Damages for “loss of a chance”: Court can use hindsight

A recent Court of Appeal judgment confirms that, in assessing damages for loss of a chance in litigation, the court should normally have regard to evidence that becomes available after the date the underlying claim would have come to trial. In Philip Dudarec v Paul Andrews & Ors [2006] EWCA Civ 256, it was held that medical evidence which would or might have been available to the underlying trial judge should be taken into account in assessing the claimant's damages. There was no need to adjust the damages for the possibility that such evidence might not have been obtained. 

The judges were unanimous that such evidence ought to be admitted on the basis that "it is better not to speculate or hazard guesses where hindsight can lead to a more accurate assessment of what a claimant has lost".

The court reserved its position in respect of evidence of entirely new matters that could not possibly have been discovered at the notional trial date, as the issue did not arise in this case. However, the court was clearly of the view that the same principle should normally apply, as otherwise the claimant might recover either more or less than what is then known to be his actual loss.

Facts

The claimant, Mr Dudarec, was injured in a road traffic accident in October 1982. He brought a claim against the driver of the other vehicle, a Mr Johnson. Mr Johnson’s insurers admitted liability but there was a dispute as to quantum. The claimant’s action was struck out for want of prosecution in June 1996.

In May 2002 the present action was commenced against the solicitors who had represented the claimant in his action against Mr Johnson. The defendant solicitors admitted liability. Accordingly, the only issue to be determined was the assessment of damages against the solicitors, to be assessed by reference to what damages the claimant would have recovered in his original claim against Mr Johnson.

In 1983, the claimant had been diagnosed with what was thought for many years to be a false traumatic aneurysm of the left carotid artery – a condition that made him unable to work, or at least to work as he had previously. The claimant refused to have surgery to correct this condition, as there was a risk (albeit fairly low in percentage terms) of death or major stroke as a result.

A key issue in the litigation between the claimant and Mr Johnson was whether the claimant’s refusal to have surgery was unreasonable and therefore amounted to a failure to mitigate his loss. Before the issue could be tried, the case was struck out.

In the present action, the defendant solicitors argued that the claimant’s damages in the underlying action would have been reduced as a result of this (alleged) failure to mitigate. The court addressed as a preliminary issue the likelihood that insurers would have established at a trial in 1996 that the claimant had acted unreasonably and therefore failed to mitigate.

The matter was complicated by the fact that, in August 2004, expert evidence was obtained which revealed that the claimant did not in fact have a false aneurysm, as had been thought. He therefore did not need surgery and could have worked in precisely the same way as he had worked before the accident. The experts opined that if they had been instructed in relation to a trial in 1996, the same evidence would have been obtained as in 2004. It was accepted however that, despite the experts’ view, there was some possibility that the evidence might not have been available at the original trial.

The judgment

The main issue for the Court of Appeal was the extent to which the new evidence should be taken into account by a court assessing the claimant’s damages for loss of a chance against the solicitors.

The judge at first instance had refused to take the new evidence into account, saying it was irrelevant to the valuation of the claimant’s claim in 1996. Ignoring this evidence, the judge had concluded that the prospects of Mr Johnson’s insurers establishing a failure to mitigate were 60/40 against, and therefore a 40% discount should be applied to the claimant’s underlying claim for the purposes of the loss of chance claim.

The Court of Appeal disagreed: where evidence becomes available which sheds light on the claimant’s actual loss, and that evidence would or might have been available to the original trial judge, it should be taken into account in assessing the value of the claimant’s lost chance. To do otherwise would be to prefer conjecture to established fact, and could result in the claimant being over or under compensated for his loss.

Taking into account the new evidence, the Court of Appeal concluded that Mr Johnson’s insurers would not have been able to establish that the claimant was unreasonable in refusing surgery and therefore the claimant’s damages should not be reduced for a failure to mitigate.

Comments

On the facts of the case the new evidence was likely, but not certain, to have been available at the original trial. In the Court of Appeal’s judgment, however, there was no need to adjust the damages to reflect the possibility that this evidence would not in fact have been available. In effect, the court assessed what, with the benefit of hindsight, was the claimant’s “true” loss rather than seeking to assess the chances of the claimant having established loss on a particular basis at the original trial.

This contrasts with the approach taken by the Court of Appeal in other cases towards factors that could have affected a claimant’s prospects in its underlying claim.

For example, it seems that an award of damages for a lost chance will be adjusted to reflect the possibility that an underlying defendant might not have run a particular defence (as suggested by the Court of Appeal judgments in Dunbar v A & B Painters [1986] 2 Lloyd’s Rep 38 and the recent case of Josselyne Cohen v Kingsley Napley [2006] EWCA Civ 66). In Cohen it was argued that the court should assess the true value of the claimant’s claim in the underlying action, not whether the claim might (mistakenly) have been thought to have value. This argument was however rejected by the Court of Appeal; the court emphasised that the value of a claim lost by a claimant depends on what points the underlying defendant would have taken (in that case, whether or not the defendant would have applied to strike out the action) - see post.

How these two approaches are to be reconciled is not immediately clear.

It may be that the distinction comes down to whether the court is considering the claimant’s prospects of establishing liability in the underlying claim, which must be looked at on a strict loss of chance basis, or the quantum of loss the claimant suffered, in which case the court is prepared to use the benefit of hindsight (at least insofar as concerns facts that were knowable, though unknown, at the original trial date) to try to arrive at the “true” loss.

But if that is the distinction it would seem to lead to anomalous results. For example, in a loss of chance claim relating to a medical negligence action, new evidence would be admitted to show that the claimant’s injuries resulting from negligent surgery were not as severe as believed at the time of the original trial, with no discount for the chance that such evidence would not have been available, but new evidence might not be admitted (or such evidence might be discounted) to show that the surgeon was not in fact negligent as suggested by the evidence at the time. It is difficult to see any justification for a different approach in these situations.

Alternatively, the distinction may be between the evidence (as in Dudarec) and the arguments (as in Cohen) that the court should take into account – the latter being assessed on a strict loss of chance basis but the former allowing for more flexibility. Again however this is problematic. Whether a party would have run a particular argument in the underlying action might well depend on whether it would have obtained particular evidence. It is difficult to see how a fundamentally different approach can be taken in considering the two questions.

Perhaps ultimately the answer is more pragmatic than principled. In Dudarec, the court considered that an application of strict loss of chance principles might have led to an unjust result, with the claimant receiving either more or less than he was known, with the benefit of hindsight, to have suffered. By contrast, in Cohen, the point that may or may not have been run by the underlying defendant was a technical one, based on the claimant’s delay in pursuing the action: there is, at least arguably, no injustice in a claimant receiving damages for the lost chance of recovery if on the facts this (technical) point might never have been taken.

As these cases illustrate, in assessing damages for a lost chance in litigation, the court’s starting point is to assess insofar as it can the claimant’s prospects at the original trial taking into account the evidence that would have been available at the time. However, it seems that the court will depart from a strict application of this approach where that is considered necessary in order to do justice in the particular circumstances of the case.