Timothy Trotman acts in complex case of historic sexual abuse

MRA v The Education Fellowship Limited

Master McLeod

[2022] EWHC 1069(QB)

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1. The Claimant was subject to sexual abuse whilst a minor by a female teacher for whom the Defendant was vicariously liable. Having autistic spectrum disorder and ADHD he was a protected party.
2. Proceedings were issued in June 2017 and served in September 2017. The Claim Form statement of value was limited to £100,000. On 19 January 2018 the Defendant made a Part 36 offer in the sum of £80,000. By January 2017 a psychiatrist had concluded that the long term prognosis would depend on ongoing pharmacology and psychological intervention. It was not clear whether the Claimant’s symptoms would respond. The Schedule of Loss served with the claim was mostly pleaded as “TBC” although it recited that the Claimant was unlikely to obtain work qualifications and was likely to spend a large part of his time unemployed. During the period of validity of the offer on 30/01/18 an addendum psychiatric report stated that symptoms of PTSD had worsened and that a specialist in autism and learning disability would be needed to input into the Claimant’s care.
3. The main cases referred to in argument were :

Matthews v Metal Improvements Co Inc [2007] EWCA Civ 215 (“Matthews”)

SG v Hewitt [2012] EWCA Civ 1053; [2012] 5 Costs LR 9372 (“Hewitt”)

Briggs v CEF Holdings Ltd [2018] 1 Costs LR 23 (“Briggs”)

Downing v Peterborough & Stamford Hospitals NHS Foundation Trust [2014] EWHC 4216 (“Downing”)

1. After an unacknowledged attempt to obtain an extension, the Claimant’s legal representatives made a substantive response to the Part 36 offer on 20/02/18 neither accepting nor rejecting the offer but stating it was impossible to advise the Claimant, adding that the Claimant being a protected party the court would not approve a settlement in the absence of a prognosis. Again no response from the Defendant. Some pessimistic Witness Statements appeared later in the year.By October 2019 the consultant psychiatrist had said that the Claimant was able to function a little bit better; in February 2020 prospects of further improvement were low. The Defendant’s psychiatric report disagreed with the diagnosis of PTSD. On 02/04/20 after nearly 26 months the Claimant accepted the £80,000 Part 36 offer requesting costs on the standard basis.
2. This chronology brought into focus CPR 36.13 (5) which limits the costs awarded to a Claimant up to the date on which the relevant period for the Part 36 offer expired with a liability to pay the offeror’s costs after the date of expiry “unless [the Court] considers it unjust to do so”.
3. The Claimant’s argument was that prognosis was uncertain and there was a requirement for the court’s approval of settlement. By rule 16.3 (7) of the CPR the statement of value does not limit the actual potential recovery by the Claimant. The Claimant referred to Hewitt. The Claimant cited an email from the Defendant’s legal representative in January 2019 appearing to endorse the Claimant’s difficulties. When declining to accept or reject the offer the Claimant had set out his reasons but had not received a response. This contrasted with Matthews where Stanley Burnton J had said the result in Matthews might have been different if the Claimant’s solicitors had requested, and the Defendant’s solicitors had refused, a stay. On the issue of settlement approval the Claimant again sought comfort from Hewitt where Black L J at paragraph 68 had emphasised the need in that case for the court to be concerned to ensure that the Claimant was obtaining proper damages for the injury he had sustained. In MRA the amount of costs to be deducted was in the order of £45,000 creating the Claimant said a completely unjust outcome.
4. The Defendant argued that £80,000 was a very high offer for PTSD. Hewitt was different because both experts there had agreed that until the age of 18 another 12 years there had to be a “wait and see” period. By contrast in the index case there was a clear diagnosis early in the Claimant’s expert evidence, of moderate to severe (not severe) PTSD. It should have been possible to advise the court as the Defendant’s offer was high end assuming a lack of improvement. The Claimant’s representatives were criticised for delaying to re-evaluate the Claimant’s condition and the delay to obtain updates should not be visited upon the Defendant. There was already an indication of poor prognosis even in the addendum report of January 2018. The Defendant argued that at the start of the case based on the educational psychologist’s report there was a prospect of disability in the market place. That was in play when the offer was made. Good news of an improvement in early 2020 simply underscored that the Defendant’s offer had been generous. The test remained whether it was unjust to apply the costs consequences. It was not a test of whether or not the Claimant had been “reasonable” in either accepting or rejecting the offer. The two tests should not be conflated. Change of possible prognoses was simply a contingency of litigation. If a Claimant is able positively to reject an offer it may be taken as evidence that generally the Claimant is able at that point in time properly to be advised – see some commentary at paragraph 36 Matthews. The Defendant argued that Hewitt was distinguishable because there it had not been possible even to diagnose conditions at all until the Claimant turned 18 years old. The index case was much closer to Briggs, a decision in essence that an uncertain prognosis did not make it unjust to reverse the usual application of the rule in CPR Part 36.
5. Master McLeod upheld the Defendant’s argument. Part 36 remained a key post-issue way to encourage settlement. This has meant that Part 36 provides a significant tool for Defendants. Master McLeod said at paragraph 68:-

“In my role as a case management judge where not sitting at trial I have seen since the advent of QOCS signs that insured Defendants do take into account that it may be better for a Defendant to settle a case even at the risk of slightly overpaying or indeed paying when there might a prospect of defeating the claim than to incur the full costs of trial against the backdrop that the Defendant will be paying its own costs come what may due to QOCS”.

1. The Master continued that he did not know of course what lay behind the offer in the index case but thought that Defendants might be encouraged to err on the generous side. It was a heavy burden to show injustice. A party may well act reasonably in not accepting a Part 36 offer but it does not follow that the ultimate result, if that is not the best judgment, is that one has shown “injustice”. It was already clear in early 2018 that the prognosis was poor and that the Claimant was highly unlikely to have gone into further education. The position in early 2018 the Master said “was the starting point from which the Claimant might possibly (and in the event did) improve”. The statement of value was an indication of the value as an upper limit reasonably placed on the claim when issued, making the Defendant’s offer a “high end offer”.
2. As regards Hewitt it was the Master said a different type of case where a key element – diagnosis – could not be reached until the majority and all experts agreed that. Contrast index case where there was “clear and unchanging diagnosis” at the start. The rules were deliberately created to shift risk. To allow uncertainty of prognosis to convert that shift into “injustice” would undermine a key aspect of balance in the QOCS regime. Settlements would be delayed. The case was closer to Briggs. The rules could have contained a test based on whether on the known facts it was reasonable for a litigation friend in the best interests of the Claimant to delay acceptance. But the rules did not take that approach and did not make special exception for people lacking capacity. Once the approving judge appreciated the offer was “high end” the Court would be in a position to approve it. The court process itself should not be a “spanner in the works in terms of settlement on a pragmatic basis.” It was not permissible to take into account the degree of reduction of damages. Detailed assessment of costs exists to ensure that excessive sums are not deducted and that is the route to avoid injustice in that form.

Practice Points

1. If there is a delay to accept an offer, the Claimant’s conduct, that is in terms of obtaining and securing further expert medical evidence, will be closely scrutinised in the extended period.
2. Uncertainty as to prognosis comes in all shapes and forms. If there is an uncertainty about some aspect of diagnosis, then it must behove the Claimant to identify that soon and flag it up if faced with a challenging Part 36 offer. Having said that the word “diagnosis” does not appear once in the case report of Hewitt and one should be wary of boxing Hewitt off as being a special case where diagnosis was unresolved : rather it appears to have been no more than a rather serious example of prognostic uncertainty eg a firm conclusion could not be reached as to whether there would be any long term neuropsychological deficits until the Claimant was older ( para 66 Black LJ)
3. With great respect was the Master right so closely to link the Part 36 regime with QOCS? Was he right to bring into account what respectfully appears to have been a subjective assessment of the motivation of Defendants faced with the QOCS regime? Should he not have given equal balance to the very real difficulties Claimants face valuing complex cases at an early stage? Do some offers at a (very) early “stage in the proceedings” (CPR36.17(5)(b)) automatically generate imbalance such that the parties are no longer on an “equal footing” ( CPR 1.1(2)(a))?
4. The thrust of the decision is to assume a fairly robust approach to approval of settlements under CPR Part 21. The decision perhaps respectfully underplays the difficulties which a court would have been faced with especially in a case such as the present. Many heads of damage were TBC at the time the Part 36 was made. When approving a sum for a protected party the Court should look at how much the Claimant will actually receive after any deductions: that must be included by the reference in the Practice Direction to the “merits” – 21PD5.1/2
5. This decision will force Claimants’ legal representatives with a renewed interest to explore applications to stay legal proceedings. Certainly the Defendants in MRA were allowed to capitalise on their silence in the face of the Claimant’s request for extensions. Other Tribunals might have been somewhat more critical of the Defendants for adopting that stance for example because it would contravene the requirement in CPR 1.3 for cooperation.