Short Reads

Liability for loss of chance: a low hurdle

Liability for loss of chance: a low hurdle

Liability for loss of chance: a low hurdle

07.10.2015 NL law

In a recent judgment, the Dutch Supreme Court rendered an important decision on the way courts should deal with liability for loss of chance. The judgment shows that once it is established that the loss of chance was caused by a breach of contract or an act in tort, the hurdle to overcome for a claim for damages resulting from loss of a chance is rather low. In this case, the Supreme Court stated that, unless it becomes immediately clear that the lost chance would have been nil or very small, a lower court is obliged to determine the damages if necessary by means of an estimate.

Mr. O, the owner of a building, claimed damages from a local municipality. He allegedly incurred these damages because the local municipality breached a promise to take measures to allow the use of the building as a house under the applicable zoning plan. More specifically, the municipality had promised to include the building as a house in a draft zoning plan but it forgot to do so.

The municipality defended itself by stating that it did not have the final say in the zoning plan: even if it had included the building as a house in the draft zoning plan, the city council as well as the province could have refused to approve it. Had this occurred Mr O would not have been allowed to use his building as a house. Given that this was a possible outcome, the municipality maintained that there were insufficient grounds to establish a causal link between its conduct and the damages incurred by Mr O, which he strongly rejected.

The Court of Appeal followed the arguments advanced by the municipality and  ruled that there was no causal link between the damages of Mr O and the conduct of the municipality.

The Supreme Court overruled the Court of Appeal’s decision. It pointed out that the damages claimed by Mr O amounted to a loss of the chance for his building to obtain a zoning permit as a house. The Supreme Court ruled that there was clearly a causal link between the loss of this chance and the conduct of the municipality. If the municipality had included the building as a house in the draft zoning plan, there would have been a chance, at in least in theory, for the municipality and province to grant its approval thereto.

In the Netherlands, like many other jurisdictions, damages are calculated by comparing the actual situation of the claimant Mr O with the hypothetical situation that he would have been in had the breach not occurred.

The Supreme Court held that Mr O’s damages should equate to the value of the chance that a draft zoning plan including the building as a house had been approved by the province and the local municipality. This “loss of  chance” theory has been applied before by the  Supreme Court and is especially relevant in cases in which it is uncertain what would have happened had the event creating liability – either a breach of contract or an act in tort –  not occurred. In other words: it is applied in cases in which the hypothetical situation is uncertain. The text book example of such a case is the situation in which a lawyer forgets to file an appeal against an unfavourable judgment. Even though one cannot be sure how the appeal judge would have ruled in such a matter, the client has certainly lost the opportunity, big or small, to have the unfavourable judgment overruled.

As stated, the Supreme Court upheld that, unless it becomes immediately clear that the lost chance would have been nil or very small, a lower court is obliged to determine the damages if necessary by means of an estimate.

There are several ways to determine the damages in the current case. The court could try to determine whether the chance had a specific market value, e.g. by determining the difference in price of the building with the promise of the municipality to include the building as a house in a draft zoning plan and the consequent chance that it would obtain housing zoning compared to the situation in which there was no such chance afforded. Alternatively, the court could take a three step approach to assessing the damages: (1) determine the difference in value between the house with housing permit and without housing permit; (2) determine the chance had the city council and the province approved the housing permit; and (3) multiply (1) by (2).

The post Liability for loss of chance: a low hurdle is a post of Stibbeblog.nl

Team

Related news

04.07.2019 NL law
Audit firms and accountant's duty of care towards third parties

Short Reads - The Dutch Supreme Court recently decided (ECLI:NL:HR:2019:744) that the standard for audit firms' and accountants' duty of care towards third parties is in essence no different than the general duty of care under Dutch tort law, and ultimately depends on the circumstances of the case. However, the role of accountants in society, their responsibility to serve the general interest, and rules of professional conduct and practice play an important role.

Read more

01.07.2019 BE law
HvJ: nationale rechter dient toe te zien op de naleving van de verplichtingen inzake luchtkwaliteit

Articles - Bij arrest van 25 juni 2019 (C-723/17) deed het Hof van Justitie uitspraak over enkele prejudiciële vragen, voorgelegd door de Nederlandstalige rechtbank van eerste aanleg Brussel, over de toepassing van de Europese Luchtkwaliteitsrichtlijn (2008/50/EG). Het Hof kent in zijn arrest de nationale rechter een belangrijke taak toe bij de correcte implementatie en afdwinging van de Luchtkwaliteitsrichtlijn. 

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring