News Category 3
Majid Ali v HSF Logistics Polska SP Zoo [2024] EWCA Civ 1479 - Andrew Ratomski, Temple Garden Chambers
24/01/25. Date of judgment: 4 December 2024.
Whilst Ali v HSF is a case arising in credit hire litigation, the Court of Appeal’s recent decision is of broader significance to injury practitioners handling cases arising from road traffic accidents because it considers a number of practical applications of the doctrine of illegality (ex turpi causa). It will be no surprise that an illegality defence is difficult to run and difficult to succeed on.
The facts
The Defendant’s lorry had driven negligently into the Claimant’s Volvo motorcar and the damage rendered it undriveable with repairs taking some time. The trial judge found that the Claimant needed to hire a replacement vehicle. The Court of Appeal noted that there was no evidence that the Volvo was unroadworthy in any way prior to the accident and observed that the last MOT for the vehicle had expired four and a half months prior to the accident.
The arguments
The Defendant had previously relied on the absence of a valid MOT to support its plea of illegality. It also relied on the same fact for what was described as a causation defence meaning the Claimant suffered no loss for which he could be awarded compensation when the vehicle, without a valid MOT, was rendered unroadworthy as a result of the Defendant’s tort.
The illegality defence
Stuart-Smith LJ first summarised the principles applying to claims seeking the recovery of credit hire charges before reviewing the modern authorities on illegality starting with the Supreme Court’s decision in Patel v Mirza [2016] UKSC 42; [2017] AC 467. He also highlighted the importance of “over kill” and there being a “proportionate response by the civil law” to wrong doing as addressed in that judgment. The courts are to avoid being “unduly precious at the first indication of unlawfulness”. Stuart-Smith LJ also accepted that the pre-Patel caselaw distinguished between cases where the illegality barred an entire claim versus where illegality barred the recovery of one or more heads of loss. Several cases distinguished collateral or insignificant illegality, and gave guidance on the level of seriousness of the offending required to engage the doctrine. The flexibility of the common law was also noted as relevant to considering when an illegality defence will be available.
The decision
Stuart-Smith LJ highlighted a number of distinctive features of an MOT certificate, most notable of which is that a certificate only means a car passed an MOT on the test date stated. Failure to hold an MOT is a summary offence punishable with a fine up to £1000 and it will not automatically vitiate an insurance policy.
The judge rejected the Defendant’s assertion as part of its causation argument that the Claimant had suffered no loss as a result of the Defendant’s tort where there was no valid MOT certificate. The failure to obtain an MOT certificate was held to be a relatively minor criminal offence and given the harm to the integrity of the legal system arising from allowing claims for hire charges in those circumstances, it was disproportionate to consider refusing the Claimant relief on the basis of an absent certificate. It was also held that allowing recovery would not undermine the effectiveness of the criminal law.
Comment
The case strikes a cautious note on succeeding on illegality and reminds practitioners that both proportionality in denying an otherwise good claim and respecting the spheres of civil law and punishment through the criminal courts are concerns that should be front and centre to any judge grappling with whether to allow an ex turpi causa defence for all or part of a claim.
https://caselaw.nationalarchives.gov.uk/ewca/civ/2024/1479?court=ewca%2Fciv
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CXC (a protected party by her litigation friend BXB) v (1) David Clarke, (2) EUI Limited [2024] EWHC 3138 (KB) - Philip Matthews, Temple Garden Chambers
22/01/25. CXC considers the use of intermediaries to assist vulnerable witnesses to give evidence in personal injury proceedings.
Background
On 16 September 2007, the Claimant (who was then 20-years-old) was involved in an RTA whilst a passenger in a car driven by the First Defendant. As a result of the admitted negligence, the Claimant suffered a severe brain injury and other injuries, including a fracture to her jaw. The claim was settled on 25 May 2009 – before issue – in the sum of £25,000.
Subsequently, the Claimant sought an order that this settlement be set aside on the basis that she lacked capacity to conduct litigation from 2007. The issue of capacity at that time was firmly disputed by the Defendant. Complicating matters further was the fact that the Claimant was involved in a further RTA in 2016, sustaining injuries which may also have impacted her capacity.
The Application
In this context, the Claimant’s solicitors made an application for permission to obtain a report from a registered intermediary to advise on how the Claimant would best be able to engage in the proceedings, and for an order that HMCTS pay the...
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FXS v The Mulberry Bush Organisation Ltd [2024] EWHC 2844 (KB) - Philip Matthews, Temple Garden Chambers
18/12/24. Date of judgment: 8 November 2024
FXS considered issues of costs where a claimant had not succeeded in establishing negligence at trial but was successful on other issues.
Background
FXS, the Claimant, was placed at the Mulberry Bush School, the Defendant. It was alleged that during his placement, the Defendant acted negligently by (amongst other things) restraining him frequently and with excessive force; inappropriately confining him to his room; and failing to manage his behaviour appropriately. In the alternative, it was pleaded that the Defendant had assaulted the Claimant during the restraints, and/or the restraints constituted battery / trespass to the person. It was also alleged that the Defendant had falsely imprisoned the Claimant, on at least two occasions, by placing a towel in the doorway of his room to prevent him from leaving. The Claimant sought damages of £172,776.
Following a 9-day trial, Margaret Obi, sitting as a High Court Judge, found that the Claimant failed in relation to negligence, but was succeeded on the issues of battery and false imprisonment. Damages in the sum of £18,900.
The Arguments on Costs
Following the judgment on damages there were issues in relation to costs.
Ms Walker, for the Claimant, submitted that FXS was the successful party. She invited the Court to exercise its discretion to order the Defendant to pay his reasonable costs on an indemnity basis. In support of this submission Ms Walker pointed to the School’s repeated attempts to procure the discharge of FXS’s legal aid certificate.
Ms Foster, for the Defendant, submitted that FXS should not have the benefit of an order for costs. Alternatively, FXS should be awarded costs in respect of the issues upon which he succeeded, and the Defendant should be awarded costs in respect of the issues upon which it succeeded.
Judgment
The Judge rejected both of these arguments. The Defendant was ordered to pay the claimant’s costs on the standard basis: -
“The claim in negligence did not succeed, but I am satisfied that it would not be appropriate to limit the recovery of costs or make an issues-based costs order. In reaching this conclusion I note that the face down restraints and use of the towel method were central to this case and took up the vast majority of court time. Furthermore, all three heads of claim were intrinsically linked. To separate the issues, at this stage of the proceedings, would be a hollow exercise given that in relation to the negligence claim, the evidence from the factual and expert witnesses provided helpful context and was extensively relied upon by both parties. This included evidence with regard to the strategies deployed by the School to manage FXS’s challenging behaviour, the training and experience of the staff and the ethos of the School. In these circumstances, I see no good reason to depart from the general rule.” [§40]
It was further held that the hearing was an appropriate place to revise the costs budgets after there were additional, unforeseen, days at trial.
https://caselaw.nationalarchives.gov.uk/ewhc/kb/2024/2844#download-options
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Elysa Alton v Powszechny Zaklad Ubezpieczen [2024] EWCA Civ 1435 - Andrew Ratomski, Temple Garden Chambers
17/12/24. Date of judgment: 6 November 2024
Alton is an important decision for practitioners bringing and responding to claims arising from road traffic accidents where issues of indemnity, direct rights against insurers and foreign insurance companies arise. Powszechny Zaklad Ubezpieczen (“PZU”), the Appellant, a Polish insurance company, were unsuccessful in seeking to overturn HHJ Parker’s decision to set aside an order striking out the Claimant’s claim.
Facts
In September 2017 the Claimant, Ms Alton, was unfortunately involved in a road traffic accident on the M20 motorway after colliding with a lorry with a Polish number plate. The lorry’s driver was insured by the Appellant.
Procedural History
The Claimant brought a claim for personal injury and filed Particulars of Claim that alleged an InterEurope were the insurers and the Claimant had a direct right of action against them pursuant to the Third Party (Rights against Insurers) Act 2010 and European Communities (Rights Against Insurers) Regulations 2002 (“2002 Regulations”). Solicitors for InterEurope filed a Defence stating it was not the insurer of the lorry but merely a UK-based claims handler for PZU and invited the court to strike out the claim for that reason. Moreover it was pleaded that the vehicle was not normally based in the UK on account of its Polish registration plate.
Draft amended Particulars were then served seeking to substitute PZU as the Defendant followed by an application to substitute a party.
Importantly the Defendant’s strike out application was listed for a thirty minute hearing where the Claimant relied on a skeleton that sought to argue a direct cause of action existed against the insurer PZU and the issue could be cured by...
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Oakwood Solicitors Ltd v Menzies [2024] UKSC 34 - Andrew Ratomski, Temple Garden Chambers
22/11/24. Date of judgment: 23 October 2024
This significant costs judgment concerned when a client can apply to have their solicitor’s bill of costs assessed under section 70 of the Solicitors Act 1974 (“the 1974 Act”). The Supreme Court was asked to construe the meaning of “payment” under subsection 70(4) which sets a 12-month time limit following a “payment” within which a client must apply for such an assessment.
Facts
Mr Menzies was unfortunately involved in a road traffic accident and suffered serious injuries. Oakwood Solicitors were instructed to pursue his claim for damages under a Conditional Fee Arrangement (“the CFA”). The CFA provided that the solicitors would receive basic charges, a success fee, an insurance premium, disbursements incurred and VAT all from any damages received subject to a cap of 25%. Mr Menzies later settled his claim for the sum of £275,000 and on 11 July 2019 received a “final statute bill” from his solicitor in the sum of £73,711.20 (to be deducted from his damages). On 1 April 2021 Mr Menzies applied to have the bill assessed and was initially barred from doing so as a result of subsection 70(4) of the 1974 Act.
The Decision
The Supreme Court over-turned the Court of Appeal who had allowed the solicitor’s appeal on the basis that the client had agreed to the CFA permitting the deduction of monies and had been sent a Final Statute Bill. The Court of Appeal held that retention of the monies by the solicitors amounted to payment for subsection 70(4).
The Supreme Court’s reasons for doing so can be summarised as follows.
“Payment” was construed in its context and the purpose of the statutory provisions in which it was used; it was held not to be a legal term of art. The relevant statutory context included that section 70 was concerned with a client’s right to assess a bill of costs; that the delivery of a bill compliant with the statute was integral to the statutory scheme; and section 70 envisaged payment after delivery of the bill and not by virtue of delivery of the bill (where a client then also has a right not to pay the bill until assessment is completed). The court also observed that the statutory requirements were concerned with the protection of a (consumer) client’s interests and to ensure excessive costs are not claimed.
Finally, in respect of the strict time limit under subsection 70(4) following payment, the court highlighted that payment of a bill by a client is taken to represent acceptance and agreement to the sums claimed and where there is acceptance, it is right to restrict challenge. In the present appeal the solicitors sought to argue that “payment” would occur, and time start running, without such an opportunity to consider the bill let alone accept it, an argument that was rejected by the Supreme Court.
The court considered the authorities lent further support to its construction of “payment” and showed a “long established understanding” as to what payment by deduction or retention required generally and by reference to section 70 of the 1974 Act. Further objections about the practical consequences of the Supreme Court’s construction of “payment” were rejected.
Discussion
The effects of this decision are being felt immediately and both the practical consequences of the judgment and the Supreme Court’s reasoning merit careful review from all practitioners engaged in injury work on CFA terms. The decision is also likely to cast a long shadow on future solicitor-client disputes arising from CFA agreements.
https://www.supremecourt.uk/cases/docs/uksc-2023-0115-judgment.pdf
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