Negligence causing the loss of a commercial opportunity – does it have some value?

Winterkorn Legal Group recently appeared for the plaintiff in a professional negligence case that settled part-way through trial – We R Somewhere Pty Ltd & Ors v Legal Practitioners' Liability Committee, Supreme Court of Victoria, 2025.

The case involved a claim advanced against a solicitor for negligence, which resulted in the loss of a commercial opportunity.  It was a complex case.  It involved, as many similar cases do, a detailed analysis of the issue of causation.  Ultimately, we are proud to have secured an excellent outcome for our client. 

So, in this article, we:

• briefly look at the relevant principles relating to negligence claims; and

• discuss the issue of causation, and how the Court views this issue in the context of loss of chance actions.

In a professional negligence claim, a plaintiff is required to prove:

• element 1: a duty of care;
• element 2: breach of that duty of care;
• element 3: causation – that is, the breach of duty must be shown to have caused actual loss; and
• element 4: loss or damage.

Elements 1 and 2 – duty of care and breach

The duty of care owed by a solicitor to a client arises out of the client’s retainer of the solicitor. The duty is concurrent in both contract and tort.[1]

A solicitor’s duty is to exercise professional knowledge and skill ‘in the protection and advancement of the client’s interests’ in carrying out the tasks which are the subject of the retainer (see: Pearce v Waller Legal Pty Ltd [2025] VSC 324 [504]-[507]). 

Generally, a ''professional" is required to exercise the standard of care and skill to be expected of a person in the professional's position.  In Rogers v Whitaker (1992) 175 CLR 479, the High Court expressed the standard as follows: "In Australia, it has been accepted that the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill”.

In similar terms, Gageler J said in Robert Badenach & Anor v Roger Wayne Calvert [2016] HCA 18: “The duty is to exercise that degree of care and skill to be expected of a member of the profession having expertise appropriate to the undertaking of the function specified in the retainer”.

That degree of care and skill is one of reasonableness in all the circumstances of the case.

So, on a practical level, an assessment of the following is required:

• what actions (or omissions) constitute the failure to exercise reasonable care and skill; and

• what a reasonably competent solicitor would have done in similar circumstances.

Element 3 – causation 

Causation in negligence comprises the following elements:[2]

• that the negligence was a necessary condition of the occurrence of the harm (factual causation); and

• that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability).

With respect to the first element, factual causation:

• if it is relevant to the determination of factual causation to determine what the person who suffered harm would have done if the negligent person had not been negligent, the matter is to be determined subjectively in the light of all relevant circumstances.[3].  Commonly, this is referred to as the ‘counterfactual scenario’ and may involve modelling hypothetical facts and adducing evidence about the plaintiff’s own conduct and, where relevant, the likely conduct of third parties; and

• the Court does not have to find a single, effective cause of the harm, but may conclude that there were multiple concurrent causes of the harm, regardless of whether the plaintiff or the defendant had the last opportunity of avoiding the harm (see: March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 512-14).

With respect to the claims for lost opportunity, to succeed on causation, the plaintiffs must also show that the lost opportunity had “some” value.  In Sellars v Adelaide Petroleum NL, Mason CJ, Dawson, Toohey and Gaudron JJ stated:

[T]he general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has suffered loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities.

When determining if a lost opportunity to pursue a legal claim because of a lawyer’s negligence has some value, the Court may be required to conduct a ‘trial within a trial’ or a ‘notional trial’; that is, the Court may be required to consider the plaintiff’s prospects of success in the trial of the claim had it gone to trial.

In Goddard Elliott v Fritsch, Bell J described the principles applied in such cases as follows:

When conducting a notional trial of the claim, the court is not determining the actual outcome of the trial on the balance of probabilities as if the notional trial court were the actual trial court for the claim. It is determining what the plaintiff’s prospects of success were in that trial for the purposes of determining whether anything of value was lost by reason of the lawyer’s negligence. Therefore, the court does not have to make a binary choice between the plaintiff’s probable success or failure in the putative trial but rather must determine where in the spectrum of results the plaintiff’s prospects did lie. The value of the plaintiff’s lost opportunity is then ascertained ‘by reference to the degree of probabilities or possibilities’.

As the evaluation of a lost opportunity involves questions of prospects and degree, the usual rule that the plaintiff must prove their loss on the balance of probabilities (the civil standard of proof) does not apply. Indeed, a lost opportunity may give rise to compensable loss even if, ‘on the balance of probabilities, it is more likely than not that the opportunity will not be realised’.

(emphasis added)

A plaintiff’s lost opportunity therefore has value even if the Court assesses the plaintiff’s prospects in relation to the cause of action against the third party at less than 50%. However, the prospect of the opportunity being realised must not be so low as to be regarded as speculative, say less than 1 per cent.[4] Put another way:[5] the plaintiff must establish that the cause of action was real as distinct from being fanciful, or put another way, that the opportunity had some value, not being a negligible value. The relevant question has also been put negatively — was the plaintiff’s case not viable, or doomed to fail?

Finally, with respect to the second element (set out in paragraph 10(b) of this article above), for the purpose of determining the scope of liability, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.[6]

Element 4 – Assessment of Damages

A Court will assess the value of the lost opportunities by a process of “informed estimation”[7] or a “broad brush approach”.[8]

In Talacko v Talacko, the High Court described the process as follows:

In the second category, the existence of a loss is sufficiently shown by proving that the tort caused a permanent impairment of the value of the plaintiff's existing right. It is enough that the right is ‘something of value’ and that its value is diminished or lost. An example of loss in this category, given by Brennan J in Sellars, is a plaintiff’s cause of action which becomes statute barred by reason of the negligence of a solicitor. The right may not have been lost but its value has declined, often to nothing, by the expiry of the limitation period. Damages are assessed as the amount by which the value of the right has diminished from the value it would have had if the acts comprising the tort had not been committed. This quantification of loss, by reference to events which did not happen, has been said to have ‘nothing to do with loss of chance as such. It is simply the judge making a realistic and reasoned assessment of a variety of circumstances in order to determine what the level of loss has been’.

The broad brush estimation of the value of a lost opportunity has been seen to be consistent with discounting a plaintiff’s prospects of success by an appropriate percentage figure, reflecting the various risks which the plaintiff actually or might have faced if the claim had gone to trial.[9]  However, it is not established that in all cases a discount is to be applied simply by reason of the inherent risks of all litigation. Even taking a broad-brush approach, the circumstances must warrant the application of a discount.

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[1] Pearce v Waller Legal Pty Ltd [2025] VSC 324 at [502] (Pearce) (J Forrest J), citing Hill v Van Erp (1997) 188 CLR 159, 167; Badenach v Calvert (2016) 257 CLR 440, 450 [20], 452 [30] (French CJ, Kiefel and Keane JJ), 457 [57] (Gageler J). 8 Pearce [2025] VSC 324 at [502] (J Forrest J), citing Astley v AusTrust Ltd (1999) 197 CLR 1, 22–23). 

[2] Civil Liability Act 2003 (Qld), s 11(1).  

[3] Civil Liability Act 2003 (Qld), s 11(3).  

[4] Falkingham v Hoffmans (A Firm) (2014) 46 WAR 510 at [220] and the authorities cited therein (Buss JA)

[5] Falkingham (2014) 46 WAR 510 at [39] (Pullin and Murphy JJ). 

[6] Civil Liability Act 2003 (Qld), s 11(4). 

[7] Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 368 (Brennan J).

[8] Johnson (1988) 166 CLR 351, 367 (Wilson, Toohey and Gaudron JJ). 

[9] Fritsch [2012] VSC 87 at [850] (Bell J).