Corporate Claims Bulletin - October 2019

• United Kingdom

• Litigation and dispute management
• Personal injury claims litigation - Personal Injury Bulletin

19-11-2019

 

Practice and Procedure

Patel and another v Patel and others [2019] EWHC 2643 (Ch)

This case looks at the obligations of defendants under CPR Part 16.5 when preparing their defences and very clearly sets out that defendants: (a) must say which individual allegations in the particulars of claim they are unable to admit or deny and then deal with those individual allegations; (b) cannot simply set out bare denials, even where their defences otherwise contains facts/allegations which, if proved, would give rise to a complete defence to the claims.

The claimants alleged that the first and second defendants had, among other things, breached a joint venture agreement (both by failing to transfer certain shareholdings identified in that agreement and by setting up and operating new special purpose vehicles (SPVs) for carrying on property development business, without involving the claimants) and breached certain fiduciary duties said to be owed.

The court carefully examined the provisions of (in particular) CPR Part 16.5(2), which provides (in relevant part) that—‘Where the defendant denies an allegation: (a) he must state his reasons for doing so, and (b) if he intends to put forward a different version of events from that given by the claimants, he must state his own version’. The court explained that—‘the word “allegation” in rule 16.5(2) is not synonymous with the word “cause of action” or “claim”, as is shown by rule 16.5(1), which draws a clear distinction between the particulars of claim, and the individual allegations it contains’.

The court went on to add that a defendant cannot rely on CPR Part 16.5(3) (‘A defendant who: (a) fails to deal with an allegation; but (b) has set out in his defence the nature of his case in relation to the issue to which that allegation is relevant, shall be taken to require that allegation to be proved’) to avoid dealing with that allegation if he is in fact able to admit or deny it. CPR Part 16.5(1) requires a defendant to say which individual allegations he is unable to admit or deny. In other words, CPR Part 16.5(3) simply permits a defendant ‘where he cannot admit or deny the allegation itself, to put forward the nature of his case on the issue to which that allegation is relevant’.

The court found that the relevant defences failed to comply with, and therefore breached, CPR Part 16.5. In the circumstances, the court considered that the correct approach was to order a revised defence to be filed and served, relying on its powers in CPR Part 3.1(2)(m).

 

Allan Campbell v Ministry of Defence [2019] EWHC 2121 (QB)

The claimant was a member of the armed forces and brought an action for damages for personal injury, as a result of a negligent pilot entering the aircraft in which he was travelling into a sharp descent, plummeting 4,400ft. The claimant suffered psychiatric injury, specifically a severe phobia of flying.

The MoD admitted liability in January 2016.

On 5 January 2018, the MoD made a part 36 offer of £100,000. The relevant period of 21 days was extended on agreement until 19 February 2018. The claimant did not accept the Part 36 offer until 13 months later on 22 March 2019.

The claimant argued that during the period for acceptance, he was not able to fully quantify the claim. The claim included a claim for loss of earnings, the value of which depended upon the success or failure of his application for a commission. The outcome of that application was not known until October 2018.

Mrs Justice Lambert rejected the claimant’s arguments. She concluded that the offer was a serious one, and it was the role of the claimant’s lawyers to evaluate the offer at the time it was made. It was not unjust for the claimant to bear the usual costs consequences.

The Judge stated that in personal injury claims offers to settle are often made at an early stage when the evidence is incomplete. It is the job of the claimant’s advisors to weigh up the merits of the Part 36 offer and give the claimant appropriate advice. She stated that, ‘if having considered matters they concluded that the claimant’s career prospects were so uncertain as to make any evaluation wholly speculative, then the appropriate course of action would have been to have made an application for the action to be stayed pending the outcome of the application to the Commission Board.

Even after the outcome of the Commission Board was known in October 2018, the claimant did not re-visit the merits of the Part 36 offer but waited a further 5 or 6 months before accepting it.

The claimant had to bear the usual costs consequences and pay the defendant’s costs for a 13 month period after late acceptance of a Part 36 offer.

The judgment emphasises the risks posted by Part 36 offers, the role that the lawyers have to play in making a “judgement call”, and the possibility of applying for a stay, which would, at the very least, reduce the escalation of costs.

 

Haider v DSM Demolition [2019] EWHC 2712 (QB)

A taxi driver sought damages after a car driven by the defendant ran into the back of his. In the first instance, Judge Tindal found that Mr Haider had over-braked and overreacted to the manoeuvre in front of him and actually stopped, causing the accident. The Judge rejected the defendant’s claim that it was a deliberately staged accident. He found the claimant to be “basically an honest man” whose recollection of the accident four years later was hazy.

As a result, there was no fundamental dishonesty and qualified one-way costs shifting applied.

On appeal, Mr Justice Julian Knowles rejected the claimant’s appeal against the ruling on the accident, but allowed the defendant’s application that the Judge was wrong on fundamental dishonesty.

This was because the claimant did not disclose either on his list of documents or in his part 18 responses that he held two credit cards and a second bank account.

The part 18 questions asked whether he could have afforded to hire a vehicle other than on credit, and if no, that he list all of his credit cards and supply supporting information such as credit limits and statements. Mr Haider said that he did not have any credit cards. He only admitted this was wrong when it was put to him in cross-examination, but claimed the second account was opened by the bank in error.

The Judge stated that the “questions were not difficult, they were in writing, he had time to consider his documentation, and he had the opportunity to take legal advice if he was unsure about how to answer and what to disclose.’ The claimant had concealed this information and this could not be justified on account of the 4 years passing since the accident.

“The only possible reasonable inference from the evidence was that the claimant intentionally failed to make full disclosure, and that failure can only be labelled as dishonest.”

He went further and said that “the dishonesty in question went to the root of a substantial part of the claim. The claim for credit hire charges exceeded £30,000. The importance of the claimant giving proper disclosure about his financial circumstances needs to be emphasised. By doing as he did, the claimant prevented the defendant from carrying out a proper investigation into his claimed impecuniosity. This skewed and distorted the presentation of his claim in a way that can only be termed fundamentally dishonest.”

This case emphasises that in credit hire cases, insurers should be on the look-out for evidence of undisclosed bank accounts. This decision enhances the fact that omitting items relating to financial disclosure will amount to fundamental dishonesty. In this case it meant that the claimant’s QOCs protection was disapplied but, in appropriate cases, could also see entire claims dismissed under s57 Criminal Justice and Courts Act 2015.

 

DXW v PXL [2019] EWHC 2579 (QB)

The claimant sustained severe physical injuries and a traumatic brain injury after an incident at work. The case settled for £6.675m. An application for an EXB Order was made by the claimant’s mother and litigation friend. This order was to prevent the injured victim from being informed about the level of damages.

Mr Justice Pushpinder Saini made it clear that a person in the claimant’s position should ordinarily be informed of the details of a settlement award, because this would be to treat him the same way as someone without a disability. Depriving the claimant of this knowledge clearly constituted an interference with basic rights, and a ‘strict justification’ was required to depart from this principle.

In this case, the Judge ruled the claimant did not have sufficient insight into or understanding of the need to keep confidential the amount of money. He also did not appear to have sufficient insight to understand a settlement covers past and future losses, and that it is there to cover care management and his long-term assistance.

The Judge declined to take evidence from the claimant, as this would undermine the protections being sought in the application. The claimant’s depute undertook to the court to consider any application to revoke or vary the order at least once a year.

The order makes it unlawful for anyone to tell him the amount awarded.

 

Pepe’s Piri Piri Ltd v Muhammad Ali Junaid Food Trends Ltd (Now Dissolved) & Ors [2019] EWHC 2769 (QB)

The claimants were successful in bringing an action in relation to procuring breaches of contracts in relation to chicken franchises. Many of the losses claimed were held not to be recoverable, or not established on the evidence. In this later judgement the Judge considered the consequences of an application for relief from sanctions which the claimants had made shortly before trial.

The claimants issued an application for permission to rely upon a supplemental expert report and four witness statements one week before trial.

The claimants’ application to rely on the further witness and expert evidence was issued on the afternoon of 5 March 2019 and served on the defendants by email after hours that day.

The Judge stated that a fact-sensitive assessment is required in each case. The claimants’ breach i.e. not having served the new witness statements in compliance with the case management order, was not serious or significant. This was because the statements were responsive in nature. He stated that there was a good reason for the breach, because the claimants were responding to issues raised, after the date for the filing of witness statements, by the defendants’ expert.

The serious delay of two months in making the application for permission to rely on the witness statements after they had been prepared and served on the defendants. There was no good reason for that delay.

In all the circumstances it would have been unjust not to permit the claimants to rely on this evidence, notwithstanding the unexplained delay in making the application.

In relation to the expert evidence, different considerations applied, but they all were deemed to be in favour of permitting the evidence to be adduced. The Judge stated that it would have been unfair to refuse them permission to rely on it in these circumstances, particularly given that it was one of the factors reducing the prejudice to the defendants arising from the claimants’ further witness statements.

The Judge gave permission to rely on the four further witness statement and on the supplemental report of the experts.

The case stresses the importance of making prompt applications for relief from sanctions. It is important to note that a serious delay on the part of a litigant in making an application may outweigh any previous considerations.

 

Costs

RXK v Hampshire Hospitals NHS Foundation Trust

Due to the defendant hospital trust’s negligence, the claimant had suffered a neurological injury when she was born in 2013. She issued proceedings in 2016. Although the trust admitted liability, it was common ground that the extent of the damages that should be awarded would not be known for some time. In 2017, the court ordered the trust to make interim payments on account of costs. In 2019, the claimant made the instant application, requesting the court to use its discretion under CPR r.44.2 to grant a further £150,000 on account of costs. The application attached a short schedule of costs to date but gave no other information and did not mention that the claimant had received some public funding from the Legal Services Commission.

As in X v Hull and East Yorkshire Hospitals NHS Trust, the court’s discretion as to costs under r.44.2 was very wide. The application that should be made in the instant circumstances was for a costs order down to a specific date and an interim payment on account of those costs.

It was clear in considering the application, the court would want to take into account the factors listed in r.44(4) and (5) as to the conduct of the parties, their level of success in the case, and whether any offers to settle had been made.

This case emphasises the fact that in cases where liability has been admitted, but there is a substantial delay before quantum could be determined parties are entitled for an interim payment on account of costs. However, they are required to make an application providing all of the relevant information the court will need to enable it to take into account the factors in CPR r.44.2(4) and (5) in determining the application.

 

Travelers Insurance Company Ltd v XYZ [2019] UKSC 48

623 claimants brought an action against a medical clinic in relation to defective silicone breast implants. The insurer, Travelers, funded the whole of the defendant’s defence. It did not disclose until a late stage that a substantial number of the claimants were uninsured, in that the defendant’s policies only covered the claims brought by 197 claimants.

The claimants who were covered recovered costs and damages. The court initially ordered that the insurer nevertheless pay the costs of those 426 claimants who were not covered by the defendant’s policies. The decision was upheld by the Court of Appeal.

The Supreme Court overturned the earlier decisions. No costs of the “uninsured” claimants were to be recoverable from the insurer.

This is an important decision in relation to non-party costs orders. There must be a causative link between the conduct of the non-party and the incurred costs which are sought to be recovered.

 

Aldred v Cham [2019] EWCA Civ 1780

The cost of counsel's advice in the present case had not been necessitated by any particular feature of the dispute, but had instead been required because it was an almost mandatory requirement in all RTA cases where the claimant was a child. In those circumstances, the fee for the advice did not fall within the rubric of CPR 45.29I(2)(h.)

The particular features of the dispute in an RTA claim will commonly be matters such as: how the accident happened, whether the defendant was to blame for the accident, the nature, scope and extent of the injuries and their consequences, and other matters of that kind. For example, the particular circumstances of the accident may be sufficiently unusual to require an accident reconstruction expert, or the injuries may be so complex that they require a number of different experts' reports. Such additional involvement of experts may also require specific advice from counsel. Depending always on the facts, such costs may be said to be a disbursement properly incurred as a result of a particular feature of the dispute.

The Judge ruled that the fact that in this case the claimant was a child or someone who cannot speak English, or requires an intermediary has nothing to do with the dispute. Age, linguistic ability and mental wellbeing are all characteristics of the claimant regardless of the dispute. They are not linked to the dispute in anyway and so cannot be said to be features of the dispute.  The Judge said that he does not consider that the fact that the respondent was a child was a particular feature of this dispute and so the fee for the advice can not been considered a disbursement.

 

OTHER NEWS

112^th practice direction update 28 November 2019

The update makes a technical change to the 111^th update for the Online Civil Money Claims pilot.

The amendment to CPR PD 51R, para 2.1(1), set out in the 111^th update, provided for the pilot to apply to claims submitted to the court on or after 11am on 9 September 2019.

However, this did not take into account the fact that under the same update, amendments were made to CPR PD 51R to extend the duration of the pilot scheme. The amendment in the 112^th update is a ‘narrow technical amendment’ to address this and to ensure that the extension of the pilot/Practice Direction will apply to pre-existing claims ie those commenced prior to 9 September 2019.

The changes come into force on 28 November 2019, the original end date for the pilot scheme was 30 November 2019 but this has now been extended for two years until 30 November 2021.