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Law Bulletin - June 2007

Assessment of loss of a chance

Where a solicitor has been negligent, and as a result the claimant has lost the opportunity of pursuing a claim, the court has to assess the extent of the loss of chance. This was an appeal to the Privy Council against a decision of the Court of Appeal of Gibraltar. The claimant had suffered an accident in the construction industry.

There was an employers liability insurance policy taken out by the construction company, which the claimant jointly owned, but it failed to notify the insurer immediately after the accident and the insurer reserved its right to deny liability. The claimant’s solicitors negligently issued proceedings against the construction company outside the limitation period and the insurer obtained the withdrawal of the proceedings.

The claimant then commenced proceedings against the solicitors to recover damages for loss of chance. The Judge found that the chance of establishing liability against the construction company was 25 per cent and that, due to its financial situation and subsequent winding up, and high likelihood that the insurer would refuse payment under the insurance policy, the chances of recovering any award were 25 per cent.

This went to the Court of Appeal which assessed the prospects of establishing liability at 100 per cent and the chances of recovery was 80 per cent.

The Privy Council held that the Court of Appeal had been correct to identify errors in the Judge’s approach but it had gone too far in assessing the prospects at 100 per cent. The Court substituted its own assessment of the prospects of establishing liability and the prospects of successful recovery of any damages assessing the prospects on liability at 70 per cent and the prospects of recovery at 40 per cent.

Phillips & Co -v- Whatley. Privy Council. 2 May 2007.