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Articles | Mon 3rd Aug, 2020
This week we look two recent decisions relating to accidents abroad: the first, a High Court decision on the assessment of damages under foreign law for a catastrophic Spanish cycling accident, and the associated costs considerations (a case where Matthew Chapman QC acted for the claimant); the second, a Court of Appeal decision which sets out the law on permission to serve out of the jurisdiction.
Assessing damages under the applicable law: When is an issue-based costs order appropriate?
Assessing damages under the applicable (foreign) law is rarely straightforward.
Even where the facts are uncomplicated, applying foreign practices, conventions and guidelines often leads to wildly different positions on which heads of loss are recoverable and in what amount. The result is that judgment awards will often comprise victories and defeats for both parties. Should the relative success of the parties be reflected in an issue-based costs order? The issue arises frequently in practice and was addressed in the recent decision of the High Court by Mr Justice Cavanagh in Scales v Motor Insurers’ Bureau  EWHC 1749 (QB)
On 23 October 2015 the claimant, Martin Scales was gravely injured while cycling on the Camino de la Hoya in Almeria, Spain. His bicycle was struck by a car travelling in the opposite direction on the wrong side of the road. The driver of the car, Ms van de Plujim was uninsured and failed to stop at the scene. A claim for damages was brought against the MIB, which stood in the shoes of the Spanish Guarantee Fund pursuant to the EU Motor Insurance Directives.
Mr Scales succeeded at trial twice, first in a liability trial in 2018 (at which the Court found for Mr Scales on a 100% basis) and second, at an assessment of damages trial, at he was awarded damages of almost £540k.
The MIB nevertheless contended that the claim had failed in two respects. He had unsuccessfully advanced claims for care costs and future costs, which were outwith of the Spanish Baremo system. According to the MIB, these claims had failed by virtue of ‘established principles of Spanish law’ and had they not been pursued, the care expert evidence (which occupied a full day of trial) would not have been necessary. Whilst the claimant had beaten his Part 36 offer, the MIB argued that these failures were relevant to the assessment of costs both prior to and following the expiry of the relevant period of the offer.
CPR 44.2 sets out the Court’s general discretion as to costs. CPR 44.2(2) provides that the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but that the Court may make a different order. CPR 44.2(4)(b) provides that in deciding what order to make about costs, the Court will have regard to all of the circumstances including whether a party has succeeded in part of its case, even if the party has not been wholly successful.
CPR 36.17(4) applies where the judgment against the defendant is at least as advantageous to the Claimant as the proposals contained in a claimant’s Part 36 offer. CPR 36.17(4) provides that the Court must, unless it considers it unjust to do so, award costs on the indemnity basis, and as well as an ‘additional amount’.
The MIB invited the Court to disallow the entirety of the costs associated with the care expert evidence and a portion of the trial costs associated with that evidence and the basis that the issues on which the claimant had failed were relevant to CPR 44.2 and rendered the normal operation of CPR 36.17(4) ‘unjust’.
Cavanagh J referred to the decision of Stephen Jourdan QC, sitting as High Court Judge, in Pigot v Environment Agency  EWHC 1444 (Ch), on the correct approach to issue-based costs orders:
(1) The mere fact that the successful party was not successful on every issue does not, of itself, justify an issue-based cost order. In any litigation, there are likely to be issues which involve reviewing the same, or overlapping, sets of facts, and where it is therefore difficult to disentangle the costs of one issue from another. The mere fact that the successful party has lost on one or more issues does not by itself normally make it appropriate to deprive them of their costs.
(2) Such an order may be appropriate if there is a discrete or distinct issue, the raising of which caused additional costs to be incurred. Such an order may also be appropriate if the overall costs were materially increased by the unreasonable raising of one or more issues on which the successful party failed.
(3) Where there is a discrete issue which caused additional costs to be incurred, if the issue was raised reasonably, the successful party is likely to be deprived of its costs of the issue. If the issue was raised unreasonably, the successful party is likely also to be ordered to pay the costs of the issue incurred by the unsuccessful party. An issue may be treated as having been raised unreasonably if it is hopeless and ought never to have been pursued.
(4) Where an issue based costs order is appropriate, the court should attempt to reflect it by ordering payment of a proportion of the receiving party’s costs if that is practicable.
(5) An issue based costs order should reflect the extent to which the costs were increased by the raising of the issue; costs which would have been incurred even if the issue had not been raised should be paid by the unsuccessful party.
(6) Before making an issue-based costs order, it is important to stand back and ask whether, applying the principles set out in CPR r.44.2 , it is in all the circumstances of the case the right result. The aim must always be to make an order that reflects the overall justice of the case.
The Court decided that an issue-based costs order did not ‘reflect the overall justice of the case’. He considered that the care expert evidence fed into other heads of loss (on which Mr Scales had succeeded) and that the claims for future costs and care costs were not a ‘discrete aspect of the case’ but rather, the more ‘ambitious’ position of two alternative arguments.
The Court also rejected the argument that it would be unjust for the MIB to bear the full Part 36 consequences (including interest on costs and an ‘additional amount’). The MIB argued that (1) penalty interest had already been awarded as a matter of Spanish law and (2) the principle established in Moreno v MIB  UKSC 52, that the claimant is entitled to the same compensation that he would have been entitled to against the Spanish Guarantee Fund under Spanish law, would be offended if he were to receive these additional sums. The Court held that penalty interest in Spanish law penalises late payment whereas Part 36 penalises non-acceptance of offers and the awards are based on different considerations.
It is not uncommon for both parties to adopt extreme positions on quantum (provided there is at least some foundation for it in the applicable law) as a negotiating tactic. But where (1) an individual claim can be shown to be so unrealistic as to be ‘hopeless’ and (2) the costs of pursuing it can be clearly demarcated, a claimant may find himself at risk of an adverse costs order, even where he succeeds overall or even beats a Part 36 offer.
Despite the result in Scales, the decision is a useful reminder of the need for claimants to take a realistic approach and to look critically at the legal and evidential basis for each head of claim.
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.
Serving out: the tort gateway and the foreign law presumption
This week the Court of Appeal handed down judgment in Brownlie No. 2:  EWHC 2533 (QB). The question on appeal was whether the judge was right to give permission to serve proceedings on the Defendant, out of the jurisdiction.
This turned on two questions.
The first question was whether the requirements of the “tort gateway” in paragraph 3.1(9)(a) of the 6B Practice Direction were met. The “tort gateway” permits service out for a tort claim “where… damage was sustained… within the jurisdiction”. The question is, what constitutes “damage” for this purpose? The claim is in respect of a road traffic accident in Egypt, where the Claimant was injured and her husband was killed. The claim is for damages for the Claimant’s personal injuries; damages for the deceased’s estate; and the Claimant’s dependency claim.
The injuries and the death occurred in Egypt. Some of the losses were sustained in England. The Claimant argued that “damage” has a wide meaning and it was sufficient that significant damage had occurred here. The Defendant contended that “damage” has a narrow meaning and the damage was sustained in Egypt.
This very question was considered by the Supreme Court in Brownlie No. 1  1 WLR 192, when the majority agreed with Claimant. This was technically obiter, however, so did not bind the Court of Appeal in Browlie No. 2. The Court of Appeal majority approached the question on the basis they should follow the Supreme Court’s obiter view unless satisfied it was clearly wrong. They were not so satisfied, and accepted the Claimant’s arguments. The result is that there is now binding authority that, for the purposes of the tort gateway, “damage” has a wide meaning.
The second question relates to the requirement to show a “good arguable case” for the claims advanced. The applicable law is that of Egypt, so the question was whether there was a good arguable case under Egyptian law. Both parties had adduced expert evidence, but there were some gaps in the Claimant’s evidence. The Defendant argued that this meant the Claimant could not show a “good arguable case”. The Claimant sought to rely on a presumption that foreign law is the same as English law. This presumption was upheld by the Court of Appeal majority, who point out that it is a rule of evidence, applying in the absence of evidence of foreign law on a particular point. The Court of Appeal also noted that the presumption is a default rule – and there are exceptions to it, where applying the presumption is too problematic to be appropriate, and also that it may be in the interests of fair and effective case management to depart from the default rule in a particular case.
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.