Legal Watch:Personal Injury11th September 2014Issue: 032

Events

Plexus and Greenwoods hold a series of events which are open to interested clients. See below for those being held in the next few months:

The Major Bodily Injury Group (MBIG) | Spring Seminar | 28.04.15 | The Wellcome Collection, London

In This Issue:

• Part 36• Civil procedure/relief from sanctions• Civil procedure/pre-action disclosure• Costs• Watch this space

Part 36Subject to the outcome of any appeal, the case of Burrett v Mencap Ltd [Lawtel 8/09/2014] could have far reaching consequences. The defendant made a Part 36 offer in July 2013 in the sum of £15,000. In January 2014, following surveillance, the offer was varied under CPR 36.3(6) to £2,500. The varied, reduced offer was accepted by the claimant within 16 days of service. However, the District Judge dealing with the costs consequences of the offer and acceptance found that CPR 36.3(7) provided no renewed period for consideration but related back to the ‘relevant period’ for acceptance of the original offer.

If this decision stands, insurers who receive evidence that a claim is fraudulent or exaggerated, but who have previously made a Part 36 offer may reduce the sum on offer by way of variation but without losing costs protection from the date the earlier offer expired.

03

Civil procedure/relief from sanctionsAlthough it is a commercial case, Carlton Advisory Services v Dorchester Holdings Ltd and others [Lawtel 2/09/2014] seems to illustrate a significant softening of a court’s approach to default. The case shows a return to the principle of achieving justice between the parties, although the fact that the trial date would not be affected was a factor that worked in the applicant’s favour.

The defendant/applicant had failed to attend a pre-trial directions hearing in relation to the filing of evidence in an action commenced by the claimant/respondent. The defendant explained that it had not attended the directions hearing as the counsel that it had originally briefed was not available, no other counsel was available and that the terms of the original retainer did not permit the instruction of other solicitors. On the morning of the hearing, the defendant complained that a representative had had travel problems which had prevented him from attending. Orders in relation to, amongst others, the service of witness statements by 1 August 2014, were made in the defendant’s absence. At the time of the instant hearing, the witness statements had still not been served. The issue was whether the orders should be set aside and replaced with revised directions for the service of witness statements and expert evidence. It was common ground the trial date would not be affected.

The defendant applied under CPR 23.11 to set aside the directions and submitted that it had not served witness statements as it had had difficulty in obtaining instructions where the relevant individual had been on holiday, and that it had been waiting on a response to a request for further information before preparing the witness statements.

Allowing the application, the deputy High Court Judge held that if the terms of the retainer did not permit the instruction of other solicitors they were unwise; although the defendant was fortunate to be represented by counsel in the instant proceedings, the explanation for not instructing counsel originally was wholly unsatisfactory. Counsel were always available for a commercial case. Although the court had

extended an invitation to the defendant’s solicitors to attend the hearing without counsel, that opportunity had been declined as the solicitor/representative who had not attended the first hearing had prioritised other professional commitments. The court was fortunate in the sense that once those commitments had fallen away, the representative had turned his mind to attending the hearing; his factual statements in relation to travel problems on the morning of the hearing were undisputed. The defendant’s solicitors were obliged to explain why they had not engaged with the proceedings and filed evidence. That instructions could not be obtained as the relevant individual had been on holiday was no justification for what had happened: it was the duty of clients to make themselves available for instructions and for solicitors to make that clear to their clients. There was some evidence that the defendant had been waiting on a response to a request for further information but there was also strong evidence the other way; even if that submission were well-founded, it faced the difficulty that there was no justification for a party to decide not to comply with a court order because a request for further information had not been answered. Rather, that party ought to apply for a variation to the court order, which the defendant failed to do.

Given the terms of the order, the court would have been fully justified in refusing the defendant relief, but for the court’s power to make an order against a party to secure costs, which had to be exercised cautiously. The defendant had clearly failed to comply with the over-riding objective; where there had been a flouting of a court order, the court had jurisdiction. It appeared as though the defendant had not been serious about defending the case; if the court were wrong about that, it was the defendant’s fault for having conducted the case as they had. Relief was granted on condition that the defendant comply with the time limits the claimant advanced in relation to pre-trial directions; all existing costs orders, including the costs of the instant proceedings, were paid within 14 days; and the defendant deposited £25,000 in court as a reassurance that the claimant would not have its costs wasted in preparation for trial.

04

Civil procedure/pre-action disclosureAlthough applications for pre-action disclosure are relatively common, reported cases on the subject are less so. The case is also relevant to the topic of ‘e-disclosure’.

In Ensign Highways Ltd v Portsmouth City Council [Lawtel 10/09/2014] the applicant company applied for pre-action disclosure in its contractual dispute with the respondent local authority. The applicant and the local authority had entered a private finance initiative agreement under which the applicant was to upgrade and maintain highways in and around Portsmouth over a 15 year period. The contractual system of monitoring the applicant’s performance provided that service points would be awarded against it if it failed to fulfil specified obligations, with the local authority being able to terminate the contract if 250 service points were accumulated within a specified period. There was a term requiring mutual co-operation and good faith. A review after eight years of the contract indicated that the applicant’s performance had been good. A further two years later, the local authority sought to renegotiate the contract following budgetary constraints, but no agreement was reached. The applicant claimed that the local authority had thereafter sought to accumulate service points against it so as to be able to terminate the contract, and relied upon an email from a local authority employee which stated that it had to have 250 by a certain date. At the instant hearing the evidence was that the 250 point threshold had either been reached or was very close. An independent adjudicator was to decide the issue of whether the local authority had acted in accordance with the contract in applying service points in the manner in which it had. The applicant sought disclosure of documents that would result from a local authority search, using specified keywords, of electronic documents held by certain local authority employees who had been involved in the matter, and all documents after a specified date relating to the local authority’s approach to monitoring performance. Shortly before the instant hearing, the local authority had offered disclosure of 150 documents

that it had identified by searching the terms, “250”, “target” and “termination”, but maintained that it was not obliged to provide disclosure. Those documents were not provided in advance of the hearing. The issues were (i) whether there should be pre-action disclosure under CPR 31.16; (ii) the extent of the disclosure.

That rule states that if an application for pre-action disclosure is to succeed the applicant must show that:

(a) the respondent is likely to be a party to subsequent proceedings;

(b) the applicant is also likely to be a party to those proceedings;

(c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to –

(i) dispose fairly of the anticipated proceedings;

(ii) assist the dispute to be resolved without proceedings or

(iii) save costs.

Allowing the application the High Court judge held that there was no real dispute that in subsequent proceedings the applicant and the local authority were likely to be parties. It seemed that, had the proceedings already started, the documents sought went to the issue of whether the local authority had properly applied the criteria for awarding service points, so that standard disclosure would have been given. It was very likely that pre-action disclosure would allow the anticipated proceedings to be disposed of more fairly, or avoid the need for proceedings, and that there would be cost savings. The criteria in CPR 31.16 were made out.

05

The contractual dispute was an important issue for which there should be proportionate disclosure. At the instant stage there would be nothing like the standard disclosure which might be necessary at a later stage. Disclosure would be limited to the allegations and issues indicated. It was appropriate to order disclosure within a short period of the 150 documents already identified, and of documents found using the search terms, “250”, “good faith”, “modernisation”, “negotiation”, “points”, “renegotiation”, “SP”, “SPs” and “termination”, provided in their native format. As to the documents sought which were alleged to be held by specified local authority employees, the proportionate response was to require the local authority to conduct a limited search by making enquiries of the relevant individuals as to the existence of such documents.

06

CostsIn another commercial case, Kellie and another v Wheatley & Lloyd Architects Ltd (2014) EWHC 2886 (TCC), the court was asked to consider an issues based costs order. This case illustrates the circumstances in which a court will treat issues raised by a party as being sufficiently ‘discrete’ to make adjustments in the overall costs’ order.

The judge found that the claimants had not established that the defendant had breached its duty of care and explained why, if he had reached a different conclusion on breach of duty, he would have held that they had failed to establish that they had suffered any loss as a result. The judge reserved three issues for consideration: (i) whether the claimants should pay more than 90 per cent of the defendant’s assessed costs; (ii) whether the assessment of the defendant’s costs should be on the indemnity basis; (iii) whether, in the light of the decision on the first two issues, the claimants should pay any further amount by way of interim payment.

The claimants contended that the defendant should recover only 90 per cent of its costs on the ground that it raised, pursued to trial and lost on two discrete issues: a no-loss defence and a limitation defence. The defendant sought indemnity costs on the basis that the claim was weak and had only been pursued in the hope of pressurising it and its insurers to avoid the time and cost involved in prolonged proceedings, and relied on the fact that the claimants had refused two reasonable offers of settlement.

The Deputy High Court Judge held that the two issues of no-loss defence and limitation defence were not truly discrete issues, they were merely arguments on the issues of no loss and no liability. It would be futile to engage in a semantic discussion of whether the no-loss defence and the limitation defence were distinct issues or merely arguments on wider issues. Each of them gave rise to specific legal issues. It was possible that they necessitated some further evidential enquiry, but if they did it was probably minimal. No additional time of any significance for costs was taken

with the points at trial. Counsel’s fees were unlikely to have been affected. The defences did not affect the outcome of the case and made no identifiable difference to the costs incurred by either party. They should not affect the basic outcome, which was that the unsuccessful party must pay the costs of the successful party.

The costs should be assessed on the standard basis. Although the case was not a strong one, it was not so weak as to be especially remarkable. The evidence was not greatly impressive on paper but that was a different matter from saying that the pursuit of the case in reliance on it was unreasonable to a high degree. There was no reason to believe that the claim was pursued with a view to pressurising insurers. The claimants must pay all of the defendant’s costs to be subject to detailed assessment on the standard basis if not agreed.

In deciding the appropriate amount of a payment on account of costs the court should make a reasonable assessment of what was likely to be awarded on assessment. Having regard to the defendant’s approved budget and to the length of the trial, it was not likely that less than £90,000 would be awarded on a standard assessment of the costs. Indeed the greater likelihood was that the increased length of the trial would result in a modest uplift above the amount of the approved budget. There was no good reason why the claimants should not pay £90,000 on account of the costs awarded to the defendant.

CommentThis case confirms that if a court is to be asked to deprive a successful party of part of its costs, it will be necessary to show that the costs of dealing with any issues on which that party lost can be separated out and are in a meaningful amount.

07

Watch this spaceThere has at last been further word on the discount rate. However, no change is imminent as the Justice Secretary has appointed a panel of three financial investment experts to advise on the issue. No timetable has been set for this process.

Some better news in relation to the proposed panel of medical experts for low value personal injury claims. Following on from the introduction with effect from 1 October of fixed fees for medical reports a short consultation has opened on establishing a panel of accredited, independent experts who will be subject to peer review.

Of greatest significance is the government’s recognition that any financial link between a claimant’s solicitor and the medical expert instructed must be broken. It will be permissible for claimant lawyers to hold a stake in a medical agency but that agency will no longer be able to report in cases involving the solicitor.

The quality of reports produced under the proposed system will be policed by the requirement that all experts become accredited and are subject to peer review. An expert will be ‘sourced’ through a single portal (‘Medco’). Among other checks, reports will be selected randomly to ensure that the necessary standards of objectivity are met.

With a view to reducing the risk of fraudulent claims being taken on by unwitting solicitors it is also proposed that there should be a sharing of data on the number and types of personal injury claim brought by an individual within the past five years. It will be mandatory for the register to be searched before a soft tissue injury claim may be brought by way of submission of a Claims Notification Form.

If implemented these proposals will see amendments to the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (The RTA ‘portal’).

The consultation closes on 1 October, showing the government’s determination to make good its promise to curb the ‘whiplash culture’.

The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 8 Bedford Park, Croydon, Surrey CR0 2AP. Parabis Law LLP is authorised and regulated by the SRA.

www.plexuslaw.co.ukwww.greenwoods-solicitors.com

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