Court of Appeal confusion on lost opportunity claims

Published 6 October 2017

Perry v Raleys [2017] EWCA Civ 314

This Court of Appeal decision arises from the settlement, by Raleys, of Mr Perry's Vibration White Finger ("VWF") claim in 1999 at £11,660. Under the VWF Scheme, the severity of Mr Perry's VWF meant he was presumed to be entitled to a services award, if he had previously carried out certain tasks (gardening, window cleaning, car maintenance, decorating etc.), but could no longer do so unaided due to VWF. Mr Perry's settlement did not include any damages for services. Subsequently he alleged that Raleys had negligently failed to advise him to pursue a services claim, and sought damages from Raleys to reflect the lost opportunity to also secure a services award of c.£17,300.

Shortly before trial, Raleys admitted that they had failed to advise of the potential for a services award. At trial, the judge found that the admitted negligence had not caused Mr Perry to settle his VWF claim at an undervalue. He found that Mr Perry could still perform the relevant services, so could not honestly have made a services claim, even if advised of the possibility of doing so. As a result, Mr Perry did not establish that he met the criteria to make a services claim. However, the judge found that if Mr Perry could have shown that he could honestly have made a services claim, then such claim would have had an 80% chance of success.

Court of Appeal Decision

The Court of Appeal reversed the first instance decision. In the only reasoned judgement, Lady Justice Gloster LJ found that this was one of the very rare cases where a trial judge's findings of fact should be overturned.

She criticised the trial judge for merging two separate issues: (1) what Mr Perry would have done if properly advised, and (2) his prospects of success in any services claim. On issue (1), the trial judge decided that Mr Perry could in fact still carry out the services, so that – acting honestly - he would not have brought a services claim, even if advised differently. LJ Gloster found that this amounted to an assessment by the trial judge of whether the services claim would have succeeded, so that the trial judge wrongly elided issues (1) and (2).

In contrast to the trial judge, LJ Gloster found that the Claimant could and would have brought a services claim (and she agreed that it would have had an 80% chance of success if brought).

Comment

LJ Gloster was correct to identify the two separate issues of (1) what Mr Perry would have done if properly advised, and (2) the prospects of success in any services claim. The extracts from the trial judgment cited by The Court of Appeal suggest that the trial judge also had these two separate issues in mind.

The key difference between the trial judge and the Court of Appeal is the stage at which the genuineness of the underlying claim should be considered. The trial judge found it was a stage 1 issue: that Mr Perry did not require assistance with services, so that acting honestly he would not have pursued a services claim in 1999. The Court of Appeal considered "the honesty issue" was for stage 2, relevant to the prospects of success.

When considering what a Claimant would have done if properly advised (in the context of a professional negligence claim), as a matter of public policy the court should determine that issue on the assumption that the Claimant would have acted honestly. If – on the facts - the Claimant could not honestly have brought the underlying claim, then that should be the end of the professional negligence claim, and any consideration of the prospects of success in the underlying claim is irrelevant and unnecessary. An award of damages to a Claimant to reflect a lost opportunity which could not honestly have been pursed is plainly wrong.

Professional negligence claims arising out of the conduct of litigation are fairly common. If a claim reaches a premature end due to a lawyer's negligence, then a further claim for the value of the opportunity the client has lost can be expected. Where the underlying claim was weak, it may have failed entirely had it reached trial (and left the client with an adverse costs liability to meet). However, where a lawyer causes a client to lose the opportunity to pursue a weak claim, the client can be arguably better off in the subsequent professional negligence claim. So long as the client can show that, but for the lawyer's error, the weak claim would have been pursued, the client will be awarded something to reflect the value of the litigation opportunity (on a percentage basis). This is a quirk of professional negligence claims which favours the wronged Claimant. However, it is a step too far if Claimants attempt to recover damages for the lost opportunity to pursue a claim which could never honestly have been brought.