Valuing Bungled Litigation, Edwards v Hugh James Ford Simey

The broad principles as to how to value what has been lost from bungled litigation have been established for a long time. In assessing what the claimant has lost through his lawyers' negligence, most commonly in failing to issue a claim within the limitation period, the court does not attempt to try the original case. Instead, it values the claimant's lost chose in action. Thus, for instance, suppose he had a 50% chance of obtaining £100,000, then (depending on the circumstances) he will be awarded about £50,000 damages in the professional negligence action. The Court will also attempt to set a notional trial or settlement date, value the claim as at that date, and award interest on it from then until trial in the professional negligence action.

The treatment of evidence and facts which occurred after the notional trial date can be controversial. An example might be a medical report casting a new light on the claimant's condition (I will largely consider bungled personal injury cases for simplicity, but the principles apply generally). In principle, it should be reasonably clear whether this should or should not be taken into account. The judge at the notional trial, or the parties at the notional settlement, would not have known about such a development, and the starting point is that the report should be ignored. However, later facts or evidence may be a very good guide as to the evidence which may in fact have been available, and would or should have been if the lawyers had done their job properly and not delayed the claim. Thus a later medical report may show that the claimant had a particular consequence of his condition which should have been known about at the notional trial or settlement date, though it was not, and therefore this fact should be taken into account in the assessment of what the claimant has lost. In contrast, if the claimant developed epilepsy after the notional trial or settlement as a result of the accident which forms the subject matter of the claim, this should not be taken into account. However, the development of epilepsy may indicate that the medical evidence at trial would have been that the claimant had a significant prospect of developing epilepsy, and damages should be awarded on that basis. What I have been outlining is what we might call the orthodox view.

However, three Court of Appeal cases appear to go much further than the orthodox view in taking into account later facts and evidence. The fundamental error, it seems to me, is to confuse the value of the lost claim with the assessment of the damages which the claimant should have recovered if the original claim were being tried now. The claimant is not recovering damages in the original action. What is or should be awarded is damages for his lost chose in action. That obviously represents, subject to discounts for the loss of a chance, what he would have been awarded then and not now, which in a personal injury case would be damages for his injuries at the notional trial date (or, more likely, at settlement). It is not the same as the value of the personal injury action if it were tried now, nor should it be. Nor is it unjust that the claimant should be awarded what he has lost, namely the value of his chose in action, whether that is more or less than what he would be awarded now if the personal injury action were being tried. Taking account of developments after the notional trial date in this illegitimate way is in principle no different from taking account of evidence as to how the claimant would in fact have frittered away any damages he would have been awarded after the notional trial date, or have made a fortune from them; those considerations should be simply irrelevant.

Whitehead v Searle

The two original cases which considered this issue (and came to the wrong conclusions), Charles v Hugh James Jones & Jenkins [2000] 1 WLR 1278 and Dudarec v Andrews [2006] EWCA Civ 256; [2006] 1 W.L.R. 3002, were obiter, and can to a large extent be ignored. The third, Whitehead v Searle [2008] EWCA Civ 285; [2009] 1 W.L.R. 549, is the leading case, because the reasoning was part of the ratio. The facts in brief were that PM gave birth to a child with spina bifida, and claimed that this should have been diagnosed antenatally and that she would have had a termination if told. Her principal heads of loss were the past and future costs of bringing up the child. The claim was progressed negligently slowly by the defendant solicitors, and PM committed suicide after the time at which the claim should have been brought to trial. There...