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Loss of Chance. Jarbeau v. McLean
In Jarbeau v. McLean (Ont CA, 2017) the Court of Appeal discusses the difference between assessing causation and damages on a 'but for' test versus a 'loss of chance' standard, all in the context of an extended discussion of solicitor's negligence:[17] The “but for” test set out in the trial judge’s charge is the appropriate test for causation in negligence in all but rare cases. The test was set out in Clements v. Clements, 2012 SCC 32 (CanLII), [2012] 2 S.C.R. 181, at para. 8, as follows:The test for showing causation is the “but for” test. The plaintiff must show on a balance of probabilities that “but for” the defendant’s negligent act, the injury would not have occurred. Inherent in the phrase “but for” is the requirement that the defendant’s negligence was necessary to bring about the injury ― in other words that the injury would not have occurred without the defendant’s negligence. This is a factual inquiry. If the plaintiff does not establish this on a balance of probabilities, having regard to all the evidence, her action against the defendant fails. [Emphasis in original.] ..........
[20] In some cases of solicitor’s negligence, where it is practically impossible to determine what would have happened but for the solicitor’s negligent conduct, courts have allowed a plaintiff to advance a claim for loss of the chance to recover.
[21] Mr. McLean relies on two such cases: Kitchen v. Royal Air Force Association, [1958] 2 All E.R. 241 (C.A.), and Henderson v. Hagblom, 2003 SKCA 40 (CanLII), 232 Sask. R. 81, leave to appeal refused, [2003] S.C.C.A. No. 278.
[22] In Kitchen, the plaintiff sued lawyers who missed a limitation period. There was a “trial within a trial” to determine what would have happened if the plaintiff had been able to sue. Lord Evershed did not accept that it must be “always all for the plaintiff or nothing” and posited three potential scenarios, at pp. 574-575:If, in this kind of action, it is plain that an action could have been brought, and if it had been brought that it must have succeeded, of course the answer is easy. The damaged plaintiff then would recover the full amount of the damages lost by the failure to bring the action originally. On the other hand, if it be made clear that the plaintiff never had a cause of action, that there was no case which the plaintiff could reasonably ever have formulated, then it is equally plain that the answer is that she can get nothing save nominal damages for the solicitors’ negligence.
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But the present case falls into neither one nor the other of the categories which I have mentioned. There may be cases where it would be quite impossible to try “the action within the action”, as [counsel] asks. It may be that for one reason or another the action for negligence is not brought till, say, twenty years after the event and in the process of time the material witnesses or many of them may have died or become quite out of reach for the purpose of being called to give evidence.
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In my judgment, what the court has to do (assuming that the plaintiff has established negligence) in such a case as the present, is to determine what the plaintiff has by that negligence lost. The question is, has the plaintiff lost some right of value, some chose in action of reality and substance? In such a case, it may be that its value is not easy to determine, but it is the duty of the court to determine that value as best it can. [23] In Hagblom, Mr. Hagblom was sued for negligent construction of a chimney in a home destroyed by fire. His lawyer was negligent in defending him, and the Saskatchewan Court of Appeal had to decide whether to allow Mr. Hagblom to advance a claim that, by reason of the lawyer’s negligence, he lost the chance to successfully defend the homeowners’ lawsuit. The court concluded that it was not feasible to send the case back for a trial within a trial and accordingly conducted a loss of chance analysis of Mr. Hagblom’s chances of success on the underlying action. It held that while Mr. Hagblom had a “potentially winnable” case, he could he not be assured of success because the cause of the fire remained a mystery even after examining the expert evidence.
[24] The court assessed the chances that Mr. Hagblom would have successfully defeated the homeowners’ action at 75%, and accordingly set his damages at that percentage.
[25] Mr. McLean also relies on Folland v. Reardon (2005), 2005 CanLII 1403 (ON CA), 74 O.R. (3d) 688 (C.A.). In that case, Mr. Folland claimed that he would have been acquitted of a criminal offence, but for the negligence of defence counsel.
[26] In Folland this court discussed the elements of a cause of action for breach of contract based on solicitor’s negligence. I extract the following principles from that decision, using the language used by Doherty J.A., at paras. 72-76:1. In most cases of solicitor’s negligence, liability rests on both a tort and contractual basis.
2. The imposition of liability grounded in the loss of a chance of avoiding a harm or gaining a benefit is controversial in tort law, particularly where the harm alleged is not purely economic.
3. Whatever the scope of the lost chance analysis in fixing liability for torts claims based on personal injuries, lost chance is well recognized as a basis for assessing damages in contract. In contract, proof of damage is not part of the liability inquiry. If a defendant breaches his contract with the plaintiff and as a result the plaintiff loses the opportunity to gain a benefit or avoid harm, that lost opportunity may be compensable.
4. A plaintiff can recover damages for lost chance in an action for breach of contract if four criteria are met:
a. The plaintiff must establish on the balance of probabilities that but for the defendant’s wrongful conduct, the plaintiff had a chance to obtain a benefit or avoid a loss.
b. The plaintiff must show that the chance lost was sufficiently real and significant to rise above mere speculation.
c. The plaintiff must demonstrate that the outcome, that is, whether the plaintiff would have avoided the loss or made the gain, depended on someone or something other than the plaintiff himself or herself.
d. The plaintiff must show that the lost chance had some practical value. [27] Where a plaintiff in a tort action arising out of solicitor’s negligence can establish on the balance of probabilities that but for the negligence he or she would have avoided the loss, he or she should be fully compensated for that loss.
[28] Where a plaintiff can only establish that but for the solicitor’s negligence he or she lost a chance to avoid a loss, a claim for breach of contract may permit recovery for the value of that chance.
[29] The case law is clear that a plaintiff in a solicitor’s negligence case can fully recover her loss in appropriate circumstances. The British Columbia Court of Appeal expressed it this way, in Nichols v. Warner, Scarborough, Herman & Harvey, 2009 BCCA 277 (CanLII), 95 B.C.L.R. (4th) 133, leave to appeal refused, [2009] S.C.C.A. No. 355, at para. 26:In a case of this kind, the court is required to essentially conduct a trial within a trial to the extent possible: the first to determine whether the solicitor has been negligent in respect of the litigation undertaken; the second to determine, if so, what loss the solicitor’s negligence has caused the client. In some instances, whether there has been a loss and what it was can be readily established. In others, however, the prospect of success and recovery may not be easily shown due to uncertainties of proof and perhaps legal consequences inherent in any given case. Indeed, the mere passage of time may render the conduct of a trial within a trial virtually impossible. What the court must do in such circumstances where the prospect of recovery in the original action is inconclusive is to quantify as best it can the value of what the authorities regard a lost opportunity. The Alberta Court of Appeal summarized the approach to be taken in Fisher v. Knibbe, 1992 ABCA 121 (CanLII) 3 Alta. L.R. (3d) 97, at pp. 7-8:After conducting the “trial within a trial” to determine what damages, if any, a negligent solicitor is liable for missing a limitation period, three results are possible. First, the trial judge could find that had the case gone to trial the plaintiff would have been successful and in such case 100 per cent of the lost damages would be awarded against the solicitor. Second, the trial judge could find that the plaintiff would not have been successful therefore only nominal damages may be awarded against the solicitor. Finally, where time has passed to such an extent that a “trial within a trial” would be impossible, then the court must to the best of its ability calculate the value of the opportunity lost to the plaintiff and award damages against the solicitor on that basis. [30] In Folland, this court rejected the appellant’s alternative loss of chance claim for several reasons, including that public policy would not countenance a damage award based on a lost chance in a criminal case. If Mr. Folland could only establish a less-than-50% chance of acquittal, by implication the trier of fact would have found that it was more likely than not that he had been properly convicted: at para. 92.
[31] Where a plaintiff advances a tort claim for damages founded on the “but for” causation test, Folland does not support Mr. McLean’s argument that some degree of probability between 50% and 100% should reduce a defendant’s liability.
[32] In short, none of the cases cited to us involved a defendant attempting to reframe a plaintiff’s case as a loss of chance, where the loss the plaintiff claims is the opportunity successfully litigate or settle a claim in full and the “trial within a trial” approach allows the plaintiff to test that claim. In such circumstances the plaintiff is entitled to advance the trial within a trial on the balance of probabilities standard, and to fully recover if that standard is met.
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[35] This is not to say that some contingencies will not affect the assessment of damages. A jury could, in its assessment of damages, properly be invited to consider future contingencies in assessing the losses that properly flow from the lawyer’s negligence.
[36] For example, if a plaintiff successfully recovered judgment against an at-fault party but there was no possibility of collection of that judgment, the plaintiff may recover nominal damages against a negligent solicitor who caused the loss of the opportunity to sue the at-fault party: see Melanson v. Cochrane, Sargeant, Nicholson & Paterson (1985), 63 N.B.R. (2d) 91 (Q.B.), aff’d (1986), 68 N.B.R. (2d) 370 (C.A.); Islington Investments Ltd. v. Day, Ault & White, [1978] O.J. No. 1322 (H.C.). As noted by Sean Campbell, Stephen Grant and Linda Rothstein in Lawyers’ Professional Liability, 3d ed. (Toronto: LexisNexis, 2013), at p. 222:In Page v. Solicitor, 1971 CanLII 1075 (NB CA), [1971] N.B.J. No. 65, 3 N.B.R. (2d) 773, 20 D.L.R. (3d) 532 (N.B.C.A.), aff’d [1972] S.C.J. No. 24, [1972] S.C.R. vi, (sub nom. Pelletier v. Page) 29 D.L.R. (3d) 386n (S.C.C.), the Court held that in the absence of any evidence as to any other funds available to satisfy the hypothetical judgment against the original tortfeasor, the maximum loss proven was the sum for which the original tortfeasor had been insured. .........
[52] The trial judge characterized both jury assessments of diminution of value and cost to repair as perverse, and reluctantly gave judgment for the lesser amount. As shown above, there was evidence before the jury justifying both assessments. Absent a reasoned basis for deciding whether to grant judgment for diminution in value or cost to repair, it falls to this court to make that decision.
[53] The general rule for resolving a question as to the measure of damages was set out in James Street Hardware and Furniture Co. v. Spizziri (1987), 1987 CanLII 4172 (ON CA), 62 O.R. (2d) 385 (C.A.). At para. 54, this court held that the general proposition is that the damages awarded to a plaintiff should put him or her in the same position as they would have been in had they not sustained the wrong for which they are receiving compensation or reparation.
[54] The Jarbeaus purchased a new home in 2007. They ended up with a home with many deficiencies that is not building code compliant and should never have been built. The fairest measure of damages is that which would provide the Jarbeaus with what they bargained for – a home free of defects.
[55] Accepting the jury’s assessment that the home itself had no value, damages should not be awarded on the lesser diminution in value basis because this does not take into account the very real difficulty of selling this home and the cost of demolition, if the property were to be sold as vacant land.
[56] In the context of this case, there is no issue of a windfall or betterment if the cost to repair is awarded. Many courts have concluded that the measure of damages may properly be fixed at the cost to repair the deficiencies in a home or rebuild a home: Nan v. Black Pine, [1991] B.C.J. No. 910 (C.A.); Fors v. Overaker & Mallon, 2014 ONSC 3084 (CanLII), [2014] O.J. No. 3108; Galan v. Finch, 2015 ONSC 2455 (CanLII), [2015] O.J. No. 2275; Gemeinhardt v. Babic, 2016 ONSC 4707 (CanLII), [2016] O.J. No. 3883.
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