PI Brief Update

Summary of Recent Cases, October 2020

15/10/20. 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

Andrew Chell v Tarmac Cement and Lime Limited [2020] EWHC 2613 (QB)

Facts

The Claimant was employed by Roltech Engineering Ltd as a site fitter. From December 2013, his services (and those of his brother) were contracted out to the Defendant. Tensions subsequently arose between the Roltech fitters and the Defendant's own fitters. On 4 September 2014, as the Claimant bent down to pick up a length of cut steel, Anthony Heath - a fitter employed by the Defendant - put two pellet targets on a bench close to the Claimant's right ear and struck them with a hammer, causing a loud explosion. The Claimant suffered a perforated right eardrum, noise-induced hearing loss measured at 9-10 decibels, and tinnitus. The Claimant brought proceedings alleging negligence directly against the Defendant and alleging vicarious liability.

Findings and Judgment of HHJ Rawlings, 14 October 2019

The Judge below found that the incident was connected with tensions that had arisen between the Roltech fitters and the Defendant fitters, giving rise to a desire on the part of the latter to play a practical joke on the Claimant. The tensions did not include threats of violence and, though reported by the Claimant to representatives of his employer and the Defendant, Anthony Heath was not specifically referred to. The Judge applied the two-stage test of Lister v Hesley Hall Limited [2001] UKHL 22, finding firstly that there was a close relationship between the Defendant and Anthony Heath. The Judge then asked whether, following Mohamud v William Morris Supermarkets PLC [2016] UKSC11, there was a sufficient connection between the close relationship and the act in question, such that it would be just to hold the Defendant responsible.

The Judge held that the act was not within the field of activities assigned to him. The pellet target was not work equipment nor formed part of the work, the act was unconnected to any work instruction, and the act did not advance the purposes of the Defendant. Further, the previous tensions did not create a sufficiently close connection: the Claimant had only felt 'uncomfortable' but not threatened, Anthony Heath had not intended to cause harm, and the tensions were not serious enough to suggest a risk of physical confrontation.

The Judge further found there was no direct duty owed by the Defendant to the Claimant. There was no threat of violence or suggestion that violence was likely. Even if a duty had been owed, it was not breached: horseplay cannot be expected to be included in a risk assessment. In any case, the risk assessment had included a section on general conduct, such that workers were not to intentionally or recklessly misuse work equipment.

The Claimant's Arguments

The Claimant submitted that the Judge should have found the Defendant negligent in failing to design a system to maintain discipline and in failing to react to the tensions. He submitted that the Judge should have found there was a foreseeable risk of injury through horseplay due to the tensions, that there should be a substantial policy on ill-discipline, that the Defendant failed to investigate the tensions, failed to provide Anthony Heath with suitable training and failed to supervise him at the material time.

The Claimant further submitted that the Judge should have given consideration to the close connection test as applied in sexual abuse cases, and that a finding of vicarious liability should have been made for the following reasons. The act happened likely immediately after a course of employment, creating a close link; the act was due to an employment issue which should have been managed by the Defendant; the Claimant was placed in a vulnerable position by the Defendant given the former was a temporary worker; the employment created the opportunity for the act; and the act involved work equipment.

The Defendant's Arguments

The Defendant sought to defend the court below's findings of fact and submitted that a risk assessment or greater supervision would not have prevented the accident. The Defendant further submitted that the Judge had carefully weighed the sufficiency of a connection between the relationship (between the Defendant and Anthony Heath) and the act.

Findings on Vicarious Liability

The Judge described the below Judgment as exemplary in its treatment of the leading cases on vicarious liability. The two-stage test of Lister was appropriately adopted.

Morrisons v Various [2020] UKSC 12 was not available to the Court below. In that case it was held that the act had to be so closely connected with acts the employee was authorised to do that it might fairly and properly be regarded as done by the employee while acting in the ordinary course of their employment. Had the Judge below had this judgment, it was held, he would only have been fortified. This was a case of an employee being on a 'frolic of his own': the work equipment was incidental to the act, and the temporal connection is of even less significance given the Supreme Court decision (and in any event should not be a significant factor, it was held).

Findings on Breach of Duty

The Judge was correct to find that horseplay need not be included in a risk assessment. Where a site is dangerous, 't is expecting too much of an employer to devise and implement a policy or site rules which descend to the level of horseplay or the playing of practical jokes'. The general conduct section of the risk assessment was sufficient, and increased supervision to prevent horseplay was not a reasonable step to expect the Defendant to have identified and taken. The Judge was further entitled to find that the situation as presented to the Defendant prior to the incident did not merit specific action in relation to Anthony Heath where there was no reasonably foreseeable risk of injury to the Claimant at the hands of Anthony Heath. It is difficult to argue that a Defendant should have taken steps to avoid such behaviour if the employee is on a frolic of his own.

Conclusion

The Judge had been right in both law and in fact and the appeal was therefore dismissed.

Summary of Recent Cases - Costs

Dr Andre Oberholster v Ms Jayne Little and Optical ExpressLtd [2020] EWHC 2635 (QB)

Facts

The Claimant contracted with the Second Defendant ("D2") for surgery. The surgery was carried out by the Eighth Defendant ("D8") as engaged by D2. The Claimant sued on the basis that the risks of the surgery were not properly explained, making claims against various companies related to D2 as well as against D2 and D8. The Claimant made a Part 36 offer of £105,000 to all Defendants on 20 June 2019, which was accepted on 1 July 2019 by D2. By agreement, the claims against the other companies were discontinued with no order as to costs. The Claimant then applied for costs between themselves and D8 to be determined by the court, while D8 applied for their costs to be paid by the Claimant or D2. D8 applied to strike out the claim against them.

The Decision Below

D8 was ordered to pay the Claimant's costs of proceeding against them. It was held that the claim could not succeed against D2 unless it succeeded against D8, given the latter was responsible for the consent process. D8 could still pursue proceedings against D2. The parties had agreed to summary assessment of costs, thus there was no need for a trial.

D8 appealed, seeking an order that the Claimant pay D8 their costs of defending the action and then seeks to recover them from D2 as part of the Claimant's costs (a Bullock Order); alternatively, an order requiring D2 to pay D8's costs (a Sanderson order); alternatively, no order as to costs between the Claimant and D8.

D8's Arguments

The Case that D8 was the Successful Party

D8 submitted that they were deprived of being vindicated at trial by virtue of D2's acceptance of the Part 36 offer. Had they had a trial, they would have vindicated their position.

Held: there was no finding of success in this case. It was reasonable to bring a claim against D8 and no conclusion of this claim was brought about by D2's acceptance of an offer, given the remaining issue of costs. Bullock and Sanderson orders would not be appropriate where D2 was not clearly unsuccessful vis-a-vis D8, as no findings had been made even between D2 and C, let alone D2 and D8.

Summary Process

D8 submitted that the summary process was unjust because the Judge made findings of fact as to which party would be liable. This submission was rejected: agreed medical evidence was sufficient to support the conclusion that ultimate responsibility for consent lies with D8. Further, the court did not adjudicate on which party had won, but was merely taking a broad-brush approach: there were sufficient difficulties in D8's case that justice was done by making a costs order adverse to D8. The summary process was agreed between the parties and thus the broad-brush approach could not be argued against.

Judge did not evaluate what a just order would be where D8 had no involvement in the settlement

D8 submitted that they suffered prejudice in being ordered to pay costs where they had been willing to go to trial. This submission was rejected. It was held that while this might be a tenable way of analysing the matter, the Judge below had not erred simply by not taking this route. Further, the depravation of a trial was caused proximately by D8 agreeing to a summary process. The cases of D2 and D8 were inextricably linked and it was likely, given D2's settlement, that D8's case faced serious difficulties.

No consideration as to who was the successful party, nor reasons given as to why D8 was not the successful party

This is principally covered in the above findings on why D8 was not a successful party. The Judge below was correct to find that D8 could not be held to be a successful party - the position remained unknown. The strike out application had failed and the outcome not appealed. The view the Judge took was 'well available' to them.

D8 had a remedy in contribution proceedings which was contrary to the Overriding Objective because it would lead to more cost, delay and court time

D8 submitted that the decision took into account the possibility of contribution of D2, and that this would require a trial which would be contrary to the overriding objective. This submission was rejected: there was already a potential for contribution proceedings regardless of the Judgment below. The Judge was entitled to consider the possibility of contribution proceedings given the likelihood of their taking place, and in any case such consideration did not form the primary basis for finding that the costs order should be made. Such consideration did not render wrong the exercise of the Judge's broad discretion.

No consideration or reasons given for rejecting Bullock/Sanderson order

It was held that the Claimant was correct to say that this ground must rely on D8's assertion that it was the successful party. There cannot be an error in the Judge's failure to make such an order where there is no 'successful' defendant. In any case, D8 accepted that Bullock/Sanderson orders are a matter of discretion under CPR r.44.2, and therefore there was no error of principle in the Judge's failure to make one.

'No order as to costs' - no reasons given as to why this was not the outcome

As above, while no order as to costs was open to the Judge, the Judge did not err in exercising their discretion in another (justifiable) manner. There was no failure to give reasons - the reasons given for the order actually made also amount to reasons as to why no other particular order (of those open to the Judge in their discretion in the circumstances) was made.

Conclusion

There may be many alternative ways of looking at a matter which were available to the judge, but this is not sufficient basis to overturn or vary decisions below, particularly where - as in summarily-assessed costs - the court below has a generous discretion. D8 had agreed to their costs being summarily assessed, which inevitably gives rise to a broad-brush approach. That approach gave the Judge an entitlement to assess, on the basis of agreed facts, the likelihood of D8's being successful at trial, one such relevant fact being the acceptance of a significant offer by D2 (on whose case the case of D8 in part relied). Given D8 was unlikely to succeed at trial (taking the broad-brush approach), there was no error of law in the Judge ordering that they pay the Claimant's costs. IT was well within the broad discretion available in costs, particularly so where the parties have entrusted the court to take a broad-brush approach without resolving the issues via a trial. Appeal dismissed.

Summary of Recent Cases - Costs (continued)

Terracorp Ltd v Mistry & Ors (Rev 1) [2020] EWHC 2623 (Ch)

Introduction

This case was an appeal of an issue-based costs order. It does not break new ground in terms of the law to be applied. However, it represents a helpful reminder of the relevant principles, and it emphasises the difficulty of appealing against a costs order made by a first instance judge. You will notice in this issue there are two costs cases and none under the heading of civil procedure. The reason is that both costs cases are recent and relatively interesting, while this month has been comparatively bare on major cases relevant to civil procedure.

Facts

This was a commercial case which the Defendants won at first instance, by demonstrating that they were not contractually required to pay certain charges in covenants relating to purchased parcels of land. However, the Defendants had wasted considerable time, both of the Claimant and of the court, by running defences "including fraudulent misrepresentation, conspiracy, estoppel, title to sue, and allegations that the original sales had been part of an unauthorised collective investment scheme". All of these had failed.
The court at first instance was faced with conflicting submissions on costs, with the Defendants asking for their costs as the winners, and the Claimant asking for an issues-based costs order whereby it would pay only 10% of the Defendant's costs. The judge took the view that the appropriate costs order would be for the Claimant to pay 50% of the Defendants' costs on a broad-brush basis.

The relevant legal principles

As a reminder to practitioners, the relevant legal principles are set out in the judgment of Jackson J(as he then was) in Multiplex v Cleveland Bridge [2009] Costs LR 55. They were not disputed and I set them out as relevant:

"(ii) In considering how to exercise its discretion the court should take as its starting point the general rule that the successful party is entitled to an order for costs.
(iii) The judge must then consider what departures are required from that starting point, having regard to all the circumstances of the case...
(v) In many cases the judge can and should reflect the relative success of the parties on different issues by making a proportionate costs order.
...
(viii) In assessing a proportionate costs order the judge should consider what costs are referable to each issue and what costs are common to several issues. It will often be reasonable for the overall winner to recover not only the costs specific to the issues which he has won but also the common costs."
[12] In addition:
(i) The fact that a party has not won on every issue is not, of itself, a reason for depriving that party of part of its costs.
"There is no automatic rule requiring reduction of a successful party's costs if he loses on one or more issues. In any litigation, especially complex litigation such as the present case, any winning party is likely to fail on one or more issues in the case. As Simon Brown LJ said in Budgen v Andrew Gardner Partnership [2002] EWCA Civ 1125 at paragraph 35: "the court can properly have regard to the fact that in almost every case even the winner is likely to fail on some issues" ... (Gloster J in Kidsons v Lloyds Underwriters [2007] EWHC 2699 (Comm)).
(ii) The reasonableness of taking a failed point can be taken into account (Antonelli v Allen The Times 8th December 2000 per Neuberger J).
(iii) The extra costs associated with the failed points should be considered (Antonelli).
(iv) One still has to stand back and look at the matter globally, and consider the extent, if any, to which it is just to deprive the successful party of costs (Antonelli).
(v) The conduct of the parties, both before and during the proceedings, is capable of being relevant (CPR 44.3(5))."


The first instance judge's reasoning

The judge at first instance considered that weight should be given to the general rule that the winners should get their costs. However, while the other defences were reasonable, they accounted for a large part of the trial, both as to evidence and argument, and they failed. This took the case beyond those where a successful party loses on one or more issues but should not be deprived of costs.

The decision of the High Court

The Claimant appealed the decision of the judge on costs to the High Court. They criticised the first instance judge for not making an issues-based costs order, and submitted that the 50% award was not just, fair or proportionate.

Miles J referred to the Court of Appeal decision in English v Emery Reimbold [2002] EWCA Civ 605, in which the Court emphasised: (1) that it is in the interests of justice that a Judge should be free to dispose of applications as to costs in a speedy and uncomplicated way; (2) appellate courts will usually be in a worse place than the trial judge to exercise discretion in relation to costs; and (3) that where no express explanation is given for a costs order, an appellate court will approach the material facts on the assumption that the Judge will have had good reason for the award made.

Miles J did criticise the first instance judge, suggesting that he could have set out his reasons more fully than he did. However, he set out the judge's logic, and having done so, he felt unable to conclude that the judge's decision was not rationally open to him. Importantly, Miles J concluded that the first instance judge took into account all the relevant factors, and he was well aware that the lost defences had taken up significant time and cost.

Note for Practitioners

This case is another illustration of the difficulties which arise when appealing the discretionary costs decision of a first instance judge. When the appeal is on a legal point, then all it takes for the decision to be overturned is for the judge to be 'wrong'. However, when matters of discretion are involved, the relevant test is that the first instance judge must have "exceeded the generous ambit within which a reasonable disagreement is possible":G. v G. (Minors: Custody Appeal) [1985] 1 W.L.R. 647, HL, at 652.
Courts will be especially reluctant to overturn a discretionary decision of a first instance judge where that judge is in a better position than the appellate court to weigh up the relevant factors: which is precisely the case when the trial judge makes a discretionary costs order. Care therefore must be taken when advising a client whether to appeal a costs decision: in circumstances similar to this case, appealing will often result in throwing good money after bad.

Paul Erdunast & Harry Peto
Temple Garden Chambers

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