News Category 3
The 'fundamental' in fundamental dishonesty: Attique Denzil v Usman Mohammed and UK Insurance Ltd [2023] EWHC 2077 (KB) - Amy Lanham Coles, Temple Garden Chambers
25/08/23. In this case, the Appellant had asserted at trial that he had suffered various injuries in a road traffic accident, including an alleged injury to his head causing swelling for three to four days. This head injury had not been pleaded and was not referenced in the medical evidence but appeared in the Appellant’s witness statement and oral evidence. In closing submissions, however, this head injury was not pursued as part of the pleaded case for pain, suffering and loss of amenity (PSLA). The trial judge held that there had been no injury to the Appellant’s head and the Appellant had been dishonest in relation to that specific injury. In relation to the other injuries, it was held these had not been proven to the sufficient standard. Further, the trial judge regarded the Appellant’s dishonesty in relation to his head injury as “fundamental” for the purposes of s. 57 of the Criminal Justice and Courts Act (“CJCA”) 2015. He found that although the alleged head injury was “nominal” in respect of the overall injuries, the Appellant’s “dishonesty [goes] to the root of the claim because of the assertion of head injury in circumstances where no head injury was sustained”. The trial judge considered it “axiomatic” that the dishonesty was fundamental.
Issues
The Appellant appealed this finding of fundamental dishonesty, although conceded he been dishonest. He challenged what he submitted was a bare assertion of fundamental dishonesty; arguing that his purported head injury did not substantially affect the presentation of his case, as it was not part of his pleaded case on quantum. The Respondent argued, inter alia, that whilst the head injury was minor in terms of valuation, invention was more significant than exaggeration and was here designed to bolster the credibility of the overall claim. The Respondent emphasised the profundity of deceit and reminded the Court that it should be slow to displace the trial judge’s findings of fact.
Held
Traversing the case law on fundamental dishonesty, Freedman J began by recalling the primacy of the statutory wording, warning against overreliance on corollary terms or metaphors (paras 20, 23 & 41(i)).
He cited the following key principles:
1. the question of whether dishonesty is fundamental is a question of fact and degree in every case (as per Elgamal v Westminster City Council [2021] EWHC 2510at para 72, cited at para 41(iii));
2. in determining the answer to the question, the judge ought to undertake a holistic exercise, considering the impact of the dishonesty on both the Appellant’s case on liability and quantum and whether the dishonesty substantially affected the presentation of the case (in line with LOCOG v Sinfield [2018] EWHC 51 at paras 62-63 and Elgamal at para 73, cited at paras 41(ii) & (iv)).
Turning to this case and whilst acknowledging “the need to give great weight to the evaluative judgment” of the trial judge (para 40), Freedman J concluded his reasoning had been deficient. The bare assertion that the Appellant’s dishonesty went to the “root of the claim” was insufficient to justify a finding of fundamental dishonesty (para 42(ii)). It was “objectionable” to conclude that it was “axiomatic” that the dishonesty was fundamental (paras 15 & 42(i)).
Crucially, the head injury was not part of the pleaded claim for PSLA (paras 42(iii) & (iv)). It was also “minor and very short-lived both in itself and relative to the neck and shoulder injuries” (para 45). Accordingly, it had not substantially affected the presentation of the case on either liability or quantum (para 46). The trial judge’s finding of fundamental dishonesty was therefore wrong and set aside (paras 48 & 51).
The judgment provides a useful reminder of the principled approach that must be taken when pursuing a finding of fundamental dishonesty.
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Both parts of a combined Part 36 offer have to be beaten for Part 36 cost consequences to follow (and leapfrog permission given on child 'lost years' claim): CCC (by LF MMM) v Sheffield Teaching Hospitals [2023] EWHC 1905 (KB) - Nancy Kelehar, Temple Gard
23/08/23. Mr Justice Richie addressed two matters of importance. First, how the court should assess whether a combined Part 36 offer has been beaten. Second, whether an appeal point in relation to a child’s claim for lost years should be certified for a leapfrog appeal to the Supreme Court.
The underlying claim related to an 8-year-old girl suffering from cerebral palsy and a reduced life expectancy caused by the Defendant’s failure to prevent severe chronic partial hypoxic ischaemia before and during her birth.
Part 36 Issue
At trial, the Claimant beat her own Periodical Payment Order (PPO) offer by a substantial amount but failed to beat her lump sum offer.
At the consequentials hearing, the court had to address the question of whether this amounted to a judgment “more advantageous to the Claimant”, i.e. better in money terms, than her offer. The Claimant argued that they had beaten their Part 36 offer if the PPO is capitalised into a lump sum by using the agreed lifetime multiplier. On this basis, the capital value of the awarded amount plus the lump sum would be more than the offered amounts calculated in the same way.
However, it was held that to reintroduce the multiplier to determine the value of the PPO would be contrary to principle where the purpose of the PPO is to avoid using a multiplier as life expectation is so uncertain [16]. Richie J placed emphasis on the fact that under Part 36 both single offers and combined offers are permitted, that a combined offer is not the same as two individual offers, and that the Claimant could have made individual offers but chose not to do so [17].
There is no prior authority on what “better in money terms” means regarding a combined offer which includes a lump sum and PPO. Richie J recognised that the inducements under Part 36.17 are to encourage good practice and create an incentive to settle claims by using sanctions and rewards. In line with those objectives, the system should be kept simple: a combined offer has two parts and no capitalisation of the PPO part is relevant. Therefore, “for an offeror to beat her Part 36 combined offer, she has to beat both parts. If she wishes protection for each part then individual offers can be made”. [18]
Leapfrog Appeal
Richie J recognised that a claim for ‘lost years’ (awarded to injured, live Claimants who die earlier than they would have) is historically contentious. The court identified an apparent inconsistency between the leading authority for child ‘lost years’ claims (Croke v Wiseman [1982] 1 WLR 71) when compared with the leading authorities for adults (Pickett v British Rail [1980] AC 136) and teenagers (Gammell v Wilson [1982] 2 AC 27).
The court summarised the ratio of Croke as follows: “that in the case of a severely disabled child, who could not and never would acquire financial dependants the claim for lost years damages was not permissible” [36]. However, Pickett did not involve determination of whether or not the claimant will acquire dependants. This inconsistency of reasoning was identified by the Court of Appeal in 2007, but it felt bound to follow Croke [37].
Richie J considered this to be a point of general public importance, that the issue had been fully argued and considered in the Court of Appeal and the concern had been made plain [44]. Accordingly, the question of whether the Claimant (aged 8) is entitled to claim for damages for the lost savings she would have accrued during her lost years was certified for a leapfrog appeal.
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‘Payment of the Bill’ Under the Solicitors Act 1974: Menzies v Oakwood Solicitors Ltd [2023] EWCA Civ 844 - Sebastian Bates, Temple Garden Chambers
31/07/23. In this case, the Court of Appeal analysed s 70 of the Solicitors Act 1974.
As explained at [1], s 70 ‘entitles a client to apply to the court for an assessment of a solicitor's bill’, although ‘the power to order assessment is not “exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill”’.
Against this background, the question for the Court was: ‘[W]hat amounts to payment of the bill’?
Summary
As set out at [2] and [7]–[17], ‘[t]hat question ar[ose] in the context of a [c]onditional [f]ee [a]greement agreed in writing [. . .] between the [c]lient and the [s]olicitors some years before settlement of the [c]lient’s claim’. It ‘included terms by which the [c]lient agreed in advance to the deduction of the [s]olicitors’ fees’. ‘When the claim was settled in 2019, the [s]olicitors deducted the fees shown in their final statutory bill from the settlement monies they held in their client account, before sending the balance to the [c]lient.’
The solicitors contended that this‘deduction constituted “payment” for the purposes of the provisions in [s] 70 restricting the time within which there can be a court assessment of their bill’ and so the client ‘was barred by [s] 70(4), when he started proceedings in 2021, from seeking an assessment of the [s]olicitors’ bill’. Costs Judge Rowley had indeed held at first instance ‘that the application for an assessment was barred by [s] 70(4)’: see [23].
Conversely, as summarised at [3], the client’s submission was ‘that “payment” of the [s]olicitors’ costs for the purposes of [s] 70(4) can only take place when there has been “a settlement of account between the parties”’—in effect, ‘that solicitors must get their clients’ express consent to the precise amount of the bill they seek to deduct before that deduction will amount to “payment” so as to start time running for an assessment application under [s] 70’. Bourne J, ‘sitting with Master Brown as an assessor’, had allowed the client’s appeal against Costs Judge Rowley’s decision on this basis: see [24].
Conclusion and Comment
The Court of Appeal allowed the appeal from Bourne J’s decision and restored Costs Judge Rowley’s decision: see [46]. This was because the Court was ‘content to adopt’, at [41], ‘the meaning proposed [in an earlier case], namely that payment for the purposes of [s] 70 is a transfer of money (or its equivalent) in satisfaction of a bill with the knowledge and consent of the payer’. As the Court explained at [42], ‘[w]hat the client needs to consent to, in order for payment to take place, is “the transfer of money”, not necessarily the precise amount to be transferred’.
It is noteworthy that, in so concluding, the Court felt it necessary to reiterate that the legislation ‘is in need of reconsideration’: see [5] and [47].
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Dishonesty or litigation 'wishful thinking' - Anisa Kassamali, Temple Garden Chambers
30/07/23. Judges are often asked to consider the honesty of a witness when giving evidence. Mr Justice Richards considered the question in the context of an action by a corporate investment fund in Old Park Capital Maestro Fund Ltd v Old Park Capital Ltd & Ors [2023] EWHC 1886 (Ch).
Background
A corporate investment fund (the “Fund”) brought proceedings against three defendants: (i) the investment manager of the Fund (“Old Park Capital); (ii) the Chief Operating Officer of Old Park Capital (“HVK”); and (iii) a director of the Fund (“BP”). This update considers Mr Justice Richards’ discussion of HVK’s evidence.
Decision
Mr Justice Richards held that various of HVK’s assertions in his witness statement were not true. However, he still concluded that this was a case of ‘litigation wishful thinking’ rather than dishonesty. He relevantly observed:
“11. During HVK’s cross-examination, it became clear that various assertions in his witness statement were not true. The Fund helpful set these matters out in a Table of Admissions…I will not deal with each instance alleged. The headline point is that HVK was wrong to deny, in his witness statement, the existence of an arrangement or understanding, made prior to the launch of the Fund, for the Fund to invest in [commercial paper]. He was also wrong to deny his knowledge of that arrangement or understanding, made prior to contemporaneous emails put to him in cross-examination. The Fund has invited me to conclude that HVK was an untruthful and unreliable witness. I have considered the matter carefully but, having regard to the totality of his evidence, I will not make that finding.
12. It was clearly not to HVK’s credit that he made untrue statements in his witness statement. Moreover, he did initially defend those statements in cross-examination. However, once he was shown emails that showed the inaccuracy of his witness statement, he accepted the inaccuracies. That necessarily meant that there was some inconsistency in his evidence, but I consider that the Fund overstates matters which it says that most of the nine indicators of unsatisfactory witness evidence that Lewison J identified in Painter v Hutchinson [2007] EWHC 758 (Ch) were present. HVK has given full disclosure of a large number of documents. While his answers to some questions in cross-examination were long, I did not consider him to be evasive or argumentative. When his answers were long, that was often because of the difficulty that he had in being invited to draw conclusions from a small cross-section of the emails that he had received t the time. If anything, he was on occasions too ready to accept propositions that were put to him.
13. Ultimately, I have concluded that the untrue statements in HVK’s witness statement were a result of what Mann J described as ‘litigation wishful thinking’ in Tamlura NV v CMS Cameron McKenna [2009] EWHC 538 (Ch)…Some allowance is appropriate for the sheer quantity of emails that HVK received. Nearly 400,000 documents were extracted from HVK’s data sources, reduced to 20,000 for the purposes of disclosure. The pre-existing arrangement for the Fund to invest in [commercial paper] featured in just a few of the emails that HVK received. He could well have overlooked those emails, or their significance, when preparing his witness statement.”
The scope of the case, particularly the extent of the disclosure, was relevant to Mr Justice Richards’ decision. Nonetheless, practitioners should take note that there is some a middle ground between ‘honest’ and ‘dishonest’ witnesses.
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Whiplash reform: As settlement times rise, the OIC portal remains far from perfect - Matthew Huggett, president of CILEX
04/07/23. In 2021, the Ministry of Justice brought in reforms that increased the small-claims limit for road traffic accidents from £1,000 to £5,000, implemented fixed damages for injuries that last up to two years and asked the insurance industry to set up an online claiming system - the Official Injury Claim Service (OIC).
These changes were made amid considerable concern from across the legal profession about the potential for restricting access to justice for those making injury claims.
CILEX, which has over 4,500 members working in personal injury law, was opposed to the reforms and remains of the view that those claiming should be provided with legal advice and that the fixed tariff of damages is not necessary and overlooks the complexity of each individual case.
A recent survey of our members showed that most disagreed that the OIC had improved access to justice. The majority believed it was “not user-friendly” and felt that its complexity was deterring some people from pursuing claims.
Responding to the Justice Committee’s recent call for evidence on the impact of the reforms, we expressed concern about rising settlement times for those seeking compensation for whiplash injuries using the OIC. Concluding personal injury claims as quickly as possible is important for everyone involved but the most recent OIC quarterly data shows average settlement times steadily increasing, from 45 days in the early days of the OIC to 227 days by the end of 2022.
Whilst we appreciate that the OIC predicted the rise to this point and beyond, we are concerned that this is being seen as the norm, with average settlement times pushing closer to taking three-quarters of a year to resolve. This rise has the potential to add yet further pressure to an already strained legal system.
While the increased use of technology is to be commended, there is a real question over the ability of claimants to engage with the OIC. Our member feedback suggests claimants are not able to effectively collate the evidence required for a claim and that claims are often far too complex and intricate for the average injured person. This is why, despite the OIC being built so that injured people could run their own claims, more than 90% choose to use a lawyer to assist them.
The economics of a system, with no costs recovery – meaning clients have to pay lawyers out of their damages – means that small and medium-sized law firms are dropping out of the whiplash claims market, as the work becomes less financially viable. As the number of providers shrinks, there is a real risk of reduced consumer choice and monopolisation of the market by larger, more equipped firms.
In addition, while some CILEX members felt the OIC provided a platform for parties to focus on negotiation as well as early settlement, it was also noted that it could result in non-standard remedies being overlooked and underemployed.
To mitigate against some of these issues, there needs to be ongoing monitoring to ensure the portal is, and remains, fit for purpose. The effect on access to justice should remain under review, with the potential creation of market monopolies for those offering advice and the question of whether the complexity of the portal is preventing certain members of the public from engaging with the system, being key considerations.
There should also be work put in to create further guidance and signposting to reduce user confusion.
Almost two years on from the implementation of whiplash reforms, a significant amount of work has gone into making improvements to the portal, but the system remains far from perfect.
Access to justice for those injured in road traffic accidents must remain paramount. That means better legal education for the public, improved advice and guidance for those using the portal and ongoing monitoring to ensure that consumer choice is not being compromised.
Matthew Huggett is president of CILEX (Chartered Institute of Legal Executives)
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