October 2002 – edition 2
Contents
Editorial ......................................................................................................................................................... 1
Callery weighed up ....................................................................................................................................... 2
Future perfect?.............................................................................................................................................. 3
Limited life expectancy for statistics .............................................................................................................. 5
Liability for failing to act................................................................................................................................. 7
Court puts brakes on over ‘Barkisland Bump’ ............................................................................................... 9
How long is a tree root? .............................................................................................................................. 11
Acceptable ‘rough justice’? ......................................................................................................................... 12
A palpable hit .............................................................................................................................................. 15
Limitation defence revived in negligence cases .......................................................................................... 16
Professionals get their fingers burnt............................................................................................................ 18
More civil justice.......................................................................................................................................... 20
Time to get your house in order .................................................................................................................. 22
Editorial
The slide of Claims Direct into administration has been just one of a number of significant developments
over the summer. The decision in the Accident Group litigation, the House of Lords’ opinions in Callery and
now the ‘two-stage’ success fee case of Halloran have provided commentators with endless opportunity to
proffer a view. Access to Justice was intended to represent a new era. We do appear at present, however,
to be treading familiar ground where positions are adopted by the various interest groups.
We also had the highly publicised story of Berkhamsted School. Here a concerned mother sought
compensation for the alleged bullying of her son who had been branded a ‘poor little rich boy’ by his fellow
pupils. The mother gave a passionate justification in a radio interview.
Bringing these strands together perhaps crystallises the challenges faced by the insurer/defendant side of
the industry. We see ‘claims farmers’ stopping people in shopping centres, outside schools and around
housing estates, inviting them to consider whether they have a claim of any kind. They may ask if a child
has been bullied or ask about their performance at school. Some may say that this is a legitimate
highlighting of individual rights to compensation. For others, it is treating the subject as an alternative form
of income.
Whichever line one adopts, the truth is that the escalation in the number and cost of claims is paid for by
everyone of us. ‘Predictable costs’ are hotly debated at the moment. Some control of claimants’ costs may
bring relief, at least in respect of the proportionality of costs to damages, but the developing ‘claims culture’
remains a hidden burden not restricted to insurers.
Jonathan Clay
Guest editor and partner, BLM Manchester
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Callery weighed up
When the House of Lords declined to overturn the Court of Appeal decisions in Callery they left
unanswered questions which the courts are already having to begin teasing out.
Just in case you have been on a sabbatical on a desert island and missed all the excitement surrounding
this case, the situation – following the Lords’ judgment – is as follows:

It is not inappropriate to take out After The Event insurance at the first meeting with solicitors.

It is not inappropriate to agree the success fee under a CFA at the first meeting with solicitors.

Where a reasonable uplift is agreed at the outset as part of a CFA, and where ATE insurance is
taken out at that stage at a reasonable premium, the costs of both the uplift (success fee) and the
insurance premium are recoverable from the defendant in the event that the claim succeeds or is
settled on terms that the defendant pays the claimants costs (ie before proceedings commence).

In straightforward cases such as this motor claim (where the risk to the claimant was very, very
minor) an uplift of 20% is the maximum that can reasonably be agreed.

In this case there was no evidence to show that the £350 ATE premium was unreasonable,
although Lord Scott dissented on this point – in his view it was unreasonable to ask a defendant
to pay the premium for an insurance policy that was only relevant to the risks the claimant would
face in proceedings.
Although Claims Direct may no longer be trading, for otherwise settled cases the judgment of Chief Master
Hurst, Senior Costs Judge, on 19 July (High Court of Justice, Supreme Court Costs Office, London) meant
recoverable premiums were reduced from a maximum of £1,450 to £621.13.The senior cost judge reopened arguments on whether ATE insurance should be taken out where liability had been admitted from
the outset, saying it would ‘generally be disproportionate and unreasonable’ to do so in minor RTA cases.
The Accident Group scheme has recently been held to fall foul of paragraphs 1(3) and 4 of the CFA
Regulations 2000 (English v Clipson, 5 August 2002).
Clients must be fully advised by a legal representative before entering a CFA or else costs will not be
recoverable. This first-instance decision will no doubt be appealed.
The case of Halloran v Delaney (6 September 2002) should also be considered. The Court of Appeal
stated that the success fee should only be 5% in simple claims settled pre-proceedings after 1 August
2001. A higher figure should only be considered if appropriate in the particular circumstances of the case.
Furthermore, this policy should be adopted in relation to all CFAs, however they are structured, and the
approach also covers the costs of any costs-only proceedings.
The House of Lords did not comment on Before The Event insurance policies, so BTE policies remain the
first port of call pursuant to Sarwar v Alam etc.
Martin Bruffell
Senior partner, BLM Southampton
Louisa Martindale
Partner, BLM Liverpool
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Future perfect?
Restructuring structured settlements
On 10 December 2001 the Lord Chancellor’s Department announced it was setting up a working party on
structured settlements. The working party is currently considering whether existing rules and practice
directions promote the best interests of litigants in cases that involve serious personal injury. Most
significantly, it is assessing the need for a practice direction that requires the parties to demonstrate that a
structured settlement has been considered.
A structured settlement enables the payment of a damages award for high-value personal injury or fatal
accident claims through a series of lifetime, tax-free instalments, rather than in a lump sum. More often
than not, legal advisers concentrate on the settlement alone, leaving the problem of investing and
managing the lump sum after settlement to the claimant or their families. The structured settlement
addresses this problem. It is an alternative to the lump-sum payment and, whether they like it or not,
requires lawyers to consider investment advice on behalf of their clients.
In the UK, structured settlements have developed without legislative assistance as a result of their tax
status. A damages award with a structured settlement usually consists of an initial lump-sum payment,
followed by a series of periodical payments. The initial lump sum tends to represent compensation for past
pain and suffering as well as for the costs and expenses already incurred. The defendant’s insurers use
the outstanding balance to purchase an annuity or a series of annuities from a life insurance company.
The payments made under the annuities are used to fund future periodic payments, which usually last the
life of the claimant or a specified term, whichever is longer. At present in the UK structures are agreed
voluntarily between the parties.
Broadly speaking, structured settlements have the advantages of being tax free; being guaranteed during
the claimant’s lifetime; offering the option to extend the guarantee period; offering a choice of payment
methods; providing a secure investment; and protecting the vulnerable claimant.
Structured settlements carry the disadvantages of potentially terminating on the death of the claimant;
being irreversible; offering low yields during economic downturns; making investments inflexible; being
independent of the national earnings index; must be arranged before settlement; and income from a
structured settlement annuity is not disregarded and can affect the claimant’s eligibility for state
benefits/local authority care.
From a claimant solicitor’s perspective, structures are a negotiating tool. They promote settlement and
reduce the Court of Protection fees. They promote peace of mind, prevent dissipation, avoid accumulation
and, so we are told, are in the public interest.
One of the common arguments for structuring is that it saves time and costs by encouraging early
settlement. Parties that cannot settle on a lump-sum figure, perhaps because of disagreements over life
expectancy, can employ an alternative approach and find an acceptable compromise.
However, the main advantage cited for claimants is certainty. The claimant is relieved of the burden of
managing a large sum of money and is protected from a possible dissipation of his funds. He has the
assurance of regular payments throughout his life, as well as the opportunity to guarantee payments to his
dependants beyond his lifetime. Furthermore, there is the assurance that the payments will not decline in
value if they are index-linked.
These features make structured settlements appropriate where there are serious injuries and the
conventional award would be large, particularly where the claimant is a child or a patient and a long period
of future care is envisaged. It is considered unlikely that the state will ever have to step in to provide for the
claimant where a settlement is structured.
Flexibility is another feature that recommends structuring to the claimant. The projected settlement can be
tailored individually to the claimant’s needs. Damages are linked to life expectancy and no exact date
needs to be specified as a cut-off point. Provided future cash requirements are considered, the annuity
package can be set up to provide money at the appropriate time for education, nursing needs, asset
accumulation, housing, marriage and children. The damages will not be spent before these needs arise.
Lastly, there are the tax advantages of the structured settlement: a significant proportion of the damages
(sometimes as high as 40%) to which a claimant becomes entitled are not chargeable to tax.
Structured settlements do, however, have a number of disadvantages. As they depend upon accurate
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forecasting, the pressure to get it right at the initial stage is extreme. Payments from annuities may come
on stream at the wrong time. Moreover, structured settlements do not eliminate the risk that the monies
provided under them will not be adequate for the claimant’s needs. Unless subject to supervision by
the Court of Protection, the claimant is still free to squander any monies received, even if they are
intended for specific purposes. Moreover, although structures are linked to the Retail Price Index (RPI) via
the index-linked annuity, this cannot guarantee that the cost of future care will always be met. Historically,
the cost of care has risen faster than the RPI. To this extent, the shortfall has to be made up from a
contingency fund. The structured settlement is thus far from perfect.
Despite seeming beneficial, a structured settlement may simply not fit the claimant’s wishes. For example,
a severely injured claimant may wish to take a large lump sum in order to move to another country to take
advantage of better opportunities. The Law Commission Report no. 224 (1994) looked into the issue of
structured settlements and interim and provisional damages. The Commission recommended that there
should be no judicial power to impose structured settlements. Any reforms should only seek to rationalise
and simplify the voluntary system.
To this end, the arrangements for structured settlements should be rationalised, enabling life offices to
make payments under annuities bought by defendants with personal injury damages free of tax direct to
the claimant. The Law Commission in 1994 recommended that there should be a provision for statutory
structured settlements with the following features:

There must be an agreement between the claimant and the defendant.

The claimant and defendant (or the defendant’s insurer) must agree that the damages consist of
periodic payments to the claimant for a fixed term or for life, or both.

The defendant must agree to buy the claimant an annuity or annuities which produce sums that,
at the time of payment, would amount to the periodic payment specified in the agreement.

The annuity payments received by the claimant are free of income tax, just as instalments of
damages received by the claimant from the defendant under a voluntary structured settlement are
free of income tax at present.
The overall theme of the 1994 Law Commission recommendations was that structured settlements should
be encouraged between parties but not imposed upon them. As the climate of investment has not altered
greatly, it would be surprising if the current working party on structured settlements were to make
recommendations that differ greatly from those made in 1994. The end result of the working party may be
to recommend a practice direction that will simply require the two sides to demonstrate that a structured
settlement has been considered, but will fall short of sanctioning or imposing one where the parties do not
wish to enter into such an agreement.
Andrew Pieri
Partner and Chartered Insurance Practitioner, BLM London
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Limited life expectancy for statistics
Practitioners are used to assessing damages for rest of a claimant’s life based on the life expectancy of
the population as set out in the Ogden Tables. However, what happens when the principles on which
those tables are based cannot be applied? How does the court go about assessing life expectancy in more
unusual claims? Should the court look purely at statistical averages or actuarial evidence, using focused
models, or should it rely on the views of those with clinical experience?
The problem was well illustrated in the recent decision of the Court of Appeal in Royal Victoria Infirmary &
Associated Hospitals NHS Trust v B a child [2002] EWCA Civ 348.
The claimant, ‘B’, was aged seven and claimed damages for severe cerebral palsy. The multiplicand for
future care was agreed at £150,000 a year. The only issue was the multiplier for the agreed cost of future
care for the rest of B’s life and therefore the task for the court was to determine the claimant’s life
expectancy.
Three experts gave evidence to the court at trial: for the claimant, Dr Lloyd, a paediatrician; for the
defendant, Dr Kovar, also a paediatrician; and finally Prof Strauss who was a Professor of Statistics from
the University of California. Dr Lloyd expected the claimant to live to between 25 and 28 years old, but to
reach the top end of that range; Dr Kovar thought the age range was 25 to 35 years but that the claimant’s
life expectancy was at the lower end; Prof Strauss’s age range was 22 to 25 years.
The trial judge discounted Dr Lloyd’s evidence as inconsistent and preferred Dr Kovar’s evidence. He also
criticised the statistical approach from Prof Strauss. He allowed the claimant a multiplier based on her
living to age 25, discounted solely for accelerated receipt on Ogden Table 38 (multipliers for pecuniary loss
for term certain).
The defendant appealed on the basis that firstly the best evidence as to the likely period that the claimant
would live had been given by Prof Strauss and secondly that Table 38 should be further discounted to
reflect the risks of mortality within the period of life expectancy determined by the court.
The majority of the Court of Appeal dismissed both grounds of the appeal.
Database
Prof Strauss had compiled a database of everyone who had received services for developmental
disabilities from the State of California between 1980 and 1996. There were 40,000 cases of cerebral
palsy of which 923 were children who had attained B’s age and were tube-fed. Prof Strauss interrogated
his database and constructed a life table which showed that B’s life expectancy was 14.9 years if she was
tube-fed, 17.8 years if she was fed by others.
The trial judge criticised Prof Strauss’s evidence because it ignored the individual claimant, played down
the role of the clinician to an unacceptable degree and was too mechanistic. The characteristics by which
Prof Strauss selected the sample were unrefined and too narrow in scope. Dr Kovar had taken into
account a more general approach by Prof Strauss in an earlier paper dating from 1977 and applied his
clinical experience to that approach to come to his opinion. The view of the Court of Appeal was that
statistics alone cannot determine a case of this kind; some medical input is required as well. Other factors
may also be relevant, such as the standard of care that the parents are able to provide.
It is for the judge, not the experts, to decide issues of this kind although of course the judge will be guided
by the experts. The Court of Appeal made it clear that the evidence of Prof Strauss or the evidence of any
other statistician or actuary was not inadmissible, but it was only a useful starting point for the judge. The
judge must take into account all of the evidence, including the evidence of any statistician.
Doubt was also expressed as to whether a clear distinction could be drawn between ‘statistical’ and socalled ‘clinical’ evidence. When a doctor gives expert evidence, his professional opinion may well include
reports of experiences of other doctors and other published material which may itself include statistical
information such as that produced by Prof Strauss.
In summary the court must rely primarily on expert medical witnesses before reaching a conclusion in the
particular case.
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The court held it would be wrong to allow a statistician or an actuary to do more than inform the opinions of
the medical witnesses and the decision of the court on what is essentially a medical or clinical issue. It was
neatly summed up by the trial judge:
‘I accept that statistics are a useful tool in the hand of the clinician but, where reliable medical evidence is
before the court, they should not displace the expertise of the clinician. They provide, rather, a useful
background to, and cross-check on, the work of the doctor.’
No place for double discount
On the second issue, the court was not persuaded that the life expectancy should be discounted further to
reflect the risks of mortality; that would be a double discount and leave the claimant with insufficient funds
if she survived to the average age assessed by the court. There was no point in the court determining life
expectancy and then discounting it further for no other reason than that its prediction might be wrong.
Statistics and actuarial evidence clearly have their place. Whilst the courts have come a long way in recent
years to adopting a more arithmetic approach to the assessment of future losses with the adoption of the
Ogden Tables, the RVI case reasserts the need for the court to treat each claimant as an individual and to
tailor its decision to the needs of the individual with the help of medical experts with practical experience of
the issues. Statistics alone offer little more than an outline.
The judiciary also appears increasingly wary of decisions based on calculations made in isolation from the
bigger picture. You need look no further than the Lord Chancellor’s statement of 27 July 2001 giving his
reasons for setting the discount rate for multipliers at 2.5% to see that precise calculations (in that case net
return on ILGS) are only used to the extent that they support the desired approach and are discounted
when they do not. Only three years earlier, in Wells, the House of Lords had approved the net return on
ILGS as the sole criterion for assessing the discount rate.
Lawrence Old
Partner, BLM Leeds
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Liability for failing to act
‘Drivers of vehicles must take the highway as they find it. Everyone knows that there are hazardous bends,
intersections and junctions. It is primarily the duty of drivers of vehicles to take due care,’ said Lord
Hoffman. Yet claimants are presenting increasingly innovative arguments to explain accidents. Two recent
cases, Kane and Gorringe, provide examples of how defendants must be alert to these issues.
In Kane v New Forest District Council [2002] 1 WLR 312 the Court of Appeal considered the liability of a
local planning authority for personal injuries suffered as a result of a decision taken by planning officers
and a subsequent failure to act to remove a known danger.
On 1 March 1995 Mr Kane was knocked down by a car as he was crossing a main road at the point where
a footpath emerged onto it from a residential estate.
In 1984 Wilcon Homes had applied to New Forest District Council for planning permission to build the
estate on land at Marchwood in Hampshire. The authority’s planning officers wanted to create a network of
footpaths in the area so the grant of planning permission for the residential estate was supplemented by
an agreement between New Forest and Wilcon which provided that Wilcon would construct a footpath
leading to the main road.
At the time that this agreement was concluded it was recognised by all concerned that the point at which
the footpath emerged onto the road was a dangerous crossing place because it was on a bend in the road
where there were inadequate sightlines. However, New Forest had already entered into separate
agreement with the highway authority (Hampshire County Council) and the owner of an adjacent property
by which the latter agreed to dedicate a strip of land for the improvement of the sightlines at the footpath
exit.
Wilcon began constructing the footpath in 1993 and New Forest pressed the highway authority to take the
steps needed to improve the sightlines. In June 1994 the highway authority suggested that the necessary
work would be carried out within a few weeks but the footpath was opened to the public four months later,
without the sight lines having been improved.
After his accident, Mr Kane brought claims against New Forest and Hampshire, alleging negligence and
breach of statutory duty. He alleged that both were negligent in permitting the opening of the footpath, and
were negligent or in breach of statutory duty in failing to take steps to render it safe before his accident.
The district judge struck out the claims under CPR 24.2 on the grounds that they had no real prospect of
succeeding. An appeal against that order was dismissed by the circuit judge. The claimant appealed to the
Court of Appeal only in respect of the claim against New Forest.
The circuit judge had dismissed the appeal from the district judge in reliance on two authorities. On the
basis of Stovin v Wise [1996] 3 All ER 801, he held that such statutory powers as New Forest and
Hampshire had under the Highways Act 1980 to remove the danger did not give rise to a duty of care at
common law. He also held that Lam v Brennan and Borough of Torbay [1997] PIQR 488 was binding
authority for the proposition that the exercise of powers under planning legislation did not give rise to a
common law duty of care.
In Lam the complaint against the planning authority related to granting planning permission for a
toymaking business. Part of the process of finishing the toys involved spraying them with chemicals, and it
was claimed that this had prevented people coming to the restaurant the claimant ran and even that it
had injured his children. The Court of Appeal dismissed this, holding that the policy of the legislation which
confers the power to grant or refuse planning permission ‘is not such as to create a duty of care at
common law which would make the public authority liable to pay compensation for foreseeable loss
caused by the exercise or non-exercise of that power’.
Simon Brown LJ, who gave the leading judgment in the Court of Appeal in Kane, doubted that a
planning authority would be immune from liability if they permitted or required the construction of a
foreseeably dangerous footpath, or failed to impose a condition forbidding the opening of the path until it
had been rendered safe. May LJ rejected the notion of any blanket immunity in the exercise of planning
powers. However, these observations on Lam are strictly by the by since the court found that it was
unnecessary to hold New Forest negligent for stipulating the creation of the footpath. Rather, the authority
was negligent in failing to prevent the opening of the path before it was safe.
New Forest argued, in reliance on Stovin v Wise, that there could be no common law duty to act to prevent
the opening of the footpath or otherwise render it safe. This argument depended upon an analysis of
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whether or not New Forest had created the danger. Stovin was a case of pure omission to act where there
was no question that the public authority had created the danger in the first place. The House of Lords
held that in such a situation there could only be an action in negligence if, first, it was so irrational not to
have exercised a statutory power that there was a duty to act under public law principles and, second,
there were exceptional grounds for holding that the policy of the statute required compensation to be paid
to persons who suffered loss because the power was not exercised. The force of Stovin is avoided by a
claimant who can show that the public authority in fact created the danger. Thus, in Alcock v Chief
Constable of South Yorkshire Police [1991] 4 All ER 907, the police were held to have created the danger
in permitting too many people into Hillsborough football stadium and were therefore liable for the
psychiatric harm suffered by spectators who were crushed.
In Kane, the Court of Appeal held that New Forest had actually created the danger by requiring the
creation of the footpath, even though, by the earlier agreement with the highway authority and adjacent
landowner, they had put in place a mechanism to render the path safe. It was then a short step to hold
that, having created the danger, there was a duty to act to remove the danger.
In the light of this decision the status of Lam is uncertain, but it is clear that where a local authority is held
to have created a danger through the planning process there will be a duty of care at common law to act to
obviate that danger. The negligence arises not necessarily in the initial planning decision but in the later
failure to act to remove the danger created by that decision.
Kane serves to underline the importance of the analysis of who or what created the danger which
ultimately resulted in loss and damage. Where the public authority has itself created a danger, reliance
cannot be placed on Stovin v Wise to argue that there is no duty to exercise statutory powers to remove
the danger.
John Snell
2 Temple Gardens, London
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Court puts brakes on over ‘Barkisland Bump’
‘This is a timely reminder that the courts should be slow to impose liability on the highway authority who
have competing claims on their budget. The courts should be on their guard against facile findings of
breach of public law duties giving rise to claims for damages out of sympathy for a badly injured claimant,
where there is no one else to blame.’
Those words from the Court of Appeal in the recent case of Denise Gorringe v Calderdale Metropolitan
Borough Council (CA, 2 May 2002) will come as welcome comfort to highway authorities.
The claimant suffered catastrophic injuries in a collision between her car and an on-coming bus on the
B6113 at Barkisland on 15 July 1996. Although a rural B-class road, it was used heavily by traffic as a
bypass for Halifax and Sowerby Bridge and as a local link to the M62. At the time of the accident it had a
national speed limit of 60 mph. At the spot where the accident occurred the road descended gently into a
dip and, after a right-hand bend, climbed to a crest where it turned to the left.
Police tests concluded that a car following the claimant’s route and travelling over the crest faster than 50
mph would momentarily lose contact with the road.
The crest, known locally as the ‘Barkisland Bump’, was described by the claimant’s engineer as ‘an
extraordinarily sharp crest’ of ‘an extreme and substandard nature’.
The accident investigation estimated the claimant’s speed at the point of impact at 54 mph. The evidence
pointed to her having braked heavily as she approached the crest out of the dip. This caused her to lose
control of her car and cross the centre line into the path of the on-coming vehicle.
The only warning of the hazard, at the date of the accident, was a triangular ‘Uneven road’ sign just after
the dip and 85 m short of the crest. The trial judge found that there had been a white ‘SLOW’ marking
painted on the road in the late 1980s or early 1990s just before the descent into the dip and approximately
175 m short of the crest. By the date of the accident that marking was no longer visible. The judge found
that the marking had most likely been obscured by resurfacing work.
Calderdale had commissioned a series of analyses of personal injury accidents on its roads in the early
1990s to meet its obligations under s 8 of the Road Traffic Act 1988. These had recommended that the
number of night-time accidents on the B6113 justified further investigation. An accident study in 1994
stated that the standard of road surface along a 4.65 km stretch varied considerably and was generally
poor. The level of signing of the various hazards was minimal and carriageway definition was, in places,
poor. The number of accidents, particularly involving losing control of a vehicle at night was said to be
significantly above average. The report suggested a package of measures including resurfacing and/or
reconstruction and a comprehensive signing and lining scheme. The report was unfortunately overlooked.
At trial, Calderdale gave evidence that as part of its annual road safety plans it maintained a prioritised list
of ‘Sites for concern’ to be addressed by government-funded local safety schemes. Although the B6113
was included in that list it had not yet been selected for funding. Calderdale said in evidence that, as the
level of government funding was directly linked to the record of casualty savings, they had to deal with the
worst sites first.
Alternative funds were available for minor and/or emergency works targeted at areas of local concern
which would be unlikely to attract central funds, but the authority had not identified the site of the accident
as meriting funding by the highway authority. The decision of the Court of Appeal is of interest on two
points:
Firstly the court unanimously rejected the judge’s finding that the failure to maintain the previous ‘SLOW’
marking on the road constituted a failure to maintain the highway pursuant to s 41 of the Highways Act
1980. Relying on the decision of the House of Lords in Goodes v East Sussex the court held that the duty
to ‘maintain’ was limited to keeping the ‘fabric’ of the highway in repair. Whilst the painting of a ‘SLOW’
sign or indeed the erection of a warning post could well operate as a warning to road users, it could not be
said to be intended or to have the effect of carrying out a repair to the physical or structural condition of the
highway. The claimant’s contention to the contrary was described an untenable.
Secondly the decision reinforces the message that claimants face an extremely tall order indeed in
establishing that highway authorities are in breach of a common duty of care by failing to undertake
positive accident prevention measures at a specific location. Further in considering that issue, the court
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should base its decision not on expert evidence prepared with the benefit of hindsight but on the
information available to the highway authority at the time of making its decision.
Perhaps of broader interest was the amendment made by the claimant following the decision of the Court
of Appeal in Larner v Solihull Metropolitan Borough Council. The claimant argued that the statutory duty to
take measures to prevent accidents imposed by s 39(3)(b) of the Road Traffic Act 1988 and the statutory
power to erect traffic signs conferred by s 65 created a parallel common duty of care and that in failing to
replace the white ‘SLOW’ marking or to erect other warning signs, Calderdale was in breach.
In keeping with the reasoning established by the House of Lords in Stovin the court held that s 39 imposed
no more than a ‘target’ duty upon the highway authority. This was a duty to carry out studies into accidents
and, in light of those studies, to take such measures ‘as appear to the authority to be appropriate’ to
prevent such accidents.
While there could be circumstances in which a common law liability might arise, they would have to be of
an exceptional nature. The test was whether the conduct of the highway authority had fallen outside the
ambit of the very considerable discretion afforded by s 39. This could only be said to have happened if the
authority had acted ‘wholly unreasonably’. It would not be wholly unreasonable for an authority to fail to
take action because of a lack of resources.
Alternatively, it would have been unreasonable if, having carried out studies identifying the accident
location as a top priority, the authority had, for no justifiable reason, failed to do anything about it but had
diverted resources elsewhere.
In the present case, the crucial question was: if Calderdale had properly considered whether it should
improve the signage at the accident site, would it have been irrational to have decided not to do so?
Calderdale’s policy was to focus firstly on accident black spots selected for centrally funded major works
according to a fixed set of criteria and secondly on more localised areas of concern, identified
predominantly by complaints from residents and road users, which could be resolved via either of their
minor works funds.
The ‘Barkisland Bump’ was neither an accident black spot nor the subject of numerous complaints. The
most that the claimant’s engineer could say was that the accident numbers at the spot established a case
before 1995 for an urgent need for safety measures. It had, in effect, to wait its turn.
Paul McClorey
Solicitor, BLM Manchester
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How long is a tree root?
In his leading judgment in the House of Lords in Delaware Mansions Ltd and others v City of Westminster,
Lord Cooke said that ‘... any decision which your Lordships may give in this case must to some extent
break new ground in English law’. Although judgment was given in October 2001, some of the implications
of the judgment have yet to be worked out. This article addresses the implications for the defence of
limitation in tree-root claims.
Delaware was a claim for subsidence damage to the claimants’ building allegedly caused by the roots of a
plane tree maintained by Westminster. The claim was chiefly for the cost of underpinning the property. At
the original trial the claim in nuisance failed, on the basis that it was necessary for physical damage to
have occurred to the property while it was owned by the claimant – although the tree was still standing, all
the damage to the claimant’s property had occurred before the property was acquired by its current owner,
Flecksun Ltd. The Court of Appeal reversed this decision.
Westminster appealed to the House of Lords, who confirmed in October 2001 that Flecksun could recover
in nuisance. The basis of their decision was, in essence, that roots from Westminster’s tree were causing
continuing damage to the land by desiccating the soil, which made underpinning necessary, and so
Flecksun had suffered physical damage during the period of its ownership (albeit to the land, rather than
the building). Lord Cooke in his leading judgment held that, ‘Damage consisting of impairment of the loadbearing qualities of the land is, in my view, itself a nuisance.’
Limitation
Although the limitation issue was not before the Lords, the change in the scope of ‘physical damage’ may
have implications for limitation.
Under the usual rules, the limitation period runs for six years from the date on which the cause of action
accrues. The cause of action in nuisance arises when damage is sustained. (There is no extension for
latent damage under sections 14 and 14B of the Limitation Act 1980, as there is in the case of negligence.)
The encroachment of tree roots has been regarded by the a ‘continuing nuisance’, of the sort identified in
Darley Main Colliery Co v Mitchell in 1886, whereby a fresh cause of action is held to arise from each new
incident of damage.
If the rationale for the Lords’ decision is followed through, there is a fresh cause of action as long as the
roots are present and continue to desiccate the soil. This means that the six-year limitation period may not
begin until the start (or perhaps even the completion) of any underpinning programme, even though there
has been no physical damage to the property or building for some months or years before that date.
As well as a claim for underpinning, tree-root claims often include a separate head of claim for damage to
the superstructure. Such damage was not in issue before the House of Lords in Delaware. Since damage
to the ‘load-bearing qualities of the soil’ is not relevant to damage to the superstructure, the limitation
period for superstructure damage may remain six years from the date of the relevant damage to the
building. However, Lord Cooke commented at paragraph 34 of his judgment that
‘Should they [the tree owners] elect to preserve the tree … they may fairly be expected to bear the cost of
underpinning or other reasonably necessary remedial works; and the party on whom the cost has fallen
may recover it, even though there may be elements of hitherto unsatisfied pre-proprietorship damage or
protection for the future.’
It is not clear whether this ‘pre-proprietorship damage’ would include any damage to the superstructure,
but the point may at least be arguable by a claimant who would otherwise be out of time.
Since Delaware did not directly address the limitation position and its effect on limitation is still unclear, to
avoid unnecessary dispute any claimant would be well advised to bring their claim in nuisance within six
years of physical damage occurring to their property. However, future cases on the limitation point may
confirm that the effect of the Delaware decision is to extend the limitation period, at least for a claim for
underpinning, considerably beyond the last date of physical damage to the building.
Andrew Plunkett
Solicitor, BLM London
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Acceptable ‘rough justice’?
Lords issue full judgment in Fairchild appeal
On 20 June 2002, the House of Lords gave their reasons for finding in favour of the claimants in the
Fairchild and related appeals. Their Lordships’ reasoning has been eagerly awaited since oral judgment
(without reasons) was given on 16 May to see how it would impact on the future handling of mesothelioma
claims.
In December 2001, the Court of Appeal held that victims of mesothelioma who had been exposed to
asbestos with more than one employer could not, on the balance of probabilities, prove a defendant had
caused or materially contributed to the condition. The claims failed and as a result many hundreds of
similar cases have since been stayed. The Court of Appeal had reached its conclusion on the basis of the
expert medical evidence which said that it was not known whether the condition was triggered by one or
more asbestos fibres and further that it was impossible to prove the source(s) of the culpable fibre(s). All
that could be said with any certainty was that exposure increased the risk of injury.
Future implications
Before Fairchild, there was an understanding between claimant’s solicitors and insurers and amongst
insurers on how mesothelioma claims were handled. Although the House of Lords’ judgment means in
theory we can all revert to the pre-Fairchild position, the equilibrium in the short term has been affected.
Many claims have been delayed or stayed pending the outcome of this judgment and we shall see these
claims procedurally reactivated.
If an element of goodwill between the parties has been lost because of Fairchild that might cause
difficulties for insurers. In the past, claimant’s solicitors often made a point of proceeding against all known
culpable employers thus avoiding complex contribution proceedings. A less co-operative claimant’s
solicitor might only pursue the easiest and most accessible employer and insurer making apportionment a
far more difficult exercise.
This judgment does not affect the individual value of a mesothelioma claim. There is no need to alter the
way or increase the value of the reserves on individual claims compared to the position pre-Fairchild.
The ABI have already stated that there will be a discussion within the insurance industry on how to deal
and presumably apportion such claims in the future. Insurers in the past have found it sensible and
practical to apportion claims on a ‘time-on-risk’ basis accounting for duration but not dose of exposure. It
would be particularly useful if insurers could agree an approach to adopt not only for apportionment but
also for uninsured periods.
In summary, this has been a genuine attempt, unanimously endorsed by the Court of Appeal, to persuade
the courts to apply a fairer assessment of liability. The injustice of an employer having to pay 100%
damages when, say, it is only responsible for 5% exposure is according to the House of Lords acceptable
‘rough justice’. Success would have meant savings to the insurance industry of many millions of pounds
but a perceived injustice to claimants which the government would no doubt have attempted to redress.
Failure has meant no significant anticipated increase in the value and number of mesothelioma claims.
This judgment makes it easier for claimants to establish causation on similar claims and no doubt this new
class of claim will be subject to interpretation and definition by the courts over the next few years.
The House of Lords has yet to decide on the liability of occupiers in asbestos claims (another important
aspect of the Fairchild appeal) which in itself may have significant implications for insurers.
The detail
In normal circumstances, to recover damages in a personal injury claim based on negligence or breach
of statutory duty, a claimant must prove that but for the breach, injury would not have occurred.
On the basis of the present medical knowledge of the aetiology of mesothelioma it is impossible for
claimants to prove, on the balance of probabilities, that the condition is triggered by a fibre of fibres
inhaled whilst working with any particular employer. All that can be said with any degree of certainty is
that the risk of developing the condition increases with the dose of exposure.
Consequently, where the ‘but for’ test is applied to a mesothelioma claim where there have been multiple
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exposures with different employers, a claimant cannot succeed – as seen with the Court of Appeal finding
of 11 December 2001. Present medical science simply cannot prove the source(s) of causative
exposure(s).
This potential injustice to a claimant has been addressed in other jurisdictions, not just for mesothelioma
cases, but any claim where there is potentially more than one cause of injury. The clearest analogy is seen
in cases where two hunters, acting independently of each other, fire guns in a wood and a pellet from one
of the guns injures an innocent passer by. If the claimant cannot prove from which gun the pellet came
then potentially his claim fails. Courts across the world have found that the evidential difficulty arising from
the impossibility of identifying which gun fired the pellet should not preclude an innocent claimant from
recovering damages. Consequently, both hunters are found jointly and severally liable. Whilst there is an
element of injustice in that an innocent hunter will be found liable, this is far out-weighed by the even less
attractive alternative of the claimant’s case failing.
The House of Lords’ findings

In mesothelioma claims involving periods of exposure with more than one employer, each
employer will be held jointly and severally liable.

The claimant will be entitled to recover damages in full against each defendant (the issue of
apportionment was never raised at the appeal in any event).

The ‘but for’ test of causation does not apply in mesothelioma cases where medical science
cannot prove who amongst multiple employers caused the condition, which in turn would result in
the claimant failing to recover damages.

In such cases, the normal standard of causation is ‘relaxed’ and exposure caused by a
defendant’s breach of duty which carries a risk of mesothelioma is sufficient in law to establish
causation.

This different and less stringent test of causation applies only to these types of mesothelioma
claims or very similar claims and is not intended to generally lower the threshold of causation
which would have adverse consequences to defendants. ‘Considerable constraint’ is called for in
any relaxation of the ‘but for’ test for causation and any such arguments should be considered on
a case by case basis.

This finding is compatible with the House of Lords reasoning in Wilsher v Essex Area Health
Authority which can be factually distinguished on the basis that there were five potential,
competing and different causes of injury as opposed to one known causative agent in these
appeals – albeit that the source of the causative asbestos fibre(s) could not be proven.
A similar causation issue was addressed by the House of Lords in the case of McGhee v National Coal
Board (1973) in which the claimant developed dermatitis from exposure to two sources of brick dust in his
employment – one source being non tortious and the other tortious. The medical experts could not say
which exposure caused the dermatitis. It was accepted that the increased exposure to the tortuous dust
made it more likely that the claimant would develop dermatitis but it could not be determined whether the
claimant would have developed the dermatitis in the absence of the tortious dust. It was held that exposure
to the tortious dust made a ‘material contribution’ to causation, where it was impossible to separate the two
sources of brick dust which ultimately gave rise to injury.
This decision was not generally viewed as changing the law on causation but simply the House of Lords
adopting a ‘robust and pragmatic’ approach to causation based on the particular factual circumstances of
the case.
A similar causation issue was again addressed by the House of Lords in Wilsher v Essex Area Health
Authority (1987) in which a premature baby suffered from blindness at birth. There were five potential and
very different competing causes of blindness, one of which may have been the defendant hospital’s
negligent administration of oxygen. The medical evidence in Wilsher could not show which of these five
competing and separate potential causes had been causative – each was as likely as the other. The
House of Lords held that whilst the defendant’s breach had resulted in another potential cause of
blindness it could not give rise to an inference or presumption that such breach had caused injury – this
was a jump too far in the chain of causation and the claim failed.
In Wilsher, the House of Lords had considered McGhee and appeared to express the view that it had
established no new principle in the law of causation.
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In Fairchild, the House of Lords is now saying that McGhee did in fact extend a new principle of law but the
House was reticent in saying so and the comments of the House in Wilsher to the contrary ‘should no
longer be regarded as authoritative’.
The House of Lords now clearly states that in exceptional cases such as these mesothelioma appeals,
which would fail if the ‘but for’ test on causation were applied, a different and less stringent test will replace
it. The normal standard of causation is ‘relaxed’ and a finding that exposure carries a risk of mesothelioma
is sufficient in law to prove causation.
The House of Lords has re-emphasised the distinctive factual differences between these appeals and
McGhee as against Wilsher.
The Lords made it plain in their reasons that their findings only presently apply to those cases where the
following criteria are met:
1
It is impossible for the claimant to prove how injury is caused due to uncertainty in the current
state of relevant science and so who caused it;
2
The breach of duty has materially increased the risk of injury;
3
The breach of duty was capable of causing the injury;
4
The claimant must prove that the agent arising from the defendant’s breach was the cause of
injury and not just one of a number of potential causes (Wilsher)
Whilst the House of Lords has stressed that this new rule should be limited to cases which have these
features, this does not mean that the principle is not capable of development and application in new
situations. Any such decisions will have to be taken when such cases arise.
Laura Trezise
Solicitor, BLM London
Boris Cetnik partner
Partner, BLM London
Nick Pargeter
Partner, BLM London
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A palpable hit
Aneco Reinsurance Underwriting Limited v Johnson & Higgins Limited (House of Lords – 18 October
2001)
Risk a little and you risk losing a lot. $11m is scarcely a small amount to gamble on, but the defendants in
this case ultimately lost a colossal $35m. The case raises again the question of whether to fight or pay –
the margin in this case was clearly very significant, making the choice that much harder.
As part of an agreement to enter into a reinsurance treaty with a Lloyd’s underwriter, the claimant
underwriters instructed the defendants to obtain reinsurance cover for them in the sum of $11m. That
cover was subsequently repudiated as a result of material non-disclosure by the defendants. The
claimants stated that they would not have entered into their reinsurance treaty without having reinsurance
themselves. As a result of entering into the treaty they had lost $35m. They sought to recover the full
amount from the defendants who, in turn, argued that their liability was limited to the $11m cover they had
been asked to obtain. In response to this, the claimants indicated that the nature of the reinsurance treaty
made it impossible to obtain reinsurance, adding that had they been aware of this, they would not have
entered into the treaty.
The majority of the House of Lords held that the defendants’ duty of care was not limited to obtaining the
reinsurance but extended to telling the claimants whether or not reinsurance was available. As a result
the defendants were not simply providing information but were also advising, and their duty of care
extended to the full loss suffered by the claimants.
This case casts further light on the application of the decision in SAAMCO, which restricted the quantum
of claims by lenders against valuers to the extent of the over-valuation. This restriction was imposed on
the basis that any greater loss fell outside the scope of the duty of care in circumstances where valuers
only inform their client of the value of the property. Brokers will now have to take considerable care to
avoid positions where they provide advice rather than information. The difference is a vital one in terms
of the scope of the duty of care which attaches, and the damages which may result. It remains to be seen
if this is but the first in a line of cases where the courts classify a defendant’s duty as being to advise, so
as to enable a claimant to recover their full loss.
Tim Smith
Solicitor, BLM London
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Limitation defence revived in negligence cases
Cave v Robinson Jarvis & Rolf (House of Lords – 25 April 2002)
The House of Lords has unanimously held that the construction of s 32(2) of the Limitation Act 1980 in the
case of Brocklesby v Armitage & Guest was wrong, overturning a notorious Court of Appeal decision.
Professionals and their insurers will have greeted the Lords’ judgment in Cave with relief. Subrogated
claims by insurers will also be affected by the ruling.
Legal background and rationale
The Limitation Act 1980 s 32(2) states that ‘deliberate commission of a breach of duty in circumstances in
which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved
in that breach of duty.’
The rationale behind this is that the defendant should not be able to profit from his own behaviour if he has
concealed from the claimant either facts relevant to the claimant’s claim, or a deliberate breach of duty
owed to the claimant. The claimant however, should only be protected up to the point when he could with
due diligence have discovered the concealed facts or breach of duty.
In such cases, the period of limitation does not begin to run until the claimant has discovered the
deliberate concealment, or could with reasonable diligence have discovered it (s 32(1)(b)). Importantly,
the long-stop of fifteen years (as provided by s 14B) does not apply to s 32, ie in cases where there has
been deliberate concealment.
Previous judgments
Brocklesby v Armitage & Guest (Court of Appeal – 9 July 1999)
The claimant alleged that the defendant solicitors had negligently failed to secure his release from his
mortgage obligations. There was no allegation of deliberate wrongdoing. Negligence was denied.
The Court of Appeal held that, to benefit from s 32, it was enough for the claimant to show that the
defendant knew he was acting for the claimant, and that in failing to secure release from the mortgage
he had deliberately committed an act that was a
breach of duty.
Liverpool Roman Catholic Archdiocese Trustees Inc v David Goldberg QC (Chancery Division – 30
June 2000)
The claimant alleged that the defendant firm provided negligent tax advice. If the defendant had given the
advice intentionally, but did so negligently, the claimant could benefit from s 32. This was held to apply
even if the defendant did not know that the advice was negligent (or wrong) and even if the claimant was
fully aware of the facts.
Criticism of the decisions in Brocklesby and Goldberg
These constructions of s 32 attracted widespread criticism. The Law Commission stated that the decision
in Goldberg gave the claimant, who had known all the facts, far more protection than was ever intended by
the concept of ‘deliberate concealment’, and penalised the defendant even though he could not be said to
be in any way culpable for the ‘concealment’. The decisions had ignored the rationale of s 32, which is that
the defendant should only be penalised where he knew what was being concealed from the claimant, and
intended the concealment.
The decision in Cave
The claimant alleged that the defendant solicitors had negligently drafted a deed designed to provide the
claimant with mooring rights, and then failed to register it. Judges at first instance and in the Court of
Appeal had found in favour of the claimant on the basis of s 32.
Lord Millet commented that the first issue in construing s 32(2) is to decide whether a ‘deliberate
commission of a breach of duty’ involves either

a deliberate breach of duty, or

a deliberate commission of an act or omission which gives rise to a breach of duty.
Secondly, Lord Millett noted the effect of Brocklesby was that where a professional performed his duty
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in a way subsequently found to be negligent, he is liable to be sued without limit of time, even where he
denies negligence.
The House of Lords held that only when the defendant is aware of his own deliberate wrongdoing is it
appropriate to penalise him for failing to disclose it. The defendant is only deprived of a limitation defence

where he takes active steps to conceal his own breach of duty after he becomes aware of it; or

where he conceals or fails to disclose his deliberate wrongdoing in circumstances where it is
unlikely to be discovered for some time.
In the absence of intentional wrongdoing, it would be wrong to expose a professional to claims for
negligence long after retirement from practice.
Conclusion
The particular significance of Cave is that the scope for circumventing the long-stop in negligence actions
has been narrowed. Professionals and their insurers will no longer need to concern themselves with the
threat of truly historic claims. Conversely, of course, it means that limitation in subrogated claims will have
to be examined very carefully. Protective proceedings may well have to be issued in these circumstances,
whereas the Court of Appeal construction of s 32 would have avoided the need for that.
Catherine Hawkins
Partner, BLM London
Peter Fitzpatrick
Partner, BLM London
Jason McNerlin
Solicitor, BLM London
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Professionals get their fingers burnt
Co-operative Retail Services Limited v Taylor Young Partnership Ltd & others [2002] UKHL 17; (2002) 1
WLR 1419
In a recent House of Lords decision involving ‘joint names’ insurance and ‘liability for the same damage’,
the contractors’ all-risks policy served to exempt the contractor and the subcontractor from liability in
respect of damage to the premises. This left the defendant architects and engineers liable for the whole of
the loss, and unable to claim anything from the parties whose negligence may have contributed to the
damage.
The case concerned fire damage to a building, caused by the alleged negligence of the architects and
mechanical & electrical engineers, who sought a contribution from the contractors and subcontractors. At
first sight, it seems extremely unfair that the architects and the engineers could not recover a contribution,
but it can be explained simply as arising by virtue of the contractual arrangements of the parties. In the
House of Lords decision, Lord Bingham expressed the view that the architects and engineers – or the
insurers – could have taken steps to ensure that they were included as co-insured in the ‘joint names’
insurance in order to protect their position.
In 1993 the claimant entered into a contract with Wimpey Construction UK Ltd (now Carillion Construction)
for the construction of a new office headquarters on the site owned by the claimant. The contract was the
JCT Standard Form of Building Contract 1980 edition, private with quantities, incorporating some
amendments. Wimpey subcontracted the electrical work to East Midlands Electricity Electrical Installations
Service Limited (trading as Hall Electrical). The form of subcontract was DOM/1, 1980 edition, with
amendments. Unfortunately, there was a fire on site and the building was extensively damaged. It was
understood by the parties that the claimant’s insurers, acting via their subrogation rights, were unable to
pursue Wimpey or Hall because they were insured against the same risk under the same insurance policy.
Accordingly, the claimant pursued the defendant architects and mechanical and electrical engineers. The
claim for damages was divided into three parts: (1) costs of re-instatement works; (2) costs of associated
professional fees; and (3) losses consequential on delay to the project.
At first instance, HHJ Wilcox held that Wimpey and Hall were not liable to the claimants in respect of any
damage arising out of the fire and therefore were not liable to make any contribution to the claim against
the engineers or architects. The decision was appealed to the Court of Appeal but was dismissed. The
architects and engineers appealed to the House of Lords and once again the appeal was dismissed.
Carillion and Hall both successfully argued that they were not liable ‘in respect of the same damage’ and
therefore were not liable to pay a contribution. Carillion and Hall argued that no liability existed in relation
to reinstatement costs and professional fees arising from the fire, as the losses were paid under the terms
of the joint policy under which they were co-insured with CRS.
Additionally, under the terms of the JCT and DOM/1 contracts (contractual scheme arrangements) Carillion
and Hall also had a complete defence to any claim, and in this instance damages in respect of delay were
not recoverable.
The main issue considered by the House of Lords was whether or not the effect of the contract between
Wimpey and the claimants was sufficient to exclude Wimpey’s liability to pay compensation in respect of
the damage caused by the fire.
Clause 22 of the contract
Clause 22(A)(1) imposed an obligation on Wimpey to take out and maintain a ‘joint names’ policy for ‘all
risks insurance’ for the reinstatement value of the works. ‘All risks insurance’ was defined in the contract as
insurance providing cover against any physical loss or damage to work executed, as well as to site
materials. In addition, the contract provided for nominated and domestic subcontractors to have the benefit
of the ‘joint names’ policy in respect of loss or damage by the specified perils – which in this instance
included fire. Clause 20.3 of the contract excluded Carillion’s liability for any loss or damage to the works,
even where the fire was caused by Carillion’s own negligence, breach of statutory duty or default. If such a
loss occurred, the restoration monies would be paid by the insurers under the ‘joint names’ policy.
Clause 22(A)(4) goes to the heart of the matter. The effect was that the claimants were not entitled to
deduct anything from the sums payable to the contractors as compensation for any loss and damage that
arose as a result of the fire (even if the fire was caused by the negligence of the contractors). In addition, it
imposed obligations on the contractors to restore the work damaged and to complete the work. It also
required the contractors to authorize the payment of insurance monies to the claimants, who were then to
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use the monies for the restoration work and to pay the contractor’s professional fees. So, the contractors
were obliged to remedy the defects, but not to pay compensation.
Meaning of ‘same damage’
Whilst clause 22(A) is the main thrust of the case, their Lordships also commented on two other points
which have become the subject of much legal discussion. The first relates to liability in respect of the
‘same damage’. Their Lordships rejected the architects’ and engineers’ submissions that the time for
determining liability in respect of the ‘same damage’ was when the damage occurred. Their Lordships
commented that the relevant time was when contribution was being sought. In this instance, the time at
which contribution was sought from the contractors was the time when they were not liable to the
claimants because the fire damage was covered by the ‘joint names’ policy and the damage had already
been made good.
The second issue related to the effect of the ‘joint names’ policy. This point was not decided by their
Lordships, but their commentary suggested that they accepted that parties who were jointly insured under
an all-risks policy could not make claims against one another in respect of damage to the contract works.
The issues of ‘liability for damage’ and the effect of the ‘joint names’ policy are of enormous interest to the
legal fraternity, but they were not material to this case.
Although disappointing for professionals and their insurers, the decision was not a great surprise. The
contractual arrangements in the dispute meant that Carillion and Hall could never be liable, even if
negligent, as the contract ably provided how such claims should be addressed, ie by the insurance and
relevant contractual arrangements.
The decision may renew pressures for construction professionals to have contractual insurance
arrangements similar to those available to contractors. Professional indemnity insurers will certainly be
reviewing the risks faced by their insureds as a result of the House of Lords decision and the current legal
opinion on joint contractual arrangements.
If construction professionals are not able to gain protection by joint insurance policies or under the
umbrella of project insurance, they should be seeking to gain as much protection as possible by
insisting on the insertion of net contribution clauses and limitations on their liability.
Michael Salau
Partner, BLM London
A BLM team led by Michael Salau was retained by Carillion and their insurers from initial proceedings
to the House of Lords hearing. Andrew Bartlett QC and Kim Franklin, both of Crown Office Chambers,
were retained as counsel.
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More civil justice
Designing a system that deals successfully with a wide range of personal injury claims is a demanding –
some might say daunting – task. A study just published jointly by the Civil Justice Council and the Law
Society assesses the working of various pre-action protocols including the personal injury protocol and
makes recommendations for future amendments.
The study, entitled More Civil Justice? The impact of the Woolf reforms on pre-action behaviour, collated
and compared interviews with insurers and claimant practitioners, 150 pre-Woolf files and 150 post-CPR
injury claims. Whilst this is a very small sample it was deemed sufficient for the purposes of the study. It
was generally agreed that the introduction of the personal injury protocol was a positive step, and that
imposing a structure on the period before issue of proceedings offered a valuable certainty to both
claimant and defendant. Anecdotal evidence suggests a one-third reduction in litigated claims post-Woolf,
attributable to the reforms including the protocol. However, there are concerns about aspects of the
protocol itself and the implementation by practitioners of its components. Concerns are raised about the
early notification stage, the adequacy of information provided by claimants, the timeliness of the
defendant’s response and the appointment of experts. Defendants raise the fundamental concern that the
costs associated with claims have not been reduced.
The pre-action protocol working group were asked:

to consider clearer guidance on the early notification of claims

to put greater emphasis on the claimant’s obligation to provide information about the value of the
claim

to emphasise that failure to provide CRU information often holds up settlement

to consider the consequences to defendants if a response to a letter of claim is not provided
within three months

to offer clearer guidance on what amounts to an admission

to consider whether the benefits of the process of nomination of experts outweigh the
consequential delay in obtaining the report
Additionally, practitioners complained about the absence of sanctions and expressed considerable
concern over the fact that an admission of liability is binding only on fast-track claims. They also
questioned why the protocol applies only to fasttrack cases.
The study’s recommendations and changes to the Injury Protocol
Unless insurers develop a clear view about the issue of early notification, amendments to this aspect of the
protocol are unlikely to be made.
There will be changes to the letter of claim requirements. Additional paragraphs are to be included in the
guidance notes highlighting the need to provide details of treating hospitals in RTA cases, and to give
sufficient information on the claim’s likely value. The format of the letter of claim changes slightly to reflect
these details and the introduction of CFAs. It may be varied depending on the particular facts – the
protocol now specifically mentions rehabilitation as an example.
The defendant’s acknowledgement letter should highlight any omissions from the letter of claim – hence
identifying omissions early, rather than doing so three months later in the letter of response. (I suggest that
the defendant should be aware of and immediately address issues where claimant solicitors are
consistently weak: factual detail, specifics of allegations of breach, GP records, providing sufficient
information to value the claim, the Schedule of Special Damage and supporting documentation.)
Claimant solicitors argue for the abolition of the limit of £15,000 under which an admission of liability is
stated to be binding. I contend that this issue is an irrelevance – the protocol cannot subvert the law as
stated in Gale v Superdrug Stores plc [1996] 1 WLR 1089. The limit will not be abolished but there will be
an amendment which provides that if on investigation the value increases to exceed £15,000 the
defendant should be notified of that change.
Specific time limits only apply to defendants (21 days for an acknowledgement letter, three months for
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investigation). Whilst fairness suggests there ought to be specific claimant time limits, these could not be
imposed on the presentation of the letter of claim without an amendment to the three-year limitation
deadline in personal injury claims. Here the conflicting demands of claimant and defendant may never be
resolved.
The process of nomination of an expert remains open to either party, and the fact that nomination often
takes place in the initial letter of claim indicates that claimant solicitors are being forced to accept a
‘holistic’ approach to liability and quantum, rather than treating them sequentially.
An additional paragraph is being added to the ‘stocktake’ provisions of the protocol, requiring claimants to
serve a Schedule of Special Damage and Loss. They will have to defer the issue of proceedings for 21
days after such disclosure, thus mirroring the provision relating to service of medical evidence. The new
provision remains limited to situations where the defendant has admitted liability – perhaps this is an issue
for the next release or amendment.
Complaint is made that the protocol lacks ‘teeth’. The Working Group’s view is that the issue of sanctions
is for the courts. Sanctions cannot be built into the protocol as, by definition, it is merely a process, and a
pre-litigation process where a sanction is by definition unenforceable. If remedy is needed, the claimant
will issue proceedings and any points regarding compliance with the protocol can then be taken up
by the courts. In practice, remarkably few cases have got to this stage – the exception is Carlson v
Townsend in which the judgment sensibly reflected the views of the working party.
The personal injury protocol is ‘primarily designed’ for relatively simple single-incident traumatic injuries
which include an element of personal injury ‘with a value of less than £15,000 [and] which are likely to be
allocated to the fast track’. It is the only protocol that is self-limiting in this way, and consideration was
given to whether it should be opened up to multitrack claims as well. To broaden it would require
significant and unnecessary changes – but a small amendment to the guidance notes will indicate that the
protocol approach is equally appropriate to higher-value claims.
A substantive improvement
As the study shows, the protocol does represent a significant improvement on pre-Woolf procedures. Its
objectives are largely being met and the proposed amendments are minor. The adversarial culture has
been mitigated by Woolf, and claimant solicitors are now active participants in the pre-action process.
Nonetheless defendants must insist that claimants meet their protocol obligations. This applies particularly
to the disclosure of information. The amendments proposed as a result of the study provide opportunities
for the defendant to do so.
Terry Renouf
Partner, BLM London
Terry Renouf has been a member of the Working Groups advising on pre-action protocols assisting at both
interim report and final report stage of the Access to Justice reports of Lord Justice Woolf and
subsequently as a member of the Law Society Pre-action Protocols Working Group. Terry has also been a
member of the Drafting Group for both the Personal Injury Pre-action Protocol and the Occupational
Disease and Illness Pre-action Protocol.
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Time to get your house in order
Draft pre-action protocol for housing cases
A working party set up by the Law Society is about to release a protocol for the future management of
housing disrepair cases. The protocol is likely to be available in its final form in October, and in anticipation
of that we look at some of the issues as they affect landlords.
At present, cases between landlord and tenants are often dealt with piecemeal, with much depending on
the court where proceedings are issued and the experience of the solicitors who are involved. Many such
cases are dealt with by firms with little experience of housing law, which causes untold misery to landlords
faced with an increasing number of cases against them. The protocol is designed to weed out this
inconsistent approach by setting specific guidelines to be followed by both landlords and claimant solicitors
in an attempt to keep costs to a minimum and to promote agreement between parties. The protocol covers
such areas as pre-action disclosure, agreement on and instruction of expert surveyors, costs to be paid,
and time limits to be followed.
‘Landlords and tenants have a common interest in maintaining housing stock in good condition. It is
generally common ground that in principle court action should be treated as a last resort.’
This was the view of Lord Woolf when deciding the aims and spirit of the Civil Justice Reforms, but how far
is this reflected in practice within the draft protocol? There are various avenues open to tenants who wish
to complain about problems with their property. They can utilise the Tenants’ Right to Repair Scheme, or
complain to the Local Authority ombudsman (who will not act if there are court proceedings in
contemplation), depending on whether they are tenants of public or private landlords. They can also
complain directly to their local councillor. However, these routes are rarely used. This is due partly to lack
of publicity, and because solicitors representing tenants do not advise clients to take these routes if court
action is possible. There are no regulations within the draft protocol to ensure these steps are taken, but
this does not prevent landlords publicising these avenues to tenants in an attempt to promote good
relations. This is likely to make tenants less aggrieved and less likely to instruct solicitors.
Likewise, landlords need to set up comprehensive and thorough reporting and inspection procedures. This
includes adequate records of tenant complaints about repairs, covering the date and time the complaint
was made, the date and time an inspection was undertaken, what repair was done and the cost. It is only
then that landlords will be able to prove to a court that their repair policy is thorough enough to rely on if it
is challenged by a tenant. Regular inspection of properties will bring to light potential problems allowing
early repair and in turn will lead to happier tenants and fewer court proceedings.
Problem areas in the draft protocol
One area where the spirit of Woolf is not reflected in the draft protocol is the issue of drawing inferences
from the timing of a complaint. If a tenant has not previously complained about something which a
surveyor then identifies as a problem, the tenant may try to claim damages for living with the defect. It is
surely only fair that the defence should be able to draw an inference from the fact that the tenant did not
complain earlier. Damages are awarded for the period of time that a tenant has been complaining, so to
refuse to allow evidence of lack of complaint is not within the spirit of Woolf. It is a decision for the trial
judge as to whether he chooses to ignore the inferences drawn, after hearing evidence from the tenant. If
a landlord has good evidence of recording tenant complaints, then it must be evidentially correct to show a
court evidence that no complaints have been received before the instruction of a solicitor. This may have
an adverse effect on the tenant but is correct within the Landlord and Tenant
Act 1985 s 11. Good repairing records speak for themselves in such cases and will make it more difficult
for tenants to suggest they complained but that their complaints went unrecorded.
The original draft of the protocol suggested time limits of 21 days. These limits were extended following
objections from solicitors representing landlords, housing associations, local authorities and other
interested parties. Landlords now have 20 working days initially to respond to a claim, providing
relevant documents. They have a further 20 working days to arrange an inspection, with 10 days more to
provide the report. Thereafter the landlord must accept or deny liability within 20 working days of receiving
the report. These limits are extended but do not allow landlords time to drag their feet. It is essential that a
system of inspection is set up to ensure a quick, reliable response to claims, and which will reduce the
number of claims being brought. The final draft is eagerly awaited to see whether further amendments
have been made to these time limits.
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Cost issues
The original draft protocol included a mandatory obligation to pay costs, regardless of whether a landlord
has completed all the repairs or not. This was both unfair and out of line with general cost provisions within
civil law. There is a mandatory obligation to pay costs within s 82(12) of the Environmental Protection Act
1990, but this applies only in criminal proceedings. If a landlord completes all the work as soon as he
receives a claim then why should he be penalised? A tenant is still able to take an action for compensation
in the Small Claims Track if the damages are worth less than £5,000 and in the Fast Track if they are
above £5,000. If a landlord then has the added burden of paying costs, despite paying for the completion
of repairs, what incentive is there to complete the repairs? If the repairs were costly the landlord might be
better off just paying damages and costs. These issues were considered and the obligation on landlords to
pay mandatory costs has been removed. Despite this, there is a very real risk to landlords of costly court
proceedings, which would drain their resources.
The provision relating to a landlord’s obligation for disclosure including the tenant’s file, repair records and
other documents under the Data Protection Act places a large burden on cash-strapped landlords, so it
can only be reasonable to charge £10 plus reasonable photocopying charges. It is unlikely a court will
consider costs of £25–£50 unreasonable. This is still unlikely to recoup all the costs lost as a result of the
manpower and resources needed to provide the required information.
Personal injury
If there is an action for personal injury arising out of the disrepair the draft protocol states the personal
injury protocol should not apply. (See Terry Renouf’s article on the Personal Injury Pre-action Protocol on
page 22.) Some injuries not attracting large compensation paymnets are included within housing disrepair
claims, as they relate to the defects – such as some minor respiratory problems and minor injuries. This
will save money by preventing concurrent proceedings. If an injury is serious then the personal injury
protocol will prevail and a tenant will have to comply with additional timetables. This will be a question of
fact in each case and the correct protocol should be identified and agreed between the parties at the
earliest stage, to prevent duplication and unnecessary costs.
Single joint experts
The appointment of a single joint expert surveyor is a positive step. If a single joint expert is appointed, a
survey takes place with the landlord and tenant present and, if an agreement on repair is reached, the
situation can be resolved fairly easily. If agreement cannot be reached on a joint expert, both parties’
surveyors should attend at the same time to prevent the need for a further meeting between the experts,
reducing the cost and hopefully leading to a resolution. A landlord is advised to prepare a list of approved
experts that they are happy to instruct as a joint expert or as a single expert. This will allow instruction of
an expert and preparation of a report to take place quickly, thus allowing early settlement of claims and
identification of those in which liability will be denied.
Conclusion
If, as seems inevitable, the protocol will come into effect at the end of this year, landlords have little time
to get their house in order. They need to be aware of the content of the protocol and they should take
steps now to reduce the risks and potential costs that they may incur. Careful planning and attention to
detail at this stage will pay off in the long run. It will certainly do much to ensure that the ‘common interest’
between landlords and tenants to which Lord Woolf referred does not become a ball and chain.
Sarah Mansfield
Solicitor, BLM Liverpool
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