Doctrine of loss of chance: how do you value a missed opportunity for better terms of employment?
In brief
- Loss of chance concerns the loss of a real opportunity for a better outcome; it is about the value of that chance.
- The court estimates the damage on the basis of what is plausible, not on the basis of certainty.
- In this case, the Court of Appeal considers it plausible that De Vrij has lost out on €5.2 million due to lack of transparency on the part of SEG.
Introduction
De Vrij argues that he could have negotiated better terms of employment if SEG had been honest about its commission. This blog discusses how the court addresses that loss through the doctrine of loss of chance. The background to this case is set out in an earlier post.
Loss of chance: the missed benefit
Loss of chance is recognised where there is uncertainty about the concrete consequence of a mistake, but a real opportunity has been missed. The damage is then the value of that missed chance. The claimant does not have to prove that the better outcome would certainly have been achieved: a reasonable probability is sufficient.
Here, this means that De Vrij might have negotiated differently about his salary if SEG had disclosed its interest. The Court of Appeal found that connection plausible and recognised loss of chance. Had De Vrij known that SEG was receiving a substantial commission, he could have negotiated higher employment remuneration.
Requirement: causal connection
There must be a causal connection between the mistake (SEG’s failure to disclose its commission) and the missed benefit. Put another way: if one were to eliminate the mistake, would the damage still have occurred? According to the Court of Appeal, that is not the case here. De Vrij would plausibly have negotiated differently if he had been fully informed.
Assessment of damage
The court compares the situation as it now actually is with the hypothetical situation in which SEG had complied with its duty. That comparison cannot be made exactly and is partly based on estimation. Section 6:97 of the Dutch Civil Code gives the court scope for this.
The Court of Appeal established that Inter was prepared to pay a total of €47 million for De Vrij and considered a commission of 10% plausible for SEG, meaning that De Vrij would have lost out on €5.2 million.
No proportional liability
The Court of Appeal deliberately does not address proportional liability in this case. Proportional liability divides damage amongst multiple possible causers where it is unclear who exactly is liable. That is not the case here. With loss of chance, the issue is precisely the uncertainty about the extent of the damage in the case of one established mistake.
Conclusion
The doctrine of loss of chance offers a practical solution in cases where damage caused by a mistake is plausible, but the exact consequence remains uncertain. The Court of Appeal held that SEG’s breach of the duty to disclose led to a real missed opportunity for De Vrij for better employment remuneration. Failure to comply with the duty to disclose can, as this case shows, have far-reaching financial consequences.
In the next part of this series, the principle of reformatio in peius will be central: a party may not, in principle, end up worse off as a result of lodging an appeal than in the original judgment.
