Update: personal injury

The Court of Appeal's ruling in C (A patient acting by her litigation friend, Jocelyn Fox) v W [2008] EWCA Civ 1459 illustrates the importance of accurately assessing risk success fees.

The respondent (C) entered into a conditional fee agreement (CFA) with solicitors after the appellant (W) admitted liability. This agreement included the Law Society's standard clause that C would not be liable for costs following the date of notice of a Part 36 settlement offer if it was rejected following the solicitor's advice, but not beaten at trial. Taking account of the risks associated with this and other factors, the CFA provided for an elevated success fee of 98 per cent.

High risk of success

The Court of Appeal disagreed with this assessment. The chance of success was actually very high because (a) W admitted liability and (b) there was no indication of anything other than W's negligence causing C's accident. The risk associated with advice on a Part 36 offer was a different matter and considered difficult to assess. However, PI solicitors would have sufficient experience of advising on quantum to minimise such risk '“ meaning a much reduced success fee of 20 per cent was held appropriate.

The court considered it not unreasonable to enter into a CFA in such a relatively 'dead cert' case where liability is admitted provided a proper risk assessment is made. It acknowledged the difficulties associated in calculating risks following Part 36 offers, but suggested that a way around this may be to apply a two-stage success fee (Callery v Gray [2001] EWCA Civ 1117) which would entitle the solicitor to review the success fee once an offer was made. In any case, it was held that any difficulties in assessing risk did not make it unreasonable to enter into a CFA.

It is interesting to note the costs judge initially considered a success fee of 70 per cent appropriate. On appeal this was reduced to 50 per cent, following which the Court of Appeal reduced the figure again. No doubt further extensive costs were expended in preparing for both appeals, which regrettably C's solicitors would have lost. There is therefore a danger in overestimating the risk and, while the courts appear sympathetic to cases where assessment is difficult, the margin of error may not be as large as hoped.

The 'but for' test

There was further discussion regarding when it is appropriate to depart from the 'but for' test in Environment Agency v Christopher Ivan Ellis [2008] EWCA Civ 1117. Unlike cases where there are multiple defendants and/or the injury is divisible, Mr Ellis (E) claimed damages following a single incident involving one responsible defendant. His opponent (X) argued his injury had multiple causes which justified a departure from the 'but for' test (relying on Holtby v Brigham & Cowan (Hull) Ltd [2000] ICR 1086 and Allen v British Rail Engineering Ltd [2001] ICR 942).

E injured his back while working for X, and was later alleged to have injured himself again in another accident (not X's responsibility). At a later date, his back gave way at home causing injury to his knee. Also, at the time of the first accident, he had pre-existing spinal degeneration.

The trial judge held that 'but for' the original workplace accident, E would not have sustained his knee injury. He then found that 'but for' the initial accident, E would have had lumbar problems anyway due to spinal degeneration. Therefore, and because he considered a defendant should only be responsible for the consequences of his own act and nothing else, a reduction in damages was considered appropriate. This was assessed at 10 per cent which also took account of the second accident, which was regarded as a contributing factor.

The Court of Appeal agreed with the judge's finding of a causative link between the first accident and the knee injury (which was supported by joint expert evidence) but disagreed with his reasoning that led to a reduction in damages. The court considered he had incorrectly applied the 'but for' test, which should have resulted in an outcome which was all or nothing, and it could not be used to reduce damages.

Regarding X's contention for a departure from the 'but for' test, Holtby and Allen were considered exceptional. Such departure should be restricted to cases of industrial disease or divisible injury (arising from exposure from various sources) cases where it was unjust for a defendant to bear the full burden. E's case was not exceptional '“ he sustained a single indivisible injury arising from a single accident.

While it makes sense for defendants to contend that the sum of damages they pay should reflect the level of their responsibility, it is clear that a court will look at the broader picture and consider the prejudice to both parties.

The 'material contribution' test

The alternative test, 'material contribution', was established in Fairchild v Glenhaven Funeral Services [2003] 1 AC 32, which found for the claimant because of the difficulties of proof faced by mesothelioma (cancer of the lining of the lungs) sufferers in multiple asbestos exposure cases. Mesothelioma can be caused by low-level asbestos exposure making it impossible to identify the causative source, especially where a claimant may have been exposed to asbestos in several places.

It was this unique scenario that justified a departure from the 'but for' test.

Conversely, the test was considered to prejudice defendants in cases involving divisible harm, such as Holtby, where the claimant developed asbestosis. The mechanism of development of asbestosis is different to mesothelioma, because the extent and duration of asbestos exposure directly impacts on causation. It was therefore considered unjust to heap the whole burden on one defendant as the cause of some of the damage (asbestosis) may have arisen from significant asbestos exposure elsewhere. E's case lacked any such unique factors and it is clear any departure will only be applied in exceptional cases.

Interfering with first instance decisions

Ebden v Richardson [2008] EWCA Civ 1589 serves as a reminder of the Courts of Appeal's reluctance to interfere with first instance decisions, even though the trial judge in this case was seriously misled regarding relevant evidence.

Mr Ebden (E) was assaulted by the appellant (R), who caused serious head injury. His personality changed, and the medical evidence confirmed that the injury affected his ability to concentrate and multi-task and made him forgetful. It was claimed that these symptoms affected his ability to look after himself, and he claimed future care costs.

However, E was later able to successfully apply for and resume his old job as a taxi driver. R questioned his future care claim and sought disclosure of his DVLA application, which would have included medical records evincing his ability to work. At the quantum hearing these were not disclosed, so R sought an adjournment. At trial, the judge was misled to believe R only requested these records once and did not pursue them thereafter (this was not true). Therefore, the trial judge concluded they were of insufficient importance to justify adjournment and disallowed it.

The Court of Appeal acknowledged that the trial judge was seriously misled concerning 'disclosable and relevant' evidence. It was accepted that the trial judge might have granted the adjournment if he was not mislead. However, the main issue was whether this evidence affected the medical evidence and the case as a whole. The court acknowledged that these records were relevant to whether E exaggerated his symptoms, but E's own evidence (particularly his wife's statement and future care expert's report) showed this was not true. Also, the trial judge was already aware E successfully applied for the job, so it was implied that he took this into consideration. Therefore, the Court of Appeal considered these records would not have affected the assessment of damages and the appeal was dismissed.

This case highlights the difficulty in appealing first instance decisions even where a trial judge is seriously misled into making an incorrect decision not to grant an adjournment. The key issue is whether any error affects the case as a whole. Also, and rather remarkably, the appeal court seems to have decided the issue without even viewing the missing relevant records.

Reversing the burden of proof

The question of when the burden of proof is reversed was considered in Hall v Holker Estate Company Ltd [2008] EWCA Civ 1422.

The appellant (H) was keeping goal during a football game played on a site owned and operated by the respondent (R). While trying to retrieve the ball from the back of the net, H caught his leg on the net and fell over. The goal then tilted and the cross bar hit him in the face causing injury.

The trial judge found that the accident would not have happened if the goal was properly secured to the ground with pegs. Also, R was aware that other site users had removed the pegs and that this had created a risk for which a regular system of inspection was required. However, he regarded H's accident as an unusual occurrence because there was no evidence of other incidents of the goal tipping over. From this, he seemed to infer that a safe system must have been in operation. In addition, he found the goal was not in a defective state for a 'very long' period of time. Therefore, H's claim was dismissed.

H successfully appealed. The Court of Appeal considered that H had the 'overall' burden of showing the accident would not have happened for want of care by the defendants. Once this was established, the defendant could escape liability by evidence or reasonable inference that the accident was likely to have occurred even if there was a proper and adequate system of inspection (Ward v Tesco Stores Ltd [1976] 1 A LL ER 219 followed).

In this case, H proved the accident was caused by a lack of safety due to defective anchorage. Also, he showed this created a risk that was known to the defendants for which they had accepted a duty of regular inspection. This established a prima facie case, following which the burden of proof shifted to R to show that (a) they implemented an adequate system and (b) despite such implementation, the accident was likely to have occurred anyway. Here, R failed to satisfy this burden and the trial judge was wrong to draw an inference as to the adequacy of R's systems just because there was no evidence of other similar accidents.

It is interesting that the defendants failed to provide evidence from any employees about the system of pegging nor any evidence of knowledge or risk assessments regarding the danger posed nor how often inspections were undertaken. They only provided a general risk assessment, which did not deal with this particular safety issue.

This case not only highlights the importance of undertaking proper risk assessments and implementing suitable systems but also shows that it is essential to maintain full records of assessments and procedures which can be used to satisfy the burden of proof.