Legal Watch: Personal Injury

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1 Legal Watch: Personal Injury 2nd July 2014 Issue: 025

2 Part 36 As can be seen from the case of Supergroup Plc v Justenough Software Corp Inc [Lawtel 30/06/2014] Part 36 is still the subject of varying interpretations. The claimant/applicant had brought a claim against the defendant/respondent and the defendant had counterclaimed for repudiatory breach of an agreement. The defendant believed the claimant s claim to be spurious and weak. In November 2013 it served a Part 36 offer of an amount that it was prepared to accept in full and final settlement of its counterclaim. In response to a without prejudice letter from the claimant in April 2014, the defendant stated that it had made an effort to settle the matter, that all offers were withdrawn and that it would only settle if the claimant paid damages for breach of contract and the defendant s costs. In May 2014, the defendant sent another letter proposing to settle for a higher sum. The claimant served a notice of discontinuance of its claim in May and then wrote to the defendant purporting to accept the Part 36 offer. The defendant replied that that offer had been withdrawn by its April letter. In This Issue: Part 36 Costs/CFA Civil Procedure/Disputing Jurisdiction Civil Procedure/Allocation In its application the claimant submitted that the defendant s April letter was ambiguous. The reference in it to the withdrawal of offers related to costs, not the Part 36 offer, the defendant s reference to the Part 36 offer in its May letter meant that that offer was still on the table; and the counterclaim was not subject to the notice of discontinuance. Refusing the application, the High Court judge held that a Part 36 offer was available for acceptance until it was withdrawn by serving written notice of withdrawal. There was no such thing as implied withdrawal. No specific form of written notice was required. An offeror just had to serve something in writing which stated in terms that its offer was withdrawn. The defendant s Part 36 offer was clearly withdrawn by its April letter. Its reference to the withdrawal of offers related to its offers to settle the matter, not to its offers as to costs. Any reasonable solicitor would have understood that the April

3 letter withdrew the Part 36 offer. The defendant s reference to the Part 36 offer in its May letter did not mean that the offer was still on the table, it just emphasised that it had acted reasonably in trying to settle in relation to costs. It was not possible to revive a Part 36 offer by subsequent correspondence. There had to be a fresh Part 36 offer. It was not possible to revive a Part 36 offer by subsequent correspondence The Part 36 offer was an offer to settle the claim and counterclaim on the basis that those claims remained extant. After the notice of discontinuance, only the counterclaim was extant so it was not open to the claimant to accept the offer in any event.

4 Costs/CFA The case of Bright v MIB (2014) EWHC 1557(QB) has already received widespread media attention. The proceedings arose from a road traffic accident on 26 September 2010, as a result of which the claimant had been rendered tetraplegic. An old style CFA had been entered into on 11 October 2010 providing for a staged success fee of 50% up to three months before trial and then 100%. Liability remained in dispute but on 26 April 2012, five days before a trial of the issue of liability the whole claim was settled at a joint settlement meeting. On 30 October 2012, the claimant submitted a bill of costs claiming a success fee of 75%. The defendant offered 30% in response. The CFA assessed as high risk the lack of independent witnesses, contributory negligence, quantum, expert evidence and risk of a well-placed Part 36 offer. At first instance the Master assessing the costs had reviewed various authorities and concluded: I do not see that the case is in fact any more risky if it only settles a week before the trial than if it settled a month or a year earlier. The process of quantification of a personal injury claim takes some time to crystallise and settlements regularly occur close to hearings. If the claimant has prepared for a forthcoming trial and the defendant then settles the case, the defendant will have to pay for those extra costs. It does not mean, in my view, that the case necessarily becomes riskier during the trial preparation period. He assessed the uplift at 30%. The claimant appealed but the High Court judge rejected the appeal. She quoted extensively from Fortune v Roe (2011). A success fee is based upon the premise that there is a risk that the claimant s solicitors will not recover all or part of their costs. The success fee compensates them for undertaking that risk. The level of risk determines the amount of the success fee, save in cases where such fees are fixed by the court. Section 58 of the Court and Legal Services Act 1990, as amended, defines a conditional fee agreement as one which provides for fees and expenses or any part of them to be payable only in specified circumstances. The Conditional Fee Agreements Regulations 2000 provide that if the percentage increase is disallowed on the grounds that the level at which the increase was set was unreasonable in view of the facts which were or should have been known to the legal representative at the time it was set, that amount ceases to be payable under the agreement unless the court is satisfied that it should continue to be so payable. The Civil Procedure Rules r states that, where the court is assessing the amount of costs either by summary or by detailed assessment, it will not, either on a standard basis or on an indemnity basis, allow costs which have been unreasonably incurred or are unreasonable in amount. The CPR Pt 44 Costs Practice Direction provides in relation to success fees as follows: When the court is considering the factors to be taken into account in assessing additional liability, it will have regard to the facts and circumstances as they reasonably appear to the solicitor or counsel when the funding arrangement was entered into and at the time of any variation of the arrangement. 11.8(1). In deciding whether a percentage increase is reasonable relevant factors to be taken into account may include: (a) the risk that the circumstances in which the costs, fees or expenses would be payable might or might not occur; The judge concluded that (w)hat is material is whether the success fee is set at such a level which is reasonable in light of the risk of non-recovery of costs anticipated at the date of entering into the CFA. The Master had correctly concluded that: the risks to be considered by the claimant s solicitor in this case revolved entirely around the risk of a Part 36 offer and

5 the complications that might ensure from any finding of contributory negligence. He had before him the Bill of Costs which included details of the allegations of contributory negligence raised in the amended defence of the MIB. These included that the vehicle s hazard lights were flashing and the allegation that the claimant had a lack of awareness of the approach of the vehicle because of her pre-occupation with her mobile phone. The Master took into account the increased risk of a well-placed Part 36 offer with the additional difficulty in assessing the adjustment for contributory negligence. Further, the fact that liability was not admitted was also taken into account by the Master as adding to the risk justification for the success fee. He had regard to the decision in C v W (2008) in which the Court of Appeal substituted a success fee of 20% for the risk of failure to beat a rejected -offer where there was an issue of contributory negligence. The decision on a reasonable success fee was reached independently of the decision of the Master as to staging. The Master had not erred in his approach to assessing a reasonable success fee. Nor was the conclusion he reached, that the success fee in this case should be assessed at 30%, outside the parameters of a decision of a Master properly directing himself on the relevant circumstances.

6 Civil Procedure/Disputing Jurisdiction Although it is a commercial case Nwoko v Oyo State of Nigeria and another [Lawtel 2/07/2014] is an important reminder to defendants about the operation of CPR 11.. That relevant part of that rule states: 1. A defendant who wishes to (a) dispute the court s jurisdiction to try the claim; or (b) argue that the court should not exercise its jurisdiction may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have. 2. A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court s jurisdiction. 4. An application under this rule must (a) be made within 14 days after filing an acknowledgment of service; and (b) be supported by evidence. 5. If the defendant (a) files an acknowledgment of service; and (b) does not make such an application within the period specified in paragraph (4), he is to be treated as having accepted that the court has jurisdiction to try the claim. In this case the claim form was issued on 28 July The time for service of the claim form outside the jurisdiction was six months from the date of issue of the claim pursuant to CPR 7.5. The claimant tried to serve out of the jurisdiction by courier which proved difficult. He accepted that the claim form had not been served within the time specified in the rules and that no application had been made to extend time for service. The defendants accepted service and it was acknowledged that service had been effected by 1 July 2011 and that the relevant time limit for filing the acknowledgment of service was two months and 21 days thereafter. An acknowledgement of service in the standard form was filed on the defendant s behalf stating an intention to dispute the court s jurisdiction on forum non conveniens grounds. The application was not made within 14 days as required by CPR 11(4). On 22 May 2014 the claimant made the instant application for a retrospective order extending the time for service of the claim form. Opposing the application, the defendants submitted that it was too late for a retrospective order extending time to serve the claim form and that it was contrary to justice if such an extension was granted as that would inadvertently extend time. They argued that they should be allowed extra time to serve notice disputing the court s jurisdiction. Allowing the application, the High Court judge held that the claim form had not been served within the period specified by CPR11(4) but that did not mean that it was a nullity or invalid. Although, when the acknowledgment of service was filed the claim form had not been served within the specified time, the filing was not void or invalid, as CPR11(5) had been engaged and the defendants were to be treated as having accepted the court s jurisdiction. There would be no prejudice to them if the claim was allowed to go forward. In exercising its discretion the court had to look at all the circumstances. Even though the claimant had delayed by serving the claim form late, the defendants should have made their application disputing the court s jurisdiction in time and that delay should be the main focus in exercising the court s discretion.

7 Civil Procedure/Allocation In so far as it is relevant to the next report, CPR 26.8 states: 1. When deciding the track for a claim, the matters to which the court shall have regard include (a) the financial value, if any, of the claim;. 2. It is for the court to assess the financial value of a claim and in doing so it will disregard (a) any amount not in dispute; (b) any claim for interest; (c) costs; and (d) any contributory negligence. In Akhtar v Boland (2014) EWCA Civ 872 the appellant/ claimant, who had been involved in a road traffic accident with the respondent/defendant, claimed damages totalling 6, in his particulars of claim. In his defence, the defendant admitted damages amounting to 2,496 and the claim was allocated to the small claims track. The claimant applied for the allocation of the claim to be changed to the fast track. That application was refused on the basis that the partial admission of a distinct head of claim constituted a reduction in the amount of the dispute, with the consequence that the appropriate track was the small claims track. Judgment was entered in the claimant s favour for the full amount of the admission. The claimant did not apply to set aside that judgment, but unsuccessfully appealed against the allocation decision. A district judge rejected his argument that the defence was no more than an offer to pay 2,496 and was not an admission that the claimant was entitled to that sum. The claimant was ordered to pay the defendant s costs of that appeal. Allowing the appeal in part, the Court of Appeal held that it was clear that the district judge had interpreted the defence as including an unqualified admission that the claimant was entitled to 2,496 and entered judgment for that sum. As judgment had been obtained and there had been no application to set it aside, CPR 26 fell to be considered in determining whether to allocate a claim to the normal track; under CPR 26.8(1)(a) the financial value of the claim was to be determined disregarding any sum not in dispute: CPR 26.8(2)(a). Once the court had determined that the defendant accepted that the claimant was entitled to judgment in the sum of 2,496, the only sum in dispute was the balance of the claim, which was less than 5,000; that was confirmed by CPR PD 26A 7.4(2). It followed from those provisions that if, in relation to a claim the value of which was above the small claims track limit of 10,000, a defendant made, before allocation, an admission that reduced the amount in dispute to a figure below 10,000, the normal track for the claim would be the small claims track. In the circumstances in which the claimant had obtained judgment for 2,496 and the sum remaining in dispute was under 5000, the district judge had been entitled to allocate the claim to the small claims track. It followed from CPR PD (3)(iv) under which on entering judgment for the admitted part before allocation of the balance of the claim a court could allow costs in respect of proceedings down to that date, that the district judge ought not to have ordered that the claimant to pay the defendant s costs of the appeal. Accordingly, the costs order was set side. The claimant appealed, the central issue being what was meant by the financial value... of the claim in CPR 26.8(1) (a) and any amount not in dispute in CPR 26.8(2)(a) in deciding which track to allocate a claim to.

8 Publications If you would like to receive any of the below, please indicating which you would like to receive. Weekly: Legal Watch: Personal Injury Monthly: Legal Watch: Property Risks & Coverage Quarterly: Legal Watch: Counter Fraud Legal Watch: Disease Legal Watch: Health & Safety Legal Watch: Marine Legal Watch: Professional Indemnity Contact Us For more information please contact: Geoff Owen Learning & Development Consultant T: E: To unsubscribe from this newsletter please 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: OC Registered office: 8 Bedford Park, Croydon, Surrey CR0 2AP. Parabis Law LLP is authorised and regulated by the SRA.

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