Sharif v Garrett & Co

Where solicitors negligently cause an earlier claim to be struck out, the claimant must show that the lost claim had a real and substantial, rather than negligible, prospect of success. If that threshold is met, the court must value the chance by making a realistic and generally generous assessment of the original claim’s prospects.

A finding that delay made the original claim incapable of fair trial is the starting point for the assessment. The court should not attempt to retry that untriable claim or hold against the claimant evidential difficulties caused by the solicitors’ negligence. Later evidence may be received only to assist a broad evaluation of the claim’s merits.

The appellants’ warehouse suffered fire damage while they mistakenly believed that insurance had been arranged by their brokers. Their action against the brokers was struck out for want of prosecution after delay attributable to their solicitors made important issues, including the availability of alternative insurance, impossible to investigate fairly.

The solicitors admitted liability in the ensuing professional negligence proceedings. On assessment, His Honour Judge Perrett QC held that the appellants’ prospects against the brokers were negligible and awarded only the wasted premium and legal costs, with interest.

The central issue on appeal was whether the judge had wrongly tried the very questions previously held to be incapable of fair trial, instead of valuing the appellants’ lost opportunity according to the principles governing loss-of-chance claims.

1. Appeal allowed unanimously. Tuckey LJ delivered the leading judgment. Chadwick LJ and Simon Brown LJ agreed. The judge had wrongly treated the assessment as a trial of the original claim and had held the appellants’ lack of evidence against them.

2. The assessment involved two stages. First, the claimant had to establish that the lost claim possessed a real and substantial, rather than merely negligible, prospect of success. Although the legal burden remained on the claimant, the negligent solicitors bore an evidential burden when seeking to show that the litigation for which they had acted and charged was worthless. Secondly, once the threshold was crossed, the court had to make a realistic assessment of the chance’s value, tending towards generosity because the solicitors’ negligence had destroyed the opportunity.

3. The earlier finding that a fair trial had become impossible was the necessary starting point. The assessment court could not properly retry the issues seven and a half years later, particularly through evidence from the claimant’s former opponent. Evidential difficulties caused by the delay should operate against the negligent solicitors. Evidence from the original opponent or experts could nevertheless be received if it assisted the court to form a better broad view of the merits.

4. The appellants had a real and substantial chance of establishing that competent advice from the brokers would have enabled them to obtain alternative cover. The brokers had not exhausted available markets or viable possibilities involving improved security or co-insurance. The judge’s presumption against effective foreign insurance was unjustified.

5. The alternative allegation that knowledge of being uninsured would have caused the appellants to take greater fire precautions had negligible prospects. A prudent insured should take the same precautions as a prudent uninsured person. A broker could not reasonably be expected to foresee different conduct.

6. The lost claim remained exposed to substantial causation, premium, security, co-insurance and costs risks. Allowing for those matters, the Court valued it at £250,000 as at July 1989. Judgment was entered for £250,000 plus £302,773.95 interest, totalling £552,773.95, in substitution for the award below.

• Court of Appeal: Allowed the appeal and substituted judgment for £250,000 plus £302,773.95 interest, totalling £552,773.95. Permission to appeal to the House of Lords was refused.
• Queen’s Bench Division, Birmingham District Registry, Mercantile List: His Honour Judge Perrett QC assessed damages against the solicitors as limited to the insurance premium and legal costs, with interest, after finding that the underlying claim against the brokers had negligible prospects.
• Queen’s Bench Division: Tucker J had struck out the underlying action against the insurance brokers for want of prosecution because delay made a fair investigation of material issues impossible. No appeal was brought.