if competently advised by Raleys, would (or in fact could) have brought an honest claim for a services award. Indeed, Raleys was entitled to test this (para 41):
… with all the forensic tools available at an ordinary civil trial, and by proof or challenge of alleged facts relevant to that question, even if the same facts would have formed part of the matters in issue, either at the trial of the underlying claim, or upon its adjudication or settlement pursuant to the Scheme.
As to the burden of proof imposed upon Mr Perry, the Supreme Court gave the Court of Appeal’s judgment short shrift, holding that the trial judge did not impose some additional burden upon Mr Perry beyond that of proving, on the balance of probabilities, that he would have brought an honest claim.
Accordingly, and contrary to the findings of the Court of Appeal, the trial judge had not erred in law when determining the claim.
The Supreme Court then turned to whether the Court of Appeal was right to hold – separately from the supposed errors of law – that the trial judge was sufficiently wrong in his determination of the facts so as to enable an appellate court to intervene. The findings of the Court of Appeal here were that the trial judge had demonstrably failed to consider, or had misunderstood, relevant evidence, and that his decision that Mr Perry could not honestly have claimed to perform the six tasks without assistance could not reasonably be explained or justified.
It is an incontrovertible principle that an appellate court, which has not benefitted from observing a fact-finding exercise at trial as a first instance judge has, faces ‘real constraints’ (para 49) and should proceed with extreme caution when invited to overturn a trial judge’s finding of fact. To that end, the Court of Appeal had referred itself to a host of authorities on the matter. These included Henderson v Foxworth Investments Ltd [2014], in which the Supreme Court had said (para 26):
It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached.
The correct question for an appellate court is whether there was material upon which the trial judge could have reasonably reached the conclusion in question. The Supreme Court in the present case, having reviewed excerpts of the transcript of the cross-examination, determined contrary to the Court of Appeal’s findings that there was.
The Court of Appeal had further criticised the trial judge for giving insufficient weight to medical evidence broadly supportive of Mr Perry’s claim. However, the Supreme Court observed that the trial judge was not only entitled, but was in fact obliged, to weigh it against his perception that Mr Perry was lying about his ability to perform the six tasks. His conclusion, that the single joint expert’s opinion (itself to a significant extent based on what Mr Perry had told the single joint expert) did not prevail over Mr Perry’s lack of credibility, could not be described (para 60):
… as either lacking in reason or trespassing beyond the range of reasonable conclusions available to a trial judge.
Lord Briggs emphasised that:
… questions as to the weight of competing evidence are pre-eminently a matter for the trial judge.
Two further criticisms made by the Court of Appeal, namely that the trial judge misunderstood or failed to apply a principle of the scheme, and that he could not have rationally reached the conclusion that Mr Perry, his wife and sons had all given false evidence, were also roundly dismissed. On this last point, the Supreme Court said (para 63):
It is a very strong thing for an appellate court to say, from a review of the paper records of a trial, that the trial judge was irrational in concluding that witnesses were not telling the truth, all the more so when the trial judge gives detailed reasons for that conclusion in a lengthy reserved judgment, and those reasons do not disclose any failure by him to consider relevant materials, or any disabling failure properly to understand them. The credibility (including honesty) of oral testimony is, of all things, a matter for the trial judge.
Furthermore, said the Supreme Court, while the Court of Appeal may have had persuasive and forcefully expressed views regarding why it, faced with the same material, would have come to a different conclusion, that did not support a conclusion that the trial judge had been irrational as the only explanation for his contrary view.
The Court of Appeal’s judgment was therefore overturned on every ground.
Although Raleys’ advice was negligent, that negligence did not cause Mr Perry to lose out on further damages, because he could not have obtained such damages without lying in court. The Supreme Court has taken a strong and sensible stance to discourage the pursuit of dishonest claims, and the message is clear: a claimant simply cannot succeed by showing that they would have brought a claim that would in fact have been dishonest. That would not be just. As Lord Briggs succinctly said, ‘the court simply has no business rewarding dishonest claimants’ (para 27).
Perry also provides important confirmation, at the highest level, of the scope of the concept of loss of a chance, and its limits. The correct approach is to test, on the balance of probabilities, matters which are neither future not counter-factual, but are within the claimant’s own knowledge and belief, and the principles set out in Allied Maples are affirmed.
In addition, the case is a timely reminder that appellate courts should be very hesitant to interfere in findings of fact made by a trial judge, who has had the benefit of hearing the evidence and seeing it tested in cross-examination. The threshold for an appellate court to interfere with findings of fact remains extremely high – the trial judge’s finding must have been one that no reasonable judge could reach.
Watchers (on the wall) will note that this judgment will be of great interest to many. It provides comfort to those seeking to resist such claims: professionals (not least solicitors) and also their personal injury insurers.
Is this the last word on loss of a chance claims? Quite possibly for some time… but for now, our watch is ended.
A version of this article was first published in the March / April 2019 edition of the Commercial Litigation Journal.
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