Fatal Mistakes (Part 1)

Reader & Ors v Molesworths Bright Clegg Solicitors (2007) EWCA Civ 169 was a professional negligence claim. Mrs Reader’s husband had been injured in a motor accident. Prior to his death Mr Reader had instructed Molesworths to act in a personal injury claim against the driver. Mr Reader subsequently committed suicide.

Without taking instructions Molesworths told the driver’s insurers that Mr Reader had died and that the claim was to be discontinued. A consent order was then signed discontinuing the claim. Mrs Reader later enquired about the progress of the claim and Molesworths admitted that it had been discontinued without her authority.

Unsurprisingly Mrs Reader issued proceedings against Molesworths for professional negligence. She claimed that if the personal injury claim had not been wrongly discontinued her claim for bereavement damages under the Fatal Accident Act and her children’s claims for loss of dependency could have been added by way of amendment.

Liability was admitted. However Molesworths argued that the Fatal Accident Act claims were separate causes of action which had not been extinguished by the discontinuance.

At first instance the judge found that from the moment of Mr Reader’s death there were two distinct causes of action, the personal injury claim that had passed to Mr Reader’s estate and the Fatal Accident Act claims for dependency and bereavement. On examining the correspondence and the consent order the judge found that only the personal injury claim had been discontinued.

The Court of Appeal agreed that the Fatal Accident Act claims had not been extinguished by the discontinuance. The personal injury claim and the Fatal Accident Act claim were separate causes of action as each was governed by a different limitation period. The fact that there were two distinct limitation periods was incompatible with the Claimant’s contention that the FAA claim was just an extension of the original claim.

Fatal Mistakes (Part 2)

Thompson and Others v Arnold (2007 EWHC 1875) was a clinical negligence claim concerning a delay in diagnosing breast cancer. When it was eventually discovered that the diagnosis had been wrong it was too late to successfully treat the cancer.

Legal Proceedings were commenced in September 1999. The Claimant settled her claim in January 2002 by accepting £120,000 in full and final settlement. However her solicitors failed to consider the effect of settlement on any claims by her husband and children after her death. She later died on 10 April 2002.

The Claimant’s husband and 2 children tried to bring a further claim under the Fatal Accident Act even though it was thought to be settled law that a Fatal Accidents Act claim could not be brought where damages had already been awarded before the victim’s death (Read v Great Eastern Railway Co).

Perhaps clutching at straws, Mrs Thompson’s husband and children argued that Read had been wrongly decided and that the court had a duty to interpret the Fatal Accident Act in a way that guaranteed the Claimant’s rights under Article 6 and Article 8 of the European Convention on Human Rights.

The court refused to allow the husband and children to bring a further claim. Section 12 of the Limitation Act provided that “An action under the Fatal Accident Act shall not be brought if the death occurred when the person injured could no longer maintain an action and recover damages in respect of the injury”

Immediately before her death Mrs Thompson could not maintain an action against Mr Arnold because she had already settled her claim. Her husband and children could therefore not bring a further claim.

Convention rights had to “go with the grain” of the underlying legislation. In these circumstances the grain was that the right to claim a dependency or bereavement award only arose when there had been no determination of the original claim.

Comment

Whilst at first sight these two decisions seem contradictory there is a logical distinction. In Reader the personal injury claim was discontinued after Mr Reader’s death. Because at the time of his death the personal injury claim could still be maintained, the Fatal Accident Act claims survived. By contrast the original claim in Thompson was settled before Mrs Thompson’s death and the bereavement and dependency claims were clearly debarred by the operation of the Limitation Act.

Inaccurate Estimates Can Seriously Damage Your Wealth

When filing the allocation questionnaire parties are required to provide an estimate of both the costs they have incurred to date and an estimate of their likely future costs. If the successful party provides an inaccurate estimate and there is no reasonable explanation there can be dire consequences. This is illustrated in the recent decision in Tribe v Southdown Gliding Club Ltd and Others (2007) EWHC 90080.

Mr Tribe suffered severe injuries in a glider accident. He commenced proceedings against:- (i) the company from whom he had hired the glider; (ii) the owner of the glider; (iii) and the inspector and maintainer of the glider. To fund his claim he took out after the event insurance with an indemnity limit of £100,000.

Liability was denied and once the liability experts meetings had taken place it was clear that the claim was unlikely to succeed. The Claimant served a Notice of Discontinuance entitling the Defendants to their costs.

When filing the allocation questionnaire, the solicitors representing the First and Third Defendants had estimated that their costs up to and including trial would be £50,000. However when Bills of Costs were eventually served, the First and Third Defendants’ bill was an eye watering £244,509. At detailed assessment the Claimant asked the court to limit the sums claimed to the amounts on the allocation questionnaire.

Paragraph 6.6 of the costs practice direction gives the court the power to consider the estimates previously filed by a party when assessing the reasonableness of any costs claimed. Guidance as to how this power should be exercised has already been given by the Court of Appeal in Leigh v Michelin Tyres plc. The Court of Appeal provided that: -

		Cost estimates provide a useful yardstick by which the reasonableness of the costs finally claimed can be measured.
		If there is a substantial difference between the estimate and the costs claimed, that calls for an explanation.
		The Court may take the estimate into account if the unsuccessful party can show that they relied on the low estimate

The First and Third Defendants’ solicitors could not satisfy the court that there was a reasonable explanation for the difference between the original estimate and the eventual costs claimed.

Although the amount of costs estimated on the allocation questionnaire was low, it was not so low for it to have been unreasonable for the Claimant to have placed reliance on the estimate. The court was satisfied that had the Claimant been aware of the true magnitude of the costs claim against him, he would have purchased additional insurance cover.

Given the low estimate, the Claimant’s reliance on this and the absence of a satisfactory explanation, the court found that the First and Third Defendants should only be able to recover costs of £70,000.

Comment

At first sight, those representing Defendants might raise an eye-brow at the court's apparent enthusiasm to hold successful Defendants to their costs estimates in contrast to the perceived lack of enthusiasm for holding successful Claimants to their costs estimates when the positions are reversed. This decision clarifies what the paying party has to show in terms of reliance. It is not enough for a party just to say it relied on a costs estimate without showing how it did so.

Here if the Claimant had known about the true level of costs he faced, he would have taken out additional ATE insurance as protection and that alone was enough for the Defendants' costs to be reduced. The decision demonstrates the importance of laying an audit trail that shows how the estimate has been relied upon. For instance it may be appropriate to respond to the cost estimate, refer to it in financial reserving advice and build this reliance into offers of settlement as an assumption on which the offer is based.

In theory the same principles should apply when the paying party is an insured Defendant who, in reliance on an inaccurate estimate, has under reserved against adverse costs or settled a case it might otherwise have fought. Arguably the outcome should be the same but would it be?