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The Supreme Court rules on causation in professional negligence case

13.03.2019 Insurance

Simon Cooper

Simon Cooper Consultant

Lucy Espley

Lucy Espley Senior Associate

In the recent case of Perry (Respondent) v Raleys Solicitors (Appellants) [2019] UKSC 5, the Supreme Court handed down a landmark judgment clarifying the correct approach to causation in professional indemnity cases in which the claimant alleges that because of his advisor’s negligence, he has last the chance to bring a claim against a third party.

Overturning the decision of the Court of Appeal, the Supreme Court held that in such cases, the claimant must be able to prove, on the balance of probabilities, that he or she would have made a claim if correctly advised (and it is implicit that any such claim would be honest).  If that hurdle can be overcome, the outcome of the proposed claim should then be assessed by the Court on a loss of chance basis – i.e. without conducting a ‘trial within a trial’ as to the merits of the lost claim.  The Supreme Court further made clear that it is not open to an appellate court to overturn the first instance court’s findings of fact unless the first instance judge’s finding was one which no reasonable judge could have reached.

This case involved Mr Perry’s professional negligence claim against his solicitors. Mr Perry had worked as a miner between 1966 and 1994. He developed a condition known as Vibration White Finger ("VWF") which is caused by excessive exposure to the effects of using vibratory tools. It was established by a group of test cases that the National Coal Board (later British Coal) had been negligent in failing to take reasonable steps to limit miners’ exposure to VWF. The Department for Trade and Industry (DTI) assumed responsibility for British Coal’s liabilities and in 1999 set up a tariff-based compensation scheme for miners who suffered from VWF. The scheme contemplated the making of two types of compensatory awards, broadly corresponding with general and special damages for personal injuries.

Mr Perry retained a firm of solicitors, Raleys, to pursue a VWF claim on his behalf in 1996. When the DTI’s scheme was set up, his claim was continued under the scheme. In 1999 Mr Perry accepted the DTI’s offer to settle his claim for the sum of £11,600. The settlement sum was calculated without reference to the cost of day-to-day assistance which Mr Perry said that he required as a result of his VWF. In 2000 the DTI’s compensation scheme was amended, establishing a new mechanism for the assessment and determination of claims in respect of such assistance ("Services Claims").  Under this new mechanism, a claimant was required to establish, by reference to a “factual matrix”, that there was at least one of six routine domestic tasks which he had undertaken without assistance prior to developing VWF but in respect of which he now required, and in fact received, assistance. Mr Perry did not make a Service Claim within the available timeframe.

Mr Perry then issued professional negligence proceedings against Raleys claiming that by reason of their negligent failure to give him appropriate advice, he had lost the opportunity to bring a Services Claim in respect of all six tasks the value of which he quantified at £17,300.17. Raleys admitted their breach of duty shortly before trial.  

At first instance, the judge concluded that Mr Perry had failed to prove that Raleys’ admitted negligent advice had caused him any loss. In coming to this conclusion, the judge found that the extent of Mr Perry’s VWF when he settled his claim had not caused him any significant disability in performing any of the six domestic tasks without assistance. The judge held, therefore that Mr Perry would not have been able to make an honest claim for a Services Award and that, therefore, Raleys’ negligence had not caused him any loss. In particular the judge did not find Mr Perry to be a credible witness, noting that there were disparities between his evidence and the medical evidence as well as evidence which included photographs of him fishing which he said he had been forced to give up because of the VWF.

Mr Perry appealed to the Court of Appeal which overturned the first instance decision on four grounds:

  1. In addressing the issue of causation, the judge had made an error in law by wrongly conducting a “trial within a trial”, of the very question which would have arisen if Mr Perry had made a claim for a Services Award, namely whether he needed assistance due to his VWF in carrying out the six domestic tasks.
  2. The judge had made an error of law by wrongly imposing on Mr Perry the burden of proving on the balance of probabilities his inability to carry out these tasks without assistance.
  3. The judge had made an error of fact in that he had demonstrably failed to consider or misunderstood relevant evidence.
  4. The judge had made an error of fact in that his decision that Mr Perry could not honestly have claimed in 1999 and thereafter that he was unable to perform the relevant tasks without assistance could not reasonably be explained or justified.

The Supreme Court disagreed with the Court of Appeal on each ground:

Causation and Burden of Proof

While in some cases, it is unfair (for example due to lack of available documents) to impose on the claimant the burden of proving the facts in the underlying claim, that does not mean that the common law has abandoned the requirement that a claim in negligence requires proof that the loss has been caused by the breach of duty. In the 1995 case, Allied Maples Group v Simmons & Simmons, the Court of Appeal laid down a clear and common sense dividing line between those matters which the claimant must prove on the balance of probabilities and those matters which may be better assessed upon the basis of evaluation of a lost chance. To the extent that the supposed beneficial outcome depends on what others would have done, a loss of chance evaluation is appropriate – as was the case in Allied Maples. To the extent the question of whether the claimant would be better off depends on what the claimant would have done if competently advised, it must be proved on the balance of probabilities that he would have taken any necessary steps required of him to convert the receipt of competent advice into some financial advantage

Applying that principle, Mr Perry therefore needed to prove that, had he been properly advised by Raleys, he would have made an honest Services Claim under the scheme within time. Consideration of whether or not Mr Perry would have initiated a Services Claim was central to the claim against Raleys and did not involved speculative evidence about the actions of third parties.  Accordingly, it was appropriate that Raleys should have the benefit of an adversarial trial of that issue. Mr Perry needed to prove that he would have made an honest claim since dishonest claims cannot fall within the category of lost claims or lost chances for obvious reasons. The facts which Mr Perry needed to prove were simple – for example, does he need assistance to change sparking plugs on his car engine and if so, is that because of a lack of ability to grip or chronic back pain? Those sorts of facts do not fall within the more hypothetical category which have traditionally included courts to adopt a loss of chance type assessment.

Overturning issues of fact

The Supreme Court considered whether the Court of Appeal was incorrect in concluding that there were errors in the judge’s factual determination which satisfied the very stringent requirements needed for an appellate court to overturn findings of fact. It is not proposed for the purpose of this article to go through each of the Court of Appeal’s criticisms of the trial judge’s findings of fact which, in the view of the Supreme Court, were  often entangled with issues of burden of proof and causation. The Supreme Court found, however, that the trial judge was entitled to consider the weight of the evidence and the credibility of the witnesses, and that there was nothing in the trial judge’s careful judgment to suggest errors or irrationality in his findings, still less that he had reached factual conclusions which no reasonable judge could have reached. Accordingly, this was not one of those “rare cases” where it was appropriate to reverse the trial judge’ findings on issues of fact. 

Article authors:

Simon Cooper Lucy Espley