Loss of Chance in Commercial Claims

Identify the Commercial Chance

Identify the commercial opportunity the claimant lost and the event alleged to have removed it. A tender, a negotiation or an opportunity to enter a more favourable agreement can each require a different causal account. Name the decision-maker, the benefit sought and the steps still required when the wrong occurred.

In Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355, the High Court separated causation and the existence of loss from valuation. The claimant ordinarily proves, on the balance of probabilities, that the conduct caused the loss of a commercial opportunity having more than negligible value. The chance of obtaining the ultimate benefit then informs its value. A chance below 50% is not automatically worth zero.

The High Court restates that distinction in Berry v CCL Secure Pty Ltd at paragraph 32. A percentage calculation cannot replace proof that the opportunity was lost through the alleged wrong. Where causation depends on what the claimant would have done, Sellars also preserves the ordinary civil standard of proof.

Separate an opportunity to obtain a new benefit from damage to an existing right. In Talacko v Talacko at paragraphs 40 to 43, the High Court distinguishes those categories. An impaired existing right can require a comparison of its value with and without the wrong. Calling every uncertain financial claim a lost chance can obscure that inquiry.

This commercial analysis also has a different legal setting from medical negligence and personal-injury chance arguments. Tabet v Gett rejects the claimed loss of a chance of a better medical outcome. Keep that distinction separate from the valuation of an established commercial opportunity. For the wider relationship between liability and financial proof, use the guide to economic loss evidence.

Evidence of a Real Opportunity

Tender and negotiation records can establish that the claimant could pursue an identifiable commercial benefit before the alleged wrong. Evidence about selection, completion and performance then helps estimate the prospects of receiving that benefit. Keep those purposes visible in the document index.

Opportunity Evidence Schedule

Preserve adverse documents alongside favourable ones. A shortlist email supports participation, but it does not establish that the claimant would win. A signed funding commitment addresses capacity more directly than a later statement that finance would have been available.

Trace the alleged wrong through to the lost opportunity. If a tender was already invalid for an unrelated reason, explain how the claimed chance survived that obstacle. If the buyer abandoned the project altogether, examine whether any benefit remained available in the proposed counterfactual.

Value the Chance and Test the Assumptions

Value the lost chance by applying supported prospects to the net benefit of the opportunity, with each contingency counted once. A single percentage can explain a simple case. A matter with several possible outcomes needs a schedule showing how those outcomes interact.

Fictional Net Benefit Calculation

Assume a fictional tender would produce $160,000 of receipts if won and performed. Further performance costs would be $60,000, leaving a net benefit of $100,000. These illustrative figures use a consistent GST-exclusive basis and exclude financing, tax and timing adjustments.

Assume the fictional evidence supports a 30% chance of obtaining that net benefit. The probability-weighted value is $100,000 multiplied by 30%, which equals $30,000 before legal adjustments. The example assumes that 30% is supported by its fictional records. A real claim needs its own evidence for the probability, separately from the legal requirements for recovery.

Probability Scenarios

The scenarios test the effect of a disputed probability while holding the financial benefit constant. They are alternatives, so adding $15,000, $30,000 and $45,000 would be incorrect. Correct use selects the assumption supported by the evidence or presents the alternatives for determination.

A prior success rate also needs context. Winning three of ten earlier tenders does not establish a 30% chance in a tender with different criteria or stronger competitors. Record why each comparator belongs in the estimate.

If winning, obtaining finance and completing the work are separate uncertainties, show which ones the 30% already includes. Multiplying separate percentages requires their dependencies to be addressed. Do not apply a second performance discount when the chosen net benefit already incorporates that same risk.

Reconcile Benefit, Costs and Double Counting

Reconcile the chance valuation with actual cashflows and other claimed losses before briefing the expert. Distinguish expenditure already incurred from expenditure required to obtain the projected benefit. The legal basis for recovering each item remains a separate question from its arithmetic.

In the fictional tender, the $60,000 performance cost has already reduced receipts to the $100,000 net benefit. Subtracting it again from the $30,000 weighted value would count that cost twice. If $8,000 of bid preparation costs were already paid, place them on a separate actual-expenditure line. Explain whether they would have been incurred in both scenarios and whether another claimed loss already includes them.

Expert Instruction and Reconciliation Register

Give each assumption an identifier, its source reference and its status as agreed or disputed. Keep the amount, probability and legal treatment in separate fields. The instructed expert can then calculate alternative outcomes without silently adopting a contested factual conclusion.

Where the financial records contain many statements, FinTrace saves lawyers and forensic accountants hours of manual statement review. Its statement-analysis service supplies a searchable ledger and findings report with PDF filename and page references. Those source-linked cashflows help you assemble the actual-expenditure side of the expert’s instructions while the opportunity evidence supports the probability assumptions.

Before sending the brief, reconcile the schedule total to its component lines. Confirm that every cost appears once and every alternative remains separate. Send the expert the assumption register with the underlying records, so the resulting calculation shows exactly which disputed facts change the value.