Loss Of Chance- How Courts Assess Damages Where A Plaintiff Loses The Opportunity To Pursue Litigation

Lawyers are human which means that even the most diligent lawyer will make mistakes from time-to-time. One of the most common mistakes a lawyer can make is missing a limitation period, thereby barring their client from pursuing litigation. When a limitation period is missed, the client may pursue their claim against the lawyer for the lawyer's negligence in missing the limitation period, but one of the challenges in professional negligence claims against lawyers is quantifying damages. For instance, a material witness may have passed away, or 20 years may have passed since the underlying tort occurred, making it exceedingly difficult to quantify damages. This blog post discusses the different methods a Court will use to quantify damages where a limitation period is missed and the various considerations a Court will consider in determining which method to choose.

The Foundational Case

One of the first cases on quantifying damages for a lost opportunity to sue is Kitchen v Royal Air Forces Assn., [1958] 2 All ER 241 ("Royal Air"; England Court of Appeal). In that case, the defendant law firm had failed to commence an action within the limitation period under the Fatal Accidents Act. The plaintiff's husband had been electrocuted in his home while using domestic electrical equipment, but it was not clear that negligence could be proven against the original defendant.

The court had to decide whether the plaintiff was entitled to anything more than nominal damages from the law firm. Lord Evershed rejected an "all or nothing" approach. Instead, damages should be assessed along a spectrum of possibilities. At pp. 574-575 Lord Evershed provided guidance in quantifying damages:

• If it is obvious that, had an action been brought it would have succeeded, the damaged plaintiff recovers the full amount of damages lost by the failure to bring the action.
• If it is obvious that, had an action been brought that there was no case the damaged plaintiff could have formulated, then the damaged plaintiff merely gets nominal damages for the solicitors' negligence.
• Where it is impossible to try the action within the action due to various reasons such as too much time has elapsed or a material witness has passed away, then the question becomes, has the plaintiff lost some right of value?

Lord Justices Parker and Sellers in Royal Air agreed that there was a scale of possibilities, from certainty of victory at one end, to certainty of failure at the other, emphasizing that anything above a certainty of failure gave a right to something more than nominal damages. As a result, the Court of Appeal in Royal Air upheld the trial judge's award which was equal to two thirds of the full amount recoverable under statute.

Folland v. Reardon, 2005 CanLII 1403 (ON CA) ("Folland")

In Folland, the plaintiff claimed that but for his solicitor's negligence he would have been acquitted of a criminal offence. Folland clarified how courts treat "loss of chance claims", especially in contract law at paragraphs 72 – 76:

1. The liability for a lost chance to avoid harm or gain a benefit is controversial in tort law, especially when the alleged harm is not purely economic.
2. Although the use of lost chance analysis in tort cases involving personal injury is still debated, it is well-established in contract law as a method for determining damages. In contract matters, demonstrating damages is not required to establish liability. When a defendant breaches a contract with the plaintiff, resulting in the plaintiff losing the opportunity to obtain a benefit or avoid a loss, the value of that lost opportunity can be recovered as damages.
3. To recover damages for a lost chance in a breach of contract action, the plaintiff must prove:
   a. that, but for the defendant's misconduct, there was a chance to gain a benefit or avoid a loss;
   b. the lost chance was substantial, not just speculative;
   c. the outcome depended on factors beyond the plaintiff's own control; and
   d. the lost opportunity had practical value.

Therefore, where a plaintiff can show that, but for the solicitor's negligence, they lost a chance to avoid a loss, a breach of contract claim may allow recovery for the value of that lost chance.

Fisher v Knibbe, 1992 ABCA 121 ("Fisher")

The Alberta Court of Appeal in Fisher similarly summarized the three approaches to quantifying damages when a client loses the chance to sue due to a solicitor's negligence in missing a limitation period. After conducting a "trial within a trial" to determine what damages, if any, the solicitor is liable for, three outcomes are possible (at paragraph 12):

First, if the court finds the plaintiff would have succeeded in the original action, the solicitor will be liable for 100% of the lost damages. Second, if the court finds the claim would have failed, only nominal damages may be awarded. Finally, if too much time has passed to fairly assess the original case, making a trial within a trial impossible, the court must estimate the value of the lost opportunity and award damages accordingly.

Main Takeaways

Ultimately, when a plaintiff loses the opportunity to pursue litigation, Courts will generally where possible, hold a "trial within a trial" to quantify damages. The assessment of damages typically falls along a spectrum, with courts applying three approaches depending on the circumstances.

1. Full-value amount: If the plaintiff can prove on a balance of probabilities that they would have been successful in their underlying claim, then they are entitled to recover the full amount of their damages.
2. Nominal amount: If it is obvious that the underlying claim would have failed, then they are entitled to nominal damages
3. Loss of chance amount: If, because of the passage of time for example, a trial within a trial is impossible to conduct then the court must undertake the loss of chance analysis and determine what chance the Plaintiff had and estimate the value of that last opportunity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.