Legal Watch: Personal Injury April 2014 Issue: 013
Costs In Greenwoods’ Alert 351 we reported the first instance decision in Jones and others v Secretary of State for Energy and Climate Change (2013) EWHC 1023 (QB). The case has
In This Issue:
now been to the Court of Appeal and is reported as Secretary
• Costs
of State for Energy & Climate Change and another v Jones and
• Damages/Fatal Accident
others (2014) EWCA Civ 363. The claimant/respondents were industrial workers of modest means who had brought claims for personal injury against the defendant/appellants. Their claims had been brought with the assistance of a conditional fee agreement. Their solicitors’ fees were only payable if the claims were successful, but
• Limitation • Credit Hire • Part 36 • Specific Disclosure
disbursements were payable regardless of the outcome of their claims. They also entered into individual “disbursement funding agreements” with their solicitors, under which the solicitors agreed to provide them with credit of up to £5,000 each for the payment of disbursements. The agreements were expressed to be credit agreements exempted from the Consumer Credit Act 1974. If the claimants’ claims were successful the credit/disbursements would be repaid by the defendants. If they were unsuccessful, a claim would be made for payment of the disbursements from after the event
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insurers. The agreement contained a charge for credit of 4% above base rate and was payable by the claimants if their
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claims were successful, and after damages were received.
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The personal injury claims succeeded and the judge ordered the defendants to pay the majority of the claimants’ costs
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plus interest on their disbursements at 4% above base rate. In arriving at the appropriate rate, the judge took into account the claimants’ means. The defendants conceded that pre-judgment interest was payable on the disbursements but submitted that the appropriate rate was 1% above base rate. They also argued that the solicitors’ means should have been taken into account rather than the claimants’ means.
01
Dismissing the appeal, the Court of Appeal held that the
the solicitors, which had funded disbursements of over
power to award interest on costs, including pre-judgment
£787,500. They won their claims and recovered damages.
interest on costs, was derived from CPR 44.2(6)(g). The
Their interest liability had therefore crystallised. The judge
purpose of the award was to compensate a party who had
had therefore been entitled to make the order that she did
been deprived of the use of his money, or who had had
as the relationship between the claimants and the solicitors
to borrow money to pay for his legal costs. The discretion
was governed by the agreement, and it gave rise to a real
conferred by the rule was not fettered by the statutory rate
liability on the claimants as borrowers.
of interest under the, but was at large. The court had to conduct a general appraisal of the position having regard to what was reasonable for both the paying and receiving parties. In commercial cases the rate of interest was usually set by reference to the short-term cost of unsecured borrowing for the relevant class of litigant. The rate might
Comment Although disturbing from an insurer’s perspective, this case has limited relevance as it relates only to CFAs entered into prior to 1 April 2013.
differ depending on whether the borrower was classed as a first class borrower, an SME or a private individual. Historically, first class borrowers had generally recovered interest at base rate plus 1% unless that was unfair. SMEs and private individuals tended to recover interest at a higher rate to reflect the real cost of borrowing to that class of litigant.
‘The purpose of the award was to compensate a party…who had had to borrow money to pay for his legal costs’ These were claimants of modest means who had brought personal injury actions for their own benefit. They needed to fund their claims and they borrowed to finance their disbursements at what the defendants conceded was a reasonable interest rate for private individuals in their circumstances. Under clause l.5 of the disbursement funding agreement, payment of the interest was contingent on the claim being successful and damages actually being received. That did not mean that the arrangements were unreal or notional. The claimants had borrowed money from 02
Damages/Fatal Accident Outside of mesothelioma claims, there are few cases
1934. The defendants admitted liability for the delay in the
reporting the basis of awards for pain, suffering and loss
diagnosis and the consequent delay in treatment.
of amenity for the period between a negligent act and the death of the victim. The case of Kadir v Mistry and others [Lawtel 27/03/2014] is therefore of interest, particularly as it is an even rarer example of an award being made under S1(1)(b) Administration of Justice Act 1982. That section states:
The claimant gave evidence that in March 2008 the family was told by doctors that the deceased might have survived if she had been diagnosed sooner, and that during a home visit in May 2008 she asked her GP why she was not diagnosed earlier and whether she would have survived if she had been. The trial judge found that if the defendants had not
• In an action under the law of England and Wales or the
been negligent the deceased would have been diagnosed
law of Northern Ireland for damages for personal injuries
in June or July 2007 and would probably have lived until
(a) no damages shall be recoverable in respect of any loss
July or August 2010. He found that if the deceased had
of expectation of life caused to the injured person by the injuries; but (b) if the injured person’s expectation of life has been reduced by the injuries, the court, in assessing damages in respect of pain and suffering caused by the injuries, shall take account of any suffering caused or likely to be caused to him by awareness that his expectation of life has been so reduced. The appellant/claimant, as personal representative of the deceased’s estate, appealed against a decision awarding no damages for pain, suffering and loss of amenity, or for mental anguish, arising from the admitted negligent failure of the respondent/defendant general practitioners to diagnose his late wife with stomach cancer as early as they should have done.
been diagnosed earlier she would have suffered the same symptoms as she did, albeit later, and would have had to endure intensive and gruelling treatments, so he awarded no damages for pain, suffering and loss of amenity. He also rejected the claim under S1(1)(b) Administration of Justice Act 1982 for damages in respect of mental anguish caused or likely to be caused by the deceased’s awareness that her life expectation had been reduced. Allowing the claimant’s appeal, the Court of Appeal held that it was important to bear in mind that there were no special rules for the assessment of damages in cases under the 1934 Act: the court was required to undertake the conventional exercise, namely decide what pain was occasioned by the negligence. If the court was looking at a living claimant facing an early death, like the deceased, the court inevitably had to compare the facts as they occurred
For several months the deceased had been visiting the
with the likely facts if there had been no negligence. On that
defendants
stomach-related
basis, the fact that the deceased would have had the same
symptoms until, in March 2008, she was diagnosed with
symptoms two years later was relevant, as was the pain of
stomach cancer. She was advised that the cancer was too
treatment. The judge had been correct on the evidence to
advanced to treat and thereafter she received only palliative
refuse the claim for pain, suffering and loss of amenity.
care until she died in August 2008. She was 32 and had
“Awareness” in S1(1)(b) of the 1982 Act did not mean strictly
complaining
of
various
four small children. The claimant claimed against the defendant on behalf of himself and the children under the Fatal Accidents Act 1976 and on behalf of the deceased’s estate under the Law Reform (Miscellaneous Provisions) Act
certain knowledge. As a matter of ordinary humanity, if there was good reason for the anguish, then it could be inferred that the sufferer would have suffered some. The claimant had given evidence that the deceased had believed that the 03
delay had caused the cancer to spread. The issue of why she was not diagnosed earlier was a live question during her last months. There was plainly material that gave rise to the proper inference that she feared on good objective grounds that her life expectancy had been reduced by the delayed diagnosis. It was necessary to prove that she knew that it was reduced.
‘(The deceased) feared on good objective grounds that her life expectancy had been reduced by the delayed diagnosis’ No cases had been found that were relevant to the assessment of damages under S1(1)(b) of the 1982 Act for the deceased’s suffering occasioned by her awareness of her reduced life expectation. On the evidence, her mental anguish was proved for the three-month period from May 2008 until her death. It was important to recognise that there was no psychiatric injury, but there were other important elements: she was a young woman with four small children. Her anguish must have been exacerbated by her knowledge that they would be left without her and that she would not see them grow up. It was proper to take those factors into account. Adopting a broad-brush approach, £3,500 would do justice.
04
Limitation The case of Francisquini v London Borough of Southwark
in breach of orders relating to disclosure and exchange
and another [Lawtel 31/03/2014] is an example of a judge
of witness statements
weighing the prejudice to each party when considering
5. the prejudice to the defendants of permitting the claim
whether or not to disapply the three-year limitation period
outweighed any prejudice to the claimant in refusing
for a personal injury claim. The claimant/applicant applied
permission
to add a personal injury claim, outside of the limitation period, to other claims against the defendant/respondents. The claimant had brought proceedings against the defendants under the Fatal Accidents Act 1976 and the Law Reform (Miscellaneous Provisions) Act 1934 following a fire in which his daughter and grandchildren had died. He gave evidence at an inquiry into the fire. His solicitor had advised that he did not have a cause of action in personal injury in his
Allowing the application, the deputy High Court judge held that it was inherently unlikely that the claimant had been advised that he had a cause of action in personal injury which he would not have pursued, despite being prepared to pursue the other claims. Nor was it likely that, if he had not suffered personal injury, he would suddenly claim that he had suffered such injury so late in the proceedings.
own right against the defendants. The claimant instructed
The defendants had not sought to put the claimant’s
each of the solicitors’ firms that his solicitor subsequently
presence at the fire into issue in their defences and, more
moved to. The last firm was concerned as to the solicitor’s
significantly, he had given evidence at the inquest. Any
handling of the case and took steps to discover whether the
forensic disadvantage on the defendants’ part was minor
claimant had suffered psychological injuries following the
at best.
fire. It emerged that he had been unable to work following his
‘Any forensic disadvantage on the defendants’ part was minor at best’
return to Brazil, where he was resident. After taking further legal advice, he gave instructions to pursue a personal injury claim some time after the original proceedings had been issued. The defendants argued that the claim should not be added as: 1. the claimant’s delay was either because he had previously decided not to pursue the claim or had not suffered from psychological symptoms 2. they were disadvantaged by the inability to investigate the claimant’s presence during the fire and its aftermath, and the difficulty in tracing witnesses arising from his delay 3. the cogency of the loss of earnings evidence was significantly reduced as a result of the delay 4. the claimant should not be able to pursue his claims until he had applied for relief from sanctions as he was
The claim for loss of earnings was relatively modest and the claimant alleged that his job paid £15,000 per annum. There was no real evidence that the available information was less cogent than if the claim had been brought within the limitation period. Although it might be a fair criticism that the claimant was in breach of orders, that did not amount to prejudice. If he pursued the personal injury claim and the defendants wished to put him to the cost and expense of obtaining relief from sanctions then the court would make a decision on that application. It was appropriate to add the personal injury 05
claim. There was at most a relatively minor prejudice to the defendants. The claimant would otherwise be significantly prejudiced. Although he might have a claim for professional negligence against his previous solicitors he would face several difficulties, such as his residence in Brazil, the fact that there were two previous firms of solicitors, and that his claim would be limited to the loss of a chance, which would be difficult to quantify.
Comment It is interesting to contrast this judge’s comments with those of the Court of Appeal in Davidson v Aegis Defence Services (BVI) Ltd and another when supporting a decision not to exercise the S33 discretion: ‘The judge was fully aware that a claim against the claimant’s former solicitors would be based on a loss of chance of success in the original proceedings. Litigation against a claimant’s former solicitors was second best but it was something which a judge could, and usually should, take into account as best he could…’
06
Credit Hire Credit hire continues to be a fertile ground for disputes
his total economic activity. The judge based his conclusion
as illustrated by Stevens v Equity Syndicate Management
on the continuous healthy balance in the claimant’s account,
Ltd (2014) EWHC 689 (QB). The driver of a car insured
and he was entitled to do so, particularly as liability was not
by the respondent insurer had collided with the appellant
disputed and therefore the recoverability of reasonable hire
claimant’s car. Liability was not in issue. The claimant’s
charges was not an issue. When the bank statements were
insurers referred him to a credit hire company who made
examined in some detail, the finding of lack of impecuniosity
arrangements for the repairs to his car, agreed the costs and
became all the more compelling.
funded them pending reimbursement from the respondent insurer. The credit hire company hired an alternative car for the claimant for 28 days whilst his car was at the garage. The repairs only started nine days after the commencement of the hire. The hiring arrangement included excess waiver fees to extinguish any liability for an excess arising in the event of any damage to the hire car. The daily rate amounted to £198.60 inclusive of VAT. The judge found that the claimant was not impecunious in that he would not have been exposed to an unreasonable burden had he hired a car directly. He determined a daily basic hire rate of £75.62 inclusive of VAT by averaging the rates charged by four hire companies at different locations local to the claimant. He also determined the reasonable period of hire at 19 days. The claimant appealed arguing that the judge: 1. should have concluded that he was impecunious
To establish a basic hire rate the court had to search for the figure which a claimant was willing to pay on the basis that he had, in fact, looked at the ordinary car hire market for a temporary replacement. In doing that, a claimant’s evidence that he was disinclined to spend more than necessary was relevant, as was evidence of how a claimant had sourced cars in different contexts. Although under a duty to mitigate his loss, a claimant was not expected to seek details of possible deals available from every car hire provider in a particular locality. However, almost everyone seeking to hire a vehicle would investigate the market by a comparative search on the internet. A claimant could reasonably choose to hire from a company that was not the cheapest. Questions on that issue should be directed at exploring what he would have been willing to pay on the hypothesis that he would have looked into the car hire market. The judge considered the extensive data provided and focused on companies
2. alternatively, should have identified a single basic hire
which provided vehicles in the appropriate group, in the
rate rather than averaging rates
locality in which the claimant lived, and with a nil excess. It
3. was wrong in determining the reasonable hire period
was appropriate to consider nil excess rates as the claimant
at 19 days because the car had to be stripped first to
had tried to ensure that he would not have any liability in
determine the parts required, which then had to be
that regard. The judge did not rely upon the lowest rates
ordered
available because the evidence did not provide any details
Allowing the appeal only in part, the High Court judge held that the evidence of the claimant’s means was unclear. He stated that he could not, in all the circumstances, have afforded to pay for a hire car, but gave no indication of what those circumstances were, nor did he elaborate upon the nature and extent of his funds or available means. His bank statements showed little activity and could not have reflected
concerning the additional cost of reduced or nil excesses. He concentrated upon four national organisations whose rates were readily accessible to someone seeking to hire a car. It was agreed that the judge erred in averaging the rates available from those four companies. Whilst able to hire a car, the claimant was not especially affluent and had demonstrated his disinclination to spend more than was
07
necessary. He would have hired with a nil excess from a reputable company with a local presence. The correct approach to reflect the factors disclosed by the evidence would have led the judge to a figure only slightly less than the actual figure selected. The error had not resulted in any detriment to the claimant.
‘ a claimant was not expected to seek details of possible deals available from every car hire provider in a particular locality’ The car was not simply left at the garage which then did nothing for a protracted period. There was no evidence that having stripped the car, it could have been reassembled for the claimant to have continued driving it until the parts arrived. There was no failure to mitigate on the part of the claimant or the credit hire company, who for those purposes were his agents. Therefore the claimant was entitled to a further nine days hire at the rate identified by the judge.
Comment This is yet another case which illustrates that the burden of proving impecuniosity is on the claimant.
08
Part 36 Another commercial case which is of wider interest is
correspondingly larger proportion of the preparation. Having
Newland Shipping & Forwarding Ltd v Toba Trading FZC
regard to those factors, in the absence of the claimant’s
(2014) EWHC 864 (Comm).
offer, a just order would have been for the claimant to pay
The claimant had sued the defendant on two contracts. The matters were initially conjoined. On 8 May 2013 the claimant made a Part 36 offer to settle both claims for $2.9 million including interest but excluding costs. The defendant did not accept the offer and it expired on 29 May 2013. The claimant’s claims were then separated into two actions. The defendant failed to comply with case management directions and the claimant obtained default judgment against it for $6.6 million on the first contract. A default judgment on the second contract was later set aside. In the second action the claimant obtained judgment for approximately $335,000. The defendant obtained judgment on its counterclaim for approximately $2.5 million. The instant hearing concerned the costs arising out of the trial of the claimant’s claim on the second contract and the defendant’s counterclaim.
50% of the defendant’s costs of the action.
‘once the two actions became decoupled.. (t) he offer was nevertheless a relevant consideration in deciding what order to make for costs’ It was impossible to say that the judgment against the defendant in the second claim was “at least as advantageous”
The defendant submitted that Part 36 did not apply to the
to the claimant as the Part 36 offer. The judgment was for
offer after the actions were separated. The claimant argued
$334,967 whereas the settlement proposal was for the
that the judgments in each action should be added together
defendant to pay $2.9 million. Alternatively, the proper
for the purpose of determining whether it had bettered the
analysis might be that the two sums were incommensurable,
Part 36 offer.
as the judgment against the defendant related only to the
The High Court judge held that the general approach to costs
second contract, whereas the proposed payment would
where the claimant succeeded in its claim and the defendant
have related to all claims and counterclaims in both actions.
succeeded in its counterclaim, used to be to make separate
On either view, the requirement of CPR 36.14(1) was not
orders whereby the claimant would be awarded its costs of
satisfied. Part 36.14(1) was not apt to cover a situation
the claim and the defendant would be awarded its costs of
where two different judgments were given at different
the counterclaim. However, the modern approach was to
times in two separate actions to enable the judgments to
look at the proceedings as a whole and start by identifying
be aggregated and treated as if they were one. It would be
which party was overall the successful party. Applying that
unjust as it would mean that once the claimant had obtained
approach, it was clear that the defendant was the successful
a default judgment against the defendant on terms more
party as it had obtained judgment for a sum of money which
advantageous than the Part 36 offer, the claimant would
very substantially exceeded the sum it had been held liable
enjoy a “free ride” since interest would be accruing on its
to pay. However, the claimant had succeeded in its claim
claim at a rate far higher than that required to compensate
and the issues raised by that claim occupied a much greater
it for the loss of use of the money. The claimant would be
amount of time at the trial, and must have accounted for a
able to resist the defendant’s counterclaim without being at 09
any risk as to costs and the longer it took the defendant to obtain judgment, the more interest the claimant would receive. Such a result would be completely contrary to the purpose of Part 36, which was to encourage the parties to reach reasonable settlements. Accordingly, once the two actions became decoupled, the claimant’s offer ceased to be effective. The offer was nevertheless a relevant consideration in deciding what order to make for costs. If the defendant had accepted the claimant’s offer it would have achieved a more favourable overall result in the two actions. Accordingly, the court made the following orders for costs: (a) the claimant was to pay 50% of the defendant’s costs of the action on the standard basis for the period 29 May 2013 (the date the offer expired) to 15 November 2013 (the date of the default judgment) (b) the defendant was to pay the claimant’s costs on the indemnity basis from 29 May to 15 November. In the absence of any special circumstances, an appropriate commercial rate of interest on sums for which judgment was given in US dollars was 6-month LIBOR plus 2.25%. Interest was to run from the date when liability to pay the sums arose until judgment was entered.
Comment As the judge in this case indicated, the old approach of ‘costs following the event’ has now gone. The courts will look at cases in the round and make costs orders which reflect more accurately the true success of failure of each party on the various issues in a claim, even where it splits into separate actions.
010
Specific Disclosure Although it is a commercial case, Fujitsu Services Ltd v Department for Transport and another [Lawtel 1/04/2014] is a reminder that any request for specific disclosure must be proportionate. In this case the claimant applied for specific
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The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 8 Bedford Park, Croydon, Surrey CR0 2AP. Parabis Law LLP is authorised and regulated by the SRA.