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Corporate Claims Bulletin _ June 2017

  • United Kingdom
  • Personal injury claims litigation

03-07-2017

Liability

CAMERON v HUSSAIN & LIVERPOOL VICTORIA [2017] EWCA CIV 366

Summary

A judgment for damages can be made against an unidentified driver described only as “an unnamed defendant” in a hit and run accident where the vehicle was insured and an effective insurance policy was in place.

An insurer is liable under section 151 of the Road Traffic Act 1988 to meet any unsatisfied judgment against an “unnamed defendant”.

Background

The claim arose when Bianca Cameron (C) on 26 May 2013, was involved in a collision with another motorist. The driver did not stop, but the vehicle registration was obtained by a third party. C suffered modest personal injuries and the value of her case including property damage and hire charges was estimated to be between £10,000 – £15,000.

Proceedings were issued against the registered owner, Mr Hussain (H), believing him to have been the driver involved in the collision. The proceedings were later amended to include Liverpool Victoria to meet any unsatisfied judgment against H pursuant to section 151 of the Road Traffic Act 1988.

The insurers denied liability on the grounds H was not covered to drive the vehicle under the policy and that C was unable to provide the identity of the driver.

C sought permission to amend her claim form and particulars of claim so as to substitute for H, an unnamed defendant. She was refused permission and she appealed to the Court of Appeal.

The issues

  1. Whether it was possible for judgment for damages to be made against an unidentified driver described only as “ an unnamed defendant” in a hit and run accident where the vehicle was insured and an effective insurance policy was in place.
  2. Whether an insurer under section 151 of the Road Traffic Act 1988 was liable to meet any unsatisfied judgment against an “unnamed defendant”.
  3. Whether the judges had been right to refuse to allow the claimant permission to amend her claim form and particulars of claim so as to substitute for the named first defendant, a defendant identified only by the following description:

“The person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZIZ on 26 May 2013.”

Grounds of appeal

  1. English civil procedure permitted proceedings to be issued and orders (including judgments) to be made against unnamed parties where it was necessary and efficacious to obtain justice.
  2. It was both necessary and efficacious to allow her to proceed against an unnamed defendant in the particular circumstances of this case.
  3. Permitting her appeal to proceed was consistent with the policy of section 151 of the 1988 Act.

Insurers’ arguments

  1. It was only in exceptional circumstances that proceedings could be issued against unnamed parties, such as where an injunction was sought and no other remedy was available.
  2. The MIB Untraced Driver’s Agreement (UTDA) was a perfectly adequate alternative remedy available to C.
  3. Section 151 and the UTDA were a unified scheme to provide compensation to victims of road traffic accidents.
  4. It would be an injustice to them if C succeeded. They also presented a “floodgates” argument that if she was correct that a claim could be brought against an unnamed defendant, whenever it was just to do so, the implications would exceed far beyond section 151, and could be applied whenever there was an insurer behind an unknown wrongdoer.

Held on Appeal

The Court of Appeal identified assumed facts relevant to the case, which included:

  1. If C obtained a judgment for damages against the unnamed defendant, such a judgment would relate to a liability that would have been covered by the terms of the policy.
  2. The insurers would have been entitled under Section 152 (a) to have avoided the policy on the grounds of fraudulent misrepresentation as to the existence of the purported insured, but they had not done so within the relevant time limit and were therefore bound by the terms of the policy.
  3. The registered keeper, H, had not been the driver of the vehicle at the time of the collision.

In considering whether a judgment for damages could be obtained against an unidentified defendant the Court looked at Bloomsbury Publishing Group –v- News Group Newspapers [2003] 1 WLR 1633 , the overriding objective and whether the overriding objective would be furthered by such a course.

The Court held that there was no distinction between insurers having to satisfy judgments under section 151 against known wrongdoers but who can no longer be traced and bringing a claim and obtaining judgment for damages against an unnamed defendant. As such the insurer would be under a duty to satisfy the judgment under section 151.

It was entirely consistent with the policy of the 1988 Act that an identified insurer’s liability under section 151 in relation to a policy of insurance written in respect of a specific vehicle and a specific named insured, should not depend on whether, at the date of issue of court proceedings, or thereafter, the claimant can identify the driver by name.

The appeal was successful and C was granted permission to amend the claim form and particulars of claim.

CRAWLEY v BARNSLEY MBC [2017] EWCA Civ 36

Summary

A local authority's system not to deal with reports of potentially serious defects in minor roads made on a Friday afternoon and over the weekend until the following Monday, was inadequate.

Background

C had been jogging on a Saturday evening when he tripped on a pothole in a minor road and injured his ankle. The pothole had been reported to B by a member of the public the previous afternoon, but the report was not seen by a highways inspector until the following Monday. C brought a claim for damages, alleging that the local authority had been negligent and in breach of its statutory duty under the Highways Act 1980 s.41 in failing to repair the pothole before the Saturday evening 

The district judge held that the pothole in question was "dangerous and actionable" but that the council had a defence under section 58 of the 1980 Act and dismissed the claim.

C appealed to a circuit judge who allowed the appeal 

B appealed to the Court of Appeal on a single ground - that the district judge was entitled to find as a matter of law that the council had established the statutory defence set out in section 58 of the 1980 Act.

B’s system of inspection

In support of their art 58 defence B provided the detail of their system of inspection as follows:

If (a) the emergency services reported a serious defect in a road and (b) that road was in a sensitive location (e.g. a main road, or a road outside a school or hospital), then the call centre staff would refer the matter to the emergency standby team. That team would go to site and take any necessary action.

In the case of any other reported defect, the call centre staff would log the report on the council's internal system for the attention of the highways inspectors. One of the inspectors would see the report and go out to inspect. In the ordinary course of events the inspector would go to site on the day after the phone call. If a weekend intervened, the inspector would go to site three days after the phone call 

Held on Appeal

The pothole was in fact a Category 1 defect within the meaning of the Code. This was because its presence represented an immediate or imminent hazard. Once recognised as a Category 1 defect on inspection, it needed immediate attention, either by immediate repair or by being rendered safe by the immediate placing of a notice, by fencing or coning, followed by repair as soon as possible.

The report made to the council on the Friday afternoon gave rise to a real risk that the pothole was a Category 1 defect. The caller described "deep potholes" in terms which suggested a risk of causing damage to a vehicle if the caller drove over them in the future. Once read on the Monday morning, it was sufficiently serious to call for inspection on the same day.

The council's system failed the s.58 test not because the injury would definitely have been prevented if had reasonable steps been taken, but because the system suffered from the built-in flaw that reports of potentially serious defects would not be evaluated at all by someone with the requisite skill out of working hours, unless they came from members of the emergency services 

LYNCH v ED WALKER RACING LTD QBD Unreported   

Summary

A claim under s.2(2)(a) of the Animals Act 1971 was dismissed because, based on the defendant’s evidence, injury is unlikely where a two-year-old race horse whipped around and caused the rider to fall off, and if any injury did occur in those circumstances, it was unlikely to be severe.

Background

The appellant had been a stable boy employed by the respondent. He had been riding a two-year-old colt in a string of nine race horses along a track beside a road. To the left of the string was a grassy bank. The horses became spooked by something which caused some, if not all, of them to whip around. The appellant's horse whipped left and then right, lost its footing and fell over. The appellant fell off of the horse and hit his head, leaving him unconscious. He brought a claim under the Animals Act 1971.

The Animals Act 1971

Section 2(2)(a): The injury must be of a kind which the animal, unless restrained, was likely to cause or which, if caused by the animal, was likely to be severe 

Section 2(2)(b): The animal's keeper would be liable for damage where the likelihood and severity of damage was due to the animal's characteristics which were not normally found in horses except in particular times or in particular circumstances.

s.2(2)(c): The animal's keeper would be liable for damage where the horse's characteristics were known to the appellant.

Both 2(2)(b) and 2(2)(a) were satisfied and only s.2(2)(a) was in issue.

The trial court’s decision

Based on the witness evidence which stated that injuries were rare as a result of a horse whipping around and that people rarely fell off a horse because it whipped the judge held that neither limb of s.2(2)(a) had been satisfied and dismissed the claim. 

Held on appeal

The trial judge had had a sufficient evidential basis to rule that an accident in the instant circumstances was not reasonably to be expected.  It was for the appellant to prove that if an injury occurred it would be severe. There was simply nothing other than the fact of the accident to take the appellant that far.

Although there were reservations concerning the judge's approach, the evidence the judge had was that if an injury occurred it was unlikely to be severe. 

Practice and Procedure

REDBOURN GROUP LTD V FAIRGATE DEVELOPMENT LTD [2017] EWHC 1223 (TCC)  

Summary

When hearing an application to set aside default judgment under CPR 13.3 a court must also apply CPR 3.9 and the Denton test. 

Background

The claimant company (R) had brought a claim for unpaid invoices regarding its management of a development project against the defendant company (F) and also sought damages arising out of F's breach of contract in bringing the parties' relationship on the project to an end.

Chronology:

06/05/2016: Letter of Claim

16/11/2016: Draft Particulars of Claim

23/12/2016: Proceedings issued

25/01/2017: Defence Due

20/01/2017: Request extension to 22/02/2017; 7-day extension granted till 01/02/2017

01/02/2017: File application for extension to 22/02/2017

23/02/2017: Default Judgment requested

09/03/2017: Default Judgment entered

14/03/2017: Application to set aside filed

11/05/2017: Defence & Counterclaim served

19/05/2017: Application hearing

Held

The Denton test for relief from sanctions under CPR 3.9 is relevant to applications to set aside default judgment under CPR 13.3 as had been endorsed by the Court of Appeal in Gentry v Miller [2016] EWCA Civ 141

In Gentry it was held that the requirements of CPR 13.3 must first be considered and then, since the application is one for relief from sanctions, the tests in Denton come into play. The question of promptness arises both under CPR 13.3(2) and under the third stage in Denton.

Clarification of relationship between CPR 3.9 and CPR 13.3

CPR 3.9 was plainly relevant to any application to set aside default judgment; there is no greater sanction than judgment being entered in default of a defence, and no more important relief from sanction than being allowed to set aside that judgment, so as to be able to put forward a defence.

CPR 13.3 requirements

In this case, having considered the claim and the parties' positions, Coulson J held that the CPR 13.3 requirements were not met.

CPR 13.3(1)(a): real prospect of success

F’s failure to set out its defence and counterclaim inevitably cast doubt on the credibility of its entire defence and counterclaim. A defendant in F's position was required to provide much more than an evasive defence and counterclaim if it wanted to persuade the court to set aside judgment. 

CPR 13.3(1)(b): some other good reason

Coulson J found that there was no other good reason for setting aside, noting that F had set out no separate argument or issue under this head.

CPR 13.3(2): promptness

It was artificial to only consider the time period from entering judgment to the filing of the application when considering promptness in relation to CPR 13.3. The real issue was whether F acted promptly "after judgment was entered, up until the hearing on 19 May."

The supporting witness statement was so devoid of detail at that stage that, if the application to set aside could have been accommodated immediately by the court, it would have failed. 

A draft defence and counterclaim should have been attached to the application to set aside.

If judgment was now set aside, then it would mean that, without advancing any explanation, reason or apology, F would have obtained a de facto extension of over three-and-a-half months, from 25 January until 11 May 2017. No such extension would have been granted if F had applied for it in the ordinary way. F could not be put in a better position because of its wholesale failure to comply with the CPR.

Denton test

As required by Gentry, in case he was wrong on either of the two elements in CPR 13.3(1) and (2), Coulson J went on to address the three stages of Denton (seriousness of failure, the reason for it, and all the circumstances of the case). 

Coulson J held that F's failure in allowing judgment in default to be entered was serious. It was even more serious that no defence and counterclaim was served during the period which F had itself indicated was long enough for it to do so.

There were no reasons for these serious failures put forward in F's witness evidence for the application. The only point addressing delay was the reference to changes of personnel and that did not explain F's position on delay.

Given the seriousness of the delays, the court was bound to take a very adverse view of the wholesale failure to explain. It is always incumbent upon a solicitor seeking relief from sanctions to explain why something is late or why a proffered date could not in fact be met.

In all the circumstances, F had not made out any case for being granted relief from sanctions.

The Court refused to set aside the judgment under both CPR 13.3 and Denton.

GLADWIN V BOGESCU [2017] EWHC 1287 (QB)

Summary

CPR 32.10, only prohibited a witness from giving oral evidence when a witness statement was filed late and did not prevent the witness statement being used as hearsay evidence 

If appropriate the court can exercise its power under CPR 32.1(2) to exclude the evidence of the witness statement, even if it would otherwise have been admissible under section 2(4) of the Civil Evidence Act 1995.

Background

The judgment followed from a collision between a  car and a motorcycle. Liability was not in dispute, only quantum.

Chronology:

29/11/2014:   RTA

04/2016:       Proceedings issued

23/08/2016:   Directions given

03/11/2016:   Witness statements due

03/11/2016:   Claimant ask for extension to 17/11/2016

17/11/2016:   Defendant served witness statements

15/12/2016:   Claimant acknowledged in Listing Questionnaires that in breach of order

05/01/2017:   Claimant’s witness statements obtained

08/02/2017:   Trial

Less than a week before trial, the claimant applied for relief from sanctions and permission to give oral evidence, as well as for an adjournment.

The directions order provided that oral evidence would not be permitted at trial from a witness whose statement had been served late, except with permission from the court.

The judge found the claimant's breach to be significant and without good reason. However, applying stage 3 of the Denton test for relief from sanctions, he concluded that, if relief was not granted, the defendant would suffer greater prejudice because the claimant, although debarred from giving oral evidence, would potentially remain entitled to rely on his statement, whilst evading cross-examination. The defendant appealed.

 Held on appeal

It was correct that the sanction in the relevant order, and in CPR 32.10, only prohibited a witness from giving oral evidence and did not preclude a statement being deployed as hearsay evidence.

The judge erred in assuming that he could not act more robustly to prevent the claimant from relying on his statement, and in failing to use his powers to strike out the claim altogether in response to the claimant's breaches. In these circumstances it would often be appropriate for the court to exercise its power under CPR 32.1(2) to exclude the evidence of the witness statement, even if it would otherwise have been admissible under section 2(4) of the Civil Evidence Act 1995.

The fact that the defaults were caused by the claimant's solicitors, rather than the claimant himself, did not justify leniency in this case.

Although strike out was likely to result in the claimant bringing a claim against his own advisors the alternatives were "even less palatable". They involved vacating the trial date and relieving the claimant from the consequences of a very serious default (except for an adverse costs order), or proceeding to a hearing in which the controversial evidence of the claimant was untested by cross-examination and the extent of any weight to be given to it rendered entirely unpredictable and unsatisfactory.

The judge was not persuaded it was appropriate to permit the claimant to proceed without the witness evidence in this case, as reliance on other documents would also be likely to produce unpredictable consequences, which could lead to an unfair or unjust result.

COSTS

FINDCHARM LTD v CHURCHILL GROUP LTD [2017] EWHC 1108 (TCC)

Summary

Defendants should not submit artificially low cost budgets and Precedents Rs, in order to gain a tactical advantage. Courts take cost budgeting seriously and will not tolerate those who treat cost budgeting as a form of game. 

Background

This was a judgment at a Case Management Conference.

The Claimant, Findcharm Ltd (F) operated a restaurant within the Churchill Hotel owned by the Defendant, Churchill Group Ltd (C). In November 2014, a gas explosion at the hotel caused the restaurant to close for around four months. F’s claim was for £820,000 plus interest, the main element of the claim was for business interruption/loss of profit.

F set out their claim in detail and fully considered all the issues in the case. C’s defence was basic with a combination of bare denials and non-admissions.

A Case Management Conference was listed and cost budgets were prepared by both parties.

Parties’ Costs Budgets

After revising their budget downwards, F’s cost budget came to £244,676.30. In contrast, C estimated through its Precedent R that F’s costs should be less than £90,000.

Held

The Court disregarded C’s Precedent R, finding that it was completely unrealistic and designed to put as low a figure as possible on every stage of the process, without justification, in the hope that the Court’s subsequent assessment would also be low. He added that the estimate was an “abuse of the cost budgeting process”.

Examples evidencing the lack of reality in C’s Precedent R:

In relation to witness statements F estimated a total cost of £40,235. The Court considered this figure to be realistic considering the work involved included preparation of three witness statements and the consideration of C’s two witness statements.

C offered just £5,300 for this work. The Court found that this was “simply incredible in a case where, not only do the background and circumstances of the explosion need to be explained, but also where a large claim for loss of profits will need to be underpinned by detailed factual evidence”.

In respect of expert reports F estimated a cost of £28,648. The Court found that this was not excessive given the particularly high fees charged by forensic accounts.

C sought to allow just £16,000 for this stage. In the Court’s experience, this figure was way out of step with what an expert accountant would normally charge for this type of work.

C’s proposal to allow just £10,000 for trial preparation was unjustifiable, whereas F’s figure of £69,765 was not unreasonable given the potential complexity of the claim.

As a result the Court disregarded C’s Precedent R and concluded that F’s revised cost budget was both proportionate and reasonable and allowed F a budget of £244,676.30.

THAKKAR & ANR v PATEL & ANR [2017] EWCA Civ 117

Summary

If one party frustrates the mediation process by delaying and dragging its feet for no good reason, that will merit a costs sanction.

Background

The claim in question was a dilapidations claim for £210,000 which was met by a counterclaim of just over £40,000. In their allocation questionnaires, both parties requested a stay for ADR.

The claimants (C) were proactive in making arrangements for a mediation and identifying possible mediators for consideration by the defendants (D). D were slow to respond to letters and raised all sorts of difficulties. Eventually, C lost confidence that a mediation can be arranged and decided that no progress was possible. The ADR stay was lifted and the trial took place.

Chronology:

23/03/2011:   Proceedings issued

Stay for ADR requested

21/07/2011:   D offered £30,000 + costs & drop counterclaim – Not accepted

12/08/2011:   C offered £86,400 – Not accepted

12/08/2011:   D withdrew £30,000 offer

07/10/2011:   Allocated to Multi Track

22/08/2012:   C withdrew from mediation

25/10/2012:   Stay lifted & Directions given

28/10/2013:   Trial started. Adjourned part heard to 10/03/2014

24/02/2014:   C offered £40,000 – Not accepted

10/06/2014:   Judgment 

C were awarded £44,933.52 and D were awarded £16,750, leaving a balance owing to C of £28,183.52. After interest was added the balance came to £32.083.18.

The trial Judge described D as having been “relatively unenthusiastic or lacking in preparedness to be flexible” but also noted that it was C who had closed down the ADR. He concluded that there were real prospects of settlement if a mediation had taken place and ordered the D to pay 75% of the C’s costs of the claim. He ordered C to pay the D’s costs of the counterclaim. D appealed.

Held on Appeal

Failure to beat part 36 offer:

C failed to beat the D’s offer of £30,000. Since the offer was withdrawn after 21 days it doesn’t take effect under Part 36 and the Court must take it into account in the exercise of its discretion under CPR 44.2.

D was in a better position to make an overall assessment of the claim and counterclaim because both parties knew what the evidence was concerning C’s dilapidations claim, but C only had D’s pleadings in relation to the counterclaim. C therefore did not act unreasonably in not accepting the offer.

Mediation

If there had been a mediation there would have been a real chance of achieving a settlement because:

  • The dispute was a commercial one, being purely about money.
  • The offers that had already been made were close.
  • The costs of the litigation were vastly greater than the sums in issue.
  • Bilateral negotiations had been unsuccessful.
  • Any skilled mediator would have brought the parties to a sensible settlement.

To remain silent in the face of an offer to mediate is, absent exceptional circumstances, unreasonable conduct meriting a costs sanction, even in cases where mediation is unlikely to succeed.

In a case where bilateral negotiations fail but mediation is obviously appropriate, it befits both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction. The costs sanction was severe, but not so severe that the CA should intervene.

Other news


INTRODUCING THE BUSINESS AND PROPERTY COURTS ENGLAND AND WALES

From June this year, several specialist courts of the High Court of England and Wales are being banded together under a new title – “THE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES”.

The key changes are:

  • Business and Property Courts of England and Wales to be introduced as new umbrella title for all specialist courts.
  • Greater deployment of specialist judges across the different court lists.
  • More complex cases being dealt with in the regional centres.

The specialist courts that will co-exist under this new umbrella comprise

  • The Commercial Court (including the Admiralty and Mercantile Court),
  • The Technology and Construction Court (“TCC”) and
  • The various distinct courts which make up the Chancery Division (including the Bankruptcy and Companies Court) 

The new title will not replace the existing individual names of the specialist courts per se but will appear as the new heading on court filings.

Practical differences

An immediate change that court users who currently e-file will see is that when issuing proceedings electronically, they will see reference to the Business and Property Courts of England and Wales and will then be asked to select which court or list they wish their case to be assigned to.

Actions in the High Court and the County Court will assume the new titles below:

If issued in the Rolls Building (London):

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMPANY & INSOLVENCY LIST (ChD)

If issued in the regional centers:

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURT IN MANCHESTER

COMPANY & INSOLVENCY LIST (ChD)

If issued in the County Court:

IN THE COUNTY COURT IN BRIGHTON

BUSINESS AND PROPERTY COURTS LIST 

Cross-deployment of judges

The changes are envisaged to facilitate more widespread cross-deployment of specialist judges across the various jurisdictional lists so that specially qualified judges can sit in other courts when required, rather than being restricted to sitting in their own specialist courts, more often than not exclusively in London.

Enhanced regional involvement

Currently, lots of complex cases get transferred to London for inadequate reasons to be heard by judges sitting in the Rolls Building. It is hoped that by introducing greater flexibility and by building up a pool of specialist judges sitting in each of the new Business & Property Court regional centres, it should be easier for cases to remain and/or be transferred back to the regions for management and trial. The Judicial Executive Board has stated that no case should be too big to be tried outside London.

For more information contact

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