Perry v Raleys Solicitors

In a professional negligence claim based on solicitors’ failure to advise about a possible claim against a third party, causation and valuation are distinct questions. The claimant must prove on the balance of probabilities that proper advice would have led him to act differently. The underlying claim is then valued as a loss of chance, rather than determined on the balance of probabilities, unless success was virtually certain or the prospect negligible. The negligence action should not become a trial of the underlying claim, including an allegation that it would have been dishonest. An appellate court may intervene where the first-instance decision contains a material legal error, ignores or misunderstands important evidence, or cannot reasonably be explained or justified.

Mr Perry had settled a claim under a compensation scheme for vibration white finger without pursuing a possible services award. He later sued his former solicitors, Raleys, alleging that they had negligently failed to advise him about that claim. Raleys admitted the negligence shortly before trial but disputed causation, alleging that Mr Perry would not honestly have made a services claim and would not have succeeded.

The County Court at Leeds dismissed the claim, finding that Mr Perry had not established the factual basis for an honest services claim. The judge nevertheless assessed the lost chance at 80% if causation had been established. The appeal concerned the correct causation and loss-of-chance approach, the treatment of alleged dishonesty, the assessment of expert and factual evidence, and whether the judge’s findings could stand.

1. Appeal allowed. The Court of Appeal allowed the appeal, quantified damages at £14,556.15, and awarded interest at 8% per annum from 1 December 2006.
2. Causation and loss of chance. The court held that two questions had to be kept separate. First, on the balance of probabilities, would Mr Perry have acted differently if properly advised and made a services claim? Secondly, if so, what were the prospects of that claim succeeding? The second question was an evaluation of a lost chance. The court should assess the prospects and award damages proportionately, moving to a 100% or nil valuation only where the material made success virtually certain or the prospect negligible. This approach was applied from Hanif v Middleweeks [2000] Lloyd’s Rep. P.N. 920 and Dixon v Clement Jones Solicitors [2004] EWCA Civ 1005.
3. The judge was wrong to conduct a balance-of-probabilities trial of whether Mr Perry was genuinely unable to perform the relevant services and therefore could have made an honest claim. Public policy did not justify determining the alleged dishonesty issue in that way. The evidential burden of showing that Mr Perry would not or could not have made the claim dishonestly lay on Raleys. The medical reports gave rise to a substantial evidential basis for the presumed entitlement, and any serious allegation of dishonesty should have been put clearly to Mr Perry in cross-examination.
4. Appellate review and evidence. The judge’s errors of law, failure to consider or misunderstanding of important evidence, and conclusions that could not reasonably be justified entitled the appellate court to intervene. The judge had failed adequately to address the unchallenged evidence of the jointly instructed expert. A claimant under the Scheme did not need to be wholly disabled from a category of task. It was enough that he could no longer perform one or more aspects without assistance: Procter v Raleys [2015] EWCA Civ 400.
5. The judge’s finding that Mr Perry could not honestly have made a services claim was unsustainable. The existing findings supported an 80% chance of success, with no further discount for alleged dishonesty. Interest under section 69 of the County Courts Act 1984 was discretionary. In the circumstances, the judgment rate was appropriate because of the long deprivation of the money and Raleys’ conduct in defending the claim.

1. Court of Appeal (Civil Division) — In [2017] EWCA Civ 314, the appeal was allowed. Damages were quantified at £14,556.15, with interest at 8% per annum from 1 December 2006.
2. County Court at Leeds — On 15 April 2015, His Honour Judge Saffman dismissed the claim after finding that causation had not been established. He assessed the lost chance at 80% on the assumption that an honest services claim would have been made.