Browning v Messrs Brachers

In a professional-negligence claim for loss of a chance to pursue litigation, damages should be assessed in two stages. The court should first determine the sum most probably recoverable at the lost trial if liability had been established, and then apply a percentage reduction for the chance of failure on liability. This is subject to an evidential presumption favouring the claimant where the defendant’s negligence caused the evidential difficulty. A broad-brush assessment must consider all relevant expert evidence. Mitigation must be assessed in light of the claimant’s resources, the costs of reasonable mitigation and expert advice lost through the negligence. Revenue loss may coexist with diminution in value of a distinct asset, but goodwill cannot be recovered twice through both goodwill loss and capitalised profits.

Mr and Mrs Browning appealed from a judgment of Jack J dated 5 April 2004 in negligence proceedings against their former solicitors, Messrs Brachers. Brachers admitted that their negligence caused the loss of the Brownings’ counterclaim in proceedings brought by Mr Gilham, but disputed the counterclaim’s value. Jack J awarded £76,873.03, ordered indemnities for specified costs and assessed a 70 per cent chance of success on liability.

The appeal concerned the method for valuing damages at a notional trial, mitigation, future loss of profits, capital loss, the value of Mr Gilham’s claims and interest. Brachers also challenged the generosity of the capital-loss award.

The appeal was allowed to the extent indicated in the judgment. The Court of Appeal held that the judge’s two-stage method was legitimate in principle. The court should assess the damages most probably recoverable at the notional trial, assuming success on liability, and then apply the percentage chance of failure on liability. The Armory v Delamirie principle gives the claimant the benefit of relevant evidential doubt and a fair wind in valuing the lost opportunity.

1. Expert evidence. A broad-brush approach must extend to the whole body of expert evidence. The judge had discounted the report forming the original basis of the claim while giving insufficient attention to the claimant-side evidence of Mr Brookes, Mr Shelton and Mr Handley. That error materially undervalued the lost chance.
2. Notional preparation and mitigation. Competent solicitors would have prepared the relevant evidence, and the opposing side would have responded accordingly. This was consistent with Charles v Hugh James Jones & Jenkins [2000] 1 WLR 1278. The chance that a notional judge would find a failure to mitigate was negligible. The first-instance findings failed to account sufficiently for the Brownings’ severe financial constraints, the recoverability of reasonable mitigation costs, the absence of appropriate expert advice and the benefit of the damages payment which the negligence had prevented.
3. Assessment of loss. The future-profit period should not be curtailed on the assumption of prompt mitigation. The appropriate basis was four years from the notional trial, extended by a further year because of the Brownings’ financial position, ending in 2001. Mr Shelton’s figures, including his separate interest calculation, were the appropriate starting point, subject to a 30 per cent discount.
4. Capital loss and deductions. No separate goodwill award was justified because the business value lay essentially in its profit-earning potential. Diminution in the value of the farm was distinct from revenue loss. The appropriate calculation used a December 1996 valuation, reduced by 15 per cent for valuation uncertainty and by a further 40 per cent for the possibility that the claim was defeated by pre-existing infection, producing £64,260. Mr Gilham’s claims were to be brought into account at the compromise figure of £5,000. The parties were expected to agree the monetary consequences; an interest inquiry might be required.

• Court of Appeal (Civil Division) — In [2005] EWCA Civ 753, the appeal was allowed to the extent indicated. The first-instance assessment was to be reworked on the stated bases, with the parties expected to agree the monetary consequences.
• Queen’s Bench Division — Jack J’s judgment dated 5 April 2004 awarded the appellants £76,873.03 and ordered indemnities for specified costs.