PROVING THINGS 22: DAMAGES, MITIGATION , PART 36 (AND EVEN SOMETHING ABOUT BUNDLES)

The Court of Appeal decision today in Pawar -v- JSD Haulage Ltd [2016] EWCA Civ 551 contains some important lessons in relation to proving damages, mitigation of loss and Part 36 offers.

“The fact that a claimant does not mitigate his loss does not mean automatically that he recovers nothing. It means he is not entitled to recover in damages sums which he would have earned had he mitigated his loss. The burden of proof on that issue is and was here on the respondent.”

“Even where the sum sought is modest and the claim conventional the burden of proof remains on the claimant. It was not discharged in this case.”

“… the appeal bundles prepared by the appellant’s solicitors were chaotic. Alternative bundles were prepared by the respondents for use by the parties and the court. Accordingly the costs of preparing the appeal bundles are to be the respondents’ in any event, to be assessed if not agreed.”

KEY POINTS

  • The claimant had failed to mitigate his loss. However the trial judge erred in failing to consider the losses that would have been incurred if the claimant had mitigated his loss. Those figures should have been awarded as damages.
  • The claimant had failed to adduce evidence to support several heads of damage and the judge was correct not to award damages under these heads.
  • The increased award made by the Court of Appeal meant that the claimant had beaten one Part 36 offer but not a second offer.  The claimant was entitled to the costs up to the second after but liable to pay the defendant’s costs of the trial thereafter.
  • The claimant had succeeded in obtaining an increased award at trial and would receive the costs of the appeal.
  • However an application to adduce new evidence was unsuccessful and the original appeal bundles were woeful. The defendant prepared appeal bundles to replace them. The defendant was to recover the costs of preparing these bundles.

THE CASE

The claimant was injured in an an accident. Liability was not disputed. At a hearing on causation and quantum damages totalling £72,417.14 were awarded. The claimant appealed.

PAST LOSS OF EARNINGS

The Court of Appeal upheld the decision of the Recorder not to award wage increases and overtime. There was insufficient evidence to justify these.

  1. It was not in dispute that because of the accident the appellant was unable to work at all between 2009 and the spring of 2013, three and a half years. Another year had elapsed before trial. During some of the early part of that period he had received statutory sick pay which fell to be deducted from any award. He had also received an award of damages from an employment tribunal for his unfair dismissal by the respondent. This included payments for post-accident wages and holiday pay which was also deducted. The issues between the parties were i) the amount of the weekly loss ii) whether and if so, when, he had become fit for work iii) to what extent he had mitigated his loss.
  2. The recorder accepted the respondent’s submission that she should calculate the loss of earnings on the basis of the appellant’s basic weekly earnings as at 2009, £300 a week, £15,600 a year with no increases between 2009 and 2013. Whilst she did not explain why she made no award in respect of pay rises nor why she made no award for loss of overtime the evidence on the issue was unclear and there is no basis for interfering with that decision.
  3. The recorder initially assessed past loss of earnings at £56,300 to which she added £2,000 which she thought was payable because she had misunderstood the respondent’s submissions about the compensation awarded by the employment tribunal for loss of earnings. When this was explained to her again she deducted the £2,000 instead of adding it. Mr Jamil submits that “the deduction of £2,000 twice, namely £4,000 was deducted in the actual sense, which makes her calculation manifestly wrong and therefore call for this court anxious scrutiny.” This argument is misconceived. The recorder made a mistake and corrected it.

MITIGATION OF LOSS

There are a number of points in relation to mitigation of loss:

  1. If the court finds a party has not mitigated their loss this does not automatically mean that damages are not awarded.
  2. The court should consider the losses that would have incurred if that party had mitigated their loss. That sum should awarded as damages.
  3. The burden of proof remains on the defendant.
  4. It is worth noting the sensible defending here.  The defendant actually puts forward alternative figures for earnings if the claimant had mitigated his loss rather than maintaining a blanket denial.

THE JUDGMENT ON MITIGATION OF PAST LOSSES

  1. The fact that a claimant does not mitigate his loss does not mean automatically that he recovers nothing. It means he is not entitled to recover in damages sums which he would have earned had he mitigated his loss. The burden of proof on that issue is and was here on the respondent.
  2. The recorder said that she accepted the submissions of the respondent. In the counter schedule the respondent had pleaded that in the year March 2013 to March 2014 had he mitigated his loss the appellant would have earned £12,000 i.e. the annual national minimum wage. For that year, it was pleaded, he was entitled to recover only the difference between what he would have earned uninjured (£15,600) and what he could have earned (£12,000) i.e. £3600 per annum.
  3. The fundamental difficulty with this approach was the agreed evidence of the experts which was not that as of March 2013 the appellant was in a position to work, it was that he was in a position to look for sedentary or semi sedentary work, as the recorder observed earlier in her judgment. There were a number of factors that would have reduced his chances of obtaining work within a short time of beginning the search: his sickness record, the fact that he was still in pain and taking medication which made him drowsy (all of which the recorder accepted) and the length of time since he had worked. On any view he would have had to undergo retraining of some duration. Given all of those matters it was overwhelmingly likely that it would have taken time to find work during which period he would have been entitled to his loss of earnings at the full rate. The recorder did not deal with this issue. This was an error. I deal with it now. Given the lengthy period of unemployment and the need to obtain further skills I consider it reasonable to allow a period of 8 months for the appellant to have found work. He is entitled to recover damages for his loss of earnings for the period from March 2013 to November 2013 at the rate of £15,600 per annum, £11,700. Thereafter I accept the respondent’s pleaded case that he would have secured employment at the minimum wage, £12,000 per annum and so his recoverable loss from December to trial was 6 months’ earnings at the annual rate of £3,600 to trial, £1,800.

MITIGATION AND FUTURE LOSSES

Future Loss of Earnings/Loss of Earning Capacity
Loss to March 2017
  1. It was the respondent’s case that there was no future loss because the appellant could have obtained better paid work. Mr Browne argued that this would have been sedentary work but there was no evidence of what the work might be or what would be the rate of pay. It was pleaded in the appellant’s schedule that he would have earned the minimum wage. The respondent had accepted that in the counter schedule, albeit for one year only. The recorder said. “As I previously said, Mr Pawar has done absolutely nothing to mitigate his loss and on the expert evidence before me any loss of earnings would cease in March 2017”.
  2. The recorder concluded that the claim for loss of earnings from trial to March 2017 was extinguished because of the failure to mitigate. She was wrong to do so. In the absence of any evidence to this effect it was not open to the recorder to conclude that the appellant would have earned more in sedentary work than as an HGV driver. That he would have started at the minimum wage was agreed. In those circumstances I am satisfied that the loss was the difference between his pre accident earnings and the minimum wage, £3,600 per annum. I adopt the multiplier pleaded, 3. The correct award for loss of earnings to March 2017 was £10,800.

    Loss of Earning Capacity beyond March 2017

  3. The position beyond March 2017 was much more uncertain. The experts agreed that from that date the appellant would not have been able to work as a HGV driver in any event. They also said that his continuing symptoms were more severe than they would have been had the accident not occurred. There was no evidence of, or thought given to, whether and to what extent this meant that there was a residual and enduring loss of earning capacity attributable to the accident over and above the loss attributable to his pre existing condition. In those circumstances it would not be right for this court to try and assess it. It would be quite impossible to identify with any accuracy a multiplicand to which we could apply a multiplier in accordance with the modern practice. I have considered whether this is one of those cases where the approach adopted by this court in Blamire v South Cumbria Health Authority [1993] PIQR is still appropriate. I am satisfied that it is not. In the absence of any evidence, assessment would be entirely speculative. The recorder was right to make no award for this period.

OTHER HEADS OF DAMAGE FOR WHICH THERE WAS NO EVIDENCE

  1. Past Loss of Services
  2. The recorder rejected this claim thus, “I have considered carefully the question of past loss of services and indeed future loss of services. Neither of these heads were claimed when the proceedings began and in any event there is no evidence in support of the figures before me. So far as these figures are concerned, I would say that £1,000 per annum, or even £650 or £500 as Mr Pawar told me, seems to be an awful lot of money for DIY, heavier household and gardening tasks but they cannot be supported and I make no award. I also bear in mind that this is a two person household.”
  3. The original pleading did not include a claim for loss of services but Mr Tucker referred in his report in 2011 to difficulties with gardening and housework. In 2013 Mr O’Hara referred to the fact that the appellant did not do as much around the house as he used to. What mattered was not the stage at which it was pleaded but whether or not the claim, conventional in type and modest in quantum was made out on the evidence. There was evidence from the appellant and the experts that he was unable to do as much as he used to. As to the figures, the appellant was asked about them, apparently for the first time, in re examination when he was asked to give a “rough estimate” of the annual sum. He replied that he thought it was between £600 and £700. Although she does not say so in terms it is plain that the recorder did not accept this figure. Given the state of the evidence on the topic she was entitled to take that view. Even where the sum sought is modest and the claim conventional the burden of proof remains on the claimant. It was not discharged in this case.
Cost of Treatment
  1. This was a hopeless claim. There was no evidence that private physiotherapy had been obtained in the past. There was no evidence that physiotherapy would be of any use in future and none was prescribed. I say no more about it.

PART 36 OFFERS: TRIALS, APPEALS (AND BUNDLES)

This is one of rare cases where we can see the impact of Part 36 offers.
  1. On 5th February 2014 the respondents made a Part 36 offer in the sum of £80,000. It was refused. A further offer was made on 1st May 2014 in the sum of £129,332. This too was refused. The appellant failed to beat either Part 36 offer at trial. As a consequence the recorder ordered that the costs up to 27th February 2014 be paid by the respondent, thereafter they were to be paid by the appellant. Mr Browne accepts that the costs order below must be amended because the appellant has now beaten the first Part 36 offer. He submits that the respondent should be liable for the cost of trial up to 23rd May 2014 (the expiry of the time for acceptance of the second Part 36 offer). Mr Jamil submits that there is no copy of the respondents’ offer to settle in the sum of £129,332 and so it should be ignored. It is a very great pity that a copy of this offer was not provided to Mr Jamil but his client was plainly aware of it, as was the recorder who made the costs order. I have recently seen a copy of the offer which was also copied to Mr Jamil by email. It is referred to also in the judgment of District Judge Bull on 24th June 2014, of which I have now seen a copy. District Judge Bull was dealing with an application for a stay on enforcement of payment of £40,000 of the damages to protect the respondents’ costs position, given that the ATE insurance had been cancelled because the appellant had rejected counsel’s advice to accept the sum of £129,332.
  2. I accept Mr Browne’s submission on the costs of the trial: the respondent is liable for costs on the standard basis to be assessed if not agreed up to close of business on 23rd May. The balance of the trial costs are to be paid by the appellant.
Appeal
  1. The parties agree that the general rule is that an unsuccessful party will be ordered to pay the costs of the successful party – see CPR 44.2 (2)(a). Mr Jamil submits that his client has succeeded. His award of damages has been increased. He is entitled to his costs. Mr Browne says that in reality the respondents were the successful party.
  2. Mr Browne concedes that the rules governing offers under CPR Part 36 apply to the costs of the proceedings in which they are made, not the costs of the appeal. Nonetheless he submits that pursuant to CPR 44.2(4)(c) the court should consider the Part 36 offers, particularly the offer in the sum of £129,332 when assessing who is the real winner on the appeal. Had the appellant accepted that sum he would have been better off than he is now by some margin. He further points to the number of hopeless arguments that were run on the appeal. He also refers us to a letter dated 20thNovember 2015 from his solicitors to the appellant’s solicitors. It is marked without prejudice save as to costs. It explains that the respondents do not consider mediation appropriate because i) the appellant had refused to accept the reasonable offer of the respondent ii) he had parted company with his ATE insurer because he had refused to accept counsel’s advice on the Part 36 offer iii) he had made no offer to settle. The letter, a copy of which was received by the court in recent days, was sent to the appellant’s previous solicitors. Mr Jamil confirmed today that he had not previously seen it. In any event the letter does not take the matter any further.
  3. In January 2016 the appellant’s solicitors offered to settle for £220,000. This was hopelessly unrealistic and would support the submission that had the respondents offered some further reasonable sum it would have been rejected. In fact they did not make any offer, even though the sum awarded by the recorder was significantly below the sum they had previously considered reasonable. It is inescapable that the appellant has demonstrated some errors in the recorder’s approach and this court has increased the award of damages to him by about one third. He has already been significantly penalised in costs for his unreasonable refusal to accept the respondents’ offer of May 2014. Whilst the amount he has recovered on appeal falls short of the second offer by some margin that offer was not open to him after May 2014. In order to improve his position it was necessary for him to pursue the appeal (for which he had permission on all grounds) to its conclusion. In those circumstances I consider that he is entitled to recover his costs of the appeal to be assessed if not agreed, subject to two caveats:-
    i) the appellant may not recover his costs of the application for permission to adduce further evidence. It was misconceived.
ii) the appeal bundles prepared by the appellant’s solicitors were chaotic. Alternative bundles were prepared by the respondents for use by the parties and the court. Accordingly the costs of preparing the appeal bundles are to be the respondents’ in any event, to be assessed if not agreed.

RELATED POSTS

Proving things

BUNDLES

Bundles

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