Under-settlements – what factors does the Court take into account

In Dunhill v W Brook and Co and Crossley a damages claim was brought against solicitors and counsel for under-settling a personal injury claim.

The personal injury claim had been previously valued at c. £40,000 and a settlement was reached at the door of the Court for £12,500.  The Court reviewed the general principles applicable to under-settlement cases and found that the solicitors and counsel had not acted negligently.  This blog explores the issues the Court considered in reaching its decision.

Factual Background

The Claimant was crossing a road close to a roundabout with her adult son and his girlfriend.  A motorcyclist collided with the Claimant as she emerged between two vehicles queuing in the nearside lane.  The Claimant suffered a serious closed head injury. 

Independent witnesses to the accident gave evidence that (1) the motorcyclist was driving sensibly, (2) the Claimant may have been drinking and (3) the Claimant was not paying attention to the road.  The Claimant’s son said that the motorcyclist was travelling at speed and he could see 150 yards up the road (and so he would have seen the motorcyclist coming had he been travelling at an appropriate speed).  The Claimant could not recall the accident.

The Claimant instructed the solicitors to bring a claim against the motorcyclist.  The claim was funded by way of legal aid. Two advices from counsel, three medical reports and a report from an accident reconstruction expert were obtained and proceedings issued on 13 May 2002 shortly before limitation expired.  Damages were limited to £50,000. 

Although not commissioned by the solicitors, a report from a consultant clinical psychologist was compiled in December 2002 shortly before trial in January 2003.  The report concluded that the Claimant had suffered a “severe brain injury”, she was unlikely to improve without specialist brain injury rehabilitation and that she would need 12 months in residential care.

The solicitors met with the Claimant in late December.  The Claimant mentioned the report from a further medical expert and that this explained “psychological problems”.  The solicitors said that they would seek a copy of the report.

There were problems instructing counsel for trial, as previous counsel who had produced the earlier advices was unable to attend.  Separate counsel with no previous involvement in the case was instructed.  Trial was listed for 7 January 2003.  The solicitors obtained a copy of the further expert report on 6 January; it does not appear that a copy of that report was provided to Counsel.

A trainee solicitor from the firm attended trial on 7 January alongside counsel, a friend of the Claimant and the Claimant.  The Claimant’s son who was to give evidence failed to turn up.  Counsel advised that the Claimant had the option of seeking an adjournment given the absence of her main witness, or to settle the case on a full and final basis.  Counsel’s view was that without evidence from the Claimant's son the claim would fail.  Accordingly, Counsel tried to secure a figure so that the Claimant would not leave court with nothing.  The case settled for £12,500. 

The Claim

The Claimant initially challenged the settlement on the basis she lacked capacity.  She succeeded before the Supreme Court in 2014 reopening the settlement.  The Claimant later achieved a settlement at 55% of the value of her claim against the motorcyclist.  The Claimant's pleaded claim was for £800,000.

The Claimant brought a professional negligence claim in December 2009 for damages, seeking the shortfall between the settlement with the motorcyclist and her pleaded claim.  She alleged that the solicitors should have realised from available evidence that her brain injury had serious consequences and Counsel should not have advised that the claim should be settled for £12,500 when earlier advice was that she should receive a substantial settlement and because Counsel did not have sufficient evidence to advise on settlement. 

The Legal principles

The Judge set out the relevant legal principles that were not in dispute between the parties:

• The standard of care does not impose any liability for damage resulting from what may turn out to be errors of judgment, unless the error was one no reasonably well-informed and competent member of that profession could have made;
• There is a difference between an error that was so blatant as to amount to negligence and an exercise of judgment which though it turned out to be mistaken was not outside the reasonable course of action that in the circumstances reasonably competent members of the profession might have chosen to take;
• Settlement at the door of the court was a relevant consideration as to whether or not there had been a breach of duty, it is a situation “in which it may be very difficult to categorise the advocate’s decision as negligent even if later events proved it to be wrong";
• A solicitor is not liable in negligence if he acts reasonably on the advice of appropriate counsel provided he exercises his own independent judgment and if he considers that counsel’s advice is “obviously and glaringly wrong it his duty to reject it”;

• No lower standard of care applies if a trainee rather than a qualified solicitor attends trial on behalf of a solicitors firm.

In light of these issues, the Judge asked the following questions (1) was Counsel negligent in recommending settlement as if he was not, the solicitors could not be negligent, but if Counsel was negligent (2) did the solicitors discharge their duties by sending a trainee to the trial and were the solicitors entitled to rely on Counsel’s advice.

The Judgment

The Judge found that Counsel was not negligent based on the material he had.  There was a risk without the Claimant’s son that the Claimant would lose altogether.  On Counsel’s non-negligent assessment of the situation Counsel faced fighting and losing or agreeing a settlement.

Counsel was not negligent for failing to include in the settlement provisional damages as on the balance of probabilities there was no evidence to show that the motorcyclist was willing to settle the claim on any other than a full and final basis.  If a settlement on such basis could not be achieved; then Counsel could not be negligent for not pressing for it.

Accordingly there could be no finding against the solicitors.  However, the Judge found that if Counsel had acted negligently, the solicitors were negligent in sending a trainee to the trial.

Take-away

The case does not set out any new principles in relation to under-settlement claims but it is a useful reminder of the principles and in particular, the inter-relationship between solicitors and counsel, where solicitors are relying on counsel’s advice.  It also confirms that the standard of care does not vary dependent upon the experience of the practitioner.