Tuesday, 12 July 2011

Fox v Foundation Piling Ltd [2011] EWCA Civ 790: Fox kills Woolf

One of the advantages in being a judge in charge of an investigation is that you can effectively implement your own investigation in your own court.   So Lord Justice Jackson, tasked with sorting out the court service and expense of litigation, could then give common law guidance in his judgments.

Although given one of his first judgments I’m not sure that’s totally a good idea.  Nemo iudex and all that.

The case of Fox is a typical personal injury claim where the claimant basically lies about their injury.  To any doctor, “oh, it hurts, I’m dying”; when nobody’s looking, star midfielder in a Sunday league team.  Insurers are wise to this and often send out surveillance teams to take sub rosa footage.  As they did with Mr Fox.

Mr Fox fell over while carrying something heavy.  Hurt his back.  Naturally he sued his employer.  Whose insurer took video footage.  Which showed that Mr Fox was walking sans problem towards the hospital for an examination, until he got within sight of the spinal clinic, whereupon he produced a walking stick and started limping.

Mr Fox was suing for the hundreds of thousands; the insurer took a view and had thrown a little over sixty grand into court.   Once the insurer appreciated the surveillance evidence it cut that in half.  Mr Fox took it – and sought his costs.  The insurer said, hang on, we’re entitled to the costs between our initial payment and your accepting.  We really won over that period.  The court agreed with the insurer, and said that even had the payment not been reduced, Mr Fox’ mendacity – be it conscious or subconscious – should preclude him from getting costs.

Now, judges have a wide discretion over costs.  The Court of Appeal has often stated that it will not interfere with a judge’s general appreciation of the whole thing; it takes a special case to get in the way.  Yet on appeal Jackson LJ decided that he would interfere.

Jackson looked at previous cases where judges had deviated from the loser pays principle.  Usually on the basis of misconduct of the party, or a massive exaggeration of a claim.  Not dissimilar to the Fox case.  The problem was that the insurer had sat on video evidence for a number of years.  Why was it not disclosed sooner?  Mr Fox would have conceded the lower payment a lot earlier.

Regardless, Jackson has re-booted the costs position.  He says that departing from loser pays has gone on far too much.  It involves significant additional cost litigating the litigation itself.  Whereas that may do justice for an individual case, he said, it causes problems for other court users.  Therefore it is better to take a strict line for the benefit, and certainty, of all.  Mr Fox therefore got his costs.

Which basically destroys the whole point of the Woolf reforms of doing justice between the parties, of encouraging a proportionate approach to litigation.  Why should a judge bespoke a costs order now?  Given Jackson’s dicta, it seems the ends do justify the means.  Jackson’s insistence on certainty may have a wholly deleterious effect.  Party A can get its expensive lawyers to go to town on Party B, grinding it into oblivion, knowing it won’t have to pay the penalty so long as it gets the slightest win.  Party A sues for £100m, Party B offers £10k to go away, case goes to court for three months and Party A gets £11k – yet per Jackson B would pay all of A’s costs…
It seems particularly egregious given the Court of Appeal’s decision in Medway Primary Care Trust v Marcus [2011] EWCA Civ 750.   In that one the Court took a far more robust view against a claimant that recovered a minute proportion of a claim.  Mr Marcus had a leg amputated and his damages were agreed at around half a million quid; the question was whether the amputation was the hospital’s fault or just one of the vicissitudes of life.    The court found that it was the latter, and the only claim was for the pain and suffering Mr Marcus suffered for a couple of days whilst the hospital faffed around with investigating what Mr Marcus’ problem was.  He got two grand for that.

Mr Marcus claimed he had won, albeit just a quarter of a per cent of his claim, and therefore he should get his costs; if the hospital thought the claim was OTT it should have made an offer.  The hospital said it was stymied.  Had it offered the right amount of claim (£2,000) using the Part 36 mechanism, and Mr Marcus accepted the offer, as a consequence of the rules the hospital would have been on the hook for his costs, including success fee uplift; costs that were estimated at £100k – for what was pretty much a small claim.  Fair?

Court of Appeal decided it wasn’t.  The hospital had won the case.  The tiny claim they’d lost on was not the major focus of the case – indeed it was thrown in almost at trial as an afterthought – and the starting point should have been that Mr Marcus pay the hospital’s costs.  The Court of Appeal applied a 25% discount on those costs because of some questionable case strategy (late admissions, that sort of thing) but even though Mr Marcus “won” he ended up losing.

There was a dissent.  Which was that Mr Marcus had won, albeit only technically, ergo he should get his costs.  Forget Woolf and the whole issue by issue thing.    If the hospital had bunged the right amount into court, rather than zero, it would have had an argument that the £100,000 in costs it was facing was disproportionate.  And therefore get it decimated on costs assessment.  As the hospital didn't pay into court, it should bear the consequences of losing the case.   I.e. paying Mr Marcus’ costs.   To be fair, “just” 50% of them as a penalty to Mr Marcus for an unwitting exaggeration.  A gigantic costs liability for a tiny claim.  The dissent of course does not bind.  The dissenting judge?  Jackson LJ.

It seems to me that these two cases are difficult to reconcile.  One demands certainty even when it causes injustice to the instant parties, the other demands a finger-in-the-air exercise to do overall justice to the merits.  Perhaps one will go to the Supreme Court.  If so, which will the Supremes prefer?  Woolf’s reforms or Jackson’s?

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