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Damages for the Loss of a Chance
When a plaintiff's chance of a prize or cure is dashed by a defendant's neg- ligence or breach of contract, the plaintiff no doubt feels that a remedy (^) is in order. The question arises, however, whether a hope, a mere chance of a prize, remedy, or cure, is a loss that the courts will consider worthy of a rem- edy. Early this century damages were awarded for a lost chance in Chaplin v Hicks. The extent of that remedy has recently been more closely defined by the House of Lords in Hotson v East BerkshireArea Health Authority.^2
I. Whether Damages Are Available
1. Chaplin v Hicks
The plaintiff in Chaplin v Hicks was a young woman who, (^) in 1908, entered a beauty contest organised by the defendant. A contractual relationship ex- isted. From over 6000 entrants the plaintiff was selected as one of fifty final- ists. Each (^) finalist was to attend a personal interview with the defendant, and he was to choose twelve (^) winners who would receive valuable employment as actresses. The plaintiff, however, was unable to attend at her allotted (^) inter- view time and the defendant, in breach of his contract with the plaintiff, re- fused to interview her at a later date. The plaintiff, then, was not (^) even consid- ered in the final selection. Counsel for the defendant argued that damages should be nominal (^) because
1 [1911] 2 KB 786. 2 [1987] 2 All ER 909.
in Contract and Tort
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"itis impossible to estimate the quantum of the reasonable probability of the plaintiff's being a prize-winner".^3 The court disagreed. They held that the plaintiff could not claim damages for^ the^ lost prize^ itself^ since^ she^ could^ not prove on the balance of probabilities that she would have won, even if she had
been considered. Nevertheless, the mere opportunity^ of^ competing^ for^ that prize was a valuable right the loss of which could be compensated:^4
the taking away from the plaintiff of the opportunity of competition, as one of a body of fifty, when twelve prizes were to be distributed, deprived the plaintiff of something which had a^ monetary^ value.
The plaintiff was awarded substantial damages for the value of the chance of
competing which she had contracted for.
2. Hotson v East Berkshire Area Health Authority
Difficult questions have arisen since Chaplin v Hicks, in both contract and
tort cases, over how far the remedy^ for^ a^ lost chance^ can^ be^ extended.^ The House of Lords has now answered some of these questions in Hotson v East Berkshire Area^ Health^ Authority.
5
The plaintiff in Hotson was^ a^ thirteen^ year old^ boy^ who^ injured^ his^ hip^ at school. The defendant health authority was admittedly^ negligent^ in^ delaying the treatment of his hip for five days. Recovery^ from^ the^ injury^ depended^ on whether the blood vessels leading^ to^ the^ femoral^ epiphysis,^ a^ part^ of^ a^ child's hip joint, were intact. It was probable, a probability which was assessed at 75 percent, that all those blood vessels had^ been^ destroyed^ by^ the^ fall^ so^ that, even without the defendant's negligence, the^ plaintiff^ would^ have^ suffered permanent deformity of the hip. However, if some blood vessels had survived the fall, then prompt treatment would have led to full recovery^ and^ it^ would have been the defendant's negligence which had caused the deformity. The Court of Appeal^6 held that a cure which depends upon a 25 percent chance of blood vessels being intact is not distinguishable from a beauty con- test prize which depends upon a chance that the entrant will be selected as a winner. They therefore upheld Brown J's decision 7 that the plaintiff be awarded damages of £11,500 for his lost chance of a cure. That figure repre- sented 25 percent of what^ damages^ would^ have^ been^ if^ the^ award^ had^ been for the deformity itself. The House of Lords, however, overturned the Court of Appeal's decision and allowed the appeal of the East Berkshire Area Health Authority. Lord Ackner and Lord MacKay pointed to an important factor which distinguishes
3 Supra at note (^) 1, at 795. 4 Ibid, at 793. 5 Supra at note 2. 6 [1987] 1 All ER 210. 7 Hotson v Fitzgerald [1985] 3 All ER 167, 181.
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pothetical fact, as in Chaplin v Hicks. Yvonne Cripps has said in a case note on the House of Lords decision that,' 5
[t]he House of Lords rejected the proposition that a defendant could be liable for causing the loss of a chance of recovery which was less than 50 percent even if proper medical treat- ment had been given promptly.
It is respectfully submitted that this note overstates the effect of the deci- sion of the House of Lords. Their decision rested on the chance (^) in Hotson
being dependent on a past fact. A chance of recovery which is less than 50 percent might, however, depend on a hypothetical fact. For example, the
chance of recovery might depend on how a patient would have reacted to certain drugs if the defendant had not negligently failed to administer those drugs. In such a case there appears to be nothing in the House of Lords deci- sion which would prevent recovery on the same principles as were applied in Chaplin v Hicks. This is especially clear in the judgment of Lord MacKay, who, after noting that, in^ Hotson,^ the^ chance^ depended^ on^ a^ past^ fact, said:'^
6
I have the impression from reading the judgments of the Court of Appeal that this aspect of the facts in the present case may not have been in the forefront of the discussion there. Much of the judgment of the Court of Appeal will remain for consideration in the future.
Even Lord Bridge, whose judgment is perhaps the most restrictive, recog- nises that Hotson does not quash the notion of an analogy being drawn be- tween Chaplin v^ Hicks^ and medical^ negligence^ cases:^
17
I think there are formidable difficulties in the way of accepting the analogy. But I do not see this appeal as a suitable occasion for reaching a settled conclusion as to whether the analogy can ever be applied.
Lord Bridge does not expand on what are the "formidable difficulties" but one important possibility^ is^ discussed^ below.'
3. The Application of Hotson to ContractActions
It seems clear that the decision in Hotson will apply equally to contract ac- tions. Even where parties contract on the express terms that one confer a benefit upon the other, the value of which (^) depends upon the chance of a past fact, no damages will be awarded for the lost chance.
Illustration
A dog is injured while attempting to jump a fence. Recovery is possible, but only if certain
15 [1987] CLJ 389, at 389. 16 Supra at note 2, at 919. 17 Ibid, at 914. 18 Infra, at p 43.
Damagesfor the Loss of a Chance in Contract and Tort
nerves (^) have not been damaged in the accident, and treatment is prompt. It is impossible to evaluate certainly whether (^) those nerves have been damaged, but a veterinary expert esti- mates there is a 75 percent probability that they have been. The dog's master contracts with Vet to treat the (^) dog, although both know that even the best treatment will depend upon the 25 percent chance that the nerves are not damaged. Vet, in breach of the contract, (^) fails to treat the dog, whose injury (^) becomes permanent.
In the above illustration the dog's master could not (^) claim damages for the lost chance of having his pet cured. Although a factual chance (^) existed, and the parties based their contractual relationship on (^) that chance, it is a chance which the law does not recognise as existing at all because of the rule stated in Mallett (^) v McMonagle as applied in Hotson v East Berkshire Area Health Au-
thority.
19
There may be other remedies to the plaintiff who has lost a chance based on a past fact. Specific performance may be (^) available, 2 although that would clearly be of little use in the above illustration. The (^) plaintiff might cancel the contract and recover any money paid. (^2) ' There might even be an action to re- cover what the defendant has saved by not performing.^22 Damages for the chance, with which this article is concerned, (^) will not be available however.
4. The Application of Chaplin (^) v Hicks to Tort Actions
In Hotson v East Berkshire Area Health Authority^23 the House of Lords did not have to decide whether (^) a chance which was legally recognised - that is, a chance which depends on a hypothetical fact (^) - could be compensated in a negligence action just as it had been in a contract action in Chaplin v Hicks. 24 Since there was no legally recognised (^) chance, that issue did not arise. The Court of Appeal, however, who thought a chance did exist, did consider the issue. It appears to be this aspect which Lord MacKay was referring to in the House of Lords when he said "much of the (^) judgement of the Court of Appeal will (^) remain for consideration in the future".^25 It is perhaps also one of the "fundamental (^) difficulties" which Lord Bridge saw in applying Chaplin v Hicks to medical negligence (^) actions. Counsel for the Health Authority had argued before the Court of Appeal that a distinction should be drawn between (^) Chaplin v Hicks and cases involv- ing tort actions on the ground (^) that "in the case of tort, but not of contract, the plaintiff (^) has to prove some loss or damage and must do so on the balance of probabilities".
19 Supra, at p 41. 20 Markholm (^) Construction Co Ltd v Wellington City Council [1985] 2 NZLR 520. 21 Contractual Remedies Act 1979, ss 7 and 9. 22 Joyner v Weeks [1891] 2 QB 31; Samson and Samson Ltd v Practor [1975] 1 NZLR (^) 655. But compare (^) T-to v Waddell (No.32) [1977] 1 Ch 106,332. 23 Supra at note 2. 24 Supra at (^) note 1. 25 Supra (^) at note 2, at 919. 26 Supra at note 6, at 216.
Damagesfor the Loss of a Chance in Contract and Tort
the mere chance was a thing of value.
5. Chances Which areBetter than Even
Assuming a chance which is based on a hypothetical fact and, therefore, recognised by the law, the next question which arises concerns the situation
where that chance is heavily in the plaintiff's favour. Suppose that in^ Chaplin^ v Hicks forty-five of^ the^ fifty^ finalists^ were^ to^ be^ selected^ as^ winners^ and^ given valuable employment as actresses. The plaintiff might then claim that the loss of the prize itself could be
proved on the^ balance of probabilities^ to^ be^ a^ result of^ the^ defendant's breach and her damages should equal the full value of the prize. An alternative view is that in such a situation damages should still^ be^ awarded^ for^ the^ chance it- self and therefore discounted, albeit by less than 50 percent, to reflect the value of the lost chance, not the prize. The authorities seem to support the latter view. In Otter v Church, Adams, Tatham & Co 31 the defendant solicitor negli- gently failed to advise the plaintiff that the deceased, an RAF pilot serving in India in 1944, should make a will. As a result a property worth £7,000 passed to the uncle of the deceased, and not to the deceased's mother, when he was killed on active service on 14 May 1945. It was highly likely that had the plaintiff, the deceased's mother, been properly advised by the defendant, she would have told the deceased of the rule of law by which the property would
pass to his uncle, and he would have made a will in her favour. There was a small chance, however, that the deceased would not have done so. This was dearly a case of a greater than even chance which depended on a contin- gency. Upjohn J, citing Chaplin v Hicks, held that he must consider the chance that the deceased would not have made a will, when considering damages. Accordingly, he discounted damages from £7,000 to^ £6,500.^ Ogus^ notes of this case that "the benefit is not the profit, but the chance of making a profit".^32 A similar solution was reached in another case involving a negligent solicitor, Kitchen v Royal Air Forces Association.^33 The plaintiff had a cause of action against an electricity company which was "more likely to succeed than not."^34 When the^ action^ lapsed^ because^ of^ the^ solicitor's^ negligence,^ however, damages were awarded for the lost cause of action (value £2,000) not the likely successful outcome (value £3,000). In tort cases also, it has been held that where loss depends on a greater than even contingency, damages should be discounted to reflect^ that^ contin-
31 [1953] Ch 280; cf Sykes v Midland Bank Executor and hstee Co **[197111 QB 113; 69 LQR
32** Ogus The Law of Damages (1973) 296. 33 [1958] 2 All ER 241. 34 Ibid, 251.
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gency. In Clark v MacLennan^35 the defendant doctor (^) negligently performed an operation prematurely. Even if he had (^) waited, however, the success of the op- eration would have depended upon hypothetical contingencies in relation to how an operation performed at the correct time on this particular patient would have (^) proceeded. The (^) plaintiff was not, therefore, entitled to damages for (^) the full failure to cure, but only to damages representing the two thirds (^) chance of a cure which she had lost. Certainly (^) the decision of the House of Lords in Hotson (^) has now shown that this type of discounting (^) of better than even chances cannot occur in cases where the chance (^) depends on a past fact. In such cases the past (^) fact must be determined (^) on the balance of probabilities, so that there (^) is no chance at all - the plaintiff has lost a certainty, not a chance, and (^) he will receive full damages for the actual (^) physical or financial loss he has suffered. This (^) principle stated in Mallett (^) v McMonagle, however, applies only "in determining (^) what did hap- pen in the past."^36 Where a chance exists which depends on a (^) contingency, a different rule (^) applies: When one is dealing with a hypothetical event (^) one values the chance the plaintiff has of a successful outcome. One does not have to decide on the (^) balance of probabilities what the outcome will be.
This different (^) rule should be just as applicable to likely hypothetical (^) events as it is to unlikely hypothetical (^) events. It is therefore submitted that if in Chaplin (^) v Hicks forty-five of the fifty finalists were to be selected (^) as winners, the plaintiff (^) would still receive damages according to her chance (^) of winning, which would be slightly less than (^) if it could have been shown that the defen- dant had caused her to lose the actual prize. That (^) could not be shown because causation would depend on evaluating (^) a hypothetical event and that cannot be evaluated on the all or nothing (^) balance of probabilities test as the distinction between Chaplin v Hicks and Hotson v East Berkshire (^) Area Health Authority shows.' When, therefore, Lord Ackner (^) says in Hotson that, "once liability is established, on the balance of probabilities, (^) the loss which the plaintiff has sustained is payable in full", it is submitted that he (^) must be referring only to those cases where the lost chance (^) depends on a past fact. Policy considerations also dictate that damages (^) be discounted where the chance lost is greater than even. If a plaintiff can benefit (^) from a less than even chance that he would have been cured, then (^) a defendant should be allowed to benefit from a less (^) than even chance that the plaintiff would not have (^) been cured. The defendant's benefit is the discount of damages. As Brown J said in the trial judgment in (^) Hotson, the opposite approach "smacks somewhat (^) of
35 [1983] 1 All ER 416. (^36) Supra at note 10, at 176. 37 Clark v MacLennan, supra (^) at note 36, at 432. 38 Supra at note 2, at 915 and 921.
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Thus in Chaplin v Hicks if the chance were reinstated, all things being equal, the plaintiff might have either won or lost. Where, however, the race has been run and the plaintiff has won despite his reduced (^) chance, there is no such contingency. He cannot claim that (^) he has lost a chance at all when, if that chance could now be somehow reinstated, (^) if the race could be rerun, there would be no possibility of his situation being improved. It can be seen how this problem illuminates exactly what (^) was being compensated in Chaplin v Hicks, (^) not a mere increased risk which may have existed at some time in the past, but a right which if it could (^) now be reinstated would have value to the plaintiff. If the plaintiff has won his race (^) or contest or achieved his cure in any event, no such (^) valuable right exists to be compensated. Similarly, if Horse Owner brought an action for damages for his reduced chance before the race had been run, it is (^) unlikely that he would succeed. The possibility would still exist that the lost chance would be "subsumed in the eventual result",^0 and the courts will (^) not allow a remedy to "a mere potential victim'" If, however, Horse Owner cancels the (^) contract before the race is run, then there will be no possibility of an eventual win and damages would be awarded for the lost chance just as if the horse had (^) run and lost the race. If Horse Owner does cancel the contract, he may mitigate his damages by en- tering an alternative (^) race if there is still time.'
II The Quantum of Damages
In Chaplin v Hicks" (^) the problem of quantifying the plaintiff's loss did not arise. Once it had been decided by the court that the mere chance of a prize was a valuable right which could be compensated by substantial damages, the quantum (^) of those damages was that which had been assessed by the jury. Since 1911, however, certain principles (^) have been considered which a judge should apply when assessing the quantum of damages for the loss of (^) a chance which depended on a contingency. Consideration will also (^) be given to relief under s 9 Contractual Remedies Act 1979. The judgments in the Court of Appeal in Hotson v East Berkshire Area Health Authority' will be relied upon in considering some of the (^) quantifica-
tion principles. Although the House of Lords overturned the Court of Ap- peal's decision, it did so on the ground that there was no chance at all. Ac- cordingly, the statements of the Court of Appeal upon what (^) the consequences would have been if there had been a chance, are still worthy of consideration.
(^43) Ibid. 44 McGhee v Nadonal Coal Board, supra at note 19, at (^) 1015. 45 Sapwe/lv Bass [191012 (^) KB 486; cf Chapin v Hicks, supra at note 1, at 797. 46 Supra at note 1. 47 Supra at note 6.
Damagesfor the Loss of a Chance in Contractand Toil
1. Whether Damages Will Be ProportionalTo The Chance
The general approach of the courts in assessing damages for lost chances has been to give a percentage value to the chance and award that percentage of the total value of the prize or cure in relation to which the chance existed. In (^) Kitchen v Royal Air Forces Association Lord Evershed, M.R., says this of the trial judge's estimation of damages: since the admitted maximum was £3,000 the final award of £2,000 must, in my view, mean that, in the opinion of the learned judge, this cause of action was one which, on merits, was more likely to succeed than not.
An even more exact proportional approach was taken by Pain J in Clark v MacLennan. He found that the plaintiff had lost a two-thirds chance of avoiding permanent stress incontinence. Damages (^) of £11,418.33 were awarded, exactly two-thirds of the £17,127.50 which would have been awarded had the damages been for the injury itself, and not for the chance of the injury. In the Court of Appeal in Hotson, however, Donaldson MR questioned whether this approach would always be applicable. In some circumstances the chance will be worth more (or less) to the plaintiff than its proportion to the eventual loss.^5 ' It has even been suggested that, where the percentage value of a chance is below a certain level, no substantial damages should be awarded at all. In his trial judgment in Hotson, Brown J suggested that no substantial damages could be awarded for a chance of much less than 25 percent. 52 That would be awarding damages for mere speculation, not for a substantial chance. It might (^) be considered rather harsh, however, that a 10 percent chance of winning a horse race be dismissed as merely speculative. Surely that is a valu- able right. This point is especially clear in contract. Should a contracting party be denied a remedy in damages simply because the contingent chance he has contracted for is a small one? Some authority for the proposition that the loss of even quite small chances may be compensated can be drawn from Otter v Church, Adams, Tatham & Co.3 That case involved a chance which was very large rather than very small. The important thing was, (^) however, that damages were still discounted to reflect the chance. If the defendant can benefit from a "rather unlikely" (^) chance that damage (^) would not have occurred, (^) then the plaintiff should benefit from an equally small chance. It is submitted, there- fore, that a directly proportional approach will almost always be applied, even to very small or large chances.
48 Supra at note 34, at 251. 49 [1983] 1 All ER 416. 50 Ibid, 433. 51 Hotson v East Berkshire Area Health Authority, supra at note 6, at 217. 52 Hotson v Fitzgerald, supra at note 7, at 177. 53 Supra at note 32.
Damagesfor the Loss of a Chance in Contract and Tort
an (^) order made under s 9(2)(a) Contractual Remedies Act for the return of the (^) purchase price, then additional damages would be $2.'
Conclusion
Proportional damages should be available for the loss of a chance which
depends on a hypothetical fact. This will be so whether the plaintiff's (^) claim is in contract or tort, and whether his chance is less or better than even. It is im- portant to note that the House of Lords (^) in Hotson have not decided that a lost chance (^) can never be compensated in a medical negligence case. Rather, it
is only when a less than even chance depends on a past fact (^) that the chance is
accorded no legal value - it is no chance at all. Where a greater than even chance depends on a past fact damages will be awarded without discount for the actual physical or fimancial loss resulting.
62 Section 10(2) Contractual Remedies Act 1979.
