Success Fees in Children’s Compensation Claims - Geoffrey Simpson-Scott, Colemans-ctts

16/06/15. The 6th April 2015 update to the CPR makes it much harder to successfully charge the full 25% success fee where we present children. Evidence justifying the percentage deduction needs to be presented at an infant approval hearing. These requirements are set out in the new Part 21 Practice Direction and appear to ignore the provisions of the CFA Order 2013 (which allows success fees of up to 25%) because they go directly to how the success fee has been calculated on each case.

Claimants are now consumers – the reforms deliberately gave them a very specific interest in the costs being incurred on their behalf. To recap, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 changed the way personal injury and clinical negligence cases are funded. Conditional fee agreements no longer have success fees payable by the unsuccessful Defendant. Instead, the successful Claimant must pay these from their damages.

Theoretically, infant or protected party cases should by dealt similarly to other cases. However, the raison d’être of the infant approval hearing is to ensure that the most vulnerable members of society have judicial protection. That scrutiny was previously limited to ensuring that the amount of compensation was fair. Now, however, it appears that the judiciary must also satisfy themselves that we are not taking too high a slice of the compensation they need to help them live with the effects of their injuries...

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Here Be Dragons! Fundamental Dishonesty in Personal Injury Claims - Paul Spiteri, Hugh James

15/06/15. “In days of yore, there was a man called Summers who verily injured himself in the course of his employment and sued his employers, Fairclough Homes. Summers sought redress of more than £800,000 of the realm. However, Fairclough’s insurers, suspicious of the claim, had him watched and proved he had massively exaggerated his plight. The most Supreme Court in the land ruled that the power to have such cases struck out was discretionary and only to be used where it was just, proportionate and thus in exceptional circumstances. The case against Summers was not considered to have met this required standard and at trial not only was he was awarded a tenth of the sum he initially desired, but he could also keep it! And lo, the insurance industry, having been rebuffed, resorted to tried and tested means to pursue dishonest claimants like Summers, (specifically bringing proceedings for contempt and seeking indemnity costs) but never gave up on their quest - the outright dismissal of such claims...”

With the advent of Section 57 of the Criminal Justice and Courts Act 2015 coming into force on 13 April 2015, claims such as Fairclough Homes v Summers (2012) may one day fall into the realms of fairy tale, myth and legend. An exaggeration perhaps, but be clear on this, the arrival of Section 57 signposts a massive change in the way Courts will deal with personal injury claims post April 2015. The phrase “Here be dragons” can frequently be found on ancient maps, made by cartographers to warn travellers of the dangers of far away, unchartered lands. The advice should equally now be used by claimant solicitors to warn their clients of the pitfalls of wilful (and perhaps unintentional) exaggeration of their claims in the context of Section 57 –itself an uncharted landscape.

For the uninitiated, section 57 concerns itself with the dismissal of a personal injury claim in its entirety where the Court is satisfied (on a balance of probabilities) that there has been "fundamental dishonesty" on the part of the claimant, whether in relation to the “primary claim” of the action (the personal injury claim) or a related one.

The defendant seeking such a finding must make an application to the Court to determine if fundamental dishonesty was indeed present. If the Court finds that was the case, the only means to avoid the claim being dismissed is to satisfy the Court that the claimant would suffer substantial injustice in doing so.

Essentially, then, if the Court considers that a claimant has been fundamentally dishonest and there is no substantial injustice caused, a claimant will not recover any damages nor indeed will they have any protection as against costs. This even where a claimant had otherwise suffered a non-fault accident and was genuinely injured as a result.

Prior to the enactment of Section 57, defendant lawyers would attempt to look for and argue “fundamental dishonesty” with a view to dis-applying qualified one way costs shifting (Qocs) as per CPR 44.16. The recent matter of Severn Valley Railway v Creech was one such case where the claimant was found to be fundamentally dishonest regarding his evidence and this resulted in a costs order of some £11,000 being awarded against him.

However, the enactment of Section 57 goes one step further and effectively robs the injured claimant of any damages where such a finding of fundamental dishonesty is reached. This effectively means that the approach in Summers has been completely turned on its head and the Courts now have a duty to dismiss a claim in appropriate circumstances, where previously this was a judicial discretionary power.

Clearly, Section 57 was always going to be divisive, with defendants on one side repeating the oft echoed sentiment that genuine claimants will have nothing to fear, whilst the claimant sector, fearful of the ongoing erosion of access to justice, view this as yet more evidence of the Government solely looking out for the interests of the insurance industry. Claimants lawyers though are no doubt most concerned that defendants will seek to make applications where there has been some discrepancy regards quantification of a claim, citing wilful exaggeration, with a view to achieving an outright dismissal of the claim.

Regardless of where you stand, even the most casual of legal observers cannot help but see the disparity as between the entire dismissal of a claim - an essentially draconian punitive measure, and the much lauded principle of proportionality, which has been very much at the heart of almost every recent civil law reform.

As to whether cases such as Summers are consigned to the history books, much will turn on how the Courts continue to interpret the definition of "fundamental dishonesty" and whether the evidence adduced in any given case meets such a definition. One would have expected, given the concept is central, or “fundamental” if you will, to a correct interpretation and application of section 57, that a clear statutory definition would have been provided. Alas, this is not the case and no doubt as matters proceed and defendants make such applications, we will see the Courts general attitude first hand.

However, as before, the concept of “fundamental dishonesty” is not a new one to this arena, having been, and continuing to be, the means for an exemption to the Qocs regime. The case of Gosling v Screwfix (2014) was one of the first to feature judicial examination of the term “fundamental dishonesty” in this context. Essentially it was considered that for the dishonesty to be fundamental it needs to go "to the heart of the claim" and that it should be considered purposively and contextually.

That is not to say however, that the definition of “fundamental dishonesty” in relation to Section 57 does not evolve separately from the definition in the context of Qocs. Time and the progression of case law will tell, though one would anticipate a good degree of overlap at the least.

Likewise there is no guidance as to what may be considered "substantial injustice", the means by which a claimant may yet keep their awarded damages even where fundamental dishonesty is shown. One would imagine though that the claimant would be precluded from arguing that the deprivation of damages was in itself a "substantial injustice"! For claimants who find themselves in such a predicament, it is to be hoped that the inclusion of the “substantial injustice” exemption will afford the Court a good degree of flexibility in applying the sanction. The subjective nature of this concept may yet prove to afford some balance to the extent that claims are dismissed, which on strict interpretation of the section, is to be the default position where fundamental dishonesty is shown.

The coming months will no doubt demonstrate how all parties to the personal injury claims process intend to use, or abuse, this provision and hopefully provide much sought after clarity.

“And they all lived happily ever after”? We shall see…

Paul Spiteri
Associate (Head of Motor Claims)
Insurance and Corporate Risk
Hugh James

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Summary of Recent Cases, June 2015

15/06/15. 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

Vann v Ocidental [2015] EWCA Civ 572

Proceedings arose from an accident in Portugal in which two pedestrians were killed after being knocked down by a speeding car while in the process of crossing a road.

The case came for trial before Supperstone J on 17th and 18th February 2014. It was an agreed fact at trial that soon after the pedestrians stepped into the road the offending car's headlights would have been in their field of vision and the sound of the car audible. In judgment handed down on 3 March 2014, Supperstone J held that the claimants succeeded on liability and there was no contributory negligence.

The Defendant appealed against that decision on the grounds that the two pedestrians were negligent in that they failed to...

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