Legal Watch:Personal Injury21st May 2015Issue: 063

In this issue:

• Civil procedure/expert evidence

• Civil procedure/pre-action conduct

• Costs\Part 36offers

Civil procedure/expert evidenceIn the last edition of this update we featured the case of Lee v Colchester Hospital University NHS Trust in which, notwithstanding the proximity of the trial, the defendant was permitted to substitute one medical expert for another and the claimant to serve supplemental medical reports. Hot on the heels of that decision we have Elliott v Stobart Group Ltd and others (2015) EWCA Civ 449 which has the added dimension of involving a litigant in person.

Theappellant/defendanthadworkedforthefifthrespondent/claimant company, which was part of the first respondent/claimant group. That relationship ended acrimoniously. The defendant alleged that the fifth claimant was carrying outunlawful operations and that the second and third claimants had engaged in fraudulent activity. The claimants obtained an injunction preventing the defendant from publishing certain defamatory statements about them, and they gave an undertaking in damages. Later they discontinued the injunction proceedings.

Thedefendantclaimedthattheinjunctioncausedhimtosuffera psychiatric disorder or exacerbated a pre-existing psychiatric disorder.Hewasorderedtofileandserveanexpertpsychiatricor psychological report to support that claim. By consent he was granted a 14-day extension to serve a report. He sought a further 30-day extension. The claimants applied for a case management conference (CMC), which proceeded despite the defendant’s request for an adjournment and his statement thathewasnotfittoattendcourt.Thejudgeorderedthatthedefendant provide an expert report and authorise the release of his GP’s notes; he gave the defendant permission to apply to vary or discharge his order within 10 days from receiving it; and he gave the claimants permission to apply to strike out the defendant’s claim if he did not provide the report or apply to vary or set aside the order in time. The defendant did not comply or apply to vary or discharge the order. Two months later he served a psychiatric report. At a further CMC the

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defendant was given two weeks to apply for an extension of time or to vary the order made at the earlier CMC and the claimants were given two weeks to issue and serve any application to strike out the defendant’s claim. Both parties duly made such applications. The defendant claimed that he had not had funds to obtain a report earlier and that he had been too ill to deal with the litigation. The judge stated that the defendant’s application was akin to an application for relief from sanctions under CPR 3.9, which he had culpably failed to progress his claim; that his reasons for failing to comply with court orders were not good enough to justify a further extension of time; and therefore his claim for damages would be struck out.

The defendant appealed and submitted that the judge should not have approached the case on the basis that it was effectively an application for relief from sanctions towhich the Mitchell/Denton line of authorities was relevant; but that in any event he had failed to take proper account of all the circumstances.

Dismissing the appeal, the Court of Appeal held that inability to pay for legal representation could not be regarded as a good reason for delay. Further, being a litigant in person with no previous experience of legal proceedings was not a good reason for failing to comply with the CPR or court orders. In any case, the defendant was an experienced litigator.

‘The prejudice to the claimants resulting from the defendant’s non-compliance was far from trivial’It was true that while a litigant who was short of funds could represent himself, the defendant needed to pay for an independent expert’s report without which he could not proceed. However, there was no independent evidence abouthisfinancialposition.Thedefendant’smentalhealthproblems were a factor to be taken into account when

ensuring that administration of justice was not undermined. That was precisely the reason that the judge in the CMCs had given him extra leeway and drafted his order as he did. Therewasnoevidence that thedefendanthadbeenunfitor unable to attend for psychiatric examination, but if the stress of so doing in connection with the litigation was too great, he could have applied in writing for a variation of the order. Instead he simply refused to engage with the litigation process. The judge had been right to treat the case as one in which the earlier order by implication imposed a sanction for non-compliance, namely the inability to proceed with the claim for compensation under the cross-undertaking.

The prejudice to the claimants resulting from the defendant’s non-compliance was far from trivial. His failure had brought the proceedings to a halt; when the enquiry into his alleged psychological harm was ordered, two years before the instant appeal, the proceedings could reasonably have been expected to have been resolved in about six months. The defendant accepted that his failure was serious and significant. The judge gave very careful consideration toall of the circumstances. Inability to present for psychiatric examination was not made out and nor was inability to meet the cost of an independent report. The judge gave careful consideration not only to the manner in which the previous judge had taken into account the mental health issues but also to the extent to which, if at all, they were relevant to the defendant’s failure to comply with the order. He found that the defendant had ignored the opportunity to apply in writing to vary the order and that he had simply ignored the requirements it imposed on him. He was fully aware that a report had belatedly been produced and of the draconian natureandeffectofanorderpreventingthedefendantfrompursuing his claim. The judge had exercised his discretion in an exemplary manner. He had directed himself impeccably, subject only to the gloss that the Mitchell principles had sincebeenexplainedorrefinedinsubsequentdecisions.

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Civil procedure/pre-action conductThe importance of how parties ‘behave’ during the pre-action phase of an action is highlighted in the non-personal injury case of Barker and another v Barnett [Lawtel 14/05/2015].

The claimant/respondent had brought a right of way claim against the defendant/appellants, who were her neighbours. The claimant had written pre-action letters to the defendants in an attempt to resolve the dispute but did not receive a response. She issued a claim in 2013. In February 2014, she filedanoticeofdiscontinuance.Shesuccessfullyappliedtoset aside a costs order that she should pay the defendants’ costs in relation to the discontinued claim. The subsequent order required the defendants to pay the claimant’s costs until the date of service of the defence, with there being no order for costs thereafter. The judge accepted the claimant’s submission that he should depart from the usual rule because the claimants had failed to comply with pre-action correspondence.

The defendants appealed and submitted that there had been no good reason to depart from the general rule in CPR 38.6(1) that a claimant who discontinued was liable for the costs which a defendant had incurred.

‘…the defendants’ solicitors had warned…that a costs order might be made against (the defendants) because they had not replied to pre-action correspondence’

Dismissing the appeal, the High Court judge held that the judgehadcorrectlyidentifiedtherelevantlaw.Hehadbeenfully aware of the factual background. An experienced judge did not have to mention all the evidence before him; his task was to summarise. Indeed, the defendants’ solicitors had warned them that a costs order might be made against them because they had not replied to pre-action correspondence. The case had been brought to court as a consequence of the appellants’ failure to communicate.

The judge had correctly had regard to the reasons for the discontinuance put forward by the claimant and had been entitledtofindthattheclaimant’scasewasnotnecessarilyhopeless. The defendants appeared to want the court to retake the decision. A generous margin was given to a judge when exercising discretion such as that in CPR 38.6(1). The court would only interfere with that exercise where the judge in the lower court had not applied the correct principles, had not taken into account all relevant considerations, had taken into account an irrelevant consideration, or had reached a perverse decision.

The defendants had failed to demonstrate that the decision was wrong.

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Costs\Part 36 offersThe risk of failing to beat a claimant’s Part 36offerincostsis highlighted in the case of Cashman v Mid Essex Hospital Services NHS Trust (2015) EWHC 1312 (QB).

The defendant/respondent had agreed to pay the claimant/appellant the sum of £90,000 in relation to a clinical negligence claim which he had brought. The defendant also agreed to pay his costs, to be assessed on the standard basis if not agreed. The claimant put in a bill of costs of about £262,000. About seven months before the costs assessment hearing, he made a Part 36offer tosettle for£152,500. At the detailed assessment hearing, the Senior Costs Judge ordered the defendant to pay the claimant’s costs in the sum of £173,693. As the costs judgment was more advantageous to the appellant than the proposal contained in the Part 36offer,CPR 36.14(3) was engaged. It provided that an additional amount of 10% of the costs awarded would be payable unless the court considered it unjust to award such an amount.

CPR 36.14(4) provided that, in considering whether it would be unjust to award an additional amount, the court would take into account all the circumstances of the case including the terms of any Part 36offer;thestageintheproceedingswhen it was made; the information available to the parties at the time it was made; and the conduct of the parties with regard to the giving or refusing to give information for the purposesofenablingtheoffertobemadeorevaluated.

The Senior Costs Judge declined to award an additional amount, stating as follows: “Had the rule permitted me to allowafigurefixedbyapplyingtheprescribedpercentageto the difference between the sum which the claimantoffered toacceptand thesumwhichwasallowed, then Ithink that may have been a just result, but that is not what the rule anticipates. In circumstances where there has been a significant reduction in the claimant’s bill, it seems tome that it would be unjust to reward the claimant with an additional amount prescribed by 36.14(3)(d)”.

Allowing the claimant’s appeal, the High Court judge held that the Senior Costs Judge had erred in relying on the degree of reduction made on assessment to the costs claimed as rendering it unjust to make an additional award in circumstances where the Part 36 offerwas lower thanthe sum at which the costs were assessed. That approach penalised the claimant for making what turned out to be a reasonable Part 36offer.

‘The claimant had been penalised for making a reasonable Part 36 offer rather than the defendant for not accepting it’It was the terms of the Part 36 offer,notthelevelofthesumsclaimed in the bill of costs, which were to be considered under CPR 36.14(4). The making of an order of the level required by CPR 36.14(3)(d) was decided as a matter of policy as explained in the Jackson report. Under the previous regime, it was considered that the claimant was insufficiently rewarded and the defendant insufficientlypenalised where the former had made an adequate Part 36 offer. The Senior Costs Judge fell into the temptationreferred to by Sir David Eady in Downing (2014) of making an exception by not making an award under CPR 36.14(3)(d) not because he considered the making of such an award unjust but because he thought it unjust to make an award of the required amount, i.e. 10% of the assessed costs. He concluded that it would not have been unjust to award an additional amount based on the difference between thePart 36offerandthesumofcostsallowedonassessment.However,thatwasnottheregimespecifiedinCPR 36.14(3)(d).

The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 12 Dingwall Road, Croydon, CR0 2NA. Parabis Law LLP is authorised and regulated by the SRA.

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The claimant had been penalised for making a reasonable Part 36offerratherthanthedefendantfornotacceptingit.ThatapproachwascontrarytotheintentandeffectofCPR 36.14(3)(d). The claimant was entitled to an additional award.