Allied Maples v Simmons & Simmons

The court drew support from the long-established authority of Chaplin v Hicks [1911] 2 KB 786, in which the Court of Appeal had affirmed that a plaintiff who had been wrongfully deprived of the chance to participate in a competition — where the outcome depended on the judgment of a third party — could recover damages for the lost chance even though it was impossible to say whether she would have won. The court in Allied Maples applied this principle by analogy: where the defendant's breach deprives the claimant of the opportunity to negotiate with a third party, the law recognises that the claimant has lost something of value, namely the chance itself, and that this loss is compensable.

Stuart-Smith LJ also applied the approach taken by the Court of Appeal in Kitchen v Royal Air Force Association [1958] 1 WLR 563, a solicitor negligence case in which it was held that a claimant whose solicitor had negligently allowed a cause of action to become time-barred could recover damages assessed by reference to the value of the lost chance of succeeding in the underlying litigation. The court in Kitchen had rejected the argument that the claimant must prove on the balance of probabilities that she would have won the original action; instead, the value of the chance was assessed and reflected in the award. This approach directly informed the reasoning in Allied Maples.

Having established the applicability of the loss of chance doctrine, Stuart-Smith LJ addressed the threshold question. He held that the chance lost must be real and substantial for it to be compensable. A merely negligible or speculative prospect of a favourable outcome from the third party does not suffice to ground a claim. The purpose of this requirement is to distinguish genuine lost opportunities — which represent a real form of economic value — from fanciful possibilities that have no meaningful probability of materialising. Where the chance is real and substantial, the court must assess its value in percentage terms and award damages accordingly.

The court considered whether the House of Lords' decision in Hotson v East Berkshire Health Authority [1987] AC 750 precluded the application of the loss of chance principle in this context. In Hotson, the House of Lords had declined to award damages for loss of a chance of avoiding a medical condition, holding that the causal question was one of established historical fact rather than future probability. Stuart-Smith LJ distinguished Hotson on the basis that it concerned a purely factual question — whether the injury had already been caused before the defendant's negligence — whereas Allied Maples concerned the hypothetical future conduct of a third party in a commercial negotiation. The distinction is between establishing past facts (to which the balance of probabilities applies in an all-or-nothing manner) and predicting what an independent third party would have done (which is appropriately addressed through the loss of chance framework).

Applying the framework to the facts, the court examined whether Allied Maples had demonstrated on the balance of probabilities that they would themselves have sought to renegotiate the clause had they been properly advised. The court held that this was plainly established: any rational commercial party in Allied Maples' position, informed that a significant protection had been deleted from the agreement, would have attempted to have it reinstated or to obtain an equivalent protection. The first limb of the causation analysis was therefore satisfied.

The court then turned to the second limb: whether there was a real and substantial chance that Gillow plc would have agreed to reinstate the clause or provide an equivalent protection had Allied Maples sought to renegotiate. This was emphatically not a case in which reinstatement was inconceivable or implausible. The protection had appeared in earlier drafts, it was of a kind routinely included in commercial acquisitions, and there was no compelling evidence that Gillow plc would have refused any modification whatsoever. On this basis, the court held that there was a real and substantial chance of a successful renegotiation, even if the precise probability could not be determined with precision.

The Court of Appeal therefore allowed the appeal and remitted the case for an assessment of damages. The quantum of damages was to be calculated by reference to the value of the chance lost: that is, the probability that renegotiation would have succeeded, multiplied by the full measure of the loss that the claimant would have avoided had that renegotiation been successful. This approach ensures that the claimant neither recovers as though success was certain nor is denied all recovery merely because certainty cannot be established.

Millett LJ, in a concurring judgment, emphasised that the loss of chance principle is a matter of substantive legal entitlement rather than merely a forensic tool for avoiding difficulties of proof. Where the defendant's breach deprives the claimant of a valuable opportunity, the chance itself is the damage, and it crystallises at the moment the breach occurs. This characterisation has important implications for the relationship between the doctrine and the rules on remoteness and assessment of damages.

The court observed, by way of obiter dictum, that the distinction between cases governed by the balance of probabilities and those governed by the loss of chance principle would require careful application in future cases. The line between a purely factual question about past events (governed by Hotson) and a predictive question about a third party's hypothetical conduct (governed by Allied Maples) is not always easy to draw, and courts would need to apply the framework with precision to avoid either unduly expanding or unduly restricting the scope of compensable loss in professional negligence claims.

The Court of Appeal held that, in a professional negligence claim where the claimant's loss depends on the hypothetical future conduct of a third party, the appropriate standard is not the balance of probabilities but the loss of chance doctrine. A claimant who can demonstrate on the balance of probabilities that they would themselves have taken the relevant step (such as seeking to renegotiate), and who can further demonstrate that there was a real and substantial chance that the third party would have responded favourably, is entitled to damages assessed by reference to the value of that chance.

The appeal was allowed. The trial judge had erred in applying the balance of probabilities standard to the question of what Gillow plc would have done in a hypothetical renegotiation. Allied Maples had established the necessary elements for a loss of chance claim: they had proved on the balance of probabilities that they would have sought to renegotiate, and the evidence supported the existence of a real and substantial chance of success. The case was remitted for an assessment of damages on the loss of chance basis.

The court confirmed that Hotson v East Berkshire Health Authority [1987] AC 750 does not preclude the operation of the loss of chance principle in cases involving the hypothetical conduct of third parties, as that decision concerned an entirely different type of causal question, namely the establishment of a past historical fact. The two lines of authority are not in conflict but operate in distinct domains.

Allied Maples v Simmons & Simmons [1995] 1 WLR 1602 is the leading authority on the application of the loss of chance doctrine in professional negligence, and in particular solicitor negligence, in English law. The tripartite framework articulated by Stuart-Smith LJ provides the analytical structure within which all subsequent cases involving lost negotiating opportunities or lost transactional protections are analysed. The case is routinely cited in claims arising from negligent advice given in the context of commercial transactions, conveyancing, and corporate acquisitions, and its framework applies equally in contract and tort.

The decision has been applied and developed in a considerable body of subsequent case law. In First Interstate Bank of California v Cohen & Co [1996] PNLR 17, the Court of Appeal applied the Allied Maples framework to a further solicitor negligence claim. The House of Lords in Gregg v Scott