Rory Thomson, a senior associate in the disputes team at CMS, comments on the judgment of the UK Supreme Court in the case of Perry v Raleys Solicitors, which was handed down on 13 February 2019. The judgment is a useful affirmation and clarification of the law on the assessment of causation and loss in professional negligence cases.

Background to the appeal

The respondent, Mr Perry, is a retired miner. He suffers from a condition known as Vibration White Finger (“VWF”). VWF is caused by excessive use of vibratory tools. It can cause a reduction in grip strength and manual dexterity in the fingers. Sufferers are often unable to carry out routine domestic tasks, such as gardening or DIY, without assistance.

In the 1990s, a group of test cases established that the National Coal Board had been negligent by failing to take reasonable steps to limit the exposure of miners to VWF. The Government set up a scheme (“the Scheme”) to provide compensation to miners who suffered from VWF.

The Scheme provided for two types of compensatory award to miners suffering from VWF, corresponding broadly with general and special damages for personal injury. Special damages could include a Services Award. To be entitled to a Services Award, a claimant had to establish: (1) that they had previously been able to do one or more of six defined routine domestic tasks, for example gardening, window cleaning and DIY, without assistance; (2) that they were currently unable to do those tasks without assistance because of VWF; and (3) that they were currently receiving assistance to do those tasks. If a medical assessment revealed a sufferer to have sufficiently severe VWF, they were entitled to a rebuttable presumption that they were eligible for a Services Award, in addition to general damages. With the benefit of that rebuttable presumption, sufferers’ claims for a Services Award were subjected to only light-touch checks.

Mr Perry instructed the appellant law firm, Raleys, to pursue a VWF claim, which ultimately fell within the Scheme. Mr Perry was medically assessed to be entitled to both an award of general damages and a rebuttable presumption in favour of a Services Award. However, Mr Perry settled his claim for payment of only general damages, in the sum of £11,600. He did not make a claim for a Services Award within the available time-frame.

Mr Perry made a claim against Raleys, alleging that because of their negligent failure to give him appropriate advice, he had lost the opportunity to claim a Services Award. He said that he had been eligible for a Services Award because, prior to developing VWF, he had been able to do all six of the defined tasks, but that he now required assistance to do them.

Raleys ultimately admitted breach of duty, but they denied that their breach caused Mr Perry any loss. The case proceeded to trial, where the judge held that Mr Perry had failed to prove that Raleys’ breach had caused him loss. The judge found that Mr Perry’s VWF had not caused him any significant disability which meant he could not perform the six tasks without assistance, sufficient to enable him to make an honest claim for a Services Award. Mr Perry’s claim was accordingly dismissed.

Mr Perry appealed and the Court of Appeal reversed the decision of the trial judge on causation. The Court of Appeal held that the trial judge had, in dealing with causation, wrongly conducted a “trial within a trial” of the very question which would have arisen if Mr Perry had made a claim for a Services Award (i.e. whether in fact, because of the VWF, he needed assistance to do the six tasks which he had previously been able to do unaided). The Court of Appeal also held that the trial judge had wrongly imposed the burden upon Mr Perry of proving that fact on the balance of probabilities.

Raleys appealed to the Supreme Court.

The Supreme Court’s judgment

The Supreme Court allowed Raleys’ appeal and restored the judgment of the trial judge.

In its judgment, the court reviewed the law of causation in professional negligence cases, noting that the assessment of causation and loss in such cases has given rise to difficult conceptual and practical issues. The main difficulty was that the court needs to assess what, if any, financial or other benefit the client would have obtained in a counter-factual world (i.e. where the professional had not been negligent), or it needs to form a view on the likelihood of a future event.

In these situations, the court occasionally departs from the ordinary burden on a claimant to prove facts on the balance of probabilities. It does so by recourse to the concept of loss of opportunity or loss of a chance. But that does not mean that the claimant does not still have the basic requirement to prove that their loss is caused by a breach of duty. Nor is it always wrong in a professional negligence claim to investigate, in the manner of a trial, facts relevant to the claim that the client has been caused loss by the professional’s breach.

Referring to the “sensible, fair and practicable dividing line” that was laid down in the case of Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602, the court noted that:

… the courts have developed a clear and common-sense dividing line between those matters which the client must prove, and those which may better be assessed upon the basis of the evaluation of a lost chance. 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.” (paragraph 20)

These principles apply equally to claims about the loss of an opportunity to achieve a more favourable outcome in a negotiated transaction, and to claims about the loss of an opportunity to pursue a legal claim.

One important consequence of this approach is that there is no reason in principle or in justice why either party to the negligence claim should be deprived of the full benefit of an adversarial trial of the question of what the client would have done. In other words, a “trial within a trial” can be a fair and appropriate means of assessing the client’s conduct, even if it would not be appropriate to undertake the same assessment of the conduct of a third party. For the latter, the court should instead evaluate the loss of opportunity.

The court therefore held that it was not wrong in law or in principle for the trial judge to have conducted a trial of the question of whether Mr Perry would, or could, have brought an honest claim for a Services Award. That was something that Mr Perry had to prove on a balance of probabilities, and for which a trial was the appropriate means of evaluation. Moreover, the trial judge was correct to impose the requirement that Mr Perry’s claim be an honest one: a client honestly describing his condition to his solicitor when considering whether to make a personal injuries claim would not be advised to do so if the facts described did not give rise to a claim; the court may fairly presume that the client would only make honest claims; and the court simply has no business rewarding dishonest claimants.

The court also held that the Court of Appeal had wrongly interfered with the trial judge’s findings of fact, and provided yet another reminder of the stringent constraints on an appellate court’s ability to reverse such findings.