The Dekagram 3rd April 2023

News

03/04/2023

As we hurtle towards Easter next weekend, passing the Equinox, cautiously welcoming Spring (we’ve been caught prematurely celebrating the passing of Winter before), and preparing for the inaugural Deka Easter Egg Hunt, our chick- and bunny-based musings were rudely interrupted by two chillingly worrying decisions this week. The Court of Appeal, in Gorbachev v Guriev [2023] EWCA Civ 327, has given respondents to applications for third party disclosure free reign to raise unmeritorious jurisdictional challenges; but never mind about that. More worryingly for barristers and solicitors, it has also given clients free reign to sue us for failing to advise on settlement as to the availability of awards for provisional damages. For those of us working in cross border disputes, in which the availability or otherwise of such awards can be a rather less straightforward question than one would wish, very great care must be taken in advising clients as to the finality of settlement awards and as to the desirability of keeping options open in respect of future claims, both domestically and in the foreign courts.

Next week the team will be in a chocolate-induced coma, but the Dekagram will return on 17th April, by which time preparations for the Coronation will be in full swing and we will be in a position to report back on the deliciousness of our new Whitley Neill Coronation Gin. There may even be a competition for the honour of nominating the new Deka Chambers Cocktail or Mocktail – the 1CL French 75 having been retired after the merger, after some pretty stellar service (thanks to Nathaniel Martindale for that nomination – can you make it two for two?).

Professional Negligence and Provisional Damages: Witcomb v. Keith Park Solicitors [2023] EWCA Civ 326

“Hi, you helped me with a personal injury claim about my ankle a number of years ago and I understand that we made a final settlement.  Unfortunately, I’ve just been advised I need to have the foot amputated.  Please could you advise me if there is any possibility of reopening my case as this was not factored in in the original claim?”

Nobody wants to receive that email.  But one personal injury solicitor did, 7 years after a JSM at which his counsel had advised his client to accept £150,000 in respect of a lower limb injury.  Ten years after the JSM, the client sued solicitor and counsel.  The alleged negligence consisted in undersettling by failing to claim provisional damages excluding amputation.

Can we really be sued ten years after a JSM?  Yes, in cases of latent damage.  Section 14A of the Limitation Act 1980 applies to negligence claims where the date of knowledge post-dates the negligence.  The limitation period is 3 years from the date of knowledge.  “Knowledge” has two components: (1) knowledge of the damage; and (2) knowledge that that damage was attributable to the defendant’s act or omission.  A claimant has knowledge even if he doesn’t know that the relevant act or omission was a breach of duty.

In this case, the defendant solicitors and counsel argued that the client had had all relevant knowledge as at the date of the JSM, such that this was not a latent damage case at all.  They had been at pains to advise the client that £150,000 might not be enough if his ankle got worse.  They knew from the medical evidence that there were future risks, and they advised him accordingly.  All the claimant needed to know, to start time running against him, was that he had not got protection against the risks he knew about.

The Court of Appeal rejected this argument.  The point was that the lawyers hadn’t advised the claimant of the existence of provisional damages orders.  How was he supposed to know that such a settlement was a possibility?  Time didn’t start to run against him until he found out about provisional damages orders, presumably (the judgment doesn’t say) when he consulted Field Fisher solicitors, 8 years after the JSM.

Does this mean we have to keep our files forever?  Hopefully not, since s.14B of the 1980 Act provides a 15-year longstop after which no claim for negligence can be brought.

About the Author

Ben Rodgers was called in 2007 and now specialises in personal injury work with an emphasis on accidents abroad, including maritime accidents (he is himself an excellent sailor). He is listed for personal injury in the Legal 500, where he is said to be ‘go-to counsel for complex liability disputes; calm and composed, but will fight ferociously when required.’

Costs, Jurisdiction and Non-Party Disclosure: Gorbachev v Guriev [2023] EWCA Civ 327

We all know that the usual costs rule is that costs follow the event; that is to say, the losing party generally pays the winning party’s costs. But the universal application of this rule has been eroded over the years following the implementation of the civil procedure rules and their many amendments, and there are now so many exceptions to it that it may be that it will soon no longer be ‘the usual rule’ at all. A recent decision of the Court of Appeal illustrates a further area in which the rule is not applicable.

The underlying proceedings arose out of a dispute between the first respondent and the third respondent over an interest in a valuable Russian fertiliser business. One of the issues was how the first respondent had been financially supported through two Cypriot trusts, of which the appellants were two of the trustees. The appellants had been advised by solicitors in England, and the solicitors held potentially relevant documents in electronic form. The first respondent sought non-party disclosure against the solicitors under CPR31.17  and s.34 of the Senior Courts Act 1981. He was granted permission to serve that disclosure application on the appellants out of the jurisdiction under gateway 20 in PD6B3.1. The appellants applied to set aside the order on the basis that the court had no jurisdiction to permit service out of the jurisdiction of a disclosure application against a foreign non-party and/or should not have exercised that discretion (the jurisdiction application).

The judge dismissed the jurisdiction application. The question then arose: who should pay the costs of the application? The usual rule was that costs in an application should follow the event; the jurisdictional challenge had failed, and usually, therefore, the appellants would have to pay the costs of it. Under CPR46.1(2), however, the general rule was that the court would award the person against whom the non-party disclosure order had been sought the costs of the application, unless the non-party had acted unreasonably.

The judge at first instance ordered the appellants to pay the first respondent’s costs, on the grounds that costs followed the event in the usual way. He held that the jurisdiction challenge was a self-standing application and that CPR46.1 was inapplicable.

The Court of Appeal subsequently dismissed the trustees’ appeal against the substantive decision on jurisdiction and the Supreme Court refused permission to appeal.

The appellants had also appealed the costs decision, however, and on this appeal they were successful.

The Court of Appeal held that the general rule in CPR46.1(2) applied to the ‘costs of the application’, that is the disclosure application under CPR31.17 and s.34. The issue was one of construction, namely whether the costs incurred in relation to the jurisdiction application came within the description of ‘costs of the (disclosure) application’. The answer was yes, both as a matter of the letter and the spirit of the rule. It was apt to describe the costs of the jurisdiction application as part of the costs of the disclosure application against the trustees because the jurisdiction challenge was one of two bases on which they had resisted disclosure. A non-party could legitimately seek to protect the privacy of its information by challenging jurisdiction as well as, or instead of, challenging the merits of the application. The jurisdiction challenge, if successful, would have that effect. There was no reason, as a matter of language or logic, why costs incurred in such an endeavour were not within the rubric of costs of the disclosure application. As a consequence of this reasoning, the judge had erred in treating the jurisdiction application as a self-standing application which took the costs outside the scope of CPR46.1. There was no basis for the general rule (in third party costs proceedings) being displaced. The first respondent was ordered to pay the appellants’ costs of the jurisdiction application, therefore.  

Comment

This decision is a cautionary tale. The respondent sought disclosure, and in response the appellant unsuccessfully challenged the jurisdiction of the court. Notwithstanding that this challenge was not something the respondent had invited or wanted, and that it was unsuccessful, the respondent still ended up paying the costs of it.

Those of us brought up in the common law tradition may feel that this is a strange result, and, furthermore, that it is a result not necessarily foreshadowed by CPR46.1(2), which deals with the costs of the disclosure application itself but says nothing about related satellite litigation. Nevertheless, the Court of Appeal has spoken, and would-be seekers of disclosure from foreign entities would do well to heed the decision. In future care will need to be taken in seeking third party disclosure from abroad; it would be open to respondents to any such application to bring weak jurisdictional challenges in a risk-free bid to delay matters and run up costs, knowing that the bill will ultimately be paid by the party seeking disclosure. Shrewd use of Calderbank offers will need to be considered at as early a stage as possible in order to limit the consequences of the decision.

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 Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, 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 undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases. She was appointed a KC in March 2023.

Featured Counsel

Sarah Prager KC

Call 1997 | Silk 2023

Ben Rodgers

Call 2007

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