Liability Brief - February 2014

13 February 2014
Liability Brief
Stop press: impact of Jackson/Mitchell
Kennedys has obtained confirmation from Master Cook that a new model direction
to address applications for extensions of time has been approved by Lord Justice
Leveson, President of the Queen's Bench Division and Lord Justice Richards,
Deputy-Head of Civil Justice. The effect of the direction is that parties may agree
extensions of up to 28 days without the need to apply to court. This is to be
considered by the Rules Committee very shortly. Our further comment on this
important development will follow.
Welcome to the February edition of the Liability Brief.
On 30 January 2014, the Mesothelioma Bill received Royal Assent, becoming the
Mesothelioma Act 2014. The Act provides for the establishment of the Diffuse
Mesothelioma Scheme, whereby claimants, who cannot trace their workplace
insurance policy, are able to receive compensation if they were first diagnosed
with diffuse mesothelioma on or after 25 July 2012. The Scheme is intended to
begin making payments by summer 2014.
Under the Scheme, claimants will receive 75 per cent of the compensation amount
they would have been awarded by a court. Speaking at a recent roundtable event
hosted by Kennedys, Lord McKenzie, who led Labour’s response to the Act in the
House of Lords, has suggested the possibility of 100 per cent pay-outs for claimants
in the future, as the number of claims levels off.
The Civil Justice Council Costs Committee has heard oral evidence from
stakeholders, which included Kennedys, about the review of guideline hourly rates
(GHR). The Committee is due to report to the Master of the Rolls on proposed
changes to the rates by 31 March 2014. The particular topics of interest to the
Committee include: (i) the use of the GHR for detailed as well as for summary
assessments and (ii) the role of the GHR in more complex litigation.
The Ministry of Justice (MoJ) has confirmed that a working group will shortly begin
the process of creating medical panels to assess whiplash injury claims. Kennedys
attended a MoJ convened meeting of stakeholders last month to discuss possible
whiplash reforms. The plan is now to create proposals for the medical panels,
focusing on claims below £5,000, by July 2014.
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On 11 February 2014, the Information Commissioner, Christopher Graham, updated
the Home Affairs Committee on his investigation into rogue private investigators
(PIs). Graham said the Information Commission had been able to categorise 90
clients of rogue PIs, by the extent to which they had undertaken bad practice. The
investigation should be completed around October 2014.
Reports indicate that Mr Justice Ramsey has said that the April 2014 update to the
Civil Procedure Rules will include the outcome of the review of the exemption from
mandatory costs management for the specialist civil courts. There are apparently
no plans to change the damages-based agreements (DBAs) regulations to allow
hybrid DBAs. Ramsey has also indicated support for an extension of qualified oneway costs shifting in other personal injury claims.
As always, I hope you enjoy reading this edition and welcome your feedback.
Tracy Head, Partner
CRU appeals: important changes
Our flowcharts provide a reminder of recent changes to the procedure for bringing
appeals against recoverable benefits and NHS charges.
Background
Given all the other developments over the last few months, including the Jackson
reforms and portal extensions, it would be easy to forget the crucial changes to
appeals against recoverable benefits (in force since 28 October 2013) and NHS
charges (in force since 7 November 2013).
Appeals against certificates are an important means by which compensators can
recover sums paid to the Compensation Recovery Unit (CRU).
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Flowcharts
Recoverable benefits appeal
NHS charges appeal
Time limit: one month from
payment of benefits.
Compensator submits grounds
and evidence of appeal to CRU
Time limit: three months from
payment of damages.
Compensator submits appeal
form (SSCS4), grounds and
evidence of appeal to HMCTS
CRU considers appeal and sends
Mandatory Reconsideration Notice
(MRN) to compensator
Time limit: one month from MRN.
If compensator still wishes to
appeal, submits appeal form
(form SSCS3) to HM Courts &
Tribunal Service (HMCTS)
CRU notified by HMCTS
CRU considers appeal and sends
NHS Decision Notice to
compensator
If compensator still wishes to
appeal, HMCTS lists appeal hearing
HMCTS makes its decision and, if
necessary, lists an appeal hearing
CRU guide
Our CRU guide is aimed at a broad spectrum of readers from the novice through to
more experienced handlers. It provides a quick reference guide to the essential
and key features of benefits, offsetting, tactics and CRU reviews and appeals.
Download our Essential Guide to CRU Benefits and Appeals: http://www.kennedyslaw.com/crubenefitsandappeals/)
For more information please contact Paul Morris – [email protected]
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NHS charges - changes to amounts to be repaid
The 2014 Regulations have just been published, increasing the daily amounts
recoverable as well as raising the overall maximum amount that can be charged.
The Government sets the level of NHS Charges that can be recovered by way of
annual amendment to The Personal Injuries (NHS Charges) (Amounts) Amendment
Regulations.
NHS charges apply to all types of personal injury claims occurring after 29 January
2007. Before this date, recovery was limited to road traffic accident claims. NHS
ambulance charges recovery also started at this date.
The amount of NHS charges to be repaid will depend upon the date of the
accident. The revised rates are:
Accident date
Daily amounts
to be repaid
Maximum amounts
to be repaid
Before 02/07/97
Outpatient: £295
Inpatient: £435 per day
£3,000
02/07/97 - 27/01/02
Outpatient: £354
Inpatient: £435 per day
£10,000
28/01/02 - 07/02/02
Outpatient: £402
Inpatient: £494 per day
£30,000
08/02/02 - 01/01/03
Outpatient: £354
Inpatient: £435 per day
£10,000
01/01/03 - 31/03/03
Outpatient: £440
Inpatient: £541 per day
£30,000
01/04/03 - 31/03/04
Outpatient: £452
Inpatient: £556 per day
£33,000
01/04/04 – 31/03/05
Outpatient: £473
Inpatient: £582 per day
£34,800
01/04/05 – 31/03/06
Outpatient: £483
Inpatient: £593 per day
£35,500
01/04/06 – 28/01/07
Outpatient: £505
Inpatient: £620 per day
£37,100
Ambulance: £159
Outpatient: £505
Inpatient: £620 per day
£37,100
01/04/08 – 31/03/09
Ambulance: £165
Outpatient: £547
Inpatient: £672 per day
£40,179
01/04/09 – 31/03/10
Ambulance: £171
Outpatient: £566
Inpatient: £695 per day
£41,545
01/04/10 – 31/03/11
Ambulance: £177
Outpatient: £585
Inpatient: £719 per day
£42,999
29/01/07 – 31/03/08
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01/04/11 – 31/03/12
Ambulance: £181
Outpatient: £600
Inpatient: £737 per day
£44,056
01/04/12 – 31/03/13
Ambulance: £185
Outpatient: £615
Inpatient: £755 per day
£45,153
01/04/13 – 31/03/14
Ambulance: £189
Outpatient: £627
Inpatient: £770 per day
£46,046
01/04/14 – 31/03/15
Ambulance: £192
Outpatient: £637
Inpatient: £783 per day
£46,831
For more information please contact Paul Morris – [email protected]
Night work: cause for concern?
Recent research indicates that regular night work could cause long-term damage.
We consider the implications for employers.
Research study
A study, published in the Proceedings of the National Academy of Sciences, claims
that employees who regularly carry out night work could cause long-term damage
to their body.
The results of the study showed that, with mistimed sleep, over 97% of rhythmic
genes became out of sync, causing them to be less active.
Professor Dijk described this predicament as “chrono-chaos”. He said that every
tissue in the body has its own daily rhythm. Irregular shift patterns and night
working causes disruption to this rhythm and, in turn, causes chaos for the person’s
body.
Similar studies have previously shown that shift workers getting too little sleep at
the wrong time of the day may be increasing their risk of Type 2 diabetes and
obesity. Other analyses have suggested that heart attacks are more common in
night workers.
Employers’ duties
This may seem alarming news to employers of night workers. However, this need
not be the case.
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The studies themselves have been restricted to a relatively small number of
subjects. The results should simply serve to remind employers of the overriding
duty owed to their employees to look after their health and safety.
Employers should already give consideration to the particular health and safety
needs of night workers. These may include providing longer or more regular rest
breaks, or having tighter controls on practices and procedures.
The Working Time Regulations 1998 include provisions dealing with employees who
work at night and/or on irregular shift patterns, which provide some guidance. For
example:

Regulation 6 covers the length of night work permitted in a 24 hour
period.

Regulation 7 provides that night workers are entitled to a free health
assessment before being assigned to night work and regular health
assessments after that.

Regulation 8 provides for regular rest breaks.
Implications
Will an ultra cautious employer try to find an alternative to night work? What could
the alternatives be?
Some night work is inevitable, for example, in situations such as highway
maintenance or in the rail industry, to avoid significant transport disruption.
Where night work is involved, employers should give careful consideration to ways
to comply with their health and safety obligations.
What of the long term consequences? Do the results of this study suggest “chronochaos” could lead to claims from those who have developed diseases such as
diabetes or suffer other forms of ill health?
The number of disease claims is increasing, not least because many are regarded as
falling outside the costs restrictive portal procedure. For example, noise induced
hearing loss claims have been described as “the new whiplash”. It is possible that,
in the future, long tail disease claims will be presented alleging that night working
caused the onset of a condition, relying on studies such as this in support.
For more information please contact Khalid Mahmood – [email protected] or Laurence Vahey – [email protected]
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New evidence after trial
Kennedys successfully defends application in the Court of Appeal for a retrial;
Claimant not allowed to adduce new evidence to be considered at a retrial
following the dismissal of his claim at trial - Hussain v King Edward VII Hospital
[12.12.13]
Implications
This Court of Appeal decision reaffirms the reluctance of the courts to allow a
party to introduce evidence after a trial, in accordance with the high threshold
established in Ladd v Marshall [1954].
To allow such evidence would undermine the principle that requires the parties to
ensure that all relevant evidence is disclosed in a timely manner to allow a trial to
proceed on an equal footing.
Even if one party could not have reasonably obtained the evidence pre-trial, to
allow it after the trial decision could give that party an unfair "second bite of the
cherry". This would prolong litigation, increase costs and waste court resources.
There would also be a lack of closure for the parties if cases were generally
allowed to be reopened on receipt of late evidence. This would not necessarily be
in the interests of justice.
Background
View the full background to the claim and the High Court decision.
In summary, the Claimant alleged that he suffered a shoulder injury during a
bladder operation on 5 January 2005. At first instance, his claim was dismissed by
Mr Justice Eady. The Defendant’s case, that the shoulder problems were most
likely the result of pre-existing degenerative change and that there was no
evidence of negligent handling, was accepted.
The appeal was based on two documents obtained from the Claimant’s employers’
medical practitioners, which had not been adduced at trial. The Claimant
contended that the fresh evidence should be relied upon at a retrial of the action.
This was on the basis that the evidence indicated that the Claimant had suffered
some trauma to his shoulder whilst under the care of the Defendant. The
documents in question were:

A fax cover sheet from Ms Awad, a senior medical administrator, to Dr AlKandari dated 10 January 2005 stating that the Claimant attended their
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medical office in London that day suffering from severe pain in his left
shoulder and "we saw traces of blood under the skin".

A letter from Dr Al-Abbasi dated 4 December 2012 suggesting that the
Claimant had severe or extensive bruising visible on 7 January 2005.
Legal framework
The courts’ primary power to allow fresh evidence to be adduced following a trial
is given by the discretion expressed in CPR 52.11(2).
However, the criteria set out in Ladd v Marshall remain relevant. These criteria
require a court to be satisfied that the evidence:

Could not have been obtained with reasonable diligence for use at (the
original) trial.

Would probably have had an important, but not necessarily decisive,
influence on the result.

Is apparently credible, although it need not be incontrovertible.
The following are also important considerations:

If permitting new evidence would lead to a retrial, this should only be
allowed "if imperative in the interests of justice".

The discretion to admit or refuse to admit fresh evidence on appeal should
be exercised in accordance with the overriding objective.

It is the duty of a party to bring forward his whole case at once, rather than
in a piecemeal fashion.
Decision
The Court of Appeal refused the Claimant’s appeal against the dismissal of the
claim and the application to adduce fresh evidence in support:

The documents could and should have been obtained pre-trial with
reasonable diligence. The first documented request for the records did not
take place until 15 September 2012, which was only eight weeks before
trial. The Claimant had been aware for a considerable period that Dr AlAbbasi was his point of contact with his employers’ medical practitioners
but failed to follow this up until after the trial.
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
It was questionable whether the evidence was sufficiently credible. There
was scant information contained within the fax cover sheet from Ms Awad.
In addition, the letter from Dr Al-Abbasi to the Claimant to support his
appeal was sparse and provided on the express condition that no further
assistance would be sought from him. Dr Al-Abbasi would not attend any
retrial to verify his written evidence.

It was also questionable whether the evidence would make any difference
to the verdict at a trial.
For more information please contact Nico Fabri – [email protected]
Northern Ireland update
Kennedys’ Belfast office provides an overview of civil litigation in Northern Ireland:
does a recently introduced pre-action protocol for personal injury and damage-only
road traffic accident claims represent the dawn of a new era for liability claims?
The fact that Northern Ireland is a different jurisdiction can be overlooked. Civil
litigation operates under a separate set of rules and procedures to those applicable
to England and Wales.
Differences
The main differences are that in Northern Ireland:

The Civil Procedure Rules/Jackson reforms do not apply.

Time limits are not strictly enforced in the majority of circumstances.

There is no requirement to exchange witness statements.

There are no Part 36 offers; instead defendants can make a physical
“payment into court”.

General damages tend to be higher.

Claimants’ costs are significantly lower.
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Pre-action protocol
The introduction in Northern Ireland last year of the Pre-Action Protocol for
Personal Injury and Damage-Only Road Traffic Accident Claims (the Protocol)
signifies an intention to carefully manage these claims.
The Protocol aims to move away from the current “ambush” system to a “cards on
the table” approach. It applies to personal injury and damage-only road traffic
claims which are commenced in the county court, i.e. matters valued at up to
£30,000. For claims above that threshold, a similar protocol was already in place
for personal injury claims in the High Court.
In order to comply with the Protocol:

The claimant must provide a clear and detailed pre-action letter of claim,
which should include a summary of the facts, details of financial loss,
personal injuries, recoverable benefits and a request for relevant
documentation.

The defendant is required to issue an acknowledgement within 21 days.

The defendant must produce a detailed response within three months.
This should include a decision on liability together with an explanation as
to how the decision was reached and whether contributory negligence
and/or the involvement of third parties are a factor.

The defendant must disclose all relevant documentation along with its
response.
The letter of claim should enable the defendant to investigate the claim properly
and make an assessment of liability before proceedings are issued, so as to avoid
litigation and unnecessary legal costs. If the letter of claim does not contain the
information necessary to facilitate proper liability investigations, it is reasonable
for a defendant to refuse to provide a detailed response until a protocol compliant
letter is received.
Failure to comply
Whilst there are currently no costs sanctions in place for non-compliance, the
Northern Ireland High Court judgment in Monaghan v The Very Reverend
Graham/Trustees of Milltown Cemetery [2013] has given us a glimpse of how the
judiciary will apply the Protocol.
In that case the Defendant’s insurers failed to provide pre-action disclosure. As a
consequence, the Claimant’s solicitors brought an application for pre-action
discovery.
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Mr Justice Stephens, finding for the Claimant, stated: “At a fundamental level the
pre-action protocol is an articulation of fairness. Before proceedings are issued the
plaintiff should give proper information to allow a view to be formed by the
defendant. A similar obligation rests on the defendant”.
The Defendant’s insurers had not complied with the High Court protocol and
accordingly were penalised in costs.
Comment
The Protocol is a step in the right direction.
It should mean that the parties to a claim receive more information at the outset
to enable a proper assessment of liability and early settlement where appropriate.
This is good news for insurers, who should see costs savings in the long term.
An official review into the application of the Protocol, particularly party
compliance, is due to take place in Spring 2014. For now, defendants and insurers
alike can take some comfort that the new regime represents a move from the
uncertainty of “ambush” towards early resolution of claims.
For more information please contact Kerrie Harrison – [email protected]
Relief from sanctions: Mitchell and Durrant endorsed
Court of Appeal gives a third significant judgment; relief from sanctions should
not have been allowed - Thevarajah v Riordan and others [16.01.14]
Implications
Little, if any, judicial leeway towards non-compliance of case management rules
continues and Mitchell v News Group Newspapers has become the legal mantra for
obedience. The legal profession and other users of the court are assumed to be
well aware of the culture change that occurred on 1 April 2013 and to understand
the rationale behind the reforms.
The Court of Appeal held that the application in this case failed under CPR 3.1(7),
on the basis that relief from sanctions had already been refused and there were no
grounds on which to vary or revoke the earlier order.
However, it took the opportunity to restate, with approval, the strict principles
established in Mitchell and, in particular, the stern approach to what constitutes a
trivial breach.
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For now, it seems that unless there has been a radical change of circumstances,
sanctions must be regarded as final. Rectifying the default is not likely to be
enough to persuade the court otherwise. Whilst attempting to appeal an order
refusing relief may be more successful than launching a secondary application for
relief at a later date, it should not be considered as a reliable option. CPR 23
makes it clear that successive applications for the same relief may be restricted
and given the courts’ approach to active case management; parties are likely to
encounter difficulties. The court is almost certainly going to be vigilant towards
additional costs, court time and the consequent impact on other litigants’ access
to the court.
Background
This was an appeal against an order of Mr Andrew Sutcliffe QC (the Deputy Judge)
dated 11 October 2013, by which he allowed the application of the First, Second
and Fourth Respondents (the Respondents) for relief from sanctions under CPR 3.9:

The dispute between the parties related to the terms of an agreement for
the Appellant’s purchase of assets from the Respondents.

At a hearing on 21 June 2013, Mr Justice Henderson found that the
Respondents’ disclosure was inadequate. He made an unless order providing
for disclosure of certain documents by 1 July 2013.

The Respondents provided further disclosure on 28 June 2013 and an
affidavit on 1 July 2013. The Appellant maintained that there had been a
failure to comply with the unless order. He issued an application for an
order striking out the defence and counterclaim. The Respondents crossapplied for relief from sanctions under CPR 3.9.

On 9 August 2013, Mr Justice Hildyard concluded that serious failures to
comply with the unless order had been established. He refused relief from
sanctions and ordered that the Respondents’ defence and counterclaim be
struck out.

On 1 October 2013 the Respondents filed a second application for relief
from sanctions. The trial itself was listed to start on 3 October 2013. The
trial was relisted for 7 October 2013 with the relief application to be heard
on the first day of the trial. The Deputy Judge allowed more than four of
the five days allotted to the trial to be spent on the relief application. He
granted relief and directed that the trial take place in a new trial window
commencing on 27 January 2014.
Decision
The Court of Appeal allowed the Appellant’s appeal against relief from sanctions.
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Lord Justice Richards held as follows:

Unless the provisions of the debarring order made by Hildyard J were set
aside by means of a variation or revocation of the order under CPR 3.1(7),
they were effective to debar the Respondents from defending the claim. It
was not open to the Deputy Judge simply to make an inconsistent order
granting relief under CPR 3.9.

The conditions for varying or revoking an order pursuant to CPR 3.1(7) were
set out by the Court of Appeal in Tibbles v SIG Plc [2012]. There was
nothing here by way of material change of circumstances since the order of
Hildyard J, and no other basis for an application under CPR 3.1(7) to vary or
revoke the order. Even if the required disclosure had been made late, this
would not amount to a material change of circumstances for the purposes of
an application under CPR 3.1(7).

Even if the Deputy Judge had been entitled to give fresh consideration to
the question of relief from sanction, his general approach to the application
of CPR 3.9 was wrong in principle. It lacked the robustness called for by
the guidance subsequently given in Mitchell. It gave insufficient
consideration to the need (a) for litigation to be conducted efficiently
and at proportionate cost, and (b) to enforce compliance with rules,
practice directions and orders, considerations which “should now be
regarded as of paramount importance and be given great weight”. It also
failed to take as its starting point that the sanction in the unless order
had been properly imposed and complied with the overriding objective.

In addition, the Deputy Judge had paid insufficient attention to the fact
that the second application had not been made promptly. The judgment
of the Court of Appeal in Durrant placed particular weight on the failure
to make a prompt application. Also, the Deputy Judge allowed the
hearing of the application for relief from sanctions to take up a
disproportionate amount of court time.
For more information please contact Tracy Head – [email protected]
Settlement offers and dishonesty.
Court of Appeal holds that Claimant in personal injury claim should have
accepted earlier offer; impact of dishonesty by Claimant considered – Rehill v
Rider Holdings Ltd [15.01.14]
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Implications
Whilst there is nothing groundbreaking in this decision, it serves as a useful
reminder to defendants of the importance of making, in the right cases, settlement
offers.
Offers, and in particular Part 36 offers, change the risk profile of a claim. A
claimant may have entered into litigation with the attitude that he has nothing to
lose. Where a well judged offer is made, and the claimant is properly advised, this
attitude should shift. Even when an offer is withdrawn, Part 44 provides bite in
respect of a dishonest claimant’s conduct.
It is reassuring to see that the Court of Appeal made it clear that if, as in this case,
the claim was being exaggerated, the reasonableness of rejecting an offer must be
judged on what a claimant himself knew, rather than his lawyers and physicians.
The decision also reinforces the Supreme Court decision in Summers v Fairclough
Homes Ltd [2012]. Where a claim is exaggerated, the courts have discretion to
show their disapproval by punishing the claimant in costs. The reality in this case is
that the Claimant should not recover any damages as a result of bringing his claim.
The postscript in the judgment in relation to compliance with a practice direction
should be noted as further endorsement (if needed) of the Court of Appeal’s
judgment in Mitchell v News Group Newspapers Ltd [2013].
Background
The claim related to an accident on 28 December 2005 when the Claimant was hit
by a bus whilst he was crossing a road.
The Defendant had made a number of offers to settle, the key ones being as
follows:

23 April 2007: £75,000, expressed to expire on 1 June 2007. Not accepted.

8 November 2007: £100,000, expressed to be made pursuant to Part 36.
Not accepted. Withdrawn on 18 January 2008.

10 June 2009: just under £40,000, pursuant to Part 36. Not accepted.
Shortly before the quantum trial, the Claimant accepted an offer of £17,500.
At first instance, in relation to costs, Mr Recorder Miller held that the Claimant had
failed to beat the Part 36 offer of 10 June 2009. He ordered him to pay the
Defendant’s costs on the standard basis from 2 July 2009.
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The Recorder did not accept that the Claimant should have to pay the costs
incurred before 2 July 2009:

At the time the offers were made in 2007 there was uncertainty about the
Claimant’s prognosis.

Although his conduct had been reprehensible, it was not so egregious to
warrant a further penal order of costs.
Decision
The Court of Appeal disagreed. It ordered that the Claimant pay the Defendant’s
costs from 21 days after the November 2007 offer:

Settlement offers: the automatic consequences attaching to a subsisting
Part 36 offer do not apply to an offer that has been withdrawn. Such an
offer falls within Part 44, which requires a court to take into account any
admissible offer to settle. Given the medical evidence, and the Claimant’s
own knowledge, it was unreasonable for the Claimant not to have
accepted the November 2007 offer. The same could not be said about the
April 2007 offer; at that time there was still some orthopaedic
uncertainty.

Dishonesty: if the overall effect of the Recorder’s order was that the
Claimant would be entitled to recover the costs of advancing a dishonest
case, then he would have erred in principle. However, the costs incurred
in promoting a dishonest case cannot be said to have been “reasonably
incurred”. This point could still be raised at a detailed assessment.

Costs of detailed assessment: neither party had complied with the
practice direction to file schedules of costs not less than 24 hours before
the appeal hearing. To mark the Court’s disapproval of the Defendant’s
failure, it was ordered to pay the costs of any detailed assessment in any
event.
For more information please contact Martin Stockdale – [email protected]
Kennedys is a trading name of Kennedys Law LLP. Kennedys Law LLP is a limited liability partnership
registered in England and Wales (with registered number OC353214).
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