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Corporate Claims Bulletin - July 2018

  • United Kingdom
  • Personal injury claims litigation - Claims e-briefing

20-08-2018

LIABILITY

Barclays Bank PLC v Various Claimants (2018)

This case arises out of various allegations of sexual assault against Dr Bates who carried out medical examinations on prospective members of staff for Barclays Bank PLC. Dr Bates had already died by the time the allegations were made but a police enquiry concluded that had he been alive there would have been sufficient evidence to pursue a criminal conviction.

The claimants brought claims against Barclays Bank PLC. Whether or not the bank was vicariously liable was held as a preliminary issue.

The decision at first instance was that the bank would be vicariously liable for Dr Bates’ actions. The Judge referred to the case of Catholic Child Welfare Society v Various Claimants (2012) in which the trial Judge had set out a two-stage test, the first stage of which was determined by meeting/not meeting 5 criteria.

The decision in this case was upheld by the court of appeal and the Judge in this case followed the method in determining the outcome of this preliminary issue:

1)    Is the relationship of Dr Bates and the Bank one that is capable of giving rise to vicarious liability?

  • Is the employer more likely to have means to compensate the victim and can be expected to have insured against that liability? Yes, Dr Bates’ estate already distributed and the bank held insurance.
  • Was the tort committed as a result of activity being taken by Dr Bates on behalf of the bank? Yes, the bank would only employ people who had a satisfactory medical exam and they had no choice as to who the doctor was that performed the exam. They had no reason to have the exam other than to try to secure or maintain their employment.
  • Was Dr Bates’ activity part of the business activity of the employer? Yes, the Judge stated that the activity benefitted the bank and was therefore an “integral part of the business”
  • Did the bank, by employing Dr Bates to carry on the examinations create the risk of the tort being committed? Yes, the bank told the claimants where and when to go, and the claimant had no choice about the conditions of the exam (they saw him alone in his room and he was instructed by the bank to take chest measurements)
  • Was Dr Bates either to a greater or lesser degree, under the control of the bank? Yes, for the following reasons:
    • Although he worked for other companies, this did not absolve the bank from vicarious liability for torts committed in the course of his role with them
    • It did not matter that the examinations were carried out at Dr Bates’ house, as long as the tort was committed in the course of employment it does not matter whether it took place on the bank’s premises
    • The bank directed what Dr Bates did and how he did it by providing templates he had to fill in such that they dictated the questions he must ask and the examinations he must do. This is a higher level of control than may be expected for a professional. There was also control in the sense that the claimants did not have a choice of doctors and had no choice but to have the examination

2)    To consider the connection that links the relationship between Dr Bates and the bank, and the abuse by Dr Bates. The Judge stated that the tort was closely related with the quasi-employment of Dr Bates by the bank for the reasons above. The assaults would not have occurred otherwise and to use the words of the Judge in Catholic Child Welfare Society, “the relationship facilitated the commission of the abuse by placing the abusers in a position where they enjoyed both physical proximity to their victims and the influence of authority over them”.

Finally, the Judge considered whether it would be just and reasonable to hold the bank liable and she concluded that it was because it was the only legal recourse now available to the claimants. The bank appealed on the following grounds:

  • the Judge wrongly concluded that Dr Bates’ relationship with the bank was akin to employment
  • the Judge was wrong in that she failed to find Dr Bates was an independent contractor
  • the Judge wrongly applied the law to the “undisputed facts”, namely the Judge was wrong to conclude:
    • that the assessment of relative means between the bank and Dr Bates should have been reached as at the time of the alleged tort, not at the time of the litigation
    • that “the fact Dr Bates had carried out medical examinations for Barclays meant” that he was not an independent contractor
    • that the examinations were “integrated” into the bank’s business
    • that the “engagement of Dr Bates” by the bank “created risk of abuse”
    • that the bank “exercised control” over Dr Bates.

The Court of Appeal upheld the trial Judge’s decision that the bank was vicariously liable of the torts committed by Dr Barnes, for the following reasons:

  • It is no longer sufficient to simply ask: “was the tortfeasor an independent contractor?”
  • Following approach of the Supreme Court, there will be cases of independent contractors where vicarious liability will be established. Operations intrinsic to a business enterprise are routinely performed by independent contractors, over long periods, accompanied by precise obligations and high levels of control (as in Cox v Ministry of Justice, 2016)
  • It was denied that the cases of Woodland v Swimming Teachers Association (2013) and Kafagi v JBW Group Ltd (2018) provided a basis for saying that there could not be vicarious liability for the actions of an independent contractor.
  • The Judge at first instance was right to conclude that the bank had more means to satisfy the claims than the long-distributed estate of Dr Bates. The appeal Judge rejected the bank’s submission that the question should be looked at as at the time of the torts
  • Agrees that the activity was being taken on behalf of the bank as the primary benefit was to the bank as opposed to employees
  • The primary benefit of the examinations being for the bank was such that it was also right to conclude that the process was part of the bank’s business activity. There is no clearer example of that than the selection of suitable employees for an institution in the service sector
  • Judge was correct to hold that the risk of the tort arose from the arrangements made by the bank because this criterion is satisfied if it is the bank that put the claimants in a position of risk. They do not need to have been negligent for this criterion to be satisfied
  • Judge was right to determine that the bank exercised control over Dr Bates.
  • Judge was right to find that the medical examinations we sufficiently closely connected with the relationship between Dr Bates and the bank. They were the whole purpose of that relationship, without which the relationship would never have existed
  • Judge’s conclusions were just and fair

This is the first recent case to determine the liability for employers where there is no employment contract and when it is not obvious that the tortfeasor was an independent contractor.

QUANTUM

X Children v the Minister for Health (ongoing case)

Two siblings who lacked basic life skills such as knowing how to wash, and who were subjected to incest and neglect (including being forced to eat from the floor of their family home), are suing the health minister in Jersey for £238 million in respect of pain, suffering and loss of amenity as well as loss of earnings and future care. The pair are expected to require institutional care for the rest of their lives. This is thought to be the largest personal injury claim in UK legal history, possibly the first case where a periodical payment order is made in Jersey.

The trial began in June and is expected to last 8 weeks.  The defendants admit that the siblings should have been taken into care sooner but dispute the level of damages claimed (£121 million for claimant 1 and £117 million for claimant 2). At present, the offer made by the defence is £14.5 million (£10.289 million for claimant 1 and £4.5 million for claimant 2). It has been suggested that 2:1 care for each sibling would cost £260,000 per year, excluding additional rent and support worker costs.

The Attorney General, Robert McRae, has recently been in touch with both claimant and defendant legal teams to suggest that periodical payment orders (an order which has never been used in Jersey before) may be considered in this case. The defence have indicated that this is a “live” issue now that it is becoming clearer how much care the pair will require in the future. This has not been welcomed by the claimants’ legal team who believe that the Attorney General has stepped in because the case is not going as well for the defence as they had hoped and indicate that there is still no certainty as to the amount of care required in the future. The Attorney General has been directed by the Judge to apply to the Royal Courts regarding this issue if he wishes to formally intervene, albeit the Royal Courts capacity to impose such an order is as yet unknown.

COSTS

Holmes v West London Mental Health Trust (2018) WL 03231112 QBD

This case arises out of a clinical negligence case in which the claimant was prescribed lithium between 1994 and 2014. She was admitted to hospital in 2012 when tests showed that lithium levels in her body were at a toxic level. She was in intensive care for 14 days and hospital for two months in total. 

She issued her claim in February 2015 and the defendant made 4 offers to split liability between January and April 2017. In February 2017, the claimant made a Part 36 offer to settle for 95/5 in her favour. The defendant rejected the offer two days before it expired. It was due to expire on 10 March 2017.

The defendant did not respond to invitations for ADR and served witness statements, expert reports and joint statements late. The claimant made an application in May 2018 seeking the defendant’s compliance with directions. The defendant then accepted the claimant’s part 36 offer of 95/5 which they had previously rejected.

The defendant argued that costs should not be awarded on an indemnity basis because the diagnosis of lithium toxicity was questionable, the current version of the draft agendas showed a change in the claimant’s case, and the claimant had relied solely on its refusal of her Part 36 to justify indemnity costs. These arguments were rejected.

The Judge stated that rejection of a part 36 offer did not mean that the offer had lapsed; the offer would only have lapsed if the claimant had withdrawn it. The Judge also commented that there is no such thing as conditional acceptance of an offer, it is either accepted or not and so as the offer had been accepted, it had been accepted in accordance with Part 36. The Judge stated that the only way for the defendant to have avoided indemnity costs was to have made their own offer of 95/5 on the standard basis.

It was for the claimant to satisfy the court that costs should be awarded on an indemnity basis and the claimant relied upon (1) the defendant’s failure to initially accept their Part 36 offer, (2) a Serious Untoward Incident report, (3) the master’s observations at the CMC, (4) the defendant’s expert’s failure to deal with the key liability issues, (5) the defendant’s negative assessment of the prospects of success demonstrated by its offers and (6) the defendant’s failure to respond to ADR.

The Judge commented that the defendant’s conduct had been poor in that it had made litigation slow and accepted the offer so long after it had been made. As such, the conduct of the litigation was relevant and for the factors that the claimant relied on, the conduct was out of the norm. Therefore, the claimant was awarded costs on an indemnity basis from the end of the relevant period for acceptance of the Part 36, and Judgement for the claimant was entered in 95% of the value of the claim to be assessed.

This case highlights the importance of the impact of costs in relation to Part 36 offers and offers advice to make offers on the standard basis if a party decides that a Part 36 offer which has expired is actually a reasonable offer which they want to accept.

Jeffrey Cartwright v Venduct Engineering (2018) EWCA Civ 1654

This case arises out of a noise induced hearing loss claim. During the course of the claim, the third defendant accepted that it was responsible, if any liability could be established by the first and second defendants. The claim was then listed for trial and the claim against the first and second defendants was settled by way of a Tomlin Order. The Tomlin Order ordered all further proceedings in respect of the first and second defendants be stayed, save for the purpose of carrying out the terms of settlement (that the 4-6 defendants would pay the claimant £20,000 in full and final settlement of his claim, including general damages, special damages, costs and interest).

The claimant then discontinued the claim against the first to third defendants. QOWCS applied such that the claimant would not be obliged to pay the successful defendant's costs. However, the exception in CPR r.44.14(1) permitted a defendant with a costs order in its favour (they claimed that the Tomlin Order was in their favour) to recover the amount of that order from the claimant (they claimed £8,000 for costs incurred before discontinuance), but only to the extent that the claimant would recover damages and interest for that amount or more (claimant would recover £20,000). The costs Judge concluded that while in principle they could recover from sums paid by another defendant under a court order, sums payable under the schedule to a Tomlin order were not payable under a court order.

The 1-3 defendants appealed and the appeal was dismissed. The court stated that it was correct that the defendants could in principle recover costs even if the source of their funds was another defendant, because otherwise it would encourage claimants to bring actions against any number of defendants without fear of costs liability if the claim failed against all but one defendant. However, the point to be tested was whether Tomlin Orders fell within r.44.14(1). It was held that a Tomlin Order is not a court order, instead it stands as a binding agreement between the parties in much the same way as acceptance of a Part 36 offer which is also outside the meaning of the rule.

This finding was based on two main points:

1)    A Tomlin order was often confidential, and a successful defendant with a costs order in its favour was not entitled to see it

2)    Schedules to Tomlin Orders often provide for global settlements where the damages are not separately identified, or where the offer includes a benefit such as continued employment, where it would be impossible to quantify the benefit in liquidated financial terms.

The important points to highlight in this case are that under r44.14, a successful defendant, or a defendant who has had the claim against them discontinued, can claim its costs from the claimant when there is an order in their favour against a different defendant, up to a limit of the maximum awarded to the claimant. However, these costs can only be claimed when there is a Court Order (as opposed to a Tomlin Order or Part 36 acceptance in their favour).

PROCEDURE

Atha & Co Solicitors v Liddle

This case arose out of a professional negligence claim brought after the appellant incorrectly filed a notice of discontinuance on behalf of the respondent when they acted for her in a personal injury claim.

The claim form against the appellant was received by the court on 29 March 2016 but not issued until 7 April 2016 (after limitation). The value stated on the claim form was £10,000-£25,000. The appellant made an offer to settle in the sum of £25,000 and this was rejected. The respondent’s solicitor also served a cost budget of £192,000 and it was following this that the appellant made an application for strike out. The appellant stated that the incorrect statement of value amounted to an abuse of process which had caused the delay in the court issuing the claim. The Judge held that it did not constitute an abuse of process and the application was refused.

The appellant appealed the decision not to strike out the respondent’s case but the decision was upheld on the basis that (1) the claim was brought at the time when the claim form was received by the court and not when it was issued and (2) the abuse of process committed by the solicitor was unconnected with the delay and fell far short of a level which would justify striking out the claim.

Dalus v Lear Corporation (Nottingham) Limited & ATV Automative & Industrial Components (UK) Ltd (2018)

The claimant was bringing an action for noise induced hearing loss (NIHL) against a number of defendants and the first defendant applied to strike out the claimant’s claim for failing to serve CPR compliant medical evidence. The claimant had served an AMR (Audiological Measurement and Reporting PLC) report alongside the particulars of claim. This involved the claimant undergoing an audiometric assessment by an audiologist, the results being analysed automatically by software and thereafter the report being signed off by Professor Lutman. The defendant stated that the report was not CPR compliant because:

  • Under CPR 35.2(1), an expert is a person, and the analysis in the report was created by software, not Professor Lutman.
  • The statement of truth had been signed electronically on behalf of Professor Lutman and he usually had not seen the report at all
  • The report was not based on an examination and therefore the expert could not have considered all material facts

Both claimant and defendant accepted that Professor Lutman and the audiologist that did the audiometric tests did not qualify as medical practitioners but that this did not preclude them from acting as an expert in the assessment of noise induced hearing loss, and had the report been conventional, it would be treated as a CPR compliant report.

The Judge accepted all of the defendant’s criticisms but stated that the most serious breach was that Professor Lutman had signed the statement of truth electronically without seeing the report at all. It was therefore held that the filing and serving the AMR report alongside the particulars of claim amounted to a breach of the Rules and Practice Directions. However, it was at the court’s discretion as to whether to strike out the claim and the Judge applied the three-stage Denton v White Ltd (2014) test:

  1. Identify & assess seriousness of breach – the AMR report served in May 2017, and the CPR compliant report not served until April 2018. It is relevant that the strike out application was not made until February 2018.
  2. Consider why the failure/default occurred – failure to comply was as a result of part of the report being computer generated. This was intentional but the motivation was not to breach the CPR; instead the aim was to provide a cheaper and more convenient method of assessing the degree of NIHL. The Judge expressed his sympathy with this reasoning, but indicated that the claimant should have obtained a CPR compliant report once it became clear that the claim would not settle without proceedings.
  3. Consider all circumstances of the case to enable the court to deal justly with the application:
  • The CPR compliant report produced almost exactly the same result as the AMR report so neither party is better/worse off as a result of the breach;
  • The delay does not appear to have prejudiced either party either;
  • If the claim is struck out, it may be categorised as a windfall defeat of an otherwise valid claim and it is not realistic for the claimant to be able to sue his solicitors because they may be aware of weaknesses in his case;
  • The defendant is still capable of defending the claim should the claimant be granted an extension until April 2018 for the CPR compliant report to be served.

The Judge held that it would be a harsh interpretation of the rules to strike out a claim simply because it was one of the first to be put before a Judge and the claimant’s interpretation of the rules did not match that of the Judge’s. He therefore held that it would not be just and proportionate to strike out the claimant’s claim and instead extended the time to serve a CPR compliant report until the day after it had been served.

Hislop v Purde (2018) & Kaur v Committee of Ramarhia Board Leicester (2018)

In these joint appeals, the Court of Appeal was asked to determine whether a claimant is entitled to indemnity costs when fixed fees apply, when the defendant has accepted the claimant’s Part 36 offer out of time. The facts of the cases are not relevant. Following the Court of Appeal decision in Broadhurst v Tan (2016), the standard position for cases falling under a fixed costs, is that a claimant is only entitled to indemnity costs if they beat their Part 36 offer at trial.

In these cases, the judge held that there are only two circumstances which take a case out of the fixed costs regime, as follows:

  1. the claimant beats their Part 36 offer at trial
  2. there are “exceptional circumstances”

It was stated that the defendant’s late acceptance of the claimant’s Part 36 offer is not an “exceptional circumstance” which justifies the claim falling out of the fixed costs regime. Therefore, when a defendant accepts a claimant’s Part 36 offer out of time, the costs payable to the claimant remain fixed under the fixed fee regime.

Woodward v Phoenix Healthcare Distribution Ltd (2018)

The claim was for damages for breach of contract and misrepresentation. The claim was issued on 19.6.17, one day before the 6-year limitation period expired. On 17.10.17 (two days before the deadline for service), the claimant sent the claim form, particulars of claim and response pack to the defendant’s solicitors (MR) by first class post and email by way of purported service. The claimant’s solicitors had not been informed that MR were instructed to accept service. MR informed the claimant’s solicitors that service was ineffective on 20.10.17 (after the 4 month period had expired). The claimant applied for retrospective validation of service.

The Judge at first instance held that there was good reason to validate service because if MR had informed the claimant’s solicitors of their lack of authority to accept service, they could have served on the defendant in time. The Judge stated that MR’s entitlement to take advantage of the claimant’s mistake was qualified by their obligation to meet the overriding objection, and what they had done involved “technical game playing”.

The defendant appealed and the Judgement was overturned. The appeal Judge held that there had been no time for MR to take instructions, and no refusal to cooperate in respect of procedural matter, but merely a failure to point out an error.  Further, they had not been playing technical games because the service did not call for a response. Finally, had MR pointed out the error, the cost of the applications would have been avoided, however the defendant saved the cost of proceedings that were about to be statute-barred and as such, were acting in accordance with the overriding objective. It was also noted that both parties were legally represented and so there was no inequality of arms.

The claimant averred that it had been reasonable to wait for the particulars of claim so that they could serve them alongside the claim form. The Judge rejected this, stating that they should have served the claim form and then sought an extension of time by agreement or application, to serve the particulars of claim, on the basis that the rules for extensions are less stringent than service.

OTHER NEWS

Changes to the Small Claims Limit for Personal Injury

The government have now published their response to the Justice Committee’s 7th report of session 2017-2019. The committee recommended that the small claims limit for RTA claims should not be increased to £5000. The government have indicated their intention to still increase this limit. They have also confirmed their intention to raise the small claims limit for employer and public liability claims to £2000 as opposed to £1500 as recommended by the committee. The committee and government have also agreed that the reforms should not be rolled out until 2020, but the government have indicated their intention to have the platform from which RTA small claims will run, ready for widespread testing from October 2019.

35 labour MPs have signed a motion in Parliament calling on the government to withdraw the plans to increase the small claims limit. They have indicated that there should only be an inflation linked increase, to £1500. Ellie Reeves, Chairwoman of the Parliamentary Labour Back Bench Justice Group said that the fraudulent whiplash case “has been used as a smokescreen” to mask the “more insidious measure [of taking] away the right to free legal advice for hundreds of thousands of people injured at work or on the roads every year, whose claims have nothing to do with whiplash”. Ms Reeves believes this is an active assault on our access to justice system a survey by Unison found that 63% would not have proceeded or been confident enough to bring their own claim without legal advice. She believes that the number of claims will decrease as seen after fees were introduced for employment tribunals, and that insurers are in cahoots with the government to hit out against all injured people, rather than deal with the issue of fraudulent whiplash claims themselves.

Senior Costs Judge flags concern over PI solicitors’ standard 100% success fee

Master Gordon-Saker made a number of comments at the Civil Justice Council seminar on the government’s post-implementation review of Part 2 of LASPO. These included:

  • There is a growing industry of challenging solicitor and own client bills since LASPO
  • To try to avoid bills being challenged, solicitors should (following Herbert v HH Law Ltd, 2018 [discussed below]) be undertaking individual risk assessments in low value cases, before setting the success fee, rather than applying a blanket 100% success fee capped at 25% of damages. The Judge stated more education should be provided by the Law Society in respect of this.
  • qualified one-way costs shifting should be extended to cover the gap left when LASPO made ATE premiums non-recoverable.
  • There should be a review of the Solicitors Act 1974 and in particular part III which deals with remuneration
  • QOCS could be extended to claims against the police, or for professional negligence and there is scope for this to be means-tested.

Herbert v HH Law (2018)

This case was heard in March 2018. The claim was brought by an injured party against her solicitors after her personal injury claim was settled for the sum of £3,400 and thereafter 25% was deducted by way of success. At trial, the Judge cut the success fee to 15% due to (1) a lack of evidence that the claimant had approved the cost to be incurred with full knowledge, and (2) there was no risk assessment to justify the 100% success fee. HH’s defence that they were acting in accordance with the rest of the market was rejected. The decision was upheld on appeal on the basis that a risk assessment is still required between solicitor/client, even though following LASPO it is not a consideration between parties. Permission has now been granted for the Court of Appeal to rule on the legality of charging clients 100% success fee as standard.

Barrister Firm targets cases PI lawyers plan to abandon

Barrister-Direct has launched a new service called Resolve to assist personal injury firms who need to abandon winnable cases due to the pressures of the market. Resolve will offer a second look on cases and take them over if it considers them to be viable. If the claim is successful, firms recover their costs and any disbursements received and owing to them.

Court of Protection, Civil Proceedings & Magistrates’ Courts Fees (Amendment) Order 2018

This amendment order amends certain fees payable in proceedings in the Court of Protection, insolvency proceedings and civil proceedings (including civil proceedings in the Magistrates’ Court). The legislation amended is Sch1 of Civil Proceedings Fees Order 2008, Magistrates’ Courts Fees order 2008 and Court of Protection Fees order 2007.

NHS faces £77 billion negligence bill

Official figures have been released which indicate that in order to settle all outstanding claims against the NHS, would cost approximately £77 billion. The NHS paid out £2.2 million in 2017 which was a 30% increase on 2016. It has been stated that £404 million of the rise was due to changes that gave bigger lump sums to people requiring life-long care, as a result of a change in the discount rate. These figures may offer support to increase the discount rate again.

Coroner calls for law change following mobility scooter death

Following the death of a pensioner who was hit by a car while driving his mobility scooter across a busy road “without looking, slowing or stopping”, Louise Pinder (Derbyshire’s assistant coroner) has called for a change in the law. At present the only legal requirement in respect of driving a mobility scooter is that the individual must be aged over 14. In 2016, 14 mobility scooter users were killed and there were a further 61 incidents classed as serious.

Successful claim for “second hand” asbestos death

A recent decision in Scotland is the first time that a claim for death as a result of asbestos has been successful despite not working with the substance. The individual, Adrienne Sweeney, contracted Mesothelioma after coming into contact with dust from her husband’s overalls. Her husband had passed away 7 years previously but a former colleague of his provided the necessary witness evidence as to working conditions at the former factory. Whilst this decision is not binding on UK courts, it is important to recognise the possibility that more claims for “second hand” asbestos deaths may arise and be successful.

Senior Judge calls for Skype hearings

Sir James Munby, who retired as Family Division President on 27 July 2018, indicated that more thought is required as to court facilities and whether it is necessary for there to be purpose-built courts owned by the state or whether standard offices would suffice. In addition, with increased closures of courts the distance which people have to travel is increasing and impacting upon people’s access to justice, particularly given the rise in litigants in person. Sir Munsby referred to someone having walked 12 miles to court and back because they did not have alternative transport. He believes that it should be up to individuals whether they wish to have meetings/hearings held by Skype.

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