Legal brief: When a loss of chance has a value

The recent decision of the Scottish courts on how to value a “loss of chance” claim in a construction context is a very useful guide to an increasingly relevant head of claim. What is a claim for loss of chance? It is where a party has been deprived of an opportunity to make something happen. There is no certainty a course of events will then follow which leads a party to gain financially but the loss is the loss of opportunity to make that happen. Usually this is in the context of a contractual claim but it can also be in tort.

In McCrindle Group vs Maclay Murray and Spens, an M&E contractor sued its lawyer for professional negligence which it claimed had lead to it losing an opportunity to settle a claim against its employer, Haden Young at a much higher figure than it eventually settled on – the difference between around £450,000 and the ultimate settlement figure of £90,000.

The circumstances around the nature of the negligence here are complex. What is important is Lord Hodge’s extremely useful summary of causation and valuation in “loss of chance” cases.

In allowing such a claim for lost opportunity the court will first look at causation. Did the negligence or breach of contract cause that lost opportunity? If the answer to that on a balance of probabilities is yes what then is the value of the lost opportunity? Lord Hodge confirmed the distinction between a loss of a right and a loss of opportunity.

He confirmed a discount requires to be applied to any calculation of loss of opportunity to reflect the fact it might still not have happened e.g. in this case Haden Young might not have offered to settle at £450,000. The court will not “treat as certain that which is merely probable. The court must value the chance”.

In the McCrindle case the judge assessed the chance of Haden Young offering McCrindle a settlement figure of £450,000 at 40%. He was satisfied McCrindle would have accepted that figure. The question was what was the chance that Haden Young would have offered it? So £450,000 x 40% was £180,000. From this was deducted what was actually paid later – a sum of £90,000 – leaving a value for the loss of chance of £90,000.

To get to this 40% assessment the judge heard witnesses on the whole circumstances around the settlement discussions which had taken place over a period of several years, so it was not just a formulaic approach. He took a view after evidence. Food for thought!

Lindy Patterson QC is a partner in Dundas & Wilson