The Supreme Court handed down its decision in Perry v. Raleys [2019] UKSC 5 yesterday. My colleagues, Helen Evans and Simon Teasdale, have produced an excellent note of what the case decides and why (see https://www.4newsquare.com/publications/honesty-and-counterfactuals-in-lost-litigation-cases-what-has-the-supreme-court-judgment-in-perry-v-raleys-got-to-tell-us/). I want to focus on some of its implications.
The essential new point that emerges from Perry is that, where one is dealing with a situation in which a claimant has lost the prospect of obtaining damages from a third party as a result of the negligence of the defendant, the claimant must prove that the claim against the third party would have been an honest one. And that question is to be determined on a balance of probabilities basis, rather than as a loss of a chance.
The rationale for this conclusion seems to be one of policy. Either there is a presumption that the claimant would only make an honest claim and the claimant is not entitled to rebut that by saying that he would have told a lie, or more bluntly “the court simply has no business rewarding dishonest claimants”: see Lord Briggs at [27].
The interesting issue to which this gives rise is whether, and to what extent, this policy might end up conflicting with the policy reasons that underpin the loss of a chance doctrine itself in the context of these type of claims. One of the principal reasons for applying the loss of a chance doctrine to lost litigation claims is the difficulties that surround proof of the underlying claim. Significant parts of the evidence upon which the claim would have turned may no longer be available. Disclosure and production of documents from the third party that would (but for the defendant’s negligence) have been sued may not be forthcoming, and obtaining evidence from witnesses might be impracticable. See Lord Briggs at [18].
But these inherent uncertainties may be as relevant to the question of whether the claim is an honest one as they are to whether it would have succeeded. On its facts, Perry was a relatively straightforward case. Whether the additional underlying claim that the claimant had had (as it happens against the Government under a special compensation scheme that had been put in place for vibration white finger) would have succeeded would have depended principally on his own account of what he was and was not able to do after onset of his condition. There was, therefore, little unfairness in permitting the defendant to subject that account to detailed forensic analysis.
Not every lost litigation case is in that mould. There will be cases in which the evidential picture contains gaps. This could work in the claimant’s favour: if his account is on its face credible, and is the only evidence available, he will likely show that his claim was honest. But that will not always be so. It may well be that the missing evidence would have supported what would otherwise have been an implausible account. Or the missing evidence might have cast a different light on a document that otherwise looks very damning. Yet following Perry the court will still be required to form a view on whether or not the claimant is telling the truth.
Whether that is fair or not may depend upon one’s opinion as to whether these cases should be governed by loss of a chance in the first place. But on any view there is clear scope for impact upon the evidential approach that is taken. In many cases one may end up having two parallel inquiries, each governed by different approaches to the question of proof, but both covering very similar ground: the first as to whether the claim is honest (determined on the balance of probabilities), the second as to whether it might have succeeded (loss of a chance). Parties preparing for the first will inevitably end up preparing for a trial within a trial, even though there is no change to the law that that is not what is required for the second.
Perry also leaves a number of questions unanswered. What happens where the underlying claim was already commenced and only lost as a result of the subsequent negligence of the defendant? The judgment in Perry strongly suggests that such a case would not be subject to the honest claim test. The claimant would satisfy the requirement to prove what he would have done simply by showing what he in fact did, namely that he commenced the claim. There is therefore no room for a balance of probabilities examination of whether that underlying claim was or was not dishonest. See Lord Briggs at [33] and [36]. But it is hard to see why this is the case if the honest claim requirement is driven by policy. As Mark Cannon QC says (https://www.linkedin.com/pulse/lost-chance-consider-loss-perry-v-raleys-solicitors-court-cannon-qc/) if it is a matter of policy, the policy should be consistent. Why should a dishonest claimant receive some damages just because his claim pre-dated the defendant’s negligence?
Moreover, how will the honest claim approach apply in the case of the lost claims of corporate clients? Whose knowledge will count for the purposes of deciding whether the claim would have been honestly brought? What about where there have been changes of personnel, or an assignment of the underlying claim?
These are all questions that will need to be worked out in future cases. However, one cannot help wondering whether Perry marks a change in attitude on the part of the courts to the loss of a chance doctrine in the context of lost litigation. Loss of a chance is unpopular in some quarters. While it undoubtedly enables the courts to take a more nuanced approach to inherently uncertain hypothetical events, it has the disadvantage that in some cases it enables claimants to recover damages for claims that they would have lost had they been fought to conclusion. To many that disadvantage is a serious one. If the Perry approach starts to undermine some of the practical benefits of the loss of a chance doctrine, there will no doubt be those who start to question its application to this kind of case in the first place.
This article is provided for information only and should not be relied on as legal advice. Always consult a specialist lawyer about the circumstances of your own case.