SUPREME COURT SETS ASIDE CONSENT ORDER

Dunhill vBurgin [2014] UKSC 18

The Undersettlement

The Supreme Court has set aside a settlement of a personal injury claim by a woman who was knocked down and injured by a driver.  The Claimant was represented by a barrister and a trainee solicitor at court when her claim was settled in 2003 for £12,500.  Unfortunately no one realised that the Claimant lacked the mental capacity to conduct her claim.  Furthermore, her advisers did not appreciate certain factors that made the claim potentially a lot more valuable.  As it was, the terms of compromise were set out in a consent order signed by both parties’ counsel.

Later she consulted new solicitors who saw things very differently.  They realised that this was not a straight forward claim and, more to the point, they assessed quantum at a very different order of magnitude: of up to £2 million.  

In 2006 the new solicitors applied to set aside the consent order on the ground that (i) at the time the settlement was agreed, the Claimant had lacked sufficient mental capacity to conduct her claim so that she should have been a protected party, and (ii) the settlement was invalid because, being a protected party, the consent order agreed on her behalf required court approval under CPR Rule 21 for it to be valid. 

Civil Procedure Rules r21.10

CPR 'Rule (1) Where a claim is made –(a) by or on behalf of a child or protected party; or(b) against a child or protected party,no settlement, compromise or payment (including any voluntary interim payment) and no acceptance of money paid into court shall be valid, so far as it relates to the claim by, on behalf of or against the child or protected party, without the approval of the court.'

Decisions of the lower courts

The Defendant succeeded initially before Mr Justice Silber who held that the Claimant’s capacity was to be judged by reference to the (less complicated) decisions that she was actually required to take in the action as formulated by the original solicitors.  He found that as the Claimant could not rebut the presumption that she had that capacity, she was not a protected party.  The Claimant’s appeal to Silber J in the High Court succeeded and the Defendant appealed that decision.

When the matter was considered by the Court of Appeal, Lord Justice Ward held that the Claimant’s capacity was not to be assessed in the light of what was required of her in 2003, as presented by her lawyers but by taking into account her ability to comprehend and to conduct the proceedings as they should have been framed.  The case was then remitted back to the High Court but, given the important issues involved, the case was leapfrogged to the Supreme Court.

The SC Ruling

In the Supreme Court Lady Hale upheld the Court of Appeal’s approach.  She held that the correct test was to ask whether the Claimant had been able to conduct the claim or cause of action that she actually had, as distinct to the case as understood or pleaded by her lawyers. 

Applying this standard, she found that the Claimant had lacked the requisite capacity to conduct her case at the time her claim was settled.  She should have had a litigation friend appointed.  As the consent order had not been approved by the court under CPR Rule 2, it was invalid and should be set aside.

In delivering her judgment Lady Hale stated:

‘….the policy underlying the Civil Procedure Rules is clear: that children and protected parties require and deserve protection, not only from themselves but also from their legal advisers. …[Approving an earlier commentary on a previous version of the relevant rules[1]]…. the objects of the compromise rule was "to protect minors and patients from any lack of skill or experience of their legal advisers which might lead to a settlement of a money claim for far less than it is worth", a sentiment which has been carried forward into the current edition of Civil Procedure.’

The consent order being rescinded, she remitted the case back for a trial.

Implications

I will comment on the wider implications flowing from this decision separately.  Suffice it to say that the key point to take away from this ruling is that the CPR 21 applies whenever a party lacks mental capacity to conduct a claim; regardless of whether a party’s lack of capacity is known to anyone.

Court approval of settlements on behalf of children and protected parties is an absolute requirement: one that is imposed as a condition precedent to its validity.  It applies to all actions governed by the CPR, not just personal injury claims. 

Whilst is relatively easy to discern whether a client is a child, it is not always so obvious to discern that they have cognitive or other mental incapacity, particularly in the case of the elderly or where a claimant appears to be merely mildly eccentric or forgetful and disorganised; the mental capacity test is a fact specific one.  This presents legal practitioners, and in particular defendants, with something of a risk management issue.  They should incept appropriate measures to ensure where a party lacks the requisite mental capacity that it is spotted: in appropriate cases this may involve obtaining an expert medical opinion.  It is already best practice to routinely address the issue of mental capacity when instructing medical experts where there has been a head injury.

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[1] The words in the square brackets are the author’s.

DfT BLOCKS LAW COMMISSION'S INVOLVEMENT

In August 2013 the Law Commission approached me to ask me to submit my proposals for reforming the United Kingdom's provision for ensuring that victims of motor accidents receive their full compensatory entitlement. I was informed that they decided to contact me after reading my four-part feature On the Right Road?, which was published in the New Law Journal in February 2013.  All very flattering!

I duly submitted a detailed paper in October 2013 in which I set out precisely what was wrong with the Road Traffic Act 1988, the European Community Rights Against Insurance Regulations 2002, the Uninsured Drivers Agreement 1999 and the Untraced Drivers Agreement 2003.  All of these national law provisions contain elements that are unlawful in that they conflict with superior Community law provision.  I explained how the original legislative objective within the Road Traffic Act 1930 had been steadily eroded, how our current national law provision fails to meet the minimum standards of protection required under European Law, which coincidentally is similar to the original 1930 concept that had the protection of victims as its overriding concern. I also explained how some recent Court of Appeal rulings had compounded the problem by failing to interpret our national law consistently with the Motor Insurance Directives and the Court of Justice of the European Union.

A long silence ensued.

Last week I received a polite 'Dear John' letter from the Law Commission indicating that it cannot become involved in reviewing this area of the law without the support of the Department for Transport.  In other words, although they would like to include reform in this area in their 12th Programme, this has been blocked by the Minister, as is his prerogative.

I ask, as Marcus T Cicero might have done: cui bono?  Surely it is the motor insurance industry that benefits most from obstructing reform in this area.  According to the Minister's statement of intent, he has been in detailed discussions with for nearly four years now, still with no tangible result.

SAFEGUARDING THE RIGHTS OF CHILDREN AND THE MENTALLY HANDICAPPED

Every year hundreds of children and mentally handicapped victims are injured by hit and run drivers on our roads. Unfortunately their compensatory entitlement is jeopardized by the Department for Transport’s outsourcing arrangement with the Motor Insurers Bureau under the Untraced Drivers Agreement 2003.

Those wonderful people at the New Law Journal have published my detailed critique of the current regime. The article considers the relevant case law and calls for urgent reform to improve the compensatory safeguards for children and the mentally handicapped under the 2003 Agreement.

My article can be accessed online, free of charge, by registering for a free six month trial of the online edition: click here.  

View the online edition of the New Law Journal

ALLOCATION OF LIABILITY FOR HEAD ON COLLISIONS

In Gray v Gibson [2014] All ER (D) 35 (Mar) the Court of Appeal overruled a first instance decision which found the claimant 40% contributory negligent for a head on collision between her car and a lorry that had veered over to her side of the road. 

The accident happened on a road with one lane in either direction.  The vehicles were travelling in opposite directions.  The judge found that the lorry driver had allowed his vehicle to cross over onto the claimant’side by more than two feet as her car approached.  She had been travelling at 30 mph. 

The Court of Appeal ruled that the DJ had been wrong to adopt a starting position that assumed that both parties were equally to blame for the accident.  The correct approach was first to determine whether the defendant was liable and only then to consider whether the claimant was also negligent. 

The extempore judgment spares the usual homily about the Court of Appeal only rarely interfering with a first instance apportionment of liability under s1 Law Reform (Contributory Negligence) Act 1945 – since, these days, this seems to be honoured more in the breach.  As it was, the Court held that the claimant’s speed was not causative: what caused the accident was the defendant’s carelessness in crossing onto the claimant’s side of the road.  She could not be blamed for failing to anticipate his negligence by driving slower. 

The defendant was fully liable.

For another recent case along these lines see: Bennett v Southwell [2013] EWHC 2382 (QB).

HUMAN RIGHTS ACT PLUGS GAP IN TORT LAW

Police liable to victims of serial rapist

Perhaps one reason why many of us are not well served by our local police force may have something to do with the arcane policy that holds that the police are not subject to a duty of care in their investigation of crimes, see for example: Smith v Chief Constable of Sussex [2009] 1 AC 225.  This is surely a disincentive to greater diligence and effort in these matters and it probably accounts for that special brand of insouciant complacency peculiar to certain police officers.  

However they may like to dress up their role and their constitutional relationship to the Crown and perhaps more importantly, to the tax-paying public (who pay their wages, in what is supposed to be a representative democracy) the Police are de facto public servants: no more and no less.  As such the Police should be held accountable for gross neglects of duty,  especially where they result in reasonably foreseeable consequences of such dire gravity - to the very people whom they are supposed to protect.

In  DSD and another v Commissioner of Police for the Metropolis [2014] EWHC 436 (QB) Mr Justice Green ruled that article 3 of the Human Rights Act 1998 entitled claimants who were raped and assaulted by the odious ‘black cab rapist’ Mr Warboys to compensation  because the Police's incompetent investigation over many years had infringed their article 3 rights.  This judgment exposes the deficiencies in a tort law system that would otherwise have denied over 100 victims any compensatory redress either from the Police (on policy grounds) or from the perpetrator's motor insurers, as to which see: AXN & Ors v Worboys & Ors [2012] EWHC 1730 (QB).  Article 3, prohibits torture or inhuman or degrading treatment or punishment and it has repeatedly been held to enshrine one of the most fundamental values of any democratic society. 

It is deplorable then that Theresa May appears to have committed the Conservative party to abolishing the Human Rights Act if they are re-elected.  O tempora, o mores!

See: MoD loses its ability to hide its neglect, in which I comment on a Supreme Court HRA ruling that plugged another gap in the protection afforded under under our domestic law  Smith & Ors v Ministry of Defence [2013] UKSC 41 

CPR RULES APPLY TO FOREIGN ACCIDENT CLAIMS

As is well known, Rome II governs the applicable law where an accident occurs abroad from 1^st January 2009.  Whilst article 15 (c) extends the scope of the applicable foreign law to issues concerning the existence, nature and assessment of damages or the remedy claimed, article 1.3 excludes this from matters of evidence and procedure; without prejudice, of course, subject to certain exceptions that do not concern us here. 

 Wall v Mutuelle de Poitiers Assurances [2014] EWCACiv 138 is important to anyone who handles personal injury claims featuring an accident abroad.  It concerned a foreign insurer that sought to impose the French approach to quantifying Steven Wall’s catastrophic injury claim, because the accident took place in France. Clearly the basic applicable law was that of France.  The French insurers want to appoint a single expert consistent with the continental model of inquisitional investigation.  They failed.

Given that there were 1.5 million road accident injuries in the EEA in 2009-2010, and that economic migration within the EEA seems likely to increase, it seem reasonable to suppose that foreign accident claims are likely to become a more common feature of personal injury practice.  So anything that makes the process of running such a claim a little easier is to be welcomed.  Robert Weir’s success in this appeal achieves just that.  Wall simplifies some of the procedural aspects of accidents that occur in a foreign jurisdiction where Rome II stipulates that foreign law applies, especially those concerning the quantification of loss.  

In essence the Court of Appeal concluded in Wall that it would be impractical to expect an English judge to apply foreign procedural rules, evidential standards and protocols when attempting to quantify the loss of a UK resident injured abroad.  Paragraphs 12 to 14 of the Longmore LJ's judgment indicate some of the difficulties that would result if otherwise.

Accordingly in  England and Wales the courts will follow the evidential practices prescribed by the Civil Procedural Rules.   So CPR Part 35, which we love and hate in equal measure, will govern the expert evidence required to quantify the loss, in so far as each head of loss claimed is recoverable under the foreign law.  The ruling has echoes of the pre-Rome II ratio in  Harding v Wealands [2007]  AC 1 but there are subtle differences. Furthermore, anyone hoping to secure a periodical payments order against a foreign insurer is likely to be disappointed

I reported the first instance decision last month because its importance appeared to have escaped the notice of most commentators; it still has.  So I am glad to report that the original decision has been upheld. 

MoJ VICARIOUSLY LIABLE FOR PRISONER

In Cox v Ministry ofJustice [2014] EWCA Civ 132 Robert Weir QC has set a new precedent in the obscure world of vicarious liablity.  The Cox judgment also clarifies the correct approach to take when applying the newly articulated criteria for deciding whether vicarious liability is appropriate.  This was devised by the Supreme Court in Various Claimants v Catholic Child Welfare Society & ors. [2012] UKSC 56 , as to which see in particular paragraphs 34 to 36 of Phillips LJ’s seminal judgment in that case.

The Cox case featured a catering officer who was injured by a prisoner’s mishap.  The prisoner was one of a number in her charge that had been tasked with carrying 25kg sacks of rice upstairs.  One of the sacks split and its contents spilled over the steps, creating a predicable slipping hazard.  She told the prisoners to stop and wait until the mess had been cleaned up but one prisoner thought he knew better.  He carried on regardless, slipped and dropped his load on the catering officer, injuring her in the process. 

The case leveled against the MoJ was that it was liable (i) directly, in negligence, and also (ii) vicariously (without regard to fault) for the prisoner’s negligence.  Both claims were dismissed by HHJ Keyser QC.  However, the Court of Appeal upheld Mr Weir’s appeal on the vicarious liability finding.

McCombe LJ’s leading judgment in Cox serves as a useful companion to Phillips LJ’s seminal judgment in the Catholic Child Welfare case and it is a 'must read' for practitioners seeking to navigate the treacherous and incompletely chartered waters around this area of the law.  Vicarious liability is a concept that still eludes a completely watertight definition.  It has been aptly described as ‘a loss distribution device based on grounds of social and economic policy’ by Millet LJ in Dubai Aluminium Co. Ltd v Salam and Ors [2002] UKHL 48. (Similar phraseaology was used by the same judge in the landmark sexual abuse ruling in Lister v Hesley Hall Ltd 2001 UKHL.)  Another eminent jurist, Lord Pearce, has described it as a doctrine; one that ‘has not grown from any very clear, logical or legal principle but from social convenience and rough justice.’ see ICI v Shatwell 1965 AC 656. 

Whatever its precise classification (policy, doctrine or concept), vicarious liability is perhaps best understood by what it does.  It operates to fix a completely innocent third party with responsibility for someone else’s tortious (sometimes criminal) wrong; hence the ‘rough justice’ epithet.  As a bold exception to conventional tort law rules, it is used sparingly and with circumspection: it is not a ‘cure all’ for every hard luck case.  It is deployed where the justice of the situation make it expedient and in keeping with judge made criteria. 

The range of situations deemed appropriate for a finding of vicarious liability has widened considerably over the past few years.  The courts have taken giant strides in extending its remit in keeping with modern expectations and social change.  Whilst it is clearly no longer the case that it is confined to the relationship of 'master and servant', it still seems to have retained at least one foot on terra cognita– with phrases such as ‘akin to employment’ still being in regularly used in many judicial explications. 

Although the scope of vicarious liability has been extended to encompass a nightclub owner for a gratuitously vicious bouncer, the Police for a homophobic officer, priests for the abuse of children (even against a non-parishioner who had no connection with the church or its youth group), for abuse by nuns and wardens, commercial subsidiaries, an unincorporated association for a bellicose sportsman, between partners in a law firm for a fraud, the dual liability of two subcontractors; yet it is still circumscribed by the need to establish a special relationship between the torfeasor and the unwitting third party.

Establishing new precedent for vicarious liability scenarios will always be a matter of fine judgment; its exercise attracts a correspondingly high litigation risk.  This is well illustrated by the first instance decision in Cox, in which the trial judge undertook a careful and painstaking review of all the correct authorities but which nevertheless arrived at a different outcome.  The deciding factor in the Cox appeal was not the degree of control exercised over the perpetrator by the Prison Service, nor whether the prisoners’ were voluntarily contracted or properly paid but, to paraphrase yet another part of the judgment, whether the wrongful act was ‘so much part of the work, ‘business’, or organisation of the person or entity who it is said should be vicariously liable that it is just to make the latter answer for the negligence of the former’[1].

There are clear echoes of Caparo Insustries plc v Dickman [1990] UKHL 2 (whose three stage test is used to establish a whether a duty of care exists in an unusual case where no obvious precedent exists) in the two stage test promulgated by Lord Phillips in the Catholic Child Welfare case.

The judgment in Cox is of particular interest in the way it applies the Catholic Child Welfare criteria to a new vicarious liability scenario, see paragraphs 42 to 47 of McCombe LJ’s judgment, and it is to be welcomed for the valuable new precedent it has set. 

Further training

I am running an in-house half-day workshop law firms on vicarious liability.  It covers all the theory and practice, including the latest developments and new thinking.  It then cements the learning by applying the theory in practice through realistic (and hopefully fun) workshop sessions based on decided cases.

For further details please contact me on:

mail@nicholasbevan.com

Office            01823 325365

Mobile           07968 427134

My training programme

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[1] See paragraph 64 in Cox v MoJ 2014 EWCA Civ 132.