Kerry Underwood

PERSONAL INJURY: PROTECTED PARTIES: RESILING FROM A SETTLEMENT: A LAW BEYOND BELIEF

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In Revill v Damiani [2017] EWHC 2630 (QB)

the Queen’s Bench Division of the High Court held that where the Claimant was a protected party, then the Defendant, and not just the Claimant, could resile from the compromise of the action contained in the Memorandum of Agreement reached between the parties.

The compromise arose out of a claim for damages caused by a road traffic accident and the Claimant at the relevant time was a protected party acting by his Litigation Friend.

It was common ground, and correctly so, that CPR 21.10, dealing with protected parties, means that a compromise involving a protected party is not binding unless and until approved by the Court.

This has been interpreted, for reasons beyond me, to mean that either the protected party, or the other party may withdraw from the compromise at any time before its approval. That is not what the rule says.

Here the Claimant argued that the provisions of CPR 21.10, as interpreted by the House of Lords and the Court of Appeal in this country, were incompatible with his rights under Article 14 of the European Convention on Human Rights, when read with the Article 6 right to a fair trial and/or the Article 1 Protocol right to peaceful enjoyment of possessions.

The Claimant argued that the provisions of CPR 21.10 discriminated against him as a protected party, as compared with someone who is not a protected party.

The key issue here was the change in the discount rate.

At the time of the settlement the discount rate was 2.5%, but it was clear that it was about to be changed and the Memorandum of Agreement recited that “in the event of a reduction in the discount rate before the date of the court approval hearing the future losses as set out herein will be recalculated in accordance with the reduced discount rate”.

As everyone knows the discount rate was reduced to a far greater extent than expected, being cut from +2.5% to -0.75%.

In these circumstances the Defendant, effectively the insurance company, withdrew from the compromise, relying on the fact that the Claimant was a protected party and case law established that where either party is a protected party, then no compromise is binding until and unless approved by the court  and that either party is entitled to resile from the agreement.

Here, the High Court set out the existing case law in relation to CPR 21.10 and its predecessor, Order 80, Rules 11 and 12 of the Rules of the Supreme Court.

The rules are for all intents and purposes the same.

It was accepted by both parties that unless the provisions of the Human Rights Act 1998 lead to a different result, then the High Court here was bound by previous domestic authority to allow the Defendant to withdraw from the settlement.

As to the Article 1 Protocol 1 point the court had this to say:

 

“48. In my judgment, the claim made by Mr Revill does not engage the provisions of article 14 with article 1 protocol 1 of the ECHR. This is because the question of whether Mr Revill has made a binding compromise does not affect Mr Revill’s peaceful enjoyment of his possessions for the purposes of article 1 protocol 1 of the ECHR. His claim for damages is a chose in action which will either have been converted into an entitlement to sums due under the compromise, or remain an existing chose in action. The law has not affected the peaceful enjoyment of his possessions or discriminated in the enjoyment of those possessions which continue to exist. In my judgment Mr Revill’s complaint falls to be addressed under articles 6 and 14 of the ECHR alone. This is because it is a complaint about discrimination in the treatment of protected parties when compared with unprotected parties in the settlement of legal claims. I should record that even if I had found the claim to be within the ambit of article 1 protocol 1 with article 14 of the ECHR, my conclusion on justification and proportionality set out below would have been the same.”

 

Here the parties agreed that the Claimant’s status as a protected party is an “other status” for the purposes of Article 14 and that Mr Revill’s claim came within Article 6 as it involved the determination of his civil rights.

It was also agreed that there was a difference of treatment between Mr Revill as a protected party and another litigant who is not a protected party as a non-protected party can compromise a claim without obtaining the approval of the court and that compromise is binding on both parties once it is made.

Thus the issue was whether the difference in treatment had an objective and reasonable justification in that:

1. the difference of treatment pursued a legitimate aim; and

2. there was a reasonable relationship of proportionality between the means employed and the aim sought to be realised.

 

The parties agreed that CPR 21 sought to pursue a legitimate aim, that is to protect the interest of the protected party and to ensure that money recovered by that party is properly looked after and to provide a means by which the Defendant may obtain a valid discharge of its obligations in relation to the claim.

Thus the effective issue was whether the measure was proportionate.

The court held that CPR 21.10 is a proportionate means of achieving legitimate aims and said:

 

“In my judgment the approach taken by CPR 21.10 to compromises and court approval was a proportionate means of achieving the legitimate aim of ensuring the protection of protected parties from: other parties; from themselves; and from legal representatives. This is because, as was common ground, the objects set out in paragraph 21 above required the implementation of a scheme which required court approval of a compromise made by a protected party before that compromise would bind the protected party. This was because the protected party required protection from inadequate compromises, other parties required a means of obtaining a valid compromise, and consequential matters of distribution of the damages and costs needed to be resolved. This means that, as was common ground, CPR 21.10 pursued a legitimate aim.”

 

Comment

Another fine piece of behaviour by an insurance company.

The case law, and this decision, do not begin to make any sense.

The whole point of CPR 21 is to protect a protected party; it is not to protect a paying party. Here CPR 21 has been successfully relied upon to get the Defendant off of the hook in relation to an unexpectedly large reduction in the discount rate.

That would be bad enough in any case, but the facts of this case are that the Defendant was sent to prison for causing serious injury by dangerous driving in this matter.

Thus the High Court has interpreted a rule protecting protected parties in a way that means that the protected party  massively loses out and the actual beneficiary of this protection is a person sent to prison for causing those injuries to the protected party, and in fact causing the party to become a protected party.

This is madness.

Why should the law not be that in a case involving a protected party, while the settlement shall not be binding unless and until it is approved by the court, the non-protected party is prohibited from resiling from a compromise or settlement without the permission of the court?

An urgent change in the law is required.

 

CPR 21.10

Compromise etc. by or on behalf of a child or protected party

(1) Where a claim is made –

(a) by or on behalf of a child or protected party; or

(b) against a child or protected party,

no settlement, compromise or payment (including any voluntary interim payment) and no acceptance of money paid into court shall be valid, so far as it relates to the claim by, on behalf of or against the child or protected party, without the approval of the court.

(2) Where –

(a) before proceedings in which a claim is made by or on behalf of, or against, a child or protected party (whether alone or with any other person) are begun, an agreement is reached for the settlement of the claim; and

(b) the sole purpose of proceedings is to obtain the approval of the court to a settlement or compromise of the claim,

the claim must –

(i) be made using the procedure set out in Part 8 (alternative procedure for claims); and

(ii) include a request to the court for approval of the settlement or compromise.

(3) In proceedings to which Section II or Section III of Part 45 applies, the court will not make an order for detailed assessment of the costs payable to the child or protected party but will assess the costs in the manner set out in that Section.

(Rule 46.4 contains provisions about costs where money is payable to a child or protected party.)

 

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Written by kerryunderwood

November 21, 2017 at 6:46 am

Posted in Uncategorized

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