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Articles | Mon 4th Jul, 2022
This week we look at two cases in which slip-ups in procedure had Consequences for unfortunate lawyers. Not the kind of thing that happens to our readers, of course, but still, it’s always best to be aware of these things. We’re delighted to be joined once again by a colleague from 9 Gough Chambers, this time Linda Nelson, who is well known to all those practicing in the Admiralty Court in particular, but also in general cross border work.
Personal Injury Claims Wrongly Issued in the County Court
Many of us have encountered an Admiralty claim issued in a County Court rather than in the Admiralty Court. A degree of uncertainty has reigned over the question of how such a scenario should be addressed and a recent decision provides some welcome guidance on the matter.
Where personal injury is suffered on a ship it is likely to fall within the broad scope of section 20(2)(f) of the Senior Courts Act 1981. S20 SCA defines the parameters of the Admiralty Court’s jurisdiction and s20(2)(f) provides that the Admiralty Court has jurisdiction to hear and determine:
‘any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or in consequence of the wrongful act, neglect or default of –
(i) the owners, charterers or persons in possession or control of a ship; or
(ii) the master or crew of a ship, or any other person for whose wrongful acts, neglects or defaults the owners, charterers or persons in possession or control of a ship are responsible,
being an act, neglect or default in the navigation or management of a ship, in the loading, carriage or discharge of goods on, or from the ship, or in the embarkation, carriage or disembarkation of persons on, in or from the ship.’
This widely-drawn provision therefore encompasses everything from accidents befalling employees on ships to passengers injured on cruise ships, including slips and trips and gastric illness cases. It is of course rare for cases in the latter category to require any specialist Admiralty knowledge or expertise and one wonders if, at the time of drafting, it was fully appreciated that the section would scoop up such claims.
Whilst section 20 grants the Admiralty Court jurisdiction over such claims, it doesn’t provide that the Admiralty jurisdiction is exclusive, nor does it oust the jurisdiction of the County Court. The County Court has a general jurisdiction to hear any action founded on contract or tort (s15 County Courts Act 1984) and claims made under statute (s16 CCA). It is CPR 61.2(1) that introduces the exclusivity of the Admiralty Court’s jurisdiction.
CPR 61.2(1) sets out an exhaustive list of the categories of claims which must be started in the Admiralty Court. The list includes collision claims, limitation claims, salvage claims and claims in rem; as well as claims for damage done by a ship; concerning the ownership of a ship; under the Merchant Shipping Act 1995; by a master or member of a crew for wages; in the nature of towage and in the nature of pilotage. Such cases clearly benefit from being heard in the Admiralty Court. The list also includes claims ‘for loss of life or personal injury specified in section 20(2)(f) of the Senior Courts Act 1981’ – it is this provision that precludes such claims being issued in the County Court, even if that court is the most appropriate forum (whether by reason of the value of the claim or because liability is admitted or questions requiring Admiralty expertise do not otherwise arise).
What then is to be done in the unfortunate circumstance of such a claim being issued in the County Court? Does the County Court have the power to transfer the claim to the Admiralty Court? If so, in which circumstances can that power be exercised?
In Meek v BP Shipping & Fyffes (2018) (unrep) a District Judge held that because a deafness claim arising out of the claimant’s employment on ships should have been commenced in the Admiralty Court, he had no jurisdiction of any kind (including the jurisdiction to transfer up) and no option other than to strike the case out. However, the Admiralty Court expressed its disagreement with that decision in the recent case of Linton v Seaprecius Shipping Limited Claim (8 April 2022) (unrep), a decision on an application under section 33 Limitation Act 1980 to disapply the limitation period in a personal injury claim. The Admiralty Court confirmed that the County Court can deal with a personal injury claim under the tort and contract jurisdiction conferred by section 15 CCA 1984; even if a case falls within the Admiralty Court’s jurisdiction pursuant to section 20(2)(f) SCA 1981, that does not oust the County Court’s jurisdiction. The County Court does therefore have the jurisdiction to transfer such cases to the Admiralty Court, so as to comply with CPR 61.2(1). The decision in Meek would in any event defeat the object of section 42(1) County Courts Act 1984. That section provides:
‘Where the county court is satisfied that any proceedings before it are required by any provision …to be in the High Court, it shall –
(a) order the transfer of the proceedings to the High Court; or
(b) if the court is satisfied that the person bringing the proceedings knew, or ought to have known, of that requirement, order that they be struck out.
The interpretation of s42 CCA has given rise to further confusion: does the ‘shall’ mean that where the court is satisfied that the person bringing the proceedings knew or ought to have known that the claim was required to be issued in the High Court (Admiralty Court), the court is bound to strike out the claim?
It does not. This question was also addressed in Linton, taking note of the case of Restick v Crickmore [1994] 1 WLR 420. Restick concerned the operation of s40 CCA (transfer of proceeding to the county court). S40 is worded almost identically to s42. In Restick it was noted that the Hansard record of the debate on s40 reveals that the words ‘if the court is satisfied that the person bringing the proceedings knew, or ought to have known, of that requirement’ were introduced to act as a hurdle to be overcome before the power to strike out could be exercised, due to concerns that the power to strike out might be used too often. The intention was not to make strike out mandatory whenever that condition was satisfied. Per Stuart-Smith LJ[1]:
“Save where there has been a contumelious disobedience of the court’s order, the draconian sanction of striking out an otherwise properly constituted action, simply to punish the party who has failed to comply with the rules of court, is not part of the court’s function”
and[2]
“It may be asked: in what circumstances should the court exercise the power to strike out? I would be reluctant to attempt to lay down any guidelines which might be thought to fetter the undoubted discretion of the judge. Where the action should plainly have been started in the county court, and the failure to do so was not due to a bona fide mistake, but can be seen as an attempt to harass a defendant, deliberately run up unnecessary costs, be taken in defiance of a warning of the defendants as to the proper venue or where a party, or more likely his solicitor, persistently starts actions in the wrong court, it may well be desirable for the court to apply the more draconian order of striking out.”
So, the correct interpretation of s42 is that the mandatory ‘shall’ applies once the court is satisfied that the condition in the first sentence is fulfilled (i.e. where it is satisfied that proceedings are required to be issued in the High Court). In such circumstances the court is required to do one of two things: either transfer the proceedings to the High Court or strike them out. It is only where the court is satisfied that the person bringing the proceedings knew, or ought to have known, that the proceedings must be issued in the High Court that it may strike the claim out, but that discretion is unfettered. In Linton, the Court held that transfer (from County Court to High Court) should be routine; it is hard to envisage where it could be fair and just not to do that; even amongst PI practitioners it is not widely known or appreciated that certain claims fall to be issued exclusively in the Admiralty Court, so fault on the solicitor’s part is excusable.
The judgment in Restick, and in particular the sentiment that the court’s function is not to punish a failure to comply with rules of court, was very much of its day. The courts nowadays generally take a less liberal attitude. In Butterworth v Lang[3] a litigant in person issued a claim in the County Court proceedings that should have been issued in the High Court. In determining an application for transfer under s42 the High Court had regard to ‘the sort of factors discussed in Denton’ (Denton v TH White Ltd[4]) but did not make a decision as to whether and to what extent Denton applies to such cases. In considering those factors, the court held that
(i) (seriousness of the failure) issuing in the wrong court was not ‘very serious’;
(ii) (reasons for the failure) litigants in person and indeed many lawyers would miss the jurisdiction point and this was therefore an ‘understandable error’ and
(iii) (all the circumstances) if the proceedings had been struck out then the claim could have been reissued in the High Court, which would simply have created more delay.
Wrongly issuing an Admiralty claim in the county court is not therefore a fatal disaster for the claimant, nor will it provide an immediate windfall success for the Defendant. It is likely that the appropriate course of action in such situations will be for the parties to agree to an order for transfer of the claim to the Admiralty Court, and thereafter to focus on litigating the real issues in dispute.
A note on the Linton decision is in the First Supplement to the 2022 White Book.
About the Author
Linda Nelson was called in 2000 and is ranked in both the Legal 500 and Chambers and Partners for her travel law work. Linda regularly advises in international personal injury cases with cross-border issues, particularly those falling within the jurisdiction of the Admiralty Court. She is well-versed in claims involving the international carriage conventions, the package holiday regulations, Merchant Shipping regulations, ship collisions and issues of jurisdiction, applicable law and limitation. She is a contributing author to Munkman on Employers’ Liability (writing the ‘Shipping and Workers on Ships’ chapter) and co-authored ‘Work Accidents at Sea’ (now in its second edition).
Costs and Protected Parties: EVX v Smith [2022] 6 WLUK 309
Introduction
This judgment of the Senior Courts Costs Office ought to be read by all those representing children and protected parties in cross-border personal injury litigation.
A solicitors’ firm applied for payment by way of deduction from damages awarded to their client in a clinical negligence claim. It arose out of an allegation that the Claimant’s GP had failed to diagnose and appropriately treat developmental dysplasia when the Claimant was five years old. The firm was instructed under a conditional fee agreement (CFA) in 2016 to bring a claim against the Defendant. This was settled for £225,000, and the Defendant agreed to pay £130,000 in respect of costs and interest.
Submissions
The firm averred that there had been a shortfall in the recovery of costs from the Defendant of around £28,000. The court was concerned about the hourly rates of the Grade C fee-earners, which had been billed at £235 – £240 per hour. For context, the 2021 Guideline Hourly Rates for a Grade C fee earner in the relevant area was £178.
In response the firm submitted that the litigation friend (the Claimant’s mother) had approved the hourly rates. Solicitors had explained to her the effect of the CFA terms, that costs would be claimed by way of shortfall from those recovered from the Defendant, and that she had given her express agreement to that. It was submitted that this approval constituted informed consent, and the litigation friend had not objected to any deduction.
Legal Background
The court was required to order a detailed assessment of costs payable by any party who was a child or protected party. Pursuant to CPR Part 46.9(3), costs were to be presumed to be reasonably incurred if they had been approved by the client, but were presumed to have been unreasonably incurred if they were of an unusual nature or amount, and the solicitor had not told the client that as a result costs might not be recovered. In order to benefit from the presumption, solicitors had to establish informed consent to the incurring of costs from the litigation friend.
Judgment
Costs Judge Brown held that there had been no informed consent to the hourly rates claimed, and therefore no presumption of reasonableness. In the absence of the requisite explanation, the rates were presumed unreasonable. In any event, the rates were clearly unreasonably high for the work done
The rates claimed for the Grade C fee earners, all of whom were either without qualification or recently qualified, were unusual. The claim carried significant risk and some complexity, but it was not of a high complexity. Further, to benefit from a presumption of reasonableness, informed consent had to be secured following a full and fair exposition of the factors relevant to it so that clients, who were lay persons, could reasonably be bound by it. If a solicitor informed the client that hourly rates were unusual and that as a result the costs might not be recovered from the other party, they would have greater protection against a contention that costs were reasonable.
Analysis
There are two points from this case which are of relevance to travel practitioners. First, in cases where there is an unusual hourly rate, the mere fact that a lay client has signed a CFA will not necessarily shield a firm. A Claimant’s informed consent requires them to understand and appreciate the unusual nature of the hourly rate, and the risk that it may not be recovered from the Defendant.
Second, the mere fact that damages are substantial does not automatically render a claim to be so complex that it requires rates in excess of the Guideline Hourly Rate. As Costs Judge Brown noted, the instant claim was not complex in terms of liability or quantum. It therefore could not be the case that such hourly rates were justified.
About the Author
Anirudh Mandagere has a broad practice across all areas of chambers’ specialisms, acting for both claimants and defendants, and is an enthusiastic and valued member of the travel team. Before joining 1CL Anirudh worked as a judicial assistant at the Court of Appeal and taught law at the London School of Economics.
…And Finally…
At 12 pm on 14th July Sarah Prager of 1CL will be joined by Rob Horner of 9GC in discussing How To Get the Most Out of Your Part 36 Offer; the link to register for the webinar is here: 1CL Webinar: How to Get the Most out of your Part 36 Offer – 1 Chancery Lane. We look forward to seeing our readers for an overview of what is one of the most important yet regularly misunderstood provisions in the CPR.
[1] at 427F
[2] at 428 D
[3] [2015] EWHC 529 (Ch)
[4] [2014] 1 WLR 3926
