Court decision brings hope for insurers in negligence claims

Loss of chance litigation arises in solicitors' negligence cases. Imagine this scenario. Mr Smith is in his mid-thirties and runs a successful business. He becomes seriously ill, owing, he claims, to his doctor's failure to diagnose an illness in its early stages. The illness prevents him from working for the rest of his life but could have been cured had the doctor
diagnosed it in time.

Aggrieved and fearful as to how he will support his family in the future, Smith visits his solicitor who agrees to sue the doctor for compensation. The solicitor, however, negligently fails to commence proceedings against the doctor within the court's time limits and Smith loses his right of action against the doctor. He then sues his solicitor for the lost chance to obtain compensation from the doctor.To evaluate Smith's claim against his solicitors, the court will make a two stage assessment:

First it will ask whether Smith had a "more than merely negligible" prospect of establishing negligence against his doctor. Generally a 10% to15% chance of succeeding against the doctor is required. If Smith passes this test, the court will then assess the "value" of his lost chance, on a percentage basis. If the court considers there is a 60% chance that Smith would have succeeded against his doctor, he will receive 60% of his damages.

Different assessments

This dual test poses some difficulties for insurers. Against his doctor Smith would have had to prove his case "on the balance of probabilities", that is 51% or more, to recover any damages. In the solicitors' negligence action, it is enough merely to show a "more than negligible" chance of success to make a recovery - two very different assessments.

Insurers have been further stung by a decided reluctance by the courts to find that a litigant in Smith's position had a "less than negligible" chance and thus to award no damages. Sharif v Garrett [July 2001] is one such case. Although the claimant's case, which was struck out for delay by his solicitors, was extremely weak, the Court of Appeal nevertheless awarded the claimant £250,000 for his lost chance, equating to some 20% of his maximum original claim.

In Hatswell the claimant, like Smith, had originally tried to sue his doctor but had been prevented from doing so by his solicitor's negligence. The claimant had serious evidential difficulties against his doctor but, in the light of Sharif, he might well have expected to recover at least a low percentage of his total claim.

Fortunately the Court of Appeal took a much more robust approach than in Sharif and found that, as the claimant had no prospect of success against his doctor, his claim was of no value.

This is a welcome decision for insurers and it is to be hoped that the Court of Appeal adopts the same approach in future cases.

William Ellerton is an insurance lawyer with law firm Beachcroft Wansbroughs