Case Alerts

On 19 March 2019 the Lord Chancellor, David Gauke, advised the London Stock Exchange of the commencement of his long awaited review of the personal injury Discount Rate as required by the Civil Liability Act 2018.

Under the terms of the Act, the review can last a maximum of 140 days which means that this long awaited decision will be announced by 5 August 2019 at the latest.

The Government Actuary’s Department has until 7 April 2019 to commence its consultation and it must report to the Lord Chancellor by 26 June 2019.

The current Discount Rate is -0.75% and represented a significant departure from the historical rate of 2.5% which has resulted in insurers having to make disproportionately high awards.

Plexus have provided evidence to the Ministry of Justice in advance of the Lord Chancellor’s review and support the position of the Forum of Insurance Lawyers (FOIL), namely that the current Discount Rate of -0.75% is unduly harsh on the NHS, public purse, motorists generally and insurers.

Low risk Claimant investors will still achieve capital growth on their compensation sums by instructing sophisticated Wealth Managers and Independent Financial Advisors to manage a wide spectrum of portfolio investments. These investment strategies need to be taken into account by the Lord Chancellor and Government Actuary’s Department when setting the Discount Rate.

FOIL hopes that the outcome of the Discount Rate review delivers a fair and just outcome for all parties without any over or under compensation.

The Lord Chancellor’s decision will not impact on Scottish claim as a separate review is being made by the Scottish Government.

If you would like to know more about this matter, please speak to your contact at Plexus Law:

Anthony Baker, Partner  & Vice President of FOIL

T: 0113 4681 702   |   M: 07811 545 321   |   E: anthony.baker@plexuslaw.co.uk

Joseph’s Well  |  Hanover Walk   |  Leeds  |   LS3 1AB

Whilst we take care to ensure that the material in this Legal Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Legal Alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Legal Alert.

A fraudster was this week sent to prison for 4 months after a judge jailed him for attempting to defraud Co-op Insurance out of thousands of pounds.

Paul Christopher Johnson was sentenced at the High Court after being found guilty of contempt.

In CIS General Insurance Limited v Mr Paul Christopher Johnson, Her Honour Mrs Justice Cutts, deemed the offences so serious that only an immediate custodial sentence could be justified. Mr Johnson had been found guilty of the offences at an earlier hearing.

Mr Johnson had previously brought a claim for personal injury and associated losses against Co-op Insurance and its insured following an accident on 1^st September 2012. The claim included the sum of £85,000.00 for alleged lost earnings purportedly incurred as a result of Mr Johnson being unable to complete a software development contract by reason of the accident and his injuries.

Plexus Law, assisted by Mr Timothy Sharpe of Temple Garden Chambers, obtained an order striking out Mr Johnson’s claim on the basis of s57 of the Criminal Justice and Courts Act 2015, it being found that the claim for lost earnings was fundamentally dishonest and entirely fabricated.

Following the strike out Plexus Law were subsequently instructed to bring proceedings on behalf of the Co-op Insurance for contempt of court on the basis of Mr Johnson making false statements in documents verified by a statement of truth.

It was alleged that Mr Johnson had interfered with the due administration of justice in that he verified statements of truth on court documents that were:

1. untrue;
2. untrue in such a way that the untruth interfered with the course of justice in a material respect; and
3. made in his full knowledge that they were untrue.

In the original judgment and upon finding the contempt proved to the criminal standard, Her Honour Judge Walden-Smith described Mr Johnson’s conduct as a serious contempt compounded by the fact that he told further untruths in a bid to cover up his attempted deceit.

Passing sentence, Mrs Justice Cutts described Mr Johnson as ‘greedy’ and explained that the court took a very serious view of his behaviour which sought to undermine the due administration of justice.

Ian Kershaw, Head of Claims at Co-op Insurance said:

“Fraudulent claims have an impact on all motorists who see their premiums rise as a result of them.

It simply isn’t fair for honest law-abiding motorists to be impacted in this way and we hope that the action we’ve taken acts as a deterrent to other potential fraudsters

Fraudulent claims are not a victimless crime and as a member-owned insurer we are keen to ensure that we are protecting the interests of our members and customers by taking proactive action against them.”

If you would like to know more about this Case Alert please contact:

Kevin Perkins, Partner

T: 01422 394 251  |   M: 07890 590 187   |   E: kevin.perkins@plexuslaw.co.uk

Dean Clough  |  G1 G Mill   |  Halifax   |   HX3 5AX

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case Alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

Today the Supreme Court gave its judgment in the much awaited decision about whether a Claimant can issue a motor claim against an unknown and unidentifiable defendant, and then, in reliance of section 151 (2) (b) of the Road Traffic Act 1988, hold the motor insurer of the offending motor vehicle liable for loss and damage claimed.

In short, the answer is a resounding no!

In what can only be described as a victory for common sense, the Justices of the Supreme Court unanimously allowed the appeal by Liverpool Victoria Insurance, thereby overturning the decision of the Court of Appeal and reinstating the District Judge’s order whom had dismissed Ms Cameron’s application to substitute the Defendant Mr Hussain with “the persons unknown driving vehicle registration number Y598 SPS whom collided with vehicle registration number KG03 ZJZ on 26 may 2013”.

Lord Sumption gave the leading Judgment finding that in these circumstances Ms Cameron’s claim lay against the Motor Insurance Bureau (MIB), which had concluded 17,700 claims by victims of untraced drivers in 2017.

As to Ms Cameron’s choice to claim against Liverpool Victoria, (which Lord Sumption described as a hazardous route) this was rejected on the basis that in the circumstances, this offended the very basic rule of natural justice that a Defendant to legal proceedings is given sufficient notice of those proceedings and thus afforded the opportunity to defend himself if he so wished.

The result of this decision will undoubtedly be welcome news to motor liability insurers whom have seen an upsurge in such claim ever since the ruling of the Court of Appeal in May 2017.

Background to the case

On 26 May 2013, Ms Cameron was driving her Ford Fiesta when she was involved in a collision with a Nissan Micra, which failed to stop at the scene. Whilst the registration number was recorded and the matter subsequently reported to the police, the identity of the Nissan driver was never established.

It was common ground the driver of the Nissan was negligent and so Ms Cameron issued proceedings against the registered keeper, Mr. Hussain, holding him liable despite the fact he was not the driver at the time and he had been convicted for failing to disclose the driver’s identity.

Ms Cameron later added Liverpool Victoria Insurance to proceedings because it insured the Nissan was under a policy issued to a Mr Nissar Bahadur, although it was Liverpool Victoria’s subsequent belief that Mr Bahadur was a fictitious person.

Ms Cameron’s claim against Liverpool Victoria was for a declaration that it was liable to meet any judgment against Mr Hussain relying on section 151 (2) (b) of the Road Traffic Act 1988.

However, Ms Cameron later sought to substitute Mr Hussain because of Liverpool Victoria’s defence denying liability on the basis there was no right to obtain judgment against Mr Hussain because there was no evidence that he was the driver. This resulted in Ms Cameron’s legal team seeking to substitute Mr Hussain with “the persons unknown driving vehicle registration number Y598 SPS whom collided with vehicle registration number KG03 ZJZ on 26 may 2013”.

Summary of the findings of the Supreme Court

There is a general rule that proceedings may not be brought against unnamed parties save as for limited exceptions. Where those limited exceptions apply there is a key distinction between two classes of these unnamed parties, namely those whom are identifiable but whose names are not known (trespassers for example) and those whom are not identifiable and whose names are not known (such as hit and run drivers).

Under section 151 of the Road Traffic Act 1988, the insurer is only liable upon judgment obtained and there is no direct right of action as between a Claimant and the motor insurer.

In the present case, Ms Cameron sought to trigger Liverpool Victoria’s liability under section 151 of the Road Traffic Act 1988 by seeking to obtain judgment against an unknown person.

Not only was this case not held to be within the limited exceptions for allowing to proceed against an unnamed person, but to have allowed Ms Cameron to proceed in this manner would have offended the very basic principle that even an unnamed person (such as a squatter) has a right to be given notice of the proceedings (by service of the claim at the relevant address) and thus have the right to defend that action if he so wished.

Whilst Ms Cameron alleged injustice would be caused because any damages and costs paid out by the MIB would not be as much as she would be entitled if she could proceed against Liverpool Victoria, that point was rejected on the premise that whilst the point was not raised before the Court of Appeal, nevertheless, it was held that the MIB is consistent with the European Directive.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Anthony Baker, Partner

T: 0113 4681 702   |   M: 07811 545 321   |   E: anthony.baker@plexuslaw.co.uk

Danny Fulton, Head of Credit Hire Strategy

T: 0113 2229 065   |   M: 07946 119 562 |   E: danny.fulton@plexuslaw.co.uk

Joseph’s Well  |  Hanover Walk   |  Leeds  |   LS3 1AB

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case Alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

On 16 January 2019, Mr Andrew Burrows QC, sitting as a Deputy High Court Judge, handed down judgment in the case of Palliser Ltd v Fate Ltd (in liquidation) and The National Insurance and Guarantee Corporation Ltd, a long running dispute involving a restaurant fire in January 2010. At issue was whether an insured freeholder was covered for its legal liability in negligently causing damage to the leaseholder’s demised premises, and whether it had the benefit of a Berni Inns defence to the claim brought by the leaseholder.

Background

Fate Limited (“Fate”) was the freeholder of 228 York Road, London, SW11 (the “Property”). Palliser Ltd (“Palliser”) was a property developer. Fate ran a restaurant from the ground floor and demised the “Upper Floors” to Palliser under a long lease (the “Lease”), which it converted into seven flats.

Fate took out a Licensed Trade (Master Chef) Policy (the “Policy”) that provided combined cover, the Buildings Section of which enured for the benefit of Palliser. Significantly, the buildings had been underinsured.

On 1 January 2010, a fire occurred at the Property causing major damage. The Buildings Section responded to the reinstatement of the Property, including the “Upper Floors”, but there was a shortfall due to the application of average. Consequently, Palliser expended monies in reinstating the “Upper Floors” totalling £300,000, and allegedly lost profits due to the inability to sell the converted flats totalling almost £4m. Palliser sued Fate for negligently causing the fire, and Fate in turn claimed an indemnity under the Public Liability (“PL”) Section of the Policy, which provided cover for legal liability in respect of damage to property “not belonging to [Fate]”. Fate later went into liquidation and Palliser’s claim was brought against Insurers under the Third Parties (Rights Against Insurers) Act 2010.

The central issue before the Court

The central issue in the case concerned the interpretation of the words “not belonging to”. If the “Upper Floors” were property belonging to Fate then there was no cover under the PL  Section of the Policy.

Principles of construction

The Judge explained that a Court has to ascertain the meaning of the words used by applying an objective and contextual approach, and it has to ask what the term, viewed in the light of the whole contract, would mean to a reasonable person having all the relevant background knowledge reasonably available to the parties at the time the contract was made. Business common sense and the purpose of the term may be relevant (see Investments Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, and Rainy Sky SA v Kookmin Bank [2011] UKSC 50) but the Court should be careful to avoid placing too much weight on business common sense at the expense of the words used.

The Judge’s decision

The Judge applied an objective contextual approach, and took into account business common sense and purpose, and he agreed with Insurers’ submissions that the words “not belonging to” were synonymous with “not owned by”. The Judge held, whilst Palliser owned a long lease of the “Upper Floors”, the buildings at 228 York Road belonged to Fate as freehold owner. This interpretation was reinforced by the fact that Fate had insured the whole of the “Property”, Palliser’s lenders’ had noted an interest on the Policy, and the Buildings Section and the PL Section fitted together “coherently” to provide cover for the buildings, including the “Upper Floors”, under the Buildings Section alone. Also, Insurers had already indemnified Fate for the damage to the “Upper Floors” under the Buildings Section (although the Judge acknowledged that the subsequent conduct of the parties was not strictly relevant to the issue of interpretation).

Accordingly, there was no cover for Fate’s liability for damage to the “Upper Floors”, so Palliser’s claim for an indemnity failed in its entirety (except for a nominal sum for damage to Palliser’s chattels lost in the fire).

The Judge nevertheless proceeded to find that Palliser’s claim for loss of profits was entirely speculative and had not been proved on a balance of probabilities.

The Judge considered it unnecessary to decide whether Berni Inns operated in favour of a negligent landlord on the basis that the parties could not objectively have intended it would apply to the extent that the landlord (Fate) had underinsured the buildings, in breach of the covenant to insure for the full reinstatement value.

Comment

This case makes clear that the negligence liability of a freeholder, in causing damage to demised premises, is not a liability that is covered by a typical PL policy. So the risk of losses flowing from such damage must be separately covered by the tenant.

This decision is a victory for business common sense.

The Judge did not take the opportunity to clarify whether Berni Inns operated in favour of a negligent landlord. He considered that such a situation would be rare and arise only in circumstances where there was a problem with the insurance, such as underinsurance. But also there was no practical possibility of a subrogated claim being made by Insurers (against the negligent freeholder in whose name the policy was taken out). This may be viewed as a lost opportunity to provide clarification on this issue.

Paul Cha and Faye Brennan of Plexus Law represented the successful Insurers, and they instructed Graham Eklund QC and Carl Troman of 4 New Square.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Paul Cha, Partner

T: 020 7469 6235  |   M: 07918 768 898  |   E: paul.cha@plexuslaw.co.uk

Faye Brennan, Solicitor

T: 020 7469 4934  |   E: faye.brennan@plexuslaw.co.uk

Peninsular House  |  30-36 Monument Street  |  London  |   EC3R 8NB

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case Alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

 

Life expectancy evidence granted in Mays v Drive Force (UK) Limited [2019] EWHC 5 (QB) (04 January 2019) in which Deputy Master Hill QC was not persuaded by the ‘floodgates’ arguments of the Claimant.

Anthony Bushell (Partner in our Evesham office) was adamant that in order to achieve the best result for our client (QBE) at trial, permission to rely upon statistical life expectancy evidence (from Professor Bowen-Jones) in addition to the parties’ clinical evidence, was essential.

Ronald Walker QC (from 12 Kings Bench Walk, acting on our behalf) argued that to ensure that the Claimant’s plethora of co-morbid conditions were fully considered, and to assist the Court in understanding how these co-morbid conditions would have a bearing on the Claimant’s life expectancy in any event (Professor Bowen-Jones assessed the Claimant’s life-expectancy, ignoring epilepsy risk, to age 73.5 which would represent a reduction of approximately 11 years), statistical life expectancy evidence was necessary. This was particularly important where the parties’ clinical evidence remained unclear on the issue.

Anthony comments: “It was noted by the Court that the current case law confirms in appropriate cases consideration should be given to whether factors other than the accident itself have impacted an injured person’s life expectancy, and if so, the Court will be assisted by expert evidence which can be statistical as well as that given by clinicians”.

This is a high value multiple million pound claim where the statistical evidence may make a significant difference to quantum, specifically future losses. Deputy Master Hill QC made the point in his summary that it is thereafter the decision of the trial judge as to how much emphasis is placed on the statistical evidence and the credibility of the same.

Read here for the official transcript and detail as to why District Master Hill QC agreed with Anthony’s approach.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Anthony Bushell, Partner

T: 01386 578 886  |   M: 07866 634 085  |   E: anthony.bushell@plexuslaw.co.uk

Vale Chambers  |  110 -112 High Street   |  Evesham  |   WR11 4EJ

Nadia Nahapiet, Partner

T: 0161 244 6925  |   M: 07977 008 772  |   E: nadia.nahapiet@plexuslaw.co.uk

City Tower  |  Piccadilly Plaza  |  Manchester  |   M1 4BT

 

Whilst we take care to ensure that the material in this Legal Update is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Legal Update do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Legal Update.

 

Issue

The decision concerned the approach to be taken and the reasonable success fee to be arrived at in regard to an application by the Claimant to escape the fixed success fee provisions within Civil Procedure Rule 45 as in place prior to 2013. The Court below had allowed a success fee for the Claimant Solicitor and Counsel at 65% in place of the fixed level of 12.5%.

Facts

The Claimant was a passenger in a car that was involved in an accident on 14th May 2010. The Claimant sustained severe injuries to include a brain injury resulting in a lack of capacity and thus was a protected party in the context of the proceedings. A Conditional Fee Agreement (CFA) was entered in to as between the Claimant Solicitor and litigation friend in July 2010 with a claim intimated against the Defendant. The Defendant was convicted of dangerous driving arising from the accident in June 2011 with liability formally admitted in December 2011. Following a change of litigation friend a second CFA was incepted 20th August 2012, such crucially being post the criminal conviction and formal liability admission. This agreement provided that a success fee would be payable of 25% if the matter settled three months before Trial and would be 100% thereafter. The matter settled within the three month period before Trial such that a success fee of 100% was sought.

Decision below

The learned Judge acknowledged the lead authority of C v W [2008] EWCA Civ 1459 but concluded that case was not a template for all such matters and there was scope for cases to fall outside the usual, this being one such case. The learned Judge went on to find that the Claimant’s concession to a success fee of 67% was not appropriate having regard to the features of the case, the weighing of liability against causation and the impact upon Part 36 offers. It was held that a success fee of 65% was appropriate to be allowed. That decision was subject to Appeal by the Defendant.

Decision

The Appellate Court considered the decision of C v W, acknowledged to be the lead authority on the issue, and the subsequent case authorities in which that decision had been applied. Notably some of those authorities involved the same legal representative for the Claimant, Irwin Mitchell, as was involved in this decision. It was held that a success fee of 100% (as pleaded) could never be justified in a case like the present where liability was admitted with no Part 36 offer made prior to the CFA. It was held there were two fundamental risks in this matter, the risk from the timing of a Part 36 offer (as only costs post 21 days from such an offer would be at risk) and the risk of failing to beat that offer at Trial.

The Appellate Judge considered that the decision below was “plainly wrong” as no attempt was made to analyse the risks which should reasonably have been taken in to account by the Claimant Solicitor when assessing the success fee at inception of the CFA. The decision was therefore to be exercised afresh.

It was held that there was nothing about the case to remove it from the category of standard high value personal injury cases. It was often the position in such cases there were difficult questions of causation or divergent medical opinion.

As to the timing of an offer it was decided that the Claimant could have anticipated the Defendant making an offer relatively late in the proceedings as was the case and is common in such high value litigation. As a result it was considered that even conservatively no more than 25% of the Claimant’s costs would be estimated to be at risk.

As to the risks of beating an offer it was said that given the involvement of an experienced Solicitor and Leading Counsel the risk could not be said to be high and in any event would also be mitigated by the fact that such only applied to 25% of the costs.

The Appellate Court suggested a possible success fee may “at a pinch” have been assessed at 20% but no higher and more likely lower. To escape the fixed success fee the Claimant required allowance of a success fee of 21% or more and therefore the success fee of 100% was reduced by the Court to the fixed level of 12.5% only. Such decision applied to the CFA of Solicitor and Counsel.

Comment/Conclusion

This issue continues to have relevance with success fees still being recovered in many catastrophic injury cases owing to their duration and thereby inception of pre 2013 CFAs.  Often it is those cases where the damages value permits the Claimant, as here, the ability under the Rules to apply to escape the fixed provision and recovery of a higher success fee. This case re affirms that when approaching the quantification of a success fee the same must be done by analysing the risks to the costs being recovered. Also that complexity should not be confused with risk and that such cases are inherently complex but not necessarily risky.

This is a claim handled by the costs team within Plexus. The decision on the success fee alone results in a reduction of the costs liability to the firm’s client of circa £376,000.

 If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Chris White, Technical Director

T: 0113 4681 659  |   M: 07557 430 241  |   E: chris.white@plexuslaw.co.uk

Joseph’s Well  |  Hanover Walk   |  Leeds  |   LS3 1AB

Whilst we take care to ensure that the material in this Legal Update is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Legal Update do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Legal Update.