Loss of Chance – What if the Third Party Gives Evidence?

15 July 2019

When assessing what a third party would have done in certain circumstances, the court will typically consider the position on a loss of chance basis. However, what happens where that third party gives evidence at the trial? This issue recently arose in Moda International Brands Limited v Gateley[1].

Background

 Moda negotiated and entered into a property transaction with Mortar Developments (“Mortar”) relating to a residential development which would provide around 440 bedrooms for Nottingham Trent University and a retail plot consisting of a cinema foyer. To facilitate this development, Mortar proposed a joint development agreement, which included terms as to profit sharing.

Moda instructed the Defendant solicitors to provide legal advice.  Moda alleged that during the course of the transaction, the Defendants failed to advise properly in respect of certain aspects of the joint venture agreement, specifically the proposed profit sharing arrangements.

High Court Decision

 During the course of the trial, a question arose as to whether, if Moda had decided not to proceed with the joint venture agreement as was ultimately executed, would Mortar have altered its negotiating position and agreed a different deal.

Typically this question would be assessed on a loss of chance basis, with the Court making an assessment as to the likelihood of certain events occurring. However, unusually in this case the Defendant firm summonsed a director of Mortar to give evidence at trial, in an attempt to show that Mortar would not have agreed to the profit share which Moda asserted would have been agreed. It was thereafter argued by the Defendant that, having regard to that evidence, the Court should make a determination on the balance of probabilities, and on that basis Moda should recover nothing because Mortar would not have altered its position / renegotiated.

However, despite evidence being given by the third party, the Court preferred to deploy a loss-of-chance analysis stating that; “The distinction in case law is not founded on the Court having all the evidence it requires, but upon a difference between what the Claimant proves about its conduct and the putative actions of a third party”.

The Court also noted that “distinctions generally made are not made in reference to whether evidence from a third party has been adduced”. Ultimately, in scenarios involving third parties, “the Court does not demand that the Claimant establish his case of causation on the balance of probabilities, all the Claimant has to show in such cases is that the chance is real or substantial[2]

 Conclusion

 This judgment further affirms that in scenarios in which, as a result of negligence, a claimant has been deprived of a real and substantial chance to receive financial betterment, or some other betterment quantifiable in damages, the Court will not adopt a restrictive all or nothing approach in establishing the effect of hypothetical actions of third parties on damages. This judgment should be read in light of Perry v Raleys Solicitors (discussed here) which, read together, provide helpful guidance in regards to the approach adopted by the Court in loss-of-chance scenarios.


Co-authored by Thomas Wilkinson, Administrator

[1] [2019] EWHC 1326 (QB)

[2] Wellesley v Withers LLP [2015] EWCA Civ 1146

Leigh Callaway Author
Leigh Callaway
Senior Associate
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