Legal Watch:Personal Injury9th October 2014Issue: 035

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:

• Jackson/Mitchell/Denton• Part 36• Civil procedure/disclosure• Costs• Major reforms of the courts’ system in

Scotland• Committal proceedings following a fraudulent

claim

Jackson/Mitchell/DentonThe case of Hockley v North Lincolnshire & Goole NHS Trust [Lawtel 6/10/2014] looks at the relevance of Denton to an application to set aside a default judgment.

In May 2011, the claimant/appellant had sent a letter of complaint to the defendant/respondent. Her medical records were disclosed in October 2011. In March 2013, to preserve the limitation position, she commenced proceedings. However, as investigations were not complete, neither a letter of claim nor the particulars of claim were served. In July 2013, a consent order between the parties provided for the time for service of the particulars of claim to be extended to 17 January 2014. They were served on 15 January. In accordance with CPR 10.3(1), the defendant had to file the acknowledgement of service within 14 days. However, it was filed on 13 February. Meanwhile, the claimant applied for default judgment which was granted on 14 February. In a telephone hearing granting the defendant’s application to set aside the default judgment, the judge found that there was a good reason for so doing, under CPR 13.3(1)(b), namely “fairness and justice”. He decided that the pre-action protocol for the resolution of clinical disputes had not been followed and that it was a major fault of the claimant. He also considered CPR 3.9 and Mitchell, and found that the breach of the acknowledgment of service deadline was not trivial, and that the reason given, namely oversight, was not good enough.

The claimant appealed and submitted that the judge placed the failure to comply with the protocol on a level above all other matters which he then failed properly to consider.

Allowing the claimant’s appeal the deputy High Court judge held that whilst the instant case concerned an application to set aside a default judgment rather than relief from sanctions, and although CPR 13.3(1) and CPR 3.9 were couched in different language, the relevant considerations in respect of either application were similar. Consequently, Mitchell

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and Denton, although covering relief from sanctions, had profound importance in applications to set aside default judgments, and the three-stage approach set out in Denton had considerable relevance when considering an application under the “good reason ground” in CPR 13.3(1)(b). Where a defaulter sought to set aside a regular and entirely reasonable judgment based on non-compliance with a rule, the court had to consider it by reference to an assessment of how serious the default was and why it occurred. It was abundantly clear that, in the instant case, the judge based much of his judgment on the failure by the claimant, as he saw it, to comply with the protocol. However, he did not analyse the consequences surrounding the consent order and failure to engage the protocol. Whilst compliance with the protocol was a key part of the litigation process and any failure to comply with it had to be properly analysed and weighed in the context of the case, such a failure did not necessarily lead to a default judgment in the same way that a failure to file an acknowledgement of service could. The judge erred when he analysed the situation as he did. He was perfectly entitled to place importance on the failure to comply with the protocol but he elevated the consequence of that to a level it did not deserve. The raw features of the case were that:

• Whilst there was no doubt that the claimant ignored the protocol, the defendant did not demand compliance

• There was plainly an agreement to allow the claimant a period of time to file and serve the particulars of claim, and the particulars were filed and served within that timeframe

• In light of the agreement, the defendant did not demand that the claimant engage the protocol; as a result of incompetence, the acknowledgement of service was not filed within the deadline provided by the rules

• The claimant was entitled to invoke the default judgment procedure and take advantage of it by saving money in not having to prove her case

Had the judge calibrated the factors correctly, the weight of the case would have come down heavily in the claimant’s

favour. The failure to do nothing more than acknowledge the particulars of claim was a serious default. That it was a first default had little relevance as it was likely to be so at that early stage. The advantage to the claimant and loss to the defendant was equally profound. The defendant was the author of its own downfall and the claimant was not at fault in complying with the agreement to the letter.

There was no doubt that an application demanding the exercise of judgment in a difficult factual matrix, where the consequences were likely to be very significant, should not have been dealt with by way of telephone hearing. Telephone hearings were amenable to short decision-making cases and truly procedural matters rather than cases requiring a fully reasoned exercise of judgment. Whilst parties were entitled to telephone hearings of applications of under an hour, allowance had to be made for a judgment to be delivered and for time for reflection.

[And under this heading see also the case of Long below under ‘Costs’].

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Part 36A number of cases have suggested that the value and status of Calderbank offers has been increasing in recent years. A Part 36 offer provides the best form of costs protection but a Calderbank offer may still have significant costs consequences for the offeree. Although in Coward v Phaestos and others (2014) EWCA Civ 1256 the offeror was not successful, the Court of Appeal considered the relative values of each form of offer.

In 1992 the claimant and his former wife had started a quantitative trading business. The business was carried on in the following years through a number of partnerships and companies, including the defendants. The claimant resigned from the business in 2009 and set up a competing business. Each side alleged that the other was using software in which it owned the copyright. The defendants were substantially the successful party at trial. In July 2013, the judge ordered the claimant to pay the defendants’ costs but made a deduction of 15% to reflect an aspect of their counterclaim that was not pursued. In July 2012, the claimant had made a Calderbank offer. However, the judge exercised her discretion against awarding him his costs from that date, rejecting his submission that the Calderbank offer gave him substantially all that they had recovered at trial.

The claimant appealed and argued, among other things, that the judge had been wrong not to order either that the defendants pay his costs from the date of the Calderbank offer or at least that from that date each side should bear its own costs. The defendants argued that the effect of a Calderbank offer was to be assessed by analogy with the terms of CPR 36.14(1A), which defined a “more advantageous” judgment as one that was “better in money terms by any amount” than the relevant offer.

Rejecting the claimant’s appeal the Court of Appeal held that the judge had rightly identified three aspects of the final order which represented substantial improvements on the claimant’s Calderbank offer. For example, his offer did not include an injunction or an undertaking; whereas he had

gone on to give an undertaking. The judge had carefully considered the offer but, by reason of the differences identified, she concluded that it would not justify a departure from the usual rule that, if there was to be any order as to costs, the costs should be paid by the unsuccessful party. The exercise of the discretion vested in her could not be faulted.

The defendants’ submission could not be accepted, although that did not affect the outcome of the appeal. The starting point was to recognise that CPR 36 and CPR 44 were separate regimes with separate purposes. Part 36 was a self-contained code dealing with offers of settlement made in accordance with and subject to the terms of CPR 36, which specified particular consequences in the event that such offers were not accepted. That those consequences included features which went far beyond that which might be ordered by way of costs under CPR 44 only served to underline that it was a separate regime from Part 44. While Part 36 was highly prescriptive in its terms and highly restrictive of the exercise of any discretion by the court in any particular case, Part 44 conferred on the court a discretion in almost the widest possible terms. CPR 44 contained no rules as to the way in which the court was to have regard to offers. In particular, and most obviously, even in the case of a money claim, there was no provision equivalent to CPR 36,14(1A). There was no warrant in the terms of CPR 44 for applying, by analogy or otherwise, a similarly rigid test. The task of the judge in any particular case was to exercise his or her discretion as to the just order for costs, having regard to all the circumstances of the case, including those specified in CPR 44.2(4). Clearly a payment into court or an admissible offer to settle was unlikely in normal circumstances to be of much if any relevance if the offeree had achieved significantly more at trial. The broad terms in which the discretion conferred by Part 44 was expressed came at the price of some uncertainty and some scope for argument as to costs. It was in the nature of a discretionary

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remedy dependent on the particular circumstances of the case that there was more uncertainty than existed where there was a rigid rule. But the courts were well accustomed to dealing with those cases where it was arguable that the just result was not simply that the unsuccessful party paid the costs of the successful party in full.

Civil procedure/disclosureIt is relatively common for claimants’ solicitors to serve documents (particularly case managers’ notes) that have been redacted. The commercial case of Decura IM Investments LLP v UBS G London Branch [Lawtel 8/10/2014] is therefore of wider interest.

The claimant/applicant company applied for further disclosure in its claim against the defendant/respondent company. The defendant applied to vary the existing disclosure order.

The underlying issue in the substantive claim was whether the defendant had ceased to carry on a specified material part of its business during a particular period. At a previous hearing, the claimant’s submissions that the matter was very urgent and required an expedited trial were accepted on the basis that the issues were narrow and that disclosure would not be onerous. A disclosure order was made, specifying categories of documents in a schedule. The defendant provided disclosure but many documents were redacted. It claimed that it had redacted irrelevant material. Some duplicate copies were inconsistently redacted. The defendant’s solicitor provided witness statements setting out that the defendant’s internal legal team in Switzerland had carried out the initial disclosure search before a batch of documents were passed on to its lawyers in England, though his third witness statement said that English lawyers had been involved at an early stage. The claimant sought unredacted versions of all documents and price-sensitive forward-looking statements, which had been deemed confidential by the defendant. The day before the instant hearing, the defendant applied to vary the disclosure so as to refer specifically to material relevant to the issues. At the instant hearing, the defendant explained other material had been redacted to comply with Swedish law.

We report only that part of the High Court judge’s judgment that is relevant to the issue of redaction and provides a basis for requiring claimant lawyers to justify why documents have been redacted.

Where documents were redacted it was important to understand the basis for it and for the disclosing party to provide an explanation. If the redacted information was not relevant, that was relatively straightforward. If it is asserted that the information was relevant but contained confidential material, or would breach foreign laws, it was incumbent upon the party to explain that so that disclosure could properly take place. It was unsatisfactory that that had not happened.

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CostsAlthough conditional fee agreements will gradually fade out of personal injury claims, the commercial case of Long v Value Properties Ltd and another (2014) EWHC 2981 (Ch) is still relevant at present.

A dispute had arisen between claimant/appellant and the defendants/respondents. In letters before action, her solicitors had informed the defendants that she was represented under the terms of a conditional fee agreement (CFA) with a success fee. She brought proceedings against the defendants which were settled and a consent order was made requiring them to pay the claimant’s costs subject to a detailed assessment. The claimant commenced detailed assessment proceedings on 17 October 2013 and served a notice of commencement and bill of costs on the defendant as required by CPR 47.6(1). However, she failed to serve the further information identified in PD 47-32.5(2) as to the details of the CFA. The claimant agreed an extension of time for the defendants to serve their points of dispute in which they alleged, for the first time, non-compliance with PD 47-32 and stated that accordingly the success fees of her counsel and solicitors were not recoverable. A week later, on 22 November, the claimant served the further information and apologised for the oversight. The defendant refused to resolve the matter and the claimant’s application for relief from sanctions was refused on the basis that the applicable sanction was under CPR 44.3B(1)(d) which imposed an “all or nothing” penalty. The judge found that the non-compliance might have been regarded as trivial and that little prejudice had been caused to the defendant, but that he was bound by Mitchell to refuse relief.

Allowing the claimant’s appeal, the High Court judge held that it was logical to conclude that the further information was intended to be served with the other documents at the commencement of the assessment. In imposing an unequivocal obligation to supply the additional documents without expressing a time for that supply, but directly linking their supply with that of the documents in CPR 47.6, the

drafter of the rule and of the practice direction had clearly intended the additional documents to be provided at the same time.

The applicable sanction for failure to serve the further information was imposed by CPR 44.3B(1)(c) as there had not been a complete failure to serve the required information in the course of the assessment process. There had been a failure to disclose on time.

If the more severe sanction under CPR44.3(B)(d) had been applicable, relief from that sanction should have been granted. The breach had to be looked at in the context of its surrounding circumstances: the claimant had commenced detailed assessment proceedings well within the three-month limit; once the breach of the CPR was brought to her attention, it was remedied swiftly; and, in the absence of any agreement by the defendants, the application for relief was also brought very quickly. The defendants preferred to take advantage of the claimant’s oversight. They had suffered no prejudice and there had been no unnecessary cost or delay. The breach was trivial and Denton was followed. The judge erred in regarding the application as bound to fail even though he had concluded that the breach was trivial. He should have gone on to consider whether that was the appropriate outcome in all the circumstances of the case, so as to enable the court to deal justly with the application as required by CPR 3.9. The just disposal of the application required complete relief from sanctions.

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Major reforms of the courts’ system in ScotlandFrom within Plexus (Scotland)The Scottish Parliament yesterday passed the Courts Reform (Scotland) Bill which will implement many of the recommendations made by Lord Gill in his review of the civil courts.

The reforms are to improve the structure and operation of the courts with an emphasis on making them more accessible and justice more affordable.

The most significant change is an increase in the exclusive jurisdiction of the Sheriff Court from £5,000 to £100,000. The reforms also include establishment of a national specialist personal injury court, a Sheriff Appeal Court and the introduction of summary sheriffs to deal with some types of criminal and civil cases.

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Committal proceedings following a fraudulent claim From within Greenwoods

BackgroundThe claim arose from an accident which was alleged to have occurred on 9 January 2012. The claimant alleged that our client’s insured had driven into the rear of her car, and then drove away.

The claimant issued proceedings in November 2012, claiming damages for whiplash and vehicle damage. The claim was defended on the basis that the insured was not involved in the crash.

The claimant had also reported the incident to the police and our client’s insured was prosecuted for failing to stop following the accident. He was acquitted of that offence.

In June 2013 the claimant served her witness evidence, in which she alleged that the accident had been witnessed by a passer-by. It was alleged that this was an independent witness; but our enquiries revealed that the two women were well known to each other. This evidence was served on the claimant. In response she served a statement in which she admitted that she knew the witness but that she had lied to avoid the witness being disbelieved.

We applied to the court to strike out the claim, on the basis that it was an abuse of the court’s process. That application was refused by the court, but the claimant was ordered to serve another statement, setting out details of other accidents in which she had been involved.

The claimant served that further statement, alleging she had only made a claim following an accident in 1999. We applied to strike out the claim again, as Cache records revealed she had been in accidents in 2006, 2007 and 2010. She discontinued her claim, on the understanding that each party would bear its own costs.

Committal proceedingsProceedings were begun for permission to issue a claim for contempt of court against the claimant and her witness. The witness produced evidence to show she had withdrawn her statement many months before it was served; and we therefore agreed to withdraw the case against her. In March 2014 the High Court granted permission to bring an action for contempt of court against the claimant, in respect of her lies regarding the witness’ independence and her subsequent failure to report her other accidents.

The claimant admitted the lies regarding the witness, but alleged that she had genuinely forgotten about her other accidents. We agreed with her that she would be sentenced for the former and we would withdraw the latter allegation, in order to save costs and bring the case to a swift conclusion.

SentenceAt the High Court on 3 October 2014, Mr Justice Cooke sentenced the claimant. He found that the custody threshold had been passed and noted that she was already in significant financial difficulties, so a fine would not be appropriate.

Cooke J noted that the claimant had admitted her lie swiftly, albeit that she had little choice once she had been found out. He noted evidence from our insurer client that fraudulent claims are a real burden on the insurance industry. He observed that independent witnesses carry a lot of weight, particularly in low-value claims, where economics militate against detailed investigations.

He accepted that the claimant was of previous good character and the main breadwinner in her family. She cares for her mother, who is unwell, and she has two young children. As such, an immediate custodial sentence would

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.

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be inappropriate; instead, her punishment is a six-week sentence of imprisonment, suspended for nine months.

Mr Justice Cooke awarded our client costs. He was alive to the fact that the claimant has little money available to her and that she has had to take a loan to pay her own solicitors’ fees. After her bills are paid, but before food and shopping, she has only £130 per month available. The judge therefore ordered she pay £7,500 towards our client’s costs, to be repaid in monthly instalments of £312.50, over a period of two years.

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