With upcoming solicitors' professional indemnity renewals, underwriters should be aware of a recent Court of Appeal decision that could prompt a look at risk management protocols. Angela Kirtley explains

The Court of Appeal has given further guidance on the approach to the assessment of damages in a loss of litigation opportunity claim against a negligent solicitor.

The case under consideration was Sharpe v Addison Lister. The claimant and his friend were crossing a road behind a bus as it began to pull away from a stop. At the same time a taxi was coming in the opposite direction towards the bus stop. The taxi driver was driving within the speed limit of 30 mph.

Witness statements suggested that the claimant and his friend saw the taxi, stepped out from the centre of the road and stepped back twice. It was said that the claimant ran into the path of the taxi and was knocked down, sustaining serious injuries including a head injury. The claimant had no memory of the accident.

The claimant consulted a firm of solicitors who advised that the claimant would not succeed in showing that the taxi driver had been negligent. The claimant's mother then went to Addison Lister for advice. This firm was much more optimistic about the claimant's prospects of success and obtained legal aid to seek counsel's opinion. Counsel also took a more favourable view of the claimant's case, although he advised that contributory negligence could be between 50% and 75%.

A writ was issued against the taxi driver and owner in 1994 just before the limitation period expired. Unfortunately, notice was not given to the insurers of the taxi within seven days of the commencement of proceedings, as required by s151 of the Road Traffic Act [1988].

Notice was given one day late. The claim proceeded slowly and in December 1999 the proceedings were finally discontinued.

The claimant then commenced proceedings against Addison Lister claiming that, as a result of its negligence, he lost the chance of securing damages from the insurers of the taxi. Addison Lister in its defence admitted that the claimant had lost the chance of obtaining an award of damages in the original action, but argued that the claimant did not have a real chance of succeeding and, therefore, had suffered no loss.

Judge Langan dismissed the claim. He followed the general principles which apply in loss of chance cases set out in Mount v Barker Austin [1998] and held that the claimant had "no more than a negligible prospect of success in the litigation".

The judge rejected the claimant's submissions that, having seen a bus on the opposite carriageway pulling away from a bus stop, the taxi driver should have slowed down.

He took the view that, given the shortest stopping distances as set out in the Highway Code, even if the taxi driver had applied his brakes when he first saw the men he would not have stopped in time. He also took into consideration the fact that the claimant's original solicitors took the same view and two independent witnesses, the driver and the claimant's friend, both were of the opinion that the driver was not to blame. The claimant appealed this decision.

General principles
The Court of Appeal confirmed that the general principles which apply are those set out in Mount v Barker Austin namely that:

  • The claimant has the legal burden of proving that he has lost a real and substantial chance of succeeding in his original action
  • The defendant has the evidential burden of showing that whatever the claimant has lost due to his negligence it has no value
  • Any difficulties caused by the passage of time should count against the negligent solicitor rather than the claimant
  • If the court decides that the claimant's chances are more than merely negligible, it will be required to evaluate them and can be expected to be more generous given that the negligent solicitor caused the claimant to lose the opportunity of succeeding.
  • In this case the Court of Appeal took the view that the claimant did have a chance of succeeding in the original action. In particular, it believed that had the taxi driver slowed down when he saw the bus pulling away from the bus stop, the accident may have been avoided or, alternatively, the claimant's injuries may not have been so severe.

    The court reiterated that, where the negligent solicitor and counsel had both advised that the claim had a good prospect of success, as in this case, and legal aid is granted, there is an even heavier burden on the solicitor to show that a case is hopeless. The court upheld the appeal.

    Positive advice
    There have been a number of reported loss of litigation opportunity cases where the courts have found that despite the positive advice from solicitor and counsel the underlying claim was hopeless. This was the result in Mount v Barker Austin, Casey v Hugh James Jones [1999] and the more recent Court of Appeal decision in Hatswell v Goldsbergs [2001].

    The Court of Appeal also considered what might have happened if the proper notice had been given to the insurers. Lord Justice Rix regarded the test of whether a claim was hopeless as akin to the test now under Civil Procedure Rule (CPR) 24.2. In other words a claim should be regarded as hopeless only if the court is of the view that had an application been made under CPR 24.2 - or its earlier equivalent - the claim was likely to have been struck out by the court as having no real prospect of success.

    The point made by the Court of Appeal in argument being that no such application had been made by the original defendant's insurers, despite the fact that litigation had been on-going for at least five years. If, as the solicitor's insurer now contended, the underlying litigation was so hopeless as to be of no value, why, the court asked, had the defendant's insurer allowed the underlying litigation to go on for so long? The answer was probably that the defendant did not need to make such an application, because it had a cast iron defence through the failure to give proper notice.

    The decision demonstrates just how much of an uphill struggle negligent solicitors face if they wish to show that a claim which faltered due to their own negligence has no chance of success. The question that is still unanswered is just how low a perceived chance of success has to be before a court will accept that in reality this represents no chance at all. In this case, the chance of success was as low as 10%, but the solicitor's firm was still held to be negligent in pursuing the claim.

    Angela Kirtley is a solicitor with Crutes law firm's professional indemnity unit