Technical claims brief

Monthly update January 2012

Contents
Costs 1
Costs award based on withdrawn art 36 offer: Epsom College v Pierse Contracting Southern Ltd - Court of Appeal (2011)

Quantum 8
European Court of Justice (ECJ) limits application of Rome II: Homawoo v GMF Assurances ECJ (2011)

Credit hire

Disclaimer 9

Court of Appeal rules on credit hire rates and interest: Vasant Pattni v First Leicester Buses and Darren Bent v Highways Utilities and Another - Court of Appeal (2011) 2 Hire claim not wiped out by refusal of replacement vehicle from Defendant: Sayce v TNT Court of Appeal (2011)

Liability 4
Court of Appeal rules on Elf and Safety: Duffosse v Melberry Events Ltd - Court of Appeal (2011) 4

Procedure
District Judge criticises claimants expert for attempting to mislead the Court: Walker v Brown - Stockport County Court (2011) European Court of Justice (ECJ) rules that injured car owners permitting uninsured driving must be compensated: Wilkinson v Churchill and Evans v Equity Claims Ltd ECJ (2011) Court of Appeal rules on meaning of Package in Holiday Claim: Sean Titshall v Qwerty Travel Ltd Court of Appeal (2011)

Costs Costs award based on withdrawn Part 36 offer: Epsom College v Pierse Contracting Southern Ltd Court of Appeal (2011)
The defendant contractors appealed against an award of costs made in favour of the claimant, which was based on a Part 36 offer that had been withdrawn. The contractors were sued by the claimant college after flooding damaged their dining hall. The college alleged that the flooding had been caused by a nail, driven through a pipe by the contractors, but did not initially produce the damaged section of pipe in evidence because it had been mislaid after it was replaced. In the absence of evidence, liability was denied. The claimants made three settlement offers. The first was on a Part 36 basis before proceedings were issued. It made no real allowance for the uncertainty over liability and the risk that the college might not prove its case and was rejected by the defendant contractors. The second offer was made after proceedings were issued for about half of the pleaded claim. It was also on a Part 36 basis and was stated as not withdrawing the first Part 36 offer. The second offer was rejected. The claimant made one final offer not on a Part 36 basis, which was also rejected. The pipe section was then found and disclosed in evidence. The college withdrew their second and third offers, leaving the first offer in place. At trial, the defendant contractors conceded that the leak had been caused by the nail and the college was awarded damages with interest exceeding the value of all their settlement offers. The judge awarded the claimant costs based on its second Part 36 offer. This offer had however been

withdrawn and the defendant contractors appealed arguing that costs could not be based on a withdrawn offer. At the appeal, the parties agreed that costs should not have been awarded based on a withdrawn Part 36 offer. The question for the court was whether the award could be allowed to stand based on the first Part 36 offer or under Part 44 of the Civil Procedure Rules (CPR). The Court of Appeal held that it should as far as possible, put itself in the shoes of the trial judge and be slow to impose its own views even where the judge was technically wrong in his approach. Part 44 could not be adopted to support the costs award, as the trial judge had not considered this in making his award. The trial judge had been reluctant to base the costs award on the first Part 36 offer because there was little discount for the uncertainty on liability and the defendants had not acted unreasonably in refusing it when the claimant had failed to produce the damaged pipe in evidence. The second Part 36 offer was far more reasonable given the absence of evidence.

The Court of Appeal held that the first Part 36 offer was still in force and reference to that offer could be made to justify the costs award. The defendants should pay the claimants costs on an indemnity basis but only from a reasonable period after the pipe had been disclosed to them. The essence of the trial judges ruling on costs was thus preserved and the appeal dismissed. Comment: Another illustration that when considering costs and the application of the CPR, the courts will look closely at the conduct of the parties and how reasonable they have been in making or considering offers. In this case, the claimant college was penalised for failing to disclose essential evidence until late in the day whilst the defendant contractors were penalised for not accepting a reasonable offer once supporting liability evidence was to hand.

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Credit hire Court of Appeal rules on credit hire rates and interest: Vasant Pattni v First Leicester Buses and Darren Bent v Highways Utilities and Another - Court of Appeal (2011)
In the above two linked appeals the Court of Appeal ruled on two longrunning areas of dispute between credit hirers and defendants. In the Pattni case, the issue was the claimants entitlement to interest on credit hire charges for the period from the end of the hire to the date of judgment. The claimant advanced three alternative grounds on which he should be awarded interest: He was contractually liable to pay interest to the hire company and this was a reasonably foreseeable loss arising from the accident An award of interest should be made based on the non-credit hire charge rates to compensate him for the loss of use of the money that he would have paid but for the credit hire arrangement He was entitled to a statutory award of interest pursuant to section 69 of the County Courts Act 1984. The Court of Appeal rejected all three arguments. The latter two did not apply because the claimant had not actually made any payment and had not been deprived of the use of his money. The contractual liability argument was rejected on the basis that the interest charge constituted the cost of an additional benefit to the claimant. It enabled him to delay payment beyond the date it would otherwise have been due and in the light of

the analysis in Dimond v Lovell, that was not recoverable by a claimant who could have afforded not to use credit hire. In the Bent case, the claimant had hired an Aston Martin DB9 on credit for a period of 94 days in 2007 at a cost of 63,406.90. The issue was the hire rate that the claimant could recover. The hire company, Accident Exchange appealed an earlier decision, which based the recoverable rates on those the judge found that the claimant could have obtained if he had made reasonable efforts to hire a car on a non-credit hire basis (which he could certainly have afforded to do). The Court of Appeal found that the judge had erred in her approach to determining the rate. The defendants had not proved that the basic hire rate (i.e. the non-credit hire rate) was any cheaper than the credit hire rate and the judge had therefore been wrong to reject the rate evidence supplied by the hire company in favour of the defendants evidence on average rates for

2009 (a different year). The claimant was entitled to the actual cost of a like for like replacement not an average rate and in the circumstances, this was the credit hire rate. The Court of Appeal however, rejected the Claimants argument that it was wrong to apply a cheaper 28-day hire rate. It was clear in this case the repair time would exceed 28 days and the claimant could have mitigated his loss by obtaining a better rate if he had contracted for a longer initial period of hire. A reduction of 12% was applied to the rate to reflect the saving that a longer initial hire period would have made. Comment Defendants will welcome the decision in the Pattni case which effectively puts an end to claims for interest on credit hire for the period from the end of the hire to judgment. The Bent decision will be less welcome as spot (average) rates will no longer be sufficient evidence on which to challenge credit hire rates.

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Not surprisingly, the appeal was allowed and the judge, who heard the first appeal, was criticised for his failure to adopt precedent. He should have given judgment based on Copley whilst raising his concerns about the case, to give the defendant grounds for appeal. As matters stood, the Court of Appeal could not grant leave to appeal to the Supreme Court in this case due to the serious procedural irregularities that had occurred. Comment: The decision in Copley remains good law until such time as defendants successfully bring a test case before the Supreme Court.

Hire claim not wiped out by refusal of replacement vehicle from Defendant: Sayce v TNT Court of Appeal (2011)
The claimant sought recovery of vehicle hire charges from the defendants. The defendants had offered the claimant a replacement vehicle at no cost to her. At first instance, the defendants successfully defeated the claim for hire on the basis that the claimant would not have incurred any loss had she accepted the replacement vehicle from them. The claimant appealed. When the appeal was heard the Court of Appeal had already ruled in the case of Copley v Lawn that a claim for hire was not wiped

out by the offer of a replacement vehicle. A claimant was still entitled to recover an amount equal to actual reasonable hire charges even if they had declined the offer of a replacement vehicle from the defendant. The judge hearing the appeal however, declined to follow the decision in Copley prompting a second appeal by the claimant, this time to the Court of Appeal. The parties prepared a joint statement saying that the appeal should be allowed as the judge had clearly erred in refusing to follow binding authority but that the defendant intended to make an appeal to the Supreme Court as Copley was inconsistent with established authorities on mitigation and wrong in principle.

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Liability Court of Appeal rules on Elf and Safety: Duffosse v Melberry Events Ltd - Court of Appeal (2011)
The elderly claimant was visiting Santas grotto in Selfridges with her grandchildren when she tripped over a plastic Christmas tree decoration lying on the floor. She fell and fractured her thighbone. The grotto was manned by Santa and an elf, whose duty it was to remove any trip hazards on the floor. At first instance, the judge found that there was no breach of duty by the defendants. There was a good safety system in place and since neither Santa nor his elf spotted the bauble, it was not in plain view but probably obscured by a toy train. The claimant appealed. The Court of Appeal found that whilst the inspection system used by Santa and his elf may have been excellent, the elf had many other duties and it was possible that she and Santa had not been as careful as they should have been. Since the bauble was there to be stepped on, on the balance of probabilities it was also there to be seen and should have been spotted and removed. There was no contributory negligence on the part of the claimant as she had stepped on the bauble whilst moving back out of camera shot at the request of the elf. The grotto was dark and the claimants attention on entry would have been drawn to the toy display on the opposite side of the entrance. Judgment was given for the claimant with damages to be assessed.

Comment: The District Judge who originally heard the case was criticised by the Court of Appeal for taking an overly benevolent view of the performance by Santa and his elf... perhaps proving that even District Judges are not immune to the Christmas spirit.

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this with the claimants solicitors who did not reply until a little over two weeks before the trial. The trial judge held that the defendant was deprived of any opportunity to increase their settlement offer pre-issue and/or to make use of Part 36 offers to protect themselves on costs. The judge was highly critical of both the conduct of the medical expert and the claimants solicitors and ordered that the claimant pay the defendants costs of the action. District Judge Horans forthright comments about the revised medical report are set out below: If a doctor is changing his mind at the behest of a claimant, there should be a totally separate report with a totally separate date indicating that he has changed his original view and explaining why he has and to do other than this is an attempt to mislead the other party and an attempt to mislead the court and I do not like it one iota and I request and I am going to order that you inform this doctor and these solicitors, Leech and Co, they must not do anything like that again and I shall remember this, I shall mention it to my colleagues to look out in particular for Leech and Co and for Dr Evans. An expert has a duty to the court, not to the claimant and not to the claimants solicitors. He has got a duty to the court and he should not have changed his opinion just like that without there being a further re-examination. Had there not been this mess up, this error by the claimants solicitors, we would not have known about this. You then wonder is this the tip of the iceberg? How often is it happening? It is unprofessional, very unprofessional. I have half mind to adjourn the case for a representative from Leech and Co and

for Dr Evans to attend personally before me and explain what they are up to and, in fact, I am going to order that they both provide a written explanation as to how this has come about. Comment: Under Part 35 of the Civil Procedure Rules, an expert witness duty is to the court and they must report impartially. Sometimes experts are suspected of either lacking impartiality or at least of being unaware of their obligations under Part 35. It is encouraging to see a judge taking such a firm line on this issue. Our thanks go to DWF solicitors for sending us the Transcript of the Judgment in this case.

Procedure District Judge criticises claimants expert for attempting to mislead the Court: Walker v Brown Stockport County Court (2011)
The claimant suffered a neck and back injury in an accident. His solicitors instructed a doctor to examine him who produced a report giving a prognosis for recovery in five months. When the claimant said he had not recovered, the doctor did not re-examine him but simply produced a revised report with the same date giving a new prognosis for recovery 12 months post accident. The original report was served rather than the revised one (presumably in error) and the defendants solicitors were unaware of the revised prognosis until a month before trial when they received a witness statement from the claimant referring to a 12- month recovery period. They queried

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European Court of Justice (ECJ) rules that injured car owners permitting uninsured driving must be compensated: Wilkinson v Churchill and Evans v Equity Claims Ltd ECJ (2011)
In June of 2010, we reported on two cases involving car owners who had permitted uninsured drivers to drive their vehicles and who were both seriously injured when their cars crashed. In both cases the insurers of the vehicles declined to pay the owners injury claims on the basis that any damages paid to them would be immediately recoverable under Section 151 (8) of the Road Traffic Act 1988 (RTA) (because they had permitted uninsured drivers to use their vehicles). The claimants argued that this interpretation of the RTA conflicted with European Union policy that victims of road traffic accidents who were injured by negligent drivers should be compensated regardless of whether the drivers were insured or not. The cases were referred by the Court of Appeal to the European Court of Justice (ECJ). The ECJ has now ruled that under EU law, insurers cannot rely on Section 151 (8) to reject claims from policyholders who have been injured whilst being driven by uninsured drivers, regardless of whether they knew the driver to be uninsured or not. The Court of Appeal will now decide whether or not to apply the ECJs ruling. If they decide that insurers may continue to rely on Section 151 (8) of the RTA even though it is in conflict of EU law, injured claimants denied compensation in this situation, would have a right of action against the UK Government. Comment: It is not certain how the Court of Appeal will rule or if the UK Government will now amend the RTA. Insurers will be watching the outcome with interest as this is not an unusual scenario.

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Court of Appeal rules on meaning of Package in Holiday Claim: Sean Titshall v Qwerty Travel Ltd Court of Appeal (2011)
The claimant was seriously injured when a glass door shattered at a hotel whilst he was on holiday. He alleged that the glass was faulty and brought a claim under the Package Travel, Package Holidays and Package Tours Regulations 1992 against the defendant travel agents. The defendants denied that they owed any obligation to the claimant. They maintained that the claimant had entered into two separate contracts with two companies for flights and accommodation. The claimant had booked his holiday by making a short telephone conversation to one of the defendants clerks. Neither the claimant nor the clerk could remember the detail of their conversation nor was there an invoice available. The claimant had however, been provided with a statement showing the individual costs of the flights and accommodation and three unspecified service fees. At first instance, the court dismissed the claim after ruling as a preliminary issue that the claimant had purchased two separate services rather than a package and the travel agents were not a party to the holiday contract. The claimant appealed arguing that the pre-arranged combination of services had been sold at an inclusive price. The Court of Appeal ruled that to assess whether the components of the holiday were sold or offered at an inclusive price, it needed to determine whether they were being sold as components of a combination or separately but at the same time. In this case, the travel agents had advertised a last minute get-away at an inclusive price and at no time had they suggested that either the flights or the accommodation were available for purchase separately. The service fees

were also presented at least partly, as the price of putting the package together. The service fees could not be attributed between flights and accommodation and there was no way of determining the separate costs of either of these inclusive of service fees. The travel agents were liable to the claimant for the proper performance of the obligations of the contract. Comment: In the lead judgment, Lord Justice Tomlinson commented that whilst consumer protection was not the primary object of the European Directive which underpinned the regulations, one aim was to make it more straight forward for a claimant to obtain recovery from a single domestic supplier in the event of some failure of the holiday providers.

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Quantum European Court of Justice (ECJ) limits application of Rome II: Homawoo v GMF Assurances ECJ (2011)
The claimant was seriously injured in a road traffic accident, in France by a French motorist in August of 2007. He brought proceedings in England and argued that his compensation should be assessed by reference to English law, which would mean a far higher award than under French law. Under European Community regulation 864/2007 known as Rome II the law used to determine damages is usually the law applicable in the country where the tort (in this case a motor accident) occurred. Prior to the implementation of Rome II, the law used in assessing damages for an English claimant injured abroad was the English law. The High Court was asked to determine whether Rome II was in force at the time of the accident (see September 2010 Brief) but this was by no means straightforward. The claimant argued that Rome II did not apply to events before 11 January 2009, as that was the application date specifically referred to in the regulation. The defendant argued that it applied to any determination by the court conducted on or after 11 January 2009 provided the original tort occurred after 20 days from the date that Rome II was first published i.e. from 20 August 2007 (European regulation is normally deemed to be in force 20 days after publication unless otherwise specified).

The High Court realising the need for consistency and the large number of cases that might be affected by their ruling, referred the case to the European Court of Justice (ECJ). The ECJ has now ruled that Rome II applied only to torts giving rise to damage occurring after 11 January 2009 meaning that the claim in this case was not subject to it and damages would be assessed under English law. Comment: The ECJ has now ended the uncertainty effecting cross-border claims occurring between 20 August 2007 and 11 January 2009. Damages in England and Wales are amongst the highest in Europe however and the fact that these claims will now achieve damages based on this jurisdictions law will make most of them more expensive.

Our thanks go to Berrymans Lace Mawer solicitors for drawing this case to our attention.

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Completed 21 December 2011 written by and copy judgments and/or source material for the above available from John Tutton (contact no: 01245 272 756, e-mail: john.tutton@uk.qbe.com).

Disclaimer
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