Supreme Court in “claimants must be honest” shocker! Good news for the solicitors’ professional indemnity market

Perry v Raleys Solicitors [13.02.19]

This case review was co-authored by Jennifer Chapman, Solicitor Apprentice, Manchester.

Here is some good news for the solicitors’ professional indemnity market on issues of causation, which had been stretched via the lower court decision in this case.

The Supreme Court has today affirmed the now rather old Allied Maples v Simmons & Simmons [1995] and added a modern touch. The court confirmed that a lost litigation claim is no different from any other claim for the loss of a chance, which is refreshing. When pursuing a lost opportunity claim, the claimant is still required to establish factual causation; that is, he would have been able to make an honest (if not necessarily successful) claim if the proper advice had been given.

Background

Mr Perry, a retired miner, suffered from Vibration White Finger (VWF). A group of test cases, representative of 25,000 similar claims, established that there had been negligence on the part of the National Coal Board in failing to take reasonable steps to limit the exposure of employed miners to VWF. A tariff based compensation scheme was set up to resolve the claims without need for litigation. The Appellant, Raleys Solicitors (Raleys), was one of the firms appointed to act on behalf of the miners to assist them with the compensation scheme, through a Claims Handling Arrangement.

Through the compensation scheme there were two main awards available, akin to general and special damages for personal injury. The special damages award could include a Services Award to qualifying miners with sufficiently severe VWF. Mr Perry underwent the examination, which triggered the presumption of an entitlement to the Services Award.

Mr Perry settled his claim in November 1999 for a payment of general damages only and made no claim for the Services Award. In February 2009, Mr Perry issued professional negligence proceedings against Raleys, claiming he lost the opportunity to claim a Services Award.

County Court

The trial judge concluded that Mr Perry had failed to prove that Raleys’ admitted negligent advice had caused him any loss because the VWF from which Mr Perry was suffering had not caused him any significant disability sufficient to enable him to make an honest claim for a Services Award. If properly advised, on the balance of probabilities, Mr Perry would never had claimed for the Services Award. Therefore, Mr Perry’s claim was dismissed.

Court of Appeal

The Court of Appeal reversed the trial judge on causation, holding that he had wrongly conducted ‘a trial within a trial’. The Court of Appeal also concluded the burden should not have been imposed on Mr Perry to prove the facts on the balance of probabilities, as this approach was contrary to settled authority.

Supreme Court

The Supreme Court concluded that the trial judge’s approach had been correct, noting:

  • There is no sensible basis in principle for distinguishing between the loss of opportunity to achieve a more favourable outcome in a negotiated transaction and the loss of opportunity to pursue a legal claim.
  • There is still the requirement in a negligence claim to prove that a loss has been caused by the breach of duty.
  • When considering the question of whether the client would have taken the step to initiate the claim, the facts of the case must be considered.
  • The trial judge was entitled to make findings of fact about the honesty of the claimant’s evidence. This was not to conduct a trial within a trial, but to properly consider factual causation.
  • The court will not undertake a ‘trial within a trial’ to evaluate the loss of a chance, but will assess whether the claimant lost a real and substantial chance and apply a discount to damages to reflect the risks that the claimant faced.

Mr Perry’s claim ultimately failed because on the facts known to him at the time regarding his VWF symptoms, he could not have given Raleys instructions that would have led to him being advised he would be entitled to the Services Award. Therefore, the first instance decision was restored.

Comment

The Supreme Court has upheld the approach laid down in Allied Maples and provided useful clarity on the question of whether a claimant’s honesty should be considered as a part of determining factual causation. This will apply not just to lost VWF and ‘under settled’ injury claims (and we are still seeing many of these), but to all loss of chance claims generally.

Where there is doubt as to the viability of the lost claim and therefore whether any such claim would be based on a dishonest presentation of the facts, this should be thoroughly investigated. Our fraud intelligence team is well equipped to conduct the appropriate investigations.

Whilst nothing terribly new, the Supreme Court’s decision is a welcome one for insurers. The retrospective analysis of long since settled injury claims may still continue, and result in negligence claims against the solicitors who advised on the original settlement. However, if a mistake has been made on a relatively minor issue, such as raising the issue of the cost of care, or services before settlement, then any such claim will be rightly scrutinised through the same retrospective lens.

We now await the Supreme Court’s decision in Edwards v Hugh James Ford Simey [2018] on the question of what evidence the court can consider when assessing the value of the lost chance. The appeal is due to be heard in July 2019.

This case review was co-authored by Jennifer Chapman, Solicitor Apprentice, Manchester.

Read other items in Professions and Financial Lines Brief - March 2019

Related item: No benefit of hindsight in professional negligence claims