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Corporate Claims Bulletin July 2017

  • United Kingdom
  • Personal injury claims litigation - Personal Injury Bulletin

04-08-2017

Liability

Dodd v Raeburn Estates Ltd [2017] EWCA Civ 439

The freeholder of a building was not liable under the Defective Premises Act 1972 s.4 where a man had died after falling down a staircase in the building, which was steep with no hand rail.

A widow appealed against a decision that the defendant, a building freeholder, was found not liable in negligence following the death of her husband after he fell down a staircase in the building and suffered brain damage.

The freeholder had leased part of the building to a developer who had reconfigured that part of the building into a number of flats. As part of the works the developer had replaced two existing staircases with a single new one. Planning permission had been granted, based on plans which showed that the new flight of stairs would be equipped with a handrail.

The new staircase in fact did not have a handrail, and the stairs were steeper and shallower than shown on the plan. The widow claimed that the new staircase had originally been equipped with a handrail which had subsequently been removed, which was denied.

The husband, whilst visiting friends, fell down the stairs. In the widow’s submission the lack of handrail and the steepness of the stairs amounted to a breach of building regulations which were in force at the time.

Clause 3(3) of the head lease required the developer to keep the premises in good and substantial repair, including the remedying of any inherent defect to the premises.

Clause 3(7) entitled the freeholder to enter the premises in order to repair, reinstate or decorate.

The widow relied on the freeholder’s right of entry to repair under clause 3(7), claiming the freeholder was liable for her husband’s injuries under the Defective Premises Act 1972 s.4. However, the freeholder obtained summary judgment on the ground that the widow’s claim had no real prospect of success.

The widow submitted that when the developer removed the original staircase, they breached clause 3(3) by causing damage to the physical condition of the building. She argued that the developer had failed to remedy that breach of covenant by installing a staircase which complied with the building regulations, meaning that the freeholder had been entitled under clause 3(7) to enter the premises in order to rectify the breach. She maintained that the right to enter triggered the application of s.4(4) of the Act, thus giving rise to a duty owed to husband.

HELD: Appeal dismissed

It was clear that the phrase ‘maintenance or repair’ in s.4 of the Act was to be interpreted according to the meaning that it had in the general law of landlord and tenant, and did not extend to defects in a general sense.

The scope of the duty to repair was not wider than that of the covenant to repair owed by the freeholder. It was also clear that a duty to repair could not be equated with a duty to ‘make safe’.

The widow’s argument did not take into account the fact that the head lease permitted the developer to make alterations with the freeholder’s consent. In those circumstances, the removal of the old staircase could not possibly amount to a breach of clause3(3) of the head lease and the right to enter under clause 3(7) could not have been triggered.

Once the staircase had been installed, clause 3(3) would have attached to that staircase and the “clock would have started again”.

If the new staircase never had a handrail, there had been no subsequent damage to or deterioration in the fabric of the staircase such as to give rise to an obligation to repair it and the claim under The Defective Premises Act would have to fail.

The judge described the hypothesis that the handrail had been removed as ‘speculative and fanciful’ and rejected it due the widow’s inability to point to further evidence in support.

Further, he concluded that the test of functionality was not the correct test. Part of the building might function inadequately, but it did not follow that it was in disrepair or that there was a “relevant defect” for the purposes of The Defective Premises Act.

Practice and Procedure

ADVA Optical Networking Limited & Another v Optron Holding Limited & Another [2017] EWHC 1813 (TCC)

The High Court granted relief from sanctions where serious breach lacks significant effect and default judgment would be contingent.

The proceedings concerned allegedly defective in-line socket electrical cables which were supplied by the principal claimant, ADVA, to BT. BT's claim against ADVA had been settled, and ADVA brought a contribution claim against Optron, who in turn passed on the claim to their supplier, Rotronic. Rotronic subsequently claimed against A One.

There was a reasonable amount of cooperation between ADVA, Optron and Rotronic, but A One, were not so accommodating, which lead to two sets of proceedings.

Rotronic served their Particulars of Claim on A One on 10 March 2017. An Acknowledgement of Service or a Defence should have been filed by A One by 24 March 2017. However, A One did not respond.

Rotronic wrote to A One on two subsequent occasions chasing for a response, however one was not forthcoming.

It was only in June 2017 that A One gave any indication that they had even received the Particulars of Claim and the other material from Rotronic and/or their solicitors.

The CMC in both actions took place on 16 June 2017. On the day of the hearing, A One's solicitors emailed a letter to Rotronic's solicitors in which they said that they had only recently been instructed and that they were not yet in a position to deal with the detailed directions.

The court ordered that, if A One wanted relief from sanctions, they had to issue an application no later than 23 June 2017 and that any such application should be heard at the re-listed CMC.

By the afternoon of the day before the re-listed CMC the court received skeleton arguments from ADVA, Optron and Rotronic, but nothing from A One.

It was later revealed that A One were apparently unaware of the re-listed CMC. Counsel was subsequently instructed and provided a helpful skeleton argument on the morning of the hearing. He did not seek a further adjournment.

A One's application for relief from sanctions was finally heard during the CMC

HELD: Relief from sanctions granted. The court’s reasoning was as follows:

The court considered the tests set out in Denton (Denton and Others v T H White Limited [2014] 1 WLR 3926.) and the position under CPR r.13.3 being the relevant test for setting aside judgment in default.

In the present case, judgment in default could have been entered against A One. But on the facts, whether judgment had been entered or not is irrelevant because, having been provided with A One's draft defence Rotronic accepted that A One has a realistic prospect of successfully defending the claim.

In that way, the test in r.13.3 has been met, and the application becomes a straightforward application of the test identified in the case of Denton.

A One’s defaults included the following pre-issue conduct points:

(a) Refusing to enter into a Standstill Agreement or equivalent in July 2016, unlike the other three parties, thereby forcing Rotronic to issue separate proceedings;

(b) Failing to respond to the invitation to agree to an extension of time for the service of the Particulars of Claim in October 2016, thereby forcing Rotronic to make an application;

(c) Failing to respond to the invitations to agree to consolidate the two sets of proceedings in February and March 2017, thereby forcing Rotronic to make a further application;

(d) Failing to respond to the letter of 11 May 2017, which amongst other things, notified A One that they had been ordered to pay the costs of the unnecessary application to consolidate the proceedings;

(e) Ignoring the letters of which Rotronic had sent to them;

(f) Failing to take any part in the proceedings until the letter of 16 June 2017.

A One's overall conduct was considered very poor. They did not comply with the relevant rules and they have prevented the efficient and proportionate conduct of the claim against them.

However, the court explained that the negative assessment has to be balanced against two factors which they believed were firmly in A One's favour and which, on analysis, have led the court to conclude that, in this case, relief from sanctions should be granted.

Firstly, the relevant period of delay here is three months. That is a significant amount of time. But as in Salford Estates, that delay has not in fact had any real effect on the course of these proceedings. The actions are at a relatively early stage. Disclosure has not yet taken place, with directions only being set down at the CMC.

Therefore, if relief from sanctions is granted, their default, serious though it has been, will not have caused any delay to the proceedings as a whole.

For these reasons, the significance of their default should be regarded as minor.

Secondly, Rotronic's claim against A One was contingent, because Rotronic's primary position, back up the supply chain, is a complete denial of liability. Many of the matters they raise, such as their reliance on their terms of business, arguments about the alleged cable failures, and the reasonableness of any settlement, are very similar to the matters raised by A One in their own draft defence. Thus, any judgment in default entered against A One (if relief from sanctions is not granted) would be a contingent judgment only, and would only become relevant if Rotronic's defence was rejected.

The court was uncomfortable about a situation where A One were made the subject of a judgment which, as things presently stand, Rotronic do not need, and which is contrary to Rotronic's primary case.

Furthermore, if A One are still going to be a party to these proceedings, able to argue at least some of the points in their draft defence, it would be artificial to restrict them to points of quantum, whilst preventing them from arguing, for example, that they did not supply the cables in the first place.

Lakhani & Another v Mahmud & Others [2017] EWHC 1713 (CH)

Relief from sanctions was denied where a Costs Budget was filed and served one day out of time, as the failing party did not apply for relief from sanctions until the CCMC.

CPR 3.14 provides that a party failing to file a costs budget in accordance with the rules will be treated as having filed a budget containing only the applicable court fees. In such circumstances only a successful application to the court will lift the sanction of restricting the failing party’s costs to court fees only.

In this, matter an order had been made on 18 November 2016, providing for the parties to file and serve updated costs budgets 21 days before the CCMC, due to take place on 10 January 2017.

The Claimant filed and served theirs on 19 December 2016, which prompted the Defendant to file and serve theirs on 20 December 2016, one day late.

The claimant contended that the as service of the defendant’s budget had been late, the automatic sanctions imposed by CPR 3.14 applied, therefore the defendant would have to apply for relief from sanctions. No application for relief was made until the matter came before the court at the CCMC, which turned the 45 minute hearing into a half day hearing, entirely dominated by the application. The result of which was refusal by the court to grant the relief.

The defendant appealed on the grounds:

1. The court had erred in their approach by failing to take into account key matters in assessing the seriousness of the breach; and

2. That they had given too little weight to the fact that there were innocent reasons for the breach.

HELD: Appeal dismissed

Whilst, it was considered that the original decision was on the tougher end of the spectrum as to substance and on the leaner end of the spectrum as to analysis. The court concluded that the defendant had not been deprived of a trial altogether.

The original decision operates to deprive the defendants of their budgeted costs in the event that they succeed at trial. If the claimants succeed at trial, the decision will have a limited adverse impact on the defendants enabling the claimants to litigate without significant risk in having to pay the defendants’ costs.

Whilst the claimants raised the issue with the defendant’s solicitors, an application for relief was not made until the CCMC, therefore CPR 3.14 would follow.

Atlantisrealm Ltd v Intelligent Land Investments (Renewable Energy) Ltd [2017] EWCA Civ 1029

An appeal by the defendants in ongoing litigation against an interlocutory judgment refusing to order the deletion of a privileged email which had been mistakenly disclosed to the claimants.

ILI and its subsidiaries constructed and operated onshore wind farms. Two of its subsidiaries were engaged in developing wind farms in Lanarkshire.

In April 2014 ILI agreed to sell the entire issued share capital of the two subsidiaries to Antisrealm. 

Schedule 1 of the share purchase agreement contained warranties. Clause 1.11 of the warranties provided that both subsidiaries had the necessary rights and consents to develop, construct and operate an onshore wind farm.

However, Antisrealm discovered at completion of purchase that neither subsidiary had the necessary rights of way over land in order to deliver the turbines and other necessary components to site.

As a consequence Antisrealm brought breach of warranty proceedings against ILI in the Technology and Construction court.

As part of the court’s directions, disclosure of documents took place in Autumn 2016. ILI served its list of documents, which identified a total 4,891 relevant documents. ILI provided those documents for inspection in October 2016.

The documents disclosed contained many emails between ILI and their subsidiaries, but one email in particular had been disclosed in error. It contained a discussion surrounding amendments to the share price agreement. The specific paragraph of concern was as follows:

“The only other point I had was that they have reinserted the warranty on the site having all necessary development rights which would in effect be a guarantee from ILI of the whole project, which is not acceptable and was not in the framework agreement.”

The email, whilst not fatal to the defendant’s case, provided useful ammunition for the claimant.

The issue in the appeal was whether the judge in the first instance had correctly applied the legal principles governing inadvertent disclosure. The appeal was made on three grounds:

1. It was not open to the judge on the evidence to find that disclosure of the email was deliberate;

2. The judge ought to have held that the mistake was obvious; and

3. That on the evidence, it was clear to the claimants that the disclosure had been a mistake.

In Atlantisrealm’s response to the application, they argued that they had now made use of the email and that it would now be unjust to prohibit its use.

Appeal allowed:

The court concluded that, contrary to the view of the judge in the first instance, this was a clear case of inadvertent disclosure, within the meaning of CPR rule 31.20.

The court emphasised that a duty of honesty rested upon the party inspecting documents as well as the party disclosing the documents. If the inspecting solicitor does not spot the mistake, but refers the document to a senior colleague who does spot the mistake before use is made of the document, then the court may grant relief.

Where a party discloses privileged documents inadvertently and that mistake is obvious to the opposing party, the court has a discretion. The court may permit the receiving party to make use of the document or it may prohibit such use. However, the lawyers on both sides should co-operate to put matters right as soon as possible.

Howe v Motor Insurers Bureau [2017] EWCA Civ 932

First clear guidance provided by the Court of Appeal in relation to the application of QOCS against parties other than the person or body responsible for any injury or breach.

Mr Howe, after sustaining injuries in an accident caused by an untraceable driver, brought a claim against the Motor Insurers Bureau, which at the first instance, was dismissed for being statute barred.

An appeal was made, but was struck out on the ground that it was bound to fail.

The remaining issues related to the costs of the claim and of the unsuccessful appeal.

It was held by the judge at first instance that the claimant’s claim under Regulation 13 of the Motor Vehicles (compulsory Insurance) (information Centre and Compensation Body) Regulations 2003, was not a claim for damages for personal injury for the purpose of CPR Part 44.13, which would give the claimant QOCS protection.

However, permission to appeal the QOCs position was permitted.

Upon hearing the appeal the court stated that “…in order to fall within the scope of CPR Part 44.13 a claim must be both a claim for “damages” and also one where damages claimed are “for personal injuries”… At common law there is a clear distinction between a claim that sounds in debt and the claim that sounds in damages. A debt is a definite sum of money payable by one person to another, usually in return for the performance of a specified obligation by the payee or on the occurrence of some specified event or condition. A claimant who claims payment of a debt need not prove anything beyond the occurrence of the event or condition on the occurrence of the event or condition on the occurrence of which the debt became due…Damages…consist of a sum fixed by law in consequence of an antecedent breach of obligation or duty.”

The court queried whether the reference in CPR 44.13 to “damages for personal injuries” could be interpreted to include a claim for compensation against the MIB.

The court concluded that those who have (or may have) valid claims for damages should not be deterred from pursuing them by the risk of having to pay the Defendant’s costs. If the claimant’s claim is covered by QOCS, then he is in an equivalent position to an injured person suing an insured driver. Otherwise he would be prejudiced by the fact that the driver was untraced, going against the purpose of the MIB.

The court found that the claimant’s claim did not constitute a sum that was “due and owing”, as the same would only be created by a debt, that is to say, an amount ascertained at the time proceedings were allowed. It is only when the amount of debt has been ascertained that it can be said to be “due and owing”.

This position could only come around once the amount of compensation had been assessed. Therefore the appeal was allowed, with QOCS being applicable.

Other News

The Ministry of Justice has confirmed that the Civil Liability Bill will be going ahead

After pushing it to one side because of the election, The Ministry of Justice has confirmed that the Civil Liability Bill will be going ahead, and as expected will include rises in the small claims limit for personal injury claims and a fixed fee tariff for compensation.

The bill will take forward the reforms contained in the Prisons and Courts Bill, which was dropped because of the election. A parliamentary answer from junior minister Sam Gyimah said the MoJ would look to “tackle the continuing high number and cost of whiplash claims” by introducing a fixed tariff of compensation for pain, suffering and loss of amenity for whiplash claims with a duration of up to two years, and banning pre-medical offers. “These measures will be supported by further secondary legislative changes to the Civil Procedure Rules to increase the small claims track limit for road traffic accident related personal injury claims to £5,000, and for all other personal injury claims to £2,000.”

 

For more information contact

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