After the Revolution - Aidan Ellis, Temple Garden Chambers

23/10/13. Claimants beware. Section 69 of the Enterprise and Regulatory Reform Act 2013 came into force on 1 October 2013. As a first year law student I remember being surprised by Wade’s use of the dramatic term “revolution” to describe changes in the fundamental rules regarding parliamentary sovereignty. In the field of employers’ liability claims, however, it is not an overreaction to describe section 69 as a revolution. At a stroke, it prevents injured employees from bringing claims for breach of statutory duty against their employer. The statutory duties (and possible criminal liabilities) remain, but instead of relying on them, claimants will have to fall back on negligence.

The intention is to protect employers from claims being brought against them in circumstances where, in lay terms, they have done nothing wrong. Take the well known case of Stark v the Post Office, in which the employee’s bicycle failed causing him injury in circumstances in which no reasonable system of maintenance or inspection would have detected the fault. The Claimant succeeded under the strict provisions of the Provision and Use of Work Equipment Regulations. In negligence (and hence under the new regime) he would surely have failed.

Nevertheless, section 69 is not the end for employers’ liability claims. First, the new regime does not apply to breaches of duty which occurred prior to 1 October 2013. As a result only new claims will be affected. Second, whilst there will be a number of claims, like Stark, which could only ever have succeeded under strict liability rules, many other claims are still capable of being pursued in negligence. For instance, claims founded on failures to train, to inspect or to maintain the workplace will all continue, though they will now be framed using the language of negligence. In such cases, the fact that the employer is also in breach of a statutory duty will hardly make it easier to defend the claim, even though the breach itself is no longer actionable. Third, a range of creative arguments could be explored to assist Claimants. For instance, where the Claimant is employed by an emanation of the state (as defined in classic European Law cases such a Foster v British Gas) and the statutory duty is based on a European Directive, the Claimant may well be able to rely on the terms of the underlying EU Directive in any event. The result would then depend on whether the directive itself is construed so as to create a right to compensation. Where the employer is not an emanation of the state, the Claimant might still be able to sue the State itself for failure to properly implement the directive. It is also possible that where the employer is a public authority, a Claimant may rely on human rights arguments. This line of argument may be particularly effective in fatal accidents cases, where Article 2 of the European Convention is engaged.

The impact of section 69 is likely to be that a minority of claims which would previously have succeeded are now doomed to fail. But the majority of claims will continue, albeit in a different form and with a different emphasis. Without the comfort of clear-cut breaches of statutory duty, liability in these cases will be more difficult to assess and for a time more unpredictable. As a result, both Claimants and Defendants will need to adapt quickly to the new environment, particularly given the strict time limits applying to portal claims.

Aidan Ellis

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Suspicions, Beliefs and Knowledge: the Date of Knowledge Test After AB v Ministry for Defence - Martin Canny, Barrister

22/10/13. The 'date of knowledge' provisions in s 14 of the Limitation Act 1980 ('LA 1980') play an important role in personal injuries litigation. The predecessor to this section was introduced in 1963 to reverse the result of Cartledge v E. Jopling & Sons Ltd [1963] AC 758, where workers exposed to noxious dust found that their cause of action for damages for personal injuries had become become statute barred prior to them realising they had suffered any injury. The word 'knowledge' is crucial to an understanding of the section, but it does not have a fixed meaning: there are levels of what be described as 'knowledge of facts' ranging from suspicion, intuitive belief or irrational belief to knowledge that a certain state of affairs exist which has been verified beyond a reasonable doubt. The precise meaning of 'knowledge' was recently exhaustively considered by the Supreme Court in AB v Ministry of Defence [2012] UKSC 9, [2013] 1 AC 78.

AB v Ministry of Defence: Atomic Veterans before the Supreme Court

AB v Ministry of Defence was the lead case in group litigation relating to the exposure of army servicemen to radiation in the 1950s. The claimants whose cases were before the court (apart from one whose injuries were recent) all had variants of the same limitation problem. Well publicised efforts to secure compensation for them based on their subjective beliefs that exposure to radiation in the 1950s had caused them ill health had been ongoing since the 1980s. Apart from funding issues, litigation had not been brought earlier as they (even in 2012) lacked expert evidence to prove that their injuries were caused by (ie attributable to, within the meaning of s 14(1)(b) of the LA 1980) the actions of the defendant. Apart from holding out a forlorn hope that the Supreme Court would change the common law rules on causation, or that some further helpful evidence would be discovered, their actions were all bound to fail on a causation point. This was clearly a hard case and the Supreme Court held, by a 4 to 3 majority, that the 'reasonable belief' or 'reasoned belief' of a claimant that his injuries were attributable to the actions or omissions of the defendant equated to 'knowledge' within the meaning of s 14(1). The dissentients, led by Lord Phillips, noted that a subjective belief was all that was in fact required by the majority, which appears to correctly summarise the ratio decidendi of the decision as scientific reason did not in fact support their intuitive beliefs. As the claimants held such a belief their claims were all found to be statute barred, except for those where the injuries suffered were recent. The court approved of the approach of Lord Donaldson MR in Halford v Brookes [1991] 1 WLR 428 to the effect that a belief would amount to knowledge for the purposes of s 14 if it was held 'with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking legal and other advice and collecting evidence': see [1991] 1 WLR 428 at 443. As subsidiary findings, the Supreme Court held that a person can have a reasonable belief in a state of facts even if unable to prove those facts and, in fact, even if those facts do not exist. Secondly, the court held that it is logically impossible for a claimant's date of knowledge to come after the date on which proceedings are brought.

AB v Ministry of Defence: Dissenting voices on the meaning of knowledge

An unusually strongly worded dissent was delivered by Lord Phillips, which carefully examined the context of each of the judgments from which quotations were relied upon in the majority judgments and argued that the majority had fallen into error in finding support for its position in those judgments. There is merit in the comments of Lady Hale that:

'If "knowledge of the facts" is to be interpreted as firm belief in a state of affairs, it surely must have that meaning for each of the circumstances in which it is employed'. Therefore... the claimant need only have a belief in the identity of the defendant...' (see [2012] UKSC 9, [2013] 1 AC 78 at para 187)

She added that 'the word knowledge... is in no sense a natural synonym for belief': see [2012] UKSC 9, [2013] 1 AC 78 at para 188. The decision of the majority may betray a level of dissatisfaction with a set of proceedings which had little to no chance of success and which was likely to cost the taxpayer a lot of money, with Lord Phillips noting that there were 1,011 claimants whose legal costs, if successful were estimated at £17.5 million. By raising the fact that a person's date of knowledge is unconnected to when they have sufficient evidence to prove their case, it was stated that the majority did not have regard to the fact that the claimants not alone lacked evidence, they lacked facts that were necessary to establish their case. By way of response to this criticism of the majority approach, Lord Brown noted that the minority approach would lead to a situation where 'the more hopeless the claim, the likelier it is that the claimant will be in a position to defeat the Limitation Act defence': see [2012] UKSC 9, [2013] 1 AC 78 at para 72.

Conclusion

It is rare to see dissenting judgments as strongly worded as those delivered in AB v Ministry of Defence; for this reason one should hesitate before concluding that it has now settled the law in this area. Although the claimants in AB were always going to lose their cases based on the law as it currently stands, a summary judgment application on the merits of the claims would have provided a less controversial route for this to occur. The approach of the majority is somewhat strained and in effect substitutes 'believes' for having 'knowledge of facts' in applying the date of knowledge test. In cases where a defendant does not know what a claimant subjectively believed many years previously this will not affect the outcome, and thus the decision may be of limited effect. However, the focus of Lord Wilson (giving the main majority judgment) on a short extract from the judgment of Lord Donaldson MR in Halford v Brookes gives rise to a risk that the first attendance for legal advice and first request for an expert report will automatically give rise to a claimant's date of knowledge, even if further investigations taking a lengthy period of time follow thereafter. This would appear inconsistent with the leading judgment of Brooke LJ in Spargo v North Essex Health Authority[1997] 8 Med LR 125 on what the law requires in order for knowledge of the fact of attributability to be established. By way of example, the recent decision in Harrison v Isle of Wight NHS Primary Care Trust[2013] EWHC 442 (QB), where the claimant genuinely thought the defendant was at fault for her injuries but initially received expert advice to the contrary, does not sit well with AB v Ministry of Defence (which was referred to only in passing in the judgment). Notwithstanding the foregoing criticisms, AB v Ministry of Defence now represents the law and is likely to lead to a further narrowing of the classes of person who may gain the benefit of s 14 and increase the importance of the s 33 of the LA 1980 in personal injuries actions.

Martin Canny BL is a practising barrister and the author of Limitation of Actions in England and Wales,
which was published by Bloomsbury Professional in July 2013
for more information visit www.bloomsburyprofessional.com.

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Post-Jackson Costs Cases - Sue Nash, Litigation Costs Services

21/10/13. We are now 6 months+ into the post-Jackson era and while the Court of Appeal has yet to get involved (although see Mitchell below), there have been a few cases that may indicate how the new regime will affect us all in the future. Most of these have been to do with compliance with the new Rules and I urge everyone to read the 18^th lecture in the Jackson implementation series of lectures which was delivered by the Master of the Rolls on 22nd March this year. http://www.judiciary.gov.uk/Resources/JCO/Documents/Speeches/mr-speech-judicial-college-lecture-2013.pdf

This article concentrates on and summarises the few cases that impact directly on costs management. A future article will deal with what solicitors (and barristers) need to be doing to comply with the new regime and to ensure that they do not fall foul of it.

Proportionality

Willis v MRJ Rundell & Associates Ltd & Anor [2013] EWHC 2923 (TCC) – Coulson J. The case concerned a £1.6m professional negligence claim against a firm of construction professionals that was subsequently reduced to £1.1m. Both sides submitted budgets at the original case management conference (CMC) in December 2012 – £821,000 for the claimant and £616,000 for the defendant. An unsuccessful mediation was subsequently held and the judge then ordered a costs management hearing which was held the last week in September. By this time the respective budgets were £897,000 and £703,000.

The costs in both budgets were found to be “disproportionate and unreasonable” on the basis “it will cost significantly more to fight this case than the claimant will ever recover”. This was so even allowing for the extra costs that a professional negligence claim can generate in expert evidence and “for the non-quantifiable, but potentially serious, damage to the defendant’s professional reputation that may be caused by a claim of this kind”.

He declined to approve either budget

Note: He went on to say that “it must be likely that [at the conclusion of the case] even the successful party will recover only some of its costs” before adding “although I am aware that some have taken the view that the absence of an approved costs budget means that that party will recover no costs at all, I do not believe that such a draconian approach is in accordance with the letter or the spirit of the new costs rules or 51G PD. Just because an estimate of costs of £900,000 at this stage of the case appears disproportionate and unreasonable does not mean that a final recovery of, say, £450,000, by agreement or on assessment, would not be appropriate.”

Comment: This is the first reported case dealing with proportionality – expect many more over the next year as the Court of Appeal’s guidance on the interpretation of the new rule will be essential.

Compliance

The headline case is Andrew Mitchell MP v News Group Newspapers Ltd [2013] EWHC 2355 (QB). Master McCloud allowed Mr Mitchell only his court fees after his solicitors failed to comply with the Court’s direction that budgets be filed at least 7 days before the CCMC (actually the day before it!). She specifically referred to the guidance given by Lord Justice Dyson (MR) in the 18^th lecture in the Jackson implementation series before concluding:

“Budgeting is something which all solicitors by now ought to know is intended to be integral to the process from the start, and it ought not to be especially onerous to prepare a final budget for a CMC even at relatively short notice if proper planning has been done. The very fact that the defendants, using cost lawyers, were well able to deal with this in the time allotted highlights that there is no question of the time being plainly too short or unfairly so.”

Comment: This case has been leapfrogged to the Court of Appeal and is due to be heard on 7^th November (Dyson LJ is to sit on it). Most costs commentators expect the Court of Appeal to uphold the judgment even though Master McCloud herself accepted that her ruling was draconian.

In Elvanite v Full Circle Ltd v AMEC Earth and Environment (UK) Ltd [2013] EWHC 1643 the Defendant had failed to make a formal application to vary its budget prior to the final hearing (although it had served the revised budget on the Claimant). Coulson J held that the Court’s approval should have been sought and that such an application should be made, “immediately it becomes apparent that the original budget costs have been exceeded by more than a minimal amount”. He dealt with the matter as an application to retrospectively amend a budget (NB it had almost doubled) and went on to say that, “The certainty provided by the new rules would be lost entirely if the parties thought that, after trial, the successful party could seek retrospective approval for costs incurred far beyond the level approved in the costs management order”.

Finally, there is the case of The Board of Trustees of National Galleries and Museums on Merseyside v AEW Architects and Designers Ltd & Ors [2013] EWHC 3025 (TCC) delivered on 11^th October by Mr Justice Akenhead. Both parties had files revised costs budgets for the PTR but they had not been dealt with at that hearing (through an oversight by both parties and by the court). The paying party argued that the costs judge could not depart from the last formally approved budget and referred to Coulson J’s ruling in Elvanite. Mr Justice Akenhead saw “no reason to disagree with the principles set down by Mr Justice Coulson” but pointed out that the Court could agree revised budgets without a formal application and referred to the oversight adding that this was “a very obvious case, based on my knowledge of the case and the case management, for a substantial upward departure from the approved budget”. He left it to the costs judge for assessment noting that he/she would no doubt “take into account what I have said.”

Comment: The latter case in no way diminishes the importance of Elvanite which is line with several other judgments on compliance with the rules.

Other

Murray and another v Neil Dowlman Architecture Ltd [2013] EWHC 872 (TCC). This case involved revision or rectification of a costs budget after it had been approved by the Court. Although Coulson J allowed the Claimants to revise their costs budget on the basis that there were special circumstances in the case (there was a technical error in the Precedent H rather than a procedural default) he held that it will normally be extremely difficult to persuade a court that inadequacies or mistakes in the preparation of a budget, which is then approved by the court, should be subsequently rectified.

Comment: It is vital that parties get their initial budgets right. They are required in all cases where mandatory costs management applies even if a Costs Management Order (CMO) is subsequently not made. Also note that the mandatory regime may well soon be extended to commercial cases over £2M.

In Slick Seating Systems and Ors v Adams and Ors [2013] EWHC B8 (Mercantile) HHJ Brown QC followed his earlier judgment in Safetynet and summarily assessed the winning party’s costs immediately following the trial of the issues and ordered payment within 14 days. He said as follows:

1. The claimants also ask for their costs and this particular case, as I say, has been case managed throughout by me and therefore the activities of the claimants have been controlled to a certain extent by the active case management of the court. The claimants have co-operated in that process, as indeed they are obliged to do. By running this case with a costs budget, I approved a budget of a grand total of £359,710.35 pence for doing this case through to trial. In my judgment, that budget was proportionate to what was at stake: the £4.4 million sum that I have just awarded. The claimants have laudably kept within that budget and exercised due control over their activities and expenditure in an exemplary fashion. The statement of costs on 13th May 2013 (which is today) is favourably compared with the costs estimate of 22nd May 2012. The form is signed by the partner of the solicitors and a member of the client company as well, Mr Beasley; the grand total is £351,267.35 pence. In my judgment that is a sum which is, looking at each of the phases is within the budget that was set and the claimants are to be commended with controlling their budget throughout this particular period.

2. That will be the sum that I would award to be paid within 14 days without the need for detailed assessment, detailed assessment becoming otiose. ……………. . Here, I am in a position - bearing in mind this is a one-day trial although a lot of activity has taken place - to summarily assess these costs because I have been actively involved in managing this case throughout. I would know more about the costings of this case than any detailed costs judge would have. Therefore, it seems to me quite right that I should assess these costs today with all that knowledge.

Comment: The upside for receiving parties of this approach is obvious. Paying parties however will want to be sure that the court has as much ongoing oversight of the costs as HHJ Brown did in this case and that the receiving party’s budget does not include non-recoverable costs.

Sue Nash
Litigation Costs Services 
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