BUTTERWORTHS PERSONAL INJURY LITIGATION SERVICE Bulletin Editor Nicholas Bevan Director of Enable Law Ltd

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1 Bulletin 109 January 2013 BUTTERWORTHS PERSONAL INJURY LITIGATION SERVICE Bulletin Editor Nicholas Bevan Director of Enable Law Ltd Filing instructions: This Bulletin includes material available up to 31 January Please file immediately behind the Bulletins Guidecard, in Binder 6. The Binder should now contain Bulletins 100 to 109. LIMITATION Sayers v Lord Chelwood and another [2012] EWCA Civ 1715 Court of Appeal disapproval of gilding the lily when applying the statutory criteria under s33 Limitation Act 1980 (Jackson, Arden, and Kitchin LJJ) The facts: Mr Sayers had worked on Lord and Lady Chelwood s estate as a forester and gardener between 1981 and His employment included forestry work which included the use of noisy mechanised equipment from 1981 to 1988 when the forest was sold. By 2000 he knew he had hearing loss and suffered from tinnitus. In 2002 Mr Sayers underwent a hearing test that was part of a periodic health check provided by a subsequent employer. This identified that he might be suffering from noise induced hearing loss. However Sayers did nothing about it. In 2005 he was referred by his GP to a specialist and fitted with a hearing aid and given hearing therapy. In October 2006 he instructed a firm of solicitors. A letter of claim was not sent to the defendants until July 2008, and proceedings were not issued until September The appeal was brought by the Defendants against a first instance finding that the claimant s date of knowledge under s14 Limitation Act 1980 was not until December The appeal was successful. The appeal judge found that Sayers had the requisite s14 knowledge in 2002 so that the three year time limit under s 11 ran from then. He also refused to exercise the s33 discretion to disapply limitation period relying chiefly on the observations of Auld LJ in KR v Bryn Alyn Community (Holdings) Ltd [2003] EWCA Civ 85 where he had opined that: The burden of showing that it would be equitable to disapply the limitation period lies on the Claimant and it is a heavy burden. Another BPILS: Bulletin 109

2 LIMITATION way of putting it is that it is an exceptional indulgence to a Claimant, to be granted only where equity between the parties demands it. Sayers conceded that his date of knowledge was in 2002 but he appealed the judge s refusal to exercise the s33 discretion in his favour. The decision: In a leading judgment, unanimously approved by the others, Jackson LJ held that the wrong approach had been applied to exercising the discretion. In referring to Auld LJ s statement, Leveson LJ s interpretation in Kew v Bettamix Ltd [2006] EWCA Civ 1535 was approved. It is important to underline that Auld LJ was not seeking to place a gloss on the observations of Lord Diplock and I read the words exceptional indulgence as meaning no more than an indulgence that represents an exception to the general rule that a claim should be brought within the primary limitation period. Inevitably, that casts a burden on the Claimant to demonstrate good reason to justify the exception but, again, that burden is itself not intended to suggest that it has necessarily become more difficult since it was first introduced. The discretion remains unfettered but its exercise requires justification the reasons for which are articulated by the judge s judgment. Jackson LJ also observed that: once it is established which party has the burden in relation to a particular issue, it is not helpful to discuss in the abstract whether that burden is a heavy one or a light one. The s33 criteria are neutral and the difficulty of establishing this burden will depend upon the circumstances of the case. Sayers delay in seeking legal advice and in issuing a claim had compromised the ability of either party to adduce evidence in four key areas: (i) the levels of noise emitted by the power tools; (ii) how much work the Claimant was required to do with the power tools; (iii) whether the Claimant was provided with hearing protection and if so, whether he wore it; (iv) what instructions the Claimant was given by Lord Chelwood (now deceased), if any, about the use of power tools and/or hearing protection, such as to cause substantial prejudice to the Defendant. This outweighed the prejudice to Sayers of his claim being statute barred. Accordingly, although the trial judge had applied the wrong test, the decision not to exercise the s33 discretion in Sayers favour was upheld. Comment: This judgment clarifies the exercise of the s33 discretion to disapply the s11 limitation period. It restores the importance of the statutory criteria, which is to be applied to the particular circumstances of each case. This is a recipe best served ungarnished.abuse The Catholic Child Welfare Society & 0rs v The Institute of Brothers of the Christian Schools & Ors [2012] UKSC 56 Supreme Court rules that dual vicarious liability is capable of extending to a relationship akin to employment (Phillips, Hale, Kerr, Wilson & Carnwath LJJ) 2

3 LIMITATION The facts: This case featured a group action brought by a large number of men who claimed that they had suffered abuse at the hands of staff at St Williams School between 1952 and The school had begun life as a reformatory school for boys and then became an assisted community home for children in care in It was owned by a charitable trust run by the Catholic Child Welfare Society. They employed the management and teaching staff. However, the claims were directed not just against the Society but also against an unincorporated religious order: the Institute of Brothers. The Institute was a wealthy Christian charitable foundation established in the late 17th Century whose objects were to provide a Christian education to children. At one time most of the staff was comprised of brethren from the Institute but their presence had diminished considerably over the years. However save for one single exception, the headmaster had always been supplied by the Institute from within the ranks of its order. In 1990 the school s headmaster, one Brother James, was expelled from the Institute after he was discovered to have perpetrated systematic abuse of the boys in his care over a 20 year period. St Williams school was closed shortly afterwards in The preliminary issue to be determined by this appeal was whether vicarious liability was capable of attaching to the Institute of Brothers. The Institute, although closely associated with the school over many decades, neither employed nor paid the headmaster. It had no direct role in its day to day management. There were no allegations of negligence or direct fault alleged against the Institute. The Court of Appeal upheld a first instance decision finding the Management Board vicariously liable but the Institute not. However, the Management Board appealed that decision, contending that the Institute was vicariously liable The decision: The Supreme Court considered, approved and applied Ward LJ s ratio from his leading judgment in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust [2012] EWCA Civ 939 [See the case comment and analysis in BPILS Bulletin 107]. In that case he held that a bishop was capable of being vicariously liable for the actions of a priest in his diocese because that relationship was akin to employment. The conventional employment related tests were no longer considered to be a touchstone for determining vicarious liability. The courts had moved on from concentrating primarily on the degree of control exercised over the perpetrator by the third party towards establishing a two-stage test for vicarious liability. This was described by Phillips LJ in this Supreme Court ruling as a synthesis of two stages. In the instant case, these resulted in the following considerations: The first step is to determine whether the relationship between the wrongdoer and the faultless third party potentially liable is capable of giving rise to vicarious liability. This will still involve consideration of many of the factors relevant to deciding whether there is an employment relationship. It will also take into account who set in motion the activities connected with the tort or benefited from their performance; 3 BPILS: Bulletin 109

4 LIMITATION Then the court must consider whether there was a sufficient connection between the acts or omissions of the wrongdoer and that relationship (i.e. between the perpetrator and the third party) to justify a finding of vicarious liability. Applying this to the facts of the case, the Supreme Court held that this arrangement was capable of giving rise to vicarious liability due to (i) the way the Institute required strict adherence to its rules, (ii) its hierarchical organisation that resembled that of a corporate body and (iii) the way the brothers activities in working for the school were directed by the Institute and undertaken in furtherance of its charitable objectives. The fact that the brothers were bound by vows of obedience instead of under a contract and donated all of their earnings to the Institute did not make a material difference; as taken as a whole, the arrangement was akin to an employment relationship. Accordingly the first stage was satisfied. As to the second stage, the close connection between the Institute and the brothers had put it in a position to use the perpetrator to carry on its own charitable objectives in a way that either created or significantly enhanced the risk of the abuse complained of. The Institute had installed the headmaster in that role, giving him proximity to the victims he abused and its relationship to him invested him with the authority associated with its religious order, as a man of God. This chimes with the ratio expressed in the Canadian Supreme Court case of John Doe v Bennett [2004] 1 SCR 436 that vicarious liability is based on the rationale that someone who puts a risky enterprise into the community may fairly be held responsible if those risks materialise and cause loss or injury to the public. This is a view that has been highly influential in recent authorities such as Lister v Hesley Hall Ltd [2002] 1 AC 215 and Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48. Another important factor relevant to the second stage test was the triple vulnerability of the children in the school. They were vulnerable because they were children, they were also virtual prisoners in the institution that was charged with their care and their personal histories made it less likely that they would be believed if they had complained. Accordingly, the Supreme Court allowed the appeal and ruled that it was fair, just and reasonable for the Institute to share vicarious liability for the abuse with the school management board. Comment: The policy objective underlying vicarious liability is to ensure, insofar as it is fair, just and reasonable, that liability for the wrong is borne by a defendant with the means to compensate the victim. The relationships capable of sustaining a finding of vicarious liability under stage one of the test have traditionally been confined to liabilities incurred within an employment context. However, in JGE Ward LJ had declared that: the time has come to emphatically announce that the law of vicarious liability has moved beyond the confines of a contract of service. In JGE the abusing priest, although not employed, was in the words of Ward LJ: 4

5 DISCLOSURE accountable to the bishop in as much as he owed him reverence and obedience and could be dismissed from his office by him in the event of gross breach of his duties under Canon law. His activities in ministering to the souls of the faithful were central to the objectives of the organisation the Roman Catholic Church, which in its organisational structure looked like a business. He was part and parcel of that organisation and wholly integrated in it. In his work he behaved more as if he was an employee than someone in business on his own account. However, in the Institute of Brothers case Lord Phillips concluded that the case for a finding of vicarious liability was much stronger than that which had been advanced against the bishop in the JGE case. Accordingly it was not necessary for the Supreme Court to endorse or reprove Ward LJ s view that vicarious liability is no longer dependent on establishing an employer/ employee relationship. Claims involving sexual abuse against vulnerable individuals are always going to be something of a special case. Vicarious liability is a doctrine more to do with loss distribution than attribution of responsibility, it has been adapted to discouraging abuse of trust in these particularly distressing cases as much as to ensure compensatory recovery. The latitude extended in these cases may not apply to other scenarios. It is worth noting that Lord Phillips still justified his conclusion that the relationship between the brethren and the Institute was capable of attracting vicarious liability on the ground that it was sufficiently akin to that of an employer and its employee. Even if Ward LJ is right in saying that the doctrine has moved beyond the confines of an employment scenario, it seems that it has only done so with one foot; the other remaining firmly planted on familiar ground. DISCLOSURE Dunn v Durham County Council [2012] EWCA Civ 1654 Guidance on disclosure of records in abuse cases (Maurice Kay VP, Munby and Tomlinson LJJ) The facts: Mr Dunn was sent to Newton Aycliffe between 1981 and He alleged that whilst at Collingwood House, a senior Care Worker (M) was violent towards him on six or seven occasions. He was then transferred to a special unit where he claims he was brutalised on several occasions by (W) and another member of staff both inside and outside the special isolation cell. Additionally he alleged he witnessed abuse of other boys in a violent way on numerous occasions. Mr Dunn s solicitors sought disclosure of various documents including personnel files from the defendant local authority in order to corroborate Mr Dunn s allegations, many of which concerned events that had occurred 30 years before. The requests were made under section 7 of the Data Protection Act 1998, although the extensive list of documents requested in the protocol letter went beyond the compass of a Data Protection Act request. 5 BPILS: Bulletin 109

6 DISCLOSURE As it transpired, the local authority was only prepared to disclose the claimant s personal records in a redacted form, in order to protect the privacy and identity of former students and staff. It also indicated that as it did not have permission to disclose the personnel files of the members of staff, the claimant would have to obtain a court order before it could do so. It also contended that the personnel files were not relevant to the claim. The solicitors persevered: they issued proceedings and then sought an application for disclosure. Both the application and the local authority s response were argued within the context of a Data Protection Act request, as opposed to Rule 31 of the Civil Procedure Rules. At first instance the District Judge order the disclosure of the personnel files duly redacted but on appeal that was rescinded and unredacted disclosure was ordered. The local authority appealed. The decision: The appeal was dismissed. A party seeking disclosure or inspection of documents must first establish their relevance. This can include train of inquiry points which are not merely fishing expeditions. Their relevance is a matter of fact, degree and proportionality. Rule 31 CPR enables the court to excuse disclosure and inspection of relevant documents on public interest grounds. However it is necessary for a party seeking this exemption to assert this. The court will determine any dispute by balancing the rights of the party seeking disclosure to a fair trial against the right to privacy or confidentiality of those who might need to be protected from the effects of the proposed disclosure. This involves consideration of the competing rights under articles 6 (right to a fair trial) and 8 (right to respect for private and family life) of the European Convention on Human Rights. The court should only refuse disclosure or inspection where this was strictly necessary. Mumby LJ concluded his judgment by observing: that disclosure is never a simply binary question: yes or no. There may be circumstances, and it might be thought that the present is just such a case, where a proper evaluation and weighing of the various interests will lead to the conclusion that (i) there should be disclosure but (ii) the disclosure needs to be subject to safeguards. For example, safeguards limiting the use that may be made of the documents and, in particular, safeguards designed to ensure that the release into the public domain of intensely personal information about third parties is strictly limited and permitted only if it has first been anonymised. Disclosure of third party personal data is permissible only if there are what the Strasbourg court in Z v Finland (1998) 25 EHRR 373, para 103, referred to as effective and adequate safeguards against abuse. An example of an order imposing such safeguards can be found in A Health Authority v X (Discovery: Medical Conduct) [2001] 2 FCR 634, [2001] 2 FLR 673, 699, 61 BMLR 22 (appeal dismissed A Health Authority v X [2001] EWCA Civ 2014, [2002] 2 All ER 780, [2002] 1 FLR 1045). 6

7 RIGHT TO CHOOSE Comment: As we have seen from JGE and The Institute of Brothers (see above), some recent Court of Appeal decisions have made it easier for Claimants to pursue civil actions based on allegations of historic physical or sexual abuse. This case illustrates the confusion that can arise as to whether the duty of disclosure is primarily one that arises under the Data Protection Act 1998 or under the Civil Procedure Rules. Whilst a data request under the 1989 Act has the advantage of incurring significantly less expenditure and exposure to legal costs for a claimant, initially, than a formal pre action application for discovery under Rule Civil Procedure Rules, it has its limitations. Part of the problem lies in the fact that the duty of a data controller under s 7 is not defined in terms of disclosing documents but involves instead the communication of information, in an intelligible form. Where a refusal necessitates an application, then this will also involve Rule 31 CPR and entail a costs risk. RIGHT TO CHOOSE Brown-Quinn & Webster Dixon LLP v Equity Syndicate Management [2012] EWCA 1633 A BTE legal expenses insurer cannot refuse a policyholder s right to choose a non-panel solicitor but the insured is likely to be restricted to the standard rate for non-panel firms (Longmore, Lloyd and McFarlane LJJ) The facts: in a conjoined test case featuring 3 different BTE policyholders One of whom wanted to instruct a non panel solicitor The others wanted to follow a solicitor that had moved on to work for a non panel firm In each case the BTE insurer refused permission for the non panel solicitor to act, citing the higher hourly charge rate in justification. At first instance Mr Justice Burton, considered Article 201 of the EU Insurance Directive 2009 /138 and Regulation 6 of the Insurance Companies (Legal Expenses Insurance) Regulations 1990 that is intended to implement the Directive before moving on to consider the ECJ decision in Eschig v UNIQA Sachversicherung AG (C-199/08) where, in a multi-party action, it held was reasonable for the policyholders to choose a non-panel representative before proceedings were issued. Burton J ruled that in interpreting the policy the court would imply a term that their consent would not be unreasonably refused. Legal expenses insurers cannot reject a policyholder s choice of a non-panel solicitor at the outset solely on the basis of increased cost. He also ruled that the non-panel rate set by the legal expense insurers (LEI) was relevant at any detailed assessment of costs as a comparator but not as a starting point for the assessment of those costs. The LEI appealed. The decision: the first instance order was set aside and substituted by a declaration that the LEI was obliged to pay the non-panel rates but no more. 7 BPILS: Bulletin 109

8 RIGHT TO CHOOSE Under the terms of the policy the insured claimants were entitled to appoint non-panel solicitors and to be supported by their LEI insurers but only if they agreed to abide by its standard terms of appointment for non-panel firms, which included a fixed hourly rate fee. The Court of Appeal ruled that the insured parties were entitled to recover their non-panel lawyer s fees at least at the standard rates provided for. If the insured wished to employ more expensive lawyers, that was their decision. They could only recover more from the LEI if they could demonstrate that the standard rates were so insufficient as to render their insured s freedom of choice meaningless. None of the insured were able to establish this was the case and accordingly the standard rate applied. ROAD TRAFFIC LIABILITY Casey v Ali [2012] EWCA Civ 1502 Motorist not liable for hitting a pedestrian on a pelican crossing (Arden Jackson and Kitchen LJJ) The facts: The claimant was knocked down by the defendant s Mercedes as he ran across a pelican crossing at a crossroads. Belgrave Middleway is one of the main roads leading into Birmingham and at the accident scene it had three lanes. The speed limit was 40 miles per hour. The defendant was driving along this road westwards towards Birmingham city centre, approaching a crossroads. The crossroads was controlled by traffic lights. There was also a pelican crossing on the eastern side of the crossroads. At about p.m. on the evening of 15th February 2008 the claimant was returning home from an evening drinking with friends. He needed to cross Belgrave Middleway from north to south. He used the pelican crossing to do so. He reached the central reservation in safety. He then started to cross the westbound carriageway. He crossed the first two lanes. In doing so he passed in front of a stationary Mini Cooper in the middle lane. However, as he entered the third and final lane (i.e. that closest to the southern verge) he was hit by a Mercedes driven by the defendant. It was common ground that the Mercedes was travelling well within the speed limit and that as he crossed the pelican crossing the lights were green in his favour. The claimant admitted that when he was crossing the road he was trying to beat the traffic lights but insisted that the lights were green in his favour when he began to jog across the road. Independent witness evidence confirmed the defendant s account to the effect that the lights had just started to show green in favour of the motorists as the claimant began to cross. At first instance HHJ McKenna dismissed the claim on the ground that the accident was entirely the claimant s fault for attempting to cross the road when the lights were red against him. The claimant appealed, arguing that the defendant was negligent for failing to see him as he started to cross the road and that had he done so, he could have stopped and avoided the accident. The decision: The appeal was dismissed. Although the trial judge had not asked the right question, it was clear that the defendant was not negligent for failing to see the claimant when he was 50 or 60 yards away as he left the 8

9 COSTS central reservation and began to cross the road. The claimant had been largely concealed by the Mini Cooper. PROCEDURE Dunhill v Burgin [2012] 3163 (QB) The validity of a consent order concerning a protected party not known to be under a disability (Bean J) The facts: the claimant was knocked down by a motor cyclist and suffered a head injury. She issued proceedings and the defendant alleged contributory negligence. She agreed to a settlement at the door of the court in At that time, no one realised that she lacked capacity due to her injuries, so court approval of the settlement was not sought. She was represented by counsel and a solicitor and a mental health team advocate. The consent order compromised her claim in the sum of 12,500. The defendants later conceded that her claim at full value would have been worth 800,000. The claimant assessed her full entitlement at a much higher figure. In 2006 she sought to set the settlement aside on the basis that she did not have the requisite capacity to compromise her claim and that she was a protected party. The key issue was whether Rule 21 of the Civil Procedure Rules applied to invalidate the contractual settlement on the basis that she had lacked the capacity to settle her claim without the approval of the court. The decision: Part 21 invalidated a consent judgment where no litigation friend had been appointed and no court approval was sought, even if the claimant s lack of capacity was not known to any of the parties involved in the case at the time. Where proceedings were issued, Part 21 was impliedly incorporated into any contractual agreement between the parties and this took precedence over any general law of contract in much the same way as Part 36 was deemed to be a self contained set of rules, independent of normal contractual principles, following Gibbon v Manchester City Council [2010] EWCA Civ 726. The judge found that the claimant had lacked the necessary capacity to settle her claim without a court approval, that the rules of court took precedence over normal contractual principles and so the consent order was ordered to be set aside. Leave to appeal was granted. COSTS SG (a minor by his mother and litigation friend) v Hewitt [2012] EWCA Civ 1053 Late acceptance of a Part 36 offer justified by uncertainties over a boy s prognosis (Pill, Arden and Black LJJ) The facts: the claimant sustained a severe head injury in 2003 when he was six years old. The medical experts were unable to predict the long term effects of 9 BPILS: Bulletin 109

10 COSTS this injury until he matured. In 2009 the defendant made a Part 36 offer to settle his claim. The claimant s counsel advised that further investigations be made. It was neither accepted nor withdrawn. In 2011, when the claimant was 14 years old, his clinical psychologist advised that it was now possible to settle the claim as the claimant s condition had stabilised sufficiently to make a tentative assessment. Later that year the claimant s paediatric neurosurgeon agreed that the defendant s offer from 2009 should be accepted, whereupon the claimant applied for the court s approval under Part 9 Civil Procedure Rules. Both parties argued that they were entitled to recover their costs 21 days from the date that the Part 36 offer had been made back in At first instance, the judge found that although the claimant had acted reasonably in waiting until the prognosis was clear, the defendant was entitled to its costs under normal Part 36 rules. He opined that the uncertainty around the claimant s prognosis was merely one of the usual litigation risks of claims of this kind. The claimant appealed. The decision: the appeal was upheld. The trial judge had fallen into error. It was unjust to categorise the claimant s uncertain prognosis as a usual litigation risk. This uncertainty made it unjust to apply the normal rule. Justice between the parties required a clear prognosis before a settlement could be recommended. It was unlikely that a Part 21 CPR court approval could have been granted any earlier. Beasley v Alexander [2012] EWHC 2715 (QB) The impact of a Part 36 offer on the court s ability to deal with the costs of a split trial (Sir Raymond Jack) The facts: The issue of liability was ordered to be heard first as a split trial in a personal injury claim. The claimant succeeded but the parties could not agree their costs. The defendant argued that the trial judge could not decide the issue as a Part 36 offer had been made and Part (2) prevented a determination of this issue until the whole case had been decided. CPR Part Restriction on disclosure of a Part 36 offer (1) A Part 36 offer will be treated as without prejudice except as to costs. (2) The fact that a Part 36 offer has been made must not be communicated to the trial judge or to the judge (if any) allocated in advance to conduct the trial until the case has been decided. (3) Paragraph (2) does not apply (a) where the defence of tender before claim has been raised; (b) where the proceedings have been stayed under rule following acceptance of a Part 36 offer; or 10

11 COSTS (c) where the offeror and the offeree agree in writing that it should not apply. The decision: Sir Raymond held that the words until the case has been decided meant that the action had to be concluded. Accordingly CPR Part (2) prevents a court being informed of Part 36 offers until this precondition was met. In the instant case, this meant that the court could not hear the costs issue at this stage. ADS Aerospace Ltd v EMS Global Tracking Ltd [2012] EWHC 2904 (TCC) A successful defendant was not to be penalised for refusing to mediate (Akenhead J) The facts: in a commercial dispute which the claimant ultimately lost, it argued that the defendant should suffer a substantial reduction in its costs entitlement for refusing to mediate. The decision: the defendant s costs should not be reduced for not consenting to mediate. The burden of establishing a departure from the normal costs rule that costs should follow the event lay on the claimant. The claimant had failed to demonstrate that the defendant s refusal was unreasonable. 11 BPILS: Bulletin 109

12 Correspondence about the contents of this Bulletin should be sent to Barbara Bergin, Editorial, LexisNexis, Halsbury House, 35 Chancery Lane, London WC2A 1EL (tel ). Subscription and filing enquiries should be directed to LexisNexis Customer Services, PO Box 1073, Belfast BT10 9AS (tel: +44 (0) ). Visit LEXISNEXIS direct at Reed Elsevier (UK) Ltd 2013 Published by LexisNexis Printed and bound in Great Britain by Hobbs the Printers Ltd, Totton, Hampshire ISBN

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