PROVING THINGS 110: ASSESSING DAMAGES: “BEGIN WITH FIRST PRINCIPLES”: PROVING AND ASSESSING LOSS IN A CLAIM FOR PROFESSIONAL NEGLIGENCE

In Edwards v Hugh James Ford Simey (a firm) [2018] EWCA Civ 1299 the Court of Appeal overturned a finding that the claimant had not established causation for damages  in a professional negligence action. When assessing damages the court should begin with first principles.

 

“… it is helpful to begin with first principles. As with all other claimants in tort, those who have suffered losses from professional negligence are entitled, so far as possible, to be put back in the position they would have been in, absent the negligence.”

THE CASE

The claimant brought an action against the defendant solicitors alleging negligence in the handling of a VWF claim.  It was alleged that a claim for services had not been made under the VWF scheme.  The Recorder looked at theevidence available by the time of  the professional negligence trial and found that  the claim for services had no chance of success.

KEY POINTS

  • In assessing damages the court was attempting to put the party in the position they would have been had the negligence no occurred.
  • In a professional negligence case the court is assessing the value of the lost claim, not trying the original causes of the negligence claim.
  • Only in exceptional cases would a court consider after-coming evidence, that would not have been available at the original hearing or trial.

THE JUDGMENT ON APPEAL

The Court of Appeal overturned the Recorder’s decision and ordered that the matter be remitted for rehearing.  There was a detailed review of the case law by Irwin L.J., who concluded:

Analysis
    1. There is no doubt that existing authority on this topic has its difficulties. It is for that reason I have quoted fairly extensively from the case law in this review. In my view, it is helpful to begin with first principles. As with all other claimants in tort, those who have suffered losses from professional negligence are entitled, so far as possible, to be put back in the position they would have been in, absent the negligence. The principle of full compensation, encapsulated in the Latin phrase restitutio in integrum, applies just as much to professional negligence cases as to others. Therefore the Court’s function, subject to specific considerations to which I will come, is to establish what loss and damage was caused. That is a question of causation: what losses resulted from the negligence?
    2. Where negligence by lawyers has prevented a claim being brought, or caused the claim wrongly to be abandoned or lost, or has led to an under-settlement, then the measure of loss is the difference between what the claimant actually got by way of compensation (whether zero, or something) and the amount he would have got, absent the negligence. Again, the claimant in professional negligence is in no different position in relation to the principle.
    3. Setting aside any question of after-coming evidence, sometimes examination of the original claim will demonstrate that the lost claim, or part claim, was completely hopeless, in which case the professional negligence claim is worthless. Sometimes the lost claim would have been unanswerable, in which case the full value of the original claim should be recovered. In many cases, the value of the original lost claim cannot be assessed as hopeless or cast-iron, and the court must assess a percentage prospect of success as applied to what would have been recovered if the original claim had been recovered in full. It is important to stress that in all three cases the assessment is of the value of the lost claim, not a trial of the original cause at the time of the negligence claim. That is true of the worthless case and the cast-iron case as much as it is true of cases with less certain outcomes.
    4. The principles referred to above, set down by Simon Brown LJ in Mount v Barker Austin (A Firm) [1988] PNLR 493, at pages 510D to 511C, are as follows:
“1. The legal burden lies on the plaintiff to prove that in losing the opportunity to pursue his claim (or defence to counter-claim) he has lost something of value i.e. that his claim (or defence) had a real and substantial rather than merely a negligible prospect of success. (I say `negligible’ rather than `speculative’ – the word used in a somewhat different context in Allied Maples Group Limited v Simmons & Simmons [1995] 1 WLR 1602 – lest `speculative’ may be thought to include considerations of uncertainty of outcome, considerations which in my judgment ought not to weigh against the plaintiff in the present context, that of struck-out litigation.)
2. The evidential burden lies on the defendants to show that despite their having acted for the plaintiff in the litigation and charged for their services, that litigation was of no value to their client, so that he lost nothing by their negligence in causing it to be struck out. Plainly the burden is heavier in a case where the solicitors have failed to advise their client of the hopelessness of his position and heavier still where, as here, two firms of solicitors successively have failed to do so. If, of course, the solicitors have advised their client with regard to the merits of his claim (or defence) such advice is likely to be highly relevant.
3. If and insofar as the court may now have greater difficulty in discerning the strength of the plaintiff’s original claim (or defence) than it would have had at the time of the original action, such difficulty should not count against him, but rather against his negligent solicitors. It is quite likely that the delay will have caused such difficulty and quite possible, indeed, that that is why the original action was struck out in the first place. That, however, is not inevitable: it will not be the case in particular (a) where the original claim (or defence) turned on questions of law or the interpretation of documents, or (b) where the only possible prejudice from the delay can have been to the other side’s case.
4. If and when the court decides that the plaintiff’s chances in the original action were more than merely negligible it will then have to evaluate them. That requires the court to make a realistic assessment of what would have been the plaintiff’s prospects of success had the original litigation been fought out. Generally speaking one would expect the court to tend towards a generous assessment given that it was the defendants’ negligence which lost the plaintiff the opportunity of succeeding in full or fuller measure. To my mind it is rather at this stage than the earlier stage that the principle established in Armory v Delamirie (1722) 1 Stra. 505 comes into play.”
  1. Those principles have been quoted with approval in many cases since, see for example in Sharif v Garrett & Co [2007] 1 WLR 3118 at paragraphs 38 to 40. This approach is based on the judgments in Kitchen v RAF Association [1958] 1 WLR 563 and is consistent with Hanif v Middleweeks [2000] LLR 920.
    1. Although Simon Brown LJ was explicitly considering cases struck out for want of prosecution, I can see no sensible distinction to be made between a case struck out for negligent delay and a case abandoned due to negligent advice. In each case the essence is that a claim was not pursued due to negligence.
  2. The reason for this rather pedantic analysis is to underscore the important principle which, it seems, has often been forgotten or at least elided. In every such case, the court is seeking to establish what was lost by the claimant, as at the date, often the notional date, of the original trial or settlement. It is easy to see why the elision occurs. The value of the original claim, however assessed, becomes the major component of loss in the professional negligence action. But what the claimant should recover in the professional negligence claim is not established by answering the question: how much of the original claim can he prove now? Rather it is established by answering the question: what was the value of what he lost then?
  3. It is a perfectly permissible approach to an assessment of the value of a claim to consider the prospects and amount of settlement: see Somatra v Sinclair, Roche and TemperleyHickman v Blake Lapthorn and Hanif v Middleweeks.
  4. Save in exceptional cases, these principles apply even where relevant after-coming evidence arises. It appears to me there is no difficulty with the decisions in Charles v Hugh James Jones and Jenkins, or Dudarec. In each of those cases the relevant after-coming evidence would and should have been available at the notional trial date, had the litigation been competently conducted. Despite some of the obiter dicta quoted above, those cases are no authority for the proposition that all available after-coming evidence falls to be assessed in every case, or for a suggestion that on any professional negligence claim the Court simply approaches the strength of the case as at the date of the professional negligence trial, asking the Claimant what he can now prove, on the basis of expert evidence which would not have been in existence had the original matter proceeded with competent representation. It appears to me that this was the central reasoning behind the decision of this Court in Perry v Raleys.
  5. Those considerations have particular force in the context of such a Scheme as this. The purpose of the Scheme was to provide a rough-and-ready resolution of a very large number of standardised small claims at low cost. That was a proportionate approach. It appears to me particularly inappropriate to lose sight of what would have been the outcome of such a Scheme, by reference to after-coming evidence which would not have been brought into being at the time.
  6. As a number of the authorities have made clear, public policy sets some limits to the principle of restitutio in integrum. If it emerges that the original claim (or part of it) was based on fraud, then of course the court will not lend itself to fraud. That is clear.
  7. A more difficult problem arises from the rare case such as Whitehead v Searle, where a key element of an award (such as the cost of care for many years) would have been based on a prediction (that the carer would live until the child was an adult) which has unexpectedly been proved wrong. This is the same problem as the lottery win contemplated by Smith LJ in Dudarec. It appears to me likely that it was both the certainty and the significance or scale of the impact of the death in that case, that led to the conclusion expressed by Laws LJ in his judgment.
  8. I accept that there is no established threshold over which a party must step before such an after-coming event, which could not and would not have been known, should alter the outcome. However, if this is a matter essentially of public policy, as the reference by Laws LJ to Attorney General v Blake makes clear, so that the Court is forced to recognise that the ordinary principles “would not do justice between the parties”, then in my view there must be a requirement for a significant or serious scale to the consequences of the supervening event, before it should be permitted to establish an exception to the normal principle. Unless there is some such threshold, there will be a continuing pressure to admit fresh evidence which would not have been available at the original notional trial, on all aspects of such cases, dependent on the energy and resources of the parties to the professional negligence action and their insurers. In practice that will undermine the rule of restitutio in integrum.
  9. In this case, no fraud was proved. The after-coming evidence would not have been available at the notional date of settlement of the claim under the scheme. The evidence was not categorical for the reasons I have already indicated: was the voice file or audio file certainly that of the deceased? Was there a real possibility that Mr Watkins, years after the event and in old age, when he rarely went out in the cold, was underplaying his symptoms when he spoke to Mr Tennant, as opposed to overplaying them originally? What would the deceased have said? What was the significance of Mr Tennant’s concession in paragraph 3 of his letter that the grading of 3Sn was justified by the technical testing?
  10. These questions were all apposite when considering the prospects of the claim under the Scheme. But in my view neither the certainty nor the scale of this after-coming evidence could possibly bring this case into the exceptional category where evidence which would never have been available at the original claim should have diverted the Court from assessing the value of the original claim. Without the fresh evidence from Mr Tennant, there was no prospect of the outcome reached. Even with the fresh evidence I do not see that the matter was “clear beyond doubt” as the Recorder put it, or “overwhelmingly clear” as the matter was expressed by Gloster LJ in Perry v Raleys. In my view the principle of restitutio in integrum should apply. The Court should have decided what were the prospects of the claim, as it would have been progressed, assessed the value of the lost claim, and made an award accordingly.
  11. For those reasons, I would quash the decision below, and remit the case for rehearing.