Kerry Underwood

Archive for February 2019


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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.

In Chapter 23 of my book, Personal Injury Small Claims, Portals and Fixed Costs, I deal at length with the issue of when a bankrupt or discharged bankrupt can nevertheless personally receive damages, that is circumstances where damages do not vest in the trustee in bankruptcy.

Here I am dealing with the other side of the coin, that is the issue of when an award can be enforced against a bankrupt or discharged bankrupt.

It is well established that a bankrupt can still receive damages where:

“The damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind, or character, and without immediate rights of property.”


Heath v Tang [1993] 3 All ER 694

the Court of Appeal said:

“Actions for defamation and assault are obvious examples. The bankruptcy does not affect his ability to litigate such claims. But all other causes of action which were vested in the bankrupt at the commencement of the bankruptcy, whether for liquidated sums or unliquidated damages, vest in his trustee.”

The bankrupt cannot commence any proceedings based upon such a cause of action and, if the proceedings have already been commenced, he ceases to have sufficient interest to continue them.  Under the old system of pleadings, the defendant was entitled to plead the plaintiff’s supervening bankruptcy as a plea in abatement. 

Since the Supreme Court of Judicature Act 1875, the cause of action does not abate but the action will be stayed or dismissed unless the trustee is willing to be substituted as plaintiff:

see Jackson v North Eastern Railway Co (1877) LR 5 Ch D 844.


Ord v Upton [2000] 1 All ER 193, Ch 352

the Court of Appeal quoted the passage from Heath v Tang and said:

“Section 436 is not in truth a definition of the word “property”. It only sets out what is included. As will appear later from the cases that have been decided over many years, actions which relate to a bankrupt’s personal reputation or body have not been considered to be property and therefore they do not vest in anybody other than the bankrupt. They relate solely to his body, mind and character and any damages recovered are compensation for damage to his body, mind and character as opposed to other causes of action which have been considered to be a right of property. Thus causes of action to recover damages for pain and suffering have been held not to vest in the trustee. That has led to a number of oddities. For example, the parties agree that if at the time of the bankruptcy, the bankrupt had in his bank a sum which included money paid as damages for a libel, that sum would vest in his trustee because the right to the money formed part of his estate and therefore was available to pay off the bankrupt’s creditors. That was to be contrasted with an action personal to the bankrupt, such as a libel action, which was not settled before the end of the bankruptcy. In such circumstances the cause of action would remain with the bankrupt as would any damages awarded after discharge. If a cause of action is not personal to the bankrupt, it vests in the trustee and therefore any damages awarded whether before or after the discharge will be available to discharge the bankrupt’s liabilities.”

In Ord the claim was a negligence action for personal injury, including special damages, and the issue was whether the existence of the special damages claim took the case out of the exception, meaning that it vested in the trustee, or remained wholly within the exception, or could be severed so that the general damages claim remained with the bankrupt but the special damages claim vested in the trustee.

The Court of Appeal held that that was a single, indivisible action and therefore it either all remained with the bankrupt or all vested in the trustee, and that it was a hybrid claim, in part personal in part relating to property.

The Court of Appeal held that the action vested in the trustee and to fall within the exception a claim must relate only to a cause of action personal to the bankrupt, adding:

“All causes of action which seek to recover property vest in the trustee whether or not they contain other heads of damage to which the bankrupt is entitled.”


Beckham v Drake (1849) 11 HLC 1213

the Court of Exchequer Chamber repeatedly used the term “assignees” in relation to the passing of the action to the trustee, and the term was also used in Stanton v Collier (1854) 23 LJQB 116  and subsequent cases.

In Ord the Court of Appeal undertook an extensive review of the authorities and concluded that although the whole of the action vested in the trustee the actual general damages belonged to the bankrupt and did not form part of the trustee’s fund, and thus the damages must be split between the trustee and the bankrupt.


Provable Debts on Bankruptcy

There is no definition of a provable debt in the Insolvency Act 1986.

The general rule is that all debts are considered provable unless they come within the exceptions of non-provable debts.

A debt or liability to which the bankrupt is subject at the commencement of the bankruptcy is a provable debt.

Any debt or liability to which the bankrupt may become subject after the commencement of bankruptcy, including after discharge from bankruptcy, by reason of any obligation incurred before the commencement of bankruptcy, is a provable debt.

I have considered the various definitions of non-provable debts and none of them relates to a judgment of the court for damages for defamation.

This is the reverse for the situation set out above, which dealt with the ability of a bankrupt to conduct litigation, and receive the fruits of that litigation, in certain circumstances, one of which is damages for defamation.

Does that principle apply against a bankrupt?

In order words does the nature of the damages in defamation mean that a bankrupt or discharged bankrupt is still liable to pay those damages, even though he was a bankrupt at the time of the hearing and his bankruptcy has subsequently been discharged?

The relevant legislation is the Insolvency Act 1986, and in particular section 281 which is headed “Effect of Discharge”.

Section 281(5) reads:

“(5) Discharge does not, except to such extent and on such conditions as the court may direct, release the bankrupt from any bankruptcy debt which—

(a) consists in a liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other duty, or to pay damages by virtue of Part 1 of the Consumer Protection Act 1987, being in either case damages in respect of personal injuries to any person, or

(b) arises under any order made in family proceedings or under a maintenance calculation made under the Child Support Act 1991.”

This subsection is terribly worded, but it appears to require there to be damages in respect of personal injuries, as that appears to be qualifying wording in relation to the damages for negligence, nuisance or breach of a statutory duty, contractual or other duty, that is that not only must there be a liability to pay damages under one of those heads, but the damages must also be in respect of personal injuries to any person.

The reference to “either” case is particularly confusing as there are six different types of action referred to, whereas the word “either” should only be used as a choice between two, and not six, options.

The words “or to pay damages by virtue of Part 1 of the Consumer Protection Act 1987”, being in either case, were inserted by the Consumer Protection Act 1987.

Doing my best to interpret this piece of legislation, I assume that the drafter of the Consumer Protection Act 1987 was some sort of consumer expert who was unaware of the law generally and treated the five types of case in the original wording as one, and therefore the word “either” is differentiating between that group of five on the one hand and the new insertion of damages under Part 1 of the Consumer Protection Act 1987, on the other hand.

To read it in any other way would mean that a bankrupt would continue to be liable for breach of contract, which is very clearly not the case.

Thus the exception in section 281(5) requires there to be personal injuries.

Are Injuries To Feelings A Species Of Personal Injury?

There is no doubt that the general damages element of an award for defamation includes an award for injury to feelings and I have quoted above the relevant section from the judgment in this case.

Section 281(8) of the Insolvency Act 1986 defines “personal injuries” as including death and any disease or other impairment of a person’s physical or mental condition.

That definition is used extensively in various legislation.

Injury to Feelings

Is injury to feelings species of personal injury? Does it involve impairment of a person’s mental condition?

Shorter Oxford English Dictionary


1. Make less effective or weaker; devalue, damage, injure.

2. Become less effective or weaker; deteriorate, suffer injury or loss.


1. One that has been impaired.

2. Of the driver of a vehicle or driving; adversely affected by alcohol or narcotics.


The action of impairing, or fact of being impaired; deterioration, injurious lessening or weakening.


To make worse, less valuable, or weaker; to lessen injuriously; to damage, injury.


Rendered worse; injured in amount, quality or value; deteriorated, weakened, damaged.

Roget’s Thesaurus gives the following alternative for “impair”:

Damage, harm, diminish, reduce, weaken, lessen, decrease, blunt, impede, hinder, spoil, disable, undermine, compromise, threaten.

Roget’s Thesaurus gives the following alternatives for “impaired”:

Disabled, handicapped, incapacitated, debilitated, infirm, weak, weakened, enfeebled, paralysed, immobilised.

Roget’s Thesaurus gives the following alternatives for “impairment”:

Disability, handicap, abnormality, defect, deficiency, flaw, affliction, disadvantage, problem.

Those definitions seem to me to be potentially wide enough to cause injury to feelings to amount to an impairment of a person’s mental condition and thus to bring injury to feelings into the sphere of QOCS protection.

Injury to feelings awards are usually in the Employment Tribunal.  There costs do not follow the event and thus QOCS is of no application, for the reasons set out above.

However injury to feelings awards are also made in the County Court where costs do follow the event; discrimination in relation to the provision of services is a County Court, not an Employment Tribunal matter.

My view is that the court could legitimately decide the issue of whether injury to feelings is a species of personal injury either way, although it is significant that the word “injury” is used.

Employment Tribunals have the power to award damages for actual personal injuries arising out of the discrimination, including physical, but more typically, psychological injuries.

These are generally awarded under the “injury to feelings” ahead of damages.  The appellate courts have frequently said that there is no fine line between actual psychological injuries and injuries to feelings.

For example, in

Birmingham City Council v Jaddoo UKEAT/0448/04/LA

the Employment Appeal Tribunal referred to “the inevitable overlap between injury to feelings and psychiatric damages…..” (Paragraph 31).


Vento v Chief Constable of West Yorkshire Police (No 2) IRLR 102 

the Court of Appeal said that tribunals should have “……regard… the overall magnitude of the sum total of the award for compensation for non-pecuniary loss made under the various headings of injury to feelings, psychiatric damage and aggravated damages” such that “in particular, double recovery should be avoided by taking appropriate account of the overlap between the individual heads of damage”.


HM Prison Service v Salmon [2001] IRLR 425

the Employment Appeal Tribunal said that it is “necessary to stand back and consider the non-pecuniary award as a whole”.

On balance my view is that injury to feeling should be classed as a species of personal injury and that cases involving claims for injury to feelings should attract the protection of Qualified One Way Cost Shifting in the civil courts, but not in Employment Tribunals.


Timothy James Consulting Ltd v Wilton [2015] IRLR 368 EAT

the Employment Appeal Tribunal overturned the decision of the Employment Tribunal that had made an award of £10,000.00 for injury to feelings but had then grossed it up to take into account income tax at the rate of 40% and thus awarded £16,666.00.

There was no dispute that £10,000.00 was the correct figure; the issue was whether it should be grossed up to take into account tax and thus the real issue was whether injury to feelings awards are taxable.

Historically it had always been assumed that such awards were free of income tax and the current legislation is the Income Tax (Earnings and Pensions) Act 2003 and section 406 provides:-

“This Chapter does not apply to a payment or other benefit provided—

(a)          in connection with the termination of employment by the death of an employee, or

(b)          on account of injury to, or disability of, an employee.”

This replaced, and is a similar wording to, section 148 of the Income and Corporation Taxes Act 1988.

Here the Employment Appeal Tribunal carried out an exhaustive analysis of the authorities.

The Employment Appeal Tribunal said that the reasoning of the Employment Appeal Tribunal in the case of 

Orthet Ltd v Vince-Cain [2004] IRLR 857 EAT

was persuasive and was preferable to a decision in the First Tier Tribunal (Tax Chamber) in 

Moorthy v Commissioners for HM Revenue and Customs [2015] IRLR 4 UKFTT

which had held that awards for injury to feelings were taxable.

Consequently the Employment Appeal Tribunal held that injury to feelings awards are not taxable and therefore reduced the award back to £10,000.00.

It was a necessary part of the reasoning here, and in the Orthet case, that “injury” could include the concept of injury to feelings.

This reasoning was necessary because of the wording of section 406 set out above which exempts payments made “on account of injury to, or disability of, an employee”.

There is no reference there to injury to feelings and therefore to come within that definition the Employment Appeal Tribunal here and in Orthet held that “injury” includes injury to feelings, or to put it another way injury to feelings is a species of personal injury itself.

Thus here the Employment Appeal Tribunal, at least equal in standing to the High Court, held that injury to feelings Is an injury.

However the feedback that I am getting from practitioners in discrimination cases in the civil courts is that those courts are not treating injury to feelings as personal injury and thus are not providing QOCS protection.


Black v Arriva North East Limited [2014] EWCA Civ 1115

the Court of Appeal rejected an application for a costs capping order.

Here, the appellant appealed against a judgment in a disability discrimination case but had not taken out a sufficient level of After-the-Event insurance before such insurance became unrecoverable by virtue of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.  Thus any fresh premium, to cover the increased level of cover required, would not be recoverable.

Consequently the appellant sought to have Arriva’s costs capped at £50,000.00.

The Court of Appeal pointed out that this would now apply to all new cases as a result of Parliament ending recoverability of After-the-Event insurance premiums by means of LASPO 2012.

“So the argument could be raised in any appeal brought in respect of a case under that Act.  Such a result is difficult to square with the indication in the Practice Direction that an order for costs capping should only be made in exceptional circumstances” (paragraph 12).

The Court of Appeal also pointed out that it is not a function of costs capping orders to remedy the problems of access to finance for litigation.  “If for instance, the respondent’s costs were agreed to be proportionate, it would not be possible to exercise any jurisdiction to make a costs capping order simply because without it the appeal would not continue to be financially viable.”

That is because CPR 3.19(5) (b) only allows a costs capping order if “there is a substantial risk that without such an order costs will be disproportionately incurred;”

There were other fact- specific reasons for refusing a costs capping order in this case but they do not establish any new legal principles.

Interestingly one of the submissions made in favour of a costs capping order, but rejected, was that there was a lacuna in the law in that Qualified One-Way Costs Shifting applied in personal injury cases but not Equality Act cases.  As this is a disability discrimination claim in relation to the provision of services one would expect damages for injuries to feelings to be available.  The issue as to whether such damages are in fact damages for personal injuries, and thus covered by QOCS, does not appear to have been considered in this case.

“Another factor was that the potential subject of the Costs Capping Order – Arriva – had already incurred vastly more costs than £50,000.00 prior to the application being made and therefore the Costs Capping Order would have been retrospective:-

“The effect of what I have described is that by the time of the application, the major part of the solicitor’s costs of the appeal had been incurred. The effect of the order sought would, therefore, be that the Respondents will have already spent what is, if the costs capping order is made, in substance a budget laid down by the court without knowing that it had to stick to that insofar as it sought to recover its costs. In principle, the person who is the subject of the costs capping order ought, so far as possible, to know the budget to which he must work in advance.” (Paragraph 25).

There are conflicting decisions in the employment field as to whether the injury to feelings is a form of personal injury.

However, there has been very recent guidance by the Court of Appeal.


Moorthy v Revenue and Customs [2018] EWCA Civ 847

the Court of Appeal held that compensation for injury to feelings paid in accordance with the terms of a Settlement Agreement is not taxable, as it falls within the exclusion from taxation of payments on account of “injury”.

Section 406 of the Income Tax (Earnings and Pensions) Act 2003 provides that a payment or other benefit provided “on account of injury to… an employee” on the termination of a person’s employment is not subject to income tax.

The issue here was whether a settlement in reference to a claim for injury to feelings, amongst other things, was subject to income tax or was excluded as coming within the definition of “injury”.

In holding that injury to feelings is indeed a species of injury exempting that part of the payment from tax, the Court of Appeal has resolved differences of opinion in the lower courts on this point.

Broadly the Employment Appeal Tribunal had held that injury to feelings awards are in relation to “injury” and are tax free – see for example:

Orthet Ltd v Vince-Cain [2004] IRLR 857; and

Timothy James Consulting Ltd v Wilton [2015] IRLR 368

whereas the Tax Tribunals, as here, have held such payments liable to tax as not being in respect of an injury.

In relation to the tax treatment of such awards section 5(7) of the Finance (No.2) Act 2017 has inserted, with effect for the tax year 2018/19 onwards, a new subsection (2) to section 406 of the Income Tax (Earnings and Pensions) Act 2003 which reads:

“Although “injury” in subsection (1) includes psychiatric injury, it does not include injured feelings.”

This is in the context of tax, but the Court of Appeal gave this judgment after that amendment had been enacted, and therefore held that in relation to awards made before that date an award for injury to feelings is indeed a species of injury.

Thus my view is that very recent Court of Appeal decision shows that awards for injury to feelings are, or certainly were before the recent law change, and thus section 281(5) of the Insolvency Act 1986 applies.

I have set out in detail above the circumstances in which a bankrupt can still receive general damages, that is the circumstances in which the award does not go into the estate.

By parity of reasoning a court should be invited to find that the same logic applies to a person with a judgment against a bankrupt, and that in so far as possible the reasons of legal consistency and certainty the court should take the same view.

For the reasons set out in detail in this advice, and in particular the Moorthy case, the court is so able to do.

I am grateful to Dr Tracey Bell for permission to use some material from an advice I prepared for her.

See also Gordon Exall’s Civil Litigation Brief of 20 January 2019 – Civil Procedure: Back To Basics 24: The Bankrupt Claimant (Personal Injury Litigants In Particular)

Written by kerryunderwood

February 25, 2019 at 7:37 am

Posted in Uncategorized


with 2 comments

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.


Cameron v Liverpool Victoria Insurance Co Ltd [2019] UKSC 6 (20 February 2019)

the Supreme Court considered the issue of suing an unnamed defendant, holding that the key questions were the basis of the court’s jurisdiction over parties, and in what circumstances such jurisdiction could be exercised against unnamed people.

The court distinguished between cases involving identifiable, but unnamed, defendants, such as squatters, and unidentified defendants such as hit and run drivers, where it is not possible to locate or communicate with the defendant.

Subject to any specific statutory provision to the contrary, it is essential that any form of alternative service can be expected to bring the proceedings to the defendant’s attention.

An exception might apply for other statutory schemes, but was not justified in the context of the Motor Insurers Bureau scheme under Part VI of the Road Traffic Act 1988 as

  • it is expressly based on the principle that the only direct liability of the insurer to the victim is to meet a judgment against the motorist;
  • ordinary service on the insurer would not constitute service on the driver; authority could only be contractually conferred on behalf of the policy-holder, and here that was not the driver;
  • alternative service on the insurer could not be expected to reach the driver, so was equivalent to no service.

A person who is not only anonymous, but cannot be identified with any particular person, cannot be sued under a pseudonym or description unless service of the claim form can be effected or properly dispensed with.

That result is not inconsistent with the Sixth Motor Insurance Directive 2009/103/EC.

Here is the Supreme Court’s own Press Summary:

Background To The Appeal

On 26 May 2013, the respondent, Ms Bianca Cameron, was injured when her car collided with a Nissan Micra. It is not in dispute that the incident was due to the negligence of the driver of the Micra. The registration number of the Micra was recorded, but the driver made off without stopping or reporting the accident to the police and has not been heard of since. Mr Naveed Hussain, the registered keeper, was not the driver and has declined to identify the driver. He has been convicted of failing to disclose the driver’s identity. The car was insured under a policy issued by the appellant, Liverpool Victoria Insurance Co Ltd, to a Mr Nissar Bahadur, whom the company believes to be a fictitious person. Neither Mr Hussain nor the driver was insured under the policy to drive the car.

Ms Cameron initially sued Mr Hussain for damages. The proceedings were amended to add a claim against Liverpool Victoria Insurance for a declaration that it would be liable to meet any judgment against him. The insurer served a defence, denying liability on the ground that there was no right to obtain a judgment against him as there was no evidence that he was the driver. Ms Cameron then applied to amend her claim form and particulars of claim. She sought to substitute for Mr Hussain, as defendant, “the person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013.” 

District Judge Wright dismissed that application and entered summary judgment for the insurer. HHJ Parker dismissed Ms Cameron’s appeal. On further appeal, the Court of Appeal allowed the appeal by a majority (Gloster and Lloyd Jones LJJ, Sir Ross Cranston dissenting). The majority considered that the court had a discretion to permit an unknown person to be sued whenever justice required it and that an alternative right of claim against the Motor Insurance Bureau (“MIB”) was irrelevant. Sir Ross Cranston would have dismissed the appeal in light of the alternative right to an MIB claim.   

Liverpool Victoria Insurance appealed to the Supreme Court in relation to two issues: (1) the power to issue or amend the claim form and (2) the compatibility of the Road Traffic Act 1988 (“the 1988 Act”) with the Sixth Motor Insurance Directive (2009/103/EC).  


The Supreme Court allows the appeal. The Court of Appeal’s order is set aside and that of District Judge Wright is reinstated. Lord Sumption gives the lead judgment, with which all the Justices agree.    

Reasons For The Judgment

Part VI of the Road Traffic Act 1988 applies in this appeal. Section 145 requires there to be an insurance policy against third party risks “in relation to the use of the vehicle” by the particular driver, while section 151(5) requires the insurer to satisfy any judgment falling within section 151(2), subject to certain conditions. Under section 151(2)(b), an insurer who has issued a policy in relation to the use of a vehicle is liable on a judgment, even where it was obtained against an uninsured driver. [3] 

The MIB has entered into agreements with the Secretary of State to compensate third party victims of road accidents not even covered by section 151(2)(b). This means victims suffering personal injury or property damage caused by (1) uninsured vehicles and (2) drivers who cannot be traced. Clause 4(d) of the 2003 Untraced Drivers Agreement (“the 2003 Agreement”) is applicable in Ms Cameron’s case. [4]

It is a fundamental feature of the statutory scheme of compulsory insurance in the UK that it does not confer on victims a direct right of recovery against an insurer for the underlying liability of the driver. The only direct right against the insurer is the right to require it to satisfy a judgment against the driver, under section 151, once the driver’s liability has been established in legal proceedings. Consistent with this approach, the 2003 Agreement assumes that judgment cannot be obtained against the driver if he cannot be identified, and therefore the only recourse is against the MIB, not the insurer. [5, 22]

The general rule remains that proceedings may not be brought against unnamed parties, as is implicit in the limited exceptions contemplated by the Civil Procedure Rules (“CPR”) [9]. The main exceptions are: (1) possession actions against trespassers, (2) actions and orders where some of the wrongdoers were known so they could be sued both personally and as representing their unidentified associates and (3) the wider jurisdiction recognised in Bloomsbury Publishing Group Plc v News Group Newspapers Ltd [2003] 1 WLR 1633 (Ch) [10]

The key distinction is between two classes of unnamed defendant cases: (1) anonymous defendants who are identifiable but whose names are unknown and (2) defendants, such as in most hit and run drivers, who are not only anonymous but cannot even be identified. In category (1), defendants are described in such a way that it is at least possible to locate or communicate with them, and to determine whether they are the person described in the claim form. In category (2), this is not possible. [13]

This appeal is not directly concerned with service – it is about the issue or amendment of the claim form – but the legitimacy of issuing or amending can be tested against the possibility of service [14]. An identifiable but anonymous defendant can be served, if necessary by CPR r.6.15 alternative service [15]. Interim injunction cases can fall in category (1), because the process of enforcing the injunction will sometimes be enough to bring the proceedings to the defendant’s attention, as in Bloomsbury [15]. However, an unknown person is not identified simply by referring to past actions [16]. Proceedings against such a person (in category (2)) offend the fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable a fair hearing [17-18]. While CPR r.6.15 permits alternative service, the mode of service should be such as can reasonably be expected to bring the proceedings to the defendant’s attention [20-21].

Applying these principles to the present appeal, alternative service against an unidentifiable person referred to in the proceedings only by a pseudonym or description cannot be justified. In particular, ordinary service on the insurer would not constitute service on the driver, and alternative service could not be expected to reach the driver of the Micra. Nor would it be appropriate to dispense with service under CPR r.6.16 in a case where it could not be shown that the defendant knew of the proceedings. [21-26] 

As to the EU law issue on the Sixth Motor Insurance Directive, the Supreme Court considers no point on the Directive arises because: (1) Ms Cameron is not trying to assert a direct right against the insurer for the underlying wrong (her claim is for damages from the driver) and (2) it is consistent with the Directive to require a claim against the MIB, not the insurer, in this class of case [27-30].  

Written by kerryunderwood

February 25, 2019 at 6:51 am

Posted in Uncategorized


with 12 comments

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.


This mad decision was overturned by the High Court on Monday 24 June 2019.

Here  is the High Court’s judgment overturning the decision. That decision is JLE (a child by her mother and litigation friend, ELH) v Warrington & Halton Hospitals NHS Foundation Trust [2019] EWHC 1582 (QB).



JLE (a child by her mother and litigation friend, ELH) v Warrington & Halton Hospitals NHS Foundation Trust [2018] EWHC B18 (Costs)

a High Court Master held that the Part 36 bonuses should be considered separately, so that it may be just for the claimant to get some of the advantages, but unjust to get others.

This was an assessment of the claimant’s costs in a clinical negligence case, and thus the effective party was the claimant’s solicitor in the costs proceedings.

The claimant’s bill totalled £615,751.51 and the claimant made a Part 36 offer of £425,000, including interest, which offer was not accepted.

The Master assessed the costs at £421,089.16, but with interest this came to £431,813.05, that is £6,813.05 more than the claimant’s offer on a submitted bill of £615,000, that is the offer was beaten by around 1% of the value of the bill.

It was accepted that the fact that it was only the interest that meant that the claimant beat its own offer was irrelevant.

The defendant contended that the issue of whether it was unjust to award the additional 10% – around £43,000 – should be considered separately to the other Part 36 bonuses and the Master agreed.

The Master held that it was appropriate to disallow the 10% uplift under CPR 36.17(4)(d) as it was disproportionate to the margin by which the offer was beaten.

This is in spite of the clear definition of “more advantageous” in CPR 36.17(2) as “better in money terms by any amount, however small”.

CPR 36.17(4) provides that where a claimant matches or beats its own Part 36 offer, unless it considers it unjust, it must order the defendant to pay:

  • interest on the sum awarded;

  • costs on the indemnity basis from expiry of the relevant period;

  • interest on those cost;

  • an additional amount of 10% of the first £500,000 awarded and 5% of any amount above that, subject to a maximum of £75,000.


An absurd anti-claimant decision, not the first by this Master, who was responsible for the Mitchell relief from sanctions fiasco.

It is simply inconceivable that the Master, or any other judge, would have applied the principle the other way around.

Thus a defendant makes a Part 36 offer of £50,000, and the trial judge awards £50,000, so the claimant has failed to beat the defendant’s Part 36 offer.

Imagine a judge saying that as it was so close it would be disproportionate to disallow the claimant’s costs from expiry of the offer and disproportionate to award the defendant its costs from expiry.

The sums in issue there will generally be far greater than 10% of the damages, so why is that not disproportionate?

Furthermore the paying party here had its remedy – had it made a Part 36 offer of say £450,000, then the claimant would have failed to beat it and would have been penalized in costs.

It should be noted that this was a costs assessment – there is no question of the defendant not being liable, as may occur in a substantive case, the issue was simply how much the defendant had to pay.

The Master lists that the case is considered, but absent from them is the key case of

Carver v BAA Plc [2008] EWCA Civ 412

where the Court of Appeal held that the claimant, who beat the defendant’s Part 36 offer by just £51, had not really won the case on Part 36 as beating a Part 36 offer by such a small amount was not deemed to be more advantageous on the facts given the trauma etc. of going to court.

I was highly critical of that decision, and said that solicitors should ensure that their clients gave evidence to say how much they enjoyed going to court, and it was not traumatic at all and indeed the whole experience of giving evidence made it more advantageous than settling.

My irony, as ever, was lost on some, but not Parliament which intervened and statutorily overturned the Court of Appeal’s decision in Carver and introduced the test set out above, that for the result to be more advantageous all it requires is for it to be better in money terms, by any amount, however small.

Thus this decision follows a Court of Appeal decision, which was not cited to the court, and which has been overturned by Parliament.

This is not a situation where the courts need to interpret the will of Parliament, but rather Parliament has told the courts that they must not interpret Part 36 in the way that the court did in Carver and in the way that this Master has.


This judgment is hopelessly wrong and, like some other Part 36 judgments of the judiciary, threatens to undermine the whole Part 36 regime.

It is worse than that. Parliament went further and CPR 36.17(5) sets out five factors which the court must take into account in considering whether it would be unjust to make the orders referred to in 36.17(4).

Those circumstances are:

(a) the terms of any Part 36 offer;

(b) the stage in the proceedings when any Part 36 offer was made, including in particular    how long before the trial started the offer was made;

(c) the information available to the parties at the time when the Part 36 offer was made;

(d) the conduct of the parties with regard to the giving of or refusal to give information for the purposes of enabling the offer to be made or evaluated;

(e) whether the offer was a genuine attempt to settle proceedings.

None of these applied here. True it is that the court must take into account all the circumstances including those matters, which does not prevent the court from considering other matters.

However the Civil Procedure Rules are riddled with references to proportionality, and had Parliament, or the Civil Procedure Rules Committee, wished proportionality to be a factor in determining whether it was unjust to give the bonus, then Parliament would have said so.

At CPR 36.17(4)(d)(ii) the rules set out the percentage uplift that must be awarded. These figures are mandatory and not a maximum.

Contrast the wording of CPR 36.17(4)(a) and (c) where the words “not exceeding 10%” are used, which clearly gives the court a discretion to award a lower percentage.

That is not the case with CPR 36.17(4)(d)(ii), where a flat percentage is given, with no discretion for the court to award less.


The very fact that as far as costs are concerned a successful Part 36 gets indemnity costs – see CPR 36.17(4)(b), where proportionality cannot apply, demonstrates the absurdity of introducing proportionality into the Part 36 regime, and in any event the courts have, time and again, stated that Part 36 is a self-contained scheme not subject to the ordinary law.

The uplift on damages is a key part of the incentive on claimants to make Part 36 offers, and this was introduced by primary legislation, that is section 55 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and not by secondary legislation or rule changes, and the rules set out above implemented an Act of Parliament, and it was not simply a question of Parliament approving changes to the Civil Procedure Rules by way of a statutory instrument.

In February 2019 the government published its Post Implementation Review of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and at chapter 6 discusses changes to Part 36 offers to settle.

The opening paragraphs of the review read:

Part 36 of the Civil Procedure Rules (CPR) was introduced to encourage early settlement through a ‘carrot and stick’ approach to ensure all parties have an interest in agreeing to early settlement.

Section 55 of the LASPO Act made relatively minor statutory changes including provision for recovery of an additional sum by a claimant where a defendant fails to beat the claimant’s offer. This was accompanied with a rule change to reverse the effect of Carver v BAA to clarify that ‘most advantageous’ meant by any amount, no matter how small.”

The review then goes out to set out, at paragraph 126, that many lawyers for claimants took the view that the 10% enhancement is not sufficiently high to make a meaningful difference or to be a decisive factor determining whether to settle and that the additional costs of a trial could exceed this enhancement, limiting the impact of any uplift.

Thus some respondents to the review suggested that the uplift should be increased to 20% and that the uplift cap of £75,000 should be raised.

This decision is close to being a contempt of Parliament, save that it appears that all of the parties, their lawyers and the judge were unaware of the legislative history in this matter.

Written by kerryunderwood

February 22, 2019 at 6:56 am

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

These principles, and the whole issue of Qualified One-Way Costs Shifting, is dealt with in my book – Qualified One-Way Costs Shifting, Section 57 and Set-Off – Available from me here for £15.


Waring v McDonnell [2018] EW Misc B11 (CC) (06 November 2018)

a Circuit Judge held that an unsuccessful counter-claiming defendant in a personal injury matter enjoyed the benefit of Qualified One-Way Costs Shifting only in relation to his claim for damages, and not in relation to defending the claimant’s claim.

He would have got the costs of his counter-claim had he won.


An obviously correct decision which has received a surprising amount of attention, presumably because it differed from the obviously wrong decision in

Ketchion v McEwan [2018] 6 WLUK 625

which held that QOCS applied equally to proceedings brought by a claimant as a Part 20 claimant in the same case if the two claims arose out of the same facts.

Neither decision is binding, but the Judge here heard full arguments and gave a full and reasoned judgment.

I am grateful to Andrew Lyons of counsel, and Inderjit Dullay, costs lawyer from Shakespeare Martineau in relation to information concerning the Ketchion case.

Written by kerryunderwood

February 22, 2019 at 6:42 am

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

There is an interesting recent blog from the ever excellent Simon Gibbs pointing out that the 1% of approved budget or £1,000 for budget drafting, and 2% for the budget process, are caps, not entitlements; in other words the costs are capped and not fixed.

I see this mistake time and time again in various areas of work.

Understanding the difference is crucial.

Where costs are fixed, then the key is to earn those fixed costs at minimum expense, while maintaining the necessary quality of work.

That may sound like a tall order, but it is the way virtually every other business works.

Capped costs maintain a lot of the inefficiency, and incentives to be inefficient, that exist with the hourly rate, that is to do as much work as possible, but only up to the level of the cap.

Simon Gibbs also states:

“Secondly, the fact that the part of the % that relates to incurred costs is calculated by reference to the amount eventually “agreed or allowed on assessment” means that at the time the budget is drafted (and at the time of the costs management hearing) it is completely unknown what figure will eventually be agreed or assessed in respect of incurred costs.  This will only be discovered at the conclusion of the claim once the other costs have actually been agreed/assessed.  It is therefore not possible to calculate the 1% or 2% figure at that stage as the amount used to calculate the figure has not yet crystallised.

Thirdly, even in respect of the estimated future costs, at best it is simply wishful thinking to believe that because the estimated future costs are £x that this amount will be approved in full.  Any reduction by the court in respect of estimated costs will lead to a corresponding reduction in the amount allowed for the “budget drafting” and “budget process” caps.

Matters are not helped by the Precedent H Guidance Notes which state:

“Budget preparation: the time spent in preparing the budget and associated material must not be claimed in the draft budget under any phase. The permitted figure will be inserted once the final budget figure has been approved by the court.”

The reference to “inserted” is clearly intended to mean the amounts that will be inserted on the front page of Precedent H.

This is also simply wrong, because at the point the future estimated costs are approved by the court, the amount that may be agreed/assessed for the incurred costs will, again, remain unknown.

Precedent H itself is clearly defectively drafted.  The 1% and 2% figures can never be inserted at the costs management stage and these elements should not be on Precedent H.”

Written by kerryunderwood

February 21, 2019 at 7:12 am

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Judges have warned that cost-cutting is the reason for the government’s pursuit of video hearings, and that saving money is being put ahead of justice.

Over ten thousand judges and office holders responded to a consultation on the proposed reforms and over 800 attended local meetings.

Judges questioned the ability to maintain open justice and the viability of hearing contested evidence by way of video hearings.

The judiciary was also concerned about the loss of gravitas in proceedings, as well as security and confidentiality and the prospect of cases being recorded and posted on social media.

In a trial of video hearings in the First-tier Tax Tribunal in 2018, over one third of cases had to be abandoned because of technical problems.

Links to all of the responses are here.

Written by kerryunderwood

February 21, 2019 at 6:55 am

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Court’s Powers When A Party Dies

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.


Currie v Thornley & Anor [2019] EWHC 172 (Ch) (01 February 2019)

the court was faced with a situation where one of two defendants in a civil action had died, and the defendant who died had already given evidence, and died before judgment.

At the relevant time none of the three executors had confirmed their willingness to be appointed. Two had refused, and one was considering his position.

The judge applied the provisions of CPR 19.8(1), and CPR 19.8 reads:

“(1) Where a person who had an interest in a claim has died and that person has no personal representative the court may order –

(a) the claim to proceed in the absence of a person representing the estate of the deceased; or

(b) a person to be appointed to represent the estate of the deceased.

(2) Where a defendant against whom a claim could have been brought has died and –

(a) a grant of probate or administration has been made, the claim must be brought against the persons who are the personal representatives of the deceased;

(b) a grant of probate or administration has not been made –

(i) the claim must be brought against ‘the estate of’ the deceased; and

(ii) the claimant must apply to the court for an order appointing a person to represent the estate of the deceased in the claim.

(3) A claim shall be treated as having been brought against ‘the estate of’ the deceased in accordance with paragraph (2)(b)(i) where –

(a) the claim is brought against the ‘personal representatives’ of the deceased but a grant of probate or administration has not been made; or

(b) the person against whom the claim was brought was dead when the claim was started.

(4) Before making an order under this rule, the court may direct notice of the application to be given to any other person with an interest in the claim.

(5) Where an order has been made under paragraphs (1) or (2)(b)(ii) any judgment or order made or given in the claim is binding on the estate of the deceased.”

It will be noted that once a Grant of Probate, or Letters of Administration, have been granted, the court has no power to allow the claim to proceed in the absence of a person representing the estate of the deceased.

This may mean that there will be circumstances where it is in the interest of the estate of the deceased party to delay obtaining a Grant of Probate or Letters of Administration so as to allow CPR 19.8(1) to be applied.

Obtaining a Grant of Probate or Letters of Administration inevitably takes some time, and therefore it may be quicker, and preferable for all parties, for the court to allow the claim to proceed in the absence of a person representing the estate of the deceased.

Fresh Proceedings Possible When Previous Proceedings On Behalf Of Deceased Were A Nullity


Personal Representatives of Hutson and another v Tata Steel UK Ltd [2019] EWHC 143 (QB) (1 February 2019)

in a group action seeking compensation from an employer for injuries and loss caused by harmful fumes and dust, the High Court granted various applications to extend time for entering the Group Litigation Order, thereby allowing cases to proceed.

Some employees had died and claims were advanced by their estates.

In three cases, the claim had purportedly been entered on the Group Litigation Order register but the requisite formalities had not been complied with before the deadline.

The court confirmed that fresh proceedings on behalf of a deceased could be issued, noting that as a matter of law, any claim purportedly commenced by a deceased party was a nullity which was incapable of subsequent rectification

(Kimathi v Foreign and Commonwealth Office (No 2) [2016] EWHC 3005.)

However, the court accepted the claimants’ argument that the fact that a claim is a nullity does not preclude the commencement of a subsequent claim which is not.

There may be circumstances in which the subsequent claim could be struck out as an abuse of the process of the court but, until this happens, the second claim was procedurally valid.

Otherwise, where an action was commenced on behalf of a claimant who had, unbeknown, died on the previous day, it would be extraordinary that his estate was thereby precluded from starting a fresh action if it was properly constituted.

The court had a discretion to extend the time within which the three claims could be entered on the register and that discretion was extended by reference to the tests for relief from sanctions established in

Denton v TH White Ltd [2014] 1 WLR 3926

and the overriding objective.

Although the defaults were serious and significant and due to culpable oversight, considering all the circumstances, the court granted relief.

The breaches did not significantly prevent the court or the parties from conducting the litigation efficiently and at proportionate cost and there had not been a history of non-compliance.

It was just to extend time.

The timetable for the future progress of the Group Litigation Order was not jeopardised, it would not save any expense to refuse and the defendant could not show real prejudice if time was extended.

Written by kerryunderwood

February 20, 2019 at 6:42 am

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