Moda International Brands Limited v Gateley LLP & Gateley Plc  EWHC 1326 (QB)
In its decision of 23 May 2019 the High Court of Justice (Justice Freedman) held that where the claimant’s loss depended on the hypothetical acts of a third party and that party had given evidence in relation to such acts the court should still assess those acts on the “loss of chance” basis rather than on the balance of probabilities basis.
The “loss of chance” basis requires the claimant showing that, as a matter of causation, it had a real or substantial rather than a speculative chance of obtaining some benefit from the third party in the absence of the defendant’s breach. For as long as the chance is substantial, it may be less than 50 per cent. It is a lower standard for the claimant to satisfy in showing the link between the defendant’s breach and the loss suffered than the balance of probabilities standard.
Use of the “balance of probabilities” basis in the circumstances would require the claimant proving that in a hypothetical scenario it would have more likely than not obtained the benefit from the third party. In other words, that its chance was more than 50 per cent. It may be difficult for the claimant to do so and may result in an all or nothing situation for it.
Since the Court of Appeal decision in Allied Maples Group v Simmons & Simmons  1 WLR 1602 CA, the hypothetical acts of the claimant in pursuit of the opportunity lost are assessed on the balance of probabilities basis meaning that the claimant has to satisfy the court that it was more likely than not to pursue the opportunity had the defendant not committed the breach. Normally, if the pursuit of the opportunity is clearly for the claimant's benefit, “the court has little difficulty in concluding that he would have taken it”.
The hypothetical acts of the third party are assessed on the loss of chance basis meaning that all the claimant has to show, as a matter of causation on this aspect of the case, is that it had a real or substantial, and not merely a speculative, chance of getting something of value from the third party. “The prospect of success [in this matter] depends on all the circumstances of the case and the third parties’ attitude must be a matter of inference.”
There is not a lower limit percentage-wise to distinguish between a real (or substantial) and a speculative chance. The court has to “assess the circumstances … by reference to the commercial context and to appraise what are the chances that a particular result would have eventuated”. And if the chance is real or substantial, its evaluation is “part of the assessment of the quantum of damage”.
Before Moda International, there has not been a loss of chance case where the third party had given evidence in relation to its hypothetical acts. According to the defendant’s counsel, there was a lacuna in the law on this matter, and because of the availability of evidence from the third party, its hypothetical actions had to be proved on the balance of probabilities basis.
The High Court rejected that argument holding that the falling of the case, in which the damages depended on the hypothetical acts of a third party, into the category of the loss of chance cases did not depend on the availability of that party’s evidence. Such evidence could only be relevant to the quantification of the loss, but not to the issue of causation. The hypothetical acts of the third party were still to be assessed on the loss of chance basis.
In arriving at its decision, the court pointed out the possibility of the third party evidence being incomplete due to this party’s disengagement with the case and lack of duty to disclose.
It is yet to be seen whether the High Court’s decision in Moda International will be successfully appealed. For the time being, it confirms that the third party’s evidence in a loss of chance case does not change the court’s approach to the assessment of that party’s acts and that the claimant only has to show that it had a real or substantial chance of obtaining some benefit from the third party.