UK: Insurance And Reinsurance Weekly Update - 16th October 2012

Last Updated: 16 October 2012
Article by Nigel Brook

Welcome to the thirty-sixth edition of Clyde & Co's (Re)insurance and litigation caselaw weekly updates for 2012.

These updates are aimed at keeping you up to speed and informed of the latest developments in caselaw relevant to your practice.

This week's caselaw

Hellard v Irwin Mitchell
A Clyde & Co case on implied waiver of legal advice privilege and papers in a barrister's possession.

Simmons v Castle
An ABI application to the Court of Appeal regarding the 10% increase in general damages post-April 2013.

Beasley v Alexander
A case on Part 36 offers and split trials.

Sandhu v Kaur
A decision on whether there had been a breach of an undertaking to disclose documents.

Tinkler & Anor v Elliott
The Court of Appeal decides whether a litigant in person had acted promptly when applying to set aside an order.

Ward v Allies and Morrison Architects
A case on damages and the loss of future earnings where the claimant was starting out on a career.

Hellard v Irwin Mitchell

Implied waiver of legal advice privilege/papers in barrister's possession

Clyde & Co for defendant

The defendant is a firm of solicitors being sued for professional negligence. It sought to argue that, by bringing the proceedings, the claimants had impliedly waived privilege attaching to papers in counsel's possession (and to which neither the clients nor the solicitors were necessarily privy). The claimants sought to rely on the case of Paragon Finance v Freshfields [1999], in which the Court of Appeal held that although there had been an implied waiver of legal advice privilege in relation to all communications between the parties once the client had commenced proceedings against his former solicitors, that waiver did not extend to communications between the client and his new solicitors who (like counsel in this case) were not being sued. HHJ Purle QC rejected that argument.

He held that Paragon did not apply here because counsel had been acting jointly with, or as agents of, the solicitors (there was no new and separate retainer). Once a client sues his solicitors, he impliedly waives privilege attaching to communications between the solicitors and the client, as well as any evidence as to those communications, including the evidence of anyone who was privy to the giving of the advice in question. As the judge put it: "in my judgment, the rule or presumption against cherry-picking applies not just to what is in the solicitors' file and mind, but to what is in anyone else's file and mind who was party or privy to the communication in question". Subject to the limitation of relevance, therefore, the waiver extends (as a matter of fairness) to all of counsel's papers, including his own working papers and notes which were never sent to anyone else.

Simmons v Castle

ABI application to Court of Appeal regarding 10% increase in tort (and contractual) damages post-April 2013

Weekly Update 28/12 reported the Court of Appeal's confirmation in this case that, with effect from 1 April 2013, general damages in tort actions would increase by 10%. This was done because the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ("LASPO"), which comes into effect on 1 April, envisaged that the judiciary would give effect to this 10% increase in damages. The Association of British Insurers brought an application inviting the Court of Appeal to reconsider its decision. The Court of Appeal has now decided as follows:

1) The 10% increase applies to all successful claimants, and not just those who have entered into a Conditional Fee Agreement ("CFA"). The increase will apply where judgment is given after 1 April 2013.

(2) However, where the claimant has entered into a CFA (and falls within section 44(6) of LASPO), the 10% increase will only apply where the claimant's funding arrangements for his legal costs are agreed after 1 April 2013.

Although the Court of Appeal recognised that this conclusion results in an inconsistency between CFA claimants and non-CFA claimants, it felt that this "temporary, transitional provision" was the best solution in the circumstances.

The Court of Appeal also held that it would be inconsistent and unfair to limit the 10% increase to claims in tort: "We can see no good reason why the 10% increase should be limited so as to exclude any type of claim". Thus the 10% increase will apply to the following types of general damages no matter what the cause of action is (eg it will apply to contractual claims such as disappointing holiday claims): (a) pain and suffering and loss of amenity; (b) physical inconvenience and discomfort; (c) social discredit; and (d) mental distress. The nature of these heads of damages will mean that the 10% uplift will usually only apply to claims made by individuals and will relate to only specific types of claim. In other words, there is no general 10% uplift on all damages.

Beasley v Alexander

Part 36 offers and split trials EWHC/QB/2012/2715.html&query=beasley+and+alexander& method=boolean

After judgment on liability was handed down in this case (but before the issue of damages was tried), the judge was required to decide whether he could make an order as to costs at this stage. The defendant argued that the effect of CPR r36.13(2) was to prevent the court making any order as to costs until the whole case had been decided. CPR r36.13(2) provides that "The fact that a Part 36 offer has been made must not be communicated to the trial judge ... until the case has been decided".

In AB v CD & Ors (see Weekly Update 12/11), Henderson J said that it might be appropriate, in certain circumstances, for the court to be told about a Part 36 offer at the end of the first part of a split trial. However, Eder J in Ted Baker v AXA & Ors (see Weekly Update 24/12) thought that Henderson J's suggestion would stretch the wording of CPR r36.13 beyond its proper limit.

In this case, Jack J held that the words in CPR r36.13(2) had a "clear meaning": "the case" meant the whole case and could not be construed as referring to part of a case. Although he reached that conclusion "with regret" (because he felt there could be good policy reasons for his dealing with the costs of liability at this stage, provided he did not know what offer had been made), because of the CPR, he could not be told the position as to Part 36 offers and so could not deal with costs at this stage.

COMMENT: This case provides useful clarity on the position regarding Part 36 offers and split trials. Although both Henderson J and Eder J have discussed the issue before, they were not required to decide it in their cases and so their views were only obiter. It might be recalled, though, that Eder J thought there was an urgent need for CPR r36.13 to be reviewed and possibly reformulated.

Sandhu v Kaur

Whether there had been a breach of an undertaking to disclose documents EWHC/Ch/2012/2679.html&query=title+(+sandhu+and+kaur +)&method=boolean

One of the issues in this case was whether the respondent had breached an undertaking, recorded in a disclosure order, under which she agreed to "(i) use reasonable endeavours to procure from [X] and disclose copies of [certain documents]...and (ii) make available for inspection the originals of the documents so disclosed...." Whilst Newey J saw an attraction in the respondent's argument that she was only required to use reasonable endeavours to make documents available for inspection, it could not be reconciled with the unambiguous wording of the undertaking. She was subject to an absolute requirement to make the documents available: "A possible explanation for the unqualified nature of the undertaking is that [the respondent] knew that she was in a position to ensure that the documents were produced".

In any event, she had not used reasonable endeavours either. It had been within her power to ensure production of the documents, even though they were held by company X. She was a director of this company and two of the other three directors were members of her family. Furthermore, she looked after the company's affairs as its managing director and she held 84% of the issued share capital (and therefore could have removed any director who was not prepared to allow the documents to be inspected).

Tinkler & Anor v Elliott

Whether litigant in person acted promptly when applying to set aside an order

The claimant in an action failed to attend trial for medical reasons. A civil restraint order was made against him. However, his application to set aside that order was granted, even though a period of 18 months had elapsed since he was given notice of the order. The defendant appealed that decision.

The Court of Appeal has now allowed that appeal. CPR r39.3(5) sets out the conditions which a litigant must satisfy in order to ask the court to set aside an order made in his/ her absence. One of those conditions is that the litigant has "acted promptly". The Court of Appeal confirmed that promptness is a mandatory requirement, pursuant to which the applicant must act "with all reasonable celerity in the circumstances". Only if that requirement is met does the court have any discretion. The Court of Appeal held that the judge had not been entitled to set aside the order on the material placed before her. It could not be said that the claimant had been incapable of functioning as a litigant in person throughout the 18 month period. Kay LJ added that "I accept that there may be facts and circumstances in relation to a litigant in person which may go to an assessment of promptness but, in my judgment, they will only operate close to the margins". The judge had gone too far in making allowances for a litigant in person.

Ward v Allies and Morrison Architects

Damages and loss of future earnings where claimant starting out on career

The claimant, a graduate, was injured whilst carrying out a short term work experience placement at the offices of the defendant. Of issue in this case was how the judge should have calculated damages for her loss of future earnings. It was common ground that the multiplicand/multiplier methodology and the Tables and guidance in the current edition of Ogden should normally be applied when making an award of damages for future loss of earnings, unless the judge really has no alternative. At first instance, the judge felt that he was "driven" to use the "broad brush" approach adopted in the case of Blamire v South Cumbria Health Authority [1993] because there had been too many imponderables in this case.

The Court of Appeal agreed with that approach. It held that the judge had been entitled to conclude that it was uncertain whether the claimant would ever have succeeded in pursuing the particular career she wished to follow, whether she would have remained in that career throughout her working life and what her level of remuneration would have been. It had also been uncertain whether her physical and psychiatric recovery would have allowed her to carry on this career (or a similar career) after the accident.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Nigel Brook
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