Thewlis v Groupama Insurance Co Ltd [2012] EWHC 3 (TCC): costs, costs and more costs

The Court likes it when parties settle; Part 36 of the Civil Procedure Rules sets out a great way for parties to make offers, with swingeing penalties for anyone who does not accept a reasonable solution.

Trouble is Part 36 has spawned plenty of litigation, with even more costs...

You would think it would be simple common sense, but no, when lawyers get involved common sense gets thrown out of the window and it's up to judges to put it back together again.  E.g. stating that you can't accept an offer if your case has been slung out.  Or working out what happens if your offer is exactly right, or you hide a big chunk of claim till the last minute.

In Thewlis the question was whether an offer had been accepted.  If it had, end of case; if not, it continued.  At least the parties had got sufficiently close to work out that an offer to settle had been made in 2008 and someone had tried to accept it in 2011.  Question was whether they could. Under a contractual regime it would have been simple - three years is far too long to wait to accept an offer, nobody would have thought the offer was still out there - but Part 36 is statutory and different rules apply.  Could an offer made in 2008, and expressed to be open for 21 days, still be open in 2011?

The problem was that the offer did not comply fully with the provisions of Part 36 - the offer letter said that it could only be accepted after 22 days or later if either the costs are agreed or the Court gives permission.  The Court had previously held that any ambiguity should be dealt with by reading the letter as according with Part 36 as far as it could, so that little provision - which was kicked out of the Part 36 regime by a revision to Part 36 not long before the offer letter was sent, which meant that costs would be automatic, rather than agreed - should be read accordingly. 

The Court refused to do so, in a tortuous attempt to say that, if a letter says "Part 36" in it and then contradicts Part 36, it cannot be a Part 36 offer.  Essentially saying that the solicitor writing the letter misquoting the provisions of the part had taken it outside the part - even though he was doing his damnedest to get it within the part and the solicitors on the other side had not taken the point.

To my mind this is an extremely tenuous ruling and one that does not help the position at all; a Part 36 offer is an offer subject to Part 36 and the somewhat loose wording can easily be read to mean that it was still a Part 36 offer.  After all, if the parties did not agree on the costs following, because there was a dispute over the amount (say), the Court would rule in accordance with Part 36.

More to the point, and conspicuously absent from the judgment, is Rule 1.  Effectively "justice must be done".  We have a Part 36 offer, never withdrawn, always on the table, that the Court decides, 3 years later, when the offeror is not keen on it, is not a Part 36 offer.  Is that really just?

Weddall v Barchester Healthcare Ltd & anor [2012] EWCA Civ 25: frolicking

When is an employee not an employee?  When they're not at work. Sometimes.  When are they at work?  When they are working.  Or sometimes not working.

Confusing?

It's simple enough, when one works out what the problem is.  Someone gets injured by someone else, they sue; they need deep pockets to pay damages.  The average individual is not going to be able to afford it.  But their employer might, especially as the employer will be insured; the deepest pockets of all are those of the insurance company.

So the injured party will do their damnedest to get the employer on the hook.  And the court often helps them.  Because it's all about justice.  Someone is injured; someone should pay.  Should that someone be the injured party - who is innocent and hurt - or the employer - who MAY be innocent but certainly IS unhurt?  Besides which, shouldn't the employer notice it has idiot employees?

The court has therefore developed various doctrines to put an employer on the hook.  There are generally three categories.  One, the employee was doing something for the employer.  Delivering material, operating a crane, whatever.  That's easy enough; if they do that negligently, then their negligence is their employer's.  Not controversial.

A second is if they're on a 'frolic of their own'.  They're doing something their employer has told them not to; it's nothing to do with work.  They're drunk as a lord and heading for a party in the company van.  The employer will not be liable.

There is the third category.  What if they're frolicking at work?  Some bright spark has the idea of human ten-pin bowling in the factory, for example.

This is where it gets tricky.

And this is where the two cases here come in.  Mr Weddall is the headliner, he was a manager at a care home needing someone to fill a shift; he rang a chap called Marsh to suggest he come in for a bit of overtime.  Marsh did come in, basically to punch Mr Weddall's lights out and announce he was quitting.  A large amount of drink was involved.

The second case heard with it involved another manager, Mr Wallbank, who ran his own firm and ended up suing it (remember the insurer would pick up the tab).  One of his employees = Brown - bodged a manufacture load and Mr Wallbank had a go at him, and started to help.  Brown's reaction was to shove Mr Wallbank through a table, chipping a vertebra.

So the question in these cases was whether the employer was responsible for the actions of their employee.  The court of appeal found Mr Weddell's case easier to deal with.  Marsh was not at work when he was called; he was not at work when he turned up.  He had never said he would work the extra shift.  Indeed the last thing he wanted to do was work it.  His punching of Mr Weddell was entirely his own decision, it just happened to be that it took place at their place of work.  Mr Weddell's claim was against Marsh alone - there was no employer liability.

The other case was trickier.  It looked similar, an unprovoked battery, but there were some crucial differences.  Brown was still at work, and, what's more, was undertaking a task of work at the time; Mr Wallbank was lifting the load of stuff that had to be put into an oven.  Brown's attack was in a work environment.  The attack, it was found, was because he objected to Mr Wallbank's orders to him; the attack was directly caused by something arising from work.  That was a close enough connexion to work to make his employer - Mr Wallbank's company, remember - liable.  Had it been a "mere" random battery, perhaps Mr Wallbank used a football taunt, for example, then perhaps the employer would not have been liable; in the circumstances, the Court of Appeal decided it was just about close enough to employment to count.

The moral of the story?  Try to get injured at work by someone working.  (NB: not legal advice.)

Glatt v Sinclair [2011] EWCA Civ 1317: flogged senseless

Bankruptcy.  A status that is sadly increasingly common in these increasingly straitened times.  You lose control over what you have.  Someone else comes in and takes control, and does their best to pay off your creditors.  Without sentimentality.
 
You are reliant on them making sure that they get as much in as possible.  You don’t want to see the precious heirlooms sold for a song and stopping you from keeping hold  of some other stuff once the creditors are satisfied.  Question is, what can you do if you think the trustee in bankruptcy is short-changing you?
 
You sue for breach of duty.   That’s what Mr Glatt did in similar circumstances – the taxman had put in a receiver over his property, and the receiver started flogging everything off.  One of the things Mr Glatt had was some property in Hendon.  Swish.  The receiver got a valuation of the property from proper valuers.  They reckoned a third of a million.  The receiver had an offer for that and duly sold it.  The purchaser, that very same day, put it up for re-sale.  At nearly half a million.  Within four months the purchaser flogged it off for a sweet £125k profit.
 
Mr Glatt was seriously dischuffed at this; the receiver, he said, had done him out of a six figure.  The receiver pointed to the valuation it had received.  The test was behaving in good faith, and taking reasonable steps to receive a proper price – one that was the best price reasonably obtainable.  The receiver had done so; he had gone to a building society rather than some hand-in-glove-with-developer cowboy and pitched the price appropriately.  Indeed he had turned down a couple of offers for well below.  The purchaser just got lucky.  The third of a mil was the best price reasonably obtainable.
 
Mr Glatt duly sued, almost on a res ipsa loquitur basis; the property sold for over four hundred k, so selling it for three hundred was self-evidently rubbish.  The receiver asked the court to kick out the claim on a summary judgment basis, i.e. it had no chance of success and there was no reason to wait for trial.  The application succeeded.   The receiver had done everything a competent receiver should have done; get a proper valuation, put it up for sale through a proper estate agent and got the market price.  Mr Glatt appealed.
 
Mr Glatt had an advantage on appeal.  As it was from summary judgment, evidence had not been heard; the judge was content to consider that the legal case was so strong, no evidence was necessary.  As soon as you bring evidence into summary judgment applications, the court is going to think a trial is necessary so a trial judge can look at the witnesses.  So would not allow the application.  Mr Glatt therefore could win by showing that witness evidence would make a difference.
 
So the Court of Appeal looked at the legal case being put forward and sought to see whether there were any areas where witness evidence may have been useful.  Choosing a bona fide agent?  That was taken for granted, no need there.  Reliance on valuation?  Seemingly OK.
 
The area on which the court alighted was the marketing.  What was done to sell it?  An advert in a local rag that generated three offers.  The last of which was then increased pretty sharpish.  Suggests that the property was in some serious demand.  Yet the receiver accepted the last, increased, offer.  OK, it matched the valuation; but maybe that valuation was now out of date?
 
The court wanted therefore to look at the advert.  How much was the property on offer for?  What had the estate agent done to bump up the price?  With three offers from one advert, did they wait for a second advert to generate more offers?  Had anyone gone back to the lower offerors and told them that they were well short?  The court did not know any of these details.  The advert had not been offered in evidence.  These were all questions the court thought needed answering before the receiver’s actions could be judged pukka.  For which witnesses would be needed. Ergo, the matter should go to trial.  The appeal succeeded.
 
Mr Glatt’s claim may well fail.  There may be very good reasons why the property went up by a third in four months.  But the court’s message is that that has to be tested out.  Summary judgment is a difficult thing to nail, you’re saying  no amount of persuasion will turn a bad case into a runner.  This one is not a bad case legally – there is something there in law, a full trial is needed to see if there’s the scaffold of evidence to support it.

Woodland v The Swimming Teachers’ Association & others [2011] EWHC 2631 (QB): deep end

Another sad personal injury case; the crumb of comfort in this one was that damages were definitely going to be paid to the claimant, it was “just” a demarcation dispute as to which defendant would pay up.

There were five of them; the STA, a lifeguard, a swimming teacher, Essex County Council and Basildon District Council.  The scene was a school swimming lesson in Basildon; the lessons were put on by the swimming teacher, she employed a lifeguard, Basildon owned the pool and Essex ran the school.

Annie Woodland was a good swimmer and had been put in the top group, but something went wrong.  She was spotted in the pool unconscious and underwater.  She suffered serious brain injuries.

Damages are to be determined, and will be paid by an insurance company; but which insurer?   Everyone involved may have had some contribution to the accident.  This particular case saw Essex trying to get the case against it thrown out.

And it did.  It did not involve any development in law – indeed this was the point Essex made; the law on this was well-established, Essex did not owe a stringent duty of care to each and every individual pupil.  Like any parent, it could arrange school visits and suchlike and expect those in charge of those visits to look after the children.

The interesting aspect of the case was the attempt to widen this duty by Annie’s QC.  He argued that the nature of the duty had changed over time, and that other jurisdictions – he cited a Queensland case – had said that the local authority could not delegate the duty of looking after a schoolchild while at school.

The law on duty has changed over the years; back in Victorian times the courts, staffed by the gentlemanly or noble classes, were quite keen to protect factory or landowners, who also came from the gentlemanly or noble classes.  Duty was extremely narrow.  The gate to the garden of compensation was flung open when Mrs Donoghue suffered a toxic shock from thinking she may have ingested an involuntary gastropod; they were widened further over the years until Junior Books v Veitchi practically demolished the fence.  Which has been re-constructed over the years to get back to where we were in about 1971.

But the “who is your neighbour?” test is flexible – it is perhaps unsurprising that Annie’s QC tried to extend it once more to the local authority.  After all, that would forestall any risk of winning against a defendant who could not pay and whose insurers declined to step in.  It did not work in this case, as the Court stood on its existing principles rather than budge them.  Sound reasons, too, such an extension of liability would have an effect on insurance, and would open up the floodgates to other claims – babysitters are one thing, but imagine a school football coach’s liability for a foul by one of his pupils, and extending that to the local authority employer – but nobody can say that that will never be opened in future.

Shah & anor v HSBC Private Bank (UK) Ltd [2011] EWCA Civ 1154: the silent whistle

Mr Shah banked with a private arm of HSBC.  In September 2006 he wanted to transfer out $30m; in February 2007 he wanted to transfer out another $9m.  They were to go out in four tranches.  The smallest tranche (by far) of $7k was to go to an ex-employee.  HSBC however smelt a rat.  Was this money laundering?  The money had only come into his account in July 2006.  HSBC therefore put a stop on things; none of the transactions went through.
 
The ex-employee, stiffed out of his small payment, was extremely disgruntled.  He grassed Mr Shah up to the Zimbabwean authorities as a suspected money launderer.  Zimbabwe therefore froze Mr Shah’s assets; Mr Shah in turn sued HSBC for mucking him around.  For $300,000,000.
 
HSBC relied on defences in the Proceeds Of Crime Act 2002 that let it hold on to the money while it reported matters to the authorities.  The problem was HSBC had to swear that its staff had suspicions, and HSBC was extremely keen to keep the members involved anonymous.  Just in case.  So HSBC brought out the various documents that had been pinging internally, and blanked out the names of the lowlier employees.  Mr Shah said that they had to be disclosed; standard disclosure, after all, dictates the whole of any relevant documents be shown to him.  Maybe some of the staff bore him grudges?  They had acted maliciously?  He needed to cross-examine to check.  He even identified a couple of employees that might have reasons to dislike him.  HSBC still refused to un-cross out the names; Mr Shah applied to court to force HSBC to do so.
 
The court was not impressed.  The judges thought Mr Shah was fishing.  Under the Civil Procedure Rules there was no need to disclose the employees’ names.  Mr Shah had identified no pressing need and even if an employee had acted out of malice the decision to hold up his money had been taken by someone else - the money laundering officer.
 
This was in some ways an unfortunate decision.  Because HSBC had a back-up argument – that public interest overrode the interests of Mr Shah.  Redacting documents for such a reason would have been a most interesting spat to have decided; but because the Court had already found for HSBC on the main issue, it refused to paddle in such dangerous waters.
 
But the decision emphasized that the whistleblowers themselves are not so important as for establishing the mind of a corporate entity.  The money laundering officer (more properly, the money laundering PREVENTING officer) was able to swear to the corporate mind.  No need for anything more forensic.

Sutton v Syston Rugby Football Club Limited [2011] EWCA Civ 1182: home disadvantage

I’ve written before that judges are moving against personal injury claims; too many people trying it on, like Mr Tomlinson, who ignored a “No Diving” sign put up by Congleton Borough Council and then blamed the council when he broke his neck whilst, er, diving.  He got short shrift.  So did a student at Nottingham Trent, injured in a rugby match, but this time with a lot more judicial regret.
 
It was one of those common rugby incidents – a player dives for a try and gets pushed over the touchline – but Mr Sutton was doubly unlucky.  Not only did he miss the try, but his knee hit something half-buried in the turf.  He did recover to the extent that he re-started his rugger career, but was in pain for some months.  The parties didn't agree on the responsibility, but they did agree that the damages, should they be awarded, would be £54k.  So quite serious.  It also cut down on the costs of the trial; no need to prove that.
 
The issue to be proved was whether the home rugby club was responsible for the half-buried thing.  It was an occupier for the purposes of the Occupiers’ Liability Act 1957, it therefore had to make sure everyone was reasonably safe.  The pitch and environs had to be free of harmful stuff.  Especially to lawful visitors like rugby players.  Had the rugby club done its duty?
 
The club had not helped itself; it had not checked the pitch, or its environs, pre-match.  Bad.  The problem for Mr Sutton was to prove that a reasonable inspection would have discovered the half-buried thing.  Had it been very difficult to spot, the club could not be liable – the club would only be liable if a competent inspection would have noticed the thing, rather than a 100% perfect archaeological scrutiny.
 
The half-buried thing was a bit of plastic that had marked a cricket boundary.  Someone had broken the top part away, leaving a jagged stump smothered in the turf.  The problem was that Mr Sutton himself said that he had not seen it; a team-mate who had helped Mr Sutton in the aftermath could not see what had caused the knee injury.  it would therefore have been next to impossible for even a careful inspector to have seen it.
 
Therefore the club was not liable, said a 3-0 Court of Appeal.  Somewhat reluctantly, but the Court felt it impossible to impose such a strict duty on an occupier.  The real blame lay with the chap or chapess who broke the boundary marker away without warning anyone, leaving such an obvious danger; however such a chap or chapess might not be easy to trace...
 

Sofia City Court, Bulgaria v Atanasova-Kalaidzhieva [2011] EWHC 2335: avoiding the arrest warrant

Being a prosecutor general in Bulgaria is not a bad job.  You’re in charge of criminal prosecutions; you can choose whom to prosecute, whom not to, what evidence is deployed and so on.  What’s more, you yourself are immune from prosecution, unless you give yourself permission to prosecute you.
 
It might be said that such an office is open to abuse.  You could blackmail people and plant evidence on them.  You could facilitate crime on an unimaginable scale by not investigating.  If any of your prosecutors under you tries to investigate, you can transfer them from Sofia to Plovdiv.
 
One former prosecutor seems to have been neck deep in such activities.  The accusations against Mr Filchev are legion.  Fraud, blackmailing magistrates, blackmailing politicians, blackmailing journalists, taking bribes, prosecuting business and political opponents, breaching UN sanctions.  All laid at his feet.  Two of his deputies started gathering evidence against him.  The day after a press conference given by the deputies, one of them was assassinated.  The other was dismissed, arrested, eventually murdered.  Not the only deaths involved in the Bulgarian prosecution office.  Another had been suicided.  An assistant, Ms Georgieva, confided to a colleague that she had been taping Filchev’s unlawful instructions, which he only gave orally; shortly after such confidence the assistant was murdered.  Her confidee fled to the UK because of death threats from the prosecutor.   The confidee’s husband was arrested and kept in custody for a year and a half in Filchev’s special detention centre; his trial was called off when the judge recused himself rather than find in the deputy’s favour.  A second trial appears still to be proceeding.
 
All somewhat nasty.  Still, Mr Filchev was evidently determined to get to the bottom of things.  He issued a European Arrest Warrant alleging that Mrs Atanasova-Kalaidzhieva had murdered Ms Georgieva.  Thing is, Mrs Atanasova-Kalaidzhieva was the assistant who had fled to Britain...
 
The European Arrest Warrant would deliver her right into the hands of the person who had threatened to kill her.  Mrs Atanasova-Kalaidzhieva launched a writ of habeas corpus to avoid such a fate.  The Bulgarian response was simple.  It was now a member of the EU, each member of the EU had to trust the other members of the EU to look after criminal proceedings properly, and there was no right to look behind the Bulgarian prosecution structure...
 
The warrant was stayed in 2009 on the basis that it was launched in bad faith.  A technicality, and one which may not apply given the wondrous European Framework Directive and Extradition Act 2003 that permit the European Arrest Warrant.  But the English Court thankfully ignored it – essentially determining that an arrest warrant that was launched in bad faith was not actually an arrest warrant.  It was re-issued in December 2010 and Mrs Atanasova-Kalaidzhieva again resisted.
 
The Court stayed the second attempt as an abuse of process – it was the same as the first, no new information had been provided and although Mr Filchev had resigned his post he still seemed to exert some influence – and on appeal the Court upheld the stay.  The Framework depends on mutual respect; the Bulgarian court had afforded the English court none of that by refusing to address the issues raised in 2009.  What’s more, the evidence was that the procedures in Bulgaria were patently unfair and downright dangerous.  A fair trial of Mrs Atanasova-Kalaidzhieva was impossible.
 
This is an extreme case and a marginal one; worryingly the Court said that had the Bulgarians addressed some of the concerns raised it may have considered extradition.  Even though it may have been tantamount to a death sentence – simply because Parliament, in a moment of delusion, had passed the toxic Extradition Act 2003.  Hopefully these obiter dicta were window-dressing to prevent any appeal to the European Court by the Bulgarians for Britain’s ostensible non-compliance with Treaty obligations – because the idea of returning Mrs Atanasova-Kalaidzhieva to Mr Filchev is, based on the unchallenged facts of the case, repugnant in the extreme.