This week saw the team at 1CL dusting off our scientific calculators and trying to remember our integers from our indices. For on Friday the Court of Appeal handed down judgment in Swift v Carpenter  EWCA Civ 1295. The judgment, which runs to 230 paragraphs, can be boiled down to this: there’s a formula for assessing the value of accommodation claims, and it’ll over-compensate some Claimants and under-compensate others, but in particularly egregious cases we don’t have to use it. Richard Collier explains further below.
Meanwhile, we didn’t think the Weekly Roundup could be dragged any further into the 80s after last week’s Bananarama theme; and particularly so after we awarded the honour of picking a theme for this week to 1CL’s own Laura Johnson, alleged in the recent edition of the Legal 500 to be ‘a complete class act’. But we’ve gone from Cruel Summer to Summer Moved On, which is at least seasonally appropriate.
(House) Hunting High and Low
The Court of Appeal last Friday gave the eagerly awaited judgment in the test case Swift v Carpenter  EWCA Civ 1295, resolving a special damages conundrum which has caused many headaches for litigators trying to value and settle claims. The issues are complex, and it is not feasible in the space available here to explain the reasoning fully, but in essence, the case concerned the correct method for calculating accommodation claims, and specifically whether the method proposed in Roberts v Johnstone  QB 878 should still be followed. The underlying problem is that where a claimant in a personal injury action requires a more expensive property as a result of their injuries, simply providing them with the additional sum to purchase this new property provides a windfall for their estate upon their death. A particular calculation method was set out in Roberts to account for this, however with negative discount rates (as there have been since 2017), this produces a nil damages award for this head of loss.
The Court of Appeal in Swift first, and rather nimbly, explained that although the methodology in Roberts represented “authoritative guidance”, crucially it did not establish legal principle and so did not need to be followed. As such the Court deemed itself able to revisit this guidance on the basis that the Roberts method no longer achieved fair and reasonable compensation for injured claimants.
Irwin LJ, giving the lead judgment, concluded that the preferable alternative method is one of reversionary interest: awarding the full additional capital cost of the accommodation to the claimant, and then deducting the value of the reversionary interest (that is, the value of the interest that the compensator would have in the property if the additional award were to revert to the compensator on death). The Court heard expert evidence on the various approaches to the valuation of this interest, deciding eventually that the correct approach is to use the typical market value derived from the small market which already exists for the sale of these interests. The evidence was that investors in the reversionary interests market normally look for 6.2% to 7%, albeit the Court concluded that a more cautious lower rate of return was required. The appropriate rate was identified at 5%.
The formula for the calculation of accommodation awards in therefore now:
Damages award: D = (P – B) – R
Value of reversionary interest is: R = (P – B) x 1.05 to the power of -L
R = reversionary interest
P = value of property now required
B = value of property owned but for the accident
L = predicted life expectancy, by reference to Ogden tables 1 or 2 and 28
All very straightforward.
In terms of how to apply this approach in a particular case, such that one reaches a figure of pounds and pence, I defer to 1CL’s Edward Bishop QC and Angus Piper, who will explain all in their webinar at 11am on Tuesday. Make sure to tune in, or watch the recording on the 1CL YouTube channel afterwards.
The link to sign up for the webinar is here:
About the Author
One of the more junior members of the team, Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.
Take On Me (claim under your name): Jurisdiction and Third Party Claims
We have all got very used to individuals who are injured abroad being able to bring Odenbreit claims against EU insurers in this jurisdiction. Providing the law in the EU member state where the injury occurred allows a direct claim against the insurer (as EU directives require in road traffic cases), Section 3 of the re-cast Brussels Regulation gives the courts of the claimant’s domicile jurisdiction. Under Rome II, the applicable law for such claims is (usually) the law of the place where the injury occurred.
It is very common in such cases for some of the claimant’s losses to have been paid by travel or health insurers. If English law applied, the claimant would include this as part of her claim. But not all legal systems allow this. In a recent case, the defendant insurer argued that local law prevented the claimant from recovering travel insurer’s costs. The claimant responded by seeking to add the travel insurer as a second claimant. The defendant retorted that the court had no jurisdiction to hear the travel insurer’s claim, arguing the travel insurer would have to bring a separate claim in the defendant’s local courts.
The defendant’s argument was as follows:-
- The re-cast Brussels Regulation provides that (subject to limited exceptions) defendants should be sued in the courts of their domicile.
- Section 3 of the Regulation provides a limited exception for injured parties bringing claims against insurers. It does not extend to professionals in the insurance sector (Groupement d’Interet Economique (GIE) Reunion Européenne v Zurich España (C-77/04)  I.L.Pr. 33).
- The travel insurer therefore could not rely on Section 3 of the Regulation and the defendant argued the court had no jurisdiction.
Requiring the travel insurer to bring a separate claim in a different jurisdiction would be a surprising result; in this case liability was in dispute, so there was the possibility of inconsistent judgments, as well as the time, trouble and additional cost of bringing a second claim. The disadvantages of doing so are recognised in the Preamble to the Regulation, which says:-
“In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in different Member States…”
Fortunately, there was another way for the travel insurer. Article 8(2) of the Regulation allows actions “as a third party in an action on a warranty or guarantee or in any other third-party proceedings, in the court seized of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case”.
Relying on the case of SOVAG C-521/14, which confirms that Section 3 does not apply to insurer claimants, but sets out a wide interpretation of “third-party proceedings”, the travel insurer successfully argued its claim was “third party proceedings” within Article 8(2), meaning the court had jurisdiction to add the travel insurer to the claim as a second claimant.
This dispute is a reminder of the limits of Section 3 of the Regulation. Although it is not limited to the person actually injured, and can cover parties affected indirectly – including an employer who seeks to recover sick-pay paid to the claimant – it does not extend to insurers or insurance professionals. Whilst such parties may be joined as additional claimants, therefore, they will have jurisdiction problems trying to bring free-standing claims against EU insurers away from the defendant’s domicile.
[Andrew is far too modest to say so, but he acted for the successful travel insurer in this case. Sarah Prager, however, is not too modest to point out that she thought it was a good idea to join the insurer too – Ed.]
About the Author
Andrew Spencer was called to the Bar in 2004, and is listed in the Legal 500 as a Band 1 practitioner in travel law. He acted for the Claimant in the seminal case of Japp v Virgin Holidays Limited  11 WLUK 131, in which the Court of Appeal considered the time at which applicable local standards should be determined for the purposes of liability under Regulation 15(2) of the Package Travel Regulations; but he is equally comfortable acting for Claimants and Defendants in all travel related claims.
(Left at the) Foot of the Mountain: Refunds in Another Context
For obvious reasons, the team at 1CL have been concentrating in recent months on whether, and when, refunds are payable in the context of the current pandemic. But readers should not conclude that we have taken our eye off the other circumstances in which Regulations 12 to 14 of the Package Travel and Linked Travel Arrangements Regulations 2018 might be engaged.
We were therefore interested to hear of the American plaintiff seeking a refund from a mountaineering tour operator arising from his failure to summit Everest. To cut a long, and rather involved, story short, the plaintiff paid US$69,500 to an American tour operator for a mountaineering package holiday including the opportunity to climb the mountain. The expedition was to be led by the American owner of the tour operator, and the plaintiff was one of a group also featuring the CEO of Mountain Hardware, a purveyor of mountain gear, which also happens to sponsor the expedition leader, also the tour operator.
After a five day trek to base camp, the party was confronted by a 27,000 tonne serac overhanging their intended route up the mountain midway between base camp and Camp 1. A serac, for the benefit of our less adventurous readers, is a column of ice of house-sized dimensions, and they are unpopular with climbers as a result of their propensity to topple over without warning, with potentially fatal results.
Our friend Simon Lowe, CEO of the mountaineering specialist Jagged Globe, and our go-to man for all things mountainous, puts it like this:
“Travelling through the icefall is like playing Russian Roulette. But this time, with such a huge serac hanging over the route, the gun had several chambers loaded and a hair trigger.”
Anyway, the group waited for the serac to fall, but to no avail, and three days later the expedition was called off.
The plaintiff asserts that the expedition was really designed as an advertising opportunity for Mountain Hardware, whose CEO he alleges was unfit for the climb in any event. The defendant tour operator contends that it was simply too dangerous to continue in the face of the serac. As Simon says:
“If you want to put that gun to your own head, then carry on. But don’t put the gun to the heads of the Sherpas, who would go through the icefall a dozen times. You do not need to be an experienced mountaineer to know this or to remember the 2014 disaster which killed 16 Sherpas…whatever risk the guide might have accepted for himself would have been forced ten-fold upon the Sherpas and that would have been appalling.”
Over and above this dispute of fact as regards why the expedition was called off, there is a dispute between the parties over whether the plaintiff was promised a refund whilst he and the defendant were on the mountain, and then subsequently on their return to the USA. He says he was told he would receive US$50,000 of his money back; the defendant disputes this and points out that it is a term of the contract that no money will be refundable in the event of the trip being called off as a result of weather or safety concerns.
It appears that the matter will now be litigated in the courts of San Francisco, with the plaintiff seeking US$100,000 of compensatory and punitive damages (which are, it seems, far more readily available in the US than in the courts of England and Wales).
For what it is worth, it would seem unlikely that an English court would allow itself to be dragged into any assessment of the reasonableness or otherwise of an expedition leader’s decision to call off a potentially dangerous undertaking on the grounds of safety, unless there was very persuasive evidence of bad faith on his or her part; and in the particular circumstances, the tour operator’s refund policy does not appear to be unfair. Unless, therefore, the plaintiff in this case could show that the entire attempt was a sham designed to generate publicity for the hardware manufacturer, his claim would be unlikely to succeed in the courts of England and Wales. But in the courts of San Francisco? Who knows?
About the Author
Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She was recently named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury.
(You frightened) The Living Daylights (out of me): Vicarious Liability and Horseplay
If, like the team at 1CL, you spent your university years covering your housemate’s possessions in Post-It notes and taping their bed to the wall, you will have felt the cold-wind of disapproval from Martin Spencer J’s recent decision in Chell v Tarmac Cement and Lime Ltd  EWHC 2613 (QB). The excoriating judgment begins as follows: ‘The practical joke must be the lowest form of humour. It is seldom funny, it is often a form of bullying and it has the capacity, as in the present case, to go seriously wrong. ’
The claim arose out of a practical joke between co-workers. Mr Chell was a sub-contractor working for Tarmac on their premises. He was injured when Mr Heath, an employee of Tarmac, struck a pellet target with a hammer which exploded close to his ear. The trial judge found that this was only meant to make Mr Chell ‘jump’ but in fact left him with serious injuries, including a perforated ear-drum, hearing loss and tinnitus. Mr Chell alleged that the ‘joke’ was the culmination of growing tensions between the Tarmac workforce and sub-contractors and that Tarmac were directly and vicariously liable for the action of its employee.
The decision provides a detailed analysis of vicarious liability in the context of injuries caused by an employee’s practical joke or general horseplay. The relevance to travel lawyers is obvious: we regularly see claims by staff and holidaymakers injured after participating in impromptu games, activities or entertainment led by tour operator reps, hotel employees or their sub-contractors. The decision is relevant to the scope of a tour operator’s duty under regulation 15 of the Package Travel (etc) Regulations 2018, and indeed to claims made outside those Regulations.
Applying the two stage test set out in Lister v Hesley Hall Ltd  UKHL 22, HHJ Rawlings held at first instance that:
- The first stage of the test (the need for a close relationship between the employer and the wrongdoer) was clearly satisfied: Tarmac employed Mr Heath;
- As to the second stage (whether there was a sufficiently close connection between the actions of the wrongdoer and the relationship between the wrongdoer and the employer so as to make it just that the employer be held liable for those actions), the Judge considered that this was not satisfied: (1) the pellet target was not work equipment, (2) using the pellet target formed no part of Mr Heath’s usual duties; (3) the joke in no way advanced his employer’s goals; and (4) Target had merely provided the opportunity for the joke by employing both men on its premises.
The Judge went on to consider foreseeability and the adequacy of Tarmac’s risk assessments. He rejected Mr Chell’s case that Tarmac ought reasonably to have foreseen the incident: There was no history or threat of violence and Tarmac was not aware of anything more than ‘general’ tensions. HHJ Rawlings specifically rejected the suggestion that Tarmac were under a duty to consider (and take measures to reduce) the risk of horseplay, ill-discipline and practical jokes in its risk assessments because such behaviour formed no part of its employees’ duties at work.
The decision, which Martin Spencer J described as exemplary, was upheld on appeal. It is a continuation of the Supreme Court’s attempts in Morrisons Supermarkets v Various Claimants  UKSC 12 and Barclays Bank v Various Claimants  UKSC 13 to restrict the reach of vicarious liability. These cases are however specific to their individual facts and to the nature of the defendant’s business.
Holiday contracts, which are unique because they include the promise of enjoyment, provide an interesting context for the application of these principles. Despite Martin Spencer J’s obvious disapproval, horseplay and practical jokes between staff and customers is permitted (even required) in certain parts of the travel industry (cf Channel 5’s Curse of Club 18-30) and tour operator reps, whose job it is to ensure their customers have a good time, might well be said to be ‘advancing their employer’s goals’ in engaging in the sort of impromptu pool-side games that often result in serious injury.
About the Author
Called in 2010, Tom Collins is ranked in the Legal 500 as a specialist in Travel Law. He has considerable experience across a wide range of travel and private international law disputes and has advised claimants and defendants in multi-party actions.
It’s hard to believe that six months ago the 1CL team were celebrating Easter Sunday in lockdown, consoling ourselves with the thought that it would all be over by Christmas. Throughout that time we’ve been connecting with you, our valued readers, by way of the Weekly Roundup, Special Briefings on cases and issues of note, and the outrageously popular 1CL Thursday webinar series. But as regular readers know, we’re not ones for resting on our laurels, and the time has come to ask you for your views on what we’ve done well, what we should be doing more of, and what you’re frankly less than enthusiastic about. To that end, we’ve set up a short survey, which shouldn’t take more than a couple of minutes of your time, and we would be very grateful to have your feedback on our activities over the last few months. We’ve already seen the Weekly Roundup lurch to the 80s in the last few weeks; if you’d prefer something rather more highbrow, now’s your chance to request it. Be warned: we’ve already had a request for a Spice Girls themed Roundup. If you don’t speak up, you’ve no one to blame but yourselves.