legal watch - personal injury - issue 13

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Legal Watch: Personal Injury April 2014 Issue: 013

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Legal Watch:Personal InjuryApril 2014Issue: 013

Events

Plexus and Greenwoods hold a series of events which are open to interested clients. See below for those being held in the next months:

Personal Data Training | 12.05.14 | Location TBC

MBIG Seminar 2014 | 22.05.14 | Wellcome

Collection - London

Credit Hire Training | 12.06.14 | Location TBC

In This Issue:

• Costs

• Damages/Fatal Accident

• Limitation

• Credit Hire

• Part 36

• Specific Disclosure

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

now been to the Court of Appeal and is reported as Secretary

of State for Energy & Climate Change and another v Jones and

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

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

insurers. The agreement contained a charge for credit of 4%

above base rate and was payable by the claimants if their

claims were successful, and after damages were received.

The personal injury claims succeeded and the judge ordered

the defendants to pay the majority of the claimants’ costs

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.

Costs

01

02

Dismissing the appeal, the Court of Appeal held that the

power to award interest on costs, including pre-judgment

interest on costs, was derived from CPR 44.2(6)(g). The

purpose of the award was to compensate a party who had

been deprived of the use of his money, or who had had

to borrow money to pay for his legal costs. The discretion

conferred by the rule was not fettered by the statutory rate

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

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.

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

‘The purpose of the award was to compensate a party…who had had to borrow money to pay for his legal costs’

the solicitors, which had funded disbursements of over

£787,500. They won their claims and recovered damages.

Their interest liability had therefore crystallised. The judge

had therefore been entitled to make the order that she did

as the relationship between the claimants and the solicitors

was governed by the agreement, and it gave rise to a real

liability on the claimants as borrowers.

CommentAlthough disturbing from an insurer’s perspective, this case

has limited relevance as it relates only to CFAs entered into

prior to 1 April 2013.

03

Outside of mesothelioma claims, there are few cases

reporting the basis of awards for pain, suffering and loss

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:

• In an action under the law of England and Wales or the

law of Northern Ireland for damages for personal injuries

(a) no damages shall be recoverable in respect of any loss

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.

For several months the deceased had been visiting the

defendants complaining of various stomach-related

symptoms until, in March 2008, she was diagnosed with

stomach cancer. She was advised that the cancer was too

advanced to treat and thereafter she received only palliative

care until she died in August 2008. She was 32 and had

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

Damages/Fatal Accident1934. The defendants admitted liability for the delay in the

diagnosis and the consequent delay in treatment.

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

been negligent the deceased would have been diagnosed

in June or July 2007 and would probably have lived until

July or August 2010. He found that if the deceased had

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

with the likely facts if there had been no negligence. On that

basis, the fact that the deceased would have had the same

symptoms two years later was relevant, as was the pain of

treatment. The judge had been correct on the evidence to

refuse the claim for pain, suffering and loss of amenity.

“Awareness” in S1(1)(b) of the 1982 Act did not mean strictly

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

04

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.

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.

‘(The deceased) feared on good objective grounds that her life expectancy had been reduced by the delayed diagnosis’

05

The case of Francisquini v London Borough of Southwark

and another [Lawtel 31/03/2014] is an example of a judge

weighing the prejudice to each party when considering

whether or not to disapply the three-year limitation period

for a personal injury claim. The claimant/applicant applied

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

own right against the defendants. The claimant instructed

each of the solicitors’ firms that his solicitor subsequently

moved to. The last firm was concerned as to the solicitor’s

handling of the case and took steps to discover whether the

claimant had suffered psychological injuries following the

fire. It emerged that he had been unable to work following his

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

in breach of orders relating to disclosure and exchange

of witness statements

5. the prejudice to the defendants of permitting the claim

outweighed any prejudice to the claimant in refusing

permission

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.

The defendants had not sought to put the claimant’s

presence at the fire into issue in their defences and, more

significantly, he had given evidence at the inquest. Any

forensic disadvantage on the defendants’ part was minor

at best.

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

Limitation

‘Any forensic disadvantage on the defendants’ part was minor at best’

06

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.

CommentIt 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…’

07

Credit hire continues to be a fertile ground for disputes

as illustrated by Stevens v Equity Syndicate Management

Ltd (2014) EWHC 689 (QB). The driver of a car insured

by the respondent insurer had collided with the appellant

claimant’s car. Liability was not in issue. The claimant’s

insurers referred him to a credit hire company who made

arrangements for the repairs to his car, agreed the costs and

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

2. alternatively, should have identified a single basic hire

rate rather than averaging rates

3. was wrong in determining the reasonable hire period

at 19 days because the car had to be stripped first to

determine the parts required, which then had to be

ordered

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

his total economic activity. The judge based his conclusion

on the continuous healthy balance in the claimant’s account,

and he was entitled to do so, particularly as liability was not

disputed and therefore the recoverability of reasonable hire

charges was not an issue. When the bank statements were

examined in some detail, the finding of lack of impecuniosity

became all the more compelling.

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

which provided vehicles in the appropriate group, in the

locality in which the claimant lived, and with a nil excess. It

was appropriate to consider nil excess rates as the claimant

had tried to ensure that he would not have any liability in

that regard. The judge did not rely upon the lowest rates

available because the evidence did not provide any details

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

Credit Hire

08

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.

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.

CommentThis is yet another case which illustrates that the burden of

proving impecuniosity is on the claimant.

‘ a claimant was not expected to seek details of possible deals available from every car hire provider in a particular locality’

correspondingly larger proportion of the preparation. Having

regard to those factors, in the absence of the claimant’s

offer, a just order would have been for the claimant to pay

50% of the defendant’s costs of the action.

It was impossible to say that the judgment against the

defendant in the second claim was “at least as advantageous”

to the claimant as the Part 36 offer. The judgment was for

$334,967 whereas the settlement proposal was for the

defendant to pay $2.9 million. Alternatively, the proper

analysis might be that the two sums were incommensurable,

as the judgment against the defendant related only to the

second contract, whereas the proposed payment would

have related to all claims and counterclaims in both actions.

On either view, the requirement of CPR 36.14(1) was not

satisfied. Part 36.14(1) was not apt to cover a situation

where two different judgments were given at different

times in two separate actions to enable the judgments to

be aggregated and treated as if they were one. It would be

unjust as it would mean that once the claimant had obtained

a default judgment against the defendant on terms more

advantageous than the Part 36 offer, the claimant would

enjoy a “free ride” since interest would be accruing on its

claim at a rate far higher than that required to compensate

it for the loss of use of the money. The claimant would be

able to resist the defendant’s counterclaim without being at

09

‘once the two actions became decoupled.. (t)he offer was nevertheless a relevant consideration in deciding what order to make for costs’

Another commercial case which is of wider interest is

Newland Shipping & Forwarding Ltd v Toba Trading FZC

(2014) EWHC 864 (Comm).

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.

The defendant submitted that Part 36 did not apply to the

offer after the actions were separated. The claimant argued

that the judgments in each action should be added together

for the purpose of determining whether it had bettered the

Part 36 offer.

The High Court judge held that the general approach to costs

where the claimant succeeded in its claim and the defendant

succeeded in its counterclaim, used to be to make separate

orders whereby the claimant would be awarded its costs of

the claim and the defendant would be awarded its costs of

the counterclaim. However, the modern approach was to

look at the proceedings as a whole and start by identifying

which party was overall the successful party. Applying that

approach, it was clear that the defendant was the successful

party as it had obtained judgment for a sum of money which

very substantially exceeded the sum it had been held liable

to pay. However, the claimant had succeeded in its claim

and the issues raised by that claim occupied a much greater

amount of time at the trial, and must have accounted for a

Part 36

010

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.

CommentAs 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.

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.

www.plexuslaw.co.ukwww.greenwoods-solicitors.co.uk

Contact UsFor more information please contact:

Geoff OwenLearning & Development Consultant

T: 01908 298 216

E: [email protected]

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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

disclosure of two categories of documents but the court

took the view that the terms used to describe the documents

were not sufficient to ensure that specific disclosure was

proportionate as required under the CPR and relevant case

law.

Specific Disclosure