When bringing a professional negligence claim, establishing that the professional breached their duty is only half the battle. In many cases, the real dispute centres on causation: whether competent advice would genuinely have led to a different decision — and whether the losses being claimed fall within the risk the professional’s duty was meant to guard against.
The courts have developed a structured approach to help determine these questions, and two recent Supreme Court decisions in 2021 — Manchester Building Society v Grant Thornton and Khan v Meadows — now shape the way causation and recoverable loss are assessed in all professional negligence cases.
This article explains how the courts analyse causation, what claimants must prove to succeed, and the key principles professionals and insurers should be aware of when defending claims.
1. The modern framework: the six key questions
In Manchester and Khan, the Supreme Court set out six questions that help determine whether a claimant can recover loss in a professional negligence claim. These questions are:
- Actionability – Is the type of harm capable of being claimed in negligence?
- Scope of duty – Which risks was the professional required to protect the claimant against?
- Breach – Did the professional fall below the standard of care?
- Factual causation (“but for” test) – Would the loss have occurred but for the breach?
- Duty nexus – Is the loss closely connected with the purpose of the adviser’s duty?
- Legal responsibility – Is the loss recoverable, or is it too remote, caused by another event, or unmitigated?
The Supreme Court emphasised that the key concepts — scope of duty, factual causation, and remoteness — should be analysed together to produce a fair outcome.
Importantly, this is not a rigid checklist. It is a practical framework that helps courts avoid compensating claimants for losses that fall outside the professional’s assumed responsibility.
2. The “but for” test: necessary, but not sufficient
The starting point for any causation analysis is the familiar “but for” test:
Would the claimant have suffered the loss but for the negligent advice or omission?
If the answer is “yes”, the claim usually fails.
But satisfying “but for” does not automatically mean the loss is recoverable — that depends on the purpose and scope of the duty.
While the courts recognise that the “but for” test can be too rigid in some areas (notably clinical negligence consent cases), it remains the default test in professional negligence claims.
3. Reconstructing the hypothetical: what would the claimant have done with proper advice?
One of the most challenging aspects of causation is determining what the claimant would have done differently had proper advice been given.
Courts approach this by looking at:
A. The claimant’s evidence
The claimant will often say they would have acted differently. But the court will test this against:
B. Objective evidence
- Emails, letters, file notes
- Financial records and business plans
- Negotiation positions
- Past conduct and risk appetite
- The commercial realities at the time
If the contemporary documents reveal enthusiasm for the transaction, appetite for the risk, or ongoing commitment despite red flags, courts may find that — even with correct advice — the claimant would likely have proceeded anyway.
The rule
The claimant must prove, on the balance of probabilities, that they would have acted differently.
If they cannot, the claim fails — even if breach is established.
4. When third‑party decisions matter: loss of a chance
Many professional negligence claims involve outcomes partly dependent on third parties, such as:
- Buyers or sellers
- Insurers
- Opponents in litigation
- Lenders
- Counterparties in transactions
In these cases, courts assess whether the claimant has lost a real and substantial chance of achieving a better outcome — not whether success was more likely than not.
Damages are then awarded on a percentage basis.
This approach frequently applies to claims concerning:
- Solicitors’ litigation decisions
- Financial advisers
- Brokers’ insurance placement
- Project monitors and valuers whose actions influence interactions with third parties
Loss‑of‑chance analysis is particularly important for cases where the counterfactual involves multiple contingencies or stages.
5. Scope of duty: which risks aas the professional protecting against?
Following Manchester and Khan, the key limiting principle on recoverable loss is scope of duty, not the old “advice vs information” distinction from SAAMCO.
The central question is:
What risk was the professional’s duty intended to protect the claimant from, and did the loss represent that risk materialising?
Examples
Valuers
Generally responsible only for valuation risk (i.e., whether the valuation was wrong), not for:
- market downturns
- unrelated title defects
- delays in resale
- external economic shocks
Accountants
Liable for risks associated with the purpose of their advice (e.g., whether hedge accounting could be used), not all risks arising from the underlying transactions.
Why this matters
A loss may pass the “but for” test and still be unrecoverable if it falls outside the duty’s purpose.
6. Voluntary actions, mitigation and intervening events
Defendants sometimes argue that claimants voluntarily assumed the loss, broke the chain of causation, or failed to mitigate.
The Supreme Court has confirmed there is no standalone “voluntariness rule”.
Instead, courts look at:
- Whether the claimant acted reasonably
- Whether a later event broke the causal chain
- Whether the claimant took appropriate mitigation steps
These are fact‑sensitive issues decided at trial, not automatic bars to recovery.
7. Practical guidance for claimants
To succeed on causation, claimants should:
- Clearly identify the purpose of the professional’s duty
Frame the loss squarely within the risk the advice was designed to avoid.
- Build a contemporaneous paper trail
Courts give far more weight to documents created at the time than to later recollections.
- Present a credible counterfactual
Not “perfect hindsight” — the alternative must have been realistic and available.
- Understand when loss‑of‑chance applies
Especially where outcomes depend on third parties.
Conclusion
Causation is often the decisive issue in professional negligence litigation. Courts look beyond breach to analyse:
- whether loss would have occurred “but for” the breach,
- whether the loss falls within the purpose of the duty, and
- what the claimant would realistically have done with correct advice.
For claimants, the strongest cases are those supported by contemporaneous documents and a credible, commercially sensible counterfactual.
If you would like advice on bringing or defending a professional negligence claim, our specialist Dispute Resolution team at Nelsons can help.
How can we help?
Daniel Brumpton is a Partner and heads up our expert Dispute Resolution team. He specialises in professional negligence claims, advising on mishandled litigation, business and personal tax advice, pension disputes.
For advice on or further information in relation to the subjects discussed in this article, please get in touch with Daniel or another member of the team in Derby, Leicester, or Nottingham on 0808 189 9643 or via our online enquiry form.
Contact usIf this article relates to a specific case/cases, please note that the facts of this case/cases are correct at the time of writing.