News Category 3
Section 33 of the Limitation Act 1980; Credibility and Prejudice - Andrew Roy & Nina Ross,12 King's Bench Walk
26/08/20. Under s.33 Limitation Act 1980, the court may disapply the limitation period in a personal injury claim if it is equitable to do so having regard to the prejudice to the claimant if precluded from bringing his claim and the prejudice to the defendant in being required to meet an out of time claim. In FZO v Haringey London Borough Council [2020] EWCA Civ 180 the Court of Appeal provided important guidance as to the assessment of evidential prejudice when limitation is determined alongside the substantive issues at the final trial.
Background
The claimant sought damages for personal injuries arising out of sexual assaults committed upon him by the first defendant schoolteacher between 1980 and 1988. The second defendant was the local authority responsible for the school and the first defendant’s employer.
It was the claimant’s case that, shortly after he had arrived at the school, the claimant had been raped by another man. The claimant confided in the first defendant about the rape. The first defendant told him that the incident meant that he was gay and that, if it became known, he would be thrown out of his family home. By this means, the first defendant groomed and manipulated the claimant into sexual activity with him, which included anal rape almost from the start.
In 1982, when he was about 16 years old, the claimant left the school, albeit he returned again for a short period in 1983/1984. He alleged that the first defendant continued to abuse him until 1988 when he was 21 years old. He then had ongoing contact with the teacher until 2011 when, after years of experiencing anxiety and psychological problems, he suffered a breakdown. In 2014, the first defendant pleaded guilty to counts of indecent assault and buggery when the claimant was aged between 13 and 15 years. He also admitted to raping the claimant when he was under 16. The claimant began the instant proceedings in 2016, which was between 25 and 30 years after the expiry of the applicable limitation period for each assault.
The key issues were:
1. Should the claim be allowed to proceed 25-30 years out of time pursuant to s.33?
2. Did the claimant consent to sexual activity with the first defendant after he left the school?
3. Was the school vicariously liable for the first defendant’s conduct after the claimant left the school?
4. What if any injury did the sexual abuse cause the claimant?
5. Whether the claimant was precluded from bringing a claim for the consequences of his breakdown in 2011 by the doctrine of ex turpi causa since his breakdown was related to his use of illegal drugs...
Image ©iStockphoto.com/danegar
Summary of Recent Cases, August 2020
15/08/20. Here is a summary of the recent notable court cases over the past month. You can also receive these for free by registering for our PI Brief Update newsletter. Just select "Free Newsletter" from the menu at the top of this page and fill in your email address.
Summary of Recent Cases - Substantive Law
Harris v (1) Bartrums Haulage & Storage Ltd (2) Paul Andre Rombough (T/A Par European) [2020] EWHC 900 (QB)
An articulated lorry and trailer rolled over the Claimant, who was employed to drive it. The Claimant was seriously injured as a result and claimed damages against his employer (the First Defendant) and a sub-contractor to his employer (the Second Defendant). The accident had occurred because the brakes of neither the tractor nor the trailer had been applied at the time. Liability for this failure was tried before Sir Robert Francis QC, as a preliminary issue.
On the day of the accident, the Claimant was instructed to take the tractor unit to a yard in Kettering and pick up a loaded trailer which had been parked by the Second Defendant. When the Claimant coupled the trailer to the tractor, the tractor-trailer unit started moving and he was trapped under the trailer wheel.
The Claimant accepted that he had failed to apply the tractor handbrake when the accident occurred. The evidence was that the failure to apply the tractor handbrake would have produced a number of alarms and warnings within the tractor cabin including: a warning chime; a brightened display; the letter "P" on an orange background; and the text "Apply parking brake".
Sir Robert Francis QC considered that the Claimant's evidence as to whether he checked the trailer brake was unsustainable. There was no sense or logic in the Claimant's assertion that he had been told not to apply the trailer brake if it was not already applied when coupling. Nor was this consistent with the code of practice and guidance provided by the First Defendant. The Second Defendant's evidence that he was "100% sure" that he had left the trailer with its parking brake on, was accepted by the court. The Second Defendant was an impressive witness and had particular reason to be careful given the fact that he had lost two friends to rollaway accidents. It was accepted that he was a careful and highly experienced HGV driver, and it was inconceivable that he would have failed to engage the parking brake. The fact that the brake was disapplied when the accident occurred did not mean that the Second Defendant left the trailer in that state. The least unlikely explanation for the disengaged trailer brake was that the Claimant had disengaged it, unaware that he had failed to apply the tractor brake...
The Claimant also alleged that the Second Defendant had been negligent in parking the trailer on a slope where it would roll forward if unrestrained. The court found that the Second Defendant could not be so criticised; he had parked the trailer where he had been directed and could not have been expected to place chocks under its wheels as this was not common practice.
As to the First Defendant, Sir Robert Francis QC made the following findings:
• By reason of his training and experience, the Claimant had a full understanding of the need to apply the brakes of the tractor and trailer. He was a fully trained and qualified LGV driver. He also knew that the yard had a slope. He knew that the tractor was equipped with warning mechanisms. The First Defendant was entitled to have regard to the Claimant's abilities.
• The First Defendant's induction and risk assessment left a lot to be desired. It was not sufficient to hand over the employee handbook as a mere formality, however, they were entitled to rely on the Claimant's experience and qualifications. Moreover, the handbook added nothing that the Claimant did not already know.
• The Claimant's training was sufficient, given his prior training and experience. The application of the handbrake was so fundamental and obvious that specific refresher training was not required.
• The First Defendant ought to have carried out a risk assessment of the yard in Kettering. Simply asking a driver to have a look at the yard and confirm that it was acceptable was insufficient. Any breach was, however, not causative of the Claimant's accident. The risk assessment in relation to coupling and un-coupling could have been more specific, but was not inadequate. It could have considered additional safety features; however, a prudent employer was not obliged to include these measures to address the risk of drivers failing to apply the brakes. This risk was well known and was addressed by training, normal procedures and measures built into the equipment. The court found that "just because an additional measure is possible and even easy to provide, does not mean it has to be deployed if the existing measures are in themselves reasonably believed to be adequate."
• The First Defendant had not breached their duty to provide a safe system of work and equipment. Multiple measures were provided to address the risk of a rollaway, including training, warnings and alarms and processes by which both the brakes of the tractor and the trailer were applied and checked before coupling.
Accordingly, the Claimant had been the author of his own accident, and the claim was dismissed.
Summary of Recent Cases - Costs
Marbrow v Sharpes Garden Services Ltd Sen Cts Costs Office (Costs Judge Gordon-Saker) 10/07/2020
The Claimant sustained significant injuries to his left hand when using a hedge cutter in the course of his employment. Liability settled shortly before trial, the settlement providing that the Defendant should pay the Claimant's costs on a standard basis. The detailed costs assessment was heard in July 2020, following which Senior Costs Judge Gordon-Saker reserved judgment on whether the caps on recoverable costs provided by Practice Direction 3E, paragraphs 7.2(a) and (b) exclude VAT.
The case was subject to a costs management order, and the Claimant did not argue that there were any exceptional circumstances which enabled him to exceed his approved budget. The Defendant contended that the caps set out in Practice Direction 3E, paragraphs 7.2(a) and (b) were inclusive of VAT, as it was not expressly stated otherwise. The only directly relevant case on the point was BP v Cardiff & Vale University Local Health Board [2015] EWHC B13, a previous decision of Senior Costs Judge Gordon-Saker himself. The Defendant described this decision as "brave", arguing that words had been imported into the rule which were not there i.e. "excluding value added tax"...
Senior Costs Judge Gordon-Saker did not consider that his decision in BP v Cardiff had been brave, nor had he intended to import any words into the rule, as there had been no need to do so. He considered that the relevant caps could not include VAT because they are expressed as percentages of figures set out in the budget. All the figures set out in a budget exclude VAT, as is made clear in the Precedent H. Friston on Costs (3rd edition) provided support for this line of reasoning.
If he was wrong in this analysis, Senior Costs Judge Gordon-Saker fell back upon his reasoning in BP v Cardiff, where he decided that VAT was excluded because this was the intention of the Civil Procedure Rule Committee.
Summary of Recent Cases - Civil Procedure
Porter Capital Corp v (1) Zulifkar Masters (2) Zabeen Masters (3) Chesterfield Trust Co Ltd Ch D (Snowden J) 28/07/2020
The Third Defendant sought relief from sanctions following a failure to file a costs budget within the timeframe prescribed by CPR r. 3.13.
The Third Defendant had taken a neutral position in the claim and had not engaged with the process. Costs budgets were due in October 2019, at which time no budget had been filed on their behalf. In December 2019, the Third Defendant applied for relief from sanctions and introduced a budget of £360,000. At this point, two CMCs had taken place and the other parties' costs had been budgeted. The Claimant contended that the budget sought by the Third Defendant was incomprehensible given their lack of involvement in the proceedings. The application was not pursued by the Third Defendant. Subsequently, the Third defendant applied for relief from sanctions once again. At this point, the Third Defendant had spent £21,000 on a statement of case, £36,000 on disclosure and further sums on witness statement preparation. The Third Defendant sought permission to file the December 2019 budget, modified to reflect the sums actually incurred.
Mr Justice Snowden applied the three-stage test set out in Denton v TH White Ltd [2014] EWCA Civ 906. The Third Defendant accepted that its failure to file a costs budget was a serious and significant breach. It should have been filed in October, and no steps had been taken to do so until December 2019. The court considered that there was no good reason for the breach. The Third Defendant had chosen not to engage with the process.
Snowden J proceeded to consider all the circumstances of the case, and in particular the need for litigation to be conducted efficiently and at proportionate cost, and to enforce compliance with rules, practice directions and orders. He considered that if the application for relief had been dealt with in December 2019 and relief granted, the court could have conducted the costs budgeting exercise envisaged by the CPR. The court could have managed the costs incurred by the parties to further the overriding objective, as was the purpose behind the costs budget regime...
Furthermore, pursuant to CPR Practice Direction 3E, paragraph 7.4, whilst the court may record comments on costs incurred before the date of any costs management hearing, it cannot approve such costs. Thus, the purpose and structure of the costs management regime is to control future costs; it is not to approve incurred costs. Granting relief from sanctions would mean allowing the Third Defendant to file a budget containing costs already incurred, which the court could only comment on. The Third Defendant's failure had rendered the courts costs management process nugatory and rendered the court unable to operate effective costs management in relation to their costs.
It was true that the court's comments on incurred costs would be taken into account when considering the reasonableness and proportionality of all budgeted costs. However, to comment on the incurred costs, the court would have regard to the comments made by other parties on the Third Defendant's costs. This was impractical, as it would take time for the other parties to make such comments, and for the court to consider them.
Accordingly, Snowden J held that it was not appropriate or just in all the circumstances to grant relief from sanctions. The budget would serve a very limited purpose and the other parties would be put to expense and divergence in the run up to trial. Moreover, the application had been pursued at a very late stage, and no explanation had been provided for its lateness.
Olivia Rosenstrom
Temple Garden Chambers
Image ©iStockphoto.com/spxChrome
Vicarious liability comes to a sudden stop - Sam Way, Devereux Chambers
20/07/20. A return to principle over policy in WM Morrisons Supermarkets plc v Various Claimants [2020] UKSC 12 and Barclays Bank plc v Various Claimants [2020] UKSC 13
Introduction
In two cases, each addressing a different boundary to the application of vicarious liability, the Supreme Court has brought an end to the policy-driven expansion of the doctrine in favour of a return to clear legal principles that should bring increased certainty in an area which has lacked clarity over recent years.
WM Morrisons Supermarkets plc v Various Claimants [2020] UKSC 12
These were the lead cases in group litigation by 9,263 employees or former employees of the well-known supermarket chain. Another of Morrisons’ employees had published their personal details on the internet as part of a disclosure designed to damage Morrisons. He had harboured a grudge against Morrisons after having been given a verbal warning for minor misconduct, and had attempted to frame one of those who had been involved in those disciplinary proceedings. Morrisons were held at trial to be vicariously liable for its employee’s breach of statutory duty under the Data Protection Act 1998, misuse of private information and breach of confidence. Following the reasoning of the Supreme Court in Mohamud v WM Morrisons Supermarkets plc [2016] UKSC 11, there was an unbroken sequence of events between the activities for which the employee was employed, and his tortious acts, such that it was right that Morrisons were to be held liable...
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Summary of Recent Cases, July 2020
15/07/20. Here is a summary of the recent notable court cases over the past month. You can also receive these for free by registering for our PI Brief Update newsletter. Just select "Free Newsletter" from the menu at the top of this page and fill in your email address.
Summary of Recent Cases - Substantive Law
Barlow v Wigan Metropolitan Borough Council [2020] EWCA Civ 696
The Claimant was injured when she was walking along a path in a park and tripped over an exposed tree root. At first instance it was found that the tree root rendered the path dangerous and defective. This finding was not disputed on appeal. The question before the Court of Appeal was whether she had a valid claim against the Defendant Council, who were the owners and occupiers of the park. Whilst the Claimant's particulars of claim included allegations of common law negligence, these were not pursued at trial. Her claim could only succeed if she established a cause of action for breach of statutory duty under section 41 of the Highways Act 1980 on the basis that the path was a highway maintainable at public expense.
The park had been constructed as a public park in the early 1930s by the Defendant's predecessor. The paths were constructed by the Defendant or its predecessor, and predated the Highways Act 1959. The Defendant's records did not list the park as a public right of way. However, the public had enjoyed unrestricted access to the park. The Defendant's predecessor had been the highway authority for the area at the time when the park was constructed, although the Defendant denied that it was acting in that capacity when constructing the paths in the park.
Lord Justice Bean considered the law on highway maintenance, and section 36 of the Highways Act 1980 in particular. Section 36(1) provides that highways which were maintainable at public expense under the earlier Highways Act 1959, continue to be so maintainable. A highway can be created by statute, or by dedication and acceptance. Dedication can be express, deemed by the operation of s 31 of the Highways Act 1980, or inferred by common law. To fall within s 36(1), the Claimant had to prove that the path had been dedicated before 16 December 1949. Bean LJ also considered s 36(2)(a), which provides that highways which were constructed by a highway authority are maintainable at public expense...
On first appeal, Waksman J, found that the path had been constructed by a highway authority and saw "no reason of language or logic for an additional 'capacity' requirement" as was contended by the Defendant. Contrary to the judgment of Waksman J, Lord Justice Bean found that the path did not constitute a highway maintainable at public expense for the purposes of s 36(2)(a) of the Highways Act. He referred to and agreed with the reasoning and conclusions of Neuberger J in Gulliksen v Pembrokeshire County Council [2002] QB 825, regarding the interpretation of s 36(2)(a): "the notion of 'a highway constructed by a highway authority' means 'a highway constructed as a highway by a highway authority in its capacity as such'". Bean LJ accepted the Defendant's contention that its predecessor was not acting in its capacity as the highway authority for the area when it constructed the path. Accordingly, the path did not fall within s 36(2)(a).
Bean LJ proceeded to consider whether the path had been dedicated as a highway before 16 December 1949, and so fell within s 36(1). There was no evidence of express dedication, however there was ample evidence to support the implication or presumption of dedication at common law. The evidence established that the park was opened in the early 1930's and that the path was laid out soon afterwards. Ever since that time the public had had unrestricted and uninterrupted access to the paths. It was accepted that the common law presumption of dedication was retrospective, as held in the Privy Council decision of Turner v Walsh (1881) 6 HL 636. Thus, the dedication "is deemed to have occurred at the beginning of the period of continuous user, not at the end of it". Accordingly, the path was deemed to be dedicated since the early to mid-1930s, well before December 1949. The path therefore fell within s 36(1), providing the Claimant with a valid cause of action for breach of statutory duty under s 41 of the Highways Act 1980.
Singh and Macur LJJ agreed.
Summary of Recent Cases - Costs
With electronic bills, all parties attending detailed assessments can easily see where the figures are heading as the hearing progresses. As was highlighted in this recent case, it will therefore be ever more important to phrase offers carefully, and to keep in mind any steps that may be required in relation to open common law offers which remain on the table.
MEF v St George's Healthcare NHS Trust [2020] EWHC 1300 (QB)
The Claimant's clinical negligence claim in relation to a severe hypoxic brain injury sustained at birth settled and was approved by the court. Detailed assessment proceedings were issued in relation to the Claimant's total liability costs bill which amounted to £621,455.57. One month before the hearing of the detailed assessment, the Defendant made a Calderbank offer to pay £440,000 for the Claimant's costs, on condition that the Claimant paid part of the Defendant's costs of the assessment. This offer had no express time limit. At the end of the second day of the three-day detailed assessment before Master Brown, the Claimant's bill had been reduced below £440,000. Before the end of the day, the Claimant's solicitors sent an email and a letter, purporting to accept the Defendant's offer.
A dispute arose as to whether the Caldebank offer could be accepted once the detailed assessment had commenced, or whether it lapsed upon commencement of the hearing. The dispute was transferred to Costs Judge Master Rowley. The Defendant argued that CPR 47.20(4) imported provisions of CPR Part 36, with the effect that the Claimant required the court's permission to accept the offer once the hearing had started. The Claimant argued that the Calderbank offer was not a Part 36 offer, was not time-limited and had not been withdrawn. Therefore, it was open to be accepted. Master Rowley held that Part 36 provisions did not apply; rather the offer made was a common law offer which could not be assumed to stop at the door of the court. The Defendant had chosen to make a common law offer and had not applied a time-limit to it. Accordingly, he held that the Claimant's acceptance was valid. However, he granted permission to appeal, given that the matter involved an important point of principle.
Mr Justice Morris heard the appeal. Firstly, the Defendant argued that the Calderbank offer had ended after the lapse of a reasonable time which was no later than the start of the hearing, and/or that there was an implied term that it would lapse on the start of the hearing. Secondly, it was argued that the wording of the Claimant's acceptance was not sufficiently specific in relation to the payment of the Defendant's costs, and thus there was no meeting of minds. The Claimant's position was that the appeal simply concerned the application of law to the facts. Here, the Defendant had chosen not to withdraw their offer, or make it time limited and thus it remained open for acceptance. Further, the Defendant had chosen to repeat or renew an offer which provided ongoing costs protection. It was therefore not necessary to imply a term limiting the time for acceptance. As to the meeting of minds, the Claimant took issue with the fact that this argument had not been raised before Master Rowley. In any event, there had been a meeting of minds, as it was clear to both parties that the offer required agreement in principle to pay the Defendant's reasonable costs of the detailed assessment from a specified date.
Mr Justice Morris made the following findings in relation to the contention that the offer had lapsed...
1. Master Rowley was correct in finding that common law principles, rather than Part 36, applied in the instant case. However, he did not expressly address the contractual principle of lapse after a reasonable time.
2. The question of lapse after a reasonable time is a question of fact. To determine whether the offer lapsed at the start of the hearing, the court must consider whether a reasonable time for acceptance had expired at the commencement of the hearing or continued during the hearing. The following features supported the conclusion that the offer had not lapsed:
a. Due to the nature of detailed assessment proceedings, it is possible for the parties to know how well or badly they are doing as the hearing progresses. This distinguishes detailed assessments from other types of hearings where the ultimate outcome is not as clearly indicated during the progression of the hearing.
b. The Part 36 procedure, with its stricter rules, was available to the Defendant. However, the Defendant chose to make a Calderbank offer, and "there can be no direct "read across" from Part 36 procedure to the contractual position of a Calderbank offer." Whilst the court's permission must be sought to accept a Part 36 offer once the hearing has commenced, there is no provision in Part 36 by which the offer lapses at court. Part 36 cannot therefore be relied upon to support the contention that Calderbank offers lapse at the door of the court.
c. None of the Defendant's earlier offers had an absolute time limit. It was reasonable to infer that the offers were subject to the condition that if they were not accepted within a reasonable time, the Claimant would be responsible for the Defendant's costs. This condition was inconsistent with an absolute time limit upon acceptance.
d. The Defendant was aware that it could withdraw the offer made, but had decided not to do so.
3. Contrary to submissions on behalf of the Defendant, the Defendant's costs protection remained effective even if the offer was considered open for acceptance during the hearing. Further, it was not accepted that the offer remaining open during the hearing provided a perverse incentive as the Defendant may end up in a worse position than had it not made an offer. It was always open to the Defendant to put a time limit on the offer or withdraw it.
Mr Justice Morris further found that the Claimant's acceptance had given rise to a contractually binding settlement. A reasonable person would have understood that the condition of the offer was acceptance, in principle, to pay the Defendant's costs of the detailed assessment from a specified date, to be assessed if not agreed.
Accordingly, the appeal was dismissed.
Summary of Recent Cases - Civil Procedure
This recent case reinforces the need not only to obtain permission from the court to rely on expert evidence, but to ensure that such permission covers the scope of that evidence.
Tully v (1) Exterion Media (UK) Ltd (In Liquidation) (2) London Underground Ltd [2020] EWHC 1119 (QB)
The Claimant claimed damages for personal injury arising from an alleged accident at work. The Defendant disputed both liability and quantum. Both sides had permission to obtain expert evidence from the fields of orthopaedics and psychiatry. The Claimant was given an opportunity to serve an updated orthopaedic report by the date of exchange, but chose not to. It was noted by Master McCloud that this choice was made without consulting the expert as to whether he considered that his report needed updating given the passage of time and the availability of further evidence. Following the exchange of witness statements and experts' reports, the Defendant served surveillance footage, which they contended showed that the Claimant was far more mobile than he claimed. The parties agreed a consent order giving the Claimant permission to serve a statement responding to the surveillance footage, and providing for a further exchange of experts reports in both specialisms "limited to issues arising from the surveillance footage and the Claimant's witness statement". As a result of the consent order, the listed CCMC was vacated.
When approached for commentary on the surveillance footage and witness statement, the Claimant's expert stated that given the discrepancy between his original findings, and the surveillance footage and the Defendant's expert report, he would need a further interview and examination of the Claimant in order to confirm or refute the Defendant's evidence and discharge his duties to the court. The Claimant then proceeded to instruct their orthopaedic expert to conduct a re-examination of the Claimant and produce an updated report which addressed the Claimant's general medical condition as well as the surveillance and the Claimant's statement in response. The updated report was shared with the Claimant's psychiatric expert.
The Defendant argued that the Claimant was in breach of the consent order and had obtained an unfair advantage as a result. Even if it had been appropriate to re-examine the Claimant, the orthopaedic expert ought not to have been provided with the surveillance footage beforehand. In effect, the Claimant had managed to gain a sequential exchange of material, in that their expert had the opportunity to consider the evidence of the Defendant's expert when drafting his report. Further, the Claimant's psychiatric report in response was also tainted, as the psychiatric expert had been provided with the updated orthopaedic report.
As a result of the alleged breach of the consent order, the Defendant declined to proceed with the preparation of joint reports. The Claimant applied for an unless order to force the Defendant to proceed to the joint report stage, as well as relief from sanctions if the Claimant was found to be in breach...
At the hearing, the Claimant argued that it had been right and proper to have produced a fully updated report, and that the earlier opportunity to do so had reasonably not been used as there had been no advance notice of the surveillance and no reason to believe that the Defendant's orthopaedic expert would disagree with the Claimant's original orthopaedic report. The updated report enabled the expert to comply with his duties to the court and ensured a level playing field and it would not be right to dictate to an expert whether he should re-examine the Claimant, where he said that he needed to do so.
Master McCloud had regard to the rules concerning expert evidence set out at CPR 35, as well as the Overriding Objective. She made the following findings:
1. The Claimant had breached the consent order. The Defendant had served surveillance evidence in an appropriate manner, and a standard order was made for the experts to comment on the limited issues raised by that evidence and the Claimant's statement in response.
2. If the Claimant reconsidered the need for an updated orthopaedic report, he should have requested permission and relief from sanctions, explaining why an updated report had not been obtained previously. If permission was granted, the expert could then produce an updated report without sight of any surveillance evidence. Commentary on the surveillance evidence could then have been made separately, as had been the case for the Defendant's expert.
3. The material obtained by the Claimant went well beyond the permission granted and rendered the playing field uneven. The obligation on an expert to assist the court does not mean that a solicitor can "effectively expand the scope of an order for a report simply because the expert wishes to". The consent order need not have been signed if there were hopes of a wider report.
4. As to relief from sanctions, the breach was not trivial or immaterial. The impact on fairness by the updated report was considerable. There was also no good reason for the breach. Considering all the circumstances, the substantial impact on fairness was reiterated. The resources deployed to consider the issue had also been substantial and the trial timetable would be delayed.
For these reasons, the Claimant's applications were largely refused. However, Master McCloud was willing to consider some limited relief. She invited arguments as to whether some paragraphs of the updated report could be allowed to stand, and whether a new psychiatrist, without knowledge of the surveillance, might be instructed.
Olivia Rosenstrom
Temple Garden Chambers
Image ©iStockphoto.com/spxChrome
QOCS and Set-Off: Court of Appeal finds for defendant but gives permission to appeal to the Supreme Court - Andrew Roy,12 King's Bench Walk
12/07/20. In Ho v Adelekun (No. 2)2020] EWCA Civ 517 the Court of Appeal confirmed that the QOCS regime did not preclude a defendant from setting off his or her costs against a claimant’s costs. This was irrespective of whether or to what extent the defendant was precluded from enforcing costs against the claimant’s damages. Recognising that this was a point of law of general public importance, permission has been given to appeal to the Supreme Court.
Background
This judgment is a sequel to Ho v Adelekun (No.1)[2019] EWCA Civ 1988; [2020] RTR 6; [2019] Costs LR 1963. The claimant suffered injury in road traffic accident. Liability was not in dispute. In due course the case settled.
The was then a dispute between the parties as the claimant’s costs entitlement under the settlement. The defendant contended that she was limited to Section IIIA of CPR Part 45. The claimant disputed this, contending that she was entitled to costs to be assessed on a conventional item by item basis.
This disputed came before Deputy District Judge Harvey. He found for the Defendant, albeit that he made no order as to costs. The claimant then appealed. His Honour Judge Wulwik allowed the appeal. The defendant in turn brought a second appeal to the Court of Appeal. This was successful, with the result that the claimant was restricted to fixed costs.
The defendant was therefore entitled to its costs of the appeals in both the County Court and the Court of Appeal. However, following the decision in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654; [2018] 1 W.L.R. 6137 that QOCS only permitted enforcement against damages ordered by the court as opposed to damages resulting from settlement, the defendant could not recover her costs from the claimant’s damages. Nor as a result of the general operation of QOCS could she otherwise recover them from the claimant directly.
The defendant therefore sought to set-off her costs against the costs to which the claimant was entitled as part of the settlement of her substantive claim. The claimant argued that (1) there was no jurisdiction to order set-off; and (2) if there were the jurisdiction to do so, the discretion should not be exercised in the defendant’s favour.
There was also a dispute as to whether the decision at first instance that there be no order to costs should be upheld. The claimant contended that it should. The defendant argued that it should be overturned and replaced by an order for costs in her favour.
The Court of Appeal’s Decision
Jurisdiction
Newey LJ gave the lead judgment with which both Males LJ and Sir Geoffrey Vos C agreed. He construed CPR 44.14 as automatically barring enforcement of costs orders against claimants in excess of damages and interest (subject to CPR 44.15 and CPR 44.16) as opposed merely to barring enforcement without the Court’s permission. Were this not the case, in his view, a claimant’s QOCS protection would be curtailed and there would be no restriction on the circumstances whereby claimants could have costs orders enforced against them with the Court’s permission.
Newey LJ considered that there were compelling reasons for constructing “enforced” to include set-off (including costs set off) for the purposes of CPR 44.14. This was because CPR 44.14 encompasses conventional methods of enforcement, as contained in Practice Direction 70 – Enforcement of Judgments and Orders. These methods of enforcement would allow a defendant to seek recovery of costs from a claimant who has already received damages and interest. He also highlighted how the QOCS regime will have been intended for it to be possible to set a claimant’s costs liability to a defendant against the defendant’s liability for damages and interest, so the claimant receives a net sum. He found it hard to see where jurisdiction for such an order was to be found other than CPR 44.14.
Newey LJ also acknowledged the force of the claimant’s arguments that (1) The QOCS rules do not cross-refer to CPR 44.12 (the general rule permitting set off of costs against costs); (2) the explanatory note to the CivilProcedure (Amendment) Rules 2013 suggested that set-off was only possible against damages; and (3) the QOCS regime does not mirror the position in legally-aided cases where costs set-off is common.
He therefore held that, were there no authority on the issue, he would have been inclined to accept the claimant’s argument that where QOCS applied the Court has no jurisdiction to order costs liabilities to be set off against each other.
However, there was authority on the point. In Howe v Motor Insurer’s Bureau (No. 2)(6 July 2017, the Court of Appeal had held precisely to the contrary. This decision was binding unless, as the claimant contended it was made per incuriam.
The Court accepted the defendant’s argument that the test for per incuriam was not satisfied. Per Newey LJ at [24]:
In my view, Mr Roy is right. There is no reason to suppose that the Court decided Howe in ignorance of any relevant statute, CPR provision or previous decision of its own, of a Court of co-ordinate jurisdiction, or of the House of Lords or Supreme Court.
The Court therefore accepted that Howe (No. 2) compelled it to hold that there was jurisdiction to order set off.
Nevertheless, both Newey LJ and Males LJ in his short concurring judgment expressed the view that this was a point which might merit reconsideration by the Rules Committee. In the same vein, the Court granted permission to appeal to the Supreme Court on this point.
Discretion
The Court accepted the defendant’s contention that set off was appropriate. It held that claimant’s argument that so ordering would be contrary to the principles of QOCS lost its potency following the finding on jurisdiction. In light of Howe (No. 2)it had to be assumed that the QOCS regime intended the Court to be able to order costs set-off regardless. There was no evidence of anything specific to the claimant’s circumstances which could render costs set-off unjust. The defendant had incurred substantial costs in vindicating her rights and would be left with a large shortfall even with the benefit of costs set-off.
Costs at first instance
The judge at had based his decision to make no order as to costs on the defendant signing a Tomlin order which was capable of being interpreted as providing for something other than fixed costs. The Court accepted the defendant’s arguments that this was a red herring. The parties had agreed that the relevant agreement was complete when the claimant emailed the defendant to accept the latter’s Part 36 offer. The wording of the subsequent Tomlin order was neither here nor there. It did not provide a reason to depart from the normal order that costs should follow the event. The defendant was therefore entitled to her costs of the costs hearing at first instance.
Comment
Given that the point is now going to the Supreme Court, Howe (No. 2) attracted little attention when it was delivered in 2017, or indeed since. However, the power to set off a defendant’s costs against a claimant’s in QOCS claims is an important one.
The vast majority of personal injury cases settle. As confirmed in Cartwright, supra, a defendant cannot enforce his costs against damages obtained via settlement. It follows that in the vast majority of cases, subject to exceptions such as fundamental dishonesty, set-off against costs is only way a defendant can recover any of his costs unless the claimant recovers damages at trial. Given that going to trial and losing is normally the last outcome a defendant would wish to seek, for practical purposes set off against costs will be the only worthwhile vehicle for recovery.
The availability of costs set off can avail a defendant in a number of circumstances. For example:
(1) Where a defendant makes an effective Part 36 offer, as in one that the claimant either fails to beat at trial or accepts late. Whilst in the former scenario the defendant could enforce costs against damages recovered, there could easily be a shortfall e.g. if the claimant’s quantum case collapses entirely. In the latter scenario, whilst the defendant would normally be entitled to a costs order in his favour, Cartwright precludes enforcement of such costs against damages.
(2) Where the claimant loses but wins an interim hearing along the way. The claimant’s costs of that interim hearing (including any subsequent appeal) would be almost certainly be extinguished by the defendant’s costs of the action.
(3) Where the claimant wins but is subject to an adverse costs order in any consequential costs proceedings (again including a subsequent appeal). This was the case in Adelekun itself.
This in turn gives defendants’ Part 36 offers sharper teeth (both in substantive proceeding and costs assessments). It likewise puts claimants at a costs risk if they advance unmeritorious points.
It obviously remains to be seen whether the Supreme Court reverses this decision. However, as the law currently stands set-off can (and, it appears, normally will) be ordered against a claimant’s costs. As described above, this has important practical ramifications of which all personal injury litigators should be aware.
Andrew Roy is a barrister at 12 King’s Bench Walk specializing in personal injury and costs. He represented the defendant in Ho v Adelekun.
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