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28 Oct 2019

Damages for loss of chance: what happens when the hypothetical becomes real?

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In damages claims for loss of chance, questions of causation which depend on what the Claimant would have done are considered on the "balance of probabilities". Questions of causation dependent on what a third party would have done, are assessed on the "loss of a chance" basis. One of the reasons for this distinction (per the Supreme Court in Perry v Raleys), is the likely difficulty in obtaining relevant evidence from third party witnesses. In this High Court case, the third party actually gave evidence at trial and the Court considered what effect this had on the way in which it approached the question of causation. In a judgment likely to be reassuring for prospective Claimants, the Court concluded the appropriate test remains the "loss of chance", irrespective of the fact that the third party can give direct evidence on the point.

Moda brought a professional negligence and breach of contract claim against Gateley LLP for loss of chance. Two questions arose on causation: 1) what would Moda have done had they discovered the true position at the relevant time; and 2) what would a third party have done at the relevant time? In defence of the claim, Gateley summonsed the third party to give evidence at trial, seeking to establish that on the balance of probabilities, Moda's claim should fail.

Notwithstanding the fact that the third party's evidence did not explicitly support Moda's claim, the Court concluded that the correct test remained that of "loss of a chance". Moda was not obliged to prove its case was "more likely than not", only that that the lost chance was a "real or substantial" one. In reaching its decision, the Court highlighted the following:

  • There is an important distinction between the level of engagement of a third party witness, and a party to litigation. Only the latter has to give disclosure.
  • If the test for causation depended on whether or not third party evidence was available, this would be difficult to appraise.
  • The Court needs to remain pragmatic where it is impractical to have full disclosure.

Stephenson Harwood comment

Where the loss suffered as a result of a breach of contract is dependent on the actions of a third party, this decision is likely to be reassuring to Claimants. Even if a Claimant cannot obtain third party witness evidence (or helpful evidence), they may still be able to bring a successful claim.

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