By Huw Davies
We are very pleased to welcome Andrew Arensten to Farrar’s Building. Andrew joins us with an extremely strong PI practice and is a great addition to our team.
In this month’s newsletter, Carwyn Cox considers what options are open to parties unhappy with apportionment issues in negligence claims, whilst Nick Blake considers the rescission of settlement agreements in fraudulent claims.
Case Law Update was prepared by our pupil Joel McMillan.
By Carwyn Cox
A finding of Contributory Negligence means that damages should be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage. What is the position where a party is dissatisfied with the reduction that is made by the court?
That was the position in the case of Jackson v Murray and another  UKSC 5 (referred to in Case Law Update in the March 2015 Edition of the Farrar’s Building Personal Injury Update). Although a Scottish case it is clearly relevant to Practitioners in England and Wales and provides useful guidance on the circumstances in which an apportionment may be altered.
Readers will be familiar with the basics, but it is worth a brief recap. Section 1 (1) of the Law Reform (Contributory Negligence) Act 1945 states:
“Where any person suffers damage as the result partly of his own fault and partly the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage.”
The burden of proving that there has been contributory negligence rests on the Defendant and it must also be proved that the alleged negligence caused the damage (Caswell v Powell Duffryn Associated Collieries Ltd  AC 152).
The Facts In Jackson
The Claimant was 13 years old at the date of the accident and lived on a farm. Access to the farm was gained by a Private Road that had a junction with an A-Road. The A-Road had a speed limit of 60mph. To get to and from school the Claimant and her sister were picked up and dropped off by a school minibus that had the correct markings on it to show that it was carrying school children. The Claimant and her Sister were dropped off on the opposite side of the road to the road to their home, and so they had to cross the A-Road.
The accident occurred at about 4.30pm. The light was poor and cars had their lights on. The minibus had stopped. It had its lights on, as well as its hazard lights.
The Defendant was driving in the opposite direction. The Defendant could see the stationary bus on the opposite side of the road, and had a clear view for 200 yards. He had seen the bus in this position before. At the time he was travelling at 50mph. His evidence was that he could not remember if he had thought about children getting off the bus, and regarded the risk of someone running out in front of him as irrelevant as it would not be his fault.
The Claimant emerged from the rear of the bus, took one or two steps out into the road and broke into a run. At that point the Defendant struck her. The evidence was that the Claimant was in his view for 1.5 seconds between emerging from the bus and the impact.
At first instance the Lord Ordinary found the Defendant to have been negligent by failing to keep a proper look-out. He failed to identify the bus as a school bus and therefore the risk that someone may try to cross the road. As a result he did not modify his driving by reducing his speed. It was found that the failure to slow down was causative, as if the Defendant had slowed down then the Claimant would have made it passed the car before the impact took place.
The court found that there was contributory negligence. At the age of 13 the Claimant knew the dangers of crossing the road, and that the Defendant’s car was only some 30-40 metres away. It was held that she bore the large proportion of the blame for the accident, and as a result contributory negligence was assessed at 90%.
The First Appeal
On appeal the Extra Division of the Inner House altered the apportionment to 70% for four reasons.
A 13 year old, whilst having an understanding of the dangers of traffic, would not have the same level of judgment and would have had difficulty assessing the speed of the Defendant.
The actions of the Defendant in failing to have any regard to the possible dangers that were in front of him made his culpability for the accident greater.
It was wrong to have described the actions of the Claimant as acts of “reckless folly” as this suggests that she acted without regard for the consequences.
On looking at the blameworthiness and causative potency of the respective parties actions one has to have in mind that the driver of a vehicle is in charge of a potentially dangerous weapon (Eagle v Chambers  EWCA Civ 1107;  RTR 115 and Smith v Chief Constable of Nottinghamshire Police  EWCA Civ 161;  RTR 294). As a result the causative potency to the driver is greater than to a pedestrian, and given that the finding at first instance was that if the Defendant had been travelling slower then the accident would not have occurred then the speed of the Defendant was causally significant.
The Supreme Court & Apportionment
The matter was then appealed to the Supreme Court. It was argued by the Claimant that there should not have been a finding of Contributory Negligence in the first place. That argument found no favour with their Lordships.
The real debate in this case was over the apportionment of liability. By a 3:2 majority it was held that the apportionment should be altered from 70% to 50%.
It was acknowledged that there was no guidance on apportionment in the Act. Guidance on how to carry out the task of apportionment was provided in Stapely v Gypsum Mines Ltd  AC 663, 682 Lord Reid said: “A court must deal broadly with the issue of apportionment and in considering what is just and equitable must have regard to the blameworthiness of each party, but ‘the claimant’s share in the responsibility for the damage’ cannot, I think, be assessed without considering the relative importance of his acts in causing the damage apart from his blameworthiness”.
In that case the deceased and a colleague were told to bring down a dangerous roof and to not work underneath it. They gave up on bringing down the roof and the deceased worked underneath it, and it collapsed. There was negligence on the part of the co-worker, but the Deceased contributed more to the incident, as it was his decision to work underneath the known dangerous roof. The House of Lords adjusted the apportionment from 50% to 80%.
More recently in Eagle v Chambers  EWCA Civ 1107;  RTR 115 Hale LJ stated that there were two aspects to the apportionment of liability. The causative potency of the action and its blameworthiness. It was in this case that the comment regarding the high burden that rests on the drivers of motor vehicles given that they were in charge of potentially lethal weapons was made. In that case the Claimant was walking in the middle of the road in an emotional state and the Defendant was driving under the influence of alcohol and failed to see her when he should have done. At first instance the Claimant was 60% to blame, on appeal this was altered to 40%. The motorist should have borne the greater share of responsibility.
In Jackson Lord Reed accepted that it was not possible to arrive at an apportionment that is demonstrably correct, and that it was necessarily a rough and ready exercise. As a result “differing views should be respected, within the limits of reasonable disagreement”.
In Baker v Willoughby  AC 467 Lord Reid stated at p.490 that “The Court of Appeal recognised that the trial judge’s assessment ought not to be varied unless ‘some error in the judge’s approach is clearly discernible'”.
What is therefore important to remember is that appellate courts will interfere with findings of apportionment. In order to do so though the appellant must establish that the judge on apportionment “has gone wrong in principle or is shown to have misapprehended the facts: but, even if neither of these is shown, we will interfere is we are of the opinion that the judge was clearly wrong.” (Kerry v Carter  1 WLR 1372 per Lord Denning MR).
What does wrong mean? Lord Reed at paragraph 35 of Jackson said:
“The question, therefore, is whether the court below went wrong. In the absence of an identifiable error, such as an error of law, or the taking into account of an irrelevant matter, or the failure to take account of a relevant matter, it is only a difference of view as to the apportionment of responsibility which exceeds the ambit of reasonable disagreement that warrants the conclusion that the court below has gone wrong. In other words, in the absence of an identifiable error, the appellate court must be satisfied that the apportionment made by the court below was not one which was reasonably open to it.”
Lord Reed went on to state that authorities show that apportionments are not altered on the basis that there is disagreement as to the precise figures, but rather on the basis that there is a disagreement as to the basis of the assessment of responsibility. It is therefore extremely unlikely that an appeal on the basis that someone should have been found to be 40% to blame as opposed to 25% would succeed. On the other hand, where the first instance Judge has found a party more to blame and that is wrong then an appellate court will intervene.
Lord Reed, giving the opinion of the majority in Jackson, then went on to explain given the comments of the first Appellate court in that case as set out above that the conduct of the Defendant was at least equal to that of the Claimant and that as a result, given that equal responsibility is substantially different to a party being substantially responsible that exceeded the wide ambit of reasonable disagreement and warranted a finding that the court was wrong. The Claimant was therefore 50% to blame for the accident.
Lord Hodge who gave the opinion of the minority accepted the legal principles, and also that the first instance Judge had got it wrong, but felt that he could not agree that the first appellate court was wrong.
It remains the case that the alteration of an apportionment of liability will not be easy to achieve in the majority of cases, and is almost certainly impossible where an aggrieved party simply disagrees by how much they have been found to blame. In instances where the court has got it wrong by blaming one party more than the other when that decision is wrong, the prospects of success are greater.
By Nick Blake
In recent years the sanctions which the Courts have been willing to visit upon Claimants found to have fraudulently exaggerated the value of their claims have increased dramatically with adverse costs orders, strike out and committal ever more commonplace. So the decision of the Court of Appeal in the case of Hayward v Zurich  EWCA Civ 327 handed down on 31st March 2015 was awaited with interest. Would the Court of Appeal uphold the Judgment of the Trial Judge, who had ordered that a settlement embodied in a Tomlin Order should be set aside after the insurer (Z) backing the Defendant received additional evidence that the settled claim was tainted by fraud? Z argued that the settlement had been procured by Z’s reliance upon the Appellant (H)’s fraudulent representations in the pleadings and witness statements as to the extent of his injuries.
The facts of the case are that in June 1998 H suffered an accident at work in which he injured his back. In 2001 he started proceedings, claiming that his injury continued to cause him serious lumbar pain which restricted his mobility, and that he had also developed a depressive illness. He claimed damages in excess of £420,000. Liability was compromised at an early stage, with an agreed 20% reduction for contributory negligence.
In the Defence reliance was placed on video surveillance evidence and it was pleaded, inter alia, that: “The Claimant has exaggerated his difficulties in recovery and current physical condition for financial gain.”
In October 2003, shortly before the issue of quantum was due to be tried in the Cambridge County Court, the parties reached an agreement, embodied in the Tomlin Order, under which the Defendant agreed to pay £134,973.11 in full and final settlement of H’s claim.
In February 2009, H’s neighbours approached Z and provided witness statements, to the effect that they believed from their observations that H had entirely recovered from his injury at least a year before the settlement date. Z commenced proceedings claiming damages for deceit, later amended to plead rescission in the alternative, alleging that the statements as to the extent of the H’s injury in the Particulars of Claim and Schedule of Loss, and his accounts given to the medical experts, constituted fraudulent misrepresentations. Damages were claimed equivalent to the difference between the amount of the settlement and the damages that should have been awarded if H had told the truth.
After failed attempts by H to strike out Z’s claim, the case was eventually tried by HH Judge Moloney QC in the Cambridge County Court in November 2012. He found that H had indeed dishonestly exaggerated the effects of his injury and went on to hold that the settlement agreement should be set aside on the basis that Z had relied upon the representations made by H and had suffered loss as a result. In the course of his Judgment he stated that:
“…an interesting (and apparently unresolved) question of principle arises. In the ordinary case, sale of goods for example, reliance by the purchaser is effectively equivalent to his belief in the truth of the statement… in the litigation context … the party to whom the representation is made is by no means likely to believe it to be true at the pre-trial stage. At the very least, statements made in the course of litigation will be viewed with healthy scepticism and weighed against the other material available. Often the other party will not be sure, even then, whether the statement is in fact true, and will mainly concern himself with how likely it is to be accepted by the court… The formulation adopted by the editors of Clerk and Lindsell (20th edn. 2010) at 18-34 fits the case better; “The claimant must have been influenced by the misrepresentation” ”
As to whether Z was influenced by H’s representations, HHJ Moloney found that:
“They may not themselves have believed the representations to be true; but they did believe that they would be put before the court as true, and that there was a real risk that the court would accept them in whole or part and consequently make a larger award than Zurich would otherwise have considered appropriate.”
Following a further trial in September 2013 the Judge awarded damages to A in the sum of £14,720 and ordered him to re-pay the sum paid under the settlement less that amount.
H Appealed on two bases. First, he argued that in a misrepresentation claim “belief is a necessary component … essentially, the representee must be deceived” and that the Judge was accordingly wrong to hold that Z could succeed on the basis that although it had not believed the misrepresentations, it was “influenced” by the fear that the Court might do so. Secondly, he argued that if Z did not trust what he was told but made his own inquiries about whether the statement was true, as it had, then he relied not on the statement, but on his own inquiries” and therefore the necessary reliance was missing.
The Appeal was upheld. Underhill, LJ preferred a contractual analysis – that Z, by entering into the settlement, necessarily implicitly agreed not thereafter to seek to have it set aside on the basis that the statements made in support of the claim were false. Another way of putting that would be that Z agreed not to rely on them for the purpose of deciding whether to settle.
As to reliance, he found that while Z will inevitably have been influenced by the possibility that the allegations put forward by H would be believed by the Court, that did not constitute reliance in the relevant sense. Z was not concerned with the truth or otherwise of the statements as the factor motivating his decision to settle. Rather, Z was treating them simply as part of H’s case. Z had to form an independent judgment about whether the disputed statements made as part of the claim were likely to be accepted by the Court. A relationship of reliance does not arise in that context. An important factor was of course that the Defendant in the original action had in their Defence not simply put the representations in issue but positively asserted that they were dishonestly advanced.
While Underhill, LJ acknowledged that in misrepresentation cases in general the situation may be different where the factual statements advanced by the Claimant and relied on by the Defendant are not merely false but fraudulent, but if it is, as in this case, sufficiently apparent that Z intended to settle notwithstanding the possibility that the claim was fraudulently advanced, there can be no reason in principle why he should not be held to his agreement even if the fraud subsequently becomes demonstrable.
He stated that though the result was unattractive because it meant that H retained the benefit of a settlement far in excess of the value of his actual loss, the wider principle at stake, that parties who settle claims with their eyes wide open should not be entitled to revive them only because better evidence comes along later, must prevail.
Briggs LJ also stated that he would gladly have embraced any sound basis for upholding the Trial Judge’s decision to strip A of the grossly inflated amount which he received upon the settlement of his fraudulently exaggerated claim, but found that the Judge’s finding that Z was induced into making the settlement agreement by reliance on A’s dishonest misrepresentations about his continuing injury was based upon a view of the law for which there was no authority, which was wrong in principle and the recognition of which would have most unfortunate consequences that it would become almost impossible to compromise a whole swathe of litigation.
From a contractual perspective Briggs, LJ held that if the decision of the Trial Judge was upheld, the effect would be that “if A makes a contract with B, to the terms of which A has been influenced into agreeing because he fears that a statement by B which he believes is untrue may nonetheless be believed and acted on by C, then A may later rescind his contract with B if he can prove the untruth of the statement…” If that were the case then it appears that A would be free to seek rescission “merely using the evidence he already had when making the contract, because he had in the meantime simply repented of it, or because his apprehension about the effect of the statement upon C had gone away.” There was nothing in the reliance test propounded by the Judge that would even make the obtaining of fresh evidence a necessary condition.
Briggs LJ further held that “for a misstatement to be the basis for a claim to rescind a contract, the claimant must have given some credit to its truth, and been induced into making the contract by a perception that it was true rather than false.” In this case Z “did not merely disbelieve H’s assertions about the continuing effect of his injury. It went so far as to plead that they were fraudulent.” All that happened thereafter was that better evidence of the fraud came to light than was available when the settlement contract was made.
He found that there was nothing contrary to conscience in holding a person to a contract made in order to deal with the risk that a statement which he believes to be untrue and even fraudulent may nonetheless persuade someone else, even a judge. To the contrary the public policy which encourages settlement of litigation would be gravely undermined if, in effect, dissatisfaction on either side led, with or without later forensic research, to the settlement being impugned on the ground that the opponent’s case contained a misrepresentation which, without being believed, influenced the terms of settlement.
Ultimately the Court of Appeal preferred the traditional approach to the requirement of reliance upon a misrepresentation before a concluded settlement can be set aside, to the novel approach of the Trial Judge. Despite the distaste for the unattractive result in this case, the wider public policy considerations and the fact that it would be extremely difficult to confine his more generous approach to “inducement” to the rescission of contracts in settlement of litigation, led to the correct result.
P v P
 EWCA 447
(Jackson LJ, Black LJ, Sir David Keene)
Significance: Pursuant to the 2015 CPR, it was no longer mandatory in civil litigation to seek permission to appeal from the lower court before approaching the appellate court, although it remained good practice to do so.
Facts: The Court of Appeal addressed the issue within the context of ancillary relief proceedings.
Held: Pursuant to CPR r.52.3(2) and CPR PD 52A paragraph 4.1, permission to appeal could be sought from the appellate court without first seeking leave to appeal from the lower court. Nevertheless, it remained good practice to request permission from the lower court first, for the five reasons set out in the White Book at paragraph 52.3.4.
Webb v Liverpool Women’s NHS Foundation Trust
 EWHC 449 (QB)
Significance: A court could make an issue-based or proportionate costs order even where a claimant had made a Part 36 offer and beaten it at trial.
Facts: The claimant (W) suffered injuries at birth and alleged that the defendant (L) had been negligent in (i) failing to perform a caesarean section; and (ii) its management of the vaginal birth. W made a Part 36 offer of 65% of the compensation claimed. At trial, the court held that L had been negligent in failing to perform a caesarean section but not in its management of the vaginal birth; nevertheless, it awarded 100% of the compensation claimed.
L argued that an issue-based or proportionate costs order should be made even though it had failed to beat W’s Part 36 offer as she had failed in the second limb of her claim. W argued that, as Part 36 was a self-contained regime and made no provision for issue-based or proportionate costs orders, the beaten offer precluded the court from making such order.
Held: (1) An issue-based or proportionate costs order was a departure from the usual rule that an unsuccessful party should pay the successful party’s costs. There was no rule that such orders would follow automatically where the successful party had failed on part of its case but nor were such orders confined to exceptional cases; the court was entitled to take the reasonableness of taking failed points into account when assessing costs: Multiplex Constructions (UK) Ltd. v Cleveland Bridge UK Ltd.  Con. L.R. 88 applied. In the instant case, each limb of the claim was discreet and supported by separate evidence, and the second limb was manifestly weaker. Absent the Part 36 offer, the court would have been disposed to making a proportionate costs order; the question remained what, if any, difference the Part 36 offer made.
(2) Part 36 was a self-contained regime and it made no reference to proportionate costs orders. Nevertheless, Part 36 permitted a court not to impose the normal costs consequences where it considered that it would be unjust to do so: Thinc Group Ltd. v Kingdom  C.P. Rep. 8 considered. Consequently, it was open to a court to make a proportionate costs order where it considered it to be necessary to avoid injustice. On the facts of the instant case such order was necessary to avoid injustice and was accordingly made.
Shorter v Sussex & Sussex Healthcare NHS Trust
 EWHC 614 (QB)
Significance: In the case of a secondary victim of psychiatric harm, the test of whether an event was horrifying was an objective one and should be judged by the standards of a person of ordinary susceptibility. It was not relevant that a claimant had professional expertise as a nurse that gave her a greater appreciation of the gravity of the situation.
Facts: The claimant (S) was a senior nurse in a neuro-intensive care unit. Her sister was admitted to hospital with a severe headache and, following a CT scan, the defendant’s (Su’s) clinicians negligently failed to detect a subarachnoid haemorrhage. A week later S’s sister was readmitted to hospital with neck and head pain. S was informed by telephone that there had been an undetected haemorrhage. With her professional background, S appreciated that this gave rise to a risk of a further haemorrhage. Upon attending hospital, she saw her sister rolling around on a trolley, crying with pain, clutching her head and saying that she was in agony. Several hours later she went home but returned to the hospital when she was told on the telephone that her sister was having seizures and fitting. On S’s return she saw her sister in intensive care. Her sister died shortly thereafter.
S subsequently suffered a major depressive episode and sought damages from Su, arguing that her psychiatric illness had been caused by being exposed to a single horrifying event as a result of Su’s negligence. Su argued that there was not a specific horrifying event as the realisation of the gravity of the situation had been gradual.
Held: S had to establish proximity to a single, seamless, horrifying event or its aftermath, which had created an assault on her senses and caused her psychiatric disorder: McLoughlin v O’Brian  1 A.C. 410 and Alcock v Chief Constable of South Yorkshire  1 A.C. 310 followed. When S had been informed of Su’s negligence on the telephone there had been no physical proximity. Whether the sight of her sister on the hospital trolley could be properly described as a horrifying event that caused a violent agitation of the mind had to be judged objectively by reference to a person of ordinary susceptibility without S’s professional expertise. Assessed on this basis, the situation could not properly be said to be horrifying: Walters v North Glamorgan NHS Trust  P.I.Q.R. 16 applied. On the balance of probability, a series of discreet events over an extended period of time had enabled S to understand the gravity of the situation, and they, not a single, seamless event, had caused her illness.
James-Bowen & Ors v Commissioner of the Police of the Metropolis
 EWHC 1249 (QB)
Significance: The Police Commissioner did not have a common law duty to conduct litigation involving an allegation of assault during an arrest in a way that protected the interests of the arresting officers. Not only was it not fair, just and reasonable to impose such duty but it was also not foreseeable that the arresting officers might suffer psychiatric harm.
Facts: The claimants (JB) had arrested a suspect (S), who alleged that he was assaulted by JB and brought a claim against P. P assured JB that the claim would be vigorously defended, and that P’s legal team was also acting for and protecting the interests of JB. P subsequently informed JB that P’s legal team was no longer acting for and protecting the interests of JB. P subsequently settled S’s claim with an admission of liability and an apology.
JB brought a claim for personal injury arguing that their psychiatric injuries had been caused by P’s breach of his duty to protect their interests in the litigation. P sought to strike out the claim pursuant to CPR r.3.4(2)(a) and / or to obtain summary judgment pursuant to CPR r.24.2(a)(i).
Held: In order for JB to establish that P owed them a duty of care they would have to satisfy the tripartite test in Caparo Industries Plc v Dickman  2 A.C. 605 as no freestanding duty could arise from the quasi-employment relationship between the parties. Whilst it was foreseeable that P’s settling S’s claim might make JB angry and distressed it was not foreseeable that JB might suffer psychiatric injury: Yapp v Foreign and Commonwealth Office  I.R.L.R. 112 followed. JB therefore had no reasonable prospect of satisfying the first limb of the Caparo test. Further, P’s lawyers owed duties solely to P who, acting on their advice, was entitled to settle S’s claim as he saw fit. It could not be fair, just and reasonable to impose liability in those circumstances, and the third limb of the Caparo test could not therefore be satisfied. The claim was duly struck out.
Moreno v Motor Insurers Bureau
 EWHC 1002 (QB)
Significance: Where a claim was brought against the Motor Insurers Bureau (MIB) by persons from England and Wales who had been injured in other EU states by culpable but insured or unidentified drivers, damages were to be assessed under English law.
Facts: The claimant (M) had suffered severe injuries in an accident involving an uninsured driver in Greece and brought a claim against MIB under reg. 13 of the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003. MIB admitted liability. Compensation under Greek law would have been lower than under English law and MIB argued that, since the enactment of the Rome II Regulation 864/2007, reg.13 could not be applied so as to provide for a level of compensation higher than that recoverable in the country of the accident.
Held: In a reg. 13 claim the assessment of damages was governed by the law of the country in which the court dealing with the claim was situated: Jacobs v Motor Insurers Bureau  1 W.L.R. 2609 followed. Jacobs had examined the impact of Rome II on the issue and was clear that whilst the question of liability was to be adjudicated under the law of the country in which the accident occurred, quantum was to be assessed under English law. This approach had subsequently been followed by the Court of Appeal in Bloy v Motor Insurers Bureau  Lloyd’s Rep. I.R. 75 and the High Court was bound by both Jacobs and Bloy.