Legal Watch:Personal Injury16th October 2014Issue: 036

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

In This Issue:

• Jurisdiction/Rome II• Civil procedure/pre-action disclosure• Costs• QOCS overturned

Jurisdiction/Rome IIIn Winrow v Hemphill and another (2014) EWHC 3164 (QB) the claimant tried to argue that although her accident had happened in Germany and involved another party then habitually resident in that country, she should nevertheless be able to bring her claim in England and under English substantive and not merely procedural law.

The claimant was an English national. She had moved to Germany with her husband after he was posted there by the British army. They had lived in Germany with their children for over eight years but intended to return to the UK at the end of his posting. The claimant had been a rear-seat passenger in a car driven by the first defendant, an English national, when it was involved in a collision with a car driven by a German national. The first defendant was also living in Germany because of her husband’s army posting. The claimant suffered a prolapsed disc. She suffered depression and continuing pain in her right leg. She and her family returned to the UK 18 months after the accident and she issued the instant proceedings. The second defendant, the first defendant’s insurer, conceded liability. It was a company incorporated in England and Wales.

The claimant submitted that German law, applicable under Rome II, was displaced by Articles 4(2) and 4(3). She asserted that all the parties were habitually resident in the UK on the date of the accident, and the tort was more closely connected to the UK because the majority of her consequential loss had been incurred in the UK.

Refusing the application the High Court judge held that Article 4(2) was an exception to the general rule that the law of the place of the tort was to be applied. To bring herself within 4(2), the claimant had to establish that she was habitually resident in England at the time of the accident. In addition, the person claimed to be liable had to be habitually resident in England at the time; that was the driver and not the insurer. The habitual residence of the second defendant was therefore immaterial.

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The claimant had been living and working in Germany for eight-and-a-half years by the time of the accident. That was a considerable length of time. She lived there with her husband and three of their children were at school in Germany. The family remained living in Germany for a further 18 months after the accident. There was no evidence that during that time they had a house in England. Her family’s intention to return to the UK at the end of her husband’s posting did not affect her status at the time of the accident. The claimant’s habitual residence at the time of the accident was Germany. The law of tort indicated by Article 4(1) had not been displaced by Article 4(2).

To bring herself within Article 4(3) the claimant had to show that the tort was “manifestly” more closely connected with a country other than that indicated by Articles 4(1) and 4(2). The circumstances to be taken into account under Article 4(3) did not vary depending upon the issues to be determined or the stage reached in proceedings. One system of law governed the entire tortious claim. The “centre of gravity” was the centre of gravity of the tort, not of the damage caused by the tort. However, there was no temporal limitation on the factors taken into account and a court would assess the factors as they stood at the date of the decision. If a claimant and a defendant were habitually resident in country A at the time of the accident but in country B at the time Article 4(3) was applied, both circumstances could be taken into account. There was a difference of opinion as to whether the factors to be taken into account under Article 4(3) were limited to those connected with the tort and excluded those connected with the consequences of the tort. While the answer was by no means clear, the court proceeded on the basis that the link of the consequences of the tort to a particular country was a relevant factor for the purposes of Article 4(3). The factors connecting the tort with German law included:

• The accident took place in Germany

• The claimant sustained injury in Germany

• The claimant and first defendant were habitually resident in Germany at the time of the accident

• The claimant had remained in Germany for a further 18 months after the accident

• She received a significant amount of treatment for her injuries in Germany

The following factors indicated a connection of the tort with English law: the claimant and first defendant were both resident in England at the date of the instant hearing; the claimant attended a pain clinic and received treatment for depression in the UK; she was allegedly suffering loss of earnings in England; she had pursued proceedings in the UK, although that was not a strong connecting factor. Those factors did not indicate a manifestly closer connection of the tort with England than with Germany. The law indicated by Article 4(1) had not been displaced by Article 4(3). The applicable law was therefore German law.

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Civil procedure/pre-action disclosureIn the predecessor to this periodical, Greenwoods’ Alert 370, we reported the first instance decision in Jet Airways (India) Ltd and another v Barloworld Handling Ltd. The case has now been before the Court of Appeal and is reported at (2014) EWCA Civ 1311.

A cargo handling depot had been destroyed by fire. The claimants were the owners of, or otherwise interested in, the building and its contents. Investigations into the cause of the fire concluded that it had started in a forklift truck. The trucks were supplied by an associated company of the defendant and it had entered into an agreement to maintain them. The claimants applied for pre-action disclosure from the defendant under CPR 31.16 of various documents relating to the maintenance of the trucks for the two years before the fire. The defendant opposed the application as speculative. The judge considered that in order for the court to have jurisdiction to order pre-action disclosure an applicant had to show a prima facie case that was more than speculative. The claimants satisfied that test and the judge exercised his discretion in favour of making an order. A subsequent Court of Appeal case confirmed that CPR 31.16(3) did not impose an arguability threshold.

The defendant appealed and submitted that the claimants’ case against it was highly speculative, and that it was unlikely that after an interval of over three years disclosure would shed any real light on the cause of the fire. Accordingly, the judge should not have imposed on the defendant the burden of giving disclosure.

Dismissing the appeal, the Court of Appeal held that as far as the existence of jurisdiction was concerned, the critical words in CPR 31.16(3) (a) and (b) were “likely to be a party” to subsequent proceedings. The rule required no more than that the parties to the application would be likely to be involved in proceedings if any were started, and in context “likely” meant something less than “probable”. It was clear from the previous authority that CPR 31.16(3) imposed no arguability threshold. The claimants had suffered loss

as a result of the fire that was potentially compensatable by those who designed, manufactured or maintained the forklift truck, and could properly bring proceedings in respect of it. Since the defendant had undertaken some, if not all, routine maintenance of the vehicle, it was likely that if the claimants started proceedings the defendant would be a party to them, even if only on an alternative basis. In that case the documents which the claimants were seeking would fall within the scope of standard disclosure. Pre-action disclosure might assist in identifying with greater certainty the true cause of the fire and thus help to resolve the dispute without the need for proceedings or save costs. The judge therefore had jurisdiction to make an order.

Although the evidence pointing to failures in maintenance of one kind or another was far from conclusive, there was sufficient evidence before the judge to justify his conclusion that the case was not merely speculative. The defendant had not identified any factors which the judge had failed properly to take into account when making his decision. There were no grounds for saying that he erred in the exercise of his discretion to make an order for disclosure or in the scope of the order made.

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CostsThere are two cases under this heading.

The case of PGF II SA v OMFS Co 1 Ltd (2013) served as a warning to parties not to refuse alternative dispute resolution (ADR) without good reason. This issue arose in the commercial case of Northrop Grumman Mission Systems Europe Ltd v BAE Systems (Al Diriyah C4)1 (2014) EWHC 3148 (TCC) and received detailed consideration by the court.

In its substantive judgment the court had found for the defendant. The claimant accepted that the defendant was entitled to its costs to be assessed on a standard basis, but asserted that those costs should be halved to reflect the defendant’s unreasonable refusal to mediate.

Refusing the application, the High Court judge held that when the court exercised its discretion under CPR 44.2, it had to have regard to all the circumstances, including the conduct of the parties both before and during the proceedings. “Conduct” included a refusal to agree to ADR. Factors to be taken into account included the nature of the dispute; the merits of the case; the extent to which other settlement methods had been attempted; whether the costs of ADR were disproportionately high; whether any delay in setting up or attending the ADR would have been prejudicial; and whether ADR had a reasonable prospect of success.

The instant case centred on an issue of contractual interpretation, and a total of £3m was at stake. It was not a point of construction which would have affected the parties’ continuing relationship, but was a major issue at the centre of a financial claim. In such claims, a skilled mediator could assist by finding a solution to a dispute which the parties would otherwise have been unable to settle. Nevertheless, the defendant had reasonably considered that it had a strong case and where a party faced an unfounded claim and wished to contest it rather than buy it off, the court was to be slow to characterise that as unreasonable conduct. The fact that a party reasonably believed that it had a watertight

case might well be sufficient justification for a refusal to mediate. That said, mediation could have a positive effect, even if the claim had no merit. A mediator could bring a new independent perspective and not every mediation ended in a payment to the claimant.

On balance, the defendant’s reasonably held view that it had a strong case provided some limited justification for its refusal to mediate. Moreover, it had made a “without prejudice save as to costs” offer which the claimant had rejected. Had the claimant accepted that offer it would have been in a better position than it was as a result of the hearing. That was a factor that was marginally in the defendant’s favour when it came to assessing its refusal to mediate. On the other hand, the claimant had proposed mediation but, each time, the defendant had requested further costs information which was never going to be produced. A mediator could have cut through the positions taken by the parties. Mediation could have taken place without affecting the litigation and would have cost around £40,000. That cost was not disproportionately high given that the claim involved some £3m and the costs actually incurred totalled some £500,000. Moreover, it was likely that there would have been a mediated settlement. Mediation was, in general, successful.

The court had to look beyond the polarised positions of the parties. A skilled mediator could find middle ground by analysing the parties’ positions and making each reflect on its own and the other’s position. By bringing other commercial arrangements or disputes into the discussion, or by finding future opportunities for the software or licences, the mediator could have found solutions that the parties had not considered.

In summary, mediation would have had a reasonable prospect of success and in such a case a party would be acting unreasonably if it rejected it on insufficient grounds. Thus, even though the defendant reasonably considered that it had a strong case, it had acted unreasonably in rejecting

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the claimant’s offer to mediate. The claimant’s conduct in rejecting the settlement offer was, similarly, conduct to be taken into account. The defendant’s refusal to mediate had deprived the parties of the opportunity of resolving the case without a hearing, but so had the claimant’s failure to accept the defendant’s offer. The fair and just outcome was that neither party’s conduct should modify the general rule on costs. The claimant was therefore to pay the whole of the defendant’s costs, to be assessed on the standard basis.

The second case under this heading is Astonleigh Residential Care Home v Goldfarb [Lawtel 10/10/2014].

In the substantive proceedings, the respondent had accepted the applicant’s Part 36 offer. The respondent, which had instructed its solicitors under a conditional fee arrangement, estimated that its costs were £59,000, though it was also owed a further £16,000 by the applicant under a previous costs order. The respondent did not provide a written statement of costs at the hearing. The judge ordered that it was entitled to its costs, subject to a detailed assessment. He ordered that the applicant make a £20,000 payment on account of those costs.

The applicant applied for permission to appeal and submitted that the power to order a payment on account depended on the availability of a written statement of costs, otherwise it would not be possible to test whether the judge had properly exercised his discretion. It further submitted that Cook on Costs suggested that where a Part 36 offer had been accepted and there had been a conditional fee agreement, there was no jurisdiction to grant an interim payment until there had been a detailed assessment, so that there was a powerful incentive to prepare a written statement of costs. The respondent submitted that the applicant’s proposition was not contained within CPR 44.2(8): the requirement for a costs statement only applied in respect of summary assessments; and that there were opportunities to correct any overestimates in a payment on account at the eventual detailed assessment.

Refusing the application, the High Court judge held that Cook on Costs did not state that there was no power to make an interim order. It was discussing the practicalities

of a situation in which a Part 36 offer had been accepted and a party was in the position of seeking a costs order and was therefore not practically in a position to seek an interim costs certificate. The application had no real prospect of success. It was clear from CPR 44.2(8) that where there was an order to pay costs subject to a detailed assessment, the court would order a reasonable sum unless there was a good reason not to do so. Therefore the assumption was that there would be an order for payment on account.

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: 8 Bedford Park, Croydon, Surrey CR0 2AP. Parabis Law LLP is authorised and regulated by the SRA.

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QOCS overturnedFrom within Plexus Law As more cases come through that are subject to qualified one way costs shifting (QOCS), defendants must take every available opportunity to overturn the principle that if the claimant is unsuccessful he has no costs liability to the defendant. We were able to achieve this in AA v AEL which was heard by the District Judge in Manchester County Court on 8 October. The claim involved a rear-end shunt, as a result of which the claimant claimed for both personal injury and vehicle-related losses. It was our client’s insured’s case that the collision was caused by the claimant’s deliberate braking. At the hearing the claimant failed to produce two allegedly independent witnesses and his own evidence was full of contradictions and conflicted with documentary evidence. As a result the judge dismissed the claim and found in favour of our client’s insured on his counterclaim.

Although the District Judge stopped short of finding the claim to be fraudulent, she nevertheless indicated that she had not believed a single word of the claimant’s evidence. Accordingly, she was prepared to accept that the claim was fundamentally dishonest providing grounds for the QOCS principle to be overturned and an order made for the claimant to pay both the costs of the counterclaim and our client’s costs of defending the claim. The costs orders are against the claimant personally and he has only 21 days in which to pay.

For further details please contact:

Steve Tann

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T: 0844 334 1017