Legal Watch:Personal Injury1st April 2015Issue: 058

Events

Plexus and Greenwoods hold a series of events which are open to interested clients. See below for those being held in the next few months:

The Major Bodily Injury Group (MBIG) | Spring Seminar | 28.04.15 | The Wellcome Collection, London

There is a limited number of seats still available for this event, so to avoid disappointment book your place now.

In this issue:

• Limitation

• Fraud/settlement of suspicious claim

• Jackson/Mitchell/Denton

• Watch this space

LimitationInsurers who may be faced with claims for historical sex abuse will gain some comfort from the decision in RE v GE (2015) EWCA Civ 287.

The appellant/claimant alleged that the respondent/defendant, her father, had abused her between the ages of 6 and 14. She turned 18 in 1986. Stubbings (1993) decided that claims for injury caused by deliberate assault were subject to a six-year, non-extendable limitation period, meaning that this claimant’s claim would be irretrievably statute-barred, limitation having run from her attaining her majority. She claimed that she had not realised until aged 25, around 1993, that she could bring proceedings. She had not done so after realising it would affectthewelfareoffamilymembersandbecauseshewishedto concentrate on her relationship with her boyfriend. She contacted solicitors in 2001 and 2006 but did not proceed with a claim.

In 2008, in A v Hoare the House of Lords declined to follow Stubbings and held that the Ss 11 and 30 Limitation Act 1980, permitting extension of the limitation period, applied to claims in respect of intentional injury. The claimant’s solicitors wrote to her advising her of that change. She instructed them to pursue a claim. A letter of claim was sent to the defendant in 2009. In 2010 the solicitors approached a consultant psychiatrist to assess the claimant. She did not see the psychiatrist until 2011. His report was produced in January 2012 but it was never disclosed. The claimant saw a second psychiatrist and issued the claim in September 2012. The judge declined to extend the limitation period under S33.

The claimant appealed and argued that the judge had (1) applied the wrong test under S33 in asking whether it was fair for the defendant to face a trial; (2) erred in saying that the S33 discretion was only to be exercised in exceptional cases; (3) not considered the balance of prejudice; (4) erred in findingthatthereasonsforthedelayhadnotbeenadequatelyexplained.

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Dismissing the appeal, the Court of Appeal held that the question under S33 was whether it “would be equitableto allow the action to proceed” notwithstanding the expiry of the primary limitation period. That was to be answered having regard to all the circumstances of the case,includinginparticularthefactorsidentifiedinS33(3). Asking whether it was “equitable” to allow an action toproceedwas no different from askingwhether it was fairin all the circumstances for the trial to take place, as the judge had. No factor could be given a priori importance; all were potentially important. However, the importance of each factor would vary in intensity from case to case. One relevant factor was the very existence of the limitation which Parliament had decided was usually appropriate. The judge had not misdirected himself.

The judge had not misdirected himself in referring to “exceptional cases”. He had not said any more than that the claimant was asking for the “exceptional indulgence” of proceeding outside the limitation period.

The judge had identified the competing arguments as towhether a fair trial was possible in his consideration of S33(3)(b). He had recognised that the memories of the parties could not be supposed to have dimmed, but also correctly weighed in the balance the loss of some evidence and the less clear position as to the circumstances and memories of subsidiary witnesses. He clearly had considered the balance of prejudice.

‘…the factors in S33(3)(a), S33(3)(e) and S33(3)(f) weighed heavily against the exercise of any discretion in the claimant’s favour’

The judge had been entitled to find that the reasons forthedelaywerenotadequatelyexplained.Althoughitmighthave been possible to explain away some of the early period after attainment of the claimant’s majority, it was impossible to do so regarding the period after 2008. Over four years passed after the claimant was informed of Hoare. That was itselfsignificantlyinexcessoftheprimarylimitationperiod.A very large part of that delay was accounted for by the timetakentoobtainthefirstpsychiatrist’sreport.Althoughthe claimant’s solicitors might have pressed harder for an outcome, there was no evidence of any anxiety expressed by the claimant herself as to the progress of her claim. It had plainly been incumbent on both the claimant and her advisers, after 2008, to proceed with despatch when the primary period had expired so long before. By the time the matter was before the judge, the factors in S33(3)(a), S33(3)(e) and S33(3)(f) weighed heavily against the exercise of any discretion in the claimant’s favour. A claimant who had failed to meet a limitation period or failed to proceed diligently after expiry of a period could in some cases shelter behind error on the part of advisers, but not always. The delay after 2008 had been egregious and the explanations proffereddid not begin to exonerate the claimant from it.

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Fraud/settlement of suspicious claimThe case of Hayward v Zurich Insurance Co Plc (2015) EWCA Civ 327 demonstrates the care defendants must take when deciding to settle claims where there is a suspicion of fraud.

The appellant/claimant had injured his back during an accident at work. He claimed that his injury continued to cause him serious lumbar pain which restricted his mobility and that his ability to work was seriously impaired. The insurers conducted the defence on behalf of the employer. They relied on video evidence which showed him undertaking heavy work at home, to argue that he had exaggerated the consequences of his injury. The partiesreached an agreement, embodied in a Tomlin order, under whichtheinsurersagreedtopay£134,973infullandfinalsettlement of his claim.

About two years later, the claimant’s neighbours approached the employers to say that from their observation of his conduct and activities, they believed that the claimant had entirely recovered from his injury at least a year before the settlement was reached. The insurers claimed damages for deceit, asserting that the statements which the claimant had made about the extent of his injury in his particulars of claim and witness statements constituted fraudulent misrepresentation. The settlement agreement was set aside. The claimant was awarded damages of £14,720 and he was ordered to repay the settlement sum, less that amount.

The claimant appealed and submitted that belief was a necessary component of a claim based on misrepresentation, whereas the insurers’ decision to enter into the settlement hadbeeninfluencedbythefearthatthecourtmightbelievehis misrepresentations rather than by their own belief in them.

Allowing the appeal, the Court of Appeal held that the judge had been wrong to set aside the settlement agreement. The contract which the insurers sought to rescind was a contract to compromise a disputed claim. The claim for rescission

was based on the very averments of fact which the claimant made in advancing that claim. In such a case, a defendant would not be entitled to seek to have the agreement set aside at some later date only on the basis that he could now show that the claimant’s factual statements of the case being advanced were wrong.

‘By entering into the settlement, the defendant implicitly agreed not thereafter to seek to have it set aside…’In deciding to settle, the defendant took the risk that those statements would not be proved at trial and paid a sum commensurate with his assessment of that risk. It could have taken the case to trial in order to disprove the statements in question,butbysettlingitagreedtoforegothatopportunityand could not reserve the right to come back for another attempt.Ifitwereotherwise,nosettlementwouldbefinal.By entering into the settlement, the defendant 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.However, thepositionwouldbedifferentwhere theclaimant’s case was not only ill-founded but dishonest. Thus, whilst it might be fair to treat the defendant as having taken the risk of the claimant’s statements in support of his claim being wrong, it would not, absent any indication to the contrary, be fair to treat him as having taken the risk of them being dishonest.

What risk the defendant was to be treated as having accepted had to depend on the circumstances of the particular case. If itwas in any case sufficiently apparentthat the defendant intended to settle notwithstanding the

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possibility that the claim was fraudulently advanced, there was no reason why it should not be held to its agreement evenifthefraudsubsequentlybecamedemonstrable.

Applying those principles to the instant case, it was clear that the insurers ought not to be entitled to rely on alleged fraudulent misrepresentations because the statements had been made by the claimant in his statements of case and witness statements and the employers had positively asserted that they were dishonestly advanced before the settlement was reached.

Alternatively, it was possible to adopt an analysis based on reliance. The insurers had not been concerned with the truth or otherwise of the claimant’s statements as the factor motivating their action. Rather, they were treating them simply as part of his case. It was inherent in the antagonistic relationship of claimant and defendant that a defendant 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 did not arise in that context.

The authorities on rescission for misrepresentation were clear that for a misstatement to be the basis of a claim to rescind a contract, the claimant had to have given some credit to its truth and been induced into making the contract by a perception that it was true rather than false. The settlement remained binding.

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Jackson/Mitchell/DentonAs the case of Singh v Thoree [Lawtel 30/03/2015] illustrates, there can be no doubt that the courts are adopting a much more relaxed approach to non-compliance in the post-Denton era.

The respondent/claimant had been employed by the appellant/defendant at a solicitors’ firm from 2002 until2008 and issued a claim form in 2013 which alleged that the defendant owed him money. A deputy Master extended time to serve a defence to 28 January 2014. Meanwhile, the claimant was granted permission to add a third party as a defendant,namelythesolicitors’firmwhichhademployedhim prior to 2008. The defendant received the amended claim form on 28 January, hours before his defence was to be served and his advisors took the view that that service reset the clock so that he had a further 28 days to serve his defence. The claimant applied for judgment in default of defence on 30 January and it was entered against the defendant on 24 February. Meanwhile, the defendant had served his defence and counterclaim on 14 February. He received notification on 26 February that judgment hadbeen entered and, on the following day, applied for it to be set aside. That application was refused by another deputy Master.

The defendant appealed, submitting that (1) the service of the amended particulars of claim had overridden the order extending time to serve a defence; (2) in considering the application to set aside, the deputy Master had not dealt with the merits of his defence under CPR 13.3.

Allowing the appeal, the High Court judge held that the service of the amended particulars of claim had not overriddenthefirstdeputyMaster’sorder.Normallywhereamended particulars were served, provisions were made to amend the timetable either by agreement or by court order. In the instant case the amendment had simply added a party. On the facts, there was no need for the defendant toplead to the amendedclaim.Hehadbeen required tocomply with the deputy Master’s order, even though his

advisershadgenuinelytakenadifferentviewthathehadtoaddress the amended claim and that time had begun to run again. They had been mistaken.

In the application to set aside, the deputy Master had not mentioned the merits of the defendant’s defence in his judgmentanditwasthereforeimpossibletofindthathehadreached a view on that matter. The claimant accepted that the instant court therefore had to make such an assessment.

‘Applications to set aside had to be made promptly and the defendant had...’There had been an extraordinary delay in bringing the claimanditsvaluehadnotbeenspecified.Thedefendantaccepted that money was potentially owed to the claimant, but the amount could not be calculated without a proper account. It was possible that the claim and counterclaim couldcanceleachotherout.Thecourtwassatisfiedthat,onthe face of the statements of case, the defendant had a real prospect of successfully defending the claim. Applications to set aside had to be made promptly and the defendant hadmadehisapplication thedayafterbeingnotified thatjudgment in default had been entered. The judgment was therefore set aside.

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Watch this spaceChanges to Part 36effectivefrom6April 2015Although CPR Part 36 has been completely rewritten (rather than amended), in reality there is little by way of fundamental change to the previous version.

It remains the case that to be valid a Part 36offermust:

• Be in writing

• Make it clear that it is made pursuant to Part 36. (The oldrulerequiredthattheoffershouldstateonthefaceofitthatitwasintendedtohavetheconsequencesofSection I of Part 36).Underbothversionstheeffectisthe same: that the defendant will pay the claimant’s costsiftheofferisacceptedwithinthe“relevantperiod”

• Specify a “relevant period” of not less than 21 days

• Indicate if it is to settle all or part of the claim

• State whether it takes into account any counterclaim

Asummaryofthemoresignificantchangesis:

1.Offerscanbetimelimitedi.e.theoffermayindicatethatif not accepted it is withdrawn on a certain date or on the happening of a certain event. However, the costs protection oftheofferisthenlost.

2. Where there is a split trial, the new CPR 36.16 allows the judge to be told of the existence, but not the terms, of a Part 36offerafter judgmenthasbeengivenonthepreliminaryissues (unless the Part 36offerrelatesonlytotheissuesthathavebeendecided,inwhichcasethetermsoftheoffercanalso be disclosed).

3.Thecurrent ruleshavegiven rise todifficultieswhereaparty makes a Part 36 offer for nearly all the relief it isseeking in the action. On the face of the rules, the costs consequencesapplywhereaclaimantobtainsajudgmentthatis“atleastasadvantageous”asitsoffer,i.e.itdoesnotneedtobetteritsoffer.Sointheorythecostsconsequences

couldapplywhereaclaimantmakesanoffer tosettle forthe full amount claimed (or 99%) and then succeeds in full.

The new Part 36seekstoaddresstheperceiveddifficultyof parties being able to obtain the costs benefits ofPart 36wheretheyhavemadeveryhighoffers. Itdoesthisbyadding a new factor for the court to take into account in deciding whether it would be unjust to order the Part 36 costsconsequences,at36.17(5): “(e)whethertheofferwasa genuine attempt to settle the proceedings”. This would appear also to rule out defendant offers for 5-10% onliability.

4. The new Part 36 states expressly (at CPR 36.2(3)) that a Part 36offermaybemade inrespectofacounterclaimor other additional claim. It cross-refers to CPR 20.2 and 20.3 which provide that counterclaims and other additional claims are treated as claims and that references to a claimant or defendant include a party bringing or defending an additional claim.

5. There is a new provision (at CPR 36.9(5)) that where anofferor changes the termsof anoffer tomake itmoreadvantageous to the offeree, it is treated as a new offerratherthanawithdrawaloftheoriginaloffer.

6. The new 36.14(5) makes clear that where a Part 36offerisaccepted late, the court must make the usual order (i.e. that the accepting party pays the costs for the period of delay) unless it would be unjust to do so. This brings into play a similar test to the court considering whether to depart from theusualcostsconsequenceswhereapartyfailstobeataPart 36 offerattrial.

The current wording of Part 36 states that on late acceptance the usual order will apply unless the court orders otherwise, which might be thought to suggest a broader discretion.

7.Ifapartyhasfailedtofileacostsbudgetintime,underCPR 3.14 it is treated as having filed abudget limited tocourtfees,sothatineffect(andsubjecttoobtainingrelief

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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from sanction) its recoverable costs are limited to court fees. Where that is the case, there may be little incentive for the opponent to settle in the face of a Part 36 offer from thepartyindefault,asthecostsriskif itfailstobeattheoffermay be minimal.

The new CPR 36.23 addresses thisdifficultybyprovidingthat, in such circumstances, the defaulting party’s recoverable costs for the purposes of Part 36 will be 50% of the costs that would otherwise be recoverable, but will not be limited to court fees. Note however that this provision only applies to the costs from expiry of the relevant period onward. Where it is the claimant that is in default, and the offer is acceptedwithin the relevant period, this new ruledoes not allow the claimant to avoid the limitation to court fees.