Lost opportunity to claim can be of uncertain value
Introduction
Claims for loss of chance, especially in the context of the lost opportunity to litigate, are something of a curate's eggs. While the claimant may have an otherwise good claim and is clearly entitled to some redress, the court is often forced to speculate on the loss to such an extent that the claimant (and, indeed, the defendant) can commit themselves to expensive litigation without any real idea of what the ultimate damages award might be.
The recent case of Chweidan v Mischon de Reya is a good example of how the principle of loss of opportunity can reduce an apparently high value claim to a relatively modest damages award – especially in cases where the claimant has been denied the opportunity to bring a claim, so-called 'lost litigation'.
Background
Chweidan appointed Mischon to act for him in respect of various employment and discrimination claims against his former employer, JP Morgan, arising out of his dismissal and bonus arrangements. In the course of that litigation Mischon failed to lodge an appeal notice in time and to advise Chweidan that he had additional cause of action against JP Morgan.
As a result Chweidan brought a claim against Mischon for the lost opportunity to litigate the appeal and the omitted cause of action, claims which (if successful) would have afforded Chweidan damages of approximately £360,000. As Chweidan was unable to show how the lost litigation would have turned out, his claim was at best for a loss of chance of winning.
The legal principles
The judge summarised the legal principles applicable to loss of chance once there has been a finding of breach of duty. First the claimant must establish causation. In the context of lost litigation the court will not hold a 'trial within a trial' to determine if the lost claim would have succeeded. Instead the claimant must prove that the lost claim had a real and substantial, rather than merely negligible, prospect of success.
If it can be shown that the claimant's chances were more than merely negligible, the court will try to evaluate them. To do so the court will assess the likely damages award if the lost litigation had succeeded. The court will then apply a fraction or percentage to that amount to reflect the uncertainties the claim faced.
The calculation of that fraction or percentage is not scientific and is entirely a matter for the judge based upon the evidence and information in front of him or her. The more information the judge has the more detailed the analysis can be, although in some cases it may still be more appropriate to take a broad brush approach.
Finally, if the claimants claim involves more than one contingency then separate percentages or fractions must be determined for each contingency and then multiplied together – this greatly reduces the amount of damages available.
Chweidan's chances
In Chweidan's case, the judge was able to undertake a detailed analysis of the lost litigation as plenty of evidence had been adduced by the parties. However, the judge had to assess the prospect of both Chweidan's appeal succeeding and then the chance of Chweidan's underlying claim succeeding once the case was remitted back to the lower court.
The judge held that the chance of the appeal succeeding was 50% and the underlying claim succeeding was 33%, giving an overall chance of 16% (ie 50% x 33% = 16%), which the judge then modified to 18% percent to reflect the possible early settlement value in the claim. This gave a damages award of £65,000.
Compared to the potential damages value of Chweidan's lost litigation £360,000, this is a relatively low award. But that underlines the uncertainty of how a judge will evaluate loss of chance claims. Claimants (and their lawyers) contemplating bringing a loss of chance claim need to give careful thought to how valuable their claim is before commencing proceedings.
The author Matthew Walker is a member of Burges Salmon's Disputes and Litigation team working with Andrew Burnette.