Legal Watch: Personal Injury 23rd October 2014 Issue: 037
Mental capacity Since the introduction of the Mental Capacity Act 2005 there has been a presumption in favour of a claimant having mental
In This Issue:
(2014) EWCA Civ 1313 serves to illustrate how hard it is for a
• Mental capacity
capacity. The case of Ali (Protected Party) v Caton and another defendant to assert that a claimant has capacity, once that presumption has been displaced.
When he was seventeen, the claimant/respondent, suffered a
severe brain injury in a road traffic accident caused by the first
• Civil procedure/‘without prejudice’ • Fraud/contempt proceedings • Limitation/product liability
defendant’s negligence. The first defendant was uninsured and the MIB (the appellant) had conducted the defence. Liability
had been admitted, subject to a deduction for contributory negligence. The only issue at trial had therefore been quantum. Various experts had treated the claimant during the seven years between the accident and the trial. They all gave evidence
that he suffered from significant cognitive disabilities. Shortly
before the trial, the claimant had taken the UK Citizenship Test
and passed it. The experts all agreed that it was surprising that he had passed the test and that his having done so appeared to be inconsistent with his apparent level of cognitive disability.
The claimant claimed that he had passed the citizenship test
with “improper assistance”, the nature of which was not identified. However, the judge found that he had passed the test without assistance, having learned answers by rote and
having struck lucky in the questions that came up. He found
that the claimant lacked mental capacity and had no residual earning capacity. Damages were assessed.
The MIB appealed and submitted that if the judge had attributed the correct weight to the citizenship test he would
have found that the claimant had either been malingering or consciously exaggerating and that he did not suffer from significant cognitive deficits. He should have found that the claimant did not lack mental capacity and that the award of damages should be reduced accordingly.
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Rejecting the appeal, the Court of Appeal held that on the
evidence before him, the judge had been entitled to make the finding that the claimant had passed the citizenship test
unaided. The judge had been bound to take into account all the features of the evidence in the context of his finding that the claimant had somehow passed the citizenship test.
He had been acutely aware of the need to factor the test
success into the rest of the evidence. To focus upon the citizenship test almost to the exclusion of anything else
would not have been the correct approach. There could be no doubt that the claimant had suffered a very severe
brain injury. He was not a person who could have kept up a pretence of incapacity, capable of fooling so many people,
for so long. The citizenship test had to be put into context with all of the other evidence. The judge had been entitled to conclude that the claimant lacked capacity, having regard to
the sum total of the evidence, including the expert evidence and evidence from other quarters as to how he presented and functioned in his day-to-day life. he award of damages was upheld.
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Civil procedure/‘without prejudice’ When is marking a communication ‘without prejudice’
to operate, but the operation of the rule could be limited or
privileged? This was the issue in Avonwick Holdings Ltd v
scope and could include the “opening shot”. Whether
ineffective when later claiming that its contents were
extended by agreement. The term “dispute” was of wide
Webinvest Ltd and another [Lawtel 21/10/2014].
there was a dispute had to be determined on an objective
The respondent/claimant company had made a loan of
$100m to the appellant/first defendant, a company controlled
by the second defendant, to enable the first defendant to make a loan to another company. The first defendant’s
obligations were guaranteed by the second defendant. The first defendant defaulted and proposed a rescheduling. The
claimant did not agree to the proposed terms and required the provision of security. The claimant then demanded
repayment from the defendants, who alleged a collateral oral agreement that the first defendant’s obligation to repay was conditional on it being repaid in full by the third party company. That company had also defaulted and the first
defendant had commenced arbitration proceedings against
it which had been settled. Disclosure had been ordered of correspondence leading up to the settlement agreement
between the first defendant and the third party company; it
was accepted that the settlement itself was disclosable. The judge held that the second defendant had waived privilege
basis. The judge was right that there had been no dispute in existence at the time of the correspondence in issue.
Freedom of contract was a basic principle of English law
and the courts recognised the efficacy of clauses such as
non-reliance, confidentiality and entire agreement clauses. However, an agreement that documents could not be used in court proceedings could not be unilaterally imposed. The
argument that there was such an agreement in the instant
case was undermined by the fact that the documents were marked “subject to contract” as well as “without prejudice”. The appellants said that that related only to
the “heads of terms” put forward for the rescheduling. In the circumstances it was clear that the words “without
prejudice” were not intended to create an agreement that
the documents would not be used in proceedings in court, but indicated that the lender’s rights were being reserved in relation to the proposed rescheduling. Therefore the documents were admissible.
in certain documents. The appellants appealed against that
The appeal against the decision of the first judge was
leading up to the unsuccessful rescheduling, which was
defendant had waived privilege. It was doubtful whether the
should be admissible. He found that the correspondence
the effect that an offer to settle had been received and his
because there was at the relevant time no dispute about
privilege was not the second defendant’s to waive. The third
defendant’s liability under the guarantee. The appellants
that it was not relying on the documents as admissions.
decision. A second judge directed that correspondence
allowed only in relation to the finding that the second
marked “Without prejudice and subject to contract”,
words relied on amounted to a waiver. They were only to
was not covered by the “without prejudice” privilege
lawyers had advised that it was a good one. In any event the
the first defendant’s liability under the loan or the second
party had not consented to waiver. The claimant argued
appealed on the without prejudice issue.
The reasonableness of the settlement was in issue and the
The Court of Appeal dismissed the appeal against the decision on the without prejudice issue. There were two
general rule applied. The documents remained privileged even after the settlement.
bases for the operation of the without prejudice rule: public policy and contract. As a matter of public policy it was
necessary for there to be a dispute in existence for the rule 03
Fraud/contempt proceedings The case of Royal & Sun Alliance Plc v Fahad [Lawtel
The High Court judge held that a person was only guilty
a court will allow an application for permission to bring
so. Bringing proceedings had to be in the public interest,
21/10/2014] sets out in some detail the grounds on which
of contempt if a statement was false and he knew it to be
contempt proceedings.
taking into account whether there was a strong case,
The applicant insurance company applied for permission to bring committal proceedings against the respondent for
contempt of court. The respondent applied for relief from sanctions.
The respondent had brought a damages claim after an
alleged road accident. The court found that the accident had been contrived and that the respondent had made false
statements by asserting that the accident had been caused by another driver’s negligence and by stating that he did
not know the other driver, when the evidence was that they were in a relationship. The respondent’s evidence that there had been no collusion was rejected. He failed to give seven
days’ notice in writing of his intention to attend the instant
hearing, or provide a written summary of his submissions as required by CPR 81.14(5). He thus lost his right to be heard. Nevertheless the court allowed him to make submissions.
The day before the hearing the respondent applied for relief from sanctions.
The applicant submitted that there was ample evidence from which permission should be granted and that the
false statements had been proved to be false at trial. It submitted that it was in the public interest to bring contempt proceedings as it was not a case of an exaggerated claim,
but one that had been entirely fabricated, and that the
respondent had also failed to pay costs orders made against him. The respondent submitted that he had faced language
problems at trial, as English was not his first language. With regard to relief from sanctions, he submitted that he had not given seven days notice for good reason as he had been in Iraq and suffering from ill health.
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whether the alleged false statements made were significant in the proceedings, whether the person understood the
likely effect of the statements and considering the deterrent
effect of contempt proceedings. Only limited weight should be attached to the likely penalty and contempt had to
be proved to the criminal standard. The respondent’s arguments went to the merits of the application rather than
whether permission should be granted. There was a strong prima facie case but it was not the job of the instant court
to make findings. It was important to deter false claims.
The public interest not only justified granting permission, but demanded it. There were different types of fraudulent
claims; one where an accident had occurred but it had been
exaggerated and one where there had been no accident at all. That latter category was far more serious. Permission to bring the committal application was granted.
Given that outcome and that the respondent’s submissions had been considered, it made no practical difference if
he was granted relief from sanctions, but it was relevant to costs. The breach had been serious. The respondent’s
medical notes showed that he was no longer unwell. He had
been in the UK shortly before the deadline and in any event
he could have emailed or telephoned from Iraq. The breach had not been an isolated occurrence. Relief from sanctions was refused.
Limitation/product liability In Unwalla v Spire Healthcare Ltd [Lawtel 22/10/2014] the
the terms of S4(2A) of the 1982 Act which provided that
losses arising from alleged breach of contract in relation
that a reasonable person would regard as satisfactory,
claimant claimed damages for personal injury and other to the supply of a hip implant using the Birmingham Hip
Resurfacing System (BHRS). The hip replacement surgery
had been carried out in 2001. The claimant had suffered
an adverse reaction to metal debris (ARMD) and had to have revision surgery in 2007. It was the claimant’s case
that the implant was in breach of the statutory implied
terms of satisfactory quality and fitness for purpose under the Supply of Goods and Services Act 1982 and that the services and/or advice given by the defendant were not
supplied with reasonable skill and care. The defendant
served a defence denying liability, but admitting the
contract for supply of the implant and the implied terms. It denied that it was vicariously liable for the actions of the
consultant and argued that the contract claim was statute-
“goods are of satisfactory quality if they meet the standard taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances”. It was said
that relevant circumstances could include the defendant’s knowledge. Its case was that its defence sufficiently raised the issue as to whether the implant was appropriate for the claimant and that it was inevitable that expert evidence
would be required on that and other issues. The claimant had not produced any incontrovertible evidence on what
were described as the core issues. Permission was given to amend the defence, and on the defence as amended, which put the claimant to proof on the key issues, it could not be
said that there were no reasonable grounds of defence or that the defence had no real prospect of success.
barred under S5 Limitation Act 1980 since proceedings had
not been brought until 2013. The claimant applied to strike
out the defence or for summary judgment on the basis that
the vicarious liability issue was irrelevant, as was S5 which
was disapplied by S11 of the 1980 Act in a personal injury claim. The claimant argued that the defence failed to deal
with the core allegations in the particulars of claim, namely that BHRS was not fit for purpose, in particular because
the claimant had hip dysplasia and that the claimant was not warned that BHRS had an unacceptably high risk of
revision surgery within 10 years. The defendant applied for permission to amend its defence substantially.
The High Court judge held that the original defence was
clearly defective, but the court, before striking it out, had
to consider whether it could be amended. The claimant accepted that there was a triable issue on limitation under S11 and S14 of the 1980 Act, leading to the court being asked to exercise its discretion under S33 to exclude the
limitation period. There were also triable issues of causation
and the assessment of damages. The defendant relied on 05
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