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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Sharif & Ors v Garrett & Company (A Firm) [2001] EWCA Civ 1269 (31 July 2001)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1269.html
Cite as: [2001] EWCA Civ 1269, [2002] Lloyd's Rep IR 11, [2002] 3 All ER 195, [2002] WLR 3118, [2002] 1 WLR 3118

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Neutral Citation Number: [2001] EWCA Civ 1269
Case No: A3/2000/2369

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
MERCANTILE LIST
(His Honour Judge Perrett,QC)

Royal Courts of Justice
Strand, London, WC2A 2LL
Tuesday 31st July 2001

B e f o r e :

LORD JUSTICE SIMON BROWN
LORD JUSTICE CHADWICK
and
LORD JUSTICE TUCKEY

____________________

SHARIF & ORS
Appellant
- and -

GARRETT & COMPANY (A FIRM)
Respondent

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Mr. C. Gardner, QC and Mr. P. Emerson
(instructed by Messrs Shakespeares) for the Appellant
Mr. R. Moxon Browne, QC and Mr. F. Bacon
(instructed by Messrs Beachcroft Wansbroughs) for the Respondent

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    LORD JUSTICE TUCKEY:

    Introduction

  1. In February 1985 part of the Appellants' cash and carry warehouse in Birmingham was destroyed by fire. The insurance arranged by brokers (PBL) to cover this risk did not pay and so the Appellants retained the Respondent solicitors to sue PBL. The claim against PBL was struck out for want of prosecution in 1992 and these proceedings against the solicitors followed. Liability was admitted and it was agreed that if the Appellants' claim against PBL had succeeded they would have recovered losses resulting from the fire of at least £842,000 plus interest. However, on the assessment of damages His Honour Judge Perrett, QC held that the only losses they were entitled to recover were the premium paid for the insurance (about £12,000) and the costs paid to the solicitors (about £11,000) plus interest. The Appellants appeal with the permission of this court saying the Judge was wrong to conclude that their prospects of recovering their uninsured losses from PBL were negligible. They say their prospects were good and the Judge should have awarded them substantial damages for loss of a chance.
  2. The Insurance

  3. In view of the Judge's unchallenged finding that the Appellants would have established negligence against PBL, it is not necessary to relate the insurance history at great length. However, the Appellants had a poor claims record. Between 1977 and February 1983 they were insured by the Phoenix who paid a flood claim of £14,000 in 1977 (in respect of other premises), a flood claim of
  4. £37,000 in May 1982 and a fire claim of £1.3m. in August 1982. In February 1983 the Phoenix declined to renew cover for the cash and carry warehouse without saying why. The Appellant then obtained cover from INA for twelve months but INA declined to renew, apparently as a result of information they had received from the Phoenix, which they refused to divulge. At this stage PBL were approached to try and arrange cover and purported to have done so for twelve months from 23 March 1984 through a company or firm called MGM whom, it was claimed, held binding authorities from a number of major insurance companies. In fact MGM had no such authority and in October 1984 they informed PBL that the risk had been transferred to a company called St. Eustatius. This company was registered in the Dutch Antilles. The Appellants were simply advised by PBL in November 1984 that the cover should be placed elsewhere as soon as possible.

  5. The Judge found that the Appellants:
  6. were misled from the date of supposed inception of the MGM policy into believing that they were viably insured against the perils in respect of which they had paid a premium. No prudent insurance broker should have assumed in those circumstances that cover had been successfully effected; still less should a prudent insurance broker have been cajoled into assuming that cover was transferred to St. Eustatius ……..
    I find therefore that had the action come to trial the Claimant would have succeeded in establishing that PBL were negligent in allowing the Claimants to suppose and in themselves believing that there had at any time been viable and/or continuing insurance cover against the perils paid for by the Claimants for the period in which the fire occurred.

  7. PBL's documents show that between November 1984 and the date of the fire they approached a firm of Lloyds' brokers in London and two insurance companies and a broker (Stewart Wrightson) in Birmingham who were unable to place or declined to accept the risk.
  8. The proceedings against PBL.

  9. The solicitors were retained soon after the fire. As well as PBL, St. Eustatius, MGM and their principal were defendants to the proceedings which were started in March 1986. By this time St. Eustatius had refused to pay the fire claim on the ground, among others, that the Appellants had failed to disclose the 1977 flood claim. They had also contended that cover was limited to £750,000.
  10. The statement of claim settled by counsel alleged that St. Eustatius were liable for the full value of the claim and that the 1977 flood claim was not material. The claim was put against PBL in the alternative on the basis that, if the 1977 flood claim was material, it had not been disclosed on the proposal form on PBL's advice and that they had failed to inform the Appellants that their cover was limited. It was alleged that if the Appellants had been informed that their cover was limited to £750,000, they would have obtained additional or alternative cover.
  11. Soon after the proceedings were issued St. Eustatius went into liquidation and it became clear that they and the other Defendants, apart from PBL, were not worth suing.
  12. By 16 April 1987 the solicitors were reporting to the Appellants' loss adjusters as follows :
  13. After several conferences with counsel and our insurance expert, we take the view that there are reasonable prospects of success ……..

    This is the only record of their having expressed any view about the merits of the claim. It is common ground that at no stage did they advise the Appellants that their claim was hopeless or likely to fail. Indeed from this time right up to the time when the claim was struck out they were saying to the Appellants that they thought that PBL's solicitors were likely to make an offer of settlement.

  14. Following the conferences referred to in the letter to the adjusters, counsel drafted an amended statement of claim which was served in July 1987 so, as he said, " to re-cast the claim in order to make (PBL) the primary target". To this end he deleted the allegations relating to the St. Eustatius cover and PBL's responsibility for its avoidance and/or limitation and alleged that PBL were negligent in much the same way as the Judge found. The consequences of this negligence were pleaded as follows :
  15. By reason of the…….. breaches………. The Plaintiffs at all material times until the said fire believed themselves to be insured. In the circumstances they took such normal precautions as a prudent insured should take as follows …….. Had they realised they were not insured they would have taken the extreme precautions that they have taken since the fire (which are set out below) and would have avoided the damage they suffered……..

    In the advice which accompanied the draft amendment counsel noted (as was the fact) that the claim was now very different and that its success depended upon the court accepting the expert's view that PBL had been negligent. He continued :

    Causation is also a crucial question. Of course an insured is required to take all reasonable precautions. Might a man not take extreme precautions if he knows that he is not insured which he might not take if he thought he was insured ?…….. If the expert is adamant that the client would be expected to take the same precautions whether he was insured or not, it would be difficult if not impossible to establish liability.
  16. It is clear from the documents that the expert was not prepared to alter his views on this point. What is not clear is why counsel did not at this stage plead that if the Appellants had been told that they were not insured, they would have obtained other cover or other cover on terms. This was a question which had been considered by the expert and which counsel specifically dealt with when he later advised in 1989. He described one of PBL's real defences as :
  17. Plaintiffs have suffered no damage …….. since their claims record was so poor that they would not have obtained other insurance anyway and (PBL's) strenuous efforts in about November and December 1984 …… were unavailing.

    He continued :

    This is a substantial defence and one which I find very troubling. The Plaintiffs could lose on this point and, as a result, be landed with all the costs of the action. There appear to be two possible answers to it. Our expert suggests that (PBL) should have selected their most likely, friendly (i.e. supportive) insurer and asked what improvements in security would enable the risk as thus improved to be acceptable despite the claims record. The documents disclosed by (PBL) indicate that this was not done. What likelihood was there in the circumstances that such a course might have proved successful ? This is of course a matter of speculation. What is our expert's view as to this ? If he feels that there was a reasonable chance and can back up his opinion with examples, the client would, at the very least, be entitled to damages for loss of that chance through the breach of contract and negligence of (PBL). The value of such a chance would be assessed as a percentage of the total recoverable damage suffered. As the claim is very substantial the damages recovered under such head would also be substantial. It is essential that the expert is consulted as to this as soon as possible. If, having seen the efforts made by (PBL) he comes to the conclusion that there was no chance of placing the insurance anywhere else, we would have to fall back on the second of our two answers.

    That was a reference to the point which had been pleaded to the effect that if they had known they were uninsured the Appellants would have taken extreme precautions to prevent fire.

  18. The expert's reply to these questions came in a supplementary report dated August 1989. He said :
  19. I am asked whether another insurer would have accepted the risk if improvements were made. All such risks are capable of being insured subject to two matters. First, the moral hazard. Insurers must be convinced that clients ran their business efficiently, that their integrity was beyond reproach and that they were likely to co-operate over whatever stipulations as to security were made following surveys. Second, the claims history. Some proposers are clearly accident prone. The incidence of claims may appear such that only some inherent fault, not necessarily negligence exists in a client's make-up …….. A prudent and experienced broker may well be able to extract such answers from his client as to convince first himself and then underwriters that no element of moral hazard or inherent propensity to accident is involved. His duty is then to put pressure on their most friendly insurer to carry out thorough fire, flood and burglary surveys of the premises on a no commitment basis. If necessary offering a co-insurance clause. Not 50% as here, but a sufficiently significant proportion – perhaps 25% - as to satisfy the insurers that the client was as involved, pro rata to the depths of the respective pockets ……..

    He added :

    The broker should have tried. What the Plaintiff lost is a chance.

    In his earlier report he pointed out that the Appellants were in the worst of all possible situations – believing they were insured when, effectively, they were not.

  20. I should say in relation to moral hazard that in 1985 the solicitors saw the Appellants' accountant who had had a meeting in 1984 with the loss adjusters who had acted for the Phoenix in the claims against them. They had told him they were satisfied as to the circumstances of all the claims otherwise payment would not have been made and there was no reason to believe that the Appellants were in any way implicated in the fire or other claims which had been made. It is also the case that the Appellants had other insurances which had been renewed without difficulty. Their problems were confined to the cash and carry warehouse and its contents.
  21. To return to the history. From the end of 1989 the action effectively went to sleep due to the inaction of the solicitors despite the Appellants' repeated attempts to spur them on. Although he had asked for a large amount of further information in his 1989 advice, no further advice was sought from counsel and very little of the further information he had asked for was obtained before PBL applied to strike the claim out at the end of 1991.
  22. This application was heard by Tucker J. on 2nd April 1992. The note of that part of his judgment dealing with prejudice says :
  23. First witness memories have faded. In that regard the Plaintiffs' counsel submitted that this was a complex commercial case based on documents. I disagree. It is clear that witness evidence is required, for example to deal with the question of security arrangements, the availability of alternative insurance cover and the ability of (PBL) to obtain such cover. In my view it would be impossible to investigate such matters now."

    There was no appeal from this decision.

    The assessment.

  24. The hearing of the assessment took place in November 1999 - fifteen years after PBL were alleged to have been negligent. It was agreed that the documents relating to the insurance and the proceedings against PBL could be relied on as evidence of their contents. The Appellants called no evidence. Despite objection from the Appellants the Judge allowed the solicitors to call Mr. McGreevy, the PBL broker responsible for this placement and Mr. Gray, an insurance expert. Mr. McGreevy's evidence was directed primarily to saying that PBL had not been negligent. The Judge summarised Mr. Gray's evidence as follows :
  25. In 1982 this risk was uninsurable with the conventional market…….. His opinion was confirmed by the exhaustive efforts made by PBL which failed to elicit a single quotation. He said in evidence that if Stewart Wrightson (a very large firm of brokers with a lot of muscle) could not place the business, no-one could. He agreed that there were other, non-United Kingdom insurance markets in which it might have been sought to place the risk and that PBL had not tapped such markets.
  26. The Judge then records counsel for the Appellants' submission that the court :
  27. ought to find that although the UK conventional market was unwilling to provide cover, even at an enhanced premium, cover might yet have been secured in some other overseas but otherwise unspecified market.

    He continued :

    I wish I could accept his submission but the Claimants called no evidence in support of that contention and it is the experience of this court, as exemplified in this case with insurers based abroad who are not licensed to underwrite business in the United Kingdom, that secondary or tertiary markets, even if they are persuaded to accept the business, are notoriously fickle when claim time comes. So, in the absence of any evidence to the contrary, I regrettably conclude that in any market worth the premium or even a greatly enhanced premium the Claimants were uninsurable.
  28. The Judge had earlier rejected the way in which the case had been pleaded against PBL in the amended statement of claim. He said that as no positive evidence had been called about the extent or spread of the fire and what might have happened if the fire brigade had attended earlier, he was unable to conclude that extreme precautions would have prevented or limited the consequences of the fire.
  29. The law.

  30. There is no dispute between the parties about the law which applies to the assessment of damages in a case such as this. The applicable principles were admirably summarised by Lord Justice Simon Brown in Mount –v- Barker Austin (1998 ) PNLR at 510/511 as follows :
  31. 1) The legal burden lies on the plaintiff to prove that in losing the opportunity to pursue his claim, he has lost something of value i.e. that his claim (or defence) had a real and substantial rather than merely a negligible prospect of success.
    2) The evidential burden lies on the defendants to show that despite their having acted for the plaintiff in the litigation and charged for their services, that litigation was of no value to their client, so that he lost nothing by their negligence in causing it to be struck out. Plainly the burden is heavier in a case where the solicitors have failed to advise their client of the hopelessness of his position. If, of course, the solicitors have advised their client with regard to the merits of his claim (or defence) such advice is likely to be highly relevant.
    3) If and insofar as the court may now have greater difficulty in discerning the strength of the plaintiff's original claim than it would have had at the time of the original action, such difficulty should not count against him, but rather against his negligent solicitors. It is quite likely that the delay would have caused such difficulty and quite possible, indeed, that that is why the original action was struck out in the first place. That, however, is not inevitable: it will not be the case in particular (a) where the original claim (or defence) turned on questions of law or the interpretation of documents, or (b) where the only possible prejudice from the delay can have been to the other side's case.
    4) If and when the court decides that the plaintiff's chances in the original action were more than merely negligible, it will then have to evaluate them. That requires the court to make a realistic assessment of what would have been the plaintiff's prospects of success had the original litigation been fought out. Generally speaking one would expect the court to tend towards a generous assessment given that it was the defendants' negligence which lost the plaintiff the opportunity of succeeding in full or fuller measure.
  32. These principles are largely taken from the leading cases of Kitchen –v- Royal Air Force Association (1958) 1WLR 563 and Allied Maples Group Ltd –v- Simmons and Simmons (1995) 1 WLR 1602 and have been applied in a number of cases to which we were referred. But there is no authority which gives any guidance as to how the court should approach its task in a case where the original claim has been struck out because a fair trial of the issue or issues in question was no longer possible as a result of delay by the Claimant's solicitors. We have been asked to give guidance because we are told that such cases are typical of those made against solicitors.
  33. Mr. Moxon-Browne, QC for the solicitors, says that the task which the Judge has to perform when striking out is different from the assessment which the judge has to make when considering whether the claimant has lost a chance and, if so, what it is worth. If there is evidence to help him with this difficult task, he should hear it even if this does in effect involve trying the issue. It would not be just to solicitors to assume the issue against them in the face of available evidence to the contrary.
  34. Although on a strike out the Judge may not have to investigate whether or not an issue or issues can still be fairly tried in great detail, I think his conclusion that no such trial is possible must be the starting point for the judge who later has to make an assessment of the claimant's prospects of success. He cannot and therefore should not attempt to try the issue or issues himself, particularly on the evidence of the negligent solicitor's former clients' opponent in the original proceedings. In a case like the present where the legal burden is on the claimant to show that he would have succeeded on the issue or issues in question, I do not go so far as to say that they must be assumed against the solicitor, but the application of the second and third principles in Mount may in practice produce this result. So, in such a case one would normally expect the claimant to be able to show that he had real and substantial prospects of success. This will not produce unjust results; what would be unjust is for the Judge to try an issue which has already been held to be untriable because of the solicitor's negligent delay.
  35. The Judge then has to evaluate those prospects applying the fourth principle in Mount. This is a difficult task but no more difficult than many others involved in the assessment of damages where the court has to predict the unknown. Here, the judge is having to put a value on the claim. This is not a science, but is a task which lawyers are used to performing. The judge will obviously need to consider all the relevant material which was available up to the time when the original claim was struck out, including documents disclosed and witness statements exchanged by the other side. If he is asked to hear the evidence which the other side would have called, or expert evidence of the kind called in this case, he may agree to do so but I do not think he should feel bound to do so if he thinks he can otherwise make a fair evaluation. If he does hear such evidence, it would simply be for the purpose of enabling him to form a better broad view of the merits of the claim.
  36. The appeal.

  37. The main point on the appeal is whether the Judge properly applied the Mount principles in reaching the conclusions which he did. But before considering this, I think it is convenient to deal with the point taken in the Respondent's notice which is that by the amendment to their statement of claim in July 1987 the Appellants abandoned any case that if they had been properly advised by PBL they would have obtained alternative insurance. So, it is submitted, the Judge should not have considered this question at all.
  38. I have set out the history of the proceedings in some detail in order to deal with this point. From that history it seems to me quite clear that it was never intended to abandon this allegation. It should have been made in the amended statement of claim, but if the case had been properly conducted by the solicitors I have no doubt that the pleadings would have been amended to make the necessary allegations before trial. Both parties were preparing for trial on the basis that this would have been one of the main issues. The Judge does not deal with this point in his judgment, but I have no doubt that he was right to proceed on the basis that it was, or would have been, the Appellants' case that if they had been properly advised by PBL alternative insurance would have been obtained.
  39. So I return to the main point of the appeal. Mr. Gardner, QC for the Appellants accepts that the Judge did set out the Mount principles in his judgment. But, he submits, when he came to make the crucial findings to which I have referred, the Judge failed to apply them. He effectively tried the issues of insurability and extreme precautions himself on the evidence which was called at the hearing and drew adverse inferences against the Claimants for their failure to call evidence. Mr. Moxon-Browne, on the other hand, submits that the solicitors discharged the heavy burden on them of showing that neither of the ways in which causation was put had any real prospect of success. On the issue of insurability, he relies on the Appellants' poor claims record, PBL's unsuccessful efforts to obtain alternative cover for them, the evidence of Mr. Gray which was to much the same effect as a report from another expert obtained on behalf of PBL and the views of the Appellants' own counsel and expert in the original proceedings to which I have referred.
  40. The starting point for any consideration of the Appellants' prospects of success on the issue of insurability, ought to have been Tucker J's finding that it was not fair for the action to proceed against PBL because it was impossible to investigate, among other things, the availability of alternative insurance cover and the ability of PBL to obtain it. If that was the position in 1992, seven and a half years later the task would have been even more difficult. The point is
  41. underlined by the fact that in 1984 Mr. Gray had only been in the industry for two years and so had to seek the views of others as to the state of the market at that time for the purpose of giving evidence.

  42. Nevertheless, in the passage dealing with insurability which I have quoted, the Judge appears to have overlooked what I have just said. He refers to the fact that "the Claimants called no evidence in support of their contention" and "in the absence of evidence to the contrary". I do not think this was the right approach. The Appellants evidential difficulty was the very reason why their claims had been struck out in the first place. It should not have been held against them seven and a half years later. The Judge could not and should not have attempted to try that issue.
  43. There were obvious difficulties with the case against PBL, but I do not think they justified the Judge's conclusion that the prospects of success were negligible. PBL's documented attempts to obtain alternative cover were not impressive. There were obviously markets which had not been approached. The presumption that foreign insurers do not provide effective cover is entirely unjustified. The suggestions made by the Appellant's expert of cover being provided subject to improved security measures and/or risk sharing by the insured (co-insurance) were viable alternatives which could have been pursued. If PBL had felt themselves unable to take any of these steps they could and should have said so. The real problem which they created was that the Appellants believed they were insured when they were not.
  44. For these reasons I think the Judge should have held that the Appellants had a real and substantial claim against PBL on the basis that, but for PBL's negligence, they would have obtained alternative cover. This makes it unnecessary to consider the alternative way in which the Appellants put their case except as part of the overall assessment of the Appellants' prospects. But here again it seems to me that the Judge placed an unjustified evidential burden on the Appellants. Despite this however, there were formidable difficulties about putting the case in this way. The most obvious one arose from what the Appellants' expert was saying. His point was that whether or not someone is insured should not make any difference to the precautions he takes to avoid loss. Put another way, an insured is required to act in the same way as a prudent uninsured. It follows that an insurer or, as here, an insurance broker, cannot be expected to foresee that someone who thinks he is insured would take different precautions if he knew he was uninsured. For this reason I think the Judge was right to conclude that the Appellants' prospects of succeeding in this alternative way of putting their case were negligible.
  45. So, how should the Appellants' prospects of success be rated having regard to the fourth principle in Mount and the broad view of the merits which the Judge was required to take ? The parties took up extreme positions. Mr. Gardner submitted that the full value of the claim should only be reduced by 10% to reflect what he called the risks of litigation. Mr. Moxon-Browne submitted that its value should be measured by the payment into court of £26,000 which PBL made and which he suggests the Appellants were tempted to take.
  46. I do not think either party's stance is realistic. Although the Judge found that the Appellants would have established negligence, the claim was not entirely straightforward because PBL (apparently in common with other brokers in the market at the time) were the victims of fraud by those behind MGM. The causation argument, as I have said, posed obvious difficulties. As their counsel said in 1989, the Appellants could well have lost on this point. This must be reflected in a substantial way in any assessment of their prospects. Other factors which would have affected the amount which the Appellants recovered are that at the outset they would almost certainly have had to pay a much larger premium to obtain cover and would probably have had to pay for expensive security measures and take a share of say 25% of the risk as a condition of obtaining it. They were also likely to incur legal costs in pursuing the claim against PBL. Of course. if they had been successful they would have recovered most but by no means all of those costs, but if they had failed the exposure was substantial.
  47. In short, there was a substantial risk that the Appellants would lose altogether and if they won they were most unlikely to recover the full value of their claim.
  48. As I have said, the Appellants' losses as a result of the fire were agreed to be at least £842,000. Interest to mid 1989 added about 65% to whatever the claim was worth. The Judge records the Appellants' contention that their losses were understated by about £150,000 because they had been unable fully to reinstate the building and its fixtures and fittings to their pre-fire condition through impecuniosity caused by PBL's.negligence. The Judge did not decide whether they were right about this and we are not in a position to do so although I think it should be taken into account in the broad assessment which has to be made.
  49. Taking account of the Appellants' prospects of success and the other factors to which I have referred, I would award the Appellants £250,000 on the basis that this is what their claim (including interest) was worth if it had come to trial in July 1989. That means that they are entitled to interest on this amount for twelve years. This award will be in substitution for the amount awarded by the Judge so my assessment has taken account of the fact that the Appellants did pay premium and costs of about £23.000 which they have not got back..
  50. For these reasons I would allow this appeal and substitute an order which reflects what I have said for the order made by the Judge.
  51. CHADWICK LJ:

  52. I have had the advantage of reading, in draft, the judgments of the other two members of the Court. I agree with those judgments and wish only to emphasise the particular feature of this case. The Judge fell into the error of seeking to try the very issue which Mr Justice Tucker had held, some seven years earlier, could not be the subject of a fair trial. This was a course which, in the interests of a due administration of justice, the Judge ought to have been astute to avoid.
  53. LORD JUSTICE SIMON BROWN:

  54. This is a claim for damages against solicitors for loss of the opportunity to litigate (or settle) an earlier claim for damages against insurance brokers. The full facts of the case are described in Tuckey LJ's judgment and I need not repeat them.
  55. In stating the principles generally applicable to this class of case, I indicated in Mount v Barker Austin [1998] PNLR 492, 510 a two-stage approach. First, the court has to decide whether the claimant has lost something of value or whether on the contrary his prospects of success in the original action were negligible. Secondly, assuming the claimant surmounts this initial handle, the court must then "make a realistic assessment of what would have been the plaintiff's prospects of success had the original litigation been fought out".
  56. With regard to the first stage, the evidential burden rests on the negligent solicitors: they, after all, in the great majority of these cases will have been charging the claimant for their services and failing to advise him in that reality his claim was worthless so that he would be better off simply discontinuing it. The claimant, therefore, should be given the benefit of any doubts as to whether or not his original claim was doomed to inevitable failure. With regard to the second stage, the Armory v Delamirie (1722) 1 Stra.505 principle comes into play in the sense that the court will tend to assess the claimant's prospects generously given that it was the defendant's negligence which has lost him the chance of succeeding in full or fuller measure.
  57. The particular question raised by this appeal concerns the extent to which it is appropriate for the court hearing the loss of an opportunity to claim (a) to entertain primary factual evidence and (b) to reach clear conclusions whether of fact or of law. The question arises here in the context of the original claim having been struck out in April 1992 for want of prosecution on the ground that the witnesses' memories had faded and "it would be impossible to investigate such matters [as the availability of alternative insurance cover] now".
  58. The judge below seems to have tried this claim for all the world as if he were seised of the original action against the insurance brokers. Not only did he hear live evidence from the brokers – called, somewhat unattractively, by the defendants' solicitors – but he treated the lack of oral evidence from the claimants in precisely the same way as if he had been deciding the original action. This is perhaps best exemplified by a passage in the judgment with regard to whether or not the claimants had disclosed to their brokers the full extent of their claims history (a point no longer relied on by the defendants but of relevance for illustrative purposes):
  59. … loath as I am to invoke the burden of proof in the circumstances of this unhappy case, I can find no facts upon which to favour, on the balance of probabilities, the claimants' version of events, which was put to Mr McGreevy [the broker] in cross examination but which was never attested to by the claimants in evidence. Had the action come to trial, the trial judge is likely to have heard evidence from Shahid [the claimant's witness] upon the non-disclosure point: there would have been no reason, in that notional trial, for the reluctance to resort to oral evidence which was demonstrated by the claimants in the trial of these proceedings. I have pondered whether I could in any way be justified in concluding that there was 'a chance', if not a probability, of Shahid's evidence having been preferred to that of Mr McGreevy at the notional trial, but, not having heard Shahid's evidence on the point in these proceedings, I am in no position to evaluate whether that chance was negligible or more substantial than that.
  60. That I would regard as an impermissible approach. If it were correct, then logically, assuming that disclosure was the determinative issue, the claimants would have lost the case irrespective of why Shahid was not called - even, therefore, had he died. It seems to me that such claims should not fail merely because, often through the passage of time, the judge hearing the second action is unable to determine whether the chance of success in the first action had been "negligible or more substantial than that". Most obviously this must be so in a case like the present where the original action was struck out for the very reason that it was no longer possible to try it fairly.
  61. In his valuable judgment in Harrison v Bloom Camillin [2000] Lloyds PN 89, 99, Neuberger J said this:
  62. First, in some loss of a chance cases the court may think it right to view the prospects on a fairly 'broad brush' basis; in other cases it may be correct to look at the prospects in far greater detail. In my view, the present case falls in the latter category. Secondly, at least in the present case, I believe that the court should be comparatively prepared to come to a clear conclusion on the likely outcome on at least some of the matters which would have been in issue in the action. My reason for these two conclusions are as follows.
    First, the evidence and arguments in relation to the various issues which would have arisen in the action have been substantially more extensive than in most loss of a chance cases. Secondly, the difference in time between the notional hearing of the action and the hearing of these proceedings is not very substantial (less than three years). Thirdly, so far as the merits are relevant (as to which see the 4th proposition of Simon Brown LJ in Mount) most of the delay (any delay before November 1992 and any delay after July 1995) was attributable more to the claimants rather than to the defendants (who were responsible for the delay between November 1992 and July 1995).
    On the other hand it would be wrong to be too ready to make firm findings as to what the court would have decided in the action on at least some of the issues which have been debated. First, it may be wrong in principle to do so because an issue might well be arguable either way even if I have a view on it. Secondly, the oral and documentary evidence available to me is, I am satisfied, less than would have been available in the action. On witnesses, I did not hear from some witnesses who I believe would have been called in the action. Also, a further 2Ύ years, while not substantial, is a significant period during which memories can be expected to weaken. Some of the documentation which would have been available in the action but was not available to me could be crucial.
  63. Whilst it is unsurprising that on the very different facts of that case the court was indeed prepared to "look at the prospects in far greater detail" and "to come to a clear conclusion on the likely outcome on at least some of the matters which would have been in issue in the [original] action", to my mind wholly different considerations apply here. The delay here was far longer than there. It was entirely attributable to the defendants rather than the claimants. And by 1992 it had already made the original action untriable. In these circumstances I agree with Tuckey LJ that the judge below could not and should not have attempted 7½ years later to try (and purport to reach a clear conclusion on) the issue as to whether alternative insurance cover would have been available (on any terms) to the claimants 15 years earlier.
  64. I agree too with the rest of Tuckey LJ's judgment as to the proper approach to bring to bear upon this claim and with the result which he proposes. The appeal is accordingly allowed and judgment will be entered for the claimants in the substantially larger sum indicated.
  65. ORDER: Appeal allowed. In substitution for the sum awarded by the judge below, judgment will be entered for £250,000 plus interest from July 1989 in the sum of £302,773.95 making a total of £552.773.95. The defendants to pay the claimant's costs of the action (including hearings in November 1999, January 2000 and June 2000 and the present appeal) including any reserved costs in the action or the appeal on a standard basis, such costs to be subject to detailed assessment if not agreed. Detailed assessment of the claimant's costs under the Access to Justice Act 1999, paragraph 4 of the Community Legal Services Funding Order 2000. Permission to appeal to the House of Lords refused.
    (Order does not form part of approved Judgment)


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