premature issue of proceedings
The end of premature issue of proceedings to recover interest
on general damages?
9 February 2011
A recent decision in a case handled by Browne Jacobson may mean
the end to the practice among claimant solicitors of issuing
proceedings prematurely in order to recover interest on general
damages, a practice seemingly endorsed following Pelling v Don
Valley Construction (19 February 2010).
Facts
In the case of Kyle v Cedar Grange (25 January 2011 –
Halifax County Court), the claimant was injured in an accident at
work on 2 February 2010. Following receipt of her letter of claim,
just three weeks later, the defendant’s representatives admitted
liability on 12 May 2010, prior to the expiry of the protocol
period.
Kyle’s solicitors disclosed her medical evidence in September
2010 which recommended she undergo surgery. In the same letter,
they invited the defendant to fund the treatment and sought
confirmation that, in consideration from refraining from issuing
court proceedings the defendant would agree to pay interest on
general damages, to be calculated from the date of their letter. If
this offer was not accepted, the claimant’s solicitors stated that
they would issue court proceedings.
In an attempt to prevent the issue of proceedings, the
defendant’s representatives offered to agree general damages and to
issue a cheque in settlement of the claim for general damages, or
an interim payment on account of general damages. They argued that
it was premature to issue proceedings while the claimant was still
undergoing medical treatment and where liability and limitation
were not an issue.
Kyle’s solicitors accepted the offer of an interim payment but
nevertheless issued proceedings contending that they were entitled
to do so to secure their client’s entitlement to interest on
general damages.
Arguments
The defendant appointed solicitors who applied to the court
seeking the sanctions set out at section 4.6 of the Pre-action
Conduct Protocol contending that the Practice Direction encourages
parties to settle claims without the need to start proceedings and
that proceedings, which should be a step of last resort, should not
normally be started when settlement is still actively being
explored.
The claimant relied on the case of Jefford v Gee [1972]
2 WLR 202, arguing that claimants should issue proceedings promptly
but the judge in the present case agreed that the spirit and
purpose of the Pre-action Protocols and the CPR was to encourage
parties to resolve cases without the need for proceedings to be
issued and that the issue of interest on general damages often gets
lost in the ether as part of the overall settlement negotiations.
The claimant’s solicitor’s conduct was criticised as being
abrasive, unnecessary and disproportionate.
The judge approved the defendant’s application and ordered that
the action be stayed until such time as the claimant had served a
medical report after the conclusion of her surgery. The case would
then be listed for a Case Management conference.
The Judge did not deprive the claimant of interest on general
damages, believing that it was her solicitors, not her, who were at
fault and that to make such an order would be too draconian.
However, it was recognised that this would largely be offset by the
pre-issue interim payment on account of general damages.
Costs
The defendant’s solicitors requested not only the costs of the
application but also the costs of the action until the date of the
Case Management Conference, on the basis that Kyle’s premature
issue of proceedings had caused the defendant to instruct
solicitors in a case where they may never have needed to. The judge
agreed and the defendant’s costs were awarded in full, with the
costs to the Case Management Conference to be assessed if not
agreed at a later date.
Implications
This is a welcome decision for defendants seeking to contest the
premature issue of proceedings and should deter claimants’
solicitors from issuing proceedings to recover interest on general
damages, where there is no other need for proceedings to be
issued.
It is also encouraging that the courts are willing, in
appropriate cases, to penalise misconduct by imposing the sanctions
set out in the Pre-Action Conduct Practice Direction and awarding
costs against claimants who issue prematurely.
Steven Conway acted for the defendant on the instructions of
New India Assurance Co Ltd.
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