Claim against professional for loss of a chance

In 1991, the Claimant company, which developed and operated petrol stations, applied for planning permission for a site in Hampshire. Permission was refused.

The company instructed the Defendant solicitors to act for it in the appeal. The appeal failed.

The Claimant sued the Defendant solicitors, alleging that they should have advised the Claimant to challenge the local plan on which the refusal of planning permission was based. This was because the planning inspector, in commenting on the local plan, had indicated that the site should no longer be retained as countryside. There was a strict six week period to object to the local plan; once that period expired, the validity of the local plan could not be questioned in any legal proceedings and the opinion of the inspector would no longer be material.

At first instance, the Judge found that the Defendants should have advised the Claimant to challenge the local plan and that such a challenge would have been successful. On that basis, when the appeal against the refusal of planning permission was heard, the site would not have been designated as countryside. The Judge said that the appeal would have had a real chance of success and he assessed the prospects of success at 40 per cent.

The Defendant solicitors appealed.

Held:

There were three grounds of appeal:

• The Defendants maintained that this was not a “lost chance” case. The issue was whether the Defendants’ negligence caused the Claimant to fail to obtain planning permission. That issue had to be decided on a balance of probabilities. The Judge had found that, even if the local plan had been successfully challenged, the Claimant only had a 40 per cent chance of succeeding on the appeal. Accordingly, the Claimant had failed to show, on a balance of probabilities, that the Defendants’ negligence caused any loss. The Court of Appeal rejected this argument. The issue was not simply one of causation. If the Defendants had advised correctly, the Claimant would have challenged the local plan successfully. The Claimant could then have gone on to appeal against the refusal to grant planning permission. The loss of the opportunity to pursue the appeal was a not a question of causation but was a question of the quantification of the loss. On that basis, provided the chances of such an appeal being successful were substantial and not negligible, the Judge was entitled to assess the loss on a percentage basis.
• The second ground of appeal was that the Judge’s finding that there was a 40 per cent chance of success at the appeal was contrary to the expert evidence. At the trial, one expert had assessed the prospects of success at 75 per cent, while two other experts indicated the appeal would have been dismissed. The Court of Appeal also rejected this argument. The Judge was not bound to choose between the opinions of the experts and the Judge sufficiently discharged his duty to give reasons for his decision. It could not be said that the Judge’s assessment was wrong.
• The third ground of appeal related to the quantum of damages. The cost of developing the site as a petrol station was approximately GBP 2.3 million. From that figure, the Judge had deducted the value of the site without planning permission (GBP 5,000) rather than the sum the Claimant had actually paid for the site with the possibility of planning permission (GBP 150,000). The Court of Appeal said this approach was incorrect. The Claimant was not claiming the difference between the value of the site with planning permission and the value of the site without planning permission: the Claimant was claiming the value of the site after it had been developed as a petrol station. Accordingly, damages were calculated by taking the figure of GBP 2.3 million, deducting the cost of building the petrol station, and then deducting the full purchase price of GBP 150,000. The purchase price represented the amount the Claimant had had to pay to acquire the opportunity to develop the site. The resulting figure represented the Claimant’s loss; the Defendants were liable for 40 per cent of that sum.

Note:

The principle of claiming for the loss of a chance is straightforward: D’s negligence causes C to lose the opportunity to take some step which might, depending upon the actions of a third party, have produced a valuable benefit for C. In such a case, once it is established that D’s negligence caused C to lose the opportunity, the court has to put a value on the opportunity lost. The effect of the Court of Appeal’s decision is that, provided the opportunity of obtaining the benefit was “substantial and not negligible”, the court is entitled to assess the loss of opportunity on a percentage basis.

This principle was firmly established by the Court of Appeal decision in Allied Maples Group Ltd v Simmons and Simmons [1995]. In that case, as a result of the negligence of the Defendant solicitors, the Claimant lost the opportunity to re-negotiate the acquisition of a company.

CMS Cameron McKenna acted for the Second Defendant, a planning consultant. The claim against the Second Defendant was dismissed at first instance and that part of the judgment was not appealed (Motor Crown Petroleum Limited V S J Berwin & Co, CA: Judgment 10th March 2000).

For further information on this articles, please contact the co-editors, Peter Maguire at [email protected] or on +44 (0) 20 7367 2893 or Jonathan Wright in Singapore at [email protected] or on +655 534 1711.