Mary Mulhall of Hugh James and John-Paul Swoboda discuss the recent  case of TDX v Raven Mount Services Company Ltd, where they acted for the Claimant, and provide some practice points in cases where you are suing a parent company.

At the heart of this case was one question, did the parent company (the Defendant) owe the deceased a duty of care in respect of his safety whilst at work? If they did then liability followed, it having been admitted that asbestos exposure was negligent and causative of the deceased’s mesothelioma. The case settled on favourable terms to the Claimant at about 5pm on the day before trial.

TDX, the Claimant, was the deceased’s daughter. The deceased also had an adult son, TSX, who suffered from profound disability. Prior to mesothelioma TSX relied entirely on his father, the deceased, for his many care needs. Because TSX lacked capacity the proceedings were anonymised.

The case arose from 18 months of exposure to asbestos in the construction industry during 1962/63 to 1963/64. The deceased was a labourer working next to carpenters sawing AIB and laggers. His employer, according to HMRC records, was a company known as Holliday and Greenwood (H&G) but no insurance could be traced. However, the deceased recalled working for Higgs and Hill (H&H), the predecessor in title to the Defendant, who were the parent company to H&G and who remain an active company. 

We argued that parent company liability arose because H&H’s parent/ subsidiary relationship with H&G was at the extreme end where the de jure difference of legal personality was, in practice,irrelevant. We argued H&G was controlled legally, administratively, and in practice by H&H; that key aspects of the business (e.g. costings, plant, stores, wages, consideration of accidents) where carried on by H&H as though H&G and H&H were a single commercial undertaking. Whilst H&G in theory had their own staff we argued the evidence suggested employees did not distinguish between H&H and H&G (with the deceased indicating he thought he worked for H&H). We said in light of the above H&H owed a duty to the deceased in respect of his work and his safety whilst at work.

Practice points

Our experience litigating this case has highlighted some practice points which we hope may be useful for practitioners considering bringing an action against a parent company.

Firstly, if the facts are right, one should be prepared to allege parent company responsibility/liability in any context. To put it another way although Chandler v Cape [2012] EWCA Civ 525 was concerned with parent company liability in an asbestos factory, and subsequent cases, such as Okpabi v Shell [2021] UKSC 3 (oil spills from pipes in the Niger delta)Lungowe v Vedanta [2019] UKSC 20 (Zambian copper mine discharge causing PI and property damage), are mass torts occurring overseas, there is no reason in principle why parent company liability may not arise in the construction industry (as alleged in this case) or in any other industry. Parent company liability provides an alternative route to establishing liability which may prove invaluable where the employer is dissolved and no insurer can be traced.

Secondly, parent company liability in the terms cast by Okpabi, Vedanta and Chandler is not the only route to establish parent company liability. The courts have, in recent years also described a concept known as “dual vicarious liability”. The Supreme Court in Various Claimants v Catholic Child Welfare Society [2021] UKSC 56) said this doctrine may apply where the employee “is so much part of the work, business or organisation of both employers that it is just to make both employers answer for his negligence.” A further doctrine of some assistance may be transferred employment/ borrowed employees. As described in Bowstead and Reynolds on Agency “An employee, X, may be in the general employment of A, but, as the result of arrangements made between A and B, X may be acting as the employee of B, so as to make B, and not A, responsible for X’s tort at the relevant time. The test is whether X is transferred, or only the use and benefit of X’s work, and this depends upon the extent to which A places X under the control and at the disposition of B.” Finally, of course one must not lose sight of the fact that many of the regulations relevant to asbestos litigation do not require a pre-existing relationship of employment but rather the relevant test is control or whether the sued person was an occupier (cf. McDonald v National Grid Electricity [2014] UKSC 53). Which legal doctrine is best suited ought to be determined by the evidence.

Thirdly, the mantra of evidence, evidence, evidence is key if a parent liability case is to be won. Whether there is sufficient intervention or control of relevant activities for a duty to be imposed depends heavily upon the contents of documents internal, or passing between, the subsidiary and parent (cf. para 44 of Lord Briggs’ judgment in Vedanta and para 129 of Lord Hamblen’s judgment in Okpabi). Where exposure to asbestos occurred decades previously documentary evidence is likely to be incomplete. That is not to say there will be no documentation but rather it will take determination to obtain such documents as still exists. Trips to archives (local and national), libraries, and the locality are de rigueur. Full company documentation from Companies House (subsidiary and parent) may be required. 

Fourthly, if you’re brining a case like this it may take a certain leap of faith at the outset. That is because the defendant (the parent company) may have much by way of disclosure but you probably will not get full disclosure until after issue and service and possibly (as happened in our case) disclosure will continue until the date of settlement. From a practical point of view this might mean needing to update the pleadings with the disclosure.

Finally, the level of intervention in the management of the subsidiary requisite to give rise to a duty of care is a “pure question of fact” (cf. para 44 of Lord Briggs’ judgment in Vedanta). The determination of that question of fact is dependent upon interpretation and evaluation of evidence by the judge. That means two things. Different judges can legitimately come to different conclusions. Second, and interconnect to the first, any appeal on a question of fact will be difficult. Accordingly, to win a case like this we think there needs to be a powerful and persuasive narrative as to why the parent ought to be held liable. 

Judgment was handed down on 3 November 2021 following a two-day assessment of damages hearing before Ritchie J in this unusual fatal mesothelioma claim where the applicable law was Scots law. Judgment for the First Claimant, Charmaine Haggerty-Garton (the widow), was given in the sum of £614,040. Dushal Mehta of Fieldfisher and John Paul Swoboda or 12 KBW represented the First Claimant and her three children.

The judgment can be found here.

An article provide more information on the facts of the case can be found here.

This claim was unusual as Scots law was the applicable law despite being tried in England. This gives PI practitioners north and south of the border a chance to consider what is the same and what is different in personal injury actions. There are two huge differences: awards of general damages for ‘loss of society’ for relatives and interest.

Loss of society is a head of loss completely unknown to English law which allows for a general damages award for close relatives who can establish a sufficient relationship with the deceased. In this case there were nine relatives who made such a claim. Five relatives (two daughter from a first marriage, two sisters, and a granddaughter) were joined into the action two days prior to trial and settled their claims one day prior to trial. The other four relatives were the widow Charmaine Haggerty-Garton and her three sons. Their loss of society awards for (a) distress and anxiety endured in contemplation of the deceased’s suffering, (b) grief and sorrow caused by the deceased’s death and (c) the loss of such non-pecuniary benefit as they may have derived from the deceased’s “society and guidance” fell to be determined by Ritchie J. He made an award of £115,000 for the widow Charmaine and awarded between £40,000 to £35,000 for each son. By contrast no general damages award would have been made under English law and there would have been a statutory entitlement to £12,980 for bereavement for the widow only. 

Ought the Scots law approach to be adopted in English law? There is certainly a case to be made but it is ultimately a question of policy as to whether English law should follow Scots law in allowing general damages claims for relatives when a loved one has died as a result of a tort. It is however undeniably the case that Scots law is more generous in the assessment of general damages for relatives in fatal cases and it is not wholly satisfactory that there should be such divergence between the Scots and English law on this issue.

The other huge difference between the approach under Scots law and English law is in respect of interest rates. Whilst English law interest rates languish at 0.025% in respect of special damages and 2% for general damages Scots law is much more generous with interest being claimable at 8% and 4% depending on the head of loss. Interest in this case amounted to over £40,000. It is inconceivable that anything like this amount would have been recovered under English law.

Two other points from the judgment may be of broader interest to PI practitioners. Firstly, in respect of the claim for loss personal services (equivalent to a services dependency claim) Ritchie J found the ONS paper “2016 Household Satellite account on household service work done through the UK” which provided a figure of £18,932 on the value of unpaid household service work undertaken per person was “helpful” but said he had difficulty in understanding what the survey meant. The extent to which this ONS paper (which suggests many services dependency claims have been undervalued where impressionistic awards were made) influences future claims is still a matter for debate (and future cases).

Secondly, the Court also had to consider what the appropriate award for Solatium (the Scots law equivalent to PSLA) was. This was a case where the deceased suffered terribly particularly towards the end of his life. He endured the symptoms of mesothelioma for some 13 months. An award of £97,250 was made confirming the trend that most awards in mesothelioma cases are likely to fall in the higher part of the JC bracket.

The judgment of the Court of Appeal can be read here.

On 26 August 2021 the Court of Appeal handed down its judgment in this fatal mesothelioma claim. The appeal was brought by the Defendant in the action and at stake was the width and breadth of dependency claims under the Fatal Accidents Act (the FAA) and the proper method of valuing such claims. In addition, a personal tragedy for the Claimant (the removal of her foster children – A and B – from her care after trial) gave the Defendant a further argument; that the future loss of services dependency, in so far as it related to A and B, was no longer sustainable.

The facts of the case and analysis of the first instance decision of Anthony Metzer QC (sitting as a Deputy High Court Judge) can be found in this earlier blog post here.

The lead judgment was given by Nicola Davies LJ, with whom Stuart-Smith LJ and Sir Patrick Elias agreed, making this a powerful and unanimous decision of the Court of Appeal.

What qualifies as a recoverable dependency under the FAA?

The Defendant argued that the Claimant’s lost opportunity to return to work following the death of her husband, who was the homemaker and responsible for primary childcare, was not a recoverable loss under the FAA because: (a) it was properly characterised as the foster children’s loss, and (b) it arose from a business relationship (fostering). These arguments were rejected by Nicola Davies LJ. As Bedlam LJ had stated in Wood v Bentall Simplex Ltd [1992] PIQR 332 (CA): “No aspect of the law of damages has been found in practice to be more dependent upon the facts of each particular case than the assessment of loss of pecuniary benefit to dependants under the Fatal Accidents Act.” Neither Nicola Davies LJ nor any other member of the Court was willing to go behind the judge’s findings of fact in respect of this issue.

The judgment of Nicola Davies LJ goes beyond a refusal to interfere with factual findings made by the judge below and clarifies the law in a number of ways.

Firstly, where the deceased and their dependant (in this case a husband and wife) receive money for a service (in this case fostering), this does not necessarily mean that the provision of the service was a business decision, such that any loss arising from the death of the deceased is ‘incidental’ to the relationship. This is a question of fact which requires a determination of why the service was provided. In this case, the judge determined that the decision to foster was “at its core” a decision to have a family and therefore not incidental to the relationship of husband and wife. This finding was upheld by the Court of Appeal.

Secondly, in a situation where the same loss is suffered by a person who is eligible to bring a dependency claim under the FAA and a person who is not eligible to bring such a claim, the mere fact that a non-eligible person has suffered the same loss does not prohibit recovery by the eligible dependant. As Nicola Davies LJ put it, “The fact that the children [who by reason of being foster children were not eligible to claim under the FAA] also benefitted from the deceased’s care does not detract from, still less undermine, the claim of Mrs Witham.”

The third and final area of clarification which this part of the decision provides is that the s3(1) gateway under the FAA is wide and cannot be reduced to a simple formulation. The foundation of any claim under s3(1) is a dependant’s loss of expectation of future pecuniary benefit from the deceased and “there is no prescriptive method by which such damage is to be identified” (as Nicola Davies LJ emphasised at [43]). There is no rule that where the loss arises because the dependant has lost earnings it is not recoverable; in Witham the Claimant/dependant’s claim arose from her lost career (the pecuniary loss giving rise to the s3(1) claim being the loss of earnings) which was held by the Court of Appeal to be a recoverable dependency. The question of how a court should value such a loss is separate and considered immediately below.

How should a recoverable dependency be valued?

The judge at first instance valued the Claimant’s dependency on the deceased in providing childcare to A and B by costing the care on a commercial basis and without making a 25% deduction (as happens in personal injury cases where gratuitous care is provided to an injured claimant to reflect that no tax or NICs will be paid by the caregiver). The Defendant argued that as it was the Claimant who was now providing the care to A and B, the valuation should not have been at commercial rates and there should have been a 25% deduction.

The Defendant’s arguments were dismissed on the basis that under the FAA a judge has a discretion to find the measure of loss most appropriate to the facts of the case. Further, and importantly, the Claimant’s argument that the valuation is of the deceased’s services, rather than the replacement services, was also accepted. As Nicola Davies LJ put it at [52]:“It is the value of the services lost which requires assessment and compensation, not the value of how the dependant manages following the death.” The Court of Appeal confirmed that there is no principle which means that commercial rates cannot be used to value the service provided by the deceased and there is no requirement for a 25% discount where care is subsequently provided on a gratuitous basis. A trial judge has a discretion as to the measure of loss and there is no “prescriptive method by which such damage is to be … calculated.”

Can loss of earnings, in principle, be used as the measure of loss in circumstances where a dependant gives up work to replace a service previously provided by the deceased? This is a point which has often been taken by defendants following Rupasinghe v West Hertfordshire Hospitals NHS Trust [2017] P.I.Q.R Q1. Although the Court of Appeal did not deal squarely with this issue, at [51] Nicola Davies LJ indicated that the judge did not choose loss of earnings as the measure of loss which would have given rise to the highest level of damages, thus presupposing that this option was open to him. Further the Court of Appeal’s restatement that there is no “prescriptive method by which such damage is to be identified, or calculated…” (this being a quote from Cape Distribution v O’Loughlin [2001] EWCA Civ 178 [11]) means that any alleged principle that loss of earnings cannot be used as the measure of loss cannot be right as such a principle would amount to a prescriptive method by which damage is, or is not, to be calculated.

Remission to the High Court

An extraordinary turn of events happened to the Claimant after the conclusion of the trial but before the decision on whether to grant the Defendant permission to appeal. A and B were removed from her care so she no longer acted as their foster carer. This was unexpected and unforeseen. It would be wrong to go into detail on this issue here as (a) the Court of Appeal has remitted the matter to High Court to determine how this change of circumstances should affect the Claimant’s dependency on the deceased, in so far as it related to A and B and (b) the Claimant hopes to have A and B returned to her care.

However, this extraordinary turn of events meant that the Court of Appeal considered two principles of general importance: in what circumstances should fresh evidence be permitted after a trial but before an appeal, and to what extent can post death events be taken into account in valuing a dependency under FAA.

Whilst accepting the general principle that there must be an end to litigation save in very exceptional circumstances (which augurs strongly against the admission of new evidence), the Court of Appeal restated its broad discretion to admit new evidence. As the first instance judge had found that the foster care arrangement would continue until 2029, Nicola Davies LJ held that to refuse to admit the evidence “would affront common sense [and] a sense of justice.”

Further, whilst the Court of Appeal’s judgment reiterates that dependency is valued at the date of death, it is also acknowledged that “post death events which are relevant are those which affect the continuance of the dependency…” (cf. Welsh Ambulance Services NHS Trust and another v Jennifer Mary Williams [2008] EWCA Civ  81). On the facts of this case, the Court of Appeal found that the new evidence was directly relevant to the continuance of the dependency and that it was a post death event which was relevant.

Upon these findings, the Court of Appeal remitted the matter to the High Court to determine the valuation of the Claimant’s services dependency upon the deceased, in respect of his childcare for A and B after 19 May 2021 (the date upon which the children were removed from the Claimant’s care) only.

The defendant sought permission to appeal on two grounds. The first was that the judge wrongly interpreted and therefore misapplied the judgment of the Court of Appeal in carrying out his reassessment. The second was that the judge wrongly attributed to Mr Head an intention, had he lived, gradually to transfer the entirety of his and his wife’s shareholding to his sons.

The application for permission to appeal came before Bean LJ, who gave the lead judgment of the Court of Appeal when Claimant’s appeal was granted in January of this year.

In respect of ground one, Bean LJ held that “Johnson J correctly applied the guidance which we gave. The distinction which the Appellant Defendant draws in ground 1 between Mr Head’s income or earnings received in the sense of being taken out of the business and those earned but ploughed back into the company seems to me to be flatly contrary to paragraph 33 of the judgment handed down on 18 January 2021, and Johnson J was unarguably right to reject it.”

In respect of ground two, Bean LJ held that “this was a finding of fact which the judge was entitled to make on the evidence before him and was consistent with the guidance given in paragraph 35 of the judgment of this court.”

Our post about the Court of Appeal’s decision in respect of the Claimant’s appeal can be read here and our post about Johnson J’s re-assessment of the lost years claim can be read here.

Yesterday morning, little more than a month after the hearing, the Court of Appeal handed down judgment in Paramount Shopfitting Company Ltd v Rix [2021] EWCA Civ 1172. It is the latest in a series of decisions about how the courts should assess loss of income where mesothelioma hits a family business.

Facts

Mr Rix contracted mesothelioma as a result of the defendant’s negligence and died aged 60. He had been the founder and driving force of a successful joinery business. The judge, Cavanagh J, described him as a “… remarkably talented and dedicated businessman.” He and his wife held 80% of the shares between them and their two sons held the remaining 20%. The business consistently generated a gross annual profit of more than £300,000, but they retained most of the profit within the business to enhance its value. 

The family business continued to thrive after Mr Rix’s death and generated greater profits in the subsequent years

Mrs Rix claimed as his widow and dependant. She contended that her loss of financial dependency under s.3 of the Fatal Accidents Act 1976 was her share of the annual income to which they would jointly have been entitled had Mr Rix lived (basis 1). Alternatively, she claimed by reference to replacing the cost of his services to the business (basis 2). The defendant contended that there was no loss since the family business had been more profitable after Mr Rix’s death and she had inherited his shares and retained her own. 

The Judge’s decision 

The trial judge, presented with these alternatives, decided that there was a loss of dependency and held that basis 1 was the appropriate method of calculation. The business was not a ‘money generating beast’ and the income was derived from Mr Rix’s efforts – his skill and acumen – and not from a capital asset. 

Grounds of appeal

The Defendant was permitted to appeal on three grounds. First, the Judge was wrong to assess the loss of dependency by reference to all the profits which accrued to Mr and Mrs Rix without regard to whether those profits survived his death and continued to accrue. Secondly, the Judge was wrong to treat Mrs Rix’s shareholding as if it had belonged to Mr Rix. Finally, the Judge was wrong not to deduct Mrs Rix’s surviving income from her shares in the calculation of the loss. 

On appeal

The Court of Appeal unanimously dismissed all three grounds of appeal.

Nicola Davies LJ, giving the lead judgment, held that the earlier authorities, Wood v Bentall [1992] PIQR 332, Cape vO’Loughlin [2001] EWCA Civ 178 and Welsh Ambulance Services NHS Trust & Anor v Williams [2008] EWCA Civ 81, did not establish a principle that a business should be treated as a capital asset which will continue to produce a flow of income regardless of the death of the prime mover and driving force. 

On the facts, there was ‘no identifiable element of the profits which was not touched by the management of Mr Rix’. The loss was the income that would have been generated by Mr Rix’s services to the business, irrespective of the fact that the business retained the capital assets. It was therefore logical to treat the whole profit available to Mr and Mrs Rix as earned income and part of the financial dependency. Accordingly, there was no sound objection to basis 1 and the first ground of appeal was dismissed. 

The second ground of the appeal – that the Judge should not have treated Mrs Rix’s share as if it belonged to Mr Rix – was dismissed on the basis that it is established by authority that the Court must look at what the underlying reality of the situation. It appears, curiously, that the defendant relied on Ward v Newall [1998] 1 WLR 1722, which on the face of it seems to be directly contrary to defendant’s argument. 

The final ground of appeal was dismissed on the basis that the finding that the income of Mr and Mrs Rix – whether in the form of salary, dividends or profits – was wholly attributable to Mr Rix’s endeavours and earning capacity. This left no room for any deduction for income that would survive his death. Any such deduction would also contravene the principle that dependency is fixed as at death. 

Discussion

The outcome was a resounding success for the claimant and a decisive statement about how the Courts should treat claims of this type in the future. 

The decision is of considerable general importance. Where the injured party in a mesothelioma case has a fixed or regular income, the assessment of ‘financial dependency’ is essentially basic arithmetic. But, increasingly often, in cases such as Rix and Head v Culver (on remarkably similar facts), the loss is both more substantial and controversial. The central difficulty is how to disentangle that part of the profit which is derived from the residual value of the shares, which may be bound up in the company assets or intangible factors such as the goodwill and the existing customer base. 

The Court of Appeal recognised that, in principle, it is necessary to distinguish between loss of income derived from services and income derived from a capital asset. As Staughton LJ pithily put it in Wood, you cannot claim for the loss of the eggs if you have inherited the goose. 

But that principle, until now at least, has been difficult to apply. 

The Court of Appeal did not opt for the quasi-compromise position represented by basis 2 and the cost of replacing Mr Rix’s services (although, it should be remembered, the defendant rejected this approach too). Instead, the Court of Appeal tackled the question of how to assess this type of loss head on. 

Underhill LJ identified the problem with precision: 

“The real question is how that distinction works in the case of a small or medium-sized business with substantial assets, where the deceased (typically, but not necessarily, the founder) is not only the owner but the main person whose work and decisions generate the profits and thus the income which he takes out of the business and which the wife enjoys.” (para 76)

In a key passage, at para 60, Nicola Davies LJ answered the question as follows: 

“Income is only derived from capital if it is identifiable as having been received without the labour and services of the deceased. In short, it is passive.”

Underhill LJ found the answer lay in the old decision of Staughton LJ in Wood in which Staughton LJ held that, in assessing the loss in this situation, the court had to decide how much of the deceased’s was ‘derived solely from capital’. Applying this reasoning, Underhill LJ held: 

“I take that to mean that it is irrelevant that the capital has in one sense made the earning of the income possible.  The income is only “derived from capital” if it is identifiable as having been received without the husband’s services – in short, if it is passive.”   

Nicola Davies LJ, at para 54(iv), used the same language in articulating the core principles. 

The Court of Appeal has seemingly come up with a practical solution which is to give the injured party, rather than the tortfeasor, the benefit of the doubt. Valuable cases are rarely decided by the burden of proof, but if the only income that is it be deducted is that which is ‘derived solely from the capital’ then it rests with the defendant to prove that which falls into this category. 

This is consistent with (a) the Court of Appeal’s recognition that damages under the fatal accidents act may be greater than would be justified on a strict view of the dependants’ loss (para 54vi) and (b) the fairwind principle which gives the benefit of the doubt to the injured party where the tort makes the future uncertain. 

The case was an appeal from a decision of Master Rowley, on a short, discrete issue: when the parties settled all heads of quantum in a mesothelioma case at the door of court in the minutes before an assessment of damages hearing was due to begin, and the hearing was used only to approve a Tomlin order and to determine one question of the incidence of costs for that day: had the case settled “at trial”, giving rise to a 100% success fee, or before trial, giving rise only to a 27.5% success fee?

Negotiations over settlement had continued literally outside the court until approximately 20 minutes before the assessment of damages hearing was due to begin. The cost of immunotherapy for the claimant (a living mesothelioma victim) was apparently the source of most of the contention.

Counsel (Aliyah Akram of 12KBW for the Claimant; Jayne Adams QC for the Defendant) were able to agree a Tomlin order in respect of virtually all contested issues. But the Defendant wanted an order that the Claimant should pay the Defendant’s costs of the trial date, on the grounds that failure to achieve agreement until that late stage was caused by the Claimant’s unreasonableness.

Counsel therefore went before Stewart J at the appointed time for the assessment of damages and presented the Tomlin order for approval, and asked him to adjudicate the sole outstanding costs issue. He did so in very brief terms and in the Claimant’s favour, leaving the order in the Tomlin order (that the Defendant pay the Claimant’s costs, to be assessed) untouched.

In the Senior Courts Costs Office, Master Rowley was invited by the Claimant to find that the matter had concluded at trial, within the meaning of the former CPR r45.15(6) (which continues to apply to mesothelioma claims), because the listed assessment of damages hearing had in fact opened, and had been used to determine an outstanding issue of costs which the parties had been unable to agree.

Master Rowley did not agree with the Claimant’s submission on this point. In his judgment the success fee system was provided to compensate claimants for going to a contested trial where there was a significant risk that they might lose; this wasn’t the case here. The matter would have already met with “success” within the meaning of the CFA before the hearing began, for instance. But in any event, the incidence of costs is a matter which (at least in theory) has to be determined at the conclusion of every hearing. The mere making of a costs order could not, without more, cause a hearing to become a “final contested hearing”.

On appeal, the Claimant relied on obiter observations of Wilson LJ in Thenga v Quinn [2009] EWCA Civ 151, that a final contested hearing referred to a hearing of the substantive claim, “albeit probably […] including a hearing referable to a disputed claim for an award of costs in principle”.

Calver J had no difficulty in dismissing the appeal. The wording of the former CPR r45.15(6) refers to the final contested hearing of “the claim”, and the claim is the claim for damages for breach of duty – i.e. the substantive claim. By the time the hearing before Stewart J had opened, that claim had already been completely compromised. “The claim” did not encompass a claim for costs to be paid by or to either party, once the substantive claim was already disposed of.

Were this otherwise: a 100% uplift would become payable even if there was a trivial dispute about costs left after the conclusion of the substantive claim. There would be an incentive for claimants to leave small matters outstanding, in order to recover their 100% success fees.

On its face this is a sensible decision which – Thenga notwithstanding, which Calver J disapproved – accords with the thrust of the decisions on the opening of final contested hearings from the pre-2013 days when success fee recovery was widespread. It does, however, mean that claimants and defendants need to be clearsighted about the consequences of settling, or not settling, as the day and hour of the final contested hearing looms nearer.

Background

There is a convention that cost budgeting is disapplied for cases in the Asbestos List. This is captured in the White Book commentary at 3DPD 5.3 as follows:

“The convention of dispensing with costs budgeting in asbestos disease cases has been reinforced by the introduction of PD 3E paragraph 2(b) which indicates that in all cases where there is limited or severely impaired life expectation (five years or less remaining) the Court will ordinarily disapply costs management.”

In this case, the Defendant had made an application to displace this convention and impose costs budgeting. Master Davison’s judgment, given ex tempore on that point in the course of the CMC, has wider application for cases in the Asbestos List.

The Judgment

Master Davison dismissed the Defendant’s application and dispensed with costs budgeting. The Master held that the convention that budgeting be dispensed with reflects the fact that matters typically need to progress very quickly in the Asbestos List. Both case management and final hearings are often listed comparatively soon after the issue of the Claim Form. Further, the Asbestos Masters do not distinguish between mesothelioma, asbestosis cases, and fatal cases for the purposes of listing. All such cases are listed for CMC very quickly, despite the differences in life expectancy in those categories of cases. Such listing arrangements cannot accommodate costs budgeting. 

Master Davison’s judgment takes the Defendant’s three arguments in turn. 

First, the fact that the case in hand was a deceased case was not significant. No distinction was made on that ground because of the administrative burden it would impose and its potential effect on living cases. 

Second, the fact that this case was a heavily contested trial was also not sufficient to take the case out of the ordinary. Heavy contest is characteristic of lots of asbestos cases, and the expert evidence in such case is also often complex. 

Third, in relation to the Defendant drawing attention to the benefits of costs budgeting across the board, Master Davison held at [9]:

“[…] these factors were considered corporately by the Asbestos Masters and by the senior judiciary who devised the present system and approved the convention that costs budgeting should not usually apply. The factors that are generally in favour of costs budgeting were judged to be subordinate to the factors that I have mentioned.” 

Two further observations were then made in relation to this. The Defendant had not produced any evidence to demonstrate that costs in asbestos cases are disproportionate or inadequately controlled. The Defendant could not therefore displace the convention of dispensing with costs budgeting. Moreover, Master Davison observed that QB Masers, Chancery Masters, and Costs Judges do not agree with the Defendant’s position that costs budgeting controls costs better. He did not recognise the Defendant’s dichotomy that imposing costs budgeting represents tight controls of costs in contrast to the ‘free-for-all’ that ensues without it. 

Comment

This is a notable judgment for asbestos practitioners. As is evident from the opening line of Master Davison’s judgment, it is handed down with the approval of the other Asbestos Masters. Its restatement of the reasons for the convention in favour of displacing costs budgeting in the Asbestos List may head off similar challenges in the future.

Master Davison held at [5] that the listing arrangements cannot accommodate costs budgeting and stated: “And I would add that they cannot accommodate too many debates, or contested hearings, about whether costs budgeting should or should not apply”. The Master’s comment at [9] that this hearing was not the appropriate forum for debates about “complex and somewhat sensitive” issues, speaks to the special considerations that underly the need for an Asbestos List. Practitioners need no reminding of the particular difficulties faced by litigators on this list, the existence of the ‘Show Cause’ procedure, expedited timetabling and case management by specialist Masters serve to meet these difficulties. It is hard to see how cost budgeting can be accommodated within this schema, it is suggested that the Master’s decision is therefore the right one.  

This was a mesothelioma trial in which the central issue was whether the deceased, Bernard Jackman, had been employed by the Defendant, Harold Firth & Son whilst working at Imperial Chemical Industries (“ICI”) in Huddersfield. The Defendant accepted, without formally admitting liability, that if this was established liability would likely follow.

The available evidence

There was no evidence from the deceased. HMRC records showed that the deceased started to work for the Defendant at some point between April 1968 and April 1969 and left at some point between April 1972 and April 1973. There were medical records which notably included a letter, from the date of the Deceased’s diagnosis, recording that he “worked in construction industry and also worked with asbestos pipes in the 1970’s at ICI”.

Mrs Jackman’s evidence went to the central issue of whether the Defendant employed the deceased. Her evidence consisted of two witness statements. In the first statement she recalled that her husband worked for the defendant at ICI in Huddersfield, that he did not like the work and talked about Eddie Firth (his boss) “for ages afterwards”. She recalled that when he was given his diagnosis he told her that “he would have been exposed to asbestos when he worked at ICI cleaning pipes out”. She goes on to say: “when he told me this, I remembered that he had mentioned at the time, in the 1970’s while he had been working at ICI that he had been working cleaning out pipes. …” When cross examined about this part of her evidence Mrs Jackman said that her husband “had mentioned over the years working at ICI. It was a filthy job – he said this quite often. He would chunter on about it.”

The Judge read witness statements from two men who worked at ICI Huddersfield, one from 1969 to 1970 and the other from 1956 to 1981. Whilst both witnesses had sadly died before trial it was agreed that their evidence could be relied upon in the proceedings. Their statements described the general working conditions at the plant at those times and the Judge held that: “the clear impression from each statement is that over a long period and at least covering the period from 1969 to 1972 labourers, laggers and maintenance engineers working at the ICI plant at Huddersfield were exposed to asbestos fibres.”

The proper approach to witness evidence

The Judge reminded himself of the principles summarised by Geoffrey Tattersall QC in Bannister v Freemans [2020] EWHC 1256 QB:

“i) A strong recollection of events expressed in evidence with confidence is not a reliable guide to the accuracy of the recollection (see paragraphs 74 and 75)

ii) The fact that a witness has a considerable amount to gain if his or her recollection of events is accepted by the court as fact, means that the witness’ recollection is very likely to be biased towards that which supports the outcome he or she seeks (see paragraph 75)

iii) When a witness recalls events from the past, he or she is in fact unconsciously reconstructing those events. … (see paragraphs 73 to 77 but in particular paragraph 76).

iv) Testing recollection against contemporaneous documentation is a very useful and important exercise (paragraph 77).”

HHJ Bird also reminded himself that he: “must not allow the tragedy inherent in every mesothelioma case and the natural “desire to assist in any proper way” to lead to a “lax” approach to fact finding”.

Analysis of the evidence

The Judge considered the Mrs Jackman’s evidence in three chronological parts: (1) her recollection of events post 2016 and the conversations she had with her husband up to his death on 4 November 2016; (2) her recollection of conversations from 1968 to 1973; and (3) her general recollection of matters after 1973, namely the deceased’s complaining about the Defendant and the unpleasant and dirty job he did for him.

The Judge treated the second part of her evidence with caution as “it seems that her recollection of events about the second part was triggered by what Mr Jackman said after his diagnosis.” The Judge was impressed with the third part of her evidence, “I was struck that Mrs Jackman recalled in evidence that her husband would “explode” if the name “Firth” was mentioned and that she went out of her way not to mention a relative by marriage who had the same surname.” He also noted that her evidence was in part supported by the medical notes.

HHJ Bird concluded that the claimant had “the hallmark of a careful witness” having marked up her statement by hand before signing it.

The findings

On the basis of the evidence the Judge came “to the clear view that on the balance of probabilities, Mr Jackman was exposed to asbestos fibres whilst working at ICI for the defendant.” The Judge had no difficulty subsequently finding “that in the circumstances the defendant was in breach of the duty owed to Mr Jackman and that that breach caused Mr Jackman to suffer personal injury.”

General damages for PSLA

The appropriate starting point for cases of mesothelioma is chapter 6 (C) of the JC Guidelines (15^th ed.) which provides a bracket of £59,730 to £107,410. It is stated (emphasis added):

“There are a large number of factors which will affect the level of award […]  duration of pain and suffering; extent and effects of invasive investigations; […]  level of the symptoms; domestic circumstances; age, level of activity, and previous state of health; extent of life loss; and concern for spouse and/or children following death. Most reported decisions other than those involving extremely short periods of symptoms or very elderly claimants fall within the middle and upper parts of the bracket. Note that where mesothelioma cases are still dealt with under pre-LASPO conditional fee agreements, the column without the 10% uplift is applicable.”

The deceased died at the age of 76 having suffered seven months of symptoms. The Judge noted that his “decline was particularly steep in the last 6 weeks of his life” and he suffered from “faecal incontinence, collapses and pressure sores.”

The Judge made an award of £75,000. This award is surprising low – in the last ten years general damages awards in mesothelioma cases have very rarely fallen below £90,000 (after adjustment for inflation). The closest comparable case appears to be Zambarda v Shipbreaking (Queenborough) [2013] EWHC 2263 (QB) in which John Leighton Williams QC awarded £77,500 (£93,701 when adjusted for inflation) in respect of a mesothelioma victim who died aged 70 after a 7 month illness. HHJ Bird made no reference to any comparable cases and it may be that he was not taken to any in the course of argument.

Loss of intangible benefits

HHJ Bird accepted that this head of loss was recoverable in the light of the “overwhelming” trend of the case law against Mosson v Spousal.

Comment

This case is a helpful reminder that witness evidence must be looked at in context and as part of the entire evidential picture. This includes looking at the contemporaneous evidence as well as the fact that the Defendant failed to produce any evidence of its own. The evidence of a single, detailed and careful, witness which is consistent with the documentary evidence (even when there is no other live evidence) should be sufficient to establish key facts on the balance of probabilities.

We will blog about each decision once handed down. 

Sivaji v Ministry of Defence

CA hearing date: 15 or 16 June 2021 

First instance judgment

A fatal mesothelioma claim brought on behalf of the deceased and his dependants. The Deceased’s alleged exposure to asbestos took place in the Sembawang naval dockyard in Singapore between 1953 and 1968. The case gave rise to various issues including whether the applicable law was the law of England or the law of Singapore and whether the action was time-barred. 

The issue before HHJ Allan Gore QC (sitting as a High Court Judge) at first instance was whether the Claimant should have permission to amend the Claim Form and Particulars of Claim. On the MOD’s case, these amendments were outside the limitation period under Singaporean law and the effect of giving permission for the amendments would be to deny the MOD the benefit of that limitation defence, at least in respect of the dependency claim, due to the doctrine of relation back, The Judge granted permission for the amendments. 

Rix v Paramount Shopfitting Company Limited 

CA hearing date: 23 or 24 June 2021 

First instance judgment

Mr Justice Cavanagh’s decision concerned the scope of the Fatal Accidents Act 1976. The Deceased was a successful businessman whose business had continued to thrive after his death from mesothelioma. The Judge held that notwithstanding the ongoing success of the business, his widow had a substantial financial dependency claim. 

John-Paul Swoboda and Cressida Mawdesley-Thomas previously blogged about the first instance decision here and Rachit Buch spoke about the case at 12KBW’s Asbestos Webinar Day 2020 which you can watch here. The permission hearing before Lord Justice Bean can be viewed here. 

Witham v Steve Hill Limited

CA hearing date: 6 or 7 July 2021 

First instance judgment

Another mesothelioma case concerning the scope of the Fatal Accidents Act. Anthony Metzer QC (sitting as a Deputy High Court Judge). As a result of the untimely death of the Deceased, his widow had been forced to give up work to look after her foster children. The Judge held that there was dependency claim, which he assessed on the basis of the cost of care to replace the services the Deceased would have provided but for his death. 

Steven Snowden QC and John-Paul Swoboda (who acted for the Claimant at trial) blogged about the case here. Kate Boakes spoke about the case at 12KBW’s Asbestos Webinar Day 2020 which you can watch here.

The Claimant was represented by Harry Steinberg QC and Aliyah Akram.

The claim

The facts are summarised at [6]-[10].

It was alleged that the Deceased was exposed to asbestos while working as a teacher between 1970 and 1975. It was said that asbestos was in the fabric of the school building and that the Deceased would “almost inevitably” have been exposed to asbestos during the construction of a new schoo l building in 1973.

The Defendant was the London Pension Funds Authority, which had inherited the relevant contingent liabilities. The Respondent to the disclosure application was the Leigh Academies Trust (“the Trust”) which, according to information obtained by the Claimant’s solicitors, had “boxes of old documents” relating to building and maintenance works at the school.

Disclosure requests

The background to the application is set out at [12]-[15]. The Claimant’s solicitors sought disclosure from the Trust and were provided with 46 pages of documents. They wrote to the Trust saying that they considered it likely that there were more relevant documents in the light of the information they had been given as to the quantity of documents the Trust held. They offered to attend the Trust’s site to inspect the documents. A representative of the Trust telephoned the Claimant’s solicitors and stated that it had provided all of the documents relevant to the 1970s. After consultation with counsel, the Claimant’s solicitors made a wider disclosure request for documents regarding building, maintenance, renovation, or demolition works at the School before and after the Deceased’s period of employment. There was no response to this request and a non-party disclosure application was filed pursuant to CPR 31.17.

Application hearing

The decision of Master Thornett is summarised at [16]-[26].

Master Thornett dismissed he application on the basis that it was too broad, vague, and unfocused. The Master held that it would impose a disproportionate and unfair burden on the Trust, particularly bearing in mind that it was a third party respondent. His overall conclusion was that:

“… this application is hopelessly vague and lacking in specificity. It is unworkable from a Respondent’s viewpoint and it is disproportionate to expect a third party to try to respond to it. … I cannot, sympathetic as I am to the principle as to how certain documentation could be relevant, today grant this application as it stands. Neither am I able to identify a shape or form of an order that could be intelligible.”

The appeal

The Claimant pursued four grounds of appeal which are set out at [33].

The Judge summarised the legal framework at [27]-[32] and the Claimant’s submissions at [34]-[44].

Murray J found for the Claimant on all four grounds. His reasons are at [45]-[53]:

“45. Acknowledging the broad discretion that the Master should be accorded in making a case management decision, I am nonetheless forced to the conclusion that he was wrong in his application of the test under CPR r 31.17(3) to the relevant facts, took into account irrelevant factors, gave insufficient weight to relevant factors, and failed to balance the relevant factors fairly in the scale. His decision was wrong, and therefore the Order had to be set aside.

[…]

51. For the reasons given by Mr Steinberg, documents regarding building, maintenance, renovation, or demolition works at the School, both before and after [the Deceased’s] period of employment, were potentially relevant, satisfying the “may well” test referred to in Three Rivers (No 4). Properly understood, the Disclosure Application did not seek to require the Trust to undertake a disproportionate, onerous, vague, or unfocused search. All the potentially relevant documents were in boxes at the School’s premises, and RWK was offering to pay copying costs or to attend and physically inspect the boxes themselves.

52. Moreover, it is clear that there was a reasonable possibility that in those boxes there would be documents that were decisive of the claim, one way or the other, and therefore that disclosure was necessary in order to dispose fairly of the claim and/or to save costs.

53. Because the Master appears to have misunderstood the scope of what was requested in the Disclosure Application, which in my view is clear from the statement supporting the Disclosure Application, he did not exercise his discretion on a proper basis and therefore made the wrong decision.”

Costs

Unusually, the Claimant was awarded the costs of making the application on the basis that the Trust had “not put forward any good reason why, from the end of October 2019 onwards it failed to engage with the appellant’s reasonable and several times repeated request for disclosure, which included reimbursing the Trust for its copying costs or attending to conduct a physical inspection, further minimising cost to the Trust.”

Comment

Applications of this sort are heard by Masters on the mesothelioma list day-in-day-out but it is rare for them to be considered in an appeal. This decision therefore provides a useful reminder of the legal framework and how those principles should be applied in practice.

In particular, it is a reminder of the threshold that is set by CPR r31.17(3), which is that documents “are likely to support the case…” if they “may well” do so as opposed to it being “more probable than not” that they will do so.

As per the Judge’s findings in this case, documents from an earlier period than the employment period may have showed asbestos being installed, or documents from a later period may have showed asbestos being removed. In either case, such documents “may well” have supported the Claimant’s case.

The decision also exemplifies the importance of giving a respondent to a non-party disclosure application adequate time to respond, or chasing for a response before issuing an application, and, where possible, of seeking to relieve the burden of compliance with the request by offering to pay for copying or even of attending to carry out the inspection. In this case, not only did the taking of these steps contribute to the success of the appeal, they also led to the Claimant recovering the costs of the application.