Dixon v Clement Jones Solicitors (a firm)

Where solicitors negligently cause underlying litigation to be struck out, the court must first decide whether the client lost a claim with better than negligible prospects. If so, it must value the lost opportunity by making a realistic assessment of all prospects of a successful outcome, including settlement.

The court does not conduct a trial within a trial. Every issue that would have arisen in the lost litigation, including whether the claimant would have acted differently if properly advised, forms part of the assessment of prospects. The balance-of-probabilities approach applicable to a claimant’s hypothetical conduct in a transaction-based negligence claim does not govern this distinct exercise.

The solicitors admitted that their negligence had caused the claimant’s professional negligence proceedings against her accountants to be struck out. The accountants had failed to warn her adequately about the financial viability of a proposed convenience store and the risk of securing its borrowing against her home.

Penry-Davey J found that the claimant was more likely than not to have proceeded with the venture despite proper warnings. He nevertheless held that her underlying claim had real value and assessed her prospects of success at 30%.

The solicitors appealed, arguing that the causation issue had to be decided against the claimant on the balance of probabilities, making the lost claim worthless, or alternatively that its value was negligible or materially below 30%.

1. Appeal dismissed. The judge correctly found that the claimant had lost a claim of real and substantial value and was entitled to damages based on a 30% prospect of success.

2. In a claim arising from solicitors’ negligent loss of underlying litigation, the court must not conduct a trial within a trial. It must decide whether the lost claim had better than negligible prospects and, if so, make a realistic assessment of its value. The assessment may take account of the prospect that the underlying dispute would have settled.

3. A causation issue in the underlying litigation is one of the issues whose prospects must be assessed. It is not determined conclusively in the professional negligence action merely because the present judge considers one outcome more probable. The ultimate value of the lost litigation depended upon the decision of the court which would have tried it, or upon bilateral settlement negotiations.

4. The approach to hypothetical conduct in transaction-based negligence claims, considered in Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, did not require the claimant to establish on the balance of probabilities that she would have abandoned the venture. Claims for the negligent loss of litigation form a distinct category. Hanif v Middleweeks (a firm) [2000] Lloyd's Rep PN 920 supported treating each disputed issue in the underlying action as part of the assessment of prospects.

5. The finding that the claimant was more likely than not to have proceeded was consistent with a 30% chance that the underlying court would have found otherwise. Other evidence might have emerged, and a settlement of real value remained possible. The claim was therefore neither bound to fail nor negligible.

6. Valuation of the chance was primarily for the trial judge. An appellate court should not interfere with such an assessment unless the judge went fundamentally wrong. The 30% assessment was not too high.

Carnwath LJ and Lord Slynn agreed with Rix LJ. The appellants were ordered to pay the respondent’s costs of the appeal, subject to detailed assessment.

• Court of Appeal (Civil Division): Dismissed the solicitors’ appeal and upheld the assessment of the lost underlying claim at 30%. The appellants were ordered to pay the respondent’s costs of the appeal.

• High Court, Queen’s Bench Division: Penry-Davey J held that the claimant had lost a professional negligence claim of real and substantial value and assessed its prospects of success at 30%. No citation is stated in the judgment.