The loss of a chance to settle – calculating the value of settlement


Posted by Michael Colledge, 14th May 2019
The High Court has recently handed down its decision on a professional negligence claim against a top 100 Law Firm in Cardiff and London, Hugh James: Hanbury & Anor v Hugh James Solicitors (a firm) [2019] EWHC 1074

Mr Hanbury worked as an insulation engineer, but sadly died in 2010 from lung cancer a common disease in his line of work as a ‘lagger’. A port-mortem report and fibre mineral analysis (which was required due to his occupation) on Mr Hanbury’s lung tissue confirmed the cause of death was industrial disease. Mr Hanbury’s widow and estate of Mr David Jack Hanbury (the Claimants) subsequently instructed Hugh James solicitors to bring a personal injury claim against Mr Hanbury’s former employers.

Mr Hanbury worked for a number of companies who had used asbestos and as a consequence, Eight potential defendants were identified, whereby further witness evidence would be required to strengthen each claim.

Hugh James instructed an expert, Dr Williamson to provide an opinion as to the cause of death. However Dr Williamson did not have the privilege of analysing the post mortem or fibre mineral analysis, despite it being in Hugh James’ possession before the expert’s instruction. Dr Williamson concluded, from sight of the GP and hospital records only, that: “There is insufficient evidence within the evidence provided to attribute an increased risk of lung cancer to previous asbestos exposure and on balance of probability his lung cancer was due to cigarette smoking.

Mr Ellis then informed the family that the expert’s report “was not supportive of the claim“, and so the Claimants, acting upon that advice, abandoned the claim in 2012.

The family claimed that Mr Ellis, the lawyer at Hugh James, had been negligent in failing to provide the post-mortem and fibre mineral analysis to Dr Williamson.  He had then followed this error with a further failure to notice that that the expert had not considered or referred to that material evidence.

Yip J found that, but for Hugh James’ breach, a more favourable expert medical opinion would have been obtained.  This expert report would have been put to the defendant companies

In her judgment, Yip J concluded that it was highly likely that the case would have settled as opposed to proceeding to trial, and, on that basis, a loss had been experienced by the Claimants as a result of Hugh James’ negligence.

Comment

This case is interesting in the way in which the loss of a chance was approached in assessing the likely settlement value.

Ordinarily a loss of a chance case will proceed on the basis of the overall value of the underlying claim, discounted to reflect the merits of that lost claim.  It was argued by the defendant that the starting point was the settlement value discounted to reflect certain risks. Yip J found that the real issue was in assessing what was lost by the defendant’s negligence i.e the prospect of the original action being settled and that the starting point was the overall value of the claim, discounted to arrive at the settlement value.  To do otherwise would be to build in multiple discounts for the same risks.

Yip J found that there were good prospects of the claimants succeeding at trial.  Mr Hanbury was a lagger and had worked with asbestos.  The question was not whether he would succeed but how much would be recovered from each employer.  Having valued the claim at £217,000, she discounted it by 20% for contributory negligence to reflect that Mr Hanbury had been a “relatively modest” smoker for most of his adult life, and by a further 25% for the ‘apportionment risk’ of splitting the compensation award between multiple insurers, and a further 20% to cover the risk that the case may not, in fact, have settled.

Yip J awarded Mr Hanbury’s estate a total of £104,283.

In relation to the discounts applied to the overall value of the claim Yip J found that a discount to reflect the prospects of actually achieving settlement was necessary in this case but that it would not always be required.  If the court could confidently assess the likely settlement value then no discount would be applied.  However, each case is fact specific and 20% discount was appropriate in this case to reflect the fact settlement may not have been achieved.

Conclusion

This year has seen a number of important cases relating to claims associated with the loss of a chance to pursue a claim.  This case provides useful guidance where the underlying case is more likely to settle than to go to trial.

Additional issues arose in this case regarding the defendant’s evidence. First, the solicitor involved gave evidence which was inconsistent with the defence which he had signed and his position changed during cross-examination.  Secondly, the Defendant’s expert was found to have strayed into commentary on matters of fact rather than expert opinion.  This is important because, it illustrates the high risk of proceeding on a case in which the witness and expert evidence has not been properly analysed and tested.  In some respects a similar issue to the underlying claim in which the Defendant missed the fact that the expert had not referred to key evidence.