“Loss of a chance” is a hot topic in professional negligence at present. Recent disputes over the doctrine have included the debate over whether a Claimant has to prove that he could honestly have brought his “lost” claim on the balance of probabilities or whether his honesty merely falls to be considered when deciding whether his case has real and substantial prospects of success. In February, the Supreme Court decided in Perry v Raleys [1] that the Claimant had to prove his honesty on the balance of probabilities.
What does a Defendant have to prove?
Last week’s judgment in Brearley & Ors v Higgs [2019] 3 WLUK 463 [2] considers an allied but opposite point: what does a Defendant have to prove about a Claimant’s dishonesty or misconduct? In particular, does a Defendant to professional negligence proceedings who wishes to rely on a third party’s allegations of wrongdoing against a Claimant have to positively assert the truth of the those matters alleged by the third party?
Helen Evans appeared for the Defendant solicitors in the Brearley appeal, led by Michael Pooles QC and instructed by Will Sefton and Claire Revell of RPC in Bristol. They successfully defeated an appeal against the Master’s refusal to strike out that part of their defence which referred to the third party’s allegations. The decision and its implications are summarised by Clare Dixon.
Brearley: the key facts
The dispute in Brearley arose out of an abortive attempt by the First Claimant to establish a car franchise in Wolverhampton. His contract of employment contained restrictive covenants preventing him from competing with his employers (a national car chain) for 12 months after his employment ended. After he resigned, his former employers sent a “cease and desist” letter alleging that he had acted in breach of contract and fiduciary obligations in pursuing the new car franchise. This culminated in contested proceedings between the First Claimant and his former employers.
The First Claimant had retained solicitors before he resigned and alleged that they had failed to advise him adequately about his service contract (negligence is denied). He contended that if he had been given different advice, he would have been able to negotiate a “clean break” from his former employer, which would have allowed him to pursue the new car franchise without a dispute with them over his restrictive covenants.
By their Defence, the Defendant solicitors stated that “according to” the former employers’ claim against the First Claimant, he had been involved in identifying new dealership sites during the course of his employment, and had wrongfully persuaded his former employers not to pursue the Wolverhampton franchise. The Defendant solicitors argued that these allegations represented serious obstacles which would have impeded any “clean break” negotiations between the Claimant and his former employers.
The Claimants sent the Defendant solicitors a Request for Further Information, requiring them to confirm whether they “positively asserted the truth of” the former employers’ allegations of wrongdoing. In response, the Defendant solicitors stated that they had no reason not to believe in the truth of the former employers’ assertions.
The strike out application, dismissal and appeal
The Claimants applied to have the paragraphs relating to the former employers’ allegations struck out. They argued that they contained allegations of fraud or dishonest wrongdoing which were not properly pleaded. The thrust of their application was that the Defendants solicitors could not rely on an allegation made by the former employers without indicating that they believed that the allegations were true.
At first instance, the master found that the application was premature and dismissed it. The Claimants appealed.
The appeal was also dismissed. Jeremy Cousins QC, sitting as a Deputy High Court Judge, held that:
- A Defendant in professional negligence proceedings was not required to confirm whether it positively asserted the truth of information emanating from a third party. This was because such a Defendant did not know first-hand whether the material was true. It was therefore permissible for a Defendant to a professional negligence claim to rely on a case stating that it had no reason to believe that the third party’s assertions were untrue;
- The evaluation of the truth of the allegations made by the third party (here, the Claimant’s former employers) was a matter for the court at trial. That approach accorded with other professional negligence loss of chance cases (such as Allied Maples v Simmons & Simmons [1995] 1 WLR 1604), in which defendants relied on matters outside their immediate knowledge which would or could have precluded a claimant’s success.
Implications of the decision
Perry v Raleys concluded that a Claimant must prove on the balance of probabilities that he could have brought honest proceedings in a “lost litigation” claim. Brearley shows that a Defendant to a case complaining of the lost chance to pursue a business deal can invoke allegations of wrongdoing by a third party involved with that deal, without having to plead that those allegations were in fact true.
The case is another contribution to the debate about the nature of the task facing a court trying a “loss of a chance” claim. The task for such a court is to assess the prospects of a Claimant being able to procure a better outcome. In the lost litigation context, that entails considering whether he would have had a real and substantial chance of success at trial. In the context of the lost chance to negotiate a clean break (as in the Brearley case) it entails considering the prospects of a Claimant being able to agree a better outcome with a third party (here, the former employers) who had their own views about the Claimant’s conduct.
In either case, the court is not conducting a mini trial or taking a third party’s decision for it: the court is looking at prospects of success based on factors including the likely stance of a third party. The precise nature of that exercise remains a matter of some debate, which may be clarified by the Supreme Court when it decides the appeal in Edwards v Hugh James Ford Simey.
By Clare Dixon of 4 New Square
About the author and member of chambers involved:
Helen Evans (2001 call)
Helen is listed in the Directories for professional liability, professional discipline and insurance. Recent comments include “Helen Evans stands out as one of the most highly regarded barristers in the field. Peers regard her as “thorough and meticulous”, and say she “can unpick the most complicated of cases”. Helen is also a co-editor of the chapters on Solicitors and Barristers’ negligence in Jackson & Powell on Professional Liability.
Clare Dixon (2002 call)
Clare is rated in the Directories for professional liability and insurance and in 2018 was nominated for the Chambers & Partners Professional Negligence Junior of the Year. Recent comments include “She has good judgment and is technically excellent“, “She is very down-to-earth, a great communicator, and inspires confidence in the client“, “She mixes great commercial acumen with an excellent grasp of black letter law” and is “a brilliant advocate“.
Disclaimer: this article is not to be relied upon as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.
© Clare Dixon of 4 New Square, April 2019.
[1] Perry v Raleys [2019] 2 WLR 636.
[2] Case available on Westlaw or Lawtel.
