piBlawg

the personal injury and clinical negligence blog

A collaboration between Rebmark Legal Solutions and 1 Chancery Lane

Exit Mitchell enter Denton

Our jurisdiction generally does not favour laws (whether judge- or parliament-made) which fail to take account of what is just in the individual circumstances of the particular case. The common law prides itself in being able to adapt to new situations to yield what we would generally understand to be the ‘right’ result. This is a priority of our legal system and Mitchell fell foul of it – whether because it overstepped the mark in the first place or whether because it was wrongly interpreted. It is a strength of our system that it has been able to correct itself within such a short space of time. Exit Mitchell and enter Denton (or perhaps it will become known as ‘Decadent’). The Court of Appeal explains that when approaching rule 3.9 the first stage is to identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’. If the breach is neither significant nor serious then there is no need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate ‘all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]’. The assessment of ‘seriousness and significance’ is substituted for the ‘triviality’ test. The Law Society had contended for a test of ‘immateriality’. The Court of Appeal was content with this as long as it involved not just a question of whether trial dates were affected but also the effect on litigation generally. Because this test did not take account of breaches which were serious but did not affect the efficient progress of the litigation, the Court preferred to stick to whether or not the breach was ‘serious or significant’. At this stage unrelated past failures should not be taken into account. The second stage is to consider why the default occurred. The examples in Mitchell are to be considered as no more than examples. When it comes to the third stage, if there is a serious or significant breach and there is no good reason for it the application will not automatically fail but the court will consider ‘all the circumstances of the case, so as to enable it to deal justly with the application’. The Court of Appeal rowed back from the epithet ‘paramount importance’ which had been attached to the only two factors expressly referred to in rule 3.9. They are now of ‘particular importance’ and should be given particular weight when all the circumstances of the case are considered. The Court of Appeal is on a tight rope. Its aim is evidently to avoid relaxation which 'will inevitably lead to the court[s] slipping back to the old culture of non-compliance which the Jackson reforms were designed to eliminate.' Equally it wants to put an end to the plethora of decisions which have come from some judges which are 'manifestly unjust and disproportionate'. Whether Denton will achieve that remains to be seen.

Allocation and admissions

Where a defendant admits a part of a claim, how does the admission affect the allocation of the claim? This was the question considered in Akhtar v Boland [2014] EWCA Civ 872. The defendant filed a Defence admitting hire, recovery and storage charges in the sum of £2,496. The claimant’s claim was pleaded at more than £5,000 but less than £10,000. However, if the sum of £2,496 was subtracted from the pleaded claim, it fell below £5,000 and therefore was below the then current limit for the fast track. Following Allocation Questionnaires the district judge allocated the claim to the Small Claims Track. The claimant applied to have the claim reallocated to the Fast Track but the judge refused the application but entered judgment against the defendant for £2,496. The Court of Appeal held that the sum of £2,496 fell into the category of ‘any amount not in dispute’ which was to be disregarded pursuant to part 26.8(2)(a) when allocating the claim to a track. An admission is binding and the Court has no jurisdiction to investigate facts which have been admitted unless permission has been granted for the admission to be withdrawn. That principle applied even more strongly to a judgment: neither party may make submissions or adduce evidence whichwould lead to decisions or findings inconsistent with a judgment. The Court of Appeal also made it clear that where there was judgment for a part of a claim the claimant’s cause of action was not extinguished: the claimant was entitled to pursue and seek judgment for the balance. Tactically defendants may want to make admissions which will bring the value of the claim into the Small Claims Track. However they will need to be careful of the costs consequences of so doing as part 44.15(3)(iv) says the court may allow the claimant costs of the proceedings to the date of the admission of part of the claim. To avoid such costs consequences it would be prudent to make such an admission during the pre-action protocol period.

Rescued from an error of procedure

Rule 3.10 rescues parties where “there has been an error of procedure such as a failure to comply with a rule or practice direction”. Where it applies “the error does not invalidate any step taken in the proceedings unless the court so orders”. The question therefore is when an error is merely an error of procedure and when it is such an error that it is irremediable. In Isaac Stoute v LTA Operations Ltd [2014] EWCA Civ 657 the Court of Appeal looked at this question in the context of failed service. Is service of the claim form by the court in disregard of a claimant’s notification that he wished to effect service himself (1) a nullity and (2) ‘an error of procedure’ within r. 3.10? The problem in this case was that the claimant had notified the Court that his solicitors wished to serve the claim form. Rule 6.4(1) states that the Court will serve the claim form except where the claimant notifies the Court he wishes to serve it. It was argued that service by the Court must therefore have been a nullity which rule 3.10 could not rescue. The Court of Appeal found that service by the court (in error) was not a nullity and was an error of procedure within r.3.10. Underhill L.J. held that there was nothing contrary to the fundamental scheme of the Rules, or radically unfair to the parties, in allowing service to stand. The Court had wrongly effected service – but Court service itself was provided for by the rules. There was no prejudice to the defendant who would not have even known that service was irregular when it was effected. It was objected by the defendant that rule 7.6 applied (making provision for extending time for service of the claim form) and that rule 3.10 was just a way of getting round this. The Court of Appeal found that rule 7.6 applied to cases where service had not been effected within the period allowed by rule 7.5. Rule 3.10 could be relied upon to establish that service had been effected, albeit by the wrong person. I blogged recently on service and rule 3.10 (‘Rule 3.10: looking beyond 3.9 for relief’, 21st March 2014). My posting concerned the case of Integral Petroleum v SCU-Finanz AG [2014] EWHC 702 (Comm). That case involved rule 3.10 and the time for serving Particulars of Claim. The judge in that case considered that the rule was to be construed as of wide effect so as to be available to be used beneficially wherever the defect has had no prejudicial effect on the other party.” However he thought that a narrower approach to r. 3.10 should be taken when dealing with the originating process. The decision in the case of Stoute suggests that the approach is not narrower than the approach the judge took to the Particulars of Claim in Integral Petroleum. One issue which arises frequently in cases at the moment is whether an application for relief from sanctions to be made where there has been a breach of a court order, rule or practice direction but there is no automatic sanction prescribed. Rule 3.10 may often be the answer.

Jackson on Jackson

“It was no part of my recommendations that parties should refrain from agreeing reasonable extensions of time, which neither imperil hearing dates nor otherwise disrupt the proceedings” said Jackson L.J. in Hallam Estates Limited v Teresa Baker [2014] EWCA Civ 661. In Hallam the claimants (paying parties) asked for an extension of time for filing their points of dispute in proceedings for detailed assessment of costs. The defendant had been late in filing her bill of costs. Jackson L.J. held that they had given sensible reasons for asking for the extension and, given her own delay, the defendant could hardly object to a modest extension. Pursuant to r. 3.8(3) the court’s approval was required for such an extension but this should have been no more than a formality. In fact the judge approved it on paper without a hearing and this approach was endorsed by the Court of Appeal. Rule 3.8 is about to be amended to allow parties to agree extensions of time for up to 28 days as long as no hearing dates are imperilled. The parties have a duty to further the overriding objective (which includes allotting an appropriate share of the court’s resources to cases) and thus, according to the great man himself, agreeing reasonable extensions which don’t imperil dates or disrupt the course of litigation is not a breach of a legal representative’s duty to their client. Jackson L.J. made it clear that if an application was made for an extension of time before the expiry of the time permitted by a rule or practice direction the application remained an application for an extension of time even if time expired before the application was heard. He said that the principles governing relief from sanctions were not applicable in these circumstances. As was said in Mitchell itself, it is clearly better to make an application for an extension in advance if a deadline is likely not to be kept. Greater clarity has now been brought to the extent to which parties can agree extensions of time. A number of cases have now emphasised the need to identify whether a court sanction has actually been imposed by breach of a court order, rule or practice direction – not all breaches automatically result in a sanction and therefore it is doubtful that relief from sanctions is required in such circumstances.                

Costs Budgets and Unallocated Part 8 Claims issued before 22 April 2014

Some further clarity as to when to file costs budgets can be gleaned from the decision of Mr Justice Hickenbottom in the case of Kershaw v Roberts & Anor  [2014] EWHC 1037 (Ch). Here it was argued on appeal from the county court that the first directions hearing in a Part 8 Claim should be treated as the “first CMC” for the purposes of CPR 3.12-14 and thus costs budgets must be filed in advance.   It was argued that whilst the claim had not been allocated to the multi-track, this was inevitable as it was commenced by way of Part 8.   The learned judge however dismissed this argument, holding that the claim was not allocated to the multi-track until the district judge specifically allocated it to that track during the course of the county court hearing. IT was held that “consequently, that hearing itself was not – indeed could not have been – a CMC… The notice of the hearing did not refer to it as a CMC; and it seems to me clear that the court, in sending out that notice, never intended the hearing to be a CMC.”   This guidance is however of somewhat limited scope in that it only really applied to unallocated Part 8 Claims. This is because, on 1 April 2014 (the same day as the hearing of Kershaw), the Civil Procedure Rules Committee made amendments to the CPR by the Civil Procedure (Amendment No 4) Rules 2014 (SI 2014 No 867). Which are due to come into force on 22 April 2014. From that date, the costs management provisions of CPR Rule 3 Section 2 and CPR PD 3E (including costs budgets) will not automatically apply to any Part 8 claim. Those provisions will only apply if the court makes a positive order that they should (as expressly confirmed by new Rule 3.12(1A)).

Vicarious liability for associate or locum clinicians: Whetstone v Medical Protection Society Ltd

The question of whether practice partners or principals are vicariously liable for negligent treatment provided by associates or locums is one which has frequently exercised the medical defence organisations in recent years.  The issue ought to be academic, because such associates or locums are usually required, under the arrangements made with a practice, to have cover with one of the recognised organisations.  However, it is not unknown for associates or locums to fail to comply with such an obligation, or at least to notify their practices of where they have obtained their cover so that the benefit of it cannot be obtained when the associate or locum has left the jurisdiction and cannot be traced. The absence of any case law dealing with the issue has made it difficult for practitioners to predict with confidence the court's reaction to any attempt to impose vicarious liability for the actions of associates or locums.  The judgment of HHJ Richard Seymour QC in Whetstone v Medical Protection Society Ltd [2014] EWHC 1024 (QB) contains the first detailed examination of this issue in our jurisdiction. The claimant was a sole principal in a dental practice.  Between 1998 and 2009, he engaged a Mr Sudworth as an associate dentist within the practice.  A contract in 2008 provided the basis of their relationship.  Allegations by patients of inadequate treatment by Mr Sudworth began to be made in early 2009, and resulted in the termination of the agreement later that year.  A number of claimants intimated claims against Mr Whetstone on a vicarious liability basis.  Mr Whetstone sought indemnity from the MPS, and the majority of the judgment contains an interesting analysis of the legal basis of discretionary cover by medical defence organisations.  In the latter part of his judgment, however, the judge considers whether Mr Whetstone was, in fact, vicariously liable for the actions of Mr Sudworth.  He first examined some of the features of the contractual relationship between the two dentists at [116]: .... there was a degree of artificiality about the Sudworth Contract. It had been carefully constructed so as to ensure that, as between themselves, Mr. Whetstone and Mr. Sudworth were not in an employment relationship. However, to the outside world, unaware of the actual terms of the Sudworth Contract, how some of those terms worked was likely to create a different impression. By clause 1 Mr. Sudworth was to follow the policies of the Practice as laid out in the Whelby House procedures and policies folder. A copy of those policies was adduced in evidence. They were highly prescriptive. By way of example, the first section was "Greeting the patient and communication", and the first item was, "Greet the patient whilst standing facing them, be polite and put them at ease". The equipment and materials provided pursuant to clause 5 of the Sudworth Contract apparently included a uniform which Mr. Sudworth was required to wear. By clause 7a Mr. Sudworth was to make himself available for work during agreed hours, rather than work whatever hours he chose. By clause 8 Mr. Sudworth's holiday entitlement was limited, rather than a matter entirely for him. The effect of clauses 15 and 17 of the Sudworth Contract was that Mr. Whetstone collected the fees for work done by Mr. Sudworth and refunded Mr. Sudworth's share, notwithstanding that the contract was structured as a payment of a licence fee by Mr. Sudworth for the opportunity to earn fees. The actual fees charged were fixed by Mr. Whetstone, not by Mr. Sudworth. Clauses 24, 25, 26 and 27 of the Sudworth Contract were extraordinary if, in truth, Mr. Sudworth were an independent contractor providing services to his own patients, rather than to the patients of Mr. Whetstone. If Mr. Sudworth were an independent contractor one would not expect that he should hand over his patients' books and records to Mr. Whetstone (clause 24), not have any goodwill in relation to his own patients (clause 25), not be able to treat his own patients wherever he liked (clause 26), and not be able to treat his own patients after the termination of the Sudworth Contract (clause 27). Provisions of those types are normally only found in contracts of employment. He concludes that the relationship was one "akin to employment". He summarised the circumstances which led him to that conclusion in the following terms at [123]: .... In the circumstances of the present case, as I have pointed out, Mr. Whetstone exercised a high degree of control over Mr. Sudworth and his activities. Not only was Mr. Sudworth bound to follow the policies prescribed by Mr. Whetstone, but he was to attend to provide his services at times prescribed by Mr. Whetstone, and to charge fees for his services fixed by Mr. Whetstone. Mr. Whetstone certainly had an organisation, the Practice, which undertook the provision of dental treatment to patients, and Mr. Sudworth participated in that organisation and was integrated into it. He was provided with the physical means to undertake the provision of dental services, both in terms of the necessary equipment, but also in terms of the necessary support staff. In no meaningful sense was Mr. Sudworth an independent dental practitioner merely taking advantage of premises provided by Mr. Whetstone. Mr. Sudworth could not decide of his own choice when to work, or what to charge for his services. When the Sudworth Contract came to an end he could not take "his" patients or their records with him. It seems to me that the relationship between Mr. Whetstone and Mr. Sudworth was as "akin to employment" as one could get in a relationship deliberately structured by contract to avoid an employment relationship. Experience suggests that the contractual relationship in this case was one in which the principal regulated the conduct of the associate in an unusually tight manner.  The judge's reasoning, set out above, suggests that his decision might have been different if Mr Sudworth had simply been renting accommodation within Mr Whetstone's practice.  Nor does the decision consider the implications of the decision in Woodland v Swimming Teachers' Association [2013] UKSC 66, [2013] 3 WLR 1227 and whether a practice principal might owe a non-delegable duty of care to patients treated within his premises.  Nevertheless, the judge's approach is likely to inform any future litigation on this topic.

Rule 3.10: looking beyond 3.9 for relief

The dreaded realisation that you have not complied with a rule or practice direction. Your life flashes past you and a cold sweat breaks out. Out comes rule 3.9 and the new criteria, Mitchell, a call to the insurers… Or perhaps r. 3.10 applies? “Where there has been an error of procedure such as a failure to comply with a rule or practice direction- (a) The error does not invalidate any step taken in proceedings unless the court so orders…” There are some nuggets to be found in the recent case of Integral Petroleum v SCU-Finanz AG [2014] EWHC 702 (Comm) in which the scope of r.3.10 was explored by Popplewell J. In Integral the parties agreed an extension of time by e-mail for the service of the Particulars of Claim by 28 days to 6th June (in fact 28 days would have given until 10th June). The Particulars were served by e-mail at 18.41 on 10th June meaning they were deemed served out of time. SCU challenged validity of service on the grounds that e-mail was not a permitted method of serving and, in any event, service was late. No Defence was filed and Integral obtained judgment in default. Under r.6.20 e-mail may only be used to serve documents other than the claim form where a party has indicated that he or she is willing to be served by e-mail. SCU had not given such an indication. The judge found that the error of procedure in serving the Particulars of Claim by e-mail was a failure to comply with a rule or practice direction which fell within r. 3.10. Accordingly under r. 3.10(a) such service was a step which was to be treated as valid: He considered that the rule was to be construed as of wide effect so as to be available to be used beneficially wherever the defect has had no prejudicial effect on the other party. The method of service was recognised but the formalities necessary to make it a permitted method had not been concluded.  He drew a distinction between service of the originating process and service of Particulars of Claim and thought a narrower approach to r. 3.10 should be taken when dealing with the originating process. r. 3.10 was particularly apposite for treating as valid a step whose whole function was to bring a document to the attention of the opposing party where such function has been fulfilled - he said “It prevents a triumph of form over substance”. The judge also found that the rule applied in relation to service of the Particulars of Claim 5 days out of time. The upshot of all of this was that Integral could not set aside judgment as of right but the judge did set it aside under r. 13.3. Rule 3.10 is one to bear in mind when you next find yourself having a scrape with deadlines, procedural formalities etc. In the light of Mitchell the caselaw on this rule is likely to expand greatly.

Applicable Law in Tort and the Instruction of Expert Witnesses

Wall v Mutuelle de Poitiers Assurances [2014] EWCA Civ 138; LTL This appeal arose out of a preliminary issue trial on the proper meaning of Articles 1.3 and 15 of the Rome II Regulation in the context of permission to rely on expert (medico-legal) evidence which was to be adduced on behalf of an Englishman who suffered spinal cord injury during the course of a visit to France. Liability was conceded and it was common ground that the English Court had jurisdiction. However, the applicable law was that of France. The Defendant sought to restrict the Claimant's medico-legal expert evidence to the kind of French or "French-style" expert evidence that might be permitted by a French Court. The Defendant's arguments were rejected at first instance ([2013] EWHC 53 (QB)) and subsequently on appeal. The Court of Appeal gave important and timely guidance on the proper approach to expert evidence in claims of this kind (and on the meaning of Articles 1.3, 15 of and recital (33) to the Rome II Regulation).

Scuppered by the Athens Convention

The Athens Convention has long been a trap for the unwary claimant who either doesn’t appreciate that accidents at sea are governed by the Convention or that there is currently a 2 year limitation period. Most of the reported cases on the Convention deal with the consequences of one or both of these mistakes. However the judgment in the case of Feest v South West Strategic Health Authority [2014] EWHC 177 (QB) (handed down today) now poses a trap for defendants wanting to bring contribution proceedings. Dr Feest was injured as a passenger on a 9 metre RIB (rigid inflatable boat) in the Bristol Channel. She was on secondment from the Health Authority and on a corporate team building exercise being run by Bay Island Voyages when she fractured her spine. Dr Feest’s claim against the Health Authority (as her employer) was issued just before expiry of the 3 year time limit. The Health Authority brought a Part 20 claim against Bay Island Voyages. This was struck out by a district judge on the grounds that the time limit under the Convention is 2 years. The Health Authority appealed. The appeal hinged on the distinction between a cause of action being time barred and a cause of action being extinguished. In common law jurisdictions for the most part when time expires, it acts as a bar to the remedy. In civil jurisdictions it said to extinguish the cause of action altogether. The significance of this is that a right of contribution under the Contribution Act is only available where the cause of action has not been extinguished. Hence the appeal was concerned with whether the limitation period under Article 16 of the Convention barred the remedy or whether it extinguished the right to sue. HHJ Havelock-Allan QC found on appeal that, although Article 16 uses the language of an action being ‘time-barred’ after a period of 2 years, it extinguished the cause of action. Albeit that the Convention has been incorporated into domestic law and modified for domestic voyages, it must be ‘construed on broad principles of general acceptation’. The judge found that if he was ignorant of the English rules he would interpret Article 16 as extinguishing the right to sue. Interestingly the Montreal Convention actually uses the words ‘the right to damages shall be extinguished’ but the Carriage by Air Act 1961 actually includes a saving provision for contribution proceedings. The Merchant Shipping Act 1996 has no equivalent – arguably because the legislators interpreted the Athens Convention as a time-bar. Either way, in the unlikely event that a Claimant’s claim is issued within 2 years of an accident, Defendants will need to act swiftly to bring contribution claims within the same 2 year time period. (The author, Ian Miller, was counsel for the Health Authority and was led by John Ross QC)

Two Recent CFA Cases: Effect of a Failure to Serve a Notice of Funding and Powers of the Ombudsman

There have been two recent decisions concerning Conditional Fee Agreements which should be of interest to any practitioner practising in any area of the law where such funding arrangements are prevalent.   The first is Harrision & Anor v Black Horse (20/12/13, Sen Cts Office per Maser Gordon-Saker), where the strict application of the Mitchell judgment was applied to a case where relief was sought by a CFA-funded party for its failure to serve a Notice of Funding. Whilst previously such a common default was excused by courts on the basis that the strict sanction for this failure (the irrecoverability of any additional liabilities, namely: uplift and ATE premium) was disproportionate to the nature of the default, now it seems that such parties cannot expect such lenience.   The second is a case which was widely reported in various newspapers last week: Layard Horsfall Ltd v Legal Ombudsman [2013] EWHC 4137 (QB) per Phillips J. Here a former CFA-funded client of a Law Firm was required to pay the firm’s base costs of £5,000 including VAT for a discontinued court case. The client complained to the Legal Ombudsman who held it was reasonable for him to pay a reduced amount of £1,500 plus VAT. The Law Firm applied for judicial review of this decision, arguing that the client’s complaint was not within the jurisdiction of the Ombudsman, which was limited by the Legal Ombudsman Scheme Rules r.2.8 to complaints about the standard of service provided by a solicitor to a client and not issues about whether fees were contractually due.   The Court disagreed and held that it would be an artificial and unworkable distinction if the Ombudsman could consider the quality and levels of services but not issues of wrongful charging or overcharging. Section 137(2) of the Legal Services Act 2007 provided that the Ombudsman could direct that the fees to which a respondent was entitled were limited to a specified amount. That would be a difficult provision to apply if the ombudsman could not consider what was the correct contractual starting point before making such a determination.