Personal Injury Update – July 2015

Published: 01/07/2015 | Newsletters, Personal Injury


Contents

  • News
  • “Lost in Translation” but no longer “Up in the Air”
  • Castles Made of Sand: The Simmons Uplift Re-examined
  • Case Law Update

News

Nigel LeyBy Nigel Spencer Ley

In this Newsletter Andrew Arentsen reflects on the difficulties in establishing liability in travel claims.

Ever wondered whether a Simmons v Castle uplift can now be claim for injuries to feelings in the Employment Tribunal? Robert Golin provides the answer.

Case Law Update was prepared by our pupil Joel McMillan.

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“Lost in Translation” but no longer “Up in the Air”

140415-3.045dgBy Andrew Arentsen

There was a time when the sensible foreign traveller needed only to ensure that they packed their passport, their credit card and their toothbrush. Everything else was dispensable or replaceable. In fact on that basis you could leave the toothbrush and travel light. However following the recent Court of Appeal ruling in Lougheed v On the Beach Limited [2014] WL 6633459, the prudent traveller might slip a copy of the Directory of Expert Witnesses into their wheeled hand luggage. It is now very difficult to imagine that a Claimant who suffers personal injury whilst on holiday will not then require the assistance of an expert witness to establish liability at trial.

The basic facts in the case of Lougheed were straightforward and commonplace. Mrs Lougheed was a consumer on a holiday that had been purchased from the Defendant’s very popular internet site. From the website had been purchased flights (provided by Ryanair) and accommodation at the four star H Top Royal Star Hotel in Lloret de Mar in Spain. Mrs Lougheed was on holiday with her daughter and granddaughter. Unfortunately on the second day of her holiday she left the pool area with her granddaughter and was proceeding to purchase an ice cream at approximately 11am. As she descended an internal staircase she slipped on a wet step and sustained a compound dislocated fracture of the ankle. The step had probably become wet because other persons, after using the pool, had dripped water on the stairs as they descended into the main hotel.

At the trial the primary issue had been the application of The Package Travel, Package Holidays and Package Tours Regulations 1992 SI 1992 No. 3288. The Defendant disputed that it was the “organiser” of a holiday package within Regulation 2. The Defendant maintained that since a consumer would select different components such as flights, transfers and hotels to individually tailor their trip and since each element was selected individually the overall purchase was not a “package”. Their website was at pains to make clear that whatever choices were made the collective did not become a “package”. In a careful Judgment Mr Recorder Harrap considered cases such as Civil Aviation Authority v Travel Republic Limited [2010] EWHC 1151 and Titshall v Qwerty Travel Limited [2012] 2 ALL ER 627. He was satisfied that the sequence of choices that were made led to the purchase of a package whatever the Defendant wished for it be called. Regulation 15(1) of the regulations therefore provided that the Defendant was liable to the Claimant “for the proper performance of the obligations under the contract, irrespective of whether such obligations are to be performed by that other party or by other suppliers of services…”.

The residual issue was whether the Claimant could prove that the hotel (for whom the Defendant was liable under Regulation 15(1)) had been in breach of duty. There was no expert evidence on the issue of liability. An application made both by the Claimant and the Defendant to rely on expert evidence had been refused prior to trial. In fact the expert evidence that had been obtained had confirmed that there were no prescribed regulations in Spain governing the nature or the frequency of the cleaning regime within a hotel. Legally the Spanish Civil Code imposed a duty on a hotel that was worded in similar terms to that under the Occupiers’ Liability Act 1957 to take reasonable care for the safety of visitors. As a matter of interest the Code also imposed an evidential burden on the Defendant to prove to the Court that it had taken reasonable care to prevent an injury occurring. The Spanish regime appeared near identical to that in the UK.

At trial the hotel manager gave oral evidence. The staircase was routinely cleaned at 8.00am each morning. Thereafter members of staff would regularly ascend and descend the stairs. All would be expected to identify any contamination or hazard on the staircase. Once they had identified the contamination then wet floor signs would be erected and the floor would be mopped and cleaned immediately. It would be totally unacceptable for staff members to ignore a wet floor and for the floor to remain wet and hazardous. However no member of staff who worked in the relevant area on that morning gave evidence either in written form or orally.

At first instance the Learned Recorder found that there was no material difference between the standard of care that would be adopted in the UK and in Spain. There were no specific Spanish standards to govern cleaning and it was not acceptable in Spain simply to leave floors in a wet state once they had been identified as such. The Defendant had called no evidence from any staff member who had been in the relevant location on the material date prior to the Claimant’s accident at 11am. The Recorder followed Dawkins v Carnival [2012] 2 Lloyds Rep 1 and Ward v Tesco Stores Limited [1976] 1WLR 810 and was satisfied that the Claimant had established a prima facia case and that the Defendant had not called evidence to rebut that contention.

The Court of Appeal overturned that decision. Tomlinson LJ repeated the general (and largely uncontroversial) proposition set out in Wilson v Best Travel Limited [1993] 1 ALL ER 353. The Court must assess the claim by applying the prevailing local standards and not impose UK standards on foreign establishments in substitution for their domestic standards. Whilst one would not expect to find regulations governing the frequency with which a hotel floor should be cleaned or inspected the standards by which the hotel is to be judged must necessarily be informed by local standards of care as applied by establishments of a similar size and type. However the evidence given by the hotel manager was not sufficient for the Court to consider the specific Spanish standards by which to assess the Defendant’s conduct. (Of course one might ask the question who might know more about the required standards than the Manager of a 4 star hotel with 33 years of experience in the Spanish hotel business). However Tomlinson LJ made clear that whilst evidence of relevant local practice or standards might not be given by an expert witness but that it was preferable that such evidence be given in that way and a Claimant who chooses not to adduce such expert evidence “does so at his peril”. Who constitutes “an appropriately experienced and qualified individual” is more complicated because “cases are infinitely varied and the exigencies of litigation unpredictable, I would not wish to be over-prescriptive”. However the hotel manager of a four star hotel with over 30 years’ experience could not be relied upon even when his evidence could be characterised as an admission contrary to his interest.

In addition Tomlinson LJ distinguished the “Tesco v Ward principle if such it is”. He appeared uncomfortable with that decision. He expressed a reservation that such an evidential burden could apply since the Defendant as travel agent or tour operator had no control over the management of the hotel at which customers were staying. In such a case it was necessary for a Claimant to show that the hotel knew of the likelihood of the presence of such a hazard and of the danger to consumers that the hazard presented. The fact that this hotel was as aware of the foreseeable danger arising from the use of the stairs by persons who had just come from the pool was not sufficient to demonstrate that the hotel knew of a likelihood of a dangerous situation arising. Not everything which is foreseeable is likely. The Court dismissed the claim since there was no expert evidence to allow the Court to determine the appropriate standard and the Defendant was under no evidential duty to demonstrate that it had taken any care at all.

The consequences of that clear decision were followed in Bronagh Kerr v Thomas Cook Tour Operations Limited [2015] NIQB 9. In that case the Claimant was attacked by a stray cat in the garden of her hotel in Tunisia. The evidence demonstrated unequivocally that the hotel had for some considerable time encouraged or at least tolerated the presence of many cats in the garden area. The Defendant called no evidence at all. Maguire LJ was:

“inclined to think that if a large number of stray cats was roaming around a hotel this situation would give rise to some obligation on the part of the hotel management to use reasonable skill and care to control them in an appropriate way. The Court finds it difficult to accept that the presence of the cats creates no obligation whatsoever on the hotel management…in this case there has been no evidence adduced by the Plaintiff which establishes the standard of care which the Court should apply. It seems to the Court that, unless there is such evidence, the Court is unable to conclude that there has been a breach of the obligation. Consequently, with reluctance, the Court is forced to conclude that the Plaintiff has failed to prove her case…”.

The lesson is clear. For any claim being brought for injury suffered on a holiday in a foreign country a Claimant would be ill-advised to proceed without first obtaining expert evidence on the issue of liability. Equally a Defendant is entitled to apply to strike out any claim that proceeds without such evidence. The Court will likely be extremely reluctant to draw any inference on applicable local standards in the absence of independent evidence of the same.

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Castles Made of Sand: The Simmons Uplift Re-examined

Robert GolinBy Robert Golin

The decision in Simmons v Castle is now old news. For those unsure of its significance, the Court of Appeal announced that, as of 1.4.13, there would be a 10% increase in general damages unless the case was funded by way of a pre-1.4.13 CFA:

“… we take this opportunity to declare that, with effect from 1 April 2013, the proper level of general damages in all civil claims for (i) pain and suffering, (ii) loss of amenity, (iii) physical inconvenience and discomfort, (iv) social discredit, or (v) mental distress, will be 10% higher than previously, unless the claimant falls within section 44(6) of LASPO.” ([2012] EWCA Civ 1288 at para.50)

While that case concluded in late 2012, individual cases have since explored the nature and extent of the Court of Appeal’s declaration. This article considers discrimination claims in particular – which may end up being heard in civil courts or tribunals – and whether the Simmons uplift applies. Such cases, of course, may result in substantial awards for injury to feelings and/or psychiatric damage, where a 10% uplift in general damages could prove valuable.

The current starting point in respect of awards for injury to feelings is the case of Vento v Chief Constable of West Yorkshire Police (No 2) [2002] IRLR 102. In that case, the Court of Appeadecreased the award made by the ET of £74,000 in respect of non-pecuniary loss, but substituted an award totalling £32,000. That sum was made up of £18,000 for injury to feelings, £5,000 for aggravated damages and £9,000 for psychiatric damage in the form of clinical depression and adjustment disorder lasting for three years.

The Court of Appeal went on to set out three bands for assessing damages in respect of injury to feelings: the “Vento” guidelines. The value of these bands was updated for inflation by the EAT in Da’Bell v NSPCC [2010] IRLR 19, and the EAT gave further guidance to the extent that tribunals ought to assess quantum for awards for injury to feelings “in today’s money” (Bullimore v Weld [2011] IRLR 18).

Notwithstanding the above, a number of questions arise following the decision in Simmons: (i) should awards made by the civil courts for injury to feelings subject to the uplift? and (ii) should awards made by the ET for psychiatric damage and/or injury to feelings be uplifted too?

In the civil courts

There can be no doubt that discrimination claims brought in the civil courts involving “actual injury” awards would attract the Simmons uplift. Cases involving, for instance, depression, clearly fall within the scope of the Court of Appeal’s declaration set out at paragraph 1 above.

On the face of it, it is less clear as to whether awards for injury to feelings would receive the same treatment. However, it is important to note that the declaration in Simmons does not limit the uplift to awards for “personal injury”. The uplift has a much wider application as it covers “general damages” in claims for, among other things, social discredit and mental distress. Accordingly, it seems likely that awards for injury to feelings would attract the Simmons uplift.

Since writing the first draft of this article, the High Court handed down a redacted judgment in the celebrity-embarrassing phone-hacking case of Gulati v MGN Limited [2015] EWHC 1482 (Ch) (judgment here). That case involved awards of substantial sums for, among other things, injury to feelings.

The Simmons uplift was not applied in that case, not because the application of the uplift was considered wrong in principle, but because of the presence of a potentially recoverable success fee (see paras.160-166). As such, the starting point for litigants should be that the uplift applies unless there is a relevant funding arrangement in place.

In the Employment Tribunal

It may have been expected that similar awards in the Employment Tribunal would attract the Simmons uplift. Indeed, the Guidance published in March 2014 by the (then) President of the Employment Tribunals in England and Wales refers to the “Vento” guidelines as having, “… since been updated by Da Bell v NSPCC and Simmons v Castle” (see here, p.6, para.14).

Subsequently, in 2014, the EAT approved of the Simmons uplift in an injury to feelings case. In Cadogan Hotel Partners Ltd v Ozog UKEAT/0001/14, the claimant succeeded in claims for sexual harassment and direct sex discrimination. Unsurprisingly, Miss Ozog had been made uncomfortable by a rather creepy chat-up line from the hotel’s head waiter: “Do you want this body? Come on, you are a woman. You should want this body.”

While the EAT quashed the ET’s award of £10,000 for injury to feelings on the basis that it was excessive, it substituted an award of £6,000 for injury to feelings, which it then uplifted to £6,600 on the basis that the award attracted the Simmons uplift:

“For those cases in which an injury to feelings award was made after 1 April 2013, it is also right to note that there is a requirement to apply the 10% uplift laid down in Simmons v Castle… Here that should have been done by the Employment Tribunal and, although there is no cross-appeal to that effect, it is common ground that this would necessarily fall to be done by this EAT if making an award for general damages in substitution for the award by the Tribunal.”

It is noteworthy that: (i) the employer’s counsel conceded that the 10% uplift applied; (ii) as such, the EAT did not hear any argument on the point; and (iii) the EAT’s judgment contained no reasoning as to whether Simmons applied in the circumstances.

In 2015, however, the tables turned. In Chawla v Hewlett Packard Ltd [2015] IRLR 356 EAT, the EAT considered whether an ET had erred by not applying the Simmons uplift to an award made under the “Vento” guidelines.

In its reasoning, the EAT referred to the rationale for the Simmons uplift in the civil courts, noting that that the 10% uplift took into account the changes to the costs regime brought in by the Jackson Reforms. Essentially, the 10% uplift provided some “quid pro quo” for claimants giving up the right to recover success fees and ATE insurance premiums from defendants.

In Chawla the EAT included in its judgment a quote from paragraph 15 of Simmons:

“15. Thirdly the increase we are laying down… is attributable to the forthcoming change in the civil costs regime initiated by Sir Rupert as an integral part of his proposed reforms which were unconditionally endorsed and supported as such by the judiciary publicly, and it was plainly on the basis that the 10% increase would be formally adopted by the judiciary that the 2012 Act was introduced and enacted.”

The EAT’s conclusion (at para.91) was that the uplift should not be applied at all in the ET: “The rationale for the uplift explained by the Court of Appeal in Simmons v Castle does not apply to litigation in the ET. Accordingly the 10% uplift decided upon in that case does not apply to increase guidelines in cases on injury to feelings in discrimination cases in ET’s.”

While the above paragraph refers only to awards for injury to feelings, the reasoning seems equally applicable to “actual injury” awards. Indeed, in the unreported case of de Souza v Vinci Construction UK Ltd UKEAT/0328/14 (judgment here), the EAT refused to apply the uplift in a case involving both injury to feelings and psychiatric injury.

At present there is direct conflict between Chawla and de Souza (against-uplift) and Ozog (for-uplift). Those interested in reading further will no doubt agree that the reasoning in Chawla and de Souza is vastly superior to that in Ozog, which is almost non-existent.

In conclusion, the case against the Simmons uplift in the ET is probably correct given the specific rationale for the Simmons uplift in relation to the shape-shifting costs regime following the Jackson Reforms. However, I understand that permission to appeal has been given in both de Souza and Chawla, so watch this space.

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Case Law Update

Liverpool Women’s Hospital NHS Foundation Trust v Edward Ronayne

[2015] EWCA 588

(Sullivan LJ, Tomlinson LJ, Beatson LJ)

Significance: One had to expect patients in a hospital to be attached to machines and drips, and to see other unpleasant scenes. Such things did not fall within the definition of ‘horrifying’ for the purposes of bringing a claim as a secondary victim of psychiatric harm.

Facts: The defendant (L) negligently performed a hysterectomy on the claimant’s (R’s) wife (W), resulting in septicaemia and peritonitis. R observed a rapid deterioration of W’s condition over two days and spoke of two distinct episodes that he found particularly difficult. The first was when he saw her connected to various machines including drips and monitors prior to emergency surgery. The second was when he saw her unconscious after that surgery and connected to a ventilator, and she had very swollen arms, legs and face. R said that he subsequently suffered psychiatric harm and successfully brought a claim for personal injury on the basis that it was triggered by seeing W’s horrifying state during those episodes. L appealed.

Held: (1) What R saw during the two episodes could not be described as ‘horrifying’ by objective standards: Shorter v Surrey and Sussex Healthcare NHS Trust [2015] EWHC 614 (QB) applied. It was to be expected in a hospital that there would be patients attached to tubes and other machines, and that one would see scenes that one may not want to. It was not surprising that the only known successful case of a secondary victim of psychiatric harm who had witnessed the aftermath of clinical negligence in a hospital setting was Walters v North Glamorgan NHS Trust [2003] P.I.Q.R. P16.

(2) The judge below had been wrong to treat the two episodes as one seamless event lasting 36 hours; rather it was a series of events over a period of time. Further, R knew before seeing W in her pre-operative state that there had been complications with her initial surgery, and he knew before seeing her in her post-operative state that she would be having surgery. What he subsequently saw was therefore to be anticipated and the requirement of suddenness was not satisfied: Walters distinguished, White v Chief Constable of South Yorkshire [1999] A.C. 455 and Alcock v Chief Constable of South Yorkshire [1992] 1 A.C. 310 applied.

Ben Harman (A Child by his Mother & Litigation Friend Joanne Harman) v East Kent Hospital NHS Foundation Trust

[2015] EWHC 1662 (QB)

(Turner J)

Significance: A claimant is entitled as of right to recover the costs of future care and accommodation from the tortfeasor rather than rely on the statutory duty of a public authority to provide the same.

Facts: The claimant (H) suffered from severe autism and significant cognitive impairment as a result of negligent post-birth management by the defendant (E), and he brought a claim when aged 14. In 2013 he was placed in a residential educational centre for those with severe autism. His place was funded by the local education authority (the LEA) from 2014 after H’s parent took the matter to a tribunal. H’s parents wanted him to stay at the centre until he was 25 before returning home, and experts for both sides agreed that the LEA would continue to fund his place until that time. Nevertheless, H’s parents stated that they preferred the place to be funded by E.

Held: H’s parents were unequivocal that they preferred to pursue E for the costs of the place at the centre. There was no doubt that that preference was genuine and that sums awarded would be used for that purpose. The effect of the Court of Appeal case of Peters v East Midlands SHA [2010] Q.B. 48 was that H was entitled to pursue E for those sums. E was misstating the position in suggesting that the LEA would simply continue to fund the place; in fact, it would only do so if H continued to apply for the funding. Further, in these circumstances, the court was not required to assess the reasonableness of H’s parents’ preference: Peters applied, Snowden v Lodge [2005] 1 W.L.R. 2129 and Crofton v NHS Litigation Authority [2007] 1 W.L.R. 923 distinguished.

ABC v (1) St George’s Healthcare NHS Trust (2) South west London & St George’s Mental Health NHS Trust (3) Sussex Partnership NHS Foundation Trust

[2015] EWHC 1394 (QB)

(Nicol J)

Significance: There was no duty of care requiring a clinician to inform a patient’s pregnant relative that the patient had Huntingdon’s disease, even where the relative would have terminated the pregnancy had she been informed. Imposing such duty would not be fair, just or reasonable, and would not be an incremental development from an established duty of care.

Facts: The claimant’s (A’s) father (F) killed her mother and was convicted of manslaughter on the grounds of diminished responsibility. He was placed under a hospital and restriction order and was diagnosed with Huntingdon’s disease, a genetic condition that can interfere with behaviour. There was a 50% chance that A, who was pregnant at the time, would inherit the disease, and in turn pass it on to her unborn child. F advised his clinicians not to inform A of his condition although he did tell his brother. A held discussions with the defendants over the discharge of F into the community but she was not informed of F’s condition. A’s child was subsequently diagnosed with the disease.

A’s case was that F’s doctor owed her a duty of care to inform her of his condition and that, if she had been informed, she would have undergone tests and terminated the pregnancy. The defendants applied to strike out the claim.

Held: It was not relevant that A had discussed F’s discharge with the defendants and that F had told his brother. Neither altered the confidential nature of the information or extinguished the duty on F’s doctor to keep it such.

Although it was sometimes difficult to distinguish between acts and omissions in the area of negligence, this was clearly an omission. As there was no special relationship between A and the defendants, or an assumption of responsibility, liability could not attach. Further, it would be entirely novel to impose such duty and A could not show that it would be an incremental extension of an established duty: Michael v Chief Constable of South Wales [2015] 2 W.L.R. 343 applied. Finally, it would not be fair, just or reasonable to impose such duty. The claim was duly struck out.

Purser v Hibbs & Anor

[2015] EWHC 1792 (QB)

(Judge Moloney QC)

Significance: (1) The approach the court should take in dealing with the cost consequences of the late acceptance of an offer made under CPR Part 36 had not materially changed despite the wording in the new rules. The appropriate test was whether, with regard to the factors set out in r.36.17, it would be unjust for the court not to depart from the usual cost consequences.

(2) The court did not agree with the note in the White Book that suggested that there should be an express allowance for surveillance in a costs budget as the efficacy of the surveillance would be undermined if its subject were alerted to its use.

Facts: The claimant (P) sustained injuries in a road traffic accident for which the defendant (H) admitted liability. Before a claim was brought H’s insurer carried out two periods of surveillance, which revealed nothing inconsistent with P’s injuries. After the claim was issued H made a Part 36 offer of £90,000, which expired but was not withdrawn. H carried out further surveillance which revealed that, whilst P displayed disability at home to the extent that she used crutches or a wheelchair, she was able to ride a horse seemingly without hindrance. H disclosed the surveillance and P accepted the Part 36 offer.

H sought a finding that P had dishonestly exaggerated her injuries to a large extent and for a significant period, and argued that P should not be entitled to recover her costs for the period prior to the expiry of the Part 36 offer as was usually the case under Part 36.

Held: (1) The wording in the new r.36.13(5) in relation to the cost consequences of a late accepted Part 36 offer differed from that in the previous r.36.10(5), and included a reference to whether it was ‘unjust’ to disapply the normal cost consequences. Nonetheless, the proper approach had not materially changed. The test remained whether, with regard to the factors set out in r.36.17(5), it would be unjust to apply the usual cost consequences. There was no evidence that P had exaggerated the claim prior to the expiry of the Part 36 offer so P remained entitled to her costs to that point; however, it was evident that she had exaggerated her injuries thereafter and it was therefore appropriate that H should recover its costs from the expiry of the offer on the indemnity basis.

(2) H was entitled to recover the costs of the third period of surveillance even though they had not been entered on the costs budget. The cost budgeting rules made no express provision for what should be done in relation to costs budgeting. Whilst a cards-on-the-table approach should generally be taken in litigation, the use of surveillance required a party to keep its cards closer to its chest. The court did not wish to do anything that would discourage the appropriate use of surveillance.

A v (1) Trustees of the Watchtower Bible & Tract Society (2) Trustees of the Loughborough Blackbrook Congregation of Jehovah’s Witnesses (3) Trustees of the Loughborough Southwood Congregation of Jehovah’s Witnesses

[2015] EWHC 1722 (QB)

(Globe J)

Significance: The trustees of a society of Jehovah’s Witnesses were vicariously liable for the sexual assaults of a ministerial servant on a child and for the failure of the elders to take reasonable steps to protect the child once they knew the ministerial servant had abused another child.

Facts: The claimant (A) was regularly sexually abused between 1989 and 1994 by a ministerial servant (S) during religious activities. S admitted to the elders (E) in 1990 that he had sexually abused another child in the congregation (M). E’s evidence was that they had warned parents in 1990 of the need to supervise their children and removed S from his post. A’s mother’s evidence was that she had received no such warning and that S had returned to his regular duties in 1990 after a short break. A claimed that the defendants (T) were vicariously liable for the sexual assault by S and also for the negligent failure of E to safeguard A once they became aware of S’s sexual abuse of M. T accepted that S had sexually abused A but denied vicarious liability for the actions of E and S.

Held: E and S played an integral role in supporting the work of T, who exercised a high degree of control over all aspects of their lives as Jehovah’s Witnesses. The relationship was at least akin to that between an employer and employee, and it was therefore just and fair to impose vicarious liability on T. Although S had been temporarily removed from his position in 1990, thereafter he held himself out as being able to perform his function with the same authority as before. His abuse of A was therefore not merely opportunistic but resulted from being in his specific role: Lister v Hesley Hall Ltd [2001] 1 A.C. 215, Maga v Birmingham Roman Catholic Archdiocese Trustees [2010] 1 W.L.R. 1441 and Various Claimants v Institute of the Brothers of the Christian Schools [2013] 2 A.C. 1 followed.

Once S had admitted his sexual abuse of M to E, it was foreseeable that his continued presence in the congregation presented a risk of abuse to other children. E assumed the responsibility of protecting the other children from that abuse, thereby creating a sufficiently proximate relationship between themselves and the children. It was therefore fair, just and reasonable to impose a duty of care on E to protect the children from abuse by S and the scope of that duty included warning parents of the risks. Warnings were either not made or were insufficient and E had therefore been negligent, for which T was vicariously liable.

John O’Brien (A Protected Party by his Father & Litigation Friend Arthur O’Brien) v (1) Michael Shorrock (2) Motor Insurers’ Bureau

[2015] EWHC 1630 (QB)

(Edis J)

Significance: Conditional fee agreements with retrospective effect were to be treated with a degree of scepticism and their retrospective effect had to made absolutely clear to the other parties.

Facts: The claimant’s (O’s) solicitor took over conduct of his case on 6th November 2008. On 21st October 2009 a conditional fee agreement (CFA) was entered into which was backdated to 6th November 2008 and included a 100% success fee. O’s solicitors had assessed the prospects of success of the claim at 60% at that time. O provided a notice of funding in March 2010 wrongly indicating that a CFA had been entered into on 6th November 2008. O issued a claim in April 2010. Judgment was entered against the first defendant and O reached a settlement on quantum with the Motor Insurers’ Bureau (MIB). The settlement was approved by the court and MIB was ordered to pay O’s costs. The Judge held that the notice of funding was non-compliant with CPR PD.44 para 19.4 in that it failed to record the correct date on which the CFA had been entered into. Nonetheless, he granted relief from sanctions on the basis that the non-compliance did not lead to injustice and he assessed the success fee at 75%. MIB appealed.

Held: Retrospective CFAs, whilst not contrary to public policy per se, were to be treated with a degree of scepticism. The non-compliance with PD.44 was an historic problem given the relevant provisions and rules had been repealed, but it was relevant to the relief from sanctions application.

Backdating the CFA meant that a success fee was claimed on the basis of risk that did not exist. Whilst this was not objectionable as between solicitor and client, it left open the possibility of abuse in the context of recovering sums from the other side. The aim of the rules in CFA funded litigation was that the defendant should be aware of the costs risks to which it was exposed as far as was compatible with the privileged nature of advice given to the claimant. This included the defendant knowing whether any of the costs that were claimed to be subject to a success fee had been incurred prior to the signing of the CFA agreement. MIB should therefore have been made aware that the CFA was backdated and the misleading notice of funding was therefore a more serious breach of PD.44 than the judge below had appreciated. Nonetheless, the fact remained that MIB had known that the CFA was effective from 6th November 2008 and it was right that relief of sanctions had been granted. The usual reckoner commonly used by solicitors was that a case with 60% prospects of success should attract a success fee of 67% and this was what was recoverable from March 2010. For the period from 6 November 2008 to March 2010 20% was be allowed.


Author: Nigel Spencer Ley Farrars (nsley@farrarsbuilding.co.uk)


Author: Andrew Arentsen Farrars (chambers@farrarsbuilding.co.uk)


Author: Robert Golin Farrars (chambers@farrarsbuilding.co.uk)